When a couple decides to separate or get divorced, one of the most important steps to go through is financial disclosure. By providing each other with a full accounting of assets and liabilities, the separating parties can get an idea of how their property will be divided and whether one might owe the other money for equalization (such as to buy the other’s interest in a home). However, when one of the parties to separation has hidden assets, or as we will see today, unreported income, the courts can order an expert to step in and determine what has been withheld or misrepresented. An approach to this type of situation was recently discussed in a decision by the Ontario Superior Court of Justice.
Father asks for spousal support order be reversed and to be allowed to sell family home
The parties involved in the dispute are separated and have a child together. The child was nine years old at the time of the trial and has lived with the mother in the matrimonial home since the mother and father separated in early 2018 or late 2017. An earlier decision determined the father was obligated to pay child support, something he has failed to do. At the time of the trial, he was in arrears of his child support obligations to the tune of $10,569.
The father brought a motion to the court asking for the child support order to be overturned and to be able to sell the family home, which was occupied by the mother and child at the time of the trial.
The court first looked at the father’s request to reverse the child support order. He told the courts he did not have sufficient funds to pay it following his termination from employment in April 2019. However, the court noted that no evidence of his termination was presented to the court.
The father’s claim allowed the court to look more closely at the financial documentation provided by the father. The court noted that the father’s child support obligations came not from his tax returns but from his endorsement of the terms contained in a Minutes of Settlement between the parents. Despite this, an order from February 2020 required the father to disclose his employment and financial records, but he has failed to do so.
In response to the father’s claims that he cannot afford to pay child support, the mother told the court that during their relationship, the father received cash for referrals in the real estate industry. She also said he had kept $100,000 in cash in their home but later moved it to a safety deposit box. He would ask the mother to deposit this cash into their bank. These would not have been included on his income tax returns, which in 2019 reported that he made $80,480 but had business expenses of just over $100,000.
The court found that there were $278,049 in deposits made into the father’s bank account in 2018 alone. He told the court that money came from the refinancing of another property, as well as money from his parents and a line of credit. He reported no income for 2020 or 2021.
In the meantime, the mother makes about $30,000 per year working two part-time jobs. She told the court the father must have transferred money to his current girlfriend or his sister, who have been transferring money back to him.
The court determined the only way to get to the bottom of the father’s finances was to have him hire a financial expert to analyze his accounts. The parties were directed to work together to appoint a professional to the task. The court also ordered the father to authorize all the major banks in Canada to disclose to the mother any information about accounts he has with them.
The matrimonial home
The home the parties lived in was registered solely in the name of the father. He asked the court to allow him to exercise what he called a prima facie right to sell it. With the father being the sole owner of the home, only a competing right under the Family Law Act was established by a 1992 decision by the Ontario Court of Appeal.
The court explained that there have been a number of cases in which courts have denied an interim motion for the sale of a home. The reasons for this have included instances when there were issues related to equalization payments or when allowing the sale of the home would violate the need of a vulnerable spouse or child who needs to retain it.
The court looked at the circumstances to determine if the mother should be able to continue to live in the home. The father had not been paying any child support at the time of the trial. The mother has sole parenting time with the child (the father has not exercised any parenting time) and works two part-time jobs relatively close to the home. The child’s school is a four-minute drive or nine-minute walk from the home. Because of these circumstances, the court found it would not be appropriate to make the mother find a new place to live, calling out her financial burden in particular.
The court then went on to look at the equity available in the home (approximately $140,000) and with the information it had available, determined the father had a net family property of $82,965. An equal division of net family property would see the mother receiving just over $41,000. However, the court stated that she may be eligible for an unequal division in which she receives more than 50%. In the meantime, though, the mother will be able to stay in the home.
Contact Windsor Family Lawyers If You Are Concerned About Hidden Assets
Jason P. Howie, one of Johnson Miller Family Lawyers founding partners, is a Certified Specialist in Family Law and has over 25 years of experience in helping clients uncover hidden assets in divorce proceedings. To speak with Jason or one of our other experienced family law lawyers, please call us at 519-973-1500 or reach out to us online to schedule a consultation.