Hiding Assets in a Divorce: Ontario Disclosure Rules and Remedies

It is unsettling to suspect that your spouse is not telling you everything about their finances. Maybe accounts have gone quiet, a business seems to earn less than it used to, or money has moved around since the separation.

Ontario's rules are built around full financial disclosure. This article explains what each spouse must put on paper, what the court can do when disclosure falls short, and what to think about before you sign an agreement.

What each spouse must disclose

A party making a property claim must serve and file a financial statement with the claim, and for property claims the form is Form 13.1. The responding party must serve and file one too, within the time for its answer or response.

In an equalization application, each party must also serve and file a sworn statement of their property, debts and other liabilities. It must cover the date of marriage, the valuation date and the date of the statement, plus claimed deductions and exclusions and certain disposals of property.

Property is defined broadly. It includes any present or future, vested or contingent interest in real or personal property, and that includes shares in a business or company.

Supporting documents and later changes

Within 30 days after the financial statement is due, a party to a Family Law Act Part I property claim must serve supporting documents. These include statements for accounts and investments issued closest to the valuation date.

Before a settlement conference or trial, each party to a Part I property claim must also serve and file a net family property statement, Form 13B. If a party discovers that a document served under Rule 13 is incorrect, they must promptly serve the corrected information.

• Statements for accounts and investments issued closest to the valuation date
• Records that help show the value of any shares in a business or company, since shares count as property
• Records of debts and of any significant transfers of property

What the court can do about missing or incomplete disclosure

If a party has not served or filed a required disclosure document, the court may on motion order them to do so, and must then also order the party to pay costs.

The court can also go beyond the other spouse. It may order a non-party to produce a document, and may order a party or non-party to be questioned under oath. The test for a document is whether it would be unfair to go on with the case without it.

If a party fails to obey an order, the court may make any order it considers necessary. That can include costs, a fine or penalty, dismissing a claim, striking out documents, barring use of undisclosed documents, refusing further orders, postponing the trial, or a contempt order.

In an equalization or title application, the court may also make interim or final orders restraining the depletion of a spouse's property, known as preservation orders.

Hidden assets, unequal division and signed agreements

Hiding or running down property can have consequences beyond disclosure orders. The court may award more or less than half the difference in net family properties, but only if equalizing would be unconscionable. Listed factors include undisclosed debts, debts incurred recklessly or in bad faith, and intentional or reckless depletion.

If you have already signed a separation agreement, a court may set it aside if a party failed to disclose significant assets, debts or other liabilities that existed when it was made.

Time limits matter. An equalization application must be brought by the earliest of two years after a divorce or nullity, six years after separation with no reasonable prospect of resuming cohabitation, or six months after the first spouse's death. The court may extend a time limit if there are apparent grounds for relief, the delay was incurred in good faith, and no one will suffer substantial prejudice.

What to do next

• Write down what you know: accounts, businesses, property, debts and when things changed
• Collect any statements, tax returns and records you already have
• Check whether your valuation date and filing deadlines are close
• Do not sign a separation agreement until you are satisfied with the disclosure you received
• Speak to a family lawyer about preservation orders and how to challenge incomplete disclosure

Valuing a business or complex property often needs evidence from a qualified valuator, and there is no statutory formula. A lawyer can explain what is likely to be needed in your case.

Frequently asked questions