Court File and Parties

Court File No.: FS-14-19285

Date: 20140728

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Jennifer Sandra Turk, Applicant

AND:

Stuart Bernard Turk, Respondent

BEFORE: Madam Justice Darla A. Wilson

COUNSEL:
Harold Niman, Counsel for the Applicant

Heather Hansen, Counsel for the Respondent

HEARD: July 24, 2014

ENDORSEMENT

[1] The Applicant Wife brings this motion for an order requiring the Respondent Husband to provide a properly sworn Financial Statement and the disclosure requested in the Applicant’s expert’s letter of June 9, 2014. The Respondent opposes this relief.

[2] By way of background to this litigation, the parties were married in 1989 and separated on November 5, 2007. They have 2 children: Jordan born in 1994; and Sydney born in 1998. The parties executed a Separation Agreement dated April 26, 2010. This Application was issued on March 11, 2014 seeking to set aside the Separation Agreement on the grounds of duress and inadequate financial disclosure. The Respondent has not filed an Answer. Instead, he served a motion for Summary Judgment in May 2014.

[3] There was a case conference on June 16, 2014 at which time the parties agreed to a timetable which included the Applicant bringing this motion for a Financial Statement, questioning of both parties and the Respondent bringing a Summary Judgment motion. The latter motion is currently scheduled for November 17, 2014.

Positions of the Parties

[4] In the affidavit of the Applicant filed on this motion, she deposes that she never received proper financial disclosure from the Respondent and that the equalization payment contained in the Separation Agreement was “grossly incorrect”. Further, it is alleged the provisions concerning spousal and child support are unfair and that the amount specified in the Agreement was arrived at in the absence of full and complete disclosure about the Respondent’s business interests and true income. In her affidavit, the Applicant deposes that she signed the Agreement under duress without the requisite financial disclosure.

[5] Further, it is asserted that the Respondent has not been paying the correct monthly payments in accordance with the Agreement and as a result, she is in difficult financial circumstances. She did not work during the marriage and remains unemployed. She asserts that the Respondent owns several companies and that his financial circumstances are complex. She retained Wayne Rudson to analyze the Respondent’s financial affairs and a letter was sent setting out the financial disclosure that is necessary to evaluate the financial circumstances of the Respondent. This information has not been produced.

[6] In the Summary Judgment motion materials the Respondent has sworn an affidavit dated May 13, 2014. He deposes that the Separation Agreement of April 26, 2010 was arrived at after 18 months of negotiations with both sides being represented by counsel. He denies there was any duress or bullying behaviour as alleged by the Applicant and states that he provided “full, complete and frank disclosure” and that no request for information was denied. There has been voluminous disclosure that has been made as contained in the Respondent’s affidavit filed on the Summary Judgment motion. It is deposed that the Respondent has complied with the terms of the Separation Agreement and in fact, has made gratuitous payments to the Applicant to assist her financially. The Respondent denies that the Applicant is in financial distress.

Analysis

[7] To be clear, I am not dealing with the issues arising from the Summary Judgment motion—that is, whether the Separation Agreement is valid and in making that determination, evaluating the credibility of the evidence of the parties. It is abundantly clear that the financial affairs of the Respondent are complex. The Applicant commenced this Application seeking a declaration that the Separation Agreement of April 26, 2010 is null and void and that it be set aside. An alternative ground of relief is for an Order setting aside the child and spousal support provisions of the Agreement and an order for appropriate support be made. It is the position of the Applicant that there was inadequate financial disclosure made by the Respondent at the time the Agreement was negotiated and that it is necessary that proper disclosure be made at the present time in order for the Court to determine whether there was proper disclosure at the time the Agreement was negotiated.

[8] It is not disputed that there has been significant financial disclosure from the Respondent; nor is it disputed that the Respondent has not filed a financial statement that complies with Rule 13.1. The language of that Rule is mandatory: “the financial statement used by the parties under these rules shall be in Form 13.1…” [emphasis mine].

[9] The Rule goes on to stipulate that parties filing financial statements shall “make full and frank disclosure of the party’s financial situation” and “if a party believes that another party’s financial statement does not contain enough information for a full understanding of the other party’s financial circumstances, the party shall ask the other party to give the necessary additional information...” If the requested material is not forthcoming, a motion can be brought for an order that the information must be provided and a new financial statement filed (Rule13 (11).

[10] A brief review of the materials before me discloses that the Respondent has financial interests in several numbered companies which are in the business of land development. According to the letter from the Respondent’s accountant dated April 21, 2014, he is a shareholder in Turk Management Group Inc. which earns management fees from one of the numbered companies. He is also a shareholder in 1579954 Ontario Ltd. which is managed by the Respondent’s father. Another company 1112396 Ontario Limited finances the operations of 1579954 Ontario Ltd. Both of these numbered companies were created during the course of the marriage. It appears that 1112396 Ontario Ltd. was formerly known as SEJ Holdings Ltd. As Mr. Niman points out, the draft Net Family Property Statements contained in the Summary Judgment materials list only one of the numbered companies which does not contain a value. There is reference to SEJ Holdings Limited which does not have a value attached to it. I make these comments simply to illustrate that the financial picture is a complicated one.

[11] The jurisprudence makes it abundantly clear that full and complete financial disclosure is necessary in the family law context, particularly when parties have entered into domestic contracts. As Justice Mesbur noted in Dubin v. Dubin 2003 2103 (ON SC), [2003] O.J. No. 547 (S.C.J.) Fundamental to a choice to opt out of the legislative scheme is a clear understanding of what one’s rights and obligations might be if there were no contract. It is in this context that financial disclosure is critical, in that knowing assets and liabilities at the date of the agreement is fundamental to an eventual calculation of net family property….”

[12] In Virc v. Blair 2014 ONCA 392, the Court of Appeal reviewed a decision where summary judgment was granted in a case where the Wife launched an application to set aside a separation agreement on the basis that the Husband had materially misrepresented the value of the property he held at the date of marriage. While that decision dealt with whether it was an appropriate case for an order for summary judgment, the Court’s comments about the necessity of full disclosure are instructive. Further, the Court noted that when looking at a Separation Agreement and deciding whether it complies with the objectives of the Divorce Act, the allegations of duress, undue influence and unconscionability should be determined by the trial judge on a full factual record. [emphasis mine].

[13] I am not deciding whether or not the Separation Agreement ought to be set aside; rather, I am tasked with the decision as to whether or not the Respondent ought to be required to file a financial statement that complies with Rule 13.1. I am of the view that he must do so.

[14] Much of the argument of the solicitor for the Respondent was directed at the financial disclosure that has been made by her client which is set out in the Summary Judgment materials. That is not disputed. Whether that is sufficient to persuade the motion judge that there is no genuine issue requiring a trial will be left for another day.

[15] However, I am not persuaded that there is a compelling reason in the circumstances to relieve the Respondent of his obligation to comply with the Rules regarding financial disclosure. The Applicant asserts that she was not given proper financial disclosure when the Separation Agreement was entered into. The Applicant’s expert has requested certain documentation from the various companies the Respondent has interests in, along with information concerning properties in which the Respondent has an interest.

[16] In my view, it is no answer for the Respondent to say that voluminous financial disclosure has been made and offer no reasonable explanation for his refusal to produce a sworn financial statement in the face of a rule which mandates its delivery. Nor is it an answer to assert that the financial disclosure requested is extensive and onerous to compile. The Respondent has complex financial interests in various companies and furthermore, he has an accountant who is familiar with the operations of these companies. Similarly, while the Respondent makes the bald assertion that the requested financial disclosure would be prejudicial, there is no evidence offered to support this contention.

[17] Counsel for the Respondent argues that it would be expeditious and cost effective if the Court bifurcated this matter and refrained from ordering further disclosure pending hearing of the Summary Judgment motion. I decline to do as in my view, given the facts of this case, it makes little sense.

[18] Given the Applicant’s position that she was not provided with adequate financial disclosure, and the Respondent’s pending motion for Summary Judgment, the issue of the adequacy of the financial disclosure must be addressed. As the Court of Appeal stated in Virc, supra, “While this does not foreclose the possibility that the respondent may ultimately be successful in resisting the claim to set aside the separation agreement, it was inappropriate for the motion judge to make a determination about the validity of the agreement in the absence of findings of actual knowledge, the extent of the respondent’s defective disclosure…” To put it another way, it makes no sense for the Respondent to fail to address the financial disclosure issue now because one of the issues before the court on the Summary Judgment motion will be the adequacy of the financial information that was provided at the time of the execution of the Separation Agreement and thus, the information requests from Rudson must be answered.

Order

[19] The Respondent is to deliver a properly executed Form 13.1 Financial Statement with supporting documentation on or before August 15, 2014. The Respondent shall produce the disclosure listed in the letter of request from Wayne Rudson dated June 9, 2014 on or before September 30, 2014.

[20] If the parties cannot agree on costs, I will accept written submissions of no more than 5 pages by August 15, 2014.

D.A. Wilson J.

Date: July 28, 2014