When imputing income to spouses to determine temporary spousal support, Mr. Justice David A. Jarvis in G. v. S., 2021 ONSC 1625 commented on the complexity of the financial transactions included in the information on which the parties asked him to rely. After detailing those transactions, which appeared to involve companies owned by the husband or with/by one or more of his family members. Jarvis J. determined the spousal support and completed his task. Jarvis J. then closed his reasons by first disclaiming any “proxy” for the Canada Revenue Agency but then observing that “consideration might be given to mediation/arbitration” where there appears to be “unusual financial transactions whether those are family expenses funded through a myriad of related corporate entities … or bundles of “gifted” neatly-bound cash hidden in a bedroom closet in excess of $100,000”.
Tasked with adjudicating a motion for temporary spousal support, Jarvis J. at para. 9 outlined the parties’ financial information generated from four (4) affidavits and two (2) financial statements inventoried at para. 2 of his reasons. As part of the financial transactions identified by Jarvis J. in his analysis, Jarvis J. also identified invoices sent to or payments made by particular companies owned by the husband or with/by one or more of his family members.
Jarvis J. qualified temporary spousal support as a “holding” order. “The application of compensatory, non-compensatory and contractual principles to the objectives of a support order under the [Divorce Act, RSC 1985, c 3 (2nd Supp)] are best reserved to trial where the court will have a more robust evidentiary record and the impact of any property division on support can be considered”.
Jarvis J. based his determination on the range of considerations, which he listed at paras 11-12. At para. 13 Jarvis J. contrasted the strength/quality of the evidence filed by each of the parties. At para. 13 (a) to (k), Jarvis J. also commented on certain inconsistencies in some of the evidence.
Jarvis J. observed that financial non-disclosure “haunts” family law and identified “[t]imely and meaningful disclosure” as the “most basic obligation in family law” citing Roberts v. Roberts, 2015 ONCA 450. Jarvis J. noted that a self-employed, owner/operator of different entities in “a tentacled corporate structure” involving apparent “family-related companies” had an “obligation to pro-actively and credibly value business interests”. Jarvis J. noted that, despite a separation which “triggered” such pro-active and credible efforts, the husband had not yet generated an organizational chart or engaged a business valuator.
“More than half of the husband’s evidence, and most of his submissions, focused on the wife’s income from her new businesses (statements she disclosed) and his challenge to her budget, something which, as already noted, was less than the budget he declared for the family shortly after the parties separated. Likely some valuation or analysis of the wife’s business interests and income will be needed but those results will most certainly pale compared to those of the husband given his central position as the family’s primary, historical breadwinner, a family that has enjoyed an enviable lifestyle for many years, and the as yet undetermined range of his business interests. The absence of meaningful evidence from the husband about the nature and extent of his business interests and what appears to be his deficit funding (without debt) of the family’s lifestyle is as remarkable as it is suspicious”.
Jarvis J. proceeded to rely on the evidence provided in order to issue a temporary spousal support prior to trial and did so by imputing income to each of the spouses. In establishing the income to impute to the husband, Jarvis J. remarked as follows, after which at para. 23(a) to (l), he set out his principal reasons for imputing a particular income level.
“As for the husband, the evidence, even at this stage of the case, is overwhelming that he enjoys an income and access to cash significantly greater than he is prepared to declare and acknowledge to the tax authorities and this court”.
Jarvis J. noted that his own conclusion was subject to a determination by the “court of final hearing” to adjust for “support overpaid or underpaid”.
After issuing an order at para. 28 for spousal support and related measures, Jarvis J. closed his reasons with the following statement.
“ Lastly, this court holds no proxy for the Canada Revenue Agency but where, as certainly appears to be the case here, there appears to be unusual financial transactions whether those are family expenses funded through a myriad of related corporate entities (OTD, JCL SFC, to name just a few) or bundles of “gifted” neatly-bound cash hidden in a bedroom closet in excess of $100,000, consideration might be given to mediation/arbitration”.
urbitral notes – First, regarding the confidentiality of arbitration, see the earlier Arbitration Matters note “Québec – judicial protection of parties’ confidentiality promotes public interest in arbitration – #305”.
In homologating an award issuing from a consensual, administered arbitration, Madam Justice Marie-Anne Paquette in 79411 USA Inc. v. Mondofix Inc., 2020 QCCS 1104 ordered that the award be kept confidential because (i) doing so encourages the use of arbitration as a dispute resolution mechanism and (ii) the public interest favors confidentiality orders to promote arbitrations and protect the expectations of the parties to the arbitration. Paquette J. also held that the burden rests on the party seeking the disclosure of otherwise confidential information to demonstrate that the good effects of disclosure outweigh the bad effects of infringing on the confidentiality expectations of parties to an arbitration. Her approach emphasizes the public interest in arbitration and does not rely merely on the private interests peculiar to the parties.
Second, regarding the confidentiality of mediation, see the earlier Arbitration Matters note “Québec – trial judge on own initiative quashes subpoena issued to mediator – #339”.
Without need for application by either the opposing party or the proposed witness, Madam Justice Céline Gervais in PC Avocats inc. (Perras Couillard Avocats) v. Perreault, 2020 QCCQ 1972 quashed a subpoena sent to the attorney who served as mediator in court-supported mediation. In quashing it proprio motu, Gervais J. explained to the self-represented litigant that the mediator was not compellable and all that transpired during the mediation was confidential. Gervais J. also commented on the role/liability of lawyers in a client’s own decision to engage in mediation and negotiate a settlement.
Third, for precedent from the courts urging parties to consider mediation and arbitration instead of litigation, see the earlier Arbitration Matters note “Québec – parties urged to mediate/arbitrate to ‘avoid bogging down’ in ‘complex and costly judicial procedures’ – #279”.
In Équipements de gardien de but Michel Lefebvre inc. v. Sport Maska inc., 2020 QCCS 44, Mr. Justice Frédéric Bachand (as he then was, now with the Court of Appeal) dismissed an application for a provisional injunction but, in doing so, prompted the parties to seize the opportunity, already consented to in their contract, to undertake mediation and arbitration ‘to avoid bogging themselves down in complex and costly judicial procedures’. Bachand J. also urged the parties to engage in less formal exchanges of information which may allow them to find a faster solution to their dispute.