“The importance of relevant financial disclosure in family law cases is well-recognized. Delays in disclosure impede the progress of an action, act to the disadvantage of the opposite party, and impact the administration of justice: see Roberts v. Roberts, 2015 ONCA 450, 65 R.F.L. (7th) 6, at paras. 11-12.
When a spouse controls a corporation and their income is necessary to determine the amount of child support, the Guidelines require that the payor spouse provide the other spouse with corporate documents. Those documents include, for the corporation’s three most recent taxation years: the financial statements of the corporation and its subsidiaries; and a statement showing a breakdown of all salaries, wages, management fees or other payments or benefits paid to, or on behalf of, persons or corporations with whom the corporation, and every related corporation, does not deal with at arm’s length: see ss. 21(2) and 21(1)(f) of the Federal Child Support Guidelines, SOR/97-175.
When a spouse is a shareholder, director or officer of a corporation, the pre-tax income of that corporation is relevant to the determination of their annual income. If the court is of the opinion that the amount of the spouse’s income does not fairly reflect all of the money available to the spouse for the payment of child support, the court may include all or part of the pre-tax income of the corporation. All amounts paid by the corporation as salaries, wages, management fees, or other payments or benefits to or on behalf of persons with whom the corporation does not deal at arm’s length must be added to the pre-tax income, unless the spouse establishes that the payments were reasonable in the circumstances: see s. 18 of the Guidelines.
If the payor spouse does not control the relevant corporation, there are two provisions of the Family Law Rules, O. Reg. 114/99, that permit the court to make orders for document disclosure from a non-party:
i. If a document is in a non-party’s control that is not protected by a legal privilege, and it would be unfair to a party to go on with the case without the document, the court may order the non-party to produce the document to the party: Rule 19(11).
ii. The court may order a non-party to disclose information where:
a. it would be unfair to the party who wants the disclosure to carry on with the case without it;
b. The information is not easily available by another method; and
c. The disclosure will not cause unacceptable delay or undue expense: Rule 20(5).
On this motion, the onus is on the mother to satisfy the court that production should be ordered: see Weber v. Merritt, 2018 ONSC 3086, 11 R.F.L. (8th) 177, at para. 29.
Non-party disclosure in family litigation is generally more permissible than under the Rules of Civil Procedure, and judges should exercise “liberal and generous discretion” in ordering non-party disclosure in the family context. This is because it is common in family litigation for parties to make use of close family members for purposes of concealing income or assets: see Weber at para. 33; Hagey-Holmes v. Hagey, 2005 CanLII 23324 (ON SC), [2005] O.J. No. 2760 (Ont. S.C.), at para. 32.
It is not uncommon in the family law context for family members and their businesses to align themselves to support and protect a family member defending a property or support claim: see Weber at para. 34; Loeb v. Loeb, 2013 ONSC 1730, 34 R.F.L. (7th) 149, at para. 42.”