In February, the Ontario Court of Appeal ordered one spouse to pay the other more than one million dollars in costs in addition to spousal and child support. So what motivated the Court to order this spouse to pay so much in costs? The answer lies in lack of financial disclosure and bad behaviour.
Financial disclosure is one of the lynchpins of family law. If full, fair and frank disclosure of finances is not presented in a timely manner, the Court has the right to nullify a domestic contract. Within family law, it is generally understood that the better one “behaves,” the more likely one will get what is sought when it comes to spousal support, child support, parenting agreements, etc. Thus, the error the respondent made in Lakhtakia v Mehra (2003 ONCA 88) was a costly one.
Mr. Mehra and Ms. Lakhtakia met in 2000 while studying commerce at the University of Windsor. The two were married eight years later in India, where both of them resided for the following five years. The couple returned to Canada in 2013 and Ms. Lakhtakia gave birth to a daughter. Shortly after his daughter’s birth, Mr. Mehra returned to India. The couple then separated in 2014 due to Ms. Lakhtakia discovering her husband’s marital infidelity. Both Ms. Lakhtakia and their daughter came back to Canada where Ms. Lakhtakia commenced divorce proceedings under the provincial Family Law Act.
When Mr. Mehra was required by the Court to submit his financial documents things began to unravel. Ms. Lakhtakia claimed that Mr. Mehra’s annual income was between $5 and $11 million, which was determined by her financial expert. This was denied by Mr. Mehra, claiming that he had only earned between $100,000 and $200,000 in recent years and that he had provided adequate financial disclosure. The Court of Appeal soon discovered that Mr. Mehra was lying and that he withheld several key financial documents. Additionally, Mr. Mehra had fraudulently transferred his own shares of one of his companies into his wife’s name in 2016 and his annual income was in fact between $5 and $7.5 million over the last 6 years.
Because of this lack of financial disclosure and “bad behaviour” on the part of Mr. Mehra, the Court imposed a harsh penalty on him, an approach that is not uncommon. The Court relied on Rule 24(4) of the Family Law Rules, which effectively authorizes judges to act in a manner which attempts to demonstrate that by engaging in these “misbehaviours,” the consequences can put a significant dent in one’s pocketbook.