Refining family law with torts

_{Laurie Pawlitza}

In the one decision, Leitch v. Novac, the Ontario Court of Appeal judge ruled that suing an ex’s family is no longer out of bounds if they help their child evade support obligations. In this case, the ex-wife sued her former husband’s parents, a family corporation, and several trusts and their trustees, alleging her former husband’s family and the various entities had conspired to defeat her family law claims and conceal the husband’s income and assets.

In another groundbreaking ruling, Justice Renu Mandhane of the Ontario Superior Court of Justice recently ordered a husband to pay his former wife damages of $150,000 because of the physical and psychological abuse over their 17-year marriage.

_{Valarie Matthews}

“Standardized methods of calculating support and division of assets don’t consider extreme examples of marital breakdown, including family violence,” says Toronto family law lawyer Valarie Matthews with McCarthy Hansen & Co. LLP.

There is no obligation for other provincial court systems to use the Ontario decisions in making their own, says arbitrator, mediator, and parenting coordinator John-Paul Boyd. However, “there’s not a single regime in Canada where cases of relationship breakdowns don’t involve looking at questions such as division of assets, income, support, and parenting duties.”

_{John Paul Boyd}

Consequently, these decisions “will influence judges in Alberta and everywhere else in the country.”

Lonny Balbi, lawyer, mediator, and arbitrator with Balbi & Company in Calgary, says that while it will likely take time for other court systems to consider them, “the two Ontario tort strategies provide a pretty solid potential additional arrow to a lawyer’s quiver.”

Justice William Hourigan of the Ontario appeal court, in the Leitch v. Novac conspiracy case, reiterated the often-quoted phrase that “nondisclosure is the cancer of family law.” He found that using the tort of conspiracy in family law can be a necessary tool to ensure fairness and achieve justice. Co-conspirators, or “invisible litigants,” he said, should “be prepared to face a conspiracy claim.”

_{Lonny Balbi}

Pawlitza notes that the Leitch v. Novac case had the advantage of the ex-wife presenting evidence that supported the conspiracy argument.

After the couple’s separation, the husband’s father incorporated a company to provide management services to a casino operation. Evidence was presented indicating the ex-husband and his father had orally agreed that the husband would receive 40 percent of the management fees otherwise payable to the father’s corporation over the contract’s life.

However, before the end of the contract, the casino owner bought out the contract for nearly $6,000,000, and the lump sum was paid to the father’s corporation. While the buyout occurred after separation, the husband’s 40 percent share would have been income used to calculate spousal and child support. However, the husband’s father kept all of the income from the buyout.

The defendants brought a motion for partial summary judgment to have the conspiracy claims dismissed. The motions judge allowed the case to go to trial, finding the basis for the claims had not been established and would open the floodgates of litigation in family law cases. Justice Hourigan saw it differently.

The tort of conspiracy in family law could be a game-changer in income or asset division if the evidence is there, says Pawlitza. She says similar claims against extended family members are uncommon and have been largely unsuccessful. When a spouse has hidden assets or income, even if assisted by extended family, court sanctions have primarily been limited to penalizing the spouse by ordering costs or a contempt finding.

What made the conspiracy allegations in Leitch v. Novac easier to prove, says Pawlitza, were several draft memos from the father’s accountant, who structured the buyout payment to the father’s corporation. One suggested the father take his tax-free proceeds and lend to the husband “his portion as a loan that will be forgiven when the husband’s divorce is final.” Another draft memo said that “this [will] keep income out of [the husband’s] hands.”

The Supreme Court of Canada also considered whether a conspiracy claim could be made regarding parenting access over thirty years ago. In Frame v. Smith, the SCC found that a conspiracy claim dealing with access to children was inappropriate. It noted: “The spectacle of parents not only suing their former spouses but also the grandparents, and aunts and uncles of their children … for interfering with rights of [parenting time] is one that invites one to pause.”

Lawrence Pinskey is a Winnipeg family law partner with Taylor McCaffrey LLP in Winnipeg. He wonders, with the new conspiracy tort established, “is the Ontario Court of Appeal saying that Frame v. Smith is outdated, at least when it comes to a conspiracy that is related to money in family law matters? And if that is the case, why wouldn’t you allow similar torts for alienation and other issues? Does that make family law even messier? And has our family law legislation evolved or devolved to the point where we must add these kinds of torts?”

_{Lawrence Pinsky}

Regarding the case involving the tort of family violence, the parties involved met in 1999, married soon after, and had their first child 18 months later. The wife was subject to several serious physical assaults during the parties’ relationship. The court was told the “general pattern was that the father would become irrationally jealous, drink, engage in verbal arguments, and then beat the mother.”

In awarding the ex-wife the $150,000, Justice Mandhane wrote that the Divorce Act “does not provide a victim/survivor with a direct avenue to obtain reparations for harms that flow directly from family violence and that go well beyond the economic fallout of the marriage.” She added the no-fault nature of family law “must give way where there are serious allegations of family violence that create independent and actionable harms that cannot be compensated through an award of spousal support.”

Justice Mandhane then filled this legislative gap by recognizing the new tort of family violence and set out a three-pronged test that should be applied. First, damages may be awarded on account of conduct by a family member in a family relationship who is violent or threatening, is so in a way that constitutes a pattern of coercive and controlling behaviour, or causes another family member to fear for their safety or that of another person.

In recognizing the new tort, Justice Mandhane noted recent amendments to the Divorce Act, which applies across all Canadian provinces and territories. Those amendments, which went into effect in 2021, “explicitly recognized the devastating, lifelong impact of family violence on children and families.”

Despite these changes, Justice Mandhane noted that the legislation did not address all the legal issues raised by an allegation of family violence.

“At its heart, spousal support is compensatory rather than fault-driven. As such, spousal support awards are not meant to censure particularly egregious conduct during the family relationship that calls out for aggravated or punitive damages,” she wrote.

Matthews noted that the superior court ruling is now under appeal, “but everyone in the family law community is going to be keeping an eye on it.”

It’s not a done deal, “but as a lawyer, you have to be aware of it and help your client understand its implications.”

Tort of family violence

The three-pronged test set by the Ontario Superior Court of Justice requires:

•  Conduct by a family member that is violent or threatening;
•  Actions and words that constitute a pattern of coercive and controlling behaviour;
•  Behaviour that causes the other family member to fear for their safety or that of another person.

Tort of conspiracy in family law

The Ontario Court of Appeal decision in Leitch v Novac stated the following:

• “If the tort of conspiracy is not available, then co-conspirators have no skin in the game. Their participation in hiding income or assets is a no-risk proposition.”
• “Where income or assets have been hidden with the assistance of a co-conspirator, often the family law litigant will be effectively judgment-proof. That, after all, is the whole purpose of the conspiracy.”
• “There is a related malady that often works hand-in-hand with nondisclosure. The problem is what I will call ‘invisible litigants.’  These are family members or friends of a family law litigant who insert themselves into the litigation process.”

Read more: Can a lawyer represent a family member?