'Established fraud' not required for time extension to file for equalization
The Court of Appeal for Ontario has ruled that the requirement to disclose financial information applies to summary judgment motions under the Family Law Rules, O Reg 114/99 (FLR) and that the Family Law Act, RSO 1990, c F.3 (FLA) does not require “established fraud” for an extension of prescribed time to file for relief such as equalization.
In Hevey v. Hevey, 2021 ONCA 740, the appellant claimed that the respondent had misrepresented material facts and failed to make significant financial disclosures at the time of their divorce more than ten years ago. While they did not pursue it at the time, the appellant later applied for equalization and spousal support. Instead of filing an answer, the respondent brought a motion for summary judgment under r. 16 of the FLR, alleging that the limitation period to file for relief had long expired.
The motions judge granted the summary judgment, stating that an answer was not required to file an answer pending determination of the summary judgment motion. Further, he agreed with the respondent’s assertion that the claim for equalization was statute-barred, as he found no evidence of fraud or bad faith.
On appeal, the appellant argued that the motion judge erred by allowing the respondent’s motion for summary judgment when he did not serve an answer as required under the FLR.
The Court ruled that the motion judge erred when he concluded that an answer was not required before proceeding with a summary judgment motion. The respondent’s failure to adequately disclose the financial assets violated the philosophy of the FLR, which recognizes that “the most basic obligation in family law is the duty to disclose financial information,” said the Court. This also applies to summary judgment motions, it added.
As for the limitation period, the Court ruled that the motion judge erred in imposing a standard of “established fraud” upon the appellant, which is higher than and inconsistent with that which Section 2(8) requires.
Section 2(8) of the FLA allows an extension of the prescribed time where there are apparent grounds for relief, relief is unavailable because of delay that has been incurred in good faith, and no person will suffer substantial prejudice by reason of delay. All three were present in this case, said the Court.
Further, the motion judge erred in inferring that the appellant ought to have known and understood the structure of the trusts, since she did not appear to have received independent legal counsel on the matter. “These determinations relate to both the respondent’s delay and to her good faith and could not be made on a summary judgment motion, at least in the absence of an answer by the respondent,” said the Court.
Thus, the Court allowed the appeal and remitted the matter to trial.
