As a family law lawyer, one of the hardest parts of my job is to convince my clients to make full financial disclosure to their separated spouses. When either of the spouses refuses to cooperate to produce financial statements, it delays the process and wastes everyone’s time. It doesn’t matter if they’re married or not.
Financial disclosure is vital in family law proceedings because (1) the law mandates it and (2) without it, the parties cannot make informed decisions on how to settle their affairs. In Ontario, if either party fails to make adequate financial disclosure, it may invalidate whatever agreements flow from the financial statements.
In a long-term relationship, hiding assets is harder than most people think. When couples start living together, few, if any, aspects of the individuals’ lives can remain secret. The husband probably knows if the wife comes from a wealthy family, while the wife likely knows how much her husband earns and therefore how much they get to spend on household expenses. Even for unexpected windfalls, any change in spending habits of the recipient spouse will inevitably attract suspicion. Therefore, in reality, it’s extremely rare for someone in a long-term relationship to successfully conceal significant assets.
Of course, that doesn’t stop people from trying to hide them.
In the extreme case of Helmy v. Helmy, the husband won a lottery prize of $2.5 million shortly before his separation from his wife of 20 years.* (Some speculated that it was the reason for separation.) In an attempt to keep his lottery winnings from the reach of his then separated wife, the husband conjured an elaborate web of lies involving his family members, both in Egypt and in Canada.
After finding that the husband and his family members had given false evidence, the judge ruled that the husband (1) bought a house and other properties in his sister’s name for the sole purpose of concealing the facts about the lottery from the wife, (2) signed a false affidavit stating that his brother was the winner of the lottery, and (3) deliberated lied under oath to deceive his wife and the court for the purpose of hiding the lottery winnings from her.
The wife testified that she had her suspicions based on the new properties purchased by the family members in a short period of time and the frequent trips abroad. To minimize his risk of exposure, the husband told the wife that his brother had won the lottery and given him the funds as a gift. Based on this piece of information, the wife signed the minutes of settlement to finalize the divorce, receiving a portion of the proceeds from the sale of one of the properties. In other words, the wife received very little because of the false financial information that the husband had given her.
Alas (for the husband), as luck would have it, greed turned on greed. A sister of the husband, holding a significant portion of the lottery winnings, as found by the court, decided to cheat her brother (the husband) out of a GIC worth about $300,000. She cashed out the funds without telling him. By the time the husband found out what his sister had done later on the same day, the funds had been dispersed to several other family members.
The husband was determined to get his money back by suing his sister. After the divorce was settled, the husband started his lawsuit against his sister. In response, the sister fought back. The entire family was dragged into three different lawsuits.
After scrutinizing the evidence, the judge found that the husband and his family had all conspired to hide the fact of the lottery winnings from the wife as the wife would be entitled to a share of these lottery winnings upon separation, which occurred shortly after the lottery was won.
The court was appalled by the husband’s conduct of giving a significant amount of money away just weeks before the separation for the purpose of concealing the wife’s entitlement from her. For all her sufferings, the wife was awarded damages for civil conspiracy made against her. What is more, because the defendants had deliberately and maliciously conspired to deprive the wife of her rightful share of the husband’s net family property, the wife was entitled to punitive damages against all the defendants in the amount of $50,000.
Finally, there was the outstanding matter of equalizing net family properties. Although the husband no longer had the entire winnings of $2.5 million in his possession at the date of separation, the entire amount of the windfall was ordered to be included in his net family property value.
Hiding a gold mine? You’ll probably get the shaft.
*2000 CanLII 22452 (ONSC)
This blog is provided for educational purposes and for your reference. It is not intended as legal advice and should not be regarded as such. The law may have changed since the publication of this article.