Which one is worse? Adultery or Financial Infidelity?

When it comes to adultery, family law in Canada is based on a "no-fault" process, which means that the courts do not place blame on either party for the end of the marriage. In other words, the courts will not consider adultery as a factor in determining child custody, child support, or division of property. But when there is financial infidelity, there may be significant consequences.

What is financial infidelity?

Financial infidelity is a term used to describe a situation where one spouse is hiding financial information or making financial decisions without the knowledge or consent of the other spouse. This can include hiding debt, spending money without consulting the other spouse, or even maintaining secret bank accounts or credit cards.

Over time, financial mistrust can erode the foundation of a relationship. It can lead to increased conflict, stress, and tension, and can make it challenging for the couple to work together on shared goals and plans. In some cases, financial mistrust can even lead to the breakdown of the relationship.

What can you do about financial mistrust during the relationship?

It is important for couples to address financial mistrust early in the relationship, before it causes significant damage. As a family lawyer, my advice is to draft a marriage or a cohabitation agreement which sets all rights and obligations of each spouse in the event of a separation or divorce. It is important to note that a marriage agreement must be entered into with full disclosure of each spouse's financial situation.

Should your spouse disclose all assets and debts after the separation?

One spouse may have been successful in hiding assets, income, or debt during the relationship but when a couple separates, there are legal obligations for each spouse to disclose their financial information, including all assets, debts and income. This is typically done through completing a court form, called the "financial statement". It is also common practice to ask the other spouse to disclose bank account statements, corporate documents, and tax documents, etc to verify what they have declared is true.

What if my ex does not disclose his/her assets or income during divorce process?

Courts have taken this issue very seriously by granting orders such as imputation of income, drawing an adverse inference regarding assets, penalty, and cost or special costs against the party who fails to make full disclosure.

To illustrate the level of condemnation from the court, in Cunha v. Cunha, 1994 CanLII 3195, Mr. Justice Fraser wrote: “Non‑disclosure of assets is the cancer of matrimonial property litigation.”[1] This phrase was thereafter expanded by the Supreme Court of Canada in Leskun v Leskun, 2006 SCC 25 and recently in Michel v Graydon, 2020 SCC 24 to “Failure to disclose material information is the cancer of family law litigation”.

Can I get more than 50% if my ex has extreme debt or has dissipated family assets without my knowledge?

Section 95 of the Family Law Act gives the court the discretion to order unequal division only if it would be “significantly unfair” to equally divide family property or family debt. The “significant unfairness” threshold is high and is ordered in rare circumstances.

In my opinion these are the relevant grounds of s. 95 of the FLA to financial infidelity and misconduct:

· whether family debt was incurred in the normal course of the relationship between the spouses. (as oppose to examples such as ambling debt or reckless spending by one spouse)

· if one spouse disposed of, transferred or converted property that is or would have been family property, or exchanged property that is or would have been family property into another form, causing the other spouse's interest in the property or family property to be defeated or adversely affected.

If financial infidelity has played a role in your relationship or divorce, it is important to speak with a family law lawyer.

Raha Seyed Ali is an experienced family lawyer with expertise in the division of property and tracing international assets. Raha Seyed Ali can help you understand your legal options and is able to take steps to protect your financial interests during the divorce proceedings. This may involve uncovering hidden assets or debts, negotiating a fair property division settlement, or pursuing disclosure application in court if necessary.