In very complicated files, it can sometime pay to seek help from the court by bringing in a civil claim, formally titled the tort of conspiracy. A Tort is a civil wrong such as negligence or breach of contract. One would ask the court in their application that various additional persons are jointly and severally liable to pay damages to the Applicant as they all conspired and/or were involved in some wrong. Often that wrong is sheltering or concealing the other party’s, ie. husband or wife’s income and/or assets to deprive the other spouse and her children their respective support entitlements or equalization payment.
If one thinks about it, it is not that uncommon for people with some money who participate in a family business to have intertwining business interests. Often, the family will rally in support of their family member in the event of a divorce. The ex-spouse will be portrayed as greedy or threatening of the family business. There can be a strong temptation to hide or minimize the involvement or wealth of their sibling or relative.
Conversely, it is not difficult to envision that such a suspicion, even if unfounded will arise. It is always remarkable that the trust and love between spouses that was intense enough to create a human life, upon separation dissolves into animosity, a complete lack of trust and a conviction that the other at all times is lying.
The facts that one would allege would be something along the lines that x alleges that y conspired with his parents or other family members to structure their business interests and income from the businesses, both just prior to separation and post separation with the intention of concealing, diverting and sheltering y’s assets and income to defeat and hinder x’s claims and entitlements to both child and spousal support. In particular y and his family members use various devices, trusts and corporate vehicles to conceal y’s true interests and entitlements to assets and income from an adjudication of support in favor of x. Further, through the structuring and creation of various trusts and after separation and through subsequent transactions between the corporations and trusts, they concealed and diverted significant assets and income that would otherwise be accounted for in the determination of y’s obligation to x for both the support of the children of the marriage and his or herself.
Allegations such as these are relatively easy to make, extremely difficult, complicated and complex to prove.
The standard defence to such allegations if that they were made in the normal course, or for estate planning purposes, and there was no malevolent intent.
One could look at a couple of important cases as to what needs to be proved for a successful claim of conspiracy. One is directed to the case of D’,Agone v. D’, Agone, a 2017 decision of theAlberta Court of Appeal and obviously following the Superior Court of Canada case in Canada Cement LaFarge Limited v British Columbia Lightweight Aggregate Limited. The tort of conspiracy requires the Defendants to have an agreement to engage in a course ofconduct with a predominant purpose of injuring the Plaintiff or if the conduct of the Defendants is unlawful, to have acted knowingly or having ought to have known that injury to the Plaintiff is likely to result. The scope of the tort of conspiracy is far from clear and it may be found where the parties combine and effect loss in the following manner:
1. Whether the means used by the Defendants are lawful or unlawful, the predominant purpose of their conduct is to cause injury to the Plaintiff or where the conduct and the Defendant is unlawful, the conduct is directed toward the Plaintiffs and the Defendants should know in the circumstances that injury to the Plaintiff is likely to result. If the action is unlawful, there must at least be evidence that the conspirators knew or ought to have known that their action would injure the Plaintiff. This has been described as constructive intent.
The Alberta Court of Appeal went further in Maraiche Investment Corp. v Paul in a 2012 decision which summarized the tort as being:
1. An agreement between two or more persons;
2. Concerted action taken pursuant to the agreement;
3. If the action was lawful, there must be evidence that the conspirators intended to cause damage to the Plaintiff;
4. Actual damage suffered by the Plaintiff.
The agreement may be inferred and need not be in any specific form or even constitute a binding contract. Proving an agreement to a conspiracy is often dependent on circumstantial evidence. However, to be party to a conspiracy, more than mere knowledge that a conspiracy exists is required. The facts that the alleged agreement must be known and intention to be part of the alleged agreement must be found. There must be intentional participation with a view to furthering the common design and purpose.
An unlawful conspiracy requires the alleged co-conspirators to do something contrary to law to further their agreement. This can include fraud, perjury or breach of a court Order.
The third characterization of civil conspiracy includes knowing, assistance and breach of trust. This requires that there be a trust and that the trustee perpetuate a dishonest and fraudulent breach of the trust and that the Respondent participate in actual knowledge of the trustee’s dishonest and fraudulent breach of trust. The knowledge required for this type of liability is actual knowledge, recklessness or willful blindness will also suffice.
Our office has been involved in many cases in which friends and families of the other spouse have actively assisted in hiding and concealing assets. The downturn to all of this is the incredible legal fees that are involved. In the recent Ontario Superior Court of Justice decision of Justice Faieta in Leitch v Novac, no less than seven lawyers were involved in acting for the numerous parties involved in the lawsuit.
Clearly, this particular case involved millions of dollars. However, in Justice Faieta’s decision, which arose from a motion dealing with what emails and evidence should be produced, but having no real substantive impact. In other words there was no decision that money move from one person to another, nor was any support or division of property decided. This was simply on a preliminary point as to what documents were to be released. That process involved seven lawyers, produced a many foot high column of paper for the court to digest, and legal fees that this author estimates well in excess of $100,000.00. I would not be surprised if it was $200,000.00. This was war by attrition.
The husband, who was at the receiving end of the wife’s rath, clearly had acted like an absolute idiot. When the wife asked the husband after separation to pay for a $354 dental bill for one of their children, he in a scrooge like response indicated that he did not have the money, that he had less than $1,000.00 in his bank account. However, later bank records show that he had almost three quarters of a million dollars in his account on that day. A little bit of generosity can often avoid the trench warfare that this insane court action makes obvious.
As evidence of the voracious appetite for legal fees that these complex cases can produce, the wife told the court that even though she received one million dollars from the sale of the matrimonial home, the vast majority of that was gone to pay her living expenses and to pay for her legal and accounting fees in chasing her husband.
Despite the inference that the husband and his family were wealthy people and that a relatively fat target was being hunted, the court basically pleaded with the parties to settle their differences and offered to make arrangements for judicial assistance in providing in essence mediation.
So what have we learned, aside from the usual repetition by this author of how in absence of common sense, grafted to an ill motive by one of the parties, can lead them down the path of financial destruction or a war of attrition. Perhaps indeed that is the husband’s motive in the case at point.
We have also learned about some of the technical factors involved in making an allegation of the tort of conspiracy. However, one’s lawyer needs to be careful before pulling the trigger on such an allegation. It will by definition increase the numbers of lawyers that are involved, the legal fees that that will engender for all and cast a very wide net by way of disclosure and the paper trail that is being chased.
Justice Faieta’s decision is an excellent summary of what is relevant documentation, how is to be provided and also, some tips in dealing with electronic discovery. The issue of search terms became an important tool in the review of over four hundred thousand emails that were hoped to be produced and synthesized in this case.
This fish net would have hauled up as many discarded rubber boots as prime cod and one can imagine the effort that would be required in actually reviewing even a few thousand emails, let alone the four hundred thousand that were being pursued in this case.
Be careful what one wishes for and choose one’s potential spouse carefully. It is a life long obligation whether or not the marriage succeeds or not.