Epstein Cole successful in the Court of Appeal: Tort of conspiracy has an important place in family law
Leitch v. Novac, 2020 ONCA 257
A unanimous panel of the Ontario Court of Appeal allowed our client's appeal and found that the tort of conspiracy "is a valuable tool in the judicial toolbox to ensure fairness in the process and achieve justice."
Partners Ilana Zylberman Dembo and Sheila Gibb, who led the Epstein Cole team acting for the Appellant, Jennifer Leitch, put a lot of consideration into amending Jennifer's claim to seek damages in conspiracy. It was an unusual approach but the justice of the case demanded it.
Jennifer sought a fair amount of child and spousal support from her husband, Anthony Novac, a successful entrepreneur. But she hit a wall when Anthony claimed to be earning minimal income from companies that he represented were controlled solely by his father. Anthony's father supported Anthony's claims that Anthony had no interest in the companies and no entitlement to the related income.
In the court below, the motions judge found that the tort of conspiracy was "too blunt an instrument" and it was instead open to Jennifer to seek imputation of income to Anthony at trial. The motions judge was concerned "about the far-reaching implications of extending the tort of conspiracy where family members are involved" and she struck Jennifer's conspiracy claim by way of summary judgment.
The Court of Appeal disagreed. The unanimous panel overturned the motion judge's decision and awarded costs to Jennifer of $50,000.
The Court of Appeal adopted the Appellant's arguments that there is an important place for the tort of conspiracy in family law where a third party assists a payor in hiding income or disclosure. Justice Hourigan wrote:
"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. If their conduct is exposed, all that happens is that the payor will be forced to pay what is appropriately owing. If there is to be deterrence, there must be consequences for co-conspirators who are prepared to facilitate nondisclosure.
There is a further practical reason for permitting the use of the tort of conspiracy in family law claims. 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. In those circumstances, the imputation of income or the inclusion of hidden assets into the net family property calculation will be a futile exercise, as the recipient cannot collect on what is owing. A judgment against a co-conspirator will often be the only means by which a recipient will be able to satisfy a judgment."
The Court of Appeal also addressed the potential denial of justice that may occur in family law cases where third parties assist litigants from the sidelines:
"There is a related malady that often works hand-in-hand with nondisclosure to deny justice in family law proceedings. 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. They go beyond providing emotional support during a difficult time to become active participants in the litigation. Usually their intentions are good, and their interference makes no difference in the ultimate result. However, sometimes they introduce or reinforce a win-at-all-costs litigation mentality. These invisible litigants are willing to break both the spirit and letter of the family law legislation to achieve their desired result, including by facilitating the deliberate hiding of assets or income."
This case represents a significant legal development, definitively extending the tort of conspiracy in family law. It is an important reminder that non-disclosure will not be tolerated and "invisible litigants" will be held accountable.
We acknowledge the outstanding advocacy and team work of appellate co-counsel Linda Rothstein and Daniel Rosenbluth of Paliare Roland LLP who saw the justice of the case and worked hard alongside Epstein Cole on this successful appeal.
The Respondents are seeking Leave to Appeal to the Supreme Court of Canada.
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