The Manitoba Court of Appeal's decision in Boucher v Boucher, 2025 MBCA 39 (CanLII) purports to clarify the obligations of a payor parent who is an officer, and director, but does not control a corporation, to provide corporate financial disclosure in child support proceedings under sections 18 and 21(1)(e) of the Manitoba Child Support Guidelines. The court found, that the motion judge erred by failing to consider and apply these sections properly, at least on the unique facts of this case, even though the payor did not control the corporation in question.
The reported history of this matter is unfortunate and may well have been the determinative factor that led to the result in this case. The payor is reported to have failed to meet his personal obligations to provide financial disclosure required by the terms of the parties' separation agreement.
The Court's decision sets out that repeatedly, and over a course of years, the payor breached his obligation to provide the more limited personal financial disclosure he had contracted to provide. This compelled the recipient parent to have to retain counsel to chase the disclosure for which she contracted, no doubt at significant expense, ultimately finding herself at the Court of Appeal on the eve of trial.
The result of that reported obfuscation by the payor, was the involvement of the corporation, reportedly controlled by an arm's length third party, in family law proceedings, an order for significantly augmented financial disclosure (this time corporate), and the expenditure of significant costs. It may well be that had the payor complied with his obligations pursuant to the agreement he entered and paid the appropriate child support, the result would have been very different as the former wife might not have found herself having to litigate at all.
Notwithstanding it's unique facts, on its face, this decision sets an important precedent in terms of corporate disclosure, where a party is an officer, director and minority shareholder of a corporation; but it also highlights the tension between transparent financial disclosure in family law, and the privacy rights of arm's length majority shareholders. Unfortunately the decision does not address the reality of third party controlled private corporations and the inability of true minority shareholders to access corporate resources absent the consent of the controlling shareholders.
Analyzing the Decision: The Good and the Key Outstanding Question
The Court of Appeal's ruling reinforces the principle that
full and honest financial disclosure is essential in family law
matters. Here the Court applied that principle even though the
payor parent was not the controlling shareholder of the
corporation.
The Court's Reasons do not explain how the minority
shareholding parent could reasonably be expected to access the
corporate resources. If the payor is a true minority shareholder
who does not control the payment of dividends, management fees,
bonuses, or other payments out, how could he possibly get his hands
on any money inside the corporation? If he could not access
whatever resources are held by the corporation, how could corporate
disclosure be relevant to the determination of his total available
resources from which he might be able to pay support?
Whether the corporation had retained earnings or other resources on hand in the millions of dollars, what is the true minority shareholder expected to do if the controlling shareholders refuse to issue dividends (or otherwise pay out funds) for their own legitimate reasons. Will the family court expect that the true minority shareholder is required to sue to access funds with little prospect of timeliness or success and at great, though unnecessary, cost? If not, what is the purpose of the mandating financial disclosure for truly inaccessible funds?
It is fair to observe that corporate structures can sometimes be used to obscure income or assets, potentially undermining the fair determination of child support obligations. In those cases, for example where the minority shareholder really has some significant measure of control in some form or another, disclosure should be mandated. In those cases though, there ought to be a finding that the requisite de facto control, or at least some cogent pathway to access corporate resources, is present. Absent such a finding, there is a risk that parties will find themselves fighting disclosure skirmishes for no "real world" purpose.
Once a party puts the requisite evidence before the court, the court must scrutinize the true nature of the payor's relationship with the corporation, including any indirect control or influence, while balancing the privacy rights of the corporation and its majority shareholders to ensure that child support is calculated based on accurate financial information and true available resources. By requiring a robust analysis of the payor's ability to access corporate resources or income, the court ensures that child support reflects the payor's actual means, not just their formal title or ownership. This approach aligns with the overarching goal of the Guidelines: to prioritize the best interests of children by ensuring adequate support based upon a realistic assessment of available resources.
Respectfully, this decision also presents practical privacy challenges for controlling shareholders. Although the Court's Rules provide some degree of immediate privacy, there is no guarantee that the corporation's records will be kept private or that a vengeful party to the litigation might not use the disclosure for other nefarious purposes. Sadly, family law has seen its share of vengeful parties.
Although the Court contemplated the possibility of using Non-Disclosure Agreements or the Deemed Undertaking Rule, such restrictions on use were not mandated here. It is unclear why, when balancing harms, the use of Non-Disclosure Agreements are not standard practice. If a person seeking disclosure to determine a legitimate family law issue has no ulterior motive, why not simply agree? The risks otherwise can, in certain cases, be substantial.
As for the Deemed Undertaking Rule, the Rule itself is limited in application and scope. Simply put, it does not provide adequate let alone fulsome protection of sometimes critical financial information. Not all information provided voluntarily in all contexts, is protected by the Rule. Further the Rule prohibits use of financial information provided in certain contexts (such as discovery related processes) from being used for other purposes but not others, and even then there are exceptions. The Rule does not necessarily prevent other forms of disclosure and harm and does not include any remedies for breaches.
When a payor does not control the corporation—such as being a true minority shareholder with no real ability to access corporate resources, requiring comprehensive financial disclosure may pose problems and fuel unrealistic expectations. The court's expectation that payors provide corporate financial records without clear safety protocols to protect privacy interests of arms-length third parties may well be seen as unduly burdensome.
While it is true that The Corporations Act authorizes the provision of or access to certain financial information to shareholders (for example Financial Statements), the real issue in determining the quantum of support, is ability to access corporate resources. Absent that ready ability, such unprotected disclosure could lead to purposeless unnecessary protracted litigation and increased costs for both parties, especially if the corporation is resistant to disclosure.
In an optimal world, this case might have provided clearer practical guidance on what constitutes "sufficient" disclosure in cases of limited or no control. It also might have addressed a pathway for the minority shareholder to access corporate resources. While the court emphasizes the importance of considering all relevant factors, including indirect control or influence, the lack of specific criteria may result in inconsistent application by lower courts and uncertainty for litigants.
Conclusion
Overall, Boucher v Boucher is a significant step toward ensuring transparency in child support calculations involving corporate entities. That said, it may well turn on the specific and unfortunate facts of a recalcitrant payor who was found to have failed to meet his contractual obligations to provide disclosure.
Practically, this decision calls for litigants to meet their financial disclosure obligations or risk more extensive disclosure and other costs and penalties for themselves and for their corporate co-owners, even when they are at arm's length. As a general principle, that must be seen as a clear step toward greater fairness. Hopefully however this decision will not be used to restrict reasonable privacy protocols to protect third parties, or to fail to engage in a deeper case by case analysis of a shareholder's true ability to access corporate resources.
At the end of the day courts should take a practical approach, look beyond formal ownership and titles, and consider the realities of financial control and resource access. Optimally in time, the Court or the Legislature will provide clearer standards for disclosure in cases where the payor truly does not control the corporation, thereby reducing ambiguity, protecting privacy interests, lessening unnecessary litigation, and promoting greater fairness in the process.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
