Family law litigation often becomes complicated when parties own businesses, investment properties, and other significant assets together. In such cases, disputes over financial disclosure, property control, and access to funds can prevent the litigation from progressing.

The decision in Derkatch v. Derkatch illustrates how the Supreme Court of British Columbia may intervene when one party’s lack of financial transparency and cooperation stalls family law proceedings. The Court addressed multiple applications arising from a high-conflict separation involving corporate assets, real estate holdings, and support obligations.

Ultimately, the Court ordered extensive financial disclosure, conduct orders requiring tax filings, and the sale of certain properties to fund litigation and comply with earlier court orders.

Spouses’ Wealth Tied Up in Real Estate & Companies

The parties were married in 2009 and separated in January 2023. They have four children who primarily reside with the claimant. During their relationship, the parties operated several businesses together, including corporations that owned multiple pieces of real estate.

Following the separation, the respondent continued to control and operate the businesses, while the claimant was no longer involved in their day-to-day management. These corporate entities generated the income historically relied upon by both parties.

The litigation became increasingly complex because the parties’ wealth and income were tied to these companies and their real estate holdings. The Court was asked to address two competing applications:

• The claimant sought orders compelling financial disclosure, requiring tax filings and financial statements, and forcing the sale of property to fund a previously ordered interim distribution.
• The respondent sought to reduce support obligations, obtain disclosure from the claimant, appoint an expert advisor, and obtain orders regarding dividend income reporting.

Prior Court Orders in the Case

Two earlier court orders played an important role in the issues before the Court. First, an order made in March 2023 granted the claimant exclusive occupancy of the family residence and required the respondent to pay $5,000 per month toward expenses relating to the children and the home.

Second, a later order required an interim distribution of $150,000 to each party. That distribution was intended to be funded through refinancing certain properties and was designed to level the financial playing field between the parties.

However, the interim distribution had not been paid because refinancing had not occurred, and funds had not been made available. As a result, the litigation had effectively stalled.

Court’s Concerns About Financial Disclosure

A central issue in the case was the respondent’s failure to provide adequate financial disclosure. The claimant sought dozens of categories of documents, including bank statements, tax returns, corporate financial statements, shareholder records, and documents relating to real estate transactions. The Court found these materials were clearly relevant to determining:

• The parties’ income for child and spousal support;
• The valuation of family property and debt; and
• Whether prior court orders had been breached.

The respondent argued that locating and producing the requested documents was unnecessary and burdensome.

The Court rejected that position, emphasizing that financial disclosure is a fundamental obligation in family law proceedings. Without accurate financial information, it is impossible for the court to properly determine property division or support.

The judge described the respondent’s approach to disclosure as “unacceptable”, particularly given the central role that corporate income and real estate assets played in the case.

Orders Requiring Disclosure and Financial Documentation

Because the respondent had failed to provide adequate disclosure, the Court ordered him to produce extensive documentation within one month. The required disclosure included personal and corporate financial records, tax returns, and documentation relating to investments, bank accounts, mortgages, and corporate governance.

The Court also ordered that updated financial statements be prepared for the companies involved in the dispute. These orders were made to ensure that the litigation could proceed on the basis of reliable financial information and to ensure compliance with statutory disclosure obligations under the Family Law Act and the Federal Child Support Guidelines.

Conduct Orders to Address Litigation Delay

The Court also issued conduct orders requiring the respondent to complete outstanding tax filings and ensure that corporate financial statements were prepared.

Under the Family Law Act, courts have broad authority to make conduct orders that manage behaviour that might frustrate the resolution of a dispute. These orders are designed to prevent misuse of the court process and to facilitate the efficient resolution of family law matters.

The judge concluded that the respondent’s failure to complete tax filings and financial statements was preventing the litigation from moving forward. Importantly, the Court emphasized that prolonged litigation can negatively affect children and that resolving family law disputes in a timely manner is in their best interests.

Ordering the Sale of Real Estate to Fund Litigation

One of the most significant aspects of the decision involved the claimant’s request for the sale of certain properties. The claimant argued that she lacked access to the financial resources necessary to continue the litigation, including paying legal fees and expert costs. Meanwhile, the respondent controlled the companies and the income generated by the real estate portfolio.

The earlier interim distribution order had been intended to address this imbalance, but refinancing efforts had failed. The Court accepted that the purpose of the interim distribution was to level the litigation playing field, allowing the financially disadvantaged spouse to access justice.

Because no other funding sources were available, the Court concluded that selling one or more properties was both necessary and appropriate. Accordingly, the Court ordered the sale of certain Cranbrook properties and granted the claimant sole conduct of the sale, concluding that the respondent was unlikely to cooperate with a joint sale process.

Application to Reduce Support Rejected

The respondent also sought to vary the earlier order requiring him to pay $5,000 per month toward family expenses. He argued that the amount should be reduced and that his income should be fixed at $60,000 per year.

The Court rejected this application. One major issue was the respondent’s failure to provide complete financial disclosure. The Supreme Court of Canada has repeatedly emphasized that parties seeking to vary support obligations must provide full and accurate financial information.

Because the respondent had not done so, the Court concluded that he had failed to meet the legal burden required to justify a variation of support. The Court therefore dismissed the request to reduce support.

Court Rejected Request for Appointment of Financial Advisor

The respondent also requested that the Court appoint a financial advisor to provide recommendations about refinancing and property distribution. The Court declined to appoint the proposed expert because there was insufficient evidence about the individual’s qualifications or independence.

Additionally, the respondent sought disclosure from the claimant. The Court found that the claimant had already provided thousands of pages of documents and had complied with her disclosure obligations.

Given the respondent’s own failures to disclose financial information, the Court dismissed that request as well.

Meridian Law Group Provides Skilled Representation in Vancouver Family Property Division Disputes

Family law disputes involving businesses, investment properties, and complex financial structures require careful legal strategy. When one party controls the majority of assets or fails to provide proper disclosure, court intervention may be necessary to ensure fairness and access to justice.

The family law team at Meridian Law Group assists clients throughout British Columbia with complex family and divorce matters involving business ownership, property division, and financial transparency. To book a confidential consultation, please contact the firm online or call (604) 687-2277.