BILOUS v BILOUS

This Appeal arose from long‑running divorce and matrimonial property litigation between the parties, who married in 1990 and separated in 2015. Following separation, the Appellant undertook corporate restructuring, including transferring interests in matrimonial property corporations to a third party, Ms. Hloba, who was not formally a party to the Action. The Respondent alleged these transactions were designed to conceal income and dissipate matrimonial assets. After a lengthy procedural history, including prior unsuccessful appeals, attempts to obtain disclosure, written interrogatories, and repeated non‑attendance by Ms. Hloba, the Chambers Judge granted an Order permitting the Respondent to question Ms. Hloba under Rule 5.18 to obtain information relevant to property division and support.

The Court of Appeal allowed the Appeal and set aside the July 21, 2025 Order permitting third‑party questioning. The Court held that the Chambers Judge erred in relying on Rule 5.18 to authorize questioning of Ms. Hloba in the circumstances. While the Appellant also raised procedural fairness and misconduct arguments, those grounds were expressly rejected as meritless. The Appeal succeeded solely on the misapplication of Rule 5.18. Importantly, the Court ordered no costs, leaving each party to bear their own appeal costs.

The Court emphasized that Rule 5.18 is a narrow exception permitting questioning of non‑parties only where the Rule’s three‑part test is met: (1) relevant and material information cannot be obtained from officers or employees of an adverse corporate party; (2) it would be unfair to proceed without the questioning; and (3) the questioning would not cause undue hardship, expense, delay, or unfairness. The Court held that those criteria were not satisfied, rendering reliance on Rule 5.18 legally incorrect. However, the Court underscored that improper disclosure tactics carry consequences such as Trial Judges retaining alternative remedies, including drawing adverse inferences, invoking statutory disclosure provisions, and addressing alleged transfers under Section 10 of the Matrimonial Property Act, thereby reinforcing the ongoing duty of full and frank financial disclosure in family proceedings.