Divorce Drives Litigant into Depression and Bankruptcy

You may have heard of the “good divorce”, a concept explored by Psychology Today in 2009 where they suggested that “it is possible if you know how to do it”. Unfortunately, as a divorce lawyer I rarely see the good ones, only the tragically destructive ones.

In worst case scenarios, divorce can be the trigger for personal bankruptcy as it was for Miroslaw Kuczera from Ontario. (Kuczera (Re), 2018 ONCA 322 CanLII)

In an Ontario Court of Appeal decision we read that Mr. Kuczera was a happy family man with two children, employed as an electrician, until his marriage ended in 2007, leading to an acrimonious divorce that included allegations that he was an abusive spouse.

As is typical in high conflict divorces, he had no access to his property and when his legal fees overwhelmed his financial resources he took to using credit cards and borrowed $16,000 from his brother. The loan was to be paid back in 2009 failing which a property owned by Mr. Kuczera in Poland would be forfeited to his brother.

By May 2009 bankruptcy was inevitable and he retained a bankruptcy trustee, made the required monthly payments and was discharged from bankruptcy in October 2010.

Meanwhile the family law litigation continued unabated and his discharge was revoked when the bankruptcy trustee alleged that he had not disclosed the Poland property. He then made a consumer proposal to escape the bankruptcy proceedings which required him to pay $66,0000 over 5 years.

By this time his mental health sadly deteriorated with the combination of soul-destroying family litigation and the exhausting bankruptcy proceedings. His psychiatrist diagnosed him as clinically depressed and suffering from “Dissociative Identity Disorder”.

In January 2012 the family home issue was finally resolved and he received $72,000, but when asked where the money went he had little to say, except that his teenage daughter, who lived with him, was a drug addict, and that he purchased expensive Chinese medicines for his ill son. He said that he always carried cash and that quite likely the children had helped themselves as well. His mental and emotional state left him unable to cope.

The bankruptcy registrar refused to grant an immediate discharge to Mr. Kuczera, delaying it by six months and ordering that he pay the sum of $61,000, writing:

“I appreciate that the bankrupt will find an order of payment of this magnitude difficult in light of the circumstances present at the date of the hearing. However, it is my view that this situation could have been avoided had the bankrupt acted reasonably with his creditors. He clearly did not wish to pay his creditors under the proposal when he received significant funds in 2012. His current situation is his own doing.”

Mr. Kuczera’s appeal from the registrar was dismissed with the court refusing to admit updated psychiatric reports. But then the case came to the Ontario Court of Appeal, who took an entirely different view of his situation.

To begin, the highest court admitted the psychiatric report and affirmed that even though it was only filed after the registrar’s initial hearing and that it came from the bankrupt’s personal therapist, it met the legal test for admission, contrary to the registrar and first appeal court’s views.

While the missing funds were problematic, the Ontario Court of Appeal accepted that Mr. Kuczera’s mental condition affected both his “thinking and his actions”. The Court also found there was no evidence that he had benefitted personally from the sale proceeds. The finding that he had not disclosed the property in Poland was found to be erroneous. The Court said:

“The condition imposed by the Registrar that the appellant pay $61,000 as a condition of his discharge, given his personal history, was more than just “difficult” for the appellant. It was crushing.It does not reflect the rehabilitative objective of the”…(bankruptcy legislation).

While not all family litigants suffer from the dire consequences recounted here, there can be no doubt that family litigation, particularly in high conflict cases and proceedings that carry on for many years after the initial separation, are the cause of mental and physical impairment, financial devastation, and even suicide.

There is a better way and that is to move family law cases out of the courtroom and into Family Law Centres with dedicated judges, lawyers, counsellors, financial experts and other professionals, with a focus on negotiation, mediation and arbitration. Will any government dedicate the funds to try this better way? Don’t hold your breath!

Lawdiva aka Georgialee Lang