When will the court set aside a separation agreement for lack of disclosure? (CASELAW Update)

Couple going through divorce signing papers

A large number of family law disputes are resolved through the negotiation of a Separation Agreement that addresses all of the issues between the parties.

Before a lawyer can advise a client on his or her entitlements, it is necessary to exchange disclosure relating to the financial circumstances of the parties during their marriage or cohabitation. This is an extremely important step of the negotiating process as the rights of each party involved hinge on the information disclosed.

The Family Law Act permits a court to set aside a domestic agreement, or a specific provision in it, if a party has failed to disclose significant financial information relating to assets, debts, or other liabilities.

This issue was recently addressed by the Ontario Court of Appeal in Shinder v Shinder, 2018 ONCA 717. At a motion, the court made findings that Mr. Shinder had deliberately failed to disclose certain financial interests, and as a result, Ms. Shinder was unaware of those interests prior to entering into a Separation Agreement. Mr. Shinder appealed these findings, arguing that he did, in fact, disclose all of his financial interests.

On appeal, the court found that while Mr. Shinder did not disclose his interests in his sworn Financial Statements, there was disclosure of his interests in other documents provided, as well as through correspondence between the lawyers.

The court relied on the general rule of law that the knowledge of an agent is imputed to its principal due to the presumption that an agent will communicate his or her knowledge to the principal because it is his or her duty to do so.

Relying on this rule, the court overturned the motion judge’s findings that Mr. Shinder did not disclose his financial interests.

In summary, it is important that both parties provide full and frank financial disclosure prior to entering into a Separation Agreement. In using their discretion to set aside an agreement, the court will look at whether the other party (including his or her lawyer) had actual knowledge of the financial interests prior to signing the Agreement.

While the court does not condone omitting information from sworn documents, doing so will not serve as a method of proving non-disclosure when there was in fact disclosure through other means.

If you believe that your agreement may be set aside and would like a legal opinion, please contact the lawyers at Epstein and Associates for a free initial consultation.