When a couple decides to separate there are a number of considerations they need to take into account, including the division of assets, what happens to the matrimonial home, equalization payments, and more. These can all be addressed in a separation agreement, which is a contract parties can agree upon after the breakdown of their relationship. Once a separation agreement is in place, the parties must follow its terms. While the courts do have the power to set aside such domestic contracts, a recent decision from the Court of Appeal for Ontario shows they are not always willing to do so.

The separation agreement

The parties were married for nearly 19 years and had two children before they decided to separate in 2008. A lengthy course of mediation resolved their financial issues and resulted in a separation agreement which was executed in April 2010. They were divorced six months later.

The separation agreement contains a provision that the husband would pay the wife $10,000 per month in child and spousal support. The husband also agreed to pay all of the children’s s. 7 expenses. Additionally, the wife agreed to pay the husband an equalization payment of $181.578.

Four years after the separation agreement was signed the wife sought an order setting it aside on the basis that the husband failed to disclose significant assets. Section 56(4) of the province’s Family Law Act (“the Act”) states that a court “may, on application, set aside a domestic contract or a provision in it if a party failed to disclose to the other significant assets…existing when the domestic contract was made”

At trial

The trial judge agreed the husband had failed to disclose interests in certain family businesses he had acquired during the marriage as well as payments he received on a shareholder loan and capital income. However, even though the trial judge found the husband to be blameworthy, she found that even though the non-disclosed assets were of considerable value, they were not “significant” to the point that the agreement should be set aside.

The trial judge’s two main reasons for not setting aside the separation agreement were that the husband had agreed to very generous terms, including support payments in excess of what he would have been obligated to pay by law. He was paying support based off of an income of $421,000 though he was living off $180,000 annually. The trial judge also pointed to additional compromises made by the husband, including not requiring the wife’s $300,000-$400,000 in jewelry to be considered in her assets.

Issues on appeal

The wife appealed on the grounds that the trial judge erred in determining whether the assets were “significant” as well as placing an onus on her to inquire as to the existence and value of the husband’s assets.

The trial judge did not agree with the wife’s position, stating that “significance” of an asset is not determined strictly by its monetary value. The court stated,

“Determining the significance of non-disclosed assets is not, as the appellant argued, the purely mathematical exercise of comparing the value of the non-disclosed assets against the value of the disclosed assets. Rather, the trial judge appropriately relied on case law finding that “the term significant must refer and be measured in the context of the entire relationship between the parties” (see Currey v. Currey (2002), 2002 CanLII 49561 (ON SC), 26 R.F.L. (5th) 28 (Ont. S.C.), at para. 17), and that significance “should not be considered in isolation of all of the surrounding circumstances” (see Bruni v. Bruni2010 ONSC 6568 (CanLII), 104 O.R. (3d) 254, at para. 102).”

The court also pointed out that the disclosure would not have changed the outcome for the wife since it would not have had a bearing on the equalization payment or the amount of monthly support paid, which was already above what was required based on the husband’s income.

At Borden Family Law we have been advising clients on separation agreements for more than 17 years. We have a talented team of family lawyers who will work with you to go over all of your options, including the risks and benefits of each. We will look to protect your interests while negotiating terms that are mutually satisfactory to everyone involved. We practice nothing but family law, and lean on our in-depth knowledge and experience  to provide our clients with exceptional service. Please call us at 905-576-6090 or contact us online to see how we can help you today.