“In Virc v. Blair, 2014 ONCA 392, 119 O.R. (3d) 721, the Court of Appeal set out the analysis for examining whether the validity and enforceability of spousal support provisions within a domestic contract raise a genuine issue requiring a trial within the context of a summary judgment motion.
The court directed that the measure is whether the spousal support provisions meet the objectives for spousal support set out under s. 15.2(6) of the Divorce Act:
(a) recognizes any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown;
(b) apportions between the spouses any financial consequences arising from the care of any child of the marriage over and above any obligation for the support of any child of the marriage;
(c) relieves any economic hardship of the spouses arising from the breakdown of the marriage; and
(d) insofar as practicable, promotes the economic self-sufficiency of each spouse within a reasonable period of time.
The Court of Appeal in Virc held that in the family law context, the onus of unearthing intentional material misrepresentations in the payor’s financial disclosure is not on the payee spouse. Rather, the burden is on the payor to demonstrate that the payee spouse had actual knowledge of the misrepresentation and signed the separation agreement notwithstanding that knowledge: “The respondent [payor spouse] could point to no authority for the proposition that the suggested duty of a spouse receiving financial disclosure in a matrimonial case, to investigate or test the veracity of the information provided, overtakes deliberate material non-disclosure by the other spouse”: at para. 58.
Citing Rick v. Bandsema, 2009 SCC 10, [2009] 1 S.C.R. 295, the court affirmed that where a party has deliberately failed to make full and honest disclosure of all relevant financial information, the resulting domestic contract may be “vulnerable to judicial intervention where the result is a negotiated settlement that is at variance from the objectives of the governing legislation”: Virc, at para. 66. Furthermore, while demonstrating that the recipient spouse had actual knowledge of the inaccurate disclosure is a defence, “a mere suspicion of lack of veracity does not absolve a fraudster of responsibility”: at para. 69.
On the issue of lack of financial disclosure, the court concluded the following, at para. 74:
[T]he court is required to take a holistic approach in determining whether there has been a failure to make disclosure under s. 56(4) of the FLA. This requires a careful balancing of the circumstances, including those set out in LeVan. In my view, in this case, that balancing required a detailed analysis of the intentions underlying the parties’ conduct. That analysis was not possible on this Rule 16 family law summary judgment motion.
The court has followed this analysis within the context of a r. 16 summary judgment framework in many cases.”