“Financial disclosure is important in marriage contracts. Prior to entering into a contract, the parties need to fully understand their rights and obligations as if no contract existed (LeVan, para. 52). In addition to understanding their rights and what they are being asked to give up, the parties also need to understand each spouse’s asset base (ibid, para. 53).
If a party enters into a marriage contract aware of any disclosure shortcomings, the party cannot then rely on those shortcomings as a basis for setting aside the contract. See Butty v. Butty, 2009 ONCA 852 (CanLII), 99 O.R. (3d) 228, at para. 54. Similarly, a party cannot resile from the consequences of failing to compel further disclosure unless that party can demonstrate that the financial disclosure provided was inaccurate, misleading or false (see Quinn v. Keiper (2007), 2007 CanLII 45714 (ON SC), 87 O.R. (3d) 184 (Ont. S.C.) [Quinn]).
In Quinn, the trial judge sets out at, para. 47, a two-stage analysis for considering whether a domestic contract should be set aside for non-disclosure:
(i) First, the party seeking to set aside the agreement must demonstrate that the other party failed to discharge its duty to disclose significant assets. The failure to disclose significant assets includes the making of a material misrepresentation about the true value of assets, and the failure to disclose changes in income. The significance of an asset is assessed by measuring the value of the asset against a party’s disclosed net assets. To conclude that a party has failed to disclose a significant asset, there must be some evidence to verify the value or extent of the party’s assets either at the date of marriage or the date of the agreement;
(ii) If a court finds that a party has failed to disclose a significant asset, the court must determine, in light of the facts of each case, whether it should exercise its discretion to rescind the domestic contract. The burden of proof lies on the party seeking to set aside the contract to persuade the court to exercise its discretion in its favour. The court will take into account a variety of factors in exercising its discretion:
i. whether the party who did not make full disclosure was asked or refused to do so; whether that party misrepresented or concealed financial facts; whether the other party had full financial information in any event; and, whether the other party would have signed the contract even if the disclosure had occurred;
ii. whether the party relied on the non-disclosure or misrepresentations in entering into the separation agreement in the sense that the party would not have entered the agreement had she known the true value of the assets;
iii. whether a party consented to incomplete disclosure, or was otherwise aware of the asset and had the means to ascertain its value;
iv. whether one party took benefits under the contract and then moved to set it aside; and,
v. whether there had been duress, or unconscionable circumstances; whether the petitioning party neglected to pursue full legal disclosure; whether she moved expeditiously to have the agreement set aside; and whether the other party had fulfilled his obligations under the agreement.”