February 19 – Duty to Disclose

“In my view, it flows from the observations and principles set out in Miglin that a duty to make full and honest disclosure of all relevant financial information is required to protect the integrity of the result of negotiations undertaken in these uniquely vulnerable circumstances.  The deliberate failure to make such disclosure may render the agreement vulnerable to judicial intervention where the result is a negotiated settlement that is substantially at variance from the objectives of the governing legislation.

Such a duty in matrimonial negotiations anchors the ability of separating spouses to genuinely decide for themselves what constitutes an acceptable bargain.  It also helps protect the possibility of finality in agreements.  An agreement based on full and honest disclosure is an agreement that, prima facie, is based on the informed consent of both parties.  It is, as a result, an agreement that courts are more likely to respect.  Where, on the other hand, an agreement is based on misinformation, it cannot be said to be a true bargain which is entitled to judicial deference.

Whether a court will, in fact, intervene will clearly depend on the circumstances of each case, including the extent of the defective disclosure and the degree to which it is found to have been deliberately generated.  It will also depend on the extent to which the resulting negotiated terms are at variance from the goals of the relevant legislation.  As Miglin confirmed, the more an agreement complies with the statutory objectives, the less the risk that it will be interfered with.  Imposing a duty on separating spouses to provide full and honest disclosure of all assets, therefore, helps ensure that each spouse is able to assess the extent to which his or her bargain is consistent with the equitable goals in modern matrimonial legislation, as well as the extent to which he or she may be genuinely prepared to deviate from them.

In other words, the best way to protect the finality of any negotiated agreement in family law is to ensure both its procedural and substantive integrity in accordance with the relevant legislative scheme.”

Rick v. Brandsema, [2009] 1 SCR, 2009 SCC 10 (CanLII) at 47-50