Court of Appeal Speaks to the Issue of Asset Disclosure and Marriage Contracts
Last week, we discussed the consequences of failing to disclose assets when entering into a marriage contract. Justice Pazaratz had found in favour of a wife who wanted her marriage contract set aside on the basis that her husband had not properly disclosed his assets going into the marriage.
The husband appealed, and the Court of Appeal ultimately overturned Justice Pazaratz’s decision.
The Court of Appeal
In the original decision, Justice Pazaratz had found that the husband had failed to properly disclose his assets by failing to indicate that the farm property that he owned was two distinct parcels of land rather than one. Based on this incomplete disclosure, Justice Pazaratz exercised his discretion to have the contract set aside.
The Court of Appeal ultimately found that Justice Pazaratz had erred in setting aside the marriage contract on the basis of failure to make proper disclosure.
Justice Pazaratz had criticized the husband’s trial lawyer, who he found had deliberately suppressed the fact that the property was two parcels in what the Justice had deemed was a deliberate attempt to mislead opposing counsel. The Court of Appeal noted that this was incorrect- both the husband and the wife had initially been under the mistaken belief that the property was one parcel only. Moreover, when the real estate appraiser retained by the husband discovered that the property was actually two separate parcels of land, that information was immediately provided to the husband’s trial lawyer.
This shared mistaken belief was innocent and did not detract from the fact that the wife was aware that she was giving up all claims against the property by signing the contract. The wife had obtained independent legal advice, though she ultimately did not act on it, and she had not been subject to any pressure or duress when she signed the contract. Any uncertainty about the value of the property could not be viewed as a disclosure failure because the wife knew she was giving up any interest in the property, irrespective of its value.
The Court of Appeal noted that:
it is important to keep in mind that courts should respect private arrangements that spouses make for the division of their property on the breakdown of their relationship, particularly where the agreement in question was negotiated with independent legal advice.
The Court of Appeal ultimately set aside Justice Pazaratz’s order and awarded the husband costs of $25,000.
If you are separated or divorced, or in the process of separating and have questions about complex property division, call us at 519.973.1500 or contact us online. Many of our clients are referred to us by former and current clients, as well as by lawyers, accountants, and other professionals.