Husband Misrepresents Value of Company, Leading To Separation Agreement Being Overturned

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When couples separate there may be circumstances that warrant putting a separation agreement into place. Separation agreements might outline things the parties agree on and therefore don’t have to be litigated during the divorce process. However, sometimes a separation agreement has to be re-visited. This can be due to changes in circumstances, such as to the health of employment of one of the parties. It can also be because one of the parties withheld information when making the agreement. This was the situation in a recent decision issued by the Ontario Superior Court of Justice.

Separation agreement established value of company

The parties were married in June 1994. They separated in 2012 and were divorced two years later. They have two children, though at the time of the trial they were in university.

The issue came before the court after the mother brought a motion in relation to a separation agreement they agreed to in late 2013 and executed in early 2014. The agreement stipulated that the father’s business interests in a company he owned were valued at $7.9 million. This number was provided to the mother by the father and the company’s SFO.

Later in 2013, it would turn out that the company was sold for $30 million, more than three times the value provided to the wife. The sale took place in between the separation agreement being agreed to and being put into place.

Court sets aside separation agreement

At the original hearing related to the issue, the motions judge found that Section 56(4)(a) of the Family Law Act states that a court may set aside a domestic contract “if a party fails to disclose to the other significant assets, or significant debts or other liabilities, existing when the domestic contract was made. “

The Supreme Court ruled in 2019 that the scope of a failure to disclose was relevant to the final determination as to whether an agreement should be set aside. The husband appealed this decision as well as the motion court’s determination that the husband’s matrimonial file, produced by his lawyer, waived solicitor-client privilege.

Husband appeals waiver of solicitor-client privilege

The husband argued during the appeal that the information provided by his matrimonial file, which was partly responsible for the decision, was a violation of his solicitor-client privileges.

However, the husband told the court that his state of mind leading to the misrepresentation was caused by his lawyer. When this occurs, it creates a waiver of solicitor-client privilege as stated by the Supreme Court of Canada in a 2001 decision which states,

“A party will have waived solicitor-client privilege where they have placed their state of mind at issue and given evidence that they received legal advice which, in part, formed the basis of that state of mind. An implicit waiver can also arise by reason of the positions taken by a party which implicitly require the disclosure of communications between solicitor and client.”

As a result, the father’s claim appeal was denied.

At Howie Johnson Barristers & Solicitors in Windsor, we provide knowledgeable advice and skilled representation to separated spouses and families in Ontario. With more than 25 years of experience helping clients with all types of family issues, from divorce to custody, we can help guide you through the process of amending the terms of your separation agreement and resolving related issues. To speak with an experienced Windsor family lawyer about child custody and support modifications, call 519.973.1500, or contact us online.

 

 

 

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