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Digest of the Week | Lack of Disclosure

Digest of the Week | Lack of Disclosure

Separation agreement set aside due to lack of disclosure in recent Ontario Superior Court of Justice case

Virc v. Blair

2016 CarswellOnt 8478

Ontario Superior Court of Justice

Family law --- Domestic contracts and settlements — Validity — Essential validity and capacity — Lack of disclosure

Parties began cohabitation in 1993, married in 1994, and had three children — Wife was lawyer and husband was businessman — Husband held controlling interest in holding company — Wife began working almost exclusively for husband, handling his litigation and related corporate affairs — On May 31, 2008, parties signed separation agreement — Net family property statement appended to agreement indicated that wife owed husband equalization payment of $954,150.88 and agreement provided that wife was released from obligation to make equalization payment — Husband claimed marriage date deduction of $11,012,39.36, principal component of which was value of his shares in holding company, represented as having book value of $7,603.685.03 — Not reflected in net family property statement was any market trading value for holding company's long term investments in its operating companies — Clause in agreement identified wife as lawyer and that she waived advice — Parties divorced on May 10, 2013 — Husband successfully moved for summary judgment to dismiss wife's application to set aside agreement — Wife appealed and Court of Appeal set aside dismissal of application — Trial was directed to proceed on all issues — Issue at trial was whether separation agreement should be set aside for lack of disclosure — Separation agreement was set aside and parties' equalization payment and child and spousal support rights were to be determined at trial — Husband never alerted wife to fact that book value of holding company's investments significantly exceeded their market value — At best, husband's evidence was that he did nothing to prevent wife from testing veracity of his representation of company's value, and this was not sufficient discharge of his duty — Especially given husband's valuation expertise and wife's deference to that expertise, it was incumbent on him to do more than to stand by and leave it for wife to verify accuracy of his representation — Husband was uniquely qualified, knew that book value of holding company's long term investments was significantly different from their market value, and said nothing — Husband failed to comply with duty imposed on him by s. 56(4)(a) of Family Law Act.

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