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PSWLaw is a Toronto-based law firm providing legal advice in corporate commercial law, contract law, and civil litigation.
The Supreme Court of Canada discussed the law pertaining to setting aside a domestic agreement in its recent judgment Rick v. Brandsema*.
After a long and difficult marriage, the parties had negotiated and signed a separation agreement. The husband allegedly took advantage of the wife’s vulnerable and fragile emotional state and obtained a financially favourable agreement. About a year after the execution of the agreement, the wife realized the financial consequences and sought to have the agreement set aside.
The Supreme Court affirmed the lower courts’ findings that the transaction was unconscionable, i.e., grossly unfair, because of one party’s disabilities.
Citing Miglin v. Miglin,^ another case decided by the Supreme Court of Canada, the court ruled that if there were any circumstances of oppression, pressure, or other vulnerabilities, and if one party’s exploitation of such vulnerabilities during the negotiation process resulted in a separation agreement that deviated substantially from the legislation, the agreement need not be enforced.
Given the unique environment of negotiating a separation agreement, the court decided that a duty to make full and honest disclosure of all relevant financial information is required, so that the separating spouses may genuinely decide for themselves what constitutes an acceptable bargain that’s also legally enforceable.
*[2009] S.C.C. 10
^[2003] S.C.C. 24, 1 S.C.R. 303
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