23 February 2009

Supreme Court of Canada Releases Important Decision

On 19 February 2009, the Supreme Court of Canada released its judgment in Rick v. Brandsema (2009 SCC 10), a case about the duty of honesty and fair play spouses owe to each other when they are negotiating a separation agreement.

The court's judgment in this case follows the reasoning it established six years earlier in Miglin v. Miglin (2003 SCC 24), a case about separation agreements and spousal support. In Miglin, the court decided that the rules about commercial contracts shouldn't apply to separation agreements because of
"the particular ways in which separation agreements generally and spousal support arrangements specifically are vulnerable to a risk of inequitable sharing at the time of negotiation and in the future"
which largely result from the unique negotiating environment of separation agreements, an environment of
"intense personal and emotional turmoil, in which one or both parties may be particularly vulnerable."
As a result, the court held that not only must the spousal support provisions of an agreement be fair in themselves, they must be negotiated in a scrupulously fair manner, without either spouse being subject to "circumstances of oppression, pressure or other vulnerabilities."

In Rick, the court took this line of reasoning a bit further, and decided that agreements must also be negotiated with full and complete financial disclosure:
"A duty to make full and honest disclosure of all relevant financial information is required to protect the integrity of the results of negotiations undertaken in these uniquely vulnerable circumstances [of separation]. The deliberate failure to make such disclosure may render the agreeement vulnerable to judicial intervention where the result is a negotiated settlement that is substantially at variance from the objectives of the governing legislation."
The "objectives of the governing legislation" might be the objectives of a spousal support order, as set out in the Divorce Act, or it might be the presumption of an equal entitlement to share in family assets, as set out in the Family Relations Act.

To boil all this down, the cumulative effect of Miglin and Rick is that agreements must be negotiated with procedural fairness (fairness in the conduct of the negotiations) and must ultimately reflect substantive fairness (conformity with any relevant legislative goals) or court may set aside or vary an agreement:

1. The freedom of spouses to negotiate a fair settlement at the conclusion of their marriage depends on the integrity of the bargaining process.

2. The integrity of the bargaining process is at risk when a spouse pressures or manipulates the other spouse, or takes advantage of the vulnerability or weakness of the other spouse, to acheive a good deal. (Miglin)

3. The integrity of the bargaining process is at risk when a spouse fails to make full and complete financial disclosure. (Rick)

4. The integrity of the bargaining process can also be jeopardized simply by the stressful emotional circumstances of separation. (Miglin and Rick)

5. The court will intervene where the bargaining process was flawed and the terms of the agreement are at odds with the objectives of the Divorce Act or the Family Relations Act.

The court's summary is perhaps best:
"[T]he more an agreement complies with the statutory objectives, the less 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."

1 comment:

  1. I believe withholding support is a form of abuse ? Withholding to cause hardship to force settlement of issues ? If you have 3 children and 2 yrs down the road one goes lives with other parent and a new order is written . So one parent pays for 2 while the other parent pays for one . Then almost 2 yrs later that child returns and at this time no new order is drawn up and the payor claims with no disclosure that income has gone down . So all 3 childen on the same amount for 2 . Then a yr later the oldest one turns of age and moves out . So the parent that the children live with only has a court order for one child and the payor stops paying for 2 and only pays for one even thou there are 2 children in there care . How would the judge look at this ? This all happens also in the middle of trying to settle final orders . Non payment of support needs to be dealt with as abuse

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