The recent decision of Virc v. Blair from the Ontario Court of Appeal shed light on what happens when a party deliberately provides numbers and financial disclosure that is false and the parties enter into a separation agreement based on those false numbers. The court held that if you provide financial information that is deliberately false, the consequence will likely be that any agreement reached which relied on that financial disclosure will be set aside. The courts in Ontario have a two-step test on which they rely to set-aside an agreement in these circumstances: (1) Has the spouse with the financial knowledge accurately discharged his/her duty to disclose the value and number of assets or have they deliberately misrepresented the same; and (2) was the resulting agreement unfair.
Financial disclosure is often a difficult issue when one party has full knowledge and control of the finances of the family, while the other has simply trusted their partner and not made any inquiries. In the seminal case of Leskun v. Leskun, the Supreme Court of Canada quoted from a British Columbia decision where it was held that “non-disclosure of assets is the cancer of matrimonial property litigation.” Whether separation is on the horizon or not, it is always best that both parties have knowledge of the income, assets and liabilities that they share as a family.