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Family Law... Marriage Contracts - Why is Financial Disclosure Required?

Without sufficient financial disclosure, Section 29 of the Nova Scotia Matrimonial Property Act provides that a court may set aside any term of a marriage contract it finds “unconscionable, unduly harsh on one party or fraudulent” and make an order varying terms “as it sees fit.”

Kay Rhodenizer – May 2019

My previous blog (“Marriage Contracts: It’s Never Too Late to Agree”) noted that negotiations should include each party knowing enough about the other’s financial circumstances to make informed choices before signing.

Without sufficient financial disclosure, Section 29 of the Nova Scotia Matrimonial Property Act provides that a court may set aside any term of a marriage contract it finds “unconscionable, unduly harsh on one party or fraudulent” and make an order varying terms “as it sees fit.”

The law about disclosure is somewhat different in Ontario, however a case decided there provides a good explanation of what is expected and why:

Fundamental to a choice to opt out of the legislative scheme [for dividing property, or support, or both] is a clear understanding of what one’s rights and obligations might be if there were no contract.  It is in this context that financial disclosure is critical…knowing assets and liabilities at the date of the agreement is fundamental to an eventual calculation of net family property [in the event of separation/divorce].  A party needs to know what asset base might potentially grow…. to determine what he or she is being asked to give up in the agreement.  Coupled with financial disclosure is the notion of understanding legal rights and obligations under the legislative scheme.  This second notion carries with it the concept of independent legal advice.  Thus, a party must know what assets and liabilities exist at the date of the contract, and must understand the general legislative scheme in order to know what he or she is giving up in the proposed agreement.” [1]

[A subsequent blog will discuss whether independent legal advice must always be obtained, although this is certainly always recommended.]

In Nova Scotia, judges sometimes find that a “general awareness” of each other’s finances is enough. [2] While not exhaustive, some illustrations of what might be required, depending on the particular couple’s circumstances, are:

In summary, if a judge is asked to set aside some or all of a marriage contract, the type of financial information exchanged is one of several factors that may affect the contract’s enforceability.  As noted by the Supreme Court of Canada in a leading case on setting aside agreements:

The degree to which a court will intervene depends on the circumstances of each case, including the extent of….defective disclosure and the degree to which it is found to have been deliberately generated.”

This blog is not intended to be a comprehensive treatment of this topic or legal advice.  If you or a family member require more information on marriage contracts our MDW lawyers can assist.

[1]         Dubin v. Dubin, 2003 CanLII 2003 (Ontario Superior Court of Justice).

[2]         Robar v. Arsenau, 2010 NSSC 175 (CanLII) (Nova Scotia Supreme Court).

[3]            D’Agnone v. D’Agnone,  2016 ABQB (Can LII) (Alberta Queen’s Bench).

[4]         Rick v Brandsema, 2009 SCC 10 (CanLII).

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