Setting Aside Separation for Non-Disclosure of Assets: Is There a Difference Between “Considerable” and “Significant”?
In a case called Turk v. Turk, there was no dispute about the fact that the husband had failed to disclose “considerable” assets during the negotiation of a Separation Agreement with his wife. The narrower question was whether those undisclosed assets were “significant” enough to invoke the court’s power to set aside the parties’ Separation Agreement altogether.
The couple had been married for nearly 19 years when they separated in 2008. After lengthy mediation, they struck a Separation Agreement in which the husband agreed to pay the wife $10,000 per month for child and spousal support, together with a $180,000 in equalization payment.
Four years later, the wife went to court to have the Separation Agreement set aside, in favour of several orders in her favour. She relied on a provision of the Ontario Family Law Act (FLA) allowing a court to set aside any Separation Agreement where there had been a failure by one of the parties “to disclose to the other significant assets … existing when the [Separation Agreement] was made.”
That word “significant” was key. An earlier trial judge had found that the husband had indeed failed to disclose interests in certain family business acquired during marriage, as well as payments from a shareholder loan, and capital income from a share sale. Despite concluding that these ongoing non-disclosures were “blameworthy” and that asset value was “considerable”, the court found there were not “significant” within the meaning of the FLA.
The earlier trial judge reasoned that even with the non-disclosure, the husband had agreed to settle on terms that were very favourable to the wife, especially since his business was in decline. He had also made certain monetary concessions at the mediation, which may not have happened otherwise. In short, the trial judge concluded that had the husband disclosed the concealed assets during mediation, he would have taken a less-generous, more hard-line approach to the negotiations. This, in turn, would have resulted in a vastly different Settlement Agreement from the wife’s point of view.
A later appeal to the Court of Appeal was dismissed. The Court noted:
The trial judge is said to have answered the wrong question – whether the non-disclosure was significant – instead of whether the non-disclosed assets were themselves significant. But this seems to be a purely semantic distinction. It is the significance of the non-disclosed assets that makes the non-disclosure itself significant. Determining the significance of non-disclosed assets is not, as the [wife] argued, the purely mathematical exercise of comparing the value of the non-disclosed assets against the value of the disclosed assets. Rather, the trial judge appropriately relied on case law finding that “the term significant must refer and be measured in the context of the entire relationship between the parties” … and that significance “should not be considered in isolation of all of the surrounding circumstances”.
The Appeal Court concluded that the trial judge correctly applied the law, by assessing the “significance” of the assets within the context of the surrounding circumstances, not necessarily by their dollar value. Here, the husband’s undisclosed assets had no bearing on either the equalization payment or the amount of child or spousal support (which had been calculated on something much higher than the husband’s actual income).
(The Appeal Court added that even the assets were “significant”, the FLA sill allowed the trial judge to use her discretion on whether the Separation Agreement should be set aside; there was no reason to interfere with the way the discretion was exercised in this case.)
For the full text of the decision, see: