HONESTY AND DIVORCE
Posted on June 22nd, 2011 by Centennial Law in Disclosure, Divorce
Some would say that the words "honesty" and "divorce" don't belong in the same sentence. Often, each of the parties in a divorce becomes obsessed with getting as much as possible with little regard for the fundamental values upon which, one might hope, a marriage should be based.
A few years ago, the Supreme Court of Canada gave us its take on the role of honesty in divorce negotiations in the case of Rick against Brandsema (Rick v Brandsema, 2009 SCC 10). The Alberta Court of Appeal has also given us an update in Brown v Silvera, (2011 ABCA 1090).
In the Rick case, Nancy Rick and Ben Brandsema endured what the Court described as a “long (29 years) and difficult marriage.” After separation, they used a mediator to help them negotiate a separation agreement. As the Court commented in the Rick case, “parties should generally be free to decide for themselves what bargain they are prepared to make.”
In the emotionally charged context of a marital breakdown, however, freedom of contract has its limits. Firstly, the Court will not allow either spouse to take advantage of the known emotional vulnerability of the other. Secondly, the Court will step in to impose an equitable settlement if one party has been prejudiced by the other’s lack of “full and honest disclosure.”
In the Rick case, Mr. Brandsema deliberately concealed assets worth $233,000 and undervalued other assets by a further $195,000. Due to his dishonesty and other considerations, the Court ordered him to pay approximately $650,000 to Ms. Rick.
In the Brown v Silvera case, the Alberta Court of Appeal applied principles enunciated in the Rick case – but on a significantly greater scale. When the couple negotiated their separation agreement in 2000, Mr. Brown failed to disclose assets valued at slightly more than $5,000,000. By the time, the trial judge heard the story in 2008, Mr. Brown had “grown” those assets to $29,000,000. The Court decided that Ms. Silvera’s share of those assets was worth over $14,000,000 – and ordered Mr. Brown to pay her that amount.
As these cases illustrate, concealing assets following the breakdown of a marriage can be costly.
Article written by Centennial Law Corp. (Douglas E. Dent)