The Supreme Court of Canada tackled this question in 2009, in the case of Rick v. Brandesma. The question arose in the context of a separation agreement which the couple had negotiated after almost 30 years of marriage and five children together. The wife later went to court to have the agreement struck down, claiming that in the course of those negotiations the husband had either deliberately concealed or under-valued assets and had taken advantage of her emotional instability. The resulting separation agreement had left the wife with $650,000 less than she should legally have obtained.
She was successful at trial in having the agreement overturned, but that had been reversed on appeal. In reviewing the case, the Supreme Court of Canada started by making the observation that the dissolution of a marriage, especially a long-term one, is uniquely emotionally charged and results in the potential for one or the other spouse to be particularly vulnerable. This potentially affects the integrity of the bargaining and negotiation process. Special care must be taken to ensure that the marriage assets are distributed in a manner that is free from exploitation, both in terms of the psychological state of the parties and information that is exchanged.
The Supreme Court expressed that spouses are free to decide what they are prepared to settle for, but they must do so after being given all the relevant information. Each spouse is also under an obligation to provide full and frank disclosure to the other of all relevant financial information. If an agreement is negotiated without such disclosure, a court may set it aside in the right circumstances, on the basis of unconscionability. Whether a court will intervene depends on the circumstances, including the extent of the defective disclosure, the degree to which it has been deliberately orchestrated and the extent to which the resulting negotiated agreement is at odds with the goals of the relevant legislation.
In this case, the husband’s failure to make full and honest disclosure, his willingness to exploit the fact that negotiations were based on incomplete information, plus his awareness of his wife’s profound psychological instability, all dictated that the separation agreement was to be set aside.