Negotiated family law settlements


March 19, 2009

The Supreme Court of Canada in a recent family law decision, Rick v. Brandsema, confirmed that the duties of spouses negotiating in the family law context differ from those that exist when negotiating a commercial contract between two parties of equal strength, including as family law negotiations take place in an emotionally charged matrimonial context. The husband in Rick v. Brandsema, who knew his wife was emotionally vulnerable and unstable, knowingly failed to disclose all relevant financial information to the wife when negotiating a settlement agreement relating to division of property following their marriage breakdown. The Supreme Court of Canada held that each spouse has a duty to make full and honest disclosure of all relevant financial information and to avoid exploitative tactics in the negotiation process, in order to protect the integrity of negotiations in the family law context. Where those duties are not met the agreement will in some circumstances be varied or set aside by the Court. Whether the Court will intervene in future to set aside or vary the agreement will depend on the circumstances of each case, including the nature of the non-disclosure, whether it was deliberate, and the extent to which the bargain struck between the parties fails to comply with the goals of the relevant legislation. The assistance of professionals, including lawyers or experts such as business valuators or accountants, can compensate for vulnerabilities of one spouse and reduce the risk that the Court will in future interfere with the agreement. The role of legal counsel in family law negotiations includes to advise each party regarding his or her duty to make or right to receive disclosure and the applicable legislative goals, and to assist in protecting a spouse from exploitative conduct or abuses in the negotiation process. In Rick v. Brandsema, the husband's misleading disclosure and his exploitation of his wife's emotional vulnerability were such that professional assistance could not adequately protect the wife's interests, and in those circumstances the agreement was set aside.