When a couple decides to separate they may wish to enter into a separation agreement – a contract between two former spouses or partners that sets out how assets will be divided and details equalization payments as well as other details such as who will live in the matrimonial home. They are incredibly important contracts that impact numerous areas of couple’s lives going forward. In an interesting case recently heard before the Ontario Superior Court of Justice, the court had to determine what to do when one former partner in a relationship seeks to strike down a 30-year-old separation agreement.

Signing the agreement

The couple was married in 1969. At the time, the wife was 15 years old and the husband was 21. They separated in 1984, at which time they executed a separation agreement (the “Agreement”) outlining the division of property and a release of spousal support. The Agreement was incorporated into a divorce order issued the following year.

In 2015 the wife commenced a motion to vary the divorce order and set aside the separation agreement.

The Agreement stated that neither the husband nor the wife required spousal support and stated that neither would “claim support or maintenance from the other regardless of the circumstances and if such a claim is made this agreement shall be a complete defence thereto.”

Another provision in the Agreement stated the wife would pay the husband $40,000 if she were to remarry, sell the matrimonial home (which she kept under the Agreement), or died.

The Agreement also contained a provision confirming the husband and wife had obtained independent legal counsel, understood the Agreement, and agreed to it voluntarily.

34 Years pass…

Nearly 34 years had passed since the signing of the Agreement. The wife testified that she had no memory of the details of the Agreement, though she did agree she had signed it and assumed she had read it. While the Agreement did say she had obtained independent legal advice, she had no memory of doing such.

The husband testified the wife initially brought up the idea of separation and that after three or four months the details of the Agreement had been formed. The husband’s lawyer drafted the Agreement, and it was the husband’s testimony that she initially objected to parts of it (specifically the $40,000 payment), but eventually took it to her lawyer and signed it.

Determining which is the governing legislation

The laws pertaining to separation agreements changed during the time between the signature of the Agreement and the motion to strike it down. The Family Law Reform Act governed the couple’s rights in 1984. In regards to setting aside a provision for support, the Family Law Reform Act stated the court could set a provision aside under the following conditions:

  1. Where the provision for support or the waiver of the right to support results in circumstances that are unconscionable;
  2. Where the provision for support is to a spouse who qualifies for an allowance for support out of public money; or
  3. Where there has been a default in the payment of support under the contract or agreement.

The current relevant law is the Family Law Act, which stipulates a provision may be set aside if:

  1. A party failed to disclose to the other significant assets, or significant debts or other liabilities, existing when the domestic contract was made;
  2. A party did not understand the nature or consequences of the domestic contract; or
  3. Otherwise in accordance with the law of contract.

The court determined the Family Law Reform Act should be the governing legislation. The next step in the court’s analysis was whether it met the Act’s criteria that the “the provision for support or the waiver of the right to support results in circumstances that are unconscionable.”

Can the agreement stand?

Both parties to the Agreement acknowledged it was reasonable and fair, with both agreeing “its provisions were entirely adequate to discharge the present and future responsibilities of the parties and would not result in circumstances unconscionable to either party.” The court noted the wife received a greater share of family assets when she received their home as well as most of the furniture. Furthermore, both the husband and wife had steady employment in the years following their separation. As a result, the court found the waiver of spousal support to not be unconscionable.

The court did not accept the Applicant’s position that she did not understand the nature of the Agreement. She had worked as a legal secretary and had obtained legal counsel when signing the Agreement, at one point negotiating at least one of its terms. She also agreed to pay the husband $40,000 as stipulated in the agreement when she later remarried.

The court’s decision stated “the parties intended to divide all of their assets, and live separate lives.  Indeed, the parties did just that.” In denying the application, the court’s decision said it would be unfair to allow either party to re-open the Agreement.

There are a number of factors to consider in going through a separation. At Borden Family Law we can help you by drafting separation agreements as well as helping with things such as spousal or child support. We understand the importance of covering all the bases and work with our clients to ensure their rights are represented. Please contact us online or by phone at 905-597-6090 to talk today.