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Review Provision Trumps Release – Separation Agreement Re-Opened to Increase Wife’s Support

Review Provision Trumps Release – Separation Agreement Re-Opened to Increase Wife’s Support
In an interesting late-February decision called Grimba v. Bossi, the Ontario Supreme Court of Justice had to reconcile the contradictory provisions of Separation Agreement:  One set of provisions acknowledged the Agreement’s finality, while another clause allowed either party to ask for a review.  The case speaks to the importance of ensuring that Separation Agreements are carefully drafted, and that they clearly and precisely reflect the intentions of the parties in all respects.

In this case, the husband and wife were married just under 19 years, and had two adult children who were both attending university.   During the marriage, the wife had taken a 13-year hiatus from her career in financial services in order to stay home and raise the children.   When they separated in 2005, they entered into a Separation Agreement that provided an equalization of their assets, made certain financial adjustments in connection with certain business income of the husband, and determined that the husband would pay support to the wife for four years, until 2009.

The Agreement also contained standard Release provisions, in which the parties acknowledged that they intended to fully and finally settle all current and future claims against each other.  Specifically the parties acknowledged in the Release that:

…their respective financial may change in future by reason of their health, the cost of living, their employment or otherwise.  No such change whether material, radical, catastrophic or otherwise will give either party the right to claim support or maintenance or interim support or maintenance pursuant to the Family Law Act or the Divorce Act from the other.  

The Release also contained the following language:

The terms of this Agreement and, in particular this release of spousal support, reflects the parties’ own unique particular objectives and concerns.  Among other considerations, we are also depending upon this spousal release, in particular, upon which to base our future lives.

The husband and the wife do not want the courts to undermine their autonomy as reflected in the terms of this Agreement, which they intend to be a final and certain settling of all issues between them.  They wish to be allowed to get on with their separate and independent lives, no matter what changes may occur.  The husband and wife specifically anticipate that one or both of them may lose their jobs, become ill and be unable to work, have additional child care responsibilities that will interfere with their ability to work, find their financial resources diminished or exhausted whether through their own fault or not, or be affected by general economic and family conditions changing over time.  Changes in their circumstances may be catastrophic, unanticipated or beyond imagining.  Nevertheless, no change, no matter how extreme, will alter this Agreement and their view that the terms of this Agreement reflect their intention to always be separate financially.  The husband and the wife fully accept that no change whatsoever in their circumstances will entitle either of them to spousal support from the other beyond the provisions of this Agreement

But notwithstanding these Release provisions (which by definition purported to finalize all matters between the couple) the Agreement also contained a Review provision, which allowed either party a certain stipulated window of time to instigate a review of the amount and termination date of the husband’s spousal support obligation to the wife.

The husband, having learned in 2008 that the wife had returned to full-time employment, e-mailed her to request such a review.  She refused.  He continued to pay support throughout 2008 and 2009 and the usual levels, and the matter came before the court for determination, as part of a Divorce application.

Against this background, the court grappled with trying to reconcile the two conflicting provisions in the Agreement, i.e. the Release and the Review.   On the one hand, this was otherwise a standard, boilerplate Separation Agreement, which was not linked to the circumstances of the husband and wife when they signed it.   However, the existence of the Review provision suggested that the parties were open to revisiting the Agreement’s terms.    Moreover, in such cases, the law establishes that any subsequent “review” essentially means that the court must do a full reconsideration, rather than approach it as if it were merely an application to vary the Agreements’ terms.

As such, and in light of the fact that the parties could not agree as to the duration and amount of spousal support that the husband was obliged to pay, the Review provision could be triggered by the husband and the court was to start afresh by applying the basic principles that govern entitlement to spousal support generally.

The court undertook this exercise by reviewing all of the circumstances.  It began by observing that – contrary to what the husband claimed – the review as to the proper support amount was not limited to whether the wife had achieved economic self-sufficiency by taking on a new full-time job.  Rather, the court could take into account the overall financial repercussions of the marriage on the wife, including the fact she had put her career “on hold” for 13 years in order to stay home with the children.  She had not been compensated for the effect of this, nor for her contribution to the husband’s career.  Overall, the court concluded that despite her recent return to the workforce, it could still not be said that she achieved economic self-sufficiency as compared to the lifestyle she would have enjoyed if the parties did not separate.

At the date of trial, the husband had already been paying spousal support to the wife for almost five years.   For a marriage of this duration, the Spousal Support Guidelines recommended the husband be obliged for between 9.5 to 19 years, depending on other factors.  (And the court pointed out that, had the parties stayed married one year longer, the Guidelines would have recommended spousal support be paid indefinitely).
In the end, the court found that the wife was entitled to support for another 10 years.

For the full text of the decision, see

Grimba v. Bossi, 2012 ONSC 1386   http://canlii.ca/t/fqdtr

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders.  For more information, visit us at  www.RussellAlexander.com