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When Agreement Calls for $1 Payment, Does it Really Have to be Paid?

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When Agreement Calls for $1 Payment, Does it Really Have to be Paid?

I ran across an older B.C. case recently that considered an interesting technical point: if a separation agreement between spouses calls for one party to pay the other a nominal $1 amount, is the agreement still legally valid if that dollar is not paid?

In Dryden v. Bischoff, the couple initially lived in a home for which the wife had provided the down-payment; however the husband had done significant renovations and reconstruction work before they had moved in. Together they eventually moved into a second home that the wife had initially co-owned with her mother, and they kept the first home in order to generate rental income and pay off their mortgage.

After they separated 6 years later, the husband ran into financial difficulties and eventually went bankrupt. In the two years after their separation he had paid no child support at all; he started paying $200 a month but after 3 months asked the wife for a reprieve and never really resumed making his contributions.

At one point the wife asked the husband to sign a short written document she had prepared, in which the husband agreed to transfer his interest in the first home in return for being absolved of liability for the mortgage on it. In return, the wife would pay him $1. The husband signed the agreement together with the necessary Land Transfer document, which was duly registered.

A few years later, when the couple’s divorce matter came before the court, the husband claimed that the wife had never paid the $1. He also added that he had been coerced into signing it by “emotional blackmail.” He therefore asked the court to declare the agreement legally invalid, and to award him a half-interest in the proceeds of the home’s sale. (He also wanted monetary credit for the value of the various carpentry work he had provided.)

In contrast, the wife simply asserted that she had paid the $1 at the time, as required, and that the agreement should be enforced.

On all the evidence, the court found there was no real evidence to support the husband’s claim that he had never been paid the $1. (And in this regard the court had numerous concerns over the husband’s credibility, lack of documentation, and poor memory.) The husband’s claim that he had been coerced into signing the agreement was also inconsistent with his other complaint about not having paid the stipulated $1 nominal sum – i.e. he couldn’t have it both ways. Finally, from a legal standpoint the agreement was valid because there was good “consideration” – if not in the form of the $1, then in the wife’s promise to save the husband harmless from liability on the outstanding mortgage.

(As an aside, the court speculated that the husband’s motives were vindictive: he had apparently told a friend that because the wife had gone after him for child support, he was going after her assets).

In the end, there was no legal basis upon which the agreement should be set aside.

While the court was able to side-step having to rule on the effect of the missing $1 payment in this particular case, I will talk more about these kinds of legal “technicalities” in a future blog.

For the full text of the decision, see:

Dryden v. Bischoff, 2006 BCSC 1297

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