Separation Agreement Drafting Error: Can a Spouse Take Advantage?
In Stevens v. Stevens, the couple had been married for 16 years when the wife discovered that the husband had been having an affair. As part of their attempts to reconcile, they crafted a marriage contract, freely negotiated with the help of separate lawyers.
Because the matrimonial home had been purchased using a significant amount of the wife’s own funds (which she had received through gifts and an inheritance), she was keenly interested in having those funds recouped in the event of divorce. To this end the terms of the marriage contract stipulated that the husband should have one-half of the value of the matrimonial home if the marriage broke down completely … which it did shortly after the agreement was signed.
Unfortunately, the draft contract prepared by the wife’s lawyer contained a significant error: it stated that the husband was to receive the whole value of the matrimonial home, not merely half. The cover letter accompanying the draft adverted to the intended one-half value, so the two documents were inconsistent. Still, the husband and his lawyer did not ask for clarification on the discrepancy; both were well aware that the draft contained a mistake.
After the split, the husband wanted to have the contract enforced as-written, which meant that he would get $2.5 million in the divorce rather than $500,000. The wife applied to have it set aside.
The court found in the wife’s favour.
From a legal standpoint, there had been no “meeting of the minds” between the spouses as to the portion of the home’s value that was to be given to the husband; the evidence was clear that – regardless of what the contract actually said, the wife intended to give only half. Her own lawyer did not realize the mistake until after the couple had separated.
The husband was well aware that there was an error in the draft and he took advantage of it, which was condemnable. The court had harsh criticism for the husband’s lawyer, whose evidence as to her understanding of the cover letter and draft was “concerning”. The court rejected the lawyer’s evidence, having concluded that she was “attempting to hide behind a selective memory by testifying in this vague and uncertain manner.”
In short: The mistake in the marriage contract was not intended by the wife, but was known to the husband and his lawyer, neither of whom obtained clarification. The court said,
A simple phone call followed by a confirmation in writing is all that was necessary. I find that without that simple clarifying act, [the husband’s lawyer] and her client took advantage of the mistake and allowed the process to conclude, while knowing that there was no meeting of the minds on this very material issue.
The court accordingly found that the marriage contract was void and unenforceable.
Incidentally, the husband later appealed that ruling, and in doing so he took a new approach: He asked that, rather than declare the contract void from the outset, the Appeal Court should merely rectify it, so that it was worded in accord with what the parties intended in the first place.
The court rejected this also, pointing out that the husband was trying to advance a fundamentally new argument on appeal, i.e. one that he had not bothered to raise at the trial and which was completely inconsistent with the position he took at trial. This was unfair to the wife, and was not permitted under family trial procedure.
For the full text of the decision, see:
Stevens v. Stevens, 2012 ONSC 706 (CanLII)
Appeal:
Stevens v. Stevens, 2013 ONCA 267 (CanLII)
