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Posts from the ‘Separation Agreements’ Category

Could a Couple’s 30-Year-Old Separation Agreement Be Struck Down Now?

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Could a Couple’s 30-Year-Old Separation Agreement Be Struck Down Now?

The couple had been married in 1969, when the woman was 15 years old, and the man was 21 years old.  They had no children.

They decided to divorce in 1985.  A year earlier they had executed a separation agreement, witnessed by their respective lawyers, in which they divided up their matrimonial property and agreed to release their spousal support obligations towards each other.   On that latter issue, they each attested to the fact that: 1) neither of them required spousal support from the other; and 2) they had both considered their present and future financial prospects, and thought the agreement was fair.  It also contained a clause confirming that they each understood their rights and had obtained Independent Legal Advice (ILA) before signing.

All the agreement’s provisions were incorporated into the divorce order they obtained from a court a year later.

Fast forward to 2015, almost 30 years later. The wife brought a motion to have the separation agreement set aside, particularly as it related to her waiver of spousal support.  While she did not recall much about the circumstances all these years later, she claimed that she did not understand the nature of what she was signing at the time.

The court’s first task was to determine which version of the provincial Family Law legislation to apply to that assessment.  The one that had been in force 30 years ago required the wife to show that she had agreed to waive her support right in “circumstances that [were] unconscionable.”   The present-day equivalent, which was the Family Law Act, required only that she show that she did not “understand the nature or the consequences” of the separation agreement.

The court concluded that – using either threshold – the wife had failed to meet the test.

Looking at the evidence that could be provided from both parties, it fell short of showing the wife – who worked as a legal secretary at the time – did not understand the agreement, or appreciate the effect of signing away her support rights.   The rest of the clauses gave her the matrimonial home, the car, and most of the furniture, in a scenario where both of them were working at the time and had no children.   Even looking only at what was in writing, the court noted the spouses had specifically agreed on the fairness and lack of unconscionability of the circumstances.  Both acknowledged receiving ILA in advance.

In fact, the court noted that the wife had actually adhered to the agreement in other respects:   It contained an unusual clause stating that if within stipulated time-frames the wife were to either remarry, sell the home, or die, she would owe the husband $40,000 with interest.  When she did marry another man 7 years after the divorce, she called the husband to tell him she was prepared to honour her obligation under the agreement to pay him the $40,000, and did so during a meeting at a local restaurant.  This helped show that she appreciated the nature of what she had signed overall.

The court concluded:

Based on all of the evidence, I conclude that the parties intended to divide all of their assets, and live separate lives.  Indeed, the parties did just that.  The agreement was not unfair …

Both parties lead lives very separate and apart from each other.  They lived their lives and organized their affairs on the assumption that everything had been divided and resolved.  This understanding survived for decades.

Concluding that it would be unfair to allow either spouse to re-open the terms of this long-ago agreement now, the court dismissed the wife’s motion.

For the full text of the decision, see:

Pipitone v. D’Amelio

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 RussellAlexander.com

 

Can You Sue a Cheater for Damages?

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Can You Sue a Cheater for Damages?

These days, not a week goes by without some sort of sexual scandal in the news. Recently, it has focused on allegations of sexual harassment by prominent figures and celebrities but this merely adds to usual crop adultery-scandal coverage that routinely graces the cover of magazines seen while waiting in the check-out line.

I was reminded of an older Family Law decision the other day, which considered the question of whether one person can sue another for cheating on them, or for falsely promising to marry them or have an exclusive relationship with them.

The decision in Lee v. Riley raised exactly this scenario.  The matter came before the court the initially to consider whether the lawsuit actually raised any valid legal claims.  (Under Canadian law, this process serves as a preliminary “screening mechanism” for weeding out those claims adjudged to be entirely without merit, so as not to waste the court’s time (and the taxpayers’ money) on frivolous or otherwise untenable lawsuits.   The prevailing test at the time was whether it is “plain and obvious” that the cause of action cannot succeed.)

In Lee v. Riley the woman had sued the man for what has a rather novel claim.  As the court put it:

The plaintiff [woman] alleges that the defendant [man] failed to advise her that he was involved with another women whom he later married while he was carrying on an intimate relationships with her within a context of an apparent ongoing developing relationship. When she discovered the truth, the [woman] claims that she became ill and has suffered damages. The [woman] asserts a number of causes of action arising out of these facts, including assault, intentional infliction of mental suffering, and fraudulent or negligent misrepresentation.

Although it appeared to have sympathy for the woman, the court dismissed her claim outright, having found no supportable, legal cause of action in her pleadings.  The court wrote:

The [man’s] conduct, as alleged, is morally reprehensible and disgraceful. Nevertheless, the law has never punished either criminally or in civil proceedings, the untruths, half-truths and other inducement which accompany seduction, absent a fraudulent relationship or the presence of a known serious transmittable disease. The [woman] knew who the [man] was and knew the [illegible text] sexual acts being undertaken. The law cannot protect every person against the kind of behaviour the [man[allegedly manifested. Relationships involve risk-taking. People should be honest but it is well known that frequently they are not.

What are your thoughts?  Are there circumstances where the law should recognized a claim in damage by the cheated-on partner?

For the full text of the decision, see:

Lee v. Riley, 2002 CarswellOnt 5558

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 RussellAlexander.com

 

 

 

Court Upholds Separation Agreement as Being “In Substantial Compliance” with the Law

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Court Upholds Separation Agreement as Being “In Substantial Compliance” with the Law

Do you have a two-decades-old separation agreement that you are trying to have overturned?  Then the recent Ontario Court of Appeal decision in Smith v. Smith might be of interest to you.

The facts were these:  Before getting married, and just as they were about to move in together, the husband and wife signed a cohabitation agreement, in which the wife gave up any claim to spousal support.   The husband had previously had a prior relationship end badly, and was eager not to have history repeat itself.

When they split 18 years (and two kids) later, the wife claimed spousal support nonetheless, but the trial judge upheld the terms of the separation agreement and dismissed her claim.

She brought an appeal, claiming that the trial judge had erred.  She wanted the agreement to release her spousal support overturned, since she claimed it did not conform to the provisions of the federal Divorce Act – whether viewed from the time it was signed, or now.

The Appeal Court took a closer look at the situation, including the wife’s assertion that the trial judge had overlooked certain facts, such as:

  • The alleged power imbalance between her and the husband;
  • The lack of any discussion about spousal support; and
  • The fact that she had no independent legal advice when she signed the agreement (though she admitted having the chance to obtain it at the time).

The Appeal Court rejected these arguments.  It pointed out that when tasked with reviewing a separation agreement purporting to release spousal support, a court’s job involved two steps:  to first consider the circumstances at the time it was reached, and then to look at the substance to see whether it complied at the time with the federal Divorce Act.

During the first step, the court pointed to specific findings of fact that the trial judge had made, namely:

  • The wife knew the husband wanted a cohabitation agreement, and they had discussed it before she received the draft prepared by his lawyer.
  • She skimmed the agreement, read some parts, and did not read others.
  • She had a full six weeks to obtain independent legal advice, but – by her own admission – chose not to do so.
  • At the time she signed the agreement, she though it was fair. There was no fraud, coercion, or duress.

As for the second step, the Court found the agreement to be in “substantial compliance” with the Divorce Act. More importantly, in light of all the circumstances including the economic disadvantages suffered by each spouse because of their 18-year marriage, the wife would not be entitled to spousal support even if the separation agreement did not exist.

The Court affirmed the trial judge’s conclusions, dismissed the appeal, and confirmed the validity of the agreement.

For the full text of the decision, see:

Smith v. Smith

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 RussellAlexander.com

Were Negotiations Contingent on the Husband Ending His Affair?

Were Negotiations Contingent on the Husband Ending His Affair?

In an case I had reported on a few weeks ago, the marriage contract between the husband and wife – drafted by the wife’s lawyer – had contained an inadvertent drafting error, giving the husband the full value of the matrimonial home, when the actual intent was to give him only half. The relationship irrevocably broke down shortly after the agreement was signed. In examining whether the flawed agreement should nonetheless be enforced, the court concluded that the proper solution was to overturn the part containing the error; all the more so because the husband was aware of the drafting mistake and was trying to take advantage of it. This conclusion was confirmed on appeal.

One of the many issues that had to be examined in the case, was the effect on the husband’s extramarital affair on the negotiation process. An earlier judge at trial had been accused of placing undue emphasis on the husband’s cheating, when deciding some of the other issues in the wife’s favour.

That same judge had addressed the impact of the wife’s insistence that if they were to reconcile, he would have to end the affair and get tested for sexually-transmitted diseases. It was against this background, over a brief 3-week period, that the defective marriage contract had been negotiated. As the trial judge explained:

[The wife] had three preconditions to reconciliation. The centrepiece of these conditions was that [the husband] stop his affair immediately and commit to the reconciliation process. [The husband] represented to [the wife] that he terminated his affair. He told her that he was in the wrong and that the most important thing to him was the survival of their marriage and family. On that representation, [the wife] went out of town to consider reconciling with [the husband].

The problem was, that the husband had not actually ended his contact with the woman, even though he told the wife otherwise. Even as one of the last drafts of the marriage contract was being exchanged between the lawyers, he had seen his affair partner only days earlier, while on a business trip to California.

The trial judge had to examine the effect of this revelation on the validity of the contract.

The husband’s promise that he would be committed to reconciliation, and his devoting to making the marriage work, imposed a heightened obligation of good faith on him, the judge found.   Marriage contracts, unlike separation agreements, are subject to an utmost duty of good faith and fair dealing between the spouses. The judge disagreed with prior rulings that suggested that an extramarital affair need not be disclosed because the Family Law Act and the Family Law Rules deal only with financial disclosure by spouses. Instead, the judge found that an affair could be relevant particularly if the couple was negotiating a marriage contract in circumstances of attempted reconciliation.

With that said, the trial judge applied the principles to these facts:

In this case, [the husband] told [the wife] that he had ended the affair and that his total dedication was to seeing the marriage work. This fact alone was a prerequisite for [the wife] to entertain the idea of entering into a process of reconciliation and, eventually, give this process priority over her involvement in the negotiation process of the Marriage Contract, which dealt with her most substantial assets.

I find that the perception created in [the wife’s] mind that [the husband] was committed to the marriage due to the termination of his affair renders evidence that he continued to see this woman during the negotiation process of the Marriage Contract relevant.

However, the trial judge went on to make an important distinction on these facts: The husband had admitted to continuing to see his affair partner in California, but he did not admit that he was actually continuing the affair with her. As he explained:

Having said that, I cannot find on the evidence in this case that [the husband] continued to have an affair with this other woman during the negotiation process. In this regard, I find the following:

(1) [The husband] admitted to [the wife] that he was having an affair and that he wanted out of the marriage at the end of March 2006.

(2) Although he stated in his evidence that he ended the affair when he committed to reconciliation, he admitted that he continued to see this same woman during the negotiation period. The woman with whom [the husband] was having an affair lived in California and he admitted to travelling through California in July 2006 in the midst of the Marriage Contract negotiations. Admitting to continuing to see her does not allow me to conclude that he was continuing the affair.

I do not find that [the husband’s] affair with this other woman impacted on the negotiation process. Although [the husband’s] resumption of his affair, at the time that his wife was in the extreme vulnerable state that she was, is reprehensible, such conduct cannot be connected to the issue of whether this Marriage Contract should be set aside.

The matter went on to later appeal, with the court focusing on other grounds. But it was an interesting, and rather thinly-sliced, legal issue and conclusion.

What are your thoughts on the trial judge’s reasoning?

For the full text of the decisions, see:

Stevens v. Stevens, 2012 ONSC 706 (CanLII)

Related Appeal and Costs decisions:

Stevens v. Stevens, 2013 ONCA 267 (CanLII)

Stevens v. Stevens, 2012 ONSC 6881 (CanLII)

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 RussellAlexander.com

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Separation Agreement Drafting Error: Can a Spouse Take Advantage?


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),

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 RussellAlexander.com

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Busted! Court Relies on Sworn Financial Statements from First Divorce to Value Assets During Second One

Busted! Court Relies on Sworn Financial Statements from First Divorce to Value Assets During Second One

The husband was a 46-year-old, recently-separated businessman who met the 26-year-old wife when she was a junior at the law firm he used for his business matters and litigation. After they moved in together and he got a divorce from his first marriage, the wife left her job at the law firm to take care of the husband’s litigation and related corporate affairs.

They were married for 14 years before they separated, and had three children.

When they split up, the husband forwarded a newly-prepared separation agreement for the wife’s signature. She signed without obtaining independent legal representation.  She was comfortable doing so because she believed that the husband had provided full disclosure, and she trusted his assessment since he had considerable experience valuing businesses.

Using the business valuation information provided by the husband, the separation agreement would have called for the wife to pay the husband just under $1 million as an equalization payment; however, it also provided that the husband would agree to forgo her having to pay that amount.

Sounds like a good deal, right?

However, the wife slowly realized afterwards that the husband had misled her. Rather than her owe him money in equalization (which he waived), the proper calculation was entirely different because he had greatly overstated the value of the corporate assets that he brought into the relationship, most notably the value of his company at the date of marriage. This would inflate the amount she was adjudged to owe him way of an equalization.

She successfully applied to the court to set aside the separation agreement, on the basis that the husband had not given full financial disclosure.  The trial judge adjusted the calculation accordingly.

The husband appealed.  In support of his business valuation figures, he put forth the evidence of an expert, who attested to the fact that the value of the business on the marriage date was over $7 million.  However, the Appeal Court concluded that the expert was partial to the husband and lacked independence, and had given an inflated figure that could not be trusted.

Instead, the court relied on some “smoking gun” evidence:  the sworn financial statements the husband had filed in his first divorce, which showed that he had essentially brought no assets of value into this second marriage to the wife.  The trial judge had relied on this evidence as well in setting the separation agreement aside, and the Appeal Court confirmed that there was nothing improper about the trial judge having done so, even if it was to the husband’s detriment.

In the end, the husband was found to have intentionally misrepresented the value of his corporate assets, by claiming that they were worth $6 million more than their actual (court-determined) value.

The Appeal Court upheld the trial judge’s decision to set aside the separation agreement, and went on to calculate the proper equalization amounts using the true valuation of the husband’s assets.

For the full text of the decision, see:

       Virc v. Blair

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 RussellAlexander.com

If Spouses Reach a Separation Agreement But Later Reconcile, Is the Agreement Still Good?

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If Spouses Reach a Separation Agreement But Later Reconcile, Is the Agreement Still Good?

Here’s an interesting legal question arising from a not-uncommon scenario:

Two spouses decide mutually to separate. They negotiate and sign a separation agreement, and duly abide by its terms for a while. They later decide to reconcile, but the reconciliation doesn’t “stick” and they separate for a final time.

The question is this: Is their original separation agreement still good? Does the fact that they reconciled after making it affect its legal validity once they have separated a second time?

It turns out this is yet another “it depends” answer.

The basic rule is that a separation agreement is void once there has been a reconciliation. The Ontario Court of Appeal established this in an older case called Sydor v. Sydor, and it was very recently confirmed in another Ontario case called Ernikos v. Ernikos.

Of course, every rule has its exceptions. The Court in Sydor v. Sydor added that if the agreement contains a clause that overrides that general rule, or if such a clause can be reasonably implied, then the exempted part of the agreement will still be valid and the spouses’ clear intention will be given effect.

Here is an example: Let’s say a couple decides to split up. They agree in their separation agreement that the wife releases her rights in their newly-purchased car to the husband, and they use language to suggest that they consider this a final disposition. They reconcile, then split again. Although legally the whole agreement is technically void because of the reconciliation, the court may view its car-related wording to mean that they considered the husband’s rights to the vehicle are final and binding, regardless of what happens to their relationship in the future. This could form the basis of the court’s divorce order in the upcoming legal proceedings, when it comes time to formally divide the couple’s assets.

The other way to circumvent the general legal rule is to build in express and careful language saying so. Specifically, the separation agreement may define what constitutes a true reconciliation (e.g. requiring at least 60 or 90 days of uninterrupted cohabitation), or it may clarify that the agreement becomes void upon reconciliation except for any transfers, payments or other dispositions made up to that time.

For the full text of the decisions, see:

Sydor v. Sydor, 2003 CanLII 17626 (ON CA)

Ernikos v. Ernikos, 2016 ONSC 6752 (CanLII)

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 RussellAlexander.com

The Difference Between Separation and Divorce in Ontario – video

Wednesday’s Video Clip: The Difference Between Separation and Divorce in Ontario

A separation occurs when one or both spouses decide to live apart with the intention of not living together again. Once you are separated, you may need to discuss custody, access and child support with your spouse. You may also need to work out issues dealing with spousal support and property. You can resolve these issues in different ways:

• You can negotiate a separation agreement. A separation agreement is a legal document signed by both spouses which details the arrangements on which you have agreed. In some jurisdictions, independent legal advice is required to make the document legally binding.

• You can make an application to the court to set up custody, access, support and property arrangements under the provincial or territorial laws that apply to you.

• You can come to an informal agreement with your spouse. However, if one party decides not to honour the agreement, you will have no legal protection.

To legally end your marriage, you need a divorce, which is an order signed by a judge under the federal law called the Divorce Act.

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 RussellAlexander.com