Be Careful When Negotiating Separation Agreements – You May Be on the Hook Longer Than You Think

Domestic contracts such as separation agreements between spouses will usually attempt to address the repercussions of any future changes to the parties’ respective situations – for example, what happens in the event that one or both of them have lost their jobs, have a lasting illness or disability, or have married someone else.

Needless to say, it is difficult to predict the future, and even more so in the context of trying to address the repercussions of such unforeseen changes on the parties support obligations to each other.
A recent case from the Ontario Superior Court of Justice illustrates the pitfalls that can arise in this context.

In Greffe v. Greffe, the parties had been married for 25 years when they separated.  The husband had been the primary wage-earner throughout the marriage, currently earning about $150,000 as a steel mill foreman and municipal councillor.  The wife had stayed home in the traditional homemaker role, to care for their children.

At the time of separation, they negotiated a separation agreement which in 2008 was incorporated into a final divorce order.   The provisions of that agreement and order obliged the husband to pay the wife $2,000 in spousal support until 2017, when the wife reached the age of 60.   In agreeing to this arrangement, the wife chose to forego receiving an additional $5,000 per month that she would be currently entitled to in combined child and spousal support, given that the youngest child lived with her and was still financially dependent.  Equalization between the parties was also waived as part of this settlement.

Subsequently, the husband subsequently lost his job at the steel mill, and was not re-elected as municipal councillor.  As a result, his income went from $150,000 in 2009, to about $97,000 in 2010 (including the severance package he received from his former employer).  He was now earning $45,000 at a new job, and still had a long way to go before he would be entitled to his pension.

In light of his changed circumstances, the husband brought a motion to the court to have the support order and underlying separation agreement varied.

The court reviewed the terms of that separation agreement, which it characterized as “remarkably rigid on the issue of the spousal support obligation and its irrevocability”.    It noted that the husband’s job loss was one of the four stipulated factors that could compel a reduction in spousal support, but pointed out that this event could not be considered in isolation.

Indeed, after scrutinizing the husband’s pension entitlement, the court observed that the husband’s early job loss had not actually affected his pension entitlement.  He was still entitled to receive the pension at the same time and at the same age as if he had not been let go.

More importantly, the mere fact of his job loss had not amounted to the “material change in the circumstances” that the agreement expressly called for as a pre-condition to it being varied.  The fact that the husband lost his steel mill job was not unforeseeable:  the agreement specifically contemplated precisely such an eventuality and in fact had a formula for reviewing spousal support in such an event.

(The court also pointed out that despite the significant drop in the husband’s annual income, he had continued to take frequent trips and had purchased a $45,000 car.   While commenting that the husband was entitled to lead the lifestyle that he chose, the court said he did so “at his own” peril, and noted that the wife should not be penalized for his failure to set aside a reserve from which to draw if his income changed).

Simply put:  While the parties’ separation agreement envisioned that the husband might experience a significant reduction in income – and directed a reduction in his support obligation pursuant to a strict formula if that happened – in this case the threshold that had been agreed by the parties have not been met.   The agreement had been reached with the benefit of legal advice on both sides, and was effectively water-tight.  The court accordingly dismissed the motion.

This case shows that it’s important to get good legal advice when you are negotiating a separation agreement, to ensure that it incorporates clear and comprehensive provisions that deal with the effect of any change in circumstances.

For the full text of the decision, see:

Greffe v. Greffe (2012), 2012 ONSC 858   http://canlii.ca/t/fq0qj

]]> http://familyllb.com/2012/05/22/be-careful-when-negotiating-separation-agreements-you-may-be-on-the-hook-longer-than-you-think/feed/ 0 familyllb carefule http://familyllb.com/2012/05/21/what-services-would-you-like-at-your-marina/ http://familyllb.com/2012/05/21/what-services-would-you-like-at-your-marina/#comments Mon, 21 May 2012 13:20:15 +0000 familyllb http://familyllb.com/?p=2737 ]]>

With the May long weekend behind us boaters are getting back into the boating season.

Ontario has many excellent marinas to service boating enthusiasts.

What services do you seek: gas, pump out, mechanics, pool or something else?

Starport marina is offering breakfast on board your boat.  Similar to room service, simply just fill out the card (see pic) and breakfast is delivered to your boat the next morning.

What will they think of next?

Read our responses or submit your own comments.

Become a Fan and join the discussion here: http://www.facebook.com/RussellAlexanderFamilyLawyers

Wife’s Pleadings Struck in Light of Continuing Contempt of Court

I a recent case heard by the Ontario Superior Court of Justice, the parties had been embroiled in ongoing divorce litigation.   The wife – who was a doctor – had failed to comply with court-ordered disclosure, in that she failed to produce certain information required and requested by the husband, such as corporate tax returns, notices of assessment, and lease agreements.  She had also failed to comply with several court orders to pay court costs, which totalled about $12,500.

The wife was found in contempt of court in August of 2011, but was given several opportunities to purge that contempt by making the ordered payments by a certain date.   She continued to neglect or resist paying, and asked for hearings on the matter to be rescheduled.   However, she failed to show up at those rescheduled hearings, claiming she was in a depressive state.  She produced a letter from her family physician, indicating that that she was under extreme mental stress and depressed, and advising that she should take time off from all legal issues.

The court ordered her to produce additional medical documentation by a stipulated date, which she also failed to do.  The court re-scheduled a few additional hearing dates, but she again failed to appear.

Eventually, the husband brought a motion to strike out the wife’s pleadings, on the basis that they should not be allowed to stand because she was in contempt, because she had failed to purge that contempt, and had failed to pay newer outstanding costs orders as well.

In response, the wife’s counsel submitted that while her compliance has “not been perfect”, this was not a case of deliberate non-compliance with the court’s orders.

The court found for the husband:  the wife’s pleadings were struck out.   Although the letter from the wife’s doctor explained her inability to attend the various hearings, the court found that it did not explain her unwillingness or inability to comply with the assorted orders to pay.  In the circumstances the court concluded:

“There comes a point at which the court cannot give any further indulgences, in the interests of fairness to the other side and the administration of justice.  … If [the wife] Dr. Nashid wishes to participate in the litigation, the onus must now be on her to take affirmative steps.”

Certainly, an order to strike the wife’s pleadings was an extreme remedy, but the court was left with no alternative in light of the wife’s continuing non-compliance, together with the lack of any evidence or indication that she ever intended to comply with the court orders in the near future.

Pleadings were accordingly struck, and husband had leave to proceed with undefended trial.  Also, additional costs orders were imposed on the wife, in order to compensate the husband for having to appear at “five attendances instead of one”, a situation that the court concluded was wholly attributable to the wife.  This was despite the wife’s claim that she was unable to pay; however, aside from one e-mail from her bank confirming that her line of credit was in arrears of about $9,000, she offered no other proof of impecuniosity.  Once again, the court found that the wife had failed to satisfy the onus on her to supply evidence in her favour in this regard.

For the full-text of the decision, see:

Nashid v. Michael, 2012 ONSC 675, additional reasons to 2011 ONSC 4713  http://canlii.ca/t/fpvks

]]> http://familyllb.com/2012/05/17/wifes-pleadings-struck-in-light-of-continuing-contempt-of-court/feed/ 0 familyllb unhappy http://familyllb.com/2012/05/16/wednesdays-video-clip-child-support-access-rights/ http://familyllb.com/2012/05/16/wednesdays-video-clip-child-support-access-rights/#comments Wed, 16 May 2012 12:17:42 +0000 familyllb http://familyllb.com/?p=2713 ]]>

In this video Kiley discusses child support in relationship to access rights. A parent cannot cut off contact to a child simply because child support is not being paid.

The law assumes that it is usually good for a child to have a relationship with both parents. Keeping a parent from seeing his or her child is considered punishing the child. The law will not punish a child because his or her parent fails to pay child support.

The law gives parents who do not have custody “access” to their children so they can spend time together. Access can be refused or limited only if the parent’s behaviour is likely to harm the child. The courts will not refuse access because the parent does not pay support. And the parent with custody should not refuse access for this reason.

There are other ways to get support from a non-paying parent.

Separation Agreement Rolled into a Court Order – “Material Change of Circumstances” Still Required

The trend towards spouses resolving their family disputes through negotiation rather than litigation is an inspiring and positive one. However, there is a resulting and necessary interplay between dispute-resolution methods and court processes, and sometimes legal conundrums develop. The Supreme Court of Canada recently addressed the question of how to deal with an application to vary a court order that embodied the terms of a separation agreement that the spouses had themselves negotiated, and freely agreed to.

In L.M.P. v. L.S., the husband and wife had married in 1988, and the wife was diagnosed with multiple sclerosis shortly after. She never worked during the marriage; instead, she cared for the children and looked after the household while the husband pursued his career. When they separated in 2002, they reached a comprehensive agreement to settle their affairs, which obliged the husband to pay the wife $3,688 per month indefinitely (i.e. with no end date). In 2003, the terms of this agreement were incorporated into a formal court order by a judge.

Later, however, the husband brought an application under the Divorce Act to vary this order, claiming that the spousal support he paid to the wife should be reduced, and ultimately should end completely as of August 31, 2010. He claimed that despite the indefinite nature of the agreement and the resulting order, the wife was now capable of working and had an obligation to become self-sufficient. The court accepted the husband’s arguments as to the wife’s level of self-sufficiency, and changed the order accordingly. The wife appealed unsuccessfully to the Court of Appeal.

The matter then came before the Supreme Court of Canada, which was asked to address an important legal question: in cases where the support terms of an agreement have been incorporated into a court order, what is the proper approach by a court to an application to vary?

The court observed that section 17 of the Divorce Act allows a court to vary any spousal support order, provided it is satisfied there has been a “material change” in the “condition, means, needs, or other circumstances of either former spouse” since the original order (or last variation) was made. The section makes no reference to situations where the terms of the order are dictated by the parties’ own separation agreements. There is also a presumption that every court order – whether incorporating the separation agreement or not – is presumed to be in compliance with the Act and its various objectives.

When faced with an application to vary an order, the court should not ignore a mutually-accepted separation agreement such as the one reached by these spouses; however, it will be only one of several factors that goes into the threshold question of whether there has been a “material change” in circumstances since the initial order was made. An agreement that contains only general terms, including a blanket statement of finality as to the fact that matters were now settled between the parties, will provide little guidance to a court which is given the task of assessing the importance to the parties of various subsequent life changes they may experience, and how their respective support rights/obligations might be affected.

With this legislative framework in mind, the Supreme Court determined that the trial judge had been remiss in failing to apply the “material change in circumstances” test first, before assessing the wife’s ability to work. Similarly, the Court of Appeal had erred by making a finding that the wife was now able to work despite her multiple sclerosis, and that this amounted to the requisite material change in circumstances.

Instead, both lower courts appeared to disregard the fact that the situation between the parties had not changed at all since 2003 when the separation agreement and resulting court order were made: At that time, the wife was already suffering from multiple sclerosis, and was not expected to look for employment outside the home. The parties had reached a comprehensive agreement that they intended would reflect their final, non-time-limited settlement of outstanding issues between them. It was indexed to reflect inflation and contained no review mechanism.

In short: there was no material change as required by section 17 of the Divorce Act, so there was no legal basis on which a court could vary the order. The Supreme Court of Canada allowed the wif’es appeal, and restored the original 2003 order which reflected the terms of the parties’ own separation agreement, including the indefinite spousal support.

For the full-text of the decision, see:

L.M.P. v. L.S., 2011 SCC 64   http://canlii.ca/t/fpddd

]]> http://familyllb.com/2012/05/15/separation-agreement-rolled-into-a-court-order-material-change-of-circumstances-still-required/feed/ 0 familyllb sa http://familyllb.com/2012/05/14/what-are-your-plans-for-the-may-long-weekend/ http://familyllb.com/2012/05/14/what-are-your-plans-for-the-may-long-weekend/#comments Mon, 14 May 2012 11:46:53 +0000 familyllb http://familyllb.com/?p=2662 ]]>

What Are Your Plans For the May Long Weekend?

Victoria Day celebrates Queen Victoria’s birthday (May 24th) and is a holiday in Canada.

Victoria Day is always on a Monday, and thus the holiday is part of a long weekend, which is commonly referred to as the Victoria Day Weekend, the May Long Weekend, the May Long, or the May Two-Four (a case of beer there is called a “two-four” and many of these are consumed over the holiday). The weekend is also called the May 24th weekend, although it does not necessarily fall on May 24th.

Canadians will be celebrating May “two-four” this weekend by boating, camping, enjoying the out doors and often times with fireworks.

What are your plans for this May long weekend?

Read our responses or submit your own comments.

Become a Fan and join the discussion here: http://www.facebook.com/RussellAlexanderFamilyLawyers

In a decision from earlier this year, the court confirmed that a father was still obliged to pay support for his two children from a first marriage even though:  1) he no longer had a relationship with them; 2) he had a new family (and two other small children) to support; and 3) the child support obligation would cause him undue hardship, in light of his difficult financial circumstances.

In a case called Espiritu v. Javinal, the husband and wife had two children together.   After they separated, the mother – who had a third child from a previous relationship — moved all three children with her to Manitoba.   The mother earned about $24,000 as a hairstylist plus another $9,000 in child support for the third child she had from the other relationship.

Meanwhile the father, who remained in Ontario, had embarked on a new relationship with another woman, and had two more children with her.  He was the sole support for this new family unit which consisted of his new wife, the two children, and his mother-in-law (who lived with them).   The father earned about 56,000 as a service technician, but this included significant overtime which was not reliably available to him in the future.

The mother applied to the Ontario court for an order for child support from the father, in respect of the two children they had together.

The court noted that on a straightforward application of the Federal Child Support Guidelines – without more – the father would be required to pay about $850 per month.   However, the father was asking for a deviation from this amount based on undue hardship, so the court was obliged to compare the household incomes of the parties.

First, the court considered the fact that the father’s had a new family to support.   Indeed, it accepted his claim that was struggling financially to support them, particularly since he had the added burden of having his mother-in-law living in the home.   He was heavily in debt, and owed considerable amounts to extended family members.  Admittedly, the father received a little assistance on car payments from his father-in-law from time to time, but these were not a regular part of his income.  And even if his new wife was able to return to the workforce in the future, her added income would be offset by day care costs, since the mother-in-law was not capable of looking after the children.

The court also made an interesting observation:  Since the father admitted that he did not in fact see his older two children anymore (the mother having apparently cut him out of their lives when she moved to Manitoba), his current debts and precarious financial situation were wholly unrelated to his prior relationship with the mother.   Furthermore, while the father may have had a moral obligation to support the mother-in-law, he did not have a legal one.  As such, the father’s dire financial scenario was essentially of his own making, and could not be the grounds for his “undue hardship” claims.

As such, there was no avoiding the conclusion that the father was legally obliged to pay child support for his two children of his first union; however, in determining the proper amount the court was entitled to consider all of the circumstances, including the father’s financial obligations to his new family.

Looking at the numbers, the father’s overall financial situation was not significantly worse than that of the mother:   He had a household of three adults and two children, with an income of $56,000 at his disposal.  She, on the other hand, had a household of one adult and three children, with an income of about $32,000.

In the end – and despite finding that he would endure financial hardship – the father was ordered to pay the mother child support.   However, in light of all the circumstances the court adjusted the amount to $400 per month.

For the full text of the decision, see:

Espiritu v. Javinal, 2012 ONCJ 13 (CanLII)   http://canlii.ca/t/fpmh9

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

This Week’s Wine Picks from Prince Edward County

Prince Edward County includes a large island in southern Ontario has two claims to fame: some of the finest wineries in Canada and one of the country’s best beaches – Sandbanks.

Well we had some great success in our wine tour earlier this week.

Thanks to Darrin, Maggie (Sandbanks E W), Katekyn (Huff E W), Cory (CAS counsel) and everyone else for their great suggestions and recommendations.

So Far the Boca Noir had been a big hit.

Here this week’s picks:

Baco Noir Reserve VQA (0)

Intense fruit notes of blackberry and chocolate. Toasted  oak barrel aged

Baco Noir VQA (1) 

A full-bodied red wine with intense plum and wild cherry  flavours.Notes of toasted oak provide a lingering finish. Our signature wine

Dunes VQA (1)

An impressive white wine with a peach and floral bouquet and a hint of passion fruit. Excellent with light meals.

Rosé VQA (1)

Luscious aromas and brilliant flavours of rich raspberry, tangerine, and pink grapefruit. This is a refreshing wine that is excellent as an aperitif or served with grilled chicken or fish.

2007 Merlot Reserve

A proud graduate of the classic Ontario ’07 vintage. Dark garnet in colour and front-loaded with aromas of tobacco leaf, black cherry, savoury thyme and juniper berries. The palate is treated to eau-de-vie Kirsch cherry flavours, roasted coffee bean and toasted oak.

2010 Pinot Gris

Innocence and Purity. Lively white floral, lemon zest, beeswax and almond aromas characterize our zesty 2010 version. A backbone of acidity on distinctly mineral frame is highlighted by flavours of green apple and tart lemon and grapefruit notes on the way to a crisp appealing finish. An ideal aperitif wine.

Tasting notes are provided by the wineries.

To learn more about the Sandbanks Winery visit them online at http://www.sandbankswinery.com/index.asp

Huff Estates Winery is also online at  http://www.huffestates.ca/index.php

A map of Prince Edward County and local wineries is available from the PEC Chamber at www.pecchamber.com there is also a taste trail map here http://tastetrail.ca/taste-trail/route/ or on google at http://bit.ly/IBHqnS

An added bonus at the Sandbanks winery is their selection of local cheeses which are also available to purchase.

Happy trails.

New Ontario Bill Fosters Child-Grandparent Relationships

The Ontario government has just introduced a new Bill that aims to promote the relationship between children and their grandparents, primarily in situations where the child’s parents have separated or divorced.

Bill 67, titled “An Act to amend the Children’s Law Reform Act with respect to the relationship between a child and the child’s grandparents”, received its first reading on April 17, 2012.   If passed, the Bill will amend those provisions in the existing Children’s Law Reform Act (CLRA) which govern custody or access, by prohibiting the parents (or anyone else who is entitled to custody) from creating or maintaining unreasonable barriers to the formation and continuation of a personal relationship between the child and the child’s grandparents.

Simply put, the amendments strive to promote such connections between children and grandparents, by prohibiting parents or others with custody from actively preventing or impeding such relationships.

Also, Bill 67 would affect custody and access applications under the CLRA, by adding the child-grandparent relationship to the list of considerations that must be applied by a court.

Currently, all applications of this type require the court to evaluate the “best interests” of the child, taking into account the child’s needs and circumstances; these include consideration of the love, affection and emotional ties between the child and a list of other people (including the person with custody or access or other family members).  If Bill 67 is passed, this list will now include the child’s grandparents.

Also, the mandated “best interests” test for the court currently includes the following:

• the child’s views and preferences, if they can reasonably be ascertained;

• the length of time the child has lived in a stable home environment;

• the ability and willingness of each person applying for custody of the child to provide the child with guidance and education, the necessaries of life and any special needs of the child;

• the plan proposed by each person applying for custody of or access to the child for the child’s care and upbringing;

• the permanence and stability of the family unit with which it is proposed that the child will live;

• the ability of each person applying for custody of or access to the child to act as a parent; and

• the relationship by blood or through an adoption order between the child and each person who is a party to the application.

The new law would augment this list, to include consideration of whether the parent applying for custody is willing to facilitate contact with the child’s grandparents.

Admittedly, the Bill is still in the very early stages, and needs to proceed through second and third readings before it could  become law in Ontario.  However, few could argue that it represents anything other than a positive addition to family law in the province.

For a full copy of the proposed Bill, see:

http://www.ontla.on.ca/bills/bills-files/40_Parliament/Session1/b067.pdf

]]> http://familyllb.com/2012/05/08/new-ontario-bill-fosters-child-grandparent-relationships/feed/ 0 familyllb grandparent access http://familyllb.com/2012/05/07/which-wineries-would-you-recommend-in-prince-edward-county/ http://familyllb.com/2012/05/07/which-wineries-would-you-recommend-in-prince-edward-county/#comments Mon, 07 May 2012 11:23:00 +0000 familyllb http://familyllb.com/?p=2622 ]]>

I am planning on stopping into some wineries in Prince Edward County this week.

Which ones would you recommend?

Read our responses or submit your own comments.

Become a Fan and join the discussion here: http://www.facebook.com/RussellAlexanderFamilyLawyers