What’s the Legal Effect of Setting a Domestic Agreement Aside Pending Trial?
In a recent case called MacLeod v. MacLeod, the court focused on a provision in the Ontario Family Law Act (namely, section 33(4)) that gives a court the clear power to overrule what spouses may have intended in their signed, written domestic agreements.
But what became less clear, is what the court’s proper legal approach should be when faced with a spouse who asks to have a domestic agreement set aside on an interim basis, (i.e. temporarily) until a full hearing into the issue can be held. For example, if a court agrees to temporarily set aside a separation agreement until trial, and that agreement covers spousal support amounts, then how are support levels to be calculated in the meantime?
In MacLeod, a couple had signed a marriage contract addressing the issue of spousal support in the event they separated. The contract called for the husband to top-up the wife’s monthly income to a certain level, and to pay her a $150,000 lump-sum, among other things.
A few years later they did separate, but the wife asked the court to set that marriage contract aside, on the basis that she did not understand it at the time she signed it, and did not obtain legal advice prior to doing so. She made this request, together with a bid for short-term spousal support, on an interim hearing, meaning one that was well in advance of a full trial of all of their issues (which would take place later). In other words, she was asking the court for a temporary order at this stage.
The husband objected. He argued that – depending on whether the wife was successful in having all or part of the contract set aside – such an order could throw his obligations into some uncertainty, and compromise him financially. The court explained the conundrum:
… [U]ntil it is set aside, there is a presumption that the parties’ executed marriage contract is valid. Where one party seeks to set aside a domestic contract and seeks interim support, support should be ordered in accordance with the marriage contract. Courts should exercise great caution in granting interim relief that contradicts the terms of a contract signed by the parties.
If I were to presume, on a temporary basis, that the marriage contract is valid, and limit the mother’s spousal support entitlement to what the contract provides (an amount sufficient to top up the mother’s income to $36,000 per year), then it seems to me that I should also order the father to immediately pay the $150,000 lump sum as well. The father objects to paying this lump sum on a temporary basis for two main reasons. First, he takes the position that the mother is a significant flight risk, and receiving this important payment will only increase her ability to remove the child from Canada. In addition, he states that if the marriage contract is ultimately declared invalid, he will have paid to the mother a significant advance towards future spousal support which he may never be able to recover down the road.
This raised the legal question of how, pending that full hearing, the court should treat the agreement the couple had reached, and whether all or parts of it should be enforced for the time being.
Essentially, the court took the middle-road: It concluded that husband’s concerns over the $150,000 lump-sum payment were “compelling”, and temporarily relieved him of the obligation to make that payment until the later hearing. However, he was still ordered to pay spousal support in a set amount, as the marriage contract called for. This would allow the wife to maintain her existing lifestyle until the trial, which was the primary goal of interim spousal support at this stage.
From a practical standpoint, this also made sense: If the couple’s marriage contract was set aside at trial, then the husband’s spousal support obligations could be adjusted retroactively by the trial judge. Conversely, if the contract was upheld at trial, then any overpayment the husband made in the interim could be offset against the $150,000 he still owed under it.
For the full text of the decisions, see:
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