Separation agreement not the final word on spousal support

By Staff

A separation agreement is not always the final word on spousal support, says St. Catharines family lawyer and mediator Sharon Silbert.

In a recent ruling, the Ontario Court of Appeal (OCA) upheld a trial judge’s order that a woman pay her ex-husband spousal support, even though the pair had agreed to waive their rights to support as part of their comprehensive separation agreement.

Silbert, principal of Sharon B. Silbert Professional Corporation, tells that courts are generally loathe to interfere with contracts made between parties, but says this decision is a reminder of their power to override agreements in certain circumstances.

“While it is absolutely the prerogative of individuals to settle in a way that is different from the legal model, there are risks associated with doing so,” she says. “The further the outcome is from the expectations based on legal principles, the greater the likelihood a court could interfere with the parties’ decision-making.”

While the OCA case may seem surprising on its face, Silbert says a deeper look at the facts offers an explanation for the judges’ intervention.

According to the ruling, the couple signed their separation agreement in early 2009, shortly after their separation. The terms provided for the wife’s retention of virtually all of their joint assets, including the family home, leaving her with a net worth of more than $1 million.

Meanwhile, the husband agreed to take on the bulk of the family’s debts, leading to a negative net worth of $500,000 following separation. The parties agreed that in return, he would not have to pay any child support for their two children, and both sides waived their claims for spousal support.

Things changed when the unemployed husband was unable to get a new job in the three years that followed, and he ended up moving in with his parents, prompting him to move to have the agreement set aside so that he could make claims for division of property and spousal support.

“The outcome of the agreement’s implementation was so different from the kinds of outcomes you would expect had the legal principles of property division and support been applied, that the decision becomes less surprising,” Silbert says.

Following a six-day hearing, the trial judge declined to set aside the agreement, which left the property division arrangement intact but ordered the woman to pay her ex-husband a lump sum of $143,000 in spousal support.

A unanimous three-judge panel dismissed appeals by both parties, finding no reason to interfere with the trial judge’s ruling.

“While the trial judge’s analysis could perhaps have been conceptually clearer … I see no reversible error in the trial judge’s application of the analyses to the facts of this case,” they concluded.

Silbert says the case also highlights the difference between federal and provincial legislation as they relate to separation agreements.

For example, the trial judge was able to order spousal support, in spite of the mutual waiver agreed, because of a landmark 2003 decision by the Supreme Court of Canada. According to that case, the existence of a valid separation agreement is only one factor for judges to consider when deciding whether to exercise their authority to award support. The second stage of the analysis allows judges to attach little weight to the agreement if the circumstances are at odds with the parties’ expectations and the objectives of the federal Divorce Act.

“But because the division of property claims are dealt with under Ontario’s Family Law Act, they could not get around the agreement in the same way,” Silbert says.

In order to set aside the agreement, she says the husband would have to show there was a problem with the contract’s formation, such as the existence of duress or lack of disclosure.

“None of those circumstances applied, and the agreement was ultimately upheld by the court,” Silbert adds.