In a judgment earlier this spring, Canada’s Supreme Court addressed the question of when a separation agreement can be opened. In the Miglin case, the husband and wife entered into a detailed separation agreement dealing with custody, support and property issues. Subsequently, the wife sought spousal support.
The couple married in 1979, separated in 1993 and divorced in 1997. They had four children and had built a successful business operating a lodge in northern Ontario. In June 1994, after 15 months of intense negotiating with the help of lawyers, accountants and financial advisers, they signed a separation agreement. The agreement provided that the wife gave up her interest in the lodge, while the husband gave up any interest in the family home in Toronto but continued to be responsible for the mortgage payments. The wife was to have custody of the children and was to receive approximately $60,000 in child support a year. She was also to provide consulting services to the business and be paid $15,000 a year. The consulting contract was to last for five years and could be renewed at the option of both parties. Prior to separation, each party drew approximately $80,000 in salary from the business. Under the separation agreement, both spouses abandoned any claim for support for all time and acknowledged that the implications of this had been explained to them by their respective lawyers.
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In 1998, the wife began an action for support for herself. At trial, the judge awarded her support in the amount of $4,400 a month, holding that the separation agreement had been unfair, noting that the husband’s annual income was $200,000. This decision was upheld by the Court of Appeal.
Unlike other contracts, courts have been willing to overturn marriage separation agreements in certain circumstances. Those have included cases where there has been a “radical and unforeseen change in circumstances connected to the marriage” or agreements that are unfair when one party was pressured or when the agreement significantly departs from the objectives of the Divorce Act.
When heard at the Supreme Court level, seven of the nine Supreme Court judges denied the wife spousal support. They noted that the Divorce Act places a positive obligation on lawyers to advise their clients of alternatives to litigation to resolve matters. These judges noted that not every change in circumstances means that a separation agreement should be set aside. It said that parties should contemplate that the job market might change, that parenting responsibilities could prove to be more onerous, that health might deteriorate and property values change. It said a change in these did not invalidate a separation agreement.
“Parties must take responsibility for the contract they execute as well as for their own lives,” the majority said.
Only when circumstances change so dramatically from the outcome anticipated by the parties when the agreement was signed should the court consider reopening the agreement. The court did not give specific examples of when it would reopen an agreement.
While the court accepted that separation is a time of upheaval and confusion, the wife relied on experienced lawyers and also other professional help. The court also noted that the wife did not complete her duties under the consulting contract but was fully paid nevertheless, that the mortgage on the house had been paid by her husband and that her overall net worth had increased by 20 percent.
Don Purich is a former practising lawyer who is now involved in publishing, teaching and writing about legal issues. His columns are intended as general advice only. Individuals are encouraged to seek other opinions and/or personal counsel when dealing with legal matters.
