Scheel v. Henkelman

[Indexed as: Scheel v. Henkelman]

52 O.R. (3d) 1

[2001] O.J. No. 55

Docket No. C33445

Court of Appeal for Ontario

McMurtry C.J.O., Borins and Feldman JJ.A.

January 16, 2001

Family law--Support--Spousal support--Waiver of right to support--Setting aside--Plaintiff bringing application for spousal support and seeking to set aside waiver of right to support in cohabitation agreement under s. 33(4) of Family Law Act--Trial judge erred in applying more stringent test which arises where party seeks to set aside entire domestic contract --Plaintiff unemployable due to age and enduring significant economic hardship--Defendant capable of supporting her--Support waiver provision in cohabitation agreement resulting in unconscionable circumstances within meaning of s. 33(4) of Family Law Act--Plaintiff entitled to spousal support--Family Law Act, R.S.O. 1990, c. F.3, s. 33(4).

The plaintiff started working for the defendant in 1978. In 1986, the parties signed a cohabitation agreement by which each waived their right to support. The relationship of employer and employee ended in 1996, when the defendant retired. The plaintiff received a termination payment of $52,500. The parties separated in 1997. The plaintiff commenced proceedings for relief under the Family Law Act. She sought an order setting aside the waiver of her right to support in the cohabitation agreement and an order for spousal support, among other relief. The trial judge dismissed the claims for an order setting aside the separation agreement and for spousal support. The plaintiff appealed.

Held, the appeal should be allowed.

The trial judge erred in failing to set aside the waiver of support on the ground that the provision had resulted in unconscionable circumstances within the meaning of s. 33(4)(a) of the Family Law Act. Section 33(4)(a) is not directed to unconscionable agreements, but to unconscionable results of a provision waiving support. An agreement which was fair and reasonable when it was signed may result in unconscionable circumstances at the time of the support application. The trial judge overlooked the fact that the plaintiff did not seek to set aside a domestic contract. She sought to have the waiver of the right to support contained in the domestic contract set aside on the ground that unconscionable circumstances had arisen from the waiver. She was entitled to seek that relief under s. 33(4) of the Family Law Act. She was not required to meet the more stringent test arising from the case law under the Divorce Act, R.S.C. 1985 (2nd Supp.), c. 3, where a party seeks to override support provisions in the parties' own agreement. The trial judge erred in deciding the issue before him on the basis of the substantial hurdle which a party must overcome when seeking to set aside an entire domestic contract. He placed too much emphasis on antecedent factors and failed to consider all of the parties' circumstances at the time of the application. His evidence did not support his finding that the plaintiff, who was 64 at the time of the trial, was capable of supporting herself. He failed to consider that the plaintiff was unemployable, that her only income was a monthly pension of $407, that the defendant had removed her as a beneficiary of his will and that the defendant had assets of $2,500,000 to $3,000,000. At the time of the trial, it was clear that the plaintiff was enduring significant economic hardship and that the defendant was capable of supporting her. Given the relative circumstances of the parties, it would be