Court of Appeal for Ontario

Date: October 2, 2017 Docket: C62021 Judges: MacFarland, Watt and Benotto JJ.A.

Parties

Between

Johnny Smith Respondent (Applicant)

and

Denise Boyda Smith Appellant (Respondent)

Counsel

P. D. Marshall, for the appellant

S. Klotz and J. Klotz, for the respondent

Hearing and Appeal

Heard: September 25, 2017

On appeal from the order of Justice Antonio Skarica of the Superior Court of Justice, dated March 21, 2016.

Reasons for Decision

Background and Issues

[1] The parties are husband and wife. Before their marriage, they signed a cohabitation agreement whereby the wife released her claims to spousal support. Upon separation, the wife sought to claim spousal support. The trial judge upheld the cohabitation agreement, dismissed her claim to support and determined the parties' income for child support. She appeals the dismissal of spousal support and the determination of income.

[2] The parties began their cohabitation on March 1, 1997. The husband had experienced an acrimonious separation of a prior relationship and wanted to avoid a repetition. Before continuing a relationship with the wife, and before purchasing a home, he wanted the security of a cohabitation agreement. The agreement was drafted and presented to the wife. Although given the opportunity to do so, she did not obtain independent legal advice. The agreement was signed on October 7, 1997.

[3] Paragraph 8 of the agreement provides as follows:

NO CLAIM FOR SPOUSAL SUPPORT AND MAINTENANCE

a) Each party releases the other from all claims that each may have against the other for the payment of interim or permanent support or maintenance whether periodic or lump sum under the laws of any jurisdiction, and in particular under the provisions of the Act, or any successors thereto;

b) Should either party hereafter make a claim against the other for support or maintenance, the provisions of this paragraph may be pleaded as and shall be a full and complete defence to any such claim;

c) Each party acknowledges that he or she is self-supporting or fully capable of being self-supporting and requires no financial assistance from the other;

d) Each party acknowledges that each may suffer or enjoy drastic changes in health, income, assets and debts, or changes in fortune by reason of unforeseen factors, but nevertheless agree that under no circumstances, however catastrophic or unconscionable, will any change, direct or indirect, or unforeseen, give either the right to claim any support or maintenance from the other.

[4] The parties had two children. The first was born in 2001 and the second in 2003. They married on June 6, 2003. They separated in September 2013 and proceeded to trial with respect to financial issues including spousal and child support.

[5] The trial judge upheld the cohabitation agreement and dismissed the wife's claim for spousal support. In determining the parties' income, he imputed income to the wife and reduced the husband's income because of his health issues.

[6] The wife alleges that the trial judge erred in upholding the cohabitation agreement because the release of support does not meet the provisions of the Divorce Act, R.S.C., 1985, c. 3 (2nd Supp.) She also submits that he erred in calculating income for child support.

The Miglin Test

[7] In Miglin v. Miglin, 2003 SCC 24, [2003] 1 S.C.R. 303, the Supreme Court of Canada set out a two-stage analysis to be applied in dealing with initial applications for spousal support in the face of a release. The first stage considers the circumstances at the time the agreement was created. This stage of the analysis is subdivided into two parts:

(1) A consideration of the circumstances surrounding negotiation and execution of the agreement to determine whether there is any reason to discount it.

(2) A consideration of the substance of the agreement to determine whether it was in substantial compliance with the general objectives of the Divorce Act at the time of its formation.

[8] The second stage of Miglin requires the court to consider, at the time of the application for spousal support, whether the applicant has established that the agreement no longer reflects the original intention of the parties, and whether the agreement is still in substantial compliance with the objectives of the Divorce Act.

[9] The objectives of the Divorce Act include "certainty, finality and autonomy": Miglin at para. 4. Subsection 15.2(6) of the Divorce Act states that a spousal support order should:

(a) Recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown;

(b) Apportion between the spouses any financial consequences arising from the care of any child of the marriage over and above any obligation for the support of any child of the marriage;

(c) Relieve any economic hardship of the spouses arising from the breakdown of the marriage; and

(d) In so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time.

Wife's Submissions and Trial Judge's Findings

[10] The wife submits that the trial judge did not consider important facts when he applied the Miglin test. She says, there was a power imbalance between her and the husband, she had not discussed spousal support with the husband, the financial disclosure was incomplete, the trial judge misconstrued the evidence when he said that her income at the date of the agreement was $70,000, and she did not have independent legal advice. She acknowledges that she was not coerced. She also submits that the agreement does not align with the overall objectives of the Divorce Act, at the time of signing or now, because the parties had an 18-year relationship, she bore the primary responsibility for the children, and his income exceeds hers.

[11] We do not accept the wife's submissions. She has shown no error of law or misapprehension of fact on the part of the trial judge. If the trial judge misstated the wife's income at the date of the agreement, the error was not material. There is no suggestion that the income of the parties at the date of the agreement impacted her decision to sign the agreement. The trial judge carefully reviewed the Miglin test, s. 56(4) of the Family Law Act, R.S.O. 1990, c. F.3, and LeVan v. LeVan, 2008 ONCA 388, 90 OR (3d) 1. He made the following findings of fact:

a) The wife was aware of the husband's desire to have a cohabitation agreement.

b) The parties had discussed the cohabitation agreement before the wife received it.

c) The wife was aware of all of the husband's sources of income and assets and did not pursue further disclosure.

d) The wife skimmed over the cohabitation agreement and read some parts of it and not others.

e) There was no fraud, coercion, or duress.

f) Although given the opportunity, the wife did not seek independent legal advice even though – on her evidence – she had six weeks to do so.

g) At the time of signing the agreement, the wife thought it was fair and that it fairly outlined the parties' discussions regarding the purchase of a house.

h) The agreement is in substantial compliance with the Divorce Act. Both parties suffered economic disadvantages arising from the marriage, and more importantly, even if the cohabitation agreement did not exist, the wife would not be entitled to spousal support.

Income Determination for Child Support

[12] The wife further submits that the trial judge erred in attributing $40,000 to her and $73,000 to the husband for purposes of child support.

[13] She submits that her income is $18,204 as disclosed on her financial statement. However, the trial judge found that by working part-time she was deliberately underemployed. He concluded, based on her evidence, that she could earn $30,000 per year and would receive child tax benefits bringing her income to $40,000. She submits that it was an error on the part of the trial judge to add the child tax benefits to her income for support purposes. She argues that tax benefits are included in the financial statement to determine the budget one needs to meet expenses. On this basis alone, the trial judge was entitled to consider it income.

[14] With respect to the husband's income, the trial judge accepted the evidence that his income would be reduced to $73,000 per year due to his health.

Conclusion

[15] The findings and conclusions of the trial judge were open to him on the evidence and are entitled to deference from this court.

[16] Accordingly, the appeal is dismissed with costs payable to the husband in the amount of $12,000 inclusive of disbursements and HST. This does not include the outstanding costs award currently owed by the wife.

"J. MacFarland J.A."

"David Watt J.A."

"M.L. Benotto J.A."