Court File and Parties

DATE: 2022 09 01 COURT FILE No.: Toronto FO-21-15887-001 ONTARIO COURT OF JUSTICE

BETWEEN:

TIMOTHY NEWINGTON Applicant

— AND —

CIARA FOY Respondent

Before: Justice Maria N. Sirivar

Heard on: June 1, 2022 by video conference Reasons for Judgment released on: September 1, 2022

Counsel: Lesley Burke .................................................................................. counsel for the applicant Ciara Foy ......................................................................................................... self represented

SIRIVAR J.:

Introduction

[1] The Respondent Mother moves to set aside the financial terms of the parties’ separation agreement, dated September 21, 2018, (the “Agreement”) in whole or in part, on the basis that the Agreement was signed under unconscionable circumstances, including lack of financial disclosure, material misrepresentation of income and undue pressure by the Applicant Father. [1]

[2] The Applicant Father resists the motion arguing that the Agreement is valid, enforceable, consistent with the objectives of the Family Law Act, [2] and reflects the parties’ intentions at the time.

Relevant Facts

[3] The parties began their relationship in February of 2010. They have one child, Quinn Foy-Newington (born on […], 2011). The Applicant Father deposes that the relationship was initially casual. The relationship ended in September 2010, although they had “an intimate encounter” which resulted in the birth of the child. The parties then dated on and off after the child was born until July 2016.

[4] Conversely, the Respondent Mother characterizes the relationship as more serious, deposing that they were in a “common law union” from June 2011 to July 2016 and were engaged to be married.

[5] At the time the Agreement was signed, the Applicant Father was employed by Macritchie LLC. When he started in December 2017, he earned USD $60,000 per year which increased to $120,000 USD per year in September 2018. The Applicant Father is not a partner and does not have an equity stake in the company or its affiliates. He is, however, paid through his corporation, Solnet Capital Management. He also earns income from personal investments.

[6] The Applicant Father deposes that he left his career on Bay Street in 2009. He secured a number of smaller consulting contracts until December 2017 and relied on savings and investment income.

[7] Both parties acknowledge that Applicant Father has provided child support and contributed to section 7 expenses since the child’s birth.

The Negotiations

[8] The Applicant Father deposes that he provided the Respondent Mother with a draft separation agreement in July 2016. The Respondent Mother replied on January 19, 2017, through her counsel, Audrey Shecter. Ms. Shecter, who represented the Respondent Mother throughout the negotiations, is a certified specialist in family law and was called to the bar in 2000. The Applicant Father was also represented by experienced family lawyers throughout the negotiations, Martha McCarthy and Lesley Burke.

[9] The correspondence between Ms. Shecter and Ms. McCarthy, between January 2017 and September 2018, was attached to the Applicant Father’s affidavit. The nature and quality of the negotiations can be gleaned from the correspondence.

[10] On January 19, 2017, Ms. Shecter wrote the following to the Respondent Father:

Ms. Foy is further willing to agree to this amount [of child support] without requiring you to make the extensive financial disclosure which will otherwise be needed for a determination of your actual income for support purposes.

Again, she is willing to make this agreement [25/75% ] without a strict analysis of your income for support purposes. [Emphasis Added]

[11] Ms. Shecter wrote to Ms. McCarthy on September 5, 2017 and indicated:

It should be noted that your client had assured Ms. Foy he would always pay the minimum of $2500 per month for Quinn’s support. In return, she would refrain from requesting proper financial disclosure and would not be entitled to additional support. It is unfortunate that he is now resiling from that assurance while expecting Ms. Foy to uphold her end of this deal made in the dark.

Ms. Foy cannot agree to equally share the costs of Quinn’s after-care program. She cannot afford to both accept [a] reduction in support and pay one half of the fees….Similarly, Ms. Foy cannot afford to pay a higher proportion of Quinn’s section 7 expenses or a higher proportion of her post secondary expenses. Ms. Foy is willing to agree to 75/25% split as set out in her proposal.

My client is willing to accept a lesser lumpsum of $70,000 on the basis of the changes set out above, on the basis that she is agreeing to a reduction in the child support without financial disclosure and on the basis that the agreement is revised and signed as soon as possible. [Emphasis added]

[12] On October 2, 2017, Ms. Shecter again wrote to Ms. McCarthy stating:

I have had no response from you to my letter dated September 5, 2017.

Mr. Newington had advised my client that she either accepts his terms as set out in your August 9, 2017 letter or any agreement is off the table. If this actually is his position, it would be unfortunate and certainly not based on Quinn’s best interests. I trust that you will clarify whether this is, in fact, Mr. Newington’s position. [Emphasis added]

[13] Ms. Shecter also suggested mediation and provided names of specific mediators if that was the Applicant Father’s position. Ms. McCarthy replied to Ms. Shecter on November 9, 2017. She provided a counter proposal revising some terms including adding material change terms (rather than fix and non variable support) and accepting the 75/25 % split of section 7 expenses proposed by the Respondent Mother.

[14] By letter dated November 16, 2017, Ms. Shecter advised Ms. McCarthy:

With respect to child support and material change terms, a baseline payment of support needs to be established for future claims. The amount of $2250 per month equates to income of $280,000 per year. This income should be noted in the Agreement. [Emphasis added]

[15] Not having received confirmation that all of the Respondent Mother’s terms were accepted by the Applicant Father, on January 3, 2018, Ms. Shecter wrote to Ms. McCarthy threatening:

My client has been willing to proceed without Mr. Newington’s financial disclosure. Should this matter drag on without resolution, she will not be willing to proceed on that basis and will require full income disclosure. [Emphasis Added]

[16] On January 23, 2018, Ms. Shecter wrote to Ms. McCarthy advising:

I have had no response from you to my letters of either November 16, 2017, January 3, 2018. As such, Ms. Foy is no longer willing to proceed or enter into any agreement without full disclosure of your client’s income as set out below. [Emphasis Added]

[17] Ms. Shecter requested disclosure related to assets and income for the Applicant Father and his business including tax returns, Notices of Assessment and financial statements for the years 2014, 2015, 2016. Ms. Shecter concluded:

This disclosure above should be produced on or by Friday, February 16, 2018, failing which my client will instruct me to commence an application and seek an order compelling is productions. [Emphasis Added]

[18] On February 9, 2018, Ms. McCarthy wrote to Ms. Shecter with a counter proposal and concluded:

If Ms. Foy does not wish to accept this offer and would prefer to proceed to review both parties’ financial documentation we will be seeking the material below. [Emphasis added]

[19] Ms. McCarthy also advised of the position that would be taken if there was no agreement.

[20] In response, on March 28, 2018, Ms. Shecter wrote advising that her client accepted the terms propose by the Applicant Father with the exception of the term related to parenting time when the child turned 10. In the alternative, she proposed that the parties would review the issue at that time.

[21] The parties executed the Agreement in September, namely the Applicant Father on September 17, 2018 and the Respondent Mother on September 21, 2018.

[22] Ms. Shecter signed a certificate of Independent Legal Advice on September 21, 2018. It reads, in part, as follows:

I acted only for Ciara Foy and fully explained to her the nature and effect of the Agreement. Ciara Foy acknowledged that she completely understood the nature and effect of the Agreement. Ciara Foy executed the Agreement in front of me and confirmed that she was entering the Agreement of her own volition without any fear, threats, compulsion or influence by Timothy Newington or any other person. [Emphasis Added]

Financial Terms of the Agreement

[23] The financial terms agreed to after negotiations can be summarised as follows:

Mother’s Initial Position	Father’s Initial Position	Final Agreement
Spousal support $100,000	$16,000 (previous payments)	$60,000 (total payments)
Table support $2,500 non variable	$2,250	$2,250
s.7 proportion 25/75 % (mother/father)	50/50% (mother/father)	25/75% (mother/father) Father contributed $50,000 to RESP 1/3 each after RESP

Positions of the Parties

Respondent Mother

[24] The Respondent Mother submits that the Applicant Father:

(1) failed to provide financial disclosure when the Agreement was being negotiated and signed;

(2) continuously threatened her with financial ruin, “out -lawyering”, used Quinn as pawn, and threatened to withhold a lumpsum payment that she needed to pay down significant debt;

(3) unilaterally reduced child support payments from $2,500 to $2,250;

(4) owns significant assets and lives a lifestyle which his purported income of $40,000 does not support; and

(5) exhibited controlling, punitive and anger driven behaviour combined with the significant power imbalance (caused by parties’ financial differences) between the parties.

Applicant Father

[25] The Applicant Father submits the following:

(1) The parties engaged in extensive negotiations, and each received independent legal advice from experienced family lawyers;

(2) The Respondent Mother is the one who proposed, through her counsel, that the parties forego the exchange of financial disclosure. The proposal was made a year before the agreement was signed and was repeatedly confirmed throughout the negotiations; and

(3) He has been paying generous support which has, at nearly all materials time, exceeded the table amount payable in accordance with his actual income.

Law and Legal Principles

[26] The authority to set aside a domestic contract is set out in section 56(4) of the Family Law Act, which reads as follows:

Setting aside domestic contract

(4) A court may, on application, set aside a domestic contract or a provision in it,

a. if a party failed to disclose to the other significant assets, or significant debts or other liabilities, existing when the domestic contract was made.

b. if a party did not understand the nature or consequences of the domestic contract; or

c. otherwise in accordance with the law of contract. [3]

[27] Section 56(4) has been characterized as the judicial oversight provision of domestic contracts. [4] It was designed to ensure that both parties fully understand their rights when contracting with their partners. To be successful on this motion, the Respondent Mother must:

(1) demonstrate that one or more of the circumstances described in section 56(4) is engaged; and

(2) If so, she must persuade the Court that it is appropriate to exercise its discretion in favour of setting aside the Agreement. [5]

[28] In assessing whether to exercise its discretion, the Court may consider whether:

(1) there has been a concealment of assets or a material misrepresentation;

(2) there has been duress or unconscionable circumstances;

(3) the moving party neglected to pursue full financial disclosure;

(4) the moving party moved expeditiously to have the agreement set aside;

(5) the moving party received substantial benefits under the agreement;

(6) the responding party fulfilled his obligations under the agreement; and

(7) the nondisclosure was a material inducement to the moving party’s entering into the agreement. [6]

[29] Formal disclosure by way of sworn Financial Statement is not necessarily a condition precedent to an enforceable domestic contract. A general awareness of the assets of the other party may be sufficient. Contracting parties are expected to use due diligence to ascertain the relevant facts underlying their agreements. [7]

[30] A domestic contract will be found unconscionable if inequality of bargaining power between the parties leads to a bargain that is seriously improvident for one party. [8]

[31] In the family law context, there must be evidence to ground a court’s finding that the agreement should not stand based on a fundamental flaw in the negotiating process. The mere presence of vulnerabilities will not, in and of itself, justify the court’s intervention. It must be established that one party exploited the other’s vulnerability during the negotiation process or took advantage of the other party due to unequal positions. The degree of professional assistance received by the parties will often overcome any imbalances between the parties. [9]

Analysis and Conclusion

[32] The Respondent Mother has not established that section 56(4) of the Act has been engaged.

Attempt to Weaponize Financial Disclosure

[33] I find that the Applicant Father did not fail to make full disclosure of his income, nor did he provide incomplete disclosure in a deliberate attempt to mislead the Respondent Mother. Rather, the Respondent Mother bargained away her entitlement to receive and her obligation to provide full financial disclosure, with the assistance of experienced counsel.

[34] The Respondent Mother used financial disclosure as a tool, throughout the lawyer assisted negotiations, to advance her position. It began with Ms. Shecter’s first letter to the Applicant Father wherein she explains the trade off the Respondent Mother was making. She was trading her right to financial disclosure for her preferred non variable table child support amount and a 25/75% split of section 7 expense.

[35] After Ms. McCarthy become involved on behalf of the Applicant Father, Ms. Shecter sent a counteroffer and again explained the trade off the Respondent Mother was making. She would accept 10% less per month and material change terms but continued to insist on the 75/25% split of section 7 expenses in exchange for her right to financial disclosure.

[36] In January 2018, when the Applicant Father had not responded to confirm that the Respondent Mother’s terms were accepted, she threaten to insist on his financial disclosure. On January 23, 2018, Ms. Shecter advised Ms. McCarthy that the Respondent Mother was no longer willing to proceed without disclosure because there had been no response to her previous correspondence. She set out the disclosure that she sought and warned that fi it was not received by a deadline, an Application would be started.

[37] I find that the Respondent Mother offered, as an implied term of the Agreement, that there be no review of financial disclosure. The Respondent Father accepted the term. To set aside this Agreement on the basis of lack of financial disclosure would be to allow the Respondent Mother to weaponize her entitled to financial disclosure. Such a result would be inconsistent with the spirit and intent of section 56(4) of Act.

Potential Imbalances Mitigated by Experienced Family Lawyers

[38] The Respondent Mother has not led evidence that would support a finding of unconscionability. She has failed to establish any circumstances of pressure or exploitation of her vulnerabilities during the negotiations.

[39] The Respondent Mother was represented by experienced counsel. Ms. Shecter was aware of conversations that took place between the parties and intervened effectively on the Respondent Mother’s behalf. For instance, Ms. Shecter wrote to Ms. McCarthy to ask about whether the Respondent Father was resiling from his position on the agreement made by the parties “in the dark”. She was able to get a response and to continue the negotiations. Similarly, Ms. Shecter wrote to Ms. McCarthy after the Applicant Father allegedly told the Respondent Mother to essentially take it or leave it. Ms. Shecter asked for confirmation and was able to keep the negotiations going and ultimately received a counteroffer.

[40] There is no evidence of inequality of bargaining power or vulnerabilities that were exploited by either party. I find that if there were any inequities or vulnerabilities, they were effectively mitigated by the presence of experienced family lawyers representing each party.

Orders

(1) Motion dismissed;

(2) If the Applicant seeks cost, submissions (6 page maximum) must be served and filed by September 15, 2022; and

(3) The Respond may serve and file responding submission (6 page maximum) by September 30, 2022.

Released: September 1, 2022 Signed: Justice Maria N. Sirivar

[1] Leave was granted to bring a motion to set aside the Separation Agreement only as the Respondent Mother confirmed she was not proceeding with the mobility motion that was scheduled.

[2] RSO 1990, c F. 3 [the Act]

[3] the Act, supra

[4] Hartshorne v. Hartshorne, 2004 SCC 22, [2004] 1 S.C.R. 550

[5] Virc v. Blair 2017 ONCA 394 at paras 86-87

[6] Dochuk v. Dochuk at para 18; Turk v Turk, 2018 ONCA 993 at para 195

[7] Quinn v. Epstein Cole LLP, 2008 ONCA 662 at para 48; Butty v. Butty, 2009 ONCA 852 at para 54; Gorman v. Sadja, 2020 ONSC 6192 at paras 29, 38

[8] Simpkins v. Simpkins, [2004] OJ No 2534; Rosen v Rosen

[9] Toscano v. Toscano, 2015 ONSC 487 at para 64; Harnette v Harnette 2014 ONSC 359 at para 93