Nature of the Motion

[1] This is a motion for summary judgment brought by the respondent (the “husband”), seeking to dismiss the applicant’s (the “wife’s”) claim to set aside a separation agreement dated May 31, 2008, together with her claims for, inter alia, spousal support, an equalization of net family property, and occupation rent. The husband also seeks an order severing and granting the divorce claim.

[2] On the same date that this motion was argued, the court initially heard a motion by the wife to amend her application, which was granted.[^1]

[3] The grounds put forward by the wife for setting aside the separation agreement include the following:

(a) The husband's financial disclosure contained material errors and omissions;

(b) The husband exercised undue influence over the wife and there was a lack of balance in bargaining power given that the husband’s income and assets were far superior to the wife’s;

(d) The husband provided inadequate, incomplete, and misleading financial disclosure with respect to the value of his assets at the date of marriage and date of separation. He significantly understated his net family property, thereby increasing the equalization payment that he represented as owing by the wife.

[4] In her amended application the wife also seeks a declaration that the separation agreement is not enforceable, because her signature on the separation agreement was not witnessed.

Summary Judgment pursuant to Rule 16 of the Family Law Rules

[5] This motion is brought pursuant to Rule 16(1) of the Family Law Rules, O. Reg. 114/99 (the “Family Law Rules”). As a result of conflicting case law, a debate arose in this case as to whether the expanded powers of the court under Rule 20 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, as amended, should also be applied to Rule 16 of the Family Law Rules. Counsel for the moving party urges the court to adopt the expansive approach.

[6] Rule 20 of the Rules of Civil Procedure was amended effective January 1, 2010, and the amendments created two key changes. First, a judge is to grant summary judgment if satisfied that “there is no genuine issue requiring a trial.” Previously, the rule had stated “no genuine issue for trial.” Second, a judge hearing a motion for summary judgment is provided with enhanced powers. He or she may weigh the evidence, evaluate the credibility of a deponent, and draw any reasonable inference from the evidence, unless it is in the interest of justice for such powers to be exercised only at a trial.

[7] The moving party relies on the “full appreciation test” set out in Combined Air Mechanical Services Inc. v. Flesch, 2011 ONCA 764, 108 O.R. (3d) 1 [“Combined Air”], at para. 50. Combined Air is now the seminal case to have interpreted the scope and application of the revised Rule 20. The respondent argues that the “full appreciation test” has no application to summary judgment motions made pursuant to Rule 16. There are cases supporting both positions.

[8] In Starr v. Gordon, 2010 ONSC 4167, 88 R.F.L. (6th) 54, at para. 14, Perkins J. very clearly drew a line between the provisions for summary judgment found in the Family Law Rules and those in the Rules of Civil Procedure. In Children’s Aid Society of Toronto v. T.H. and R.A.R., 2012 ONSC 3916, [2012] O.J. No. 3032 , Mesbur J. was of the view that the test from Combined Air should not be applied to summary judgment motions under the Family Law Rules in child protection proceedings. She held, at para. 26, that there was no reason to import jurisprudence under the Rules of Civil Procedure into the Family Law Rules, given the different wording between the two provisions and the extensive jurisprudence under the Family Law Rules. Similarly, in McCash v. McCash, 2012 ONCJ 503, 2012 CarswellOnt 9477, at para. 52, Zisman J. rejected the proposition that the expanded powers under Rule 20 should be incorporated into Rule 16. She noted that there was no reason to resort to Rule 1 of the Family Law Rules, because Rule 16 adequately covers the issue of summary judgment and therefore it is not necessary to resort to Rule 20 of the Rules of Civil Procedure. Rule 1(7) of the Family Law Rules, provides:

MATTERS NOT COVERED IN RULES - if these Rules do not cover a matter adequately, the court may give directions, and practice shall be decided by analogy to these rules, by reference to the Courts of Justice Act and the act governing the case and, if the court considers it appropriate, by reference to the Rules of Civil Procedure.

[9] In contrast, in Steine v. Steine, 2010 ONSC 4289, 91 R.F.L. (6th) 93, at para. 56, Mulligan J. stated:

I am satisfied that FLA Rule 16(6) is now bolstered by the new tools that motions judges can have regard to under Rule 20 of the Rules of Civil Procedure. The additional ability to weigh evidence, evaluate the credibility of deponents and draw reasonable inferences gives motion judges additional tools to determine and weed out those cases where no genuine issue requiring a trial exists.

[10] In reaching his decision in Steine, Mulligan J. took into account Rule 1(7) of the Family Law Rules.

[11] This debate was raised but not resolved by the Ontario Court of Appeal in Kalaba v. Bylykbashi (2006), 2006 3953 (ON CA), 265 D.L.R. (4th) 320, at para. 54, where the majority wrote:

As well, no issue was raised on this appeal as to whether the test for summary judgment under the Family Law Rules is different from the applicable rule under the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. Therefore, we have dealt with the appeal, assuming but without deciding, that there is no difference. An analysis of the textual differences between Rule 16 of the Family Law Rules and Rule 20 of the Rules of Civil Procedure, and their significance, if any, would best await a case where the issue is raised and argued. It is worth noting that this case does not affect the children of the marriage directly.

[12] As it now stands, the majority of the existing case law upholds the view that Rule 16 is the legislative context within which summary judgment motions must be decided in the family law arena. There may well be merit to amending Rule 16 so that it mirrors Rule 20, but the legislature has not done so to this point. That being the case, it is only the provisions of Rule 16 that are relevant to this motion, and not the test set out in Combined Air. This state of the law prohibits the judge on a summary judgment motion under Rule 16 from assessing credibility, weighing evidence, or drawing factual conclusions.

[13] Rule 16(6) sets out the test to be applied. It provides:

(6) If there is no genuine issue requiring a trial of the claim or defence, the court shall make a final order accordingly.

[14] The law by which a motions judge is governed when considering Rule 16(6) was described in Children’s Aid Society of Toronto v. T.(K.), 2000 20578 (Ont. C.J.) at paras. 12 and 13:

The test for granting summary judgment is met when the moving party satisfies the court that there is no genuine issue of material fact that requires a trial for its resolution. See Irving Ungerman Ltd. v. Galanis (1991), 1991 7275 (ON CA), 4 O.R. (3d) 545, 50 O.A.C. 176, 83 D.L.R. (4th) 734, 1 C.P.C. (3d) 248, [1991] O.J. No. 1478 (Ont. C.A.). The relationship between a genuine issue for trial and a material fact was pointed out by Associate Chief Justice John W. Morden in Irving Ungerman Ltd. v. Galanis, supra, at page 550 [O.R.]:

If a fact is not material to an action, in the sense that the result of the proceeding does not turn on its existence or nonexistence, then it cannot relate to a "genuine issue for trial".

Clearly not every disputed fact or question of credibility gives rise to a genuine issue for trial; the fact must be material.

The role of the judge on a summary judgment motion is an important one, but is limited in scope. It is not for the judge at this stage to find facts, weigh evidence or draw factual conclusions once he finds that a genuine issue for trial exists. These are all functions reserved to the trial judge. However, the judge is carefully to assess the threshold issue of whether there exists a genuine issue as to material facts requiring a trial. See Aguonie v. Galion Solid Waste Material Inc. (1998), 38 O.R. (3d) 161, 107 O.A.C. 115, 156 D.L.R. (4th) 222, 17 C.P.C. (4th) 219, 1998 954, [1998] O.J. No. 459, 1998 CarswellOnt 417 (Ont. C.A.). In determining this threshold issue, the court must review the evidentiary record carefully and give it a good hard look. At this stage, mere bare denials or self-serving affidavits without detailed facts and supporting affidavits are not sufficient to raise a triable issue. See Guarantee Co. of North America v. Gordon Capital Corporation, supra.

[15] To these propositions must be added the following: the moving party bears the onus of establishing that there is no triable issue; however, the responding party on a motion for summary judgment must “lead trump or risk losing”: 1061590 Ontario Ltd. v. Ontario Jockey Club (1995), 1995 1686 (ON CA), 21 O.R. (3d) 547 (C.A.), at p. 557. A party opposing a motion for summary judgment must show a “real chance of success” against the party seeking summary judgment: Guarantee Co. of North America v. Gordon Capital Corp., 1999 664 (SCC), [1999] 3 S.C.R. 423, at para. 27. Although the onus is on the moving party to establish the absence of a genuine issue requiring a trial, there is an evidentiary burden on the responding party, who may not rest on the allegations or denials in pleadings, but must present by way of affidavit, or other evidence, specific facts showing that there is a genuine issue for trial. This is codified in Rule 16(4.1) of the Family Law Rules, which provides:

(4.1) In response to the affidavit or other evidence served by the party making the motion, the party responding to the motion may not rest on mere allegations or denials but shall set out, in an affidavit or other evidence, specific facts showing that there is a genuine issue for trial.

[16] It is not sufficient for the responding party to say that their case requires a trial because more or better evidence will be, or possibly may be, available at trial. As stated in Dawson v. Rexcraft Storage and Warehouse Inc. (1998), 1998 4831 (ON CA), 164 D.L.R. (4th) 257 (Ont. C.A.) at para. 17, “[t]he motions judge is entitled to assume that the record contains all the evidence which the parties will present if there is a trial.”

Issues

[17] The questions that this court must answer are:

(1) Has the husband demonstrated that no genuine issue exists as to whether he failed to disclose to the wife significant assets, debts or liabilities, existing when the separation agreement was made? If a genuine issue requiring a trial exists on this basis, has the husband demonstrated that no genuine issue exists as to whether the court, in any event, should exercise its discretion to set aside the agreement?

(2) Has the husband demonstrated that no genuine issue exists as to whether the separation agreement should be set aside on the basis of duress, undue influence, unconscionability, or due to lack of independent legal advice? If a genuine issue requiring a trial exists on this basis, has the husband demonstrated that no genuine issue exists as to whether the court, in any event, should exercise its discretion to set aside the agreement?

(3) Has the husband demonstrated that no genuine issue exists as to whether a spousal support order should be made?

(4) Has the husband demonstrated that no genuine issue exists as to whether the agreement is unenforceable as a result of the operation of s. 55(1) of the Family Law Act?

(5) Should a divorce order be granted?

The Law Regarding Setting Aside Separation Agreements

[18] The jurisdiction for a court to set aside a separation agreement is found in s. 56(4) of the Family Law Act, R.S.O. 1990, c. F.3, as amended. It provides:

Setting aside domestic contract

56 (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

[19] The wife seeks to set aside the contract on the basis of subclauses (a) and (c).

[20] There is a two-stage analysis that must be applied when a party seeks to set aside a domestic agreement. It was summarized by the Ontario Court of Appeal in LeVan v. LeVan, 2008 ONCA 388, 90 O.R. (3d) 1, at para. 51, as follows:

The analysis undertaken under s. 56(4) is essentially comprised of a two-part process: Demchuk v. Demchuk (1986), 1986 6295 (ON SC), 1 R.F.L. (3d) 176 (Ont. H.C.J.). First, the court must consider whether the party seeking to set aside the agreement can demonstrate that one or more of the circumstances set out within the provision have been engaged. Once that hurdle has been overcome, the court must then consider whether it is appropriate to exercise discretion in favour of setting aside the agreement.

[21] LeVan confirms that a finding that s. 56(4) is engaged does not automatically render the contract a nullity (at para. 33). Instead, a trial judge must determine whether it is appropriate in the circumstances to order that the contract be set aside, and exercise discretion accordingly. The Court cited with approval Dochuk v. Dochuk (1999), 1999 14971 (ON SC), 44 R.F.L. (4th) 97 (Ont. Ct. (Gen. Div.)), in which Lack J. set out some of the factors to be taken into account in the exercise of the court's discretion when considering whether to set aside a separation agreement, including:

Whether there had been concealment of assets or material misrepresentation;
Whether there had been duress, or unconscionable circumstances;
Whether the petitioning party neglected to pursue full legal disclosures;
Whether the petitioning party moved expeditiously to have the agreement set aside;
Whether the petitioning party received substantial benefits under the agreement;
Whether the other party had fulfilled his or her obligations under the agreement; and
Whether the non-disclosure was a material inducement to entering the agreement, in other words, how important was the non-disclosed information to the negotiations.

[22] In Rick v. Brandsema 2009 SCC 10, [2009] 1 S.C.R. 295, and in the earlier case of Miglin v. Miglin, 2003 SCC 24, [2003] 1 S.C.R. 303, the Supreme Court of Canada focused on the integrity of the bargaining process surrounding the creation of domestic contracts. Writing for the court in Rick v. Brandsema, Abella, J. stated that while Miglin dealt with spousal support agreements, it nonetheless offers guidance for the conduct of negotiations for separation agreements generally, including negotiations for the division of matrimonial assets (at para. 39). Both cases make clear that where an agreement is based upon incorrect information, it is more vulnerable to being set aside. Such a fundamental flaw in the bargaining process vitiates informed consent to the terms of the final agreement. At para. 47, Abella J. wrote:

In my view, it flows from the observations and principles set out in Miglin that a duty to make full and honest disclosure of all relevant financial information is required to protect the integrity of the results of negotiations undertaken in these uniquely vulnerable circumstances. The deliberate failure to make such disclosure may render the agreement vulnerable to judicial intervention where the result is a negotiated settlement that is substantially at variance from the objectives of the governing legislation.

[23] However, Rick v. Brandsema also makes clear that not all cases in which misinformation has been given will result in the agreement being set aside. At para. 49, Abella, J. stated:

Whether a court will, in fact, intervene will clearly depend on the circumstances of each case, including the extent of the defective disclosure and the degree to which it is found to have been deliberately generated. It will also depend on the extent to which the resulting negotiated terms are at variance from the goals of the relevant legislation. As Miglin confirmed, the more an agreement complies with the statutory objectives, the less the risk that it will be interfered with. Imposing a duty on separating spouses to provide full and honest disclosure of all assets, therefore, helps ensure that each spouse is able to assess the extent to which his or her bargaining is consistent with the equitable goals in modern matrimonial legislation, as well as the extent to which he or she may be genuinely prepared to deviate from them.

[24] LeVan provides useful guidance about the factors that a court must consider in determining whether there has been a failure to disclose financial information of the type to potentially trigger the remedy under s. 56(4). In LeVan, the court referred to the following findings made by the trial judge, at para. 34:

The trial judge relied upon the following findings to set aside the marriage contract apart from the husband's failure to disclose the value of his significant assets:

(1) The husband failed to disclose his income tax returns.

(2) The husband failed to disclose shares that he held in Grannyco and RWL.

(3) The footnote to Schedule A was inaccurate and did not contain sufficient information to be meaningful.

(4) The disclosure provided was misleading. For example, the husband's lawyer stated that his interest in the Family Trust had a very “minimal value”.

(5) The husband's lawyer failed to disclose that he had three siblings, and that the four LeVan children had always been treated equally under the Family Trust.

(6) The financial statements for RWL, Grannyco and the Family Trust were not provided.

(7) The husband's lawyer failed to disclose that, in addition to being a capital beneficiary of the Trust, the husband was also an income beneficiary.

[25] The preceding case law shows that the decision as to whether to set aside an agreement under s. 56(4) is ultimately a discretionary decision based on many factors, perhaps the most significant being the extent to which the terms of the agreement deviate from the objectives of the governing legislation.

The Facts

[26] The parties began cohabiting in 1992 and married on September 14, 1994. The parties' three children were born in 1994 (Michael), 1997 (Jeffrey), and 1999 (Grace), respectively.

[27] The date of separation is at issue. The wife says it is May 31, 2008; the husband says it is December 2007. In any event, the parties began discussing a separation during the 2007/2008 Christmas season. The parties attended individual and couples counselling in January 2008, and the wife continued with individual counselling after the separation.

[28] In her cross-examination the wife explained that at some point the counsellor suggested to them that they figure out what it would ‘look like’ if they separated; in the wife’s words “…just why don’t you do some kind of pro forma of what it would look like”. The wife acknowledges that she recalls the husband expressing that he did not wish to separate.

[29] The husband e-mailed a “pro forma” separation agreement to the wife in January 2008. In his covering e-mail the husband stated “while we do not contemplate separating at this time, I think it is prudent to deal with the issues of separation now rather than later so that they can be dealt with in a spirit of warmth and concern for the children”. This draft contained no financial terms or other information specific to their circumstances. The wife did not respond, comment, or do anything about this draft agreement. While she does not deny receiving it, she also cannot recall the event.

[30] Between January and May, 2008, unbeknownst to the wife, the husband was getting his affairs in order. He retained a lawyer, valued assets, commissioned some valuations and appraisals, consulted with accountants, and prepared various net family property scenarios that he did not provide to the wife until mid-May 2008.

[31] The next draft of a separation agreement was e-mailed by the husband to the wife on May 16, 2008. It contained no financial disclosure. She did not ask him to review the separation agreement with her, nor did he attempt to do so.

[32] When asked when she decided to separate from the husband, the wife explained that it was a progression, and that for a time she felt “frozen” or incapable of making a decision. The wife's evidence is that she thought that she was depressed. She was not eating or sleeping. She was unsure whether she wanted to continue the marriage, and did not feel capable of making a decision. It was when the husband presented her with a draft separation agreement in May 2008 that she thought “okay, maybe I can do this, maybe I can leave”.

[33] The wife did not seek advice or treatment from a physician about her mood, lack of appetite, and sleep disturbance. The initial counsellor who assisted her suggested supplements from a health food store and that she see a physician, but she did not follow that advice. The wife has refused to produce any of the records kept by either of the two counsellors whom she saw in 2008.

[34] The wife is a lawyer. She was called to the bar in 1991 after articling with Tory Tory DesLauriers & Binnington. The wife carried on a successful commercial litigation practice at Lockwood & Associates following her call to the bar, where she became involved as litigation counsel to the husband’s corporate entities. The wife's work experience consisted of civil and corporate litigation. She had not been trained as a family law lawyer and had no experience with respect to financial issues in that field, except for taking the bar admission course in family law. In 1991 she assisted a lawyer with respect to a custody motion, but it involved no financial issues. She had no experience with business valuations.

[35] The husband is an experienced and sophisticated businessman. Renegade Capital Corporation (“Renegade”) was and is a private holding company controlled by the husband. At the date of marriage, he owned 60% and his first wife owned 40%. The husband was and is the sole director and president, and therefore controls the company. He has always had access to all relevant information. The husband was also the chief executive officer of Algonquin Mercantile Corporation (now Automodular Corporation) (“Algonquin”) at the time of the marriage and held that position until December 31, 2011, when he retired. He claims to have substantial experience valuing businesses and enterprises, and considers himself to be an expert in this area.

[36] Eventually the work that the wife did for Renegade and Algonquin, as well as the respondent personally, took up a substantial portion of her practice. In 1993 she left her employment with Lockwood & Associates in order to assist with the husband’s litigation work. She began her own firm and worked as a sole practitioner, working part-time and continuing to do the husband’s legal work until 2001. She continued to be one of Renegade’s lawyers, and took over representing the husband on any personal matters that he had. She appeared in both the Ontario Court of Appeal and the Supreme Court of Canada as counsel in relation to an appeal that she successfully defended.

[37] The wife became a shareholder of Renegade in 2000, and an officer of Renegade in January 2008.

[38] Prior to the signing of the separation agreement, the wife had no experience with business valuations. The wife completed an LLM in securities law in 2001. That course did not provide instruction or exposure to business valuations. It provided no information regarding family law entitlements.

[39] From 2001 to 2009, the wife was a stay-at-home parent. She was 42 when the parties separated, and the husband was 62.

[40] As earlier stated, on May 16, 2008, the husband presented the wife with the second draft separation agreement. The draft contained no separation date, no financial terms, no financial disclosure, and no net family property statement. It required the wife to vacate the matrimonial home by June 29, 2008.

[41] The wife delivered an e-mail to the husband the next day in which she sent the draft agreement back with changes marked in the margin. Her amendments to the draft agreement included those set out below:

(a) The addition of trampoline, art lessons, and summer camp to the list of annual children’s expenses for which the husband was to be solely responsible;

(b) The removal of a clause stating that the parties had obtained independent legal advice; and,

(c) The removal of a clause stating that the agreement was without prejudice to either party bringing an application for equalization of net family property.

[42] Another e-mail was sent to the husband by the wife on May 19, 2008, again attaching a separation agreement marked “final” and indicating a couple of minor edits.

[43] The husband did not provide a financial statement before signing the separation agreement. In the days before the agreement was signed, the husband produced a binder entitled “Blair Net Family Property Documents”. Its table of contents indicates that it contained 10 tabs, listing among other items, audited financial statements of Renegade for the years ended December 31, 1994, and December 31, 2007. The wife acknowledges receiving this disclosure, but the husband has admitted that three of the listed items were not actually contained in the binder when it was provided to the wife, those being: TD Waterhouse statements dated May 31, 2008, a statement from Scotia McLeod for Renegade dated May 31, 2008, and a 1994 valuation of Algonquin. However, the wife agrees that these documents all became available for her review prior to signing the separation agreement, with the exception of the valuation of Algonquin. Along with no valuation of Algonquin, it also omitted any information as to Algonquin’s principal holdings in Pharmx Rexall (a drugstore chain) and Dominion Citrus (a wholesale distributor and packager of fresh produce).

[44] The valuation of Algonquin was received by both parties shortly after the agreement was signed. The wife was aware, prior to signing, that this valuation was being prepared.

[45] On or after May 17, 2008, the husband supplied the wife with a net family property statement prepared by him and his lawyer. It showed that the wife owed the husband an equalization payment of $954,150. This net family property statement was later attached to the separation agreement. The husband relies on the net family property statement in this proceeding as evidence of his disclosure at the time the agreement was made. He takes the position that it represents the value of his assets and liabilities at the date of marriage and the date of separation.

[46] It is alleged by the wife that the husband provided incorrect information with respect to the value of his business interests at both at marriage and separation, and that he overstated other assets at date of marriage and understated date of marriage liabilities. In doing so, he significantly overstated his date of marriage net worth, and thereby understated his net family property. He created the illusion that the wife owed an equalization payment of $954,000.

[47] The wife relied on the disclosure provided by the husband, and his representation as to the value of his net family property. The wife’s evidence is somewhat ambiguous in that she indicates that at the time, the husband’s attitude toward her was “pretty kind” and that she did not think he would want to see anything terrible happen to her. She stated on her questioning that she trusted him. At the same time, when asked whether she would have been comfortable approaching her husband to initiate a conversation, she replied that she would not have been comfortable challenging him. The wife concedes that, had she asked the husband to show her documents, such as minute books, he would have shown them to her.

[48] The wife’s evidence is that the relationship was calm and respectful, and that throughout the 15 years of marriage they never raised their voices to one another. She admits that there were no threats to have her leave the home or withdraw financial support. At all times she had access to the parties’ joint bank account. She indicated during her questioning that there was only one discussion that stood out in her mind. She stated that she questioned him about something, but she could no longer specifically remember the subject matter, and in her words “… he became very upset, and it was probably the most sort of emotional agitated moment we'd ever had between each other. He seemed offended that I was asking the question… It did have to do with something relating to the separation agreement, and the context was that he felt that he was being extremely generous, and was offended by whatever it was I was raising”.

[49] Despite experiencing the one interaction in which the husband became upset when questioned, and not feeling that she could challenge him, the wife admits that she did not consider obtaining legal advice before signing the separation agreement. She could not recall whether the husband had asked her to obtain legal advice, but stated that he may have. Nor did she discuss the financial terms contained in the agreement with an accountant or anyone with a financial background. The following evidence was given by the wife at her questioning:

Q. Okay. So did you make the statement to Mr. Blair that you weren't seeking legal advice because you're a lawyer, or that you didn't require legal advice because you're a lawyer?

A. Well, it sounds like I would not have advised him I was a lawyer. He knew that.

Q. Okay. So then would it be accurate to say that you advised him that you didn't require legal advice?

A. Or I didn't want it, or something.

Q. Okay.

A. Possibly I said that. I don't have a recollection of a discussion, but if he says I told him I didn't want legal advice, am I going to adamantly disagree with that? No.

[50] The parties signed the agreement on May 31, 2008, at their home.

[51] The wife made no request to the husband for additional time for consideration or review, or to delay the signing of the agreement to get legal advice or for any other purpose. The parties continued to reside together in the matrimonial home until the wife moved out on June 30, 2008. Under the terms of the separation agreement, she was entitled to remain there until September 1, 2008. She explains that she moved in June because accommodation became available to her, and she wanted to give the children the summer to adjust to the change in living arrangements prior to the school year beginning.

[52] Relying on the husband's representations with respect to values, the wife agreed to the following:

(a) She was released from the obligation to pay the $954,150 equalization payment the husband represented was owing to him;

(b) She received time limited support for herself ($10,000/month until December 31, 2010);

(c) Renegade would retain her as corporate secretary and general counsel until December 31, 2010, and compensate her in the amount of $10,000 per month. Termination of that retainer without cause would entitle her to a severance payment equivalent to 24 months’ pay;

(d) She was to move out of the matrimonial home by September 2008, and the husband would assume responsibility for payment of all carrying costs and household expenses;

(e) The husband had exclusive possession of the matrimonial home and the right, until December 2010, to buy the matrimonial home from the wife for $1,250,000 (from those monies the wife had to discharge the $500,000 mortgage);

(f) She transferred or permitted a redemption of her shares of Renegade for $250,000, although the NFP valued them at $386,512;

(g) No child support was payable by either party even though the children were to reside with the parties equally. The husband claimed to earn $590,000 annually and the wife’s income inclusive of support was set out in the agreement as $329,000 annually. The parties were to review the issue of child support prior to December 31, 2010, and thereafter they were to review the child support provisions annually, if requested by either party;

(h) The husband was to be solely responsible for the children’s expenses for private schools, skiing lessons, tennis lesson, music lessons, and a number of other items in an amount the parties estimated to be $97,760 annually;

(i) Renegade, if requested, would loan the wife $250,000 towards the purchase of a home; and,

(j) Renegade, if requested, would invest $200,000 in shares of a private company that the wife was considering incorporating to carry on a business.

[53] The wife was satisfied with the disclosure at the date of execution except for a valuation of Renegade. She was also aware of an Osler Bluffs ski club membership that was not listed on the net family property statement, but did not seek out a value, nor did she dispute the value of any other asset.

[54] Following the signing of the separation agreement, the wife took a course at Schulich Business School, and then another course through Ivey, which increased her understanding of financial statements.

[55] Around August 2009, the wife determined that she needed to consult with counsel over the separation agreement. Her evidence is that over the course of the intervening year she found that the husband was unwilling to accommodate her request to share some of the things that they had previously enjoyed with the children, such as tennis tickets and a cabin in Collingwood that is owned by Renegade. She was then asked, during her cross-examination, the following question and gave the following answers:

Q. All right. Were there any other things happening at that time in your life that prompted you to seek legal advice?

A. Well, I think more I was sort of reflecting on things, and in particular I asked Michael – since we separated, I asked him a couple of questions about the Renegade value, and I felt that I'd not been careful enough about that. And the answers he'd given me subsequently, I didn't find the answers helpful. I'm not asserting that he was trying to jerk me around, but it didn't improve my understanding.

Q. At that point you had taken your business courses, and I think what you indicated before was that in August and September of 2009 you had taken those courses, and that's when you became more fluent in the financial statements?

A. That's right.

Q. Okay. So a little bit of education, some feelings of being shut out; that's what you're saying sort of prompted the review?

A. Yeah, I would say probably a little bit more understanding that – yeah, that I should have looked at that more carefully.

[56] Since commencing this proceeding, the wife has obtained valuations of the husband’s business interests at the date of marriage and the date of separation. The husband provided his third party valuations after the agreement was signed. All of the experts’ valuations differ materially from the representations made by the husband and confirm that he substantially overvalued his date of marriage assets, and thereby miscalculated his net family property and the equalization payment. The wife alleges that the root of the problem is that the $954,150 equalization payment that the husband represented that she owed was a fiction, based on material misrepresentations. The wife received a total of $1,500,000 ($1,250,000 + $250,000) for her interest in the house, her shares, and the equalization payment. She alleges that she ought to have received $2,200,000 for her interest in the home, $586,000 for her Renegade shares, and an equalization payment in excess of $1,164,000, for a total of $3,950,000. It is her position that she received $2,450,000 less than the amount to which she was entitled.

[57] The wife states that the date of marriage value for Renegade used by the husband on his net family property statement was affected by the following deliberate acts or omissions on the part of the husband:

(a) The $7,603,685 that the husband included in the net family property statement at the date of marriage applied a “cost” or “book value” approach. He took the retained earnings of $12,672,805 as at December 31, 1994, and multiplied it by his 60% interest in Renegade. No effort was made by him to obtain an alternative value of his interest;

(b) The balance sheet for Renegade included approximately $32,300,000 of investments in operating companies. That value was recorded at cost. The notes to the 1994 financial statement state that the market value of those shares was $16,243,000. The husband made no attempt to adjust the cost-based representation for market adjustments. His deliberate failure to do so resulted in an overstatement of the value of Renegade by approximately $16,057,000 ($32,300,000 - $16,243,000). That resulted in an overstatement of his date of marriage interest by approximately $9,634,000 ($16,057,000 x 60%);

(c) He did not review Renegade’s 1994 financial statements with the wife. He left her to review them herself. He did not discuss with her that the 1994 financial statement valued the long-term investments at cost, or what that meant;

(d) The husband knew and knows what a mark to market adjustment means, describing it as an adjustment of the carrying value of a security to the market value if its original carried cost differs from the market value. Had the husband done a mark to market adjustment for the Algonquin shares and flowed that through to Renegade at the date of marriage, and had he provided it to the wife, she would have been made aware that:

(i) Renegade was in a net deficit position of $3,446,801 at the marriage date, the company value nil;

(ii) Renegade would not have had sufficient assets to pay the shareholder’s loan of $1,305,607 to the husband;

(iii) The husband’s net family property would have increased from a deemed value of nil to $4,300,417; and

(iv) The equalization payment would have been from the husband to the wife in the amount of $1,300,000, not the approximate $954,000 he represented she owed to him, a turn-around of $2,254,000.

[58] The wife alleges that the husband must have been aware when he provided the net family property statement that the value of $7,603,685 for Renegade was materially in error. At questioning he suggested that the Capital Canada valuation was consistent with what he had represented to the wife as the value of the shares in Algonquin. He claimed that the value determined by Capital Canada was “no big surprise” to him. In fact, the Capital Canada valuation translates to $12,854,350 less in value than the husband represented to the wife. She says that if the value determined by Capital Canada was “no big surprise to him” he ought to have been honest with the wife in his disclosure.

[59] Under the separation agreement, the wife has been paid $300,000 in spousal support payments, and has received $1,850,000.00 in cash. In particular:

(a) On May 31, 2008, the husband paid the wife $250,000.00 cash for her shares in Renegade;

(b) On June 30, 2010, the husband paid the wife $1,250,000.00 cash for her interest in the matrimonial home, from which she had to discharge a $500,000 mortgage;

(c) From May 31, 2008, through April 30, 2009, Renegade paid the wife $10,000.00 plus GST monthly as a retainer. Renegade further paid the wife $240,000.00 plus GST on December 27, 2010;

(d) In addition to the foregoing, the wife took with her from the matrimonial home, inter alia, the following items:

(i) Jewellery with an appraised value of $128,536;

(ii) A Ford Freestyle vehicle;

(iii) China;

(iv) A wardrobe of designer clothing;

(v) Pieces of art, kitchen appliances, flatware, and other items.

[60] Additionally, through Renegade and directly, the husband provided further support to the wife including:

(a) Payment of $20,000 for the wife to attend the Directors’ College, a program to educate corporate directors put on by McMaster University;

(b) Payment of the wife’s Law Society dues and insurance until such expenses were assumed by her employer;

(c) Agreement that Renegade would provide a $200,000 investment loan to support a business enterprise that the wife was contemplating, and a further $250,000 loan to assist the wife to purchase a home; and,

(d) Payment of all expenses of the family (including the wife) from January 1, 2008, through June 30, 2008, while the wife continued to live in the home with the husband.

[61] The husband’s line 150 income was $592,929 in 2007, $773,488 in 2008, $724,436 in 2009, $1,070,756 in 2010 and $1,430,260 in 2011. The wife also asserts that the husband has decided to leave profit within Renegade to shelter it from inclusion in his income for calculation of support. Taking into consideration the husband’s share of the amount of profit (or loss) for Renegade, and deducting the taxable dividend that he has received each year, the wife asserts that the husband’s net income in each of those years was: $675,721 in 2007; $695,857 in 2008; $490,532 in 2009, $1,346,155 in 2010 and $2,433,280 in 2011.

[62] The wife admitted at questioning that she has always known that the husband’s income fluctuated annually.

[63] The wife again alleges that the disclosure by the husband with respect to his income at the time of the separation agreement was deficient, and that he has deliberately failed to disclose income since this proceeding began. She points in particular to his failure to advise the court in 2011 that Renegade was to receive dividends from Automodular Corporation of approximately $1,276,000, 70% of which would constitute the husband’s indirect share as the majority shareholder.

[64] Following the signing of the separation agreement, the wife remained out of the workforce, but attended courses. She was receiving support pursuant to the agreement. She obtained employment in April 2009 at an annual salary of $145,000, which lasted until November 2010 when her employer went into receivership. She then worked again as a sole practitioner until able to find employment in September 2011, which continues.

[65] In 2008 the wife's taxable income was $150,000, consisting of spousal support of $60,000 and professional fees received from Renegade in the amount of $70,000. The wife does not explain in her material why she stated in the separation agreement that her annual income was $329,000. The wife’s affidavit material indicates that she had no professional income in 2007, but she has not placed her 2007 income tax return before the court for the purpose of this motion.

[66] The wife’s 2009 income was $276,000, comprised of $120,000 in spousal support, $103,000 in employment income, and $40,000 from Renegade.

[67] In the spring of 2009, when the wife obtained full-time employment, her position with Renegade was terminated. In December 2010 the husband tendered a cheque to her for $252,000 in respect of termination pay for the Renegade retainer. After November 2010, the wife searched for full-time employment and undertook projects as a sole practitioner, working for wind energy developers. This work was unpredictable, and payment contingent on the success of her client’s projects. The wife's 2010 income was $453,839. This included the one-time payment from Renegade for termination pay and $120,000 in spousal support.

[68] Under the terms of the separation agreement, spousal support ceased at the end of 2010. In September 2011 the wife obtained employment with a law firm. Under the terms of her employment agreement, she is receiving earnings based on a percentage of her billings. The husband began to make child support payments of $4,500 per month commencing in January 2011, after the wife brought a motion for child support. In 2011 the wife’s total income was $205,291, and her taxable income was $121,818.

[69] The most current income information from the wife as of the date of the hearing of this motion was that her 2012 gross year-to-date income for the first two-thirds of the year was approximately $62,367.

[70] It is the position of the wife that she has an entitlement to compensatory support due to having been out of the legal field for some time, although working formally and informally with and for the husband, and stayed home to raise their children for a number of years. She states that her employability has been compromised. It is her position that the appropriate level of support would have been approximately $14,000 per month for a duration of 7 to 14 years due to the length of the marriage, their individual incomes at the date of their separation and currently, the detrimental effect of the marriage on her career, and her contribution to the household and child rearing.

ANALYSIS

The Law

(i) Section 56(4)(a) - Failure to disclose financial information

[71] Rick v. Brandsema addresses the issue of the parties’ obligations to disclose assets, debts, and liabilities when a domestic contract is made. In that case, the parties each had lawyers and reached a mediated agreement. The trial judge found that the husband knowingly presented misleading financial information to the wife during the negotiations by placing values on assets that were not based on independent valuations, misstating values, and failing to disclose other assets. The husband was an astute and experienced businessman who was aware of the wife’s psychiatric disorder, which the trial judge found to have rendered her vulnerable during the negotiations. The husband knowingly took advantage of her vulnerabilities, and that resulted in the equalizing payment being $649,680 short of what the wife was entitled under the British Columbia matrimonial property legislation. The Supreme Court of Canada reinstated the trial judge’s finding that the separation agreement was unconscionable and the agreement was set aside.

[72] The wife relies on Rick v. Brandsema as authority for the proposition that all relevant financial information must be disclosed during negotiations. Rick v. Brandsema was a case initially decided under British Columbia’s Family Relations Act, R.S.B.C. 1996, c. 128, which does not contain an equivalent, or similar, provision to s. 56(4)(a). Therefore that case does not resolve, in my view, the question raised in the Ontario cases of whether s. 56(4) places an onus on the party who owns the asset or liability to provide values, in the context of private negotiations. Certainly where such values are provided, the party producing the number must endeavour to do so honestly and without misrepresentation. And, of course, where the parties are engaged in a court proceeding and required to exchange financial statements sworn under oath, the values stated in their financial statements must, to the best of their knowledge, be completely accurate.

[73] The obligation to produce the value of assets and liabilities is not expressly stated within the wording of s. 56(4). In LeVan, one of the husband’s arguments on appeal was that the trial judge had erred in importing the word “value” into s. 56(4)(a). At paras. 52 and 53 the court cited with approval both Patrick v. Patrick, [2002] O.J. No. 639 (S.C.) and Dubin v. Dubin (2003), 2003 2103 (ON SC), 34 R.F.L. (5th) 227 (Ont. S.C.) in reaching its conclusion, at para. 54, that the disclosure must be sufficient for the parties to calculate or determine net worth. While deciding not to engage in an analysis of the absence of the word “value”, the court nonetheless wrote, at para. 57, “…[t]here is no case law that supports the husband’s position that the positive obligation required by s. 56(4)(a) can be met by providing only a list of significant assets without some indication of value being attributed to them (emphasis added).

[74] This comment from LeVan was relied upon in Rempel v. Smith, 2010 ONSC 6740, 2012 O.J. No. 5301, at para. 24. The court in Rempel found that the husband had relied on the wife to provide a proper valuation of her pension for the purposes of preparing the separation agreement. The court found such reliance reasonable because the wife had a financial background and had access to all of the documentation from her employer's pension and benefits department. The court appeared to accept that the wife did not have the qualifications to be a pension valuator, but nonetheless found that she purported to undervalue her pension by a maximum of $74,000 and a minimum of $28,000. This, in combination with the non-disclosure of four additional assets, resulted in a total advantage to the wife in the range of $56,000 to $102,000. The court found that given the net worth of the parties as set out in the agreement, this was a significant amount. Accordingly, the court found that this amounted to non-disclosure of significant assets by the wife and therefore the provisions of s. 56(4)(a) were engaged.

[75] However, there is also ample authority for the proposition that the party who seeks to set aside the separation agreement cannot rely on the fact that she failed to undertake her own investigation into values when she had the opportunity to do so. The Ontario Court of Appeal in Armstrong v. Armstrong, 2006 32899 (Ont. C.A.), at para. 2, recognized that the wife was aware of the assets and that, on the evidence, had as much ability to value these assets as her husband. While the judgment is silent as to whether the husband had initially provided incorrect values, the comment nonetheless stands on its own as authority for the proposition that, where assets are disclosed and a party has the opportunity to question or clarify their values, but chooses not to, the court will not necessarily grant relief.

[76] Likewise in Butty v. Butty, 2009 ONCA 852, 99 O.R. (3d) 228, the court refused to set aside a separation agreement for non-disclosure. Although Mr. Smith attempted to distinguish this case on its facts, as a unique case involving an inadvertent misdescription of farm property that was comprised of two parcels rather than one, the case goes beyond those facts. The additional alleged defects in disclosure included the nature of the wife’s interest in the farm property, the estimated value of the husband’s interest in the farm, and an incorrect value ascribed to one of the husband’s debts. At para. 54 the court stated:

Apart from item #1, Ms. Butty was aware of the shortcomings in disclosure listed as items #2 through #4 above, at the time she entered into the Contract. Ms. Butty's first lawyer raised these very concerns and advised Ms. Butty not to enter into the Contract. When efforts were made by her lawyer to investigate these matters, Ms. Butty chose to fire her and hire a new lawyer to complete the transaction without further investigation. In our view, a party to the marriage contract cannot enter into it knowing of its shortcomings in disclosure and then rely on those shortcomings as the basis to have the contract set aside: see Raaymakers v. Green (2006), 2006 719 (ON CA), 25 R.F.L. (6th) 54 (Ont. C.A.) at para. 40.

[77] In determining that none of the factors in LeVan were present, the court specifically noted that the husband in Butty had disclosed his assets and liabilities.

[78] In a much earlier case, Farquar v. Farquar (1983), 1983 1946 (ON CA), 43 O.R. (2d) 423 (C.A.), the court dismissed an appeal by the wife, who appealed on the basis of a lack of financial disclosure. The trial court found that the husband had done nothing to conceal his assets, and the wife had done nothing to exercise due diligence for the purpose of obtaining values. The Court of Appeal denied the appeal, in part, because there was no justification for setting aside minutes of settlement when the wife’s lack of knowledge of the details of her husband’s finances was due only to her failure to ask for the information.

[79] Also necessary to mention is Quinn v. Epstein Cole LLP, 2008 ONCA 662, 92 O.R. (3d) 1, in which the Court of Appeal denied the appeal of a summary judgment motion decided in favour of the moving party husband. At para. 4 the court wrote:

Contrary to the appellant's submission, nothing in s. 56 of the Family Law Act R.S.O. 1990, c.F.3 precludes a litigant from entering into a final and binding settlement in the circumstances above-described, i.e. where financial disclosure is provided. Having chosen to do so without seeking to compel further financial disclosure from Keiper, the appellant could not resile from the consequences of that decision unless she demonstrated that Keiper’s financial disclosure was inaccurate, misleading or false.

[80] The foregoing authorities show that there are two major, competing interests at play: the obligation of the spouses to provide full and reliable disclosure, and their obligation to make their own inquiries and protect their own interests.

[81] Butty is the most recent decision from the Court of Appeal, and is a restatement of the law as earlier set out by that court in Farquar. These cases demonstrate one way to approach the issue of financial disclosure, which, in my view, places a reasonable expectation on parties to protect their own interests. Courts cannot play the role of protecting parties against their own carelessness, absent the considerations of duress, undue influence, mistake, or unconscionability. As stated in Clayton v. Clayton (1998), 1998 14840 (ON SC), 40 O.R. (3d) 24, (Gen. Div.) at p. 30, “[p]arties are expected to use due diligence in ascertaining the facts underlying their agreements. A party cannot fail to ask the correct questions and then rely on a lack of disclosure.”. Where there is nothing impeding the ability of a party to ask questions and obtain his or her own values of assets and liabilities, the court should not at a later date remedy that oversight. And while each case must be decided on its own facts, I find the approach in Rempel v. Smith is one to be approached cautiously. The idea that it is reasonable for one party to rely on the valuations provided by another within the context of a marriage breakdown is a difficult one to justify in the overwhelming majority of cases, where the parties frequently have divergent and competing interests, and neither owes the other a legal duty to safeguard the other’s best outcome. It is acknowledged that in many cases, the financial position of one or both spouses will not permit the additional costs of investigating, with professional assistance, the values put forth by the other. And there are both public and private interests at play in settling matrimonial disputes in the least complicated and most efficacious manner possible. These are factors that may be considered by the court in the exercise of its discretion on a case by case basis.

[82] Accepting that LeVan directs that some indication as to value is to be provided, it is my view that the decisions of Farquar, Butty, and Armstrong impose an onus on the recipient of that information, should he or she not accept the veracity of the information, to take steps to question it. If the accuracy of the information is accepted by the party, it is not for the court at a later date to attempt to do that which the party, in negotiating his or her own private contract, failed to do for herself, absent a material misrepresentation. This approach is in keeping with the policy rationale articulated repeatedly by the higher courts: the desirability of the finality of domestic agreements and the incentive for people to settle their own matrimonial affairs on marriage breakdown: Farquar, at paras. 19-24; Miglin, at para. 4. Again, this assumes that a situation such as that which existed in Rick v. Brandsema is absent, where the inaccurate disclosure became significant because of the vulnerability wrought by the wife’s psychiatric condition, or other situations involving duress or undue influence.

[83] Accordingly, the provision of misleading information has not and should not be the sole basis for a court’s intervention when it comes to assessing whether there has been a failure pursuant to s. 56(4)(a). The court is required to take a more holistic approach, ultimately measuring the outcome against the degree to which the agreement departs from the objectives of the Family Law Act. The court should consider all of the circumstances surrounding disclosure of financial information, including the extent of the error or misrepresentation in relation to the overall outcome of the agreement. The monetary amounts involved in the defective disclosure are important for another reason; the greater the asset or deduction forming part of the net family property of a party, the less reasonable it would be for the party who receives such information to fail to take steps to make his or her own inquiries, provided that he or she has the means to do so. Further, where the recipient spouse has a reason to question the information provided, but does not, no misrepresentation or omission could result in the contract being avoided. I refer to Cheshire and Fifoot, The Law of Contract, 10th ed., at p. 244, and quoted in Farquar, at para. 35:

Knowledge of the untruth of a representation is a complete bar to relief, since the plaintiff cannot assert that he has been misled by the statement, even if the misstatement was made fraudulently. In such a case, “the misrepresentation and concealment go for just absolutely nothing…”.

[84] Accordingly, it is highly relevant for the court to consider whether the party attacking the agreement had a reason to question the information provided, and to closely examine any such reason or reasons to decide whether that party’s lack of due diligence was reasonable in the circumstances. The more extensive the party’s familiarity with the asset or liability at issue, the more cautiously the court should approach that party’s request to set aside the contract based upon the misrepresentation of the opposing party. In some circumstances, the failure to take steps to explore the reliability of the value provided could be fatal to a claim under s. 56(4), even where there was a significant error or misrepresentation that results in an outcome departing markedly from the statutory scheme, even where that misrepresentation was made with deliberate intent.

(ii) Section 56(4)(c) – Otherwise in accordance with the law of contract

[85] With respect to the second question at issue on this motion, the wife’s amended pleading also seeks to set aside the agreement based upon undue influence caused by the inequality in bargaining power occasioned by the husband’s superior financial situation, unconscionability in relation to the terms of the agreement concerning child support and the matrimonial home, duress caused by the husband’s eagerness to resolve matters quickly, and lack of independent legal advice.

[86] The court in A.A.M. v. R.P.K., 2010 ONSC 930, 81 R.F.L. (6th) 370, at para. 148, reviewed the common law requirements for a finding of both duress and undue influence, as follows:

The Respondent's lawyer referred to Segal v. Qu 2001 28201 (ON SC), 17 R.F.L. (5th) 152, in which Himel J. stated at paragraph 58:

Traditionally, duress at common law requires a “threat of death or serious physical injury”: R. v. Mena (1987), 1987 2868 (ON CA), 34 C.C.C. (3d) 304 (Ont. C.A.). The threats must be made with the intention of inducing someone to enter into an agreement against his or her will such that the coercion vitiates the consent to the agreement: Byle v. Byle (1990), 1990 313 (BC CA), 65 D.L.R. (4th) 641 (B.C. C.A.). The decision of Sills J. in Clutchey v. Clutchey, [1995] O.J. 889 (Ont. Gen. Div.) emphasizes coercion broader than physical violence including “coercion, intimidation or the application of illegitimate pressure”.
Undue influence is intended to capture abuses of power that are more subtle than actual duress, but the focus is similarly on the sufficiency of consent. Although some relationships raise a presumption of undue influence, there is no such presumption between husband and wife: Stuart v. Bank of Montreal (1910), 1909 3 (SCC), [1911] A.C. 120 (Ontario P.C.). To establish undue influence in circumstances such as this case, the plaintiff must prove “the ability of one person to dominate the will of another, whether through manipulation, coercion, or outright but subtle abuse of power”: Goodman Estate v. Geffen (1991), 1991 69 (SCC), 81 D.L.R. (4th) 211 (S.C.C.) per Wilson J. The past relationship of the parties must be examined for dominance that continues through the time the contract was signed.

[87] The court in Berdette v. Berdette (1991), 1991 7061 (ON CA), 3 O.R. (3d) 513 (C.A.) at p. 521, defined duress as meaning a coercion of the will, such that it must place the party to whom the pressure is directed in such a position as to have no realistic alternative but to submit to it.

[88] While Miglin did not involve the issue of setting aside a separation agreement under s. 56(4) of the Family Law Act, but instead examined the question of when it is appropriate to award spousal support contrary to the terms of a separation agreement, the Court’s direction about how to examine the issues of undue influence and unconscionability is germane. At paras. 81-83 the majority wrote:

It is difficult to provide a definitive list of factors to consider in assessing the circumstances of negotiation and execution of an agreement. We simply state that the court should be alive to the conditions of the parties, including whether there were any circumstances of oppression, pressure, or other vulnerabilities, taking into account all of the circumstances, including those set out in s. 15.2(4)(a) and (b) and the conditions under which the negotiations were held, such as their duration and whether there was professional assistance.

We pause here to note three important points. First, we are not suggesting that courts must necessarily look for “unconscionability” as it is understood in the common law of contract. There is a danger in borrowing terminology rooted in other branches of the law and transposing it into what all agree is a unique legal context. There may be persuasive evidence brought before the court that one party took advantage of the vulnerability of the other party in separation or divorce negotiations that would fall short of evidence of the power imbalance necessary to demonstrate unconscionability in a commercial context between, say, a consumer and a large financial institution. Next, the court should not presume an imbalance of power in the relationship or a vulnerability on the part of one party, nor should it presume that the apparently stronger party took advantage of any vulnerability on the part of the other. Rather, there must be evidence to warrant the court’s finding that the agreement should not stand on the basis of a fundamental flaw in the negotiation process. Recognition of the emotional stress of separation or divorce should not be taken as giving rise to a presumption that parties in such circumstances are incapable of assenting to a binding agreement. If separating or divorcing parties were generally incapable of making agreements it would be fair to enforce, it would be difficult to see why Parliament included “agreement or arrangement” in s. 15.2(4)(c). Finally, we stress that the mere presence of vulnerabilities will not, in and of itself, justify the court’s intervention. The degree of professional assistance received by the parties will often overcome any systemic imbalances between the parties.

Where vulnerabilities are not present, or are effectively compensated by the presence of counsel or other professionals or both, or have not been taken advantage of, the court should consider the agreement as a genuine mutual desire to finalize the terms of the parties’ separation and as indicative of their substantive intentions. Accordingly, the court should be loathe to interfere. In contrast, where the power imbalance did vitiate the bargaining process, the agreement should not be read as expressing the parties’ notion of equitable sharing in their circumstances and the agreement will merit little weight.

The Claim to Set Aside the Agreement – Financial Disclosure

[89] All of the facts set out above are those advanced by the wife or admitted to at her questioning. For the purposes of this motion, since I am not allowed to weigh the evidence or assess credibility, I accept that they are all true. The husband disagrees with none of the above facts, other than the value put forth by the wife’s experts for the value of Renegade on the date of marriage and its effect on his net family property, and he denies that there was any intention to deliberately mislead in the net family property statement or otherwise.

[90] That being the case, a court could readily conclude at trial on the wife’s own evidence that all assets and liabilities were disclosed to the wife, that values were provided by the husband, that those values were not accurate, and further, their use appears to have resulted in a significantly large underpayment of equalization monies to the wife.

[91] Whether the misrepresentation as to the value of Renegade was deliberate, either at the date of marriage or the date of separation, is a question that cannot be determined on the evidence given the constraints of the court’s ability to evaluate credibility. Accordingly, there is a genuine issue for trial on this issue. However, this is a case that turns on the issue of whether the wife had information that should have caused her to question this value, and, given the amounts in issue, on the facts of this case her failure to do so is fatal to her case. Even though the equalization payment that she received may have been substantially less than her entitlement under the equalization provisions of s. 4 of the Family Law Act, I conclude that there is no genuine issue for trial as to whether a court, even if the numbers provided by the husband were deliberately false, would exercise its discretion to set aside this separation agreement.

[92] The wife was a shareholder and, after January 1, 2008, an officer of Renegade. She had full access to its book and records; she chose not to review them. Further, she admits that if she had asked, the husband would have provided her with further information. The wife received audited financial statements of Renegade each year up to and including the year ended December 31, 2007, and had complete access to the minute books and records of Renegade. Despite having these financial statements, she chose not to consult with anyone regarding valuing the shares.

[93] Prior to her marriage to the husband, she knew that he was the CEO of Algonquin Mercantile, and she believed that he held offices in Algonquin’s subsidiary companies. She knew that Renegade held his shares of Algonquin, as well as the shares of Enfield Corporation, which were ultimately acquired by Algonquin. She would have been aware that the valuation of Algonquin could have an impact on the value of Renegade, yet she chose to sign the agreement without receiving the valuation, which she knew was in the process of being prepared.

[94] Even accepting that the information provided by the husband may have been grossly inaccurate, it remains a fact that there was nothing done by the husband that prevented the wife from exercising her own due diligence to examine and question the value placed on Renegade by the husband. She could have had the company valued at any time. The same goes for any other values provided by the husband in the net family property statement. She was also aware of the Osler Bluffs ski membership but did not seek out a value, and did not take issue with the ownership or value of the Collingwood cabin.

[95] None of the disclosure provided by the husband placed an obstacle in the way of the wife to pursue such information. Nothing said or done by the husband would lead the wife to a reasonable belief that she should not or could not obtain her own valuation of Renegade. At all times the wife had her own income and access to the parties’ joint account; funding these inquiries was not an issue.

[96] Finally, the evidence is clear that on the date of signing, the wife suspected that the date of marriage value of Renegade was incorrect. In exhibit E to the husband’s affidavit sworn October 3, 2012, being an e-mail sent by the wife to the husband on June 7, 2009, she wrote:

With respect to equalization and support, what I agreed to does represent a compromise in that I was prepared to accept less on the other components on the understanding that I would receive a total of $240,000 in payments from Renegade. Your net family property statement is just a disclosure document. I did not analyze it or cross-examine on it or otherwise test its assumptions or validity. I did not accept your equalization calculation as correct. I just decided that I was too overcome with grief and guilt to fight about it and could live with the payments you offered, which included both support and the Renegade retainer to the end of 2010. (Emphasis added.)

[97] As articulated in Butty, a party to the marriage contract cannot enter into it knowing of its shortcomings in disclosure and then rely on those shortcomings as the basis to have the contract set aside.

[98] The wife was in a unique position to be fully familiar with and knowledgeable about the husband’s assets, both as counsel for Renegade prior to, during, and after marriage, and in assisting the husband with his 1994 divorce and the subsequent settlement of that action. The wife had full access to and knowledge of the husband’s financial affairs at all material times. Specifically, her questioning revealed that she had information, prior to the marriage, that the value of Renegade’s assets was inadequate to support its bank loan, such that the respondent was being asked to personally guarantee Renegade’s debt. Although she did not know what the shares of Renegade were worth, it was her evidence during questioning that she understood that the value of the Renegade assets had fallen. Objectively, this information ought to have raised a question in her mind as to whether the date of marriage value of $7,603,685 being used by the husband in his net family property statement was accurate.

[99] Accordingly, the wife was at all times in receipt of information that would have led a reasonable person to question the value placed on such a sizeable deduction, which had such a significant effect on the husband’s net family property calculation.

[100] Based on the wife’s evidence, which I have not weighed but rather have assumed to be correct as stated, the wife has been unable to show that her application to set aside the agreement has a real chance of success at trial.

[101] It also bears remarking that a review of the additional factors set out in Dochuk supports the conclusion that there is no genuine issue requiring a trial. These considerations include: the wife has accepted all of the benefits available to her under the separation agreement; the husband complied with all of his obligations under the agreement and additionally volunteered to fund her further education; the wife chose to waive the receipt of independent legal advice; the wife waited almost two years from the date of the agreement to commence her application; and, as will be explained below, there are no other circumstances existing that would compel the court to consider setting aside the agreement under s. 56(4)(c).

[102] I conclude for all of the above reasons that the husband has met the onus of proving that the wife will be unable to avoid the effect of the separation agreement on the grounds of his financial disclosure, and therefore find that there is no genuine issue requiring a trial on this ground.

The Claim to Set Aside the Agreement – Duress, Unconscionablity, Lack of Professional Assistance

[103] Turning now to the second question, I likewise find that there is no genuine issue for trial with regard to whether the contract should be set aside in accordance with the law of contract.

[104] Paragraph 13.14 of the agreement provides:

(a) Michael and Patricia:

(i) understands his or her rights and obligations under this Agreement and its nature and consequences,

(ii) acknowledge that this Agreement is fair and reasonable,

(iii) acknowledge that they are not under any undue influence or duress, and

(iv) acknowledge that both are signing this Agreement voluntarily.

[105] Paragraph 13.17 provides:

Both parties and Michael's solicitor prepared this Agreement jointly. Michael received independent legal advice from Valerie Brown. Patricia, who was a lawyer, waived independent legal advice.

[106] There was no behaviour on the part of the husband amounting to duress or undue influence. The wife’s counsel points to the presentation of the proposed equalization payment of $954,150 as being a fact that would compel the wife to accept the deal as presented to her. But as explained above, the fact that she did not question that number, when she very well could have, can hardly then be used against the husband to amount to an allegation of duress or undue influence.

[107] The wife proposed changes to the agreement. The changes were accepted by the husband. This is not a case where the agreement was presented to the wife as a fait accompli and she was denied an opportunity to consider it. There is no evidence that the husband pressured her to sign the agreement, or that he was in any rush to sign it, or that he presented her with circumstances that would cause her to feel pressured by time. The evidence in fact is that the wife made the decision to sign it and obtain her own housing because she wanted the children to have the summer to adjust to the separation.

[108] The husband may or may not have suggested that she obtain independent legal advice. It is of little consequence, however, since there is no ambiguity in the wife’s evidence with respect to her decision to not seek legal advice - she chose not to, despite having no specific knowledge with respect to the applicable law. Even though her area of expertise was not in family law, it could never be argued that she did not understand the consequences of entering into a binding contract. Her area of legal practice is commercial litigation, and therefore the nature and effect of contracts generally would fall within her practice experience. As her e-mail of June 7, 2009 indicates, she was well aware of the bargaining process and the consequences that the final agreement had for her. Again, the fact that she made significant changes to the draft provided by the husband, and specifically changes having the effect of disentitling the spouses from bringing an application for equalization at a later date, and eliminating reference to the provision of independent legal advice for herself, shows that she turned her mind to the impact that the document would have upon her affairs.

[109] The wife is an intelligent, well-educated individual who had been previously divorced. In addition to her extensive litigation experience, she also holds a masters degree in securities law.

[110] Historically, the relationship between the parties is not one that could give rise to an allegation of duress or undue influence. There was no vulnerability on the part of the wife and no preying upon the wife by the husband. A single incident, in which the husband raised his voice at some time within the two-week period that this agreement was being negotiated, can hardly amount to the type of conduct that demonstrates “the ability of one person to dominate the will of another, whether through manipulation, coercion, or outright but subtle abuse of power”. Nor does the wife anywhere in her evidence suggest that this discussion led to her decision to sign the agreement.

[111] Her feelings of being “frozen”, being incapable of making a decision, being emotionally labile, and being physically affected by the situation in terms of weight loss and sleep disturbance, is not an unusual constellation of experiences for a person undergoing a separation and divorce. If agreements could be set aside on the basis of those common grief-related feelings and experiences, the courts would be clogged with such applications. As stated by the court in Miglin, “recognition of the emotional stress of separation or divorce should not be taken as giving rise to a presumption that parties in such circumstances are incapable of consenting to a binding agreement”. Finally, even if I am incorrect and the wife was somehow rendered vulnerable as a result of the separation, as previously discussed, such vulnerabilities were not taken advantage of by the husband.

[112] The real reason for the wife’s application was revealed on her questioning when she admitted that it was only with time, and further education, that she began to reflect on the bargain that she had struck. As she stated, she had begun to reconsider the Renegade value, and felt that she had not been careful enough.

[113] There was nothing unconscionable about the negotiating process or its result.

[114] Taking into account all of the circumstances that existed during the period of the negotiation and surrounding the execution of this contract, there were no flaws in the negotiating process that could lead a trier of fact to conclude that the agreement should be set aside on that basis. I find that the husband has established that there is no genuine issue for trial with respect to the second question.

The Claim for Spousal Support

[115] This court has now determined that there are no genuine issues for trial with respect to whether the separation agreement should be set aside. There remains the issue of whether the wife’s claim for spousal support under the Divorce Act raises a genuine issue requiring a trial. This question falls squarely within the analysis in Miglin, where the court, in the face of a final agreement that settles all of the parties’ affairs including spousal support, must determine whether to override the spousal support provisions of the agreement.

[116] In the preceding section I have already determined that the circumstances surrounding the negotiation of the agreement were unimpeachable.

[117] The second stage of the inquiry is to examine whether the substance of the agreement complies substantially with the general objectives of the Divorce Act. As explained in Miglin, these general objectives include not only an equitable sharing of the consequences of the marriage breakdown under s. 15.2; but also certainty, finality, and autonomy. As directed by Miglin, where an agreement complies with such objectives, courts should not interfere with an agreement freely negotiated by the parties (at para. 46).

[118] In terms of finality, the relevant provisions of the parties' agreement are as follows:

1.4 They agree to be bound by this Agreement that settles all issues between them.

7.1

(a) Michael will pay Patricia $10,000.00 per month for the period commencing the first day of the first month after Patricia leaves the matrimonial home and end December 31, 2010. Patricia will continue to receive health and other benefits coverage under Michael’s Group Benefits Plan as an executive of Automodular Corporation for so long as the parties are separated and not divorced. Michael will consent to a court order extending Patricia’s coverage under such plan, if any, following divorce.

(b) Michael and Patricia and Renegade Capital Corporation will enter into the transactions as set out in Schedule A to this Agreement.

(d) If Patricia has not received all payments from the transactions described in Schedule A prior to December 31, 2010, and if requested by Patricia in writing, the parties will review the issue of whether spousal support needs to continue and will use the section of this Agreement entitled “Dispute Resolution” to resolve the issue.

(e) As a result of the terms of this Agreement Michael and Patricia are financially independent of each other and release his or her rights to spousal support from the other, now and forever.

(f) Michael and Patricia intend this Agreement to be forever final and non-variable.

(g) For greater certainty, the parties acknowledge that:

(i) they have negotiated this agreement in an unimpeachable fashion and that the terms of this Agreement fully represents their intentions and expectations;

(ii) the terms of this Agreement, including the release of all spousal support rights, reflects an equitable sharing of the economic consequences of their relationship and its breakdown;

(iii) the terms of this Agreement substantially comply with the overall objectives of the Divorce Act now and in the future;

(iv) they require the courts to respect their autonomy to achieve certainty and finality in their lives;

(v) the terms of this Agreement and, in particular, this release of spousal support, reflect his and her own particular objectives and concerns, and are intended to be a final and certain settling of all spousal support issues between them. Among other considerations, they are also relying on this spousal release, in particular, upon which to base their future lives.

(h) Michael and Patricia specifically wish to be able to pursue their separate and independent lives, no matter what changes may occur. Michael and Patricia specifically anticipate that one or both of them may lose their jobs, become ill and be unable to work, have additional child care responsibilities that will interfere with their ability to work, find their financial resources diminished or exhausted whether through their own fault or not, or be affected by general economic and family conditions changing over time. Changes in their circumstances may be catastrophic, unanticipated or beyond their imagination. Nevertheless, no change, no matter how extreme or consequential for either or both of them, will alter this agreement and their view that the terms of this Agreement reflect their intention to always be separate financially. Michael and Patricia fully accept that no change whatsoever in either or both of their circumstances will entitle either of them to spousal support from the other, now and forever.

(i) In short, the parties expect the courts to enforce fully this spousal support release no matter what occurs in the future.

[119] In addition to the full and final release of spousal support, the separation agreement contains comprehensive releases of one another’s estates, and of any further property claims.

[120] The separation agreement contains other provisions dealing with the terms of a parenting plan, child support, including expenses as defined by s. 7 of the Child Support Guidelines, life insurance, a dispute resolution mechanism, the provision of life insurance as security for child support, the division of net family properties, the matrimonial home, debts, releases, and general terms. It contains several attachments, those being:

Schedule A: transactions between the husband and wife and Renegade.
The husband's net family property statement dated May 31, 2008.
Renegade liquidation value analysis.
Retainer agreement between Renegade and the wife dated May 31, 2008.
Subscription agreement between Renegade and the wife dated May 31, 2008.
Loan agreement between Renegade and the wife dated May 31, 2008.

[121] Under the heading “General Terms” at paragraph 13 of the agreement are additional, relevant clauses:

13.1 There are no representations, collateral agreements, warranties or conditions affecting this Agreement. There are no implied agreements arising from this Agreement and this Agreement between the parties constitutes the complete agreement between them.

13.11 Michael and Patricia have disclosed their income, assets and other liabilities existing at the date of marriage, separation and the date of this Agreement.

[122] The separation agreement appears to be exhaustive in its attempts to disentangle the economic relationship of the parties, to bring finality to their economic affairs, and in its intent to bar each party from any further claims, other than those that are specifically provided for in the agreement.

[123] We start from the proposition that the agreement was what the parties considered to be mutually acceptable at the time that it was entered into, and the spousal support provisions were part of a comprehensive settlement of all issues related to the marriage breakdown.

[124] The relevant statutory provisions that are to be considered are contained in the Divorce Act as follows:

15.2 SPOUSAL SUPPORT ORDER - (1) A court of competent jurisdiction may, on application by either or both spouses, make an order requiring a spouse to secure or pay, or to secure and pay, such lump sum or periodic sums, or such lump sum and periodic sums, as the court thinks reasonable for the support of the other spouse.

(4) FACTORS – In making an order under subsection (1) or an interim order under subsection (2), the court shall take into consideration the condition, means, needs and other circumstances of each spouse, including

(a) the length of time the spouses cohabited;

(b) the functions performed by each spouse during cohabitation; and

(6) OBJECTIVES OF SPOUSAL SUPPORT ORDER – An order made under subsection (1) or an interim order under subsection (2), that provides for the support of a spouse 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;

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

[125] In Miglin, the Court made clear that what constitutes equitable sharing of the breakdown of the marriage relationship cannot be informed solely by the list of objectives set out in s. 15.2(6) of the Act, as these factors are not intended to dictate the precise terms of an enforceable negotiated agreement. The majority wrote: “To impose on all separating or divorcing persons an obligation to adhere strictly and exclusively to the statutory spousal support objectives denies them the autonomy to organize their lives as they see fit and to pursue their own sense of what is mutually acceptable in their individual circumstances" [para.55].

[126] At para. 57 the Court wrote:

We are of the view that, rather than trying to measure whether the terms of a comprehensive agreement advance the objectives of support set out in s. 15.2(6), trial judges must consider the agreement more broadly in light of all of the objectives of the Divorce Act. These objectives of the Act as a whole, as compared with the objectives set out in s. 15.2(6), include the compelling policy goals of certainty, autonomy and finality. These legislative objectives require the trial judge to consider the extent to which the agreement presents a final settlement of the issues, negotiated under unimpeachable conditions, to which both parties agreed and on which each of them intended to rely. It is only then that the judge will consider whether the agreement must nevertheless be set aside in full or in part because it is not in substantial compliance with the broader objectives of the Act.

[127] The terms of this particular agreement could lead a court to no other conclusion than that the overall objectives of certainty, finality and autonomy were intended to be met, and were met.

[128] Taking into consideration the objectives of a spousal support order, the following terms of the agreement are relevant:

(i) There is equal responsibility for the care of the children, so that ongoing childcare responsibilities are not primarily those of the wife, and her ability to re-enter the workforce not constrained by such responsibilities;

(ii) For a period of 15 months, the wife received payments of $20,000 per month, comprised of spousal support and her Renegade retainer, thereby assisting with her transition from unemployment to obtaining paid employment. While 15 months is less than the time period suggested in the Spousal Support Advisory Guidelines, the age of the wife, her education and work history, her apparent competence within her field and overall intelligence are all factors that ameliorate the economic disadvantages arising from this marriage;

(iii) To further the objectives of relieving against hardship arising from the marriage breakdown, and to recognize the economic disadvantages to her resulting from a career interruption, the agreement builds in benefits such as Renegade paying for the wife’s Law Society membership and insurance, health benefit coverage, that Renegade would provide her with a loan to assist her in purchasing a new residence, on favourable terms, that Renegade would provide her with up to $200,000 through share subscriptions if she chose to incorporate a business, and that Renegade would purchase her shares in order to provide her with additional cash;

(iv) The provision of the offer to purchase shares in her new corporation, which did not occur because the wife did not pursue such a course of action, assisted in the aim of promoting the wife’s economic self-sufficiency. This goal was also set out at subclause 7.1(c) of the agreement, wherein the wife agreed to make reasonable efforts to become financially independent by December 31, 2010;

(v) The property division scheme of the agreement assisted in all of the objectives by allowing the wife to start over, debt free, with approximately $1,000,000 in liquid assets; and

(vi) While not provided for in the agreement, there were economic advantages provided to the wife after separation, such as payment of her further schooling.

[129] The Court in Miglin directs that it is only a significant departure from the general objectives of the Act that will warrant the court’s intervention on the basis that there was not substantial compliance with the objectives of the Divorce Act at the time of its creation. The wife does not raise any material evidence to suggest that this agreement significantly depart from those objectives; to the contrary, when looked at in its totality, the agreement does in fact comply with those objectives. This suggests that the agreement should be afforded great weight in this analysis.

[130] The last consideration is whether the agreement still reflects the original intention of the parties and the extent to which it is still in substantial compliance with the objectives of the Divorce Act. In this regard, Miglin directs that the wife must clearly show that in light of new circumstances that were not reasonably anticipated by the parties, the terms of the agreement no longer reflect their intention or the Act’s objectives. At para. 91 the Court directs:

Although we recognize the unique nature of separation agreements and their differences from commercial contracts, they are contracts nonetheless. Parties must take responsibility for the contract they execute as well as for their own lives. It is only where the current circumstances represent a significant departure from the range of reasonable outcomes anticipated by the parties, in a manner that puts them at odds with the objectives of the Act, that the court may be persuaded to give the agreement little weight….

[131] I have fully considering the evidence presented on this motion, which was comprehensive in detailing the history of the parties’ financial circumstances. I am entitled to assume that there would be no further and better evidence presented at a trial. I therefore find that there is no genuine issue for trial regarding whether there was any change that was not, or could not, have been within the contemplation of the parties when they made this agreement. The parties built into their agreement a period of time for the wife to obtain employment and to become economically self-sufficient. Even though the agreement states that the wife is to make reasonable efforts to become financially independent by December 31, 2010, it is clear that the parties intended that, even if she fails in that regard, there would be no further claim to support. Having been out of the work force for a number of years, it would have to have been in the contemplation of the parties that the wife might be challenged, as has been the case, to secure work immediately. Such a possibility is referred to within the spousal support release. The termination of the wife from Renegade was likewise within the contemplation of the parties, as the agreement specifically provides for what is to occur in such a case, and the wife did receive her entitlement in that regard. Accordingly, although she claims that part of her changed circumstance is that Renegade no longer referred work to her once she became self-employed, there was no obligation in the agreement for the company to do so. It was also understandable, given that she initially made claims against Renegade in this application. Lastly, there has been an improvement in the financial circumstances of the wife since the agreement was signed in that she is now receiving child support in the amount of $4,500 per month. The potential liability of the husband for the payment of child support was contemplated in the agreement, and he is now meeting that obligation. In addition to the special expenses for the children, which are not being apportioned according to income but continue to be paid wholly by the husband, the wife receives close to $10,000 per month to cover the children’s expenses.

[132] The wording of the spousal support release in the agreement also makes clear that the parties, in their words, “expect the courts to enforce fully this spousal support release no matter what occurs in the future”.

[133] Accordingly, the agreement was negotiated under unimpeachable circumstances and was in substantial compliance with the objectives of the Divorce Act both at the time of negotiation and subsequently, remaining so to the date of the hearing of this motion. Having applied the analysis set out in Miglin, I find that there is no genuine issue requiring a trial on the issue of whether the terms of the agreement should be altered to provide for an order of spousal support.

Unenforceability of the Agreement under s. 55(1)

[134] There is little dispute in the parties’ evidence regarding the signing of the marriage contract, and the facts surrounding its witnessing. They signed it in their home on Saturday, May 31, 2008, without a witness. The husband took the agreement to his office the following Monday, June 2, 2008 and gave it to his co-worker, Diane Erlingher, for the purpose of her signing as a witness to their signatures. There is consensus that Ms. Erlingher would have seen the wife’s signature many times during the course of the wife’s involvement with the husband’s business affairs.

[135] Ms. Erlingher provided information regarding her recollection of these events through her own counsel. She indicated that she signed as a witness to both the husband’s and wife’s signatures when Mr. Blair presented the agreement to her. She indicated that she recognized the wife’s signature, and placed her name on the witness line beside the wife’s signature. The wife could not recall ever seeing a copy of the witnessed agreement until it was provided during this litigation, although the husband’s evidence is that he took two copies back home and provided one to the wife.

[136] What is not clear on the evidence is whether Ms. Erlingher witnessed only one, or two documents. Nothing turns on this, however, as it is noted that two agreements have been produced in this litigation. One is a copy of the agreement signed by only the parties[^2], and the other is a copy of the agreement bearing Ms. Erlingher’s signature beside the signing line for each of the parties[^3]. The handwriting of the wife, with respect to her signature and the date, are slightly different on each document. As there is no evidence that the wife signed again on June 2, 2008, it is clear that two agreements were originally signed by her on May 31, and only one of them was witnessed. This absolutely must be the case, since the wife has always retained a copy of the “unwitnessed” agreement. Whether the husband made a copy of the agreement witnessed by Ms. Erlingher, and provided it to his wife upon returning home, is unimportant to the analysis. When I say that there is no evidence that the wife signed the agreement a second time, it was originally asserted by the husband in an affidavit that Ms. Erlingher witnessed both of their signatures, but a close reading of the transcripts of his questioning shows that at all times he was fair in stating that he had no clear recollection as to whether his wife accompanied him to his office that Monday.

[137] Ms. Erlingher also advised through counsel that she and the husband had no further discussions surrounding the separation agreement until he advised her at a later date that the wife was questioning its validity. She then told the husband that she recalled the event of signing, as well as the date on which she executed the document. Ms. Erlingher stated that when she told the husband this, he advised her that they should not discuss the matter in the event that Ms. Erlingher was called as witness in the proceeding.

[138] Accordingly, for the purpose of this analysis, I accept that the relevant facts are that Ms. Erlingher did not physically see the wife sign the document, but that she recognized the wife’s signature. The wife does not deny that it is her signature on the agreement.

[139] The wife did not raise any issue surrounding the execution of the document until this proceeding began in 2009, and as earlier indicated, accepted the benefits under the contract without questioning its formal validity at the time.

[140] Accordingly, I find that this issue raises a question of law only, which is: in order to comply with the requirements for formal validity set out in s. 55(1), is the witness to an agreement required to observe the execution by its signatories?

[141] The husband asserts that McEwen J. made a finding that the separation agreement was ultimately witnessed in his endorsement of September 26, 2008, and as such, this issue is res judicata. Upon hearing a motion requesting interim child and spousal support orders, McEwen J. endorsed:

While the applicant may ultimately succeed at trial, there are no compelling arguments to vary the agreement on an interim basis. The applicant, a well-educated person, negotiated an agreement over a long period of time. It was ultimately signed and witnessed.

[142] I agree with Mr. Smith that this last comment was obiter, as the validity of the separation agreement was not before McEwen J. He was not required to answer the legal question posed on this motion for summary judgment.

[143] Section 55(1) of the Family Law Act has been given judicial consideration and the law on this issue is mixed. That section provides:

(1) A domestic contract and an agreement to amend or rescind a domestic contract are unenforceable unless made in writing, signed by the parties and witnessed.

[144] In Geropoulous v. Geropoulous, (1982) 1982 2020 (ON CA), 26 R.F.L. (2d) 225 (Ont. C.A.), the Court of Appeal considered an earlier, similar provision, being s. 54 of the Family Law Reform Act. That section stated:

(1) A domestic contract and any agreement to amend or rescind a domestic contract are void unless made in writing and signed by the persons to be bound and witnessed.

[145] At p. 223 of Geropoulous, the court noted that the formal requirements laid down by the section were intended to ensure that asserted domestic contracts are reduced to writing and agreed to by the parties, as evidenced by their witnessed signatures. The court noted that this provision is in essence a statute of frauds type provision made referable to domestic contracts by the Family Law Reform Act.

[146] Accordingly, Geropoulous confirms that the rationale for requiring a witnessed signature on a separation agreement and other domestic contracts is avoidance of the “that's not what we agreed to” or “but we agreed that…” type of dispute. The parties are required to place their signatures on the domestic contract in order to confirm that the document embodies their agreement.

[147] But what of the necessity of having those signatures witnessed? In Campbell v. Campbell, (1985) 1985 2237 (ON SC), 52 O.R. (2d) 206, (H.C.), at para. 11, Steele J. stated that the requirement of the witnessing of an agreement under s. 54 is to ensure that the parties in fact signed it and that there was no duress or other grounds to refuse its enforcement. At para. 11 of Campbell, Steele J. also wrote:

Section 54 requires only that the agreement be witnessed, not that the signature of each party be expressly witnessed.

[148] In Hyldtoft v. Hyldtoft (1991), 1991 12868 (ON SC), 33 R.F.L. (3d) 99 (Ont. Ct. (Gen. Div.)), the wife signed a contract while she was alone, and after signing it returned the document to the coffee table where it had been laying since it arrived in the mail. Sometime later her husband noticed that she had signed the agreement, and asked an acquaintance to come into the home to witness his signature. This acquaintance lived in a trailer on the same property as the husband and wife and was well-known to the couple. The trial judge was asked to determine whether the agreement was invalid because the wife’s signature was not witnessed as required by s. 55(1). He found that the acquaintance/witness was present when the document was signed by the husband, and that the witness had assumed that the wife had also signed it at that time. However, the wife raised no objection to the agreement in the presence of the witness, nor did she choose to absent herself from the room. The trial judge concluded, therefore, that she accepted the acquaintance as the witness for both signatures, thereby affirming her earlier execution of that document. He was therefore satisfied that the formalities required by s. 55(1) were met.

[149] In Waters v. Conrod, 2007 BCCA 230, 282 D.L.R. (4th) 525, (“Waters”), the British Columbia Court of Appeal had the opportunity to consider the requirements of s. 61(3) of the Family Relations Act, R.S.B.C. 1996, c. 128, a similar provision to s.55(1). Section 61(3) of the Family Relations Act provides:

A marriage agreement, or an amendment or rescission of a marriage agreement, must be in writing, signed by both spouses, and witnessed by one or more persons.

[150] The facts of Waters are that the parties acknowledged signing an agreement, and then brought their document before a notary public the next day, in the presence of whom they acknowledged their signatures. The notary then signed as witness to their signatures. The court considered that the agreement between the parties was witnessed by the notary public, in that the he had satisfied himself that they had in fact executed the agreement the previous day. At para. 14 the court stated:

The fact that he did not witness them actually sign the document does not mean that he did not witness the agreement.

[151] Two of the cases relied upon by the wife are distinguishable from the fact situation before me. In Sagl v. Sagl (1997), 1997 12248 (ON SC), 31 R.F.L. (4th) 405 (Ont. S.C.), the agreement could not stand because the husband had witnessed the wife’s signature, and at para. 16 Macdonald J. noted that the law is clear that the witness is to be someone other than a party. In Wright v. Wright, 2005 ONCJ 268, [2005] O.J. No. 4347, the agreement was not witnessed at all.

[152] However, Ashmore v. Ashmore, 1996 CarswellOnt 3676 (Ont. Ct. (Gen. Div.)) is a case also relied on by the wife. In Ashmore the court held that, in the circumstances of that case, the subsequent signature by a person who did not previously watch the parties execute the agreement did not constitute witnessing within the meaning of s. 55. In Ashmore the wife argued that an amendment to a separation agreement failed to comply with s. 55(1) because it had not been witnessed when the parties signed it. It was subsequently signed by a neighbour who purported to witness the document. However, the court also rescinded the separation agreement due to a combination of facts including abuse, intimidation, fear, and failure to disclose income. At para. 48 Speyer, J. stated:

In this case, abuse and intimidation are real issues. The purpose of the formal requirements of the agreement being properly witnessed is to recognize that such agreements are negotiated free of duress. I rule that the agreement is unenforceable for want of compliance with s. 55(1).

[153] In summary, there are no binding cases that unequivocally state that the witness must observe the parties signing the document in order to comply with the formal requirements set out in s. 55(1). Nor is s. 55(1) clear in its drafting; like Steel J. in Waters, who was dealing with the predecessor provision, I conclude that s. 55(1) as it is drafted appears to require that the agreement be witnessed, but not that the signatures be witnessed at the time of their actual execution. Had that been the intent of the drafters, they could easily have stipulated that the agreement must be signed by the parties in the presence of a witness in order to be valid.

[154] In the circumstances of this case, I find that following the approach in Waters and Campbell is most appropriate. Like Campbell, in this case the wife accepted the agreement, as her e-mail of June 7, 2009 confirms, and admits that she signed it. Like Waters, the subsequent witness confirmed that the wife signed it, not from the wife verbally affirming having done so, but through her own recognition of the wife’s signature. As in Campbell, the wife then affirmed her acceptance of the agreement by accepting all of the benefits provided by the agreement. As stated by the court in Campbell, at para. 11, “[i]t would defeat the intent of the Act encouraging settlement of disputes to hold, in this case, that the absence of a specific witness to the defendant's signature would allow him to escape the very settlement that he made”. I agree that in the circumstances of this case it would be manifestly unfair to allow the wife to resile from her agreement on the basis that Ms. Erlingher did not watch her sign the agreement, particularly when there are no factors present that might otherwise vitiate the agreement.

[155] Accordingly, I find that the husband has met the onus of proving that there is no genuine issue requiring a trial on the issue of the formal validity of the agreement.

[156] Given that there is no genuine issue for trial with respect to setting aside the separation agreement, or having it declared unenforceable, it follows that there is no genuine issue for trial with respect to the wife’s claims for an equalization of net family property, or that the husband pay occupation rent for the time post-separation that he continued to reside in the home. The agreement offers a full release with respect to such claims, as follows:

12.1 Except as otherwise provided in this Agreement, Michael and Patricia release each other from all claims either may have against the other now or in the future under the terms of any statute or the common law, including all claims under the Divorce Act, the Family Law Act, and the Succession Law Reform Act, for:

(a) possession of property,

(b) equalization of net family property,

(d) compensation for contributions to property.

Divorce

[157] I am ordering that the divorce be severed from any other issues remaining in this application, and to proceed on an uncontested basis.

[158] When asked to grant a divorce, several duties are imposed on the court by s. 11 of the Divorce Act. One of those is set out in subsection 11(b), which provides that the court is required:

(b) to satisfy itself that reasonable arrangements have been made for the support of any children of the marriage and, if such arrangements have not been made, having regard to the applicable guidelines, to stay the granting of the divorce until such arrangements are made.

[159] During the motion before him on September 26, 2011, McEwen J. considered the fact that since January 1, 2011, the husband had paid $4,500 per month for child support. He had further paid 100% of the s. 7 expenses totalling approximately $5,900 per month since separation, a figure exceeding $300,000. McEwen J. endorsed:

Since the total amount the respondent is paying (i.e. approximately $10,000 per month) is not inconsistent with the Guidelines, and one has to have regard to the entire agreement, and the children are in no way negatively affected, there is no need to make an order for additional child support on any interim basis.

[160] It is also noted by McEwen J. that the husband’s income would approximate $1,000,000. Contrary to the wife’s allegations, the husband did advise the court that his income would increase beyond that initially anticipated because of the dividend payments received last year from Automodular.

[161] Even though the husband had not provided proof of his 2012 income at the time of the hearing of this motion, I am satisfied that $10,000 per month constitutes a “reasonable arrangement”, particularly since the husband has borne more than his share of the responsibility for the s. 7 expenses since the signing of the separation agreement.

[162] Accordingly, this court orders:

The husband’s motion for summary judgment is granted in full;
The divorce may proceed on an uncontested basis.

[163] If the parties are unable to agree upon the costs of this motion, they may make submissions in writing through the office of the judicial assistants in Barrie, the moving party by January 14, 2013, the responding party by January 21, 2103, and any reply by the moving party 5 days after being served with the responding submissions.

HEALEY J.

Date: December 12, 2012

[^1]: See handwritten endorsement dated October 9, 2012 in the Endorsement Record. As a result of the amendments, the claims that the husband seeks to have dismissed are those at paragraphs 1, 5, 6, 7 and 11 of the amended application.

[^2]: Exhibit 28 on the Examination of Patricia Virc

[^3]: Exhibit 15 on the Examination of Michael Blair

Virc v. Blair, 2012 ONSC 7104

Case Summary

Nature of the Motion

Summary Judgment pursuant to Rule 16 of the Family Law Rules

Issues

The Law Regarding Setting Aside Separation Agreements

The Facts

ANALYSIS

The Law

(i) Section 56(4)(a) - Failure to disclose financial information

(ii) Section 56(4)(c) – Otherwise in accordance with the law of contract

The Claim to Set Aside the Agreement – Financial Disclosure

The Claim to Set Aside the Agreement – Duress, Unconscionablity, Lack of Professional Assistance

The Claim for Spousal Support

Unenforceability of the Agreement under s. 55(1)

Divorce

Judge

Counsel

Parties

Areas of Law

Fact Patterns

Issues

Statutory Provisions 4

Legal Tests 3

Legislation 5