ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: FC - 11-1234
DATE: 20130611

BETWEEN:

Jeffrey Stacey Cuffe
Applicant

– and –

Sylvie Lousie Desjardins
Respondent

Douglas Menzies, for the Applicant

Mary Jane Binks and Michael Heikkinen, for the Respondent

HEARD: May 21 - 24, 2013

REASONS FOR JUDGMENT

J. Mackinnon J.

[1] The parties signed a marriage contract and a separation agreement in terms favourable to the husband. The wife seeks to set aside both contracts pursuant to Section 56(4) of the Family Law Act, R.S.O 1990, c. F.3. In the alternative, she seeks spousal support pursuant to Section 15.2 of the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.), as am., despite the waiver of spousal support in both contracts.

[2] The parties began cohabitation in June 1991. They were married on July 23, 1994. The marriage contract was signed on December 16, 1994. They have a daughter, Lauren, who was born June 14, 1997. They agree that the date of their separation is April 1, 2009. The separation agreement was signed June 12, 2009.

[3] The parties are six months apart in age. The husband is currently 52 years of age and the wife is currently 51 years of age. Both spouses have post secondary education. Ms. Desjardins received a diploma in medical administration in 1981. She subsequently obtained a Bachelor of Business Administration degree in 2004. At the time the couple met, she was employed as an administrative officer for the Canadian Museum of Nature. Mr. Cuffe obtained a Bachelor of Science degree in Biology in 1984. He subsequently completed his basic accreditation from the Canadian Council of Pharmaceutical Education Programs. When the couple met, he was working as a sales representative.

[4] Mr. Cuffe owned a home prior to cohabitation. When Ms. Desjardins moved in, she contributed $300 per month towards the housing costs. I am satisfied that at the time, they both regarded this as rent. Other expenses were shared between them in a way that was satisfactory to them both.

[5] In the fall of 1992, Mr. Cuffe sold that home. He purchased a new property located on Carr Place and took title in his sole name. The couple moved in. They agreed that her rent would increase to $550 per month. By the time they married, this figure had risen to $900 per month. Other expenses continued to be shared between them and Ms. Desjardins contributed to some home improvement expenses.

[6] In the fall of 1993, the couple discussed their future. By now, they were both in their early 30’s. They decided to make the commitment of marriage with the intention of starting a family in the future. They became engaged in December 1993, wedding plans were made and the wedding took place on July 23, 1994.

The Marriage Contract

[7] There was some disagreement between the parties with respect to their discussions about having a marriage contract. I find that the topic was raised by Mr. Cuffe. He definitely wanted to sign a marriage contract to protect his premarital equity in the matrimonial home, to establish the parties as separate as to property and to waive spousal support. He was prepared to share the increased equity in the matrimonial home in proportion to each person’s contribution to it. His view was that the couple had been financially separate throughout their cohabitation and this should continue in the future.

[8] The topic was discussed from time to time over the winter of 1994. Ms. Desjardins felt that she had contributed to the equity in Carr Place and was hesitant to agree that all of it should be reserved to Mr. Cuffe. She was also of the view that the future growth in the matrimonial home should be shared between them equally.

[9] On about June 29, Mr. Cuffe called a lawyer about preparing a marriage contract. He saw the lawyer on July 11. A marriage contract was prepared. In the draft, Mr. Cuffe had conceded that the equity in the matrimonial home after marriage would be divided equally between the parties in the event of a separation. The other terms established separation of property and waived spousal support in all circumstances. It is not clear when the contract was provided to Mr. Cuffe; however, I find that Ms. Desjardins did not receive a copy of it until on or shortly before July 21, 1994. On that date, she met with a lawyer, Ms. Miller, to review the marriage contract. I am satisfied from Ms. Desjardins’ own testimony and from Ms. Miller’s notes that by this point, Ms. Desjardins was accepting the separation of property and the protection of the marriage date equity in the matrimonial home for Mr. Cuffe. Ms. Miller advised her that the amount of equity in the home should be verified, financial disclosure obtained and that the full waiver of spousal support was not appropriate in the event that Ms. Desjardins might, in future, remain at home with children. She also suggested the contract need not be signed before the wedding date.

[10] In the fall, Mr. Cuffe received a reminder letter from his lawyer inquiring about the marriage contract. Mr. Cuffe wanted to get the contract signed. He testified that during the fall, Ms. Desjardins was hesitant to sign it because of the point Ms. Miller had raised about spousal support. He described this as the only area of “push back” by Ms. Desjardins. Mr. Cuffe’s testimony in this area was important. He stated he told his wife that the question of what would happen if they had children was only a “what if” at this point in time. He said he was not prepared to make a change to the spousal support release clause that would leave open the prospect of spousal support if she were to stay at home with children. He testified that he would not sign the marriage contract without the full spousal support waiver in it.

[11] A letter from Mr. Cuffe’s lawyer dated November 24, 1994 to Ms. Miller confirms that the parties were satisfied with financial disclosure and all of the terms of the draft marriage contract except that “both are agreeable to changing and softening paragraph 13.” That paragraph was the release of spousal support. I find that this was significant issue between them and both had discussed it with their respective lawyers. Despite this letter, the waiver was not “softened”.

[12] Ms. Desjardins’ testimony was that when her husband raised the question of the contract again in the fall of 1994, he was adamant that she sign it as written. Her testimony was that he told her to sign the contract or “we are done, you can leave.” She testified he kept at her until finally she signed the contract. She decided to do so because she was committed to the marriage. Ms. Miller forwarded a letter to her after the contract was signed confirming that she had reviewed the contract with her on three occasions, that Ms. Desjardins understood the nature of the agreement and had signed it voluntarily. She wrote that Ms. Desjardins had accepted the figures used to determine her husband’s equity in the matrimonial home, was appreciative of the need for complete financial disclosure and was satisfied with the information she had with respect to her husband’s financial circumstances. The letter went on to state:

We have discussed the waiver of spousal support and the statement in the agreement that your earning capacity will not be adversely effected by the responsibilities assumed during the marriage. I have advised you that I consider this provision to be unfair if you stay at home with children. You have decided to seek an amendment to the agreement if you stay home for any significant period of time, if and when you have children. You realize that amendments to the agreement must be in writing and signed by both parties.

The agreement provides for separate property regimes, and I recommend to you that you keep records of significant assets purchased or acquired by you.

[13] This letter reinforces my finding that the key issue for Ms. Desjardins was the waiver of spousal support in the event of children.

[14] I find that Mr. Cuffe pressured her into signing the agreement with the full spousal waiver in it. I make this finding not only based on her testimony but on his as well. As noted above, Mr. Cuffe testified that he was only prepared to sign the agreement if the full spousal support waiver was in it. Even though he denied telling her that “they were done” if she did not sign the contract as written, I am persuaded that he conveyed this point of view to her. His statements to Ms. Desjardins that he was not prepared to sign the contract if the spousal waiver clause was changed, as requested by her, would have held no threat or adverse consequence for her unless not having the contract signed would mean the end of their recent marriage. Clearly, the contract was to his advantage, not hers.

[15] Mr. Cuffe tried to persuade me that the marriage contract was to Ms. Desjardins’ advantage because it allowed her to share in the increased equity in the matrimonial home and kept her future income and pension growth from being divisible with him. I do not agree. Without the contract, all the equity in the matrimonial home would have been included in his net family property. This would have produced a more favorable outcome for Ms. Desjardins. Similarly, given the income and asset disparity between them, it would have been unlikely that any future growth in her pension would have exceeded her potential claim to an equalization payment and spousal support.

Lauren’s Birth

[16] Prior to Lauren’s birth, her parents discussed and agreed that her mother would remain home to look after her. Ms. Desjardins was entitled to a five year care and nurturing leave. This meant she could remain home and resume her previous position at the end of five years should she choose to do so. She was also eligible for maternity leave with Employment Insurance payments. Ms. Desjardins remained home full-time with Lauren for two and one half years. She then returned to work on a part-time basis for three additional years.

[17] During this time, the couple also agreed that Ms. Desjardins would obtain a Bachelors degree through an on-line university program. The reason for this was to enable her to move into pharmaceutical sales, for which a university degree was a requirement. When she re-entered the workforce, she did so as a sale merchandiser, moving into dental and medical sales as soon as she could. In this way, she quickly restored her income to the level it had been prior to Lauren’s birth (approximately $37,000 per annum). By the time of the separation, her income had increased to just over $80,000 per annum.

[18] During these years, Mr. Cuffe continued to be a very successful pharmaceutical sales representative. His income was about double hers at the time of marriage and continued to be, up to the date of separation.

Marital Difficulties Arise

[19] There was some stress in the marriage relationship by 2005. At that point in time, Mr. Cuffe had an opportunity to transfer to Nova Scotia. Earlier on, the couple had discussed living ten years in Ottawa and then moving to Nova Scotia to be closer to his family for the next ten years. In anticipation of doing so, they had purchased a residential lot which they paid for equally. However, when the opportunity to move presented itself, Ms. Desjardins did not wish to leave Ottawa. One of her reservations was a level of unhappiness in the marriage. Mr. Cuffe was disappointed but, nonetheless, agreed to sell the property, divide the proceeds equally and remain in Ottawa.

[20] Ms. Desjardins testified that Mr. Cuffe was a controlling, domineering person. She said that he belittled her throughout the marriage in terms of her education, her contribution to the family and in the event she expressed an opinion that differed from his. As more time went on, she became more unhappy with the fact she had signed the marriage contract. She felt humiliated by it and that it did not show respect to her as equal partner in the marriage.

[21] Ms. Desjardins had suffered from chronic depression for years. She had been treated for depression and anxiety both prior to and during the marriage. Mr. Cuffe acknowledged he knew she had post-partum depression following Lauren’s birth but it cleared up. He acknowledged she told him on one occasion she had been sexually abused as a child but said she provided no other details and did not want to talk about it. This was the extent of his knowledge of any mental health issues on her part. Ms. Desjardins did not contradict his testimony on this point and I accept it.

[22] Marriage problems came to a head in 2007 when Ms. Desjardins had an outbreak of genital herpes. I accept her testimony that she never had this virus before and had always been faithful during the marriage. She suspected her husband must have been unfaithful to her. Around the same time, she began to receive anonymous emails suggesting she be tested for HIV because of her husband’s alleged numerous infidelities to her.

[23] There emails were very upsetting to both spouses. They both tried their best to track down the source with no success. Mr. Cuffe did agree to be tested. The result of his test is in dispute. Ms. Desjardins says he told her that he tested positive for the herpes virus. He says that he was told it was possible he may have had herpes but it was not confirmed. In any event, both the virus and the emails became very upsetting for Ms. Desjardins and she was not coping well with these events.

[24] The parties had previously been to marriage counseling and decided to go back. They attended one session in March 2009. Ms. Desjardins testified that her husband said she needed individual counseling and that she was the source of the marriage problems. This was the last straw for her; she decided to leave.

[25] She began looking for a house immediately and signed an Agreement of Purchase and Sale on March 21. The closing date was June 25, 2009. Mr. Cuffe testified this came as a “bombshell” to him. He had thought that they had agreed to return to the marriage counselor for further sessions. He had no idea that she was looking for alternative housing.

[26] Nonetheless, he appears to have accepted her decision quickly. He pointed out to her that she would need her equity from the matrimonial home in order to close her purchase and that they should see a mediator. This was done. The mediator prepared a separation agreement consistent with the terms of the marriage contract.

The Separation Agreement

[27] Each party retained a family law lawyer. The draft separation agreement was forwarded to each lawyer. A Schedule was prepared by Mr. Cuffe and the couple’s financial planner setting out their assets. They did not have any debts at this time. The Schedule did not take the form of a net family property statement but rather simply listed the assets and values. The final Schedule, as attached to the signed separation agreement, showed Mr. Cuffe with assets worth $963,000 and Ms. Desjardins with assets worth $312,000, both in round numbers.

[28] Ms. Desjardins testified that at this point, she was desperate to get out of the house and the marriage. She first saw her lawyer, Barbara Cohen, on May 21, 2009. Ms. Cohen did not like the agreement. She gave the opinion that the property division was unconscionable and that it may be possible to have the marriage contract set aside. She was also concerned about the waiver of spousal support and gave the opinion that generally speaking after a long term marriage such as this, there would not be a release of spousal support. Ms. Desjardins testified that Ms. Cohen had advised her that the draft agreement was unfair because it did not provide for child or spousal support. She recommended that Ms. Desjardins seek amendments to the spousal waiver. She also discussed with her that the property division in the marriage contract appeared to be unconscionable and that she might have a case to set aside that contract.

[29] One of the reasons Ms. Cohen thought the marriage contract led to unconscionable results was that she thought Ms. Desjardins had been harassed into allowing her husband to register a $100,000 mortgage against the home and using the proceeds for his sole benefit. This was not the case. Ms. Desjardins had independent legal advice and was agreeable to Mr. Cuffe using some of his equity for investments. Mr. Cuffe paid the cost of borrowing and discharged the mortgage fully without any expense or detriment to Ms. Desjardins. There was no profit, only a small loss which he covered himself.

[30] On May 26, Mr. Cuffe advised his wife that he may be losing his job. This in fact did happen. He was terminated without cause in early June and accepted a lump sum severance package equivalent to about ten months’ salary. There was some skepticism expressed at trial as to whether Mr. Cuffe had engineered his departure from his employment. I find that his testimony was uncontradicted, even if it was challenged in cross-examination.

[31] Accordingly, while Ms. Cohen’s opinion was that the spousal support release was improper, she was faced with a somewhat uncertain situation with respect to Mr. Cuffe’s financial circumstances. Ms. Desjardins testified that her husband threatened her that she should sign the agreement including the waiver because he was now in a position where he could seek spousal and child support from her.

[32] Mr. Cuffe denies making such a blatant threat to her. He did concede he may have said to her that someone without a job may be in a position to seek child and spousal support. He pointed out, however, that he did not do so.

[33] I prefer Ms. Desjardins’ testimony in this regard. I find that Mr. Cuffe knew about Ms. Cohen’s concerns about the spousal release. He denied this, but he emailed his lawyer on Saturday, May 30, stating that “despite the feedback she received from her independent counsel, Sylvie was still prepared to proceed”.

[34] Although it appears from Ms. Cohen’s file that Ms. Desjardins was giving some “sober informed thought” to the advice she had received, in the end, the agreement was signed in accordance with the terms of the marriage contract. Ms. Desjardins received a payment of $130,000 in return for which she released all of her claims against Mr. Cuffe. This included her share of the equity in the matrimonial home plus an additional payment of $7,500 which was stated to be on account of the diminishment in her pension during her five year care and nurturing leave.

[35] Ms. Cohen changed the Certificate of Independent Legal Advice before signing it. The original Certificate included these words:

Sylvie Desjardins acknowledged that she completely understood the nature and effect of the agreement. Sylvie Desjardins executed the agreement in front of me and confirmed that she was entering into the agreement of her own volition without any fear, threats, compulsion or influence by Jeffrey Cuffe or any other person.

[36] Ms. Cohen deleted the words “without out any fear, compulsion or influence”. Ms. Cohen stated that she did so because she could not honestly attest to the Certificate in its original form. She also stated that this was the only occasion in her practice when she had felt compelled to take such a step.

Did Mr. Cuffe compel or influence Ms. Desjardins to sign the Separation Agreement?

[37] I accept that when the separation agreement was signed, Ms. Desjardins was in a very upset, fragile state of mind. She had not come to grips with the fact of the herpes diagnosis. This contributed strongly to her unhappiness, anxiety and lessened her self-esteem.

[38] I find that Mr. Cuffe knew she was unhappy and upset but not that she was in a vulnerable mental state. She did not leave their bedroom until after the separation agreement was signed. Ms. Desjardins testified she kept up a brave face for the sake of their daughter. She also continued to go to work without apparent difficulty. I accept her description of Mr. Cuffe as being controlling and having a dominating personality. This was amply demonstrated during his cross-examination. At numerous times, he was abrasive and challenging. On occasion, he lectured counsel. On other occasions, he was very argumentative. I formed the opinion that he was a person who liked to get the last word in. By comparison, Ms. Desjardins did appear quite meek and timid, consistent with her family practitioner’s description.

[39] I find that Ms. Desjardins was under pressure to sign the contract in order to obtain the payment of $130,000 which was essential for her purchase of her new home. She created this situation herself. Mr. Cuffe did not pressure her in this regard by saying she would not get the money unless she signed the agreement first. This is confirmed in the Answer given by Ms. Desjardins in questioning. She was asked whether Mr. Cuffe had said he would not give her the equity in the home and she answered, “I guess he was going to give me the money.”

[40] I find that Ms. Desjardins was influenced by her husband telling her that now that he had lost his job, he was in a position to seek child and spousal support from her. I believe that this, in combination with the existence of the marriage contract, were both operating on Ms. Desjardins’ mind when she signed the separation agreement.

[41] The fact that the separation agreement provided for no monthly child support payment underlines the unfairness of the support arrangements. Even though Mr. Cuffe had lost his job, he had a ten month severance package in hand, he had always made twice the income of his wife and, at least until the severance period ran out, there was no legal justification for the omission to include at least the set off amount of monthly child support.

Should either contract be set aside under the Family Law Act?

[42] Section 56(4) of the Family Law Act provides as follows:

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

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

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

(c) otherwise in accordance with the law of contract. R.S.O. 1990, c. F.3, s. 56 (4).

Ms. Desjardins relies on sub paragraphs (a) and (c).

[43] Ms. Desjardins submits that the disclosure provided to her prior to the execution of the marriage contract was inadequate. My finding is that she had a good understanding of what the home was worth and was aware at all times that her husband made about twice as much as she did. I am persuaded by her lawyer’s letter that she was satisfied with the financial information she had at that time and knew she could have asked for more information if she had wanted it.

[44] I am also satisfied that Ms. Desjardins was well aware of Mr. Cuffe’s financial position at the time of the separation agreement. They had the same financial planner who had been sending them a family financial summary every six months for many years. Mr. Cuffe testified that she saw his income tax return every year. He said they always prepared their income tax returns together. Ms. Desjardins admitted that she knew that he made about twice what her salary was.

[45] There was an inaccuracy in Schedule C attached to the Seperation Agreement. Mr. Cuffe agreed that a mistake had been made. His total assets should have been shown as $1,093,000 rather than $963,293.

[46] In Rick v. Brandsema, 2009 SCC 10, [2009] 1. S.C.R. 295, The Supreme the Court of Canada underscored the importance of accurate financial disclosure at paras. 48 – 50:

48 ...An agreement based on full and honest disclosure is an agreement that, prima facie, is based on the informed consent of both parties. It is, as a result, an agreement that courts are more likely to respect. Where, on the other hand, an agreement is based on misinformation, it cannot be said to be a true bargain which is entitled to judicial deference.

49 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 bargain 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.

50 In other words, the best way to protect the finality of any negotiated agreement in family law, is to ensure both its procedural and substantive integrity in accordance with the relevant legislative scheme.

[47] In this case, I was not persuaded that there was any intentional non-disclosure in connection to the signing of the separation agreement. The error in Schedule C to the separation agreement did not induce Ms. Desjardins to sign the agreement. Were I to rely on that disclosure error to set aside the property provisions of the seperation agreement, the outcome would not change in that Ms. Desjardins would still be bound by the provisions in the marriage contract.

[48] In order to set a contract aside at common law, the Court must make a finding of unconscionability. The leading case in Ontario is Rosen v. Rosen (1994), 1994 2769 (ON CA), 18 O.R. (3d) 641 (C.A.). The Court quoted its earlier decision in Mundinger v. Mundinger, 1968 250 (ON CA), [1969] 1 O.R. 606 (C.A.) where it said:

11 …The principle enunciated in Vanzant v. Coates, supra, has been consistently followed and applied by the Courts of this Province and the other common law Provinces of Canada. The effect of the relevant decisions was neatly stated by Professor Bradley E. Crawford in a commentary written by him and appearing in 44 Can. Bar Rev. 142 (1966) at p. 143, from which I quote the following extract:

If the bargain is fair the fact that the parties were not equally vigilant of their interest is immaterial. Likewise if one was not preyed upon by the other, an improvident or even grossly inadequate consideration is no ground upon which to set aside a contract freely entered into. It is the combination of inequality and improvidence which alone may invoke this jurisdiction. Then the onus is placed upon the party seeking to uphold the contract to show that his conduct throughout was scrupulously considerate of the other's interests.

12 This is slightly different from the test set forth by the trial judge in the case at bar. It is, however, the basis of our modern law of unconscionability and I would unhesitatingly follow it. The question therefore becomes was there an inequality between the parties, a preying of one upon the other which, combined with improvidence, cast the onus upon the husband of acting with scrupulous care for the welfare and interests of the wife. I think not.

13 We must always remember that it is not the ability of one party to make a better bargain that counts. Seldom are contracting parties equal. It is the taking advantage of that ability to prey upon the other party that produces the unconscionability. I can find nothing in the reasons for judgment quoted above to denote that advantage taken.

[49] I find that Ms. Desjardins was accepting of the property provisions of the marriage contract even after Ms. Miller carefully reviewed the equalization scheme of the Family Law Act with her. After obtaining legal advice, the point of contention she raised with her husband was the complete waiver of spousal support including in the event she remained home with a child. I have found Mr. Cuffe pressured her into accepting the full spousal release by threatening that their recent marriage was off unless she left that clause unchanged. In this way, he “preyed” upon her and pressured her into signing the agreement with that improvident clause in it.

[50] Ms. Desjardins submits that the separation agreement should be set aside because it was entered into while she was under emotional and economic duress. I have found that the financial pressure she was under to close her house purchase was her own responsibility and did not derive from Mr. Cuffe. I have found that Ms. Desjardins was influenced by her husband’s representation to her that he was in a position to seek child and spousal support from her. In reality, he had no chance of obtaining either from her given his severance package. This misrepresentation combined with her knowledge of the terms of the marriage contract, induced Ms. Desjardins to accept the full waiver of spousal support.

[51] Ms. Desjardins also submits that in the absence of duress, undue influence, unconscionability, or disclosure issues, nonetheless both agreements vary so greatly from her legal entitlement that they ought not to be upheld by the court. The parties agree that the equalization payment that would have been owing to Ms. Desjardins, even allowing for a date of marriage deduction for Mr. Cuffe’s equity in the matrimonial home, would range between $170,000 and $210,000[1]. In my view, an improvident property agreement is not subject to review by the court for that reason alone.

[52] I find that the provisions in the marriage contract and the separation agreement relating to spousal support were only agreed to by Ms. Desjardins because of the undue influence applied to her by Mr. Cuffe in securing their inclusion in each contract. The waiver is also improvident in the circumstances of their marriage. For these reasons, the support waiver is set aside.

[53] In my view, it is appropriate in this case to set aside the waivers of spousal support and to uphold the balance of the agreements. Ms. Desjardins accepted the property provisions in the marriage contract with legal advice.

Section 15.2 of the Divorce Act

[54] In Miglin v. Miglin, 2003 SCC 24, [2003] 1 S.C.R. 303, the Supreme Court of Canada set out a two stage analysis to apply when an application is made pursuant to Section 15.2 of the Divorce Act for spousal support at variance from the terms of a pre-existing final agreement. Stage 1 of the analysis focuses on the circumstances in which the agreement was negotiated and executed to determine whether there is any reason to discount the agreement. The substance of the agreement is then to be considered to determine the extent to which its terms are in substantial compliance with the objectives of the Divorce Act. With respect to stage 1, the Court stated at paras. 81 and 82:

81 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.

82 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. ... 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. ... 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.

[55] I am of the view that the inclusion of the spousal support waiver in the separation agreement is tainted by its derivation from the marriage contract and Mr. Cuffe’s insistence on that clause as a condition of continuing the marriage. The existence of the marriage contract with the spousal support release in it resulted in a fundamental flaw “in the negotiation phase of the separation agreement”. The independent legal advice that Ms. Desjardins received could not make up for this deficit. She was not in any position to challenge the validity of the marriage contract. Mr. Cuffe compounded the matter by misrepresenting his ability to seek child and spousal support from her at the time of seperation. From this conclusion, it follows that the agreement waiving spousal support merits little weight.

[56] Nor does the agreement reflect an equitable sharing of the economic consequences of the marriage or its breakdown. Section 15.2(6) of the Divorce Act provides:

15.2(6) 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;

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

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

[57] The substance of this agreement is not in substantial compliance with subparagraphs (a) or (b), either at the time it was written or at the present time. The Court is not restricted to simply viewing the spousal support arrangements in a vacuum. The failure to provide any spousal support for Ms. Desjardins in the context of the net worth of each party constitutes a significant departure from the general objectives of the Divorce Act for spousal support. So does the omission of any spousal support having regard to Ms. Desjardins’ child caring role and her absence from full-time employment for five years. The agreement does not address the economic dependence arising from the marriage or the discrepancies between the standards of living enjoyed by the parties.

[58] The parties’ Line 150 incomes for the years 2008 forward are as follows:

Year
Mr. Cuffe
Ms. Desjardins

2008
$137,213
$82,059

2009
$166,470
$81,808

2010
$41,835
$75,089

2011
$85,651
$53,008

2012
$130,295
$57,833

[59] The parties share physical custody of Lauren. Prior to trial, they agreed that Mr. Cuffe would make a retroactive payment equal to the set off amount of child support and continue to pay the set off amount, now $591 per month. That amount of child support is not sufficient to address the financial consequences to the mother arising from the care of the child. It still leaves a significant discrepancy between the standards of living for the child in the two parental households.

[60] Mr. Cuffe submits that there should be no spousal support awarded to Ms. Desjardins for 2010 when her income exceeded his. I agree. He also submits that he should be awarded spousal support in that year by way of a set off to any award the court might make in her favour. I do not agree. He did not claim spousal support in his pleadings. He has not demonstrated an entitlement to support arising out of the circumstances of the marriage. The net worth imbalance between them would have ruled out a spousal support payment in his favour even if it had been claimed.

[61] Mr. Cuffe made two other submissions with respect to entitlement and quantum of spousal support. In 2011, he arranged for his previous employer to offer his former position to Ms. Desjardins at a salary of $80,000 per annum. She declined the position. She explained she did not want to be dependent on him for her employment. I accept this explanation as reasonable in the circumstances. She should not have to take the risk that if he could obtain the job for her, he might also be able to secure her dismissal.

[62] Mr. Cuffe also pointed out that with his encouragement, Ms. Desjardins left her government position, and according to his calculations, has outstripped her probable rate of earnings had she remained with the government. Even if his calculations are correct, nonetheless, her full actual income is taken into account in quantifying spousal support.

[63] Accordingly, I would also award spousal support under Section 15.2 of the Divorce Act based on a Miglin analysis.

Quantum of Spousal Support

[64] Ms. Desjardins is entitled to spousal support. The quantum and duration should be within the ranges suggested by the Spousal Support Advisory Guidelines. She asked for mid-range spousal support on the basis that she would also receive a substantial equalization payment which I have not ordered. In my view, she should have spousal support at the high end of the range. The terms of the marriage contract and separation agreement, which I have upheld in relation to property division, result in a substantial difference in the parties’ net worth. Payment of mid-range spousal support would, according to the DIVORCEmate provided by Ms. Desjardins, distribute their net disposable incomes between them 54.3% in Mr. Cuffe’s favour and 45.7% in hers. That is a large discrepancy having regard to the shared custody of their daughter.

[65] I have calculated the retroactive spousal support at the high end of the SSAG range for nine months in 2009 at the rate of $2,197 per month; for 12 months in 2011 at the rate of $795.00 per month; and for 12 months in 2012 at the rate of $1,829 per month. This totals $51,261 before tax consequences are considered.

[66] Had Ms. Desjardins received these payments as periodic support, she would have retained about $33,000 after tax.

[67] I have also considered the priority given to savings and debt reduction during marriage. Mr. Cuffe testified that both were a priority and, in fact, the mortgage on their home was fully paid off before Lauren was born. In his current budget, Mr. Cuffe shows $2,883 per month for pension and RRSP contributions, and other savings, including “car replacement”. Ms. Desjardins shows $431 per month in these categories. His RRSP’s and savings of all types total $869,095 compared to hers of $215,695. Ms. Desjardins carries a debt of $56,430 over and above her mortgage loan. Mr. Cuffe has no debt of any description.

[68] Spousal support is appropriate to address a need to save for retirement. It can be utilized to promote self sufficiency in retirement. See: Griffore v. Adsett (2001), 2001 28207 (ON SC), 18 R.F.L. (5th) 63 (Ont. Sup. Ct.) at paras. 88 and 89:

88 In considering these factors, I note that the applicant, in this case, is 50 years of age and earns about $48,000 per annum. When the contract was signed he earned about $45,000 per annum. At date of separation he had a net worth of $24,000. Given his own financial requirements and his financial obligations to the children, he is unable to save any money or make any provision for his retirement. Given his age and lack of assets, saving for retirement is a real and pressing need for the applicant. He has cohabited with the respondent in a marriage of 26 years which produced three children. I am satisfied that he has assumed and met appropriate financial, childcare and household obligations as a spouse and father. In addition, his assumption of responsibilities in the marriage has assisted the wife in completing three university degrees with the result that she now has a Ph.D. and a secure job with the federal government earning a salary of $80,000 per annum. The applicant also assisted his spouse in the assumption of financial and parental responsibility to her two sisters and niece, all of whom resided with this family at various times. Indeed, although some testimony of the respondent was directed toward showing that the applicant was unreliable financially, the record before me does not permit a finding that he had failed to contribute in a way that would affect the outcome of any issue in this case.

89 The result of my finding to uphold the validity of the marriage contract is that the respondent is not required to share with the applicant any of the equity in the matrimonial home or in her federal government employment pension. She, at age 48, with an employment income of $80,000, also has equity in the home of $112,700 and a pension valued net, at the date of separation, after tax, at $115,344 calculated on the basis of retirement at age 65. The court takes note that the gross, before tax value, and based on an earlier retirement age, would yield a higher value for this pension. She is entitled to continue to enhance the value of her pension. Her own contribution to it is $380 per month, by way of source deduction, and it is well known that the employer also contributes significantly to the value of this defined benefit pension.

[69] In addition, the Ontario Court of Appeal approved the use of lump sum awards of spousal support in Davis. v. Crawford, 2011 ONCA 294, 106 O.R. (3d) 221 (C.A.) at paras 52, 67, 68 and 69:

52 Both the Family Law Act, R.S.O. 1990, c. F.3 and the Divorce Act (1985, c. 3 (2nd Supp.)) contain provisions conferring a broad discretion on judges to make an award of periodic or lump sum spousal support, or to make an award comprising both forms of support.

67 The advantages of making such an award will be highly variable and case-specific. They can include but are not limited to: terminating ongoing contact or ties between the spouses for any number of reasons (for example: short-term marriage; domestic violence; second marriage with no children, etc.); providing capital to meet an immediate need on the part of a dependant spouse; ensuring adequate support will be paid in circumstances where there is a real risk of non-payment of periodic support, a lack of proper financial disclosure or where the payor has the ability to pay lump sum but not periodic support; and satisfying immediately an award of retroactive spousal support.

68 Similarly, the disadvantages of such an award can include: the real possibility that the means and needs of the parties will change over time, leading to the need for a variation; the fact that the parties will be effectively deprived of the right to apply for a variation of the lump sum award; and the difficulties inherent in calculating an appropriate award of lump sum spousal support where lump sum support is awarded in place of ongoing indefinite periodic support.

69 In the end, it is for the presiding judge to consider the factors relevant to making a spousal support award on the facts of the particular case and to exercise his or her discretion in determining whether a lump sum award is appropriate and the appropriate quantum of such an award.

[70] Here, I consider a lump sum suitable to address the importance placed on savings and debt reduction during this marriage and the disparate situations of the parties in this regard after the termination of marriage. As stated in Davis at paras. 60, 61 and 62:

60 It is well accepted - and undisputed - that a lump sum award should not be made in the guise of support for the purpose of redistributing assets: Mannarino; Willemze-Davidson v. Davidson (1997), 1997 1440 (ON CA), 98 O.A.C. 335 (C.A.), at para. 32. Moreover, the governing legislation does not recognize redistribution of assets as one of the purposes of a spousal support award.

61 That said, a lump sum order can be made to "relieve [against] financial hardship, if this has not been done by orders under Parts I (Family Property) and II (Matrimonial Home)": Family Law Act, s. 33(8)(d).

62 In any event, the purpose of an award must always be distinguished from its effect. Any lump sum award that is made will have the effect of transferring assets from one spouse to the other. The real question in any particular case is the underlying purpose of the order: Willemze-Davidson at para. 32.

[71] Mr. Cuffe has the ability to pay a lump sum. A lump sum spousal support payment can address the retroactive claim and the savings/debt reduction needs of Ms. Desjardins to date, without engaging the disadvantage described above. I order him to pay her $60,000 by way of a lump sum spousal support.

[72] In addition, I also order Mr. Cuffe to pay periodic spousal support to Ms. Desjardins commencing January 1, 2013 in the amount of $1,800 per month for an indefinite (unspecified) duration subject to variation in the event of a material change in circumstances. On an ongoing basis, this amount will meet Ms. Dejardins’ budgetary needs, allow her to increase her provision for savings and retirement and to achieve a standard of living more commensurate with that of Mr. Cuffe.

Costs

[73] If counsel are unable to agree on costs, I will receive written submissions. These should be restricted to three pages plus necessary attachments, including any offers and a Bill of Costs. The respondent shall deliver her submissions on or before June 28, 2013. The applicant shall deliver his on or before July 17, 2013. A further brief right of reply, if necessary, is open to the respondent until July 26, 2013.

J. Mackinnon J

Released: June 11, 2013

COURT FILE NO.: FC - 11-1234
DATE: 20130611

ONTARIO
SUPERIOR COURT OF JUSTICE

BETWEEN:

Jeffrey Stacey Cuffe
Applicant

– and –

Sylvie Lousie Desjardins
Respondent

REASONS FOR JUDGMENT

J. Mackinnon J

Released: June 11, 2013

[1] Had it been necessary to my decision, I would have upheld the date of marriage deduction and found the equalization payment due to Ms. Desjardins to be $194,748. This derives from accepting her NFP statement and allowing Mr. Cuffe the agreed upon date of marriage deduction for the equity in the matrimonial home.