CITATION: Rolland v. Tevendale, 2015 ONSC 3226
COURT FILE NO.: FC-14-1952
DATE: 2015/06/26
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Tania Rolland
Applicant
– and –
Thomas Tevendale
Respondent
Cecil Lyon, for the Applicant
Paul Fitzgerald, for the Respondent
HEARD: March 30, 2015
REASONS FOR DECISION
Justice patrick smith
Overview
[1] The Applicant, Tania Rolland seeks an order setting aside the separation agreement entered into with the Respondent, Thomas Tevendale, on January 25, 2012. The application is brought under both the Divorce Act, R.S.C. 1985, as amended and under the Family Law Act, R.S.O. 1990, c.F.3 as amended, [FLA]. While the Applicant’s application sets out a variety of orders sought, the essence of her claim is for spousal support, both retroactive and prospective.
[2] The Applicant’s factum recites three primary grounds in support of her application:
The Respondent intentionally failed to disclose material assets;
The quantum and duration of spousal support set out in the agreement is “woefully inadequate” given the length of the marriage and the roles adopted by the parties during the marriage; and,
The Respondent preyed upon the Applicant’s vulnerabilities for his own benefit and misled the Applicant to believe that by signing the separation agreement, there was a possibility of reconciliation between the parties.
Factual Background
[3] The parties began cohabiting on July 1, 1996 and were married on July 15, 2000. They separated on December 27, 2011, after a 15 year relationship. During 11 of those years they were married.
[4] There are no children of the marriage.
[5] The marriage was not without its ups and downs. The parties had separated on previous occasions and had reconciled.
[6] Both parties worked throughout the marriage. The Applicant has been employed on a permanent and full time basis by the Ottawa Carleton District School Board as an Educational Assistant. At the time that the parties separated the Applicant earned approximately $51,782.00, along with benefits including a pension.
[7] At all relevant times to this proceeding the Respondent was employed as a recruiter by Ajilon/Modis. At the time of separation the Respondent’s annual income was $97,386.51, including base salary, bonuses and commission. This amount is net of a $16,500.00 severance payment received in 2011 from a previous employer. The Respondent has no pension from his employment.
[8] During their marriage the parties maintained separate bank accounts. Their sole joint financial obligation was ownership of the matrimonial home.
[9] Throughout the course of their marriage the parties resided in Ottawa. Neither was required to relocate to accommodate the other’s career or personal needs.
[10] Save and except for short periods of time, after separation the parties continued to primarily reside together, separate and apart, in the same home. It appears that during this time the parties were able to get along and to exchange financial disclosure information and discuss various options to settle support obligations, as well as the division of their property including the division of the Applicant’s pension and the Respondent’s retirement savings plans.
[11] Both retained and instructed legal counsel and exchanged sworn financial statements. Notwithstanding that each party had legal counsel they continued to discuss how to settle their marital issues. On January 22, 2012, the Applicant informed her lawyer that she and the Respondent had reached a settlement of all issues and instructed him to prepare a draft separation agreement for review.
[12] On January 24, 2012, the Applicant’s lawyer provided a draft separation agreement and Net Family Property Statement for review by the parties and counsel. As well, the Applicant’s lawyer confirmed that he was satisfied with the Respondent’s financial disclosure and did not require anything further.
[13] The valuation date chosen for marital assets was not December 27, 2011, the date of separation, but rather dates between the date of separation and January 13, 2012. In the course of this proceeding the parties have exchanged and disclosed all assets and liabilities as at December 27, 2011.
[14] It is noteworthy that the valuation of the Applicant’s pension used to equalize net family property was $18,478.52, whereas it now appears that the actual family law value should have been $124,788.44 or $107,942.00 net of nominal taxes.
[15] The agreement contained five major financial provisions:
The Respondent is obligated to pay spousal support to the Applicant in the amount of $250.00 per month for 8 years ending December 1, 2019;
The Respondent was to transfer an RRSP GIC with a value not less than $5,000.00 into an RRSP in the name of the Applicant as payment of lump sum spousal support;
Each party fully and completely waived any claim to the other’s pension or RRSPs;
The Applicant would pay the sum of $75,000.00 to the Respondent for the purchase of his interest in the matrimonial home and for full and final settlement of the equalization of all net family property; and
The Respondent would transfer his interest in the matrimonial home to the Applicant.
[16] The separation agreement contains several clauses that indicate that it was the intention of the parties that it would be a full and final settlement of all their marital affairs.
[17] Paragraph 2 of the agreement states that “The spousal support herein is non-reviewable and not subject to any variation regardless of any material change in circumstances of either of the parties.”
[18] Paragraph 9(ii) of the agreement states: “insofar as the issues of spousal support is concerned, it is their mutual intention that the variation provisions of the Family Law Act, the Divorce Act not now and never apply to them.”
[19] Each party acknowledged that they had received independent legal advice, understood their rights and obligations, were signing the agreement voluntarily without duress or coercion, that neither was under emotional stress or disability and that the terms were fair and reasonable.
[20] Paragraph 49 stated that the agreement was “a once and for all settlement of all their differences and affairs to avoid ever engaging in further litigation with each other, whether about matters or causes of action existing now or at any time.”
[21] Paragraph 62 of the agreement contained the attestations of both lawyers certifying that they witnessed the agreement and “explained to their client the meaning and implication at law of each provision…”
[22] On January 25, 2012, the Applicant and the Respondent signed the separation agreement with the advice of independent counsel. The Net Family Property Statement drafted by the Applicant’s lawyer is attached as a schedule to the agreement.
[23] On or about February 2014 the Applicant retained counsel who contacted the Respondent and advised that he had been retained to seek a review of the spousal support and property provisions of the separation agreement based upon the assertion that they were unconscionable.
[24] On August 18, 2014, the Applicant issued the application before the Court seeking, inter alia:
• An order setting aside the separation agreement dated January 25, 2012;
• Awarding interim and permanent spousal support as well as retroactive support; and
• An order equalizing net family property.
[25] During the hearing of this application, counsel for the Applicant advised the Court that they were abandoning the claim for an equalization of net family property and were asking the agreement be set aside only with respect to the spousal support provisions.
The Position of the Applicant
[26] The position of the Applicant may be summarized as follows:
• The Respondent “preyed” upon the Applicant and enticed her to sign the agreement by leading her to believe that doing so could or would save their marriage;
• Living separate and apart from the Respondent was intended to be temporary as was his purchase of a condo which would ultimately be retained as a rental property after cohabitation resumed;
• She was severely distraught by the separation and in January 2012 she was forced to take medical stress leave because she was unable to cope emotionally;
• She signed the separation agreement against the advice of her lawyer for the purpose of saving her marriage; and,
• She was not satisfied with the financial disclosure received from the Respondent.
The Position of the Respondent
[27] The Respondent’s position is that:
• The breakdown of the marriage occurred on December 27, 2011, and there was never any effort to reconcile;
• He never induced the Applicant to sign the agreement and did not “prey” upon the Applicant because she was not vulnerable;
• The separation agreement is based upon proper financial disclosure, signed with independent legal advice and represents a fair resolution of the issues arising from the breakdown of the marriage;
• In order to set aside the agreement the Applicant must meet the onus of satisfying the requirements of s. 56(4) of the FLA and has not done so.
The Law
Section 56(4) of the Family Law Act and the ‘Miglin’ Analysis
[28] Section 51 of the FLA defines a separation agreement as a domestic contract.
[29] Section 56(4) provides:
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.
[30] In 1994, the Ontario Court of Appeal in the case of Rosen v. Rosen (1994), 1994 CanLII 2769 (ON CA), 18 O.R. (3d) 641 (Ont. C.A.), set out the principle that, courts will respect agreements entered into between parties and that such agreements are subject to considerable deference.
[31] The Court, at paragraph 10 of the decision, noted the following:
I start with the proposition that it is desirable that the parties should settle their own affairs if possible. I think that they are more likely to accept their own solution to their problem than one imposed upon them. A more pedestrian reason for encouraging parties to settle their own affairs is that the courts may simply be incapable of dealing with the ever-increasing mass of matrimonial disputes.
It is, I think, obvious that the settlement of matrimonial disputes can only be encouraged if the parties can expect that the terms of such settlement will be binding and will be recognized by the courts. In my respectful view, as a general rule in the determination of what is fit and just, courts should enforce the agreement arrived at between the parties.
[32] In 2009 the Court of Appeal in Butty v. Butty, 2009 ONCA 852, 99 O.R. (3d) 228, once again stated, at para. 50, the importance of the courts respecting the right of private citizens to fashion their own agreements:
…it is important to keep in mind that courts should respect private arrangements that spouses make for the division of their property on the breakdown of their relationship, particularly where the agreement in question was negotiated with independent legal advice.
[33] Section 56(4) of the FLA requires a court to partake in a two-step process when conducting a review of a domestic contract. The Court of Appeal explained the process in LeVan v. LeVan, 2008 ONCA 388, 90 O.R. (3d) 1, at para. 51:
The analysis undertaken under s. 56(4) is essentially comprised of a two-part process: Demchuk v. Demchuk (1986), 1986 CanLII 6295 (ON SC), 1 R.F.L. (3d) 176 (Ont. H.C.). First, the court must consider whether the party can demonstrate that one or more of the circumstances set out within the provisions 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.
[see also: Virc v. Blair, 2014 ONCA 392, 119 O.R. (3d) 721.]
[34] The Applicant has the onus of establishing that she has met the requirements of s. 56(4) and if so, then convincing the court that it should exercise its discretion to set aside the agreement (see: Bowes v. Bowes, 2005 BCSC 593, 15 R.F.L. (6th) 247; and, Verkaik v. Verkaik (2009), 2009 CanLII 6843 (ON SC), 68 R.F.L. (6th) 293 (Ont. S.C.)).
[35] In Ontario, when there is an application for spousal support under the Divorce Act and where there is also a challenge to a separation agreement, the issues of validity or enforceability of the agreement should be assessed, first under both the common law and s. 56(4) of the FLA. If the agreement is then found to be valid, the Miglin v. Miglin, 2003 SCC 24, [2003] 1 S.C.R. 303 [Miglin], analysis is then used to decide whether an otherwise valid and enforceable agreement should be overridden and whether to award support under the Divorce Act.
Has the Applicant Met the Criteria set out in s. 56(4) of the Family Law Act or at Common Law?
[36] For reasons that follow, I find that the Applicant has not satisfied any of the requirements set out in s. 56(4) of the FLA or at common law necessary to set aside the separation agreement. The separation agreement signed by the parties is valid and enforceable.
Disclosure – s. 56(4)(a)
[37] The Superior Court of Justice in Quinn v. Epstein Cole LLP (2007), 2007 CanLII 45714 (ON SC), 87 O.R. (3d) 184, aff’d 2008 ONCA 662, 92 O.R. (3d) 1, set out a comprehensive summary, at paras. 46-48, of the disclosure requirements of s. 56(4):
Section 56(4)(a) of the Family Law Act provides that a court may set aside a domestic contract, or a provision in it, “if a party failed to disclose to the other significant assets, or significant debts or other liabilities, existing when the domestic contract was made”.
The case law indicates that a court should employ a two-stage analysis when considering a claim to set aside a domestic contract for non-disclosure:
(i) First, the party seeking to set aside the agreement must demonstrate that the other party failed to discharge its duty to disclose significant assets. The failure to disclose significant assets includes the making of a material misrepresentation about the true value of assets, and the failure to disclose changes in income. The significance of an asset is assessed by measuring the value of the asset against a party’s disclosed net assets. To conclude that a party has failed to disclose a significant asset, there must be some evidence to verify the value or extent of the party’s assets either at the date of marriage or the date of the agreement;
(ii) If a court finds that a party has failed to disclose a significant asset, the court must determine, in light of the facts of each case, whether it should exercise its discretion to rescind the domestic contract. The burden of proof lies on the party seeking to set aside the contract to persuade the court to exercise its discretion in its favour. The court will take into account a variety of factors in exercising its discretion:
i. whether the party who did not make full disclosure was asked or refused to do so; whether that party misrepresented or concealed financial facts; whether the other party had full financial information in any event; and, whether the other party would have signed the contract even if the disclosure had occurred;
ii. whether the party relied on the non-disclosure or misrepresentations in entering into the separation agreement in the sense that the party would not have entered the agreement had she known the true value of the assets;
iii. whether a party consented to incomplete disclosure, or was otherwise aware of the asset and had the means to ascertain its value;
iv. whether one party took benefits under the contract and then moved to set it aside; and
v. whether there had been duress, or unconscionable circumstances; whether the petitioning party neglected to pursue full legal disclosure; whether she moved expeditiously to have the agreement set aside; and whether the other party had fulfilled his obligations under the agreement.
In considering these factors, a court should not narrowly construe the obligation of spouses to make full disclosure because the FLA imposes a positive duty on both parties to disclose.
Finally, formal disclosure by way of sworn financial statements prior to executing an agreement is not necessary to meet the obligation to disclose. A general awareness of the assets of the other party may be sufficient to avoid setting aside an agreement. Parties 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. One must inquire whether the responding party withheld information or whether the information was available to the party seeking to set aside the agreement.
(i) The Allegation of Undisclosed Income
[38] The Applicant alleges that the Respondent misrepresented his income. I disagree.
[39] Paragraph 6 of the separation agreement discloses the Respondent’s income for 2010 as $91,373.00. The Respondent’s tax return and notice of assessment confirm his income for 2010 as $91,373.00.
[40] The Respondent’s 2001 tax return discloses a one-time severance pay of $14,971.00 and income of $97,386.51. The payment was received before the valuation date and the Applicant was made aware of it and, in fact, enjoyed some of the benefits derived from it including a vacation, renovations to the kitchen and the purchase of a new couch.
[41] The parties exchanged financial statements themselves and also through their legal counsel. Documents supporting the values of the assets and debts accompanied the financial statements.
[42] In a letter dated January 24, 2012, counsel for the Applicant wrote to counsel for the Respondent and confirmed “My client has provided me with copies of your client’s bank statements and income tax assessments for the last three years so I need not a copy of same.”
[43] Counsel for the Applicant prepared a Net Family Property Statement based upon the disclosure he received and attached it to a draft copy of the separation agreement that he then forwarded to counsel for the Respondent.
[44] At paragraph 56 of the separation agreement the Applicant stated that she was satisfied with the information and disclosure received and had no further requests for more information.
[45] I find that there is no evidence that the Respondent has failed to disclose a significant asset or debt.
(ii) The Allegation of Hidden Assets
[46] The Applicant asserts that the Respondent failed to disclose hidden assets in foreign or offshore accounts.
[47] There is absolutely no evidence to support this allegation. In paragraph 56 of the agreement, the Applicant stated that she was satisfied with the disclosure that she had received through her lawyer and that she had no request for further information.
Did the Applicant Understand the Nature and Consequences of the Agreement - s. 56(4)(b)?
[48] Both parties had independent legal advice throughout the negotiation process and signing of the agreement.
[49] It was the Applicant who emailed her lawyer with the terms that he was to use to draft the agreement. The Applicant’s lawyer drafted the separation agreement and Net Family Property Statement.
[50] The terms of the agreement were not complicated. The Applicant is an intelligent person, does not suffer from any disability, and demonstrated an excellent understanding of the issues and the consequences of signing the agreement.
[51] The Applicant also confirmed, when signing the agreement, that she understood its terms and consequences and was signing voluntarily.
[52] The agreement contains a Certificate and Affidavit of the Applicant’s solicitor attesting to the fact that he “advised the said Tania Rolland with respect to the within contract and I believe that she is fully aware of the nature, consequences and effect of this contract on and in light of her present and future circumstances and is signing it voluntarily.”
[53] Additionally, paragraph 63 of the agreement contains a “Solicitor Attestation” signed by both counsel confirming that “Each solicitor signs this Agreement not only in his or her capacity as witness but also to attest that he or she explained to the client the meaning and implication at law of each provision of the Agreement.”
[54] I find that there is no evidence before the Court that the Applicant did not understand what she was signing or the consequences of signing the separation agreement.
Is there a Reason to Set Aside the Agreement Based Upon the Law of Contract – s.56(4)(c)?
[55] The Ontario Court of Appeal in the case of Ward v. Ward, 2011 ONCA 178, 104 O.R. (3d) 401, set out a list of grounds that justify a court setting aside a domestic contract pursuant to s. 56(4)(c) of the FLA. At para. 21 the Court stated:
Section 56(4)(c) of the FLA permits a court to set aside a domestic contract "in accordance with the law of contract", which counsel agree would include grounds such as unconscionability, duress, uncertainty, undue influence, mistake and misrepresentation.
Unconscionability
[56] Recently, in the case of Toscano v. Toscano, 2015 ONSC 487, 57 R.F.L. (7th) 234, the court provided a thorough summary of s. 56(4)(c) of the FLA. With respect to the issue of unconscionability Blishen J. stated:
[63] Although in her Application Ms. Toscano argued that the consequences of the marriage contract were unconscionable, in general the doctrine of unconscionability with respect to domestic contracts focuses on whether or not there were unconscionable circumstances surrounding the formation of the contract. It is the circumstances at the time of the drafting and signing of the contract which must be examined, not the results, under this criterion. There is an exception for a spousal support waiver which can be set aside if it results in unconscionable circumstances, pursuant to s. 33(4) of the FLA.
[64] Matrimonial negotiations occur in a unique environment and therefore unconscionability in the matrimonial context is not equivalent to unconscionability in a commercial context (Rick v. Brandsema, 2009 SCC 10, [2009] 1 S.C.R. 295, at para. 43 [Brandsema]). The question to be asked is whether there were “any circumstances of oppression, pressure, or other vulnerabilities, and if one party’s exploitation of such vulnerabilities during the negotiation process resulted in a separation agreement that deviated substantially from the legislation” (ibid, at para. 44).
[65] Examples of inequality in bargaining may include one party being intellectually weaker by reason of a disease of the mind, economically weaker or situationally weaker. Vulnerability may also arise due to a special relationship of trust and confidence (see Norberg v. Wynrib, 1992 CanLII 65 (SCC), [1992] 2 S.C.R. 226, at para. 33). However, 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” (Miglin v. Miglin, 2003 SCC 24, [2003] 1 S.C.R. 303, at para. 82, [Miglin]).
[66] In Rosen v. Rosen (1994), 1994 CanLII 2769 (ON CA), 3 R.F.L. (4th) 267 at para. 12 (Ont. C.A.), the Ontario Court of Appeal states the question to be answered in determining unconscionability is whether there was inequality between the parties, or a preying of one upon the other, that placed an onus on the stronger party to act with scrupulous care for the welfare and interests of the vulnerable. At para. 13 the Court notes 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”.
[68] In Miglin at para. 83 the Supreme Court of Canada notes that the emotional stress from separation or divorce does not give rise to the presumption that a party is incapable of assenting to a binding agreement. By extension, the emotional stress due to planning a large wedding which was to take place 11 days after the contract was signed, does not mean Ms. Toscano was incapable of understanding or assenting to a binding agreement. I do not find unconscionability a ground to set aside the marriage contract.
[57] In the case at bar, the evidence is simply insufficient, if not non-existent, to prove on a balance of probabilities that there were “any circumstances of oppression, pressure, or other vulnerabilities, and if one party’s exploitation of such vulnerabilities during the negotiation process resulted in a separation agreement that deviated substantially from the legislation” (Rick v. Brandsema, 2009 SCC 10, [2009] 1 S.C.R. 295, at para. 43).
[58] The Applicant abandoned her request to set aside the property settlement at trial; however, it bears noting that unquestionably her pension was significantly undervalued by approximately $90,000.00 leaving her with a sizeable equalization overpayment.
Undue Influence and Duress
[59] In considering undue influence, the court must inquire into whether there was: (i) an improvident bargain, and (ii) if so, whether there was inequality in bargaining power (see Hyldtoft v. Hyldtoft (1991), 1991 CanLII 12868 (ON SC), 33 R.F.L. (3d) 99, at paras. 26-28 (Ont. Gen. Div.)).
[60] To establish undue influence or inequality in bargaining power “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” (see Segal v. Qu (2001), 2001 CanLII 28201 (ON SC), 17 R.F.L. (5th) 152 at para. 59 (Ont. S.C.)).
[61] Duress involves a coercion of the will of one party or directing pressure to one party so they have no realistic alternative but to submit to the party (see Berdette v. Berdette (1991), 81 D.L.R. (4) 194 at para. 22 (Ont. C.A.)). Equity recognizes a wider concept of duress including coercion, intimidation or the application of illegitimate pressure.
[62] There is no evidence to show that the Applicant was dominated, manipulated or coerced by the Respondent. The evidence before me can be fairly described as representing a ‘level playing field’ meaning that there was a balance of power between the parties at all times the agreement was being negotiated and signed.
Misrepresentation
[63] In Dougherty v. Dougherty 2008 ONCA 302, 89 O.R. (3d) 760 [Dougherty], the Ontario Court Appeal, at para. 13, held that, in order for a separation agreement to be set aside on the basis of misrepresentation:
A misrepresentation must be material in the sense that a reasonable person would consider it relevant to the decision to enter the agreement in question. In addition, the material misrepresentation must have constituted an inducement to enter the agreement upon which the party relied.
[64] There is no evidence before the Court of any misrepresentation whatsoever. Disclosure of income, assets, values and debts was thorough and complete.
Independent Legal Advice
[65] The Court of Appeal in Dougherty stated that whether an Applicant has obtained independent legal advice is a relevant consideration in the determination of whether an agreement will be set aside and stated at paragraph 82:
Courts should in general respect private agreements between spouses for the division of their property on marriage breakdown. This is especially so where the agreement concerned is negotiated with independent legal advice (see Hartshorne v. Hartshorne, 2004 SCC 22, [2004] 1 S.C.R. 550, at para. 9).
[66] In paragraphs 20 and 21 above, I have already commented on the aspect of the legal advice that the Applicant received. Suffice it to say, that there is no evidence to show that independent legal advice was not obtained or that it was inadequate.
The Miglin Analysis and Brief Summary of the Principles of Spousal Support
[67] Having found that the separation is a valid and enforceable domestic contract (the validity analysis) I turn now to what is commonly referred to as the “Miglin” analysis in determining, whether to set aside the separation agreement pursuant to the provisions of the Divorce Act.
[68] Confusion about the distinction between the validity analysis and the Miglin analysis of an agreement continues to prevail.
[69] Since the release of the decision in Miglin there has been widespread confusion about when the analysis applies and how it relates to other bodies of law that apply to challenges to domestic contracts which may include the common law and provincial legislation such as the FLA.
[70] The underlying legal context for the Supreme Court’s decision in Miglin was the exercise of the specific statutory power to make and vary spousal support awards under the Divorce Act. Under the Divorce Act, a spousal support agreement is not binding on a court but rather only one factor to be considered in deciding to vary or make a spousal support award.
[71] Miglin did not deal with the ‘setting aside’ of a separation agreement. A careful reading of the decision indicates that it was a case interpreting the statutory authority of the court to award spousal support pursuant to s. 15.2 of the Divorce Act and the power to vary prior spousal support orders pursuant to s. 17(1) of the Divorce Act.
[72] What Miglin did provide was a framework or set of guidelines with which to assess an agreement and to guide a court in the exercise of its discretionary power including the determination of what weight to accord the agreement when awarding spousal support under the Divorce Act.
[73] The framework endorsed by the Supreme Court in Miglin is a two part analysis:
Step 1.1 (fairness of the negotiations);
Step 1.2 (substantive fairness at the time of execution);
Step 2 (substantive fairness in light of changed circumstances at the time of application).
[74] Julian Payne in his text, Canadian Family Law, 4th ed., (Toronto: Irwin Law, 2011) summarized the effect of the Miglin decision as follows:
The courts retain a supervisory jurisdiction to determine whether an order for spousal support should be granted pursuant to sections 15.2 or 17 of the Divorce Act in the face of a purportedly final spousal agreement or consent order.
The narrow test imposed by the Pelech trilogy under the 1968 Divorce Act is inappropriate under the 1986 Divorce Act. The provisions of a spousal agreement that limits the amount or duration of spousal support or waives any right to spousal support may be overridden by an order for spousal support granted pursuant to section 15.2 of the Divorce Act on grounds that are somewhat broader than those defined in the Pelech trilogy.
The emphasis of the Pelech trilogy on economic self-sufficiency and a clean break is inconsistent with the current model of compensatory support espoused in Moge v. Moge and the conceptual analysis of compensatory and non-compensatory support in Bracklow v. Bracklow. Economic self-sufficiency, nevertheless, remains as one of the objectives of spousal support orders and the policy of encouraging spouses to resolve their disputes by agreement remains of vital importance.
Although a material change in the condition, means, needs, or other circumstances of either of the former spouses is a threshold requirement on an application to vary a pre-existing spousal support order pursuant to section 17 of the Divorce Act, no similar prerequisite applies where an original order for spousal support is sought pursuant to section 15.2 of the Divorce Act. In the latter context, a change of circumstances since the execution of a pre-existing spousal agreement has no relevance except with respect to its impact when the court has regard to “any order, agreement or arrangement relating to support of either spouse” as required by section 15.2(4)(b) of the Divorce Act.
Where an application for spousal support under section 15.2 of the Divorce Act is inconsistent with a pre-existing spousal agreement, the court should examine the agreement in two stages.
First, the agreement should be reviewed in light of the circumstances that existed at the time of its negotiation and execution. As of this date, the court should ascertain whether one spouse was vulnerable and whether the other spouse took advantage of that vulnerability.
In assessing the issue of vulnerability, the court need not adhere to the stringent requirements of the doctrine of unconscionability that are applied to commercial transactions.
Vulnerability and an imbalance of power should not be assumed, however, in the absence of evidence of a fundamental flaw in the negotiation process.
The existence of emotional stress on separation or divorce should not be judicially perceived as negating the ability of the spouses to freely negotiate a mutually acceptable agreement. Any systemic imbalance of power between spouses will usually, but not always, be overcome if each spouse has independent legal representation.
After addressing the circumstances attendant on the execution of the agreement, the contents of the spousal agreement should be examined as of the date of its execution to see whether they substantially comply with the overall objectives of the Divorce Act, which include an equitable sharing of the economic consequences of the marriage and its breakdown in accordance with section 15.2(6) of the Divorce Act and the promotion of certainty, autonomy, and finality that is implicitly acknowledged by section 9(2) of the Divorce Act.
Where the spousal agreement is unimpeachable as of the date of its execution, the court will pursue the second stage of its inquiry by examining the spousal agreement in light of the facts existing at the time of the application for a support order under section 15.2 of the Divorce Act. As of that date, the court should determine whether the applicant has established that the agreement no longer reflects the original intention of the spouses and whether it is still in compliance with the overall objectives of the Divorce Act.
In this context, the applicant must show that new circumstances have arisen that were not reasonably anticipated by the spouses when their agreement was executed and that these changes have led to a situation that cannot be condoned.
Changes that occur in the ordinary course of people’s lives, such as health problems, changes in the job market, business upswings or downturns, remarriage, or increased parenting responsibilities will not justify judicial interference with a final spousal settlement. It is only where the current circumstances represent a significant departure from the range of reasonable outcomes anticipated by the spouses, in a manner that puts them at odds with the overall objectives of the Divorce Act, that the court may be persuaded to give little weight to the agreement on the application for a spousal support order under section 15.2 of the Divorce Act.
[75] Subsection 15.2(4) of the Divorce Act defines the “factors” that a court must consider in determining the right to, amount, and duration of spousal support. It provides that the court shall take into consideration the condition, needs, means, 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 (c) any order, agreement, or arrangement relating to support of either spouse.
[76] These four statutory criteria confer a broad discretion on the court to have regard to any facts that the trial judge considers relevant, with the exception of matrimonial misconduct.
[77] Spousal support cases are fact-driven. Terms such as “means” and “needs” in subsection 15.2(4) of the Divorce Act and “economic self-sufficiency” in subsection 15.2(6) of the Divorce Act must be interpreted and applied having regard to the circumstances of the particular spouses.
[78] A substantial matrimonial property entitlement on the breakdown of marriage does not imply that a spousal support order is inappropriate. Rather, it is another factor that may be balanced by the court.
[79] As McLachlin J., as she then was, observed in Bracklow v. Bracklow, 1999 CanLII 715 (SCC), [1999] 1 S.C.R. 420, the judicial role is not to select one particular model but to apply the relevant factors to the statutory objectives and strike a balance that best achieves justice in the particular case before the court.
[80] The four objectives defined in the Divorce Act are not necessarily independent of each other. They may overlap or they may operate independently, according to the circumstances of the particular case. All four of the objectives defined in the Divorce Act should be examined in every case wherein spousal support is claimed or an order for spousal support is sought to be varied. There is nothing in the Divorce Act to suggest that any one of the objectives has greater weight or importance than any other objective.
[81] The fact that one of the objectives, such as economic self-sufficiency, has been attained does not obviate the need to ascertain whether the remaining objectives have also been satisfied.
[82] The aforementioned objectives, which operate in the context of a wide judicial discretion under subsections 15.2(4) and 17(4.1) of the Divorce Act provide opportunities for a more equitable distribution of the economic consequence of divorce between the spouses.
[83] The Supreme Court in Moge v. Moge, 1992 CanLII 25 (SCC), [1992] 3 S.C.R. 813 [Moge], confirmed that there is a broad judicial discretion to determine the right to, amount, and duration of spousal support under the Divorce Act. Judicial discretion is exercisable having regard to the factors signified under sections 15.2(4) and 17(4.1) of the Divorce Act and having regard to the policy objectives defined in sections 15.2(6) and 17(7).
[84] There is no single model or objective that underlies spousal support orders. It is a discretion-driven analysis that is geared towards overall fairness.
[85] In the words of L’Heureux-Dubé J. in Moge: “[T]he focus of the inquiry when assessing spousal support after the marriage is ended must be the effect of the marriage in either impairing or improving each party’s economic prospects” (at para. 373).
[86] In determining whether the spousal support provisions of a purportedly final settlement comply with the objectives of the Divorce Act as defined in Miglin, the court must guard against analyzing particular clauses in isolation; rather, the settlement must be viewed as a whole to determine whether the spousal support provisions comply with the statutory objectives.
[87] Moge clearly affirms that an equitable sharing of the economic consequences of the marriage and its breakdown can be achieved by means of property division, spousal support, child support, or any combination thereof.
[88] A policy of promoting negotiated settlements is clearly endorsed by s. 9(2) of the Divorce Act, which imposes a duty on every lawyer to discuss with his or her client the advisability of negotiating matters that may be the subject of a support or custody order. Certainty and finality that is achieved by means of freely negotiated settlements are fundamental objectives of the Divorce Act when it is viewed as a whole.
[89] A court should be loath to interfere with a pre-existing spousal agreement, unless the court is convinced that the agreement does not comply substantially with the overall objectives of the Divorce Act. Courts should not condone spousal agreements that are manifestly prejudicial to one spouse but, equally important, they should not stand in the way of spouses bringing their personal concerns, desires, and objectives to the bargaining table in their negotiation of a mutually acceptable agreement that they regard as balancing economic fairness with the need for certainty and finality on the dissolution of their marriage.
[90] This is especially important when spousal support provisions constitute only one aspect of a comprehensive settlement that encompasses such interrelated matters as family property division and child support.
The Application of the Miglin Analysis to the Facts of the Case
[91] Applying the framework set out in Miglin and for the reasons set out below, the application must fail.
[92] For the reasons already set out above with respect to s. 56(4) of the FLA and the law of contract, the evidence is clear to me that there was fairness in the negotiations, substantive fairness at the time of execution and substantive fairness in light of changed circumstances at the time of application.
[93] I do not find the evidence of the Applicant credible with respect to being devastated by the separation and therefore vulnerable or that she signed the agreement to give the Respondent his “space” which would lead to an eventual reconciliation.
[94] I accept that the Applicant was off work for 50 days in the five months from January 2012 to June 2012 and emotionally troubled by the separation. I also accept the testimony of Carolyn Gill and Jennifer Shipley that the Applicant was hoping that reconciliation would occur.
[95] However, I do not find that the evidence supports the allegation of the Applicant that she was vulnerable, preyed upon and that she signed the agreement only to save her marriage, or that she was “duped” by the Respondent into signing it.
[96] The relationship and marriage had been a difficult one with at least three prior separations. The Applicant acknowledged that her conduct (sexual affairs) was one of the issues that led to marital difficulties and was a factor in the final separation that occurred in December 2011.
[97] The evidence, viewed in its totality does not credibly support the Applicant’s position that she was vulnerable and taken advantage of. To the contrary, I find that the evidence portrays the Applicant as an intelligent person who was in control and just as interested in moving ahead with separation as the Respondent. This was demonstrated by her retaining counsel, directing him to draft a separation agreement, dictating the terms of the agreement and exchanging financial statements with the Respondent. There is no evidence showing a power imbalance between the spouses.
[98] The agreement provided that the Respondent would pay spousal support of $250.00 per month for eight years plus a $5,000.00 lump sum payment. The Applicant submits that, given the length of the relationship and disparity in incomes between she and the Respondent, the quantum and duration of support is woefully inadequate and inconsistent with the principles set out in the Divorce Act.
[99] Counsel for the Applicant suggested that the spousal support provisions of the agreement when compared to the SSAG calculations (a range of $1,215.00-$1,620.00 for up to 15 years) reinforces her position that the agreement is not in accordance with the philosophy and principles set out in the Divorce Act.
[100] As mentioned above, every spousal support case is fact driven. The SSAG are of assistance in cases where an entitlement to support exists. On the facts of this case, entitlement has not been demonstrated.
[101] The evidence was uncontroverted that the parties had separate financial lives save and except for their ownership of the marital home. Both were and are economically self-sufficient.
[102] There is no evidence to suggest that, as a result of the marriage either party suffered economic deprivation. Rather, the evidence shows that both parties were at all times financially independent and self-sustaining. Both had well-paying careers. This is not a case where one of the parties has given up a career to advance the career of the other or, where one party puts his or her career on hold to have children.
[103] Viewing the agreement through the lens of s. 15.2(4) of the Divorce Act and the evidence with respect to the condition, needs, means and other circumstances of each spouse, I find that the support provisions were not unfair at the time the agreement was negotiated and then signed nor are they unfair now.
[104] Generally speaking, where both spouses have pursued their respective careers prior to the dissolution of their long-term marriage and there is no evidence of any significant economic advantage or disadvantage to either spouse arising from the marriage or its breakdown, an ongoing disparity between their professional incomes does not automatically justify an order for spousal support in favour of the lower-income spouse.
[105] As mentioned above, judicial discretion in determining spousal support is exercised having regard to the factors set out in s. 15.2(4) of the Divorce Act, however, as stated in Moge, the focus of the inquiry must be the effect of the marriage on the economic prospects of the parties.
[106] In the case at bar, I find that the Applicant has not met the onus of proving that she suffered any deprivation or negative economic consequence flowing from the marriage or relationship. In my view, all of the statutory objectives of the Divorce Act have been met by the agreement.
Disposition
[107] For the reasons set out above, the application is dismissed.
[108] In the event that counsel are unable to resolve the issue of costs, they shall provide written submissions within 30 days. Submissions are not to exceed 5 pages in length.
Patrick Smith J.
Released: June 26, 2015
CITATION: Rolland and Tevendale 2015 ONSC 3226
COURT FILE NO.: FC-14-1952
DATE: 2015/06/26
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Tania Rolland
Applicant
-and-
Thomas Tevendale
Respondent
REASONS FOR JUDGMENT
Patrick Smith J.
Released: June 26, 2015