When a couple agrees to forego spousal support as part of a separation agreement, a court is generally reluctant to order a change. However, if a clause is deemed unfair in light of the circumstances, a court may step in to restore equity between the parties. This was the case in a recent decision of the Ontario Court of Appeal when the court had to consider whether to uphold a support release clause or set it aside.
The husband and wife had been married for 18 years and separated in 2008. The couple had two children. The following year, the couple executed a separation agreement which stated that the husband would be responsible for paying a disproportionate amount of the couple’s shared debts. As a result, the couple agreed that the husband would not be responsible to pay child support to the mother, who remained in the matrimonial home with the two children. The parties also released all rights to spousal support via a spousal support release clause.
The debts assigned to the husband exceeded his assets by over $500,000. The husband had become unemployed prior to executing the separation agreement. At one point, he stopped paying the debts and the wife took responsibility for them herself. At this point, she had assumed full financial responsibility for the couple’s children, the mortgage on the matrimonial home and over half of the couple’s shared debts.
The husband did not become re-employed, and three years after executing the agreement, the husband sought to challenge it, seeking an equalization payment, which he later amended to a lump-sum spousal support award. The trial judge did not see a reason to set aside the agreement in full, however using the reasoning from Miglin v. Miglin, found that the husband was entitled to a lump-sum payment of $143,933, as the spousal support waiver did not fully align with protections under the Divorce Act.
The Court of Appeal
Both parties appealed the lower court decision. The husband argued that the trial judge had erred in not setting aside the agreement in full, while the wife appealed the support award, arguing that the spousal support release clause should be honoured.
The Court of Appeal rejected the husband’s appeal and also upheld the support award. The trial judge had found that the release clause did not align with the objectives of the Divorce Act because, at the time of execution, it had been highly unlikely the husband would be able to support himself while assuming responsibility for over $600,000 in debt.
The trial judge had also correctly identified a material change in circumstances between the time that the agreement had been executed and the support award. The husband had been unable to secure new employment after being terminated from his previous job and was unable to become self-sufficient as a result.
Based on the husband’s need for support and the wife’s means to pay support, the trial judge had correctly set aside the support release clause and awarded the lump sum payment to the husband.
This case makes clear that while couples are entitled to enter into any agreement they wish upon separating, the clauses within cannot contravene statute-based protections for either party. If an agreement, or a portion of it, is deemed inequitable under the legislation, a court will set the agreement or clause aside. Seeking skilled input and guidance from a family law lawyer when drafting such an agreement will help to ensure that the agreement will be in compliance with all relevant legislation.
At Baker & Company, our Toronto family law lawyers are highly experienced in high-conflict divorce matters and support litigation. We are committed to making the process of legally addressing a family matter as clear and approachable as possible. Call us at 416-777-0100 or contact us online for a consultation.