Home»Publications»Setting Aside Separation Agreements

Setting Aside Separation Agreements

Topic: Separation Agreements. Tags: Children, Custody, Access, Child Support, Sole Custody, Joint Custody, Shared Custody, Separation Agreements

Separation agreements are a form of domestic contract - as their name implies, they simply reduce to written form the agreement that has been reached between spouses who have decided to separate.

In order to be valid, these agreements must be signed by both spouses, witnessed by a third party, and negotiated after each spouse has fully disclosed their financial information. They are usually reached only after each spouse has received independent legal advice.

With all those protections in place, it would be fair to assume that a freely-negotiated separation agreement is legally binding on both parties to it, and can be changed only when both of them agree to do so. This is also consistent with the overall aim of the Canadian legal system, which encourages spouses to resolve to their disputes following separation if at all possible, without recourse to the courts.

Yet the Supreme Court of Canada has held that in certain circumstances, a court may override the provisions of a domestic contract, including a separation agreement.In a decision called Miglin v. Miglin, the Supreme Court of Canada confirmed that the terms of a separation agreement relating to spousal support can be set aside if:

they were not fairly negotiated;
they do not reflect the objectives of the family law legislation that applies to the situation; and/or
there has been a significant change in circumstances beyond the contemplation of the parties, and if as a result of such change, the agreement no longer reflects the parties' expectations and the relevant support objectives.

The Court explained that the decision whether to vary a separation agreement will involve two stages: first, a court must look at the circumstances in which the agreement was negotiated and executed (including the conditions under which the negotiation took place, the existence of pressure or duress, the duration of the negotiation, and whether one or both spouses had professional assistance).

Next, a court must look at the agreement's substance, to determine whether it takes into account the objectives and factors set out in the relevant legislation (which in the Miglin case was the federal Divorce Act), and whether it substantially complies with them.

After this two-step process has been undertaken, a court can vary the terms of a separation agreement in relation to spousal support if the circumstances warrant.

The Supreme Court of Canada had a further opportunity to refine its thoughts on the variation of separation agreements in the recent decision in Rick v. Brandsema, this time against the factual background of a husband who filed to make full and honest disclosure, and who took advantage of what he knew to be his wife's mental instability.

First, the Supreme Court reaffirmed that the negotiations following the disintegration of a spousal relationship take place in a uniquely difficult context, a "singularly emotional negotiating environment" which requires that special care must be taken to ensure that negotiations are free from informational and psychological exploitation.

The Supreme Court of Canada started by observing that in these uniquely vulnerable circumstances, the parties have a duty to make full and honest disclosure of all relevant financial information, in order to protect the integrity of the result of negotiations. This ensures that separating spouses can genuinely decide for themselves what amounts to an acceptable bargain.

On the other hand, where there are circumstances of oppression, pressure or other vulnerabilities, and where one of the parties exploits them to the point where the separation agreement deviates from the legislation, it will not be enforced. Similarly, decisions about what amounts to an acceptable agreement can only be made if both parties come to the negotiating table with the information required to evaluate what concessions to accept, or offer.

Of course, whether the court intervenes in a separation agreement will depend on the circumstances of the case, including the extent of the defective disclosure, the degree to which it is found to have been deliberately generated, and the extent to which the separation agreement varies from the relevant legislation.

All of this reinforces that it is not easy to have a separation agreement set aside; indeed, the Supreme Court emphasized that courts should do so only reluctantly. In fact, absent a fatal flaw in the negotiation process, a freely and fairly-negotiated separation agreement is considered to reflect the intention of the parties. Separating spouses should be encouraged to settle support, and are entitled to expect that their settlement will be respected, unless something unusual happens. That having said, the issue of setting aside a separation agreement, must be distinguished from varying (or changing) a separation agreement due to a material change of circumstances, which in some circumstances can be an easier task.

Issues arising out of separation agreements can get complicated, and are very case specific. We would be happy to meet with you to review your circumstances as well as your agreement, and provide you with legal advice in your matter.