Can Separation Agreements Finally Be The Last Word?
This article must now be read taking into consideration my article entitled: Marriage Is Forever! (When it comes to spousal support.)
Eric Juri Miglin v. Linda Susan Miglin
The Supreme Court of Canada on April 17, 2003 in a 7 to 2 majority decision, handed down their decision in Miglin v. Miglin [2003] SCC 24. You can now be reasonably sure that the Separation Agreement you sign does say "the last word" and will not be revised if later one party feels he/she should have bargained for a better deal. Accordingly, it is even more important than ever that you receive competent advice from a Family Law Lawyer when drafting your separation agreement.
The following quote from the head note of the case provides a concise synopsis of the facts of this case.
Five years after the parties were married in 1979, they purchased a lodge in northern Ontario as equal shareholders, and ran it together as a family business. The parties each drew a salary from the business of $80,500 per annum. They had four children and the family divided their time between the lodge and the matrimonial home in Toronto. In 1993, the parties separated when the children were between two and eight years of age. The wife was then 41 and the husband 43 years old. After more than a year of negotiations, they executed a separation agreement containing a full and final spousal support release clause. It was agreed that the children would reside primarily with the wife, and that the husband would pay $60,000 per annum for their support. He also agreed to pay the mortgage on the matrimonial home. Pursuant to the agreement, the husband transferred his one-half interest in the matrimonial home, valued at $250,000, to the wife, while the wife released her interest in the lodge, valued at $250,000, to the husband. In addition, the wife released any interest in his unvalued outfitting business. The parties also executed a consulting agreement between the wife and the lodge that provided her with an annual salary of $15,000 for a period of five years, renewable on the consent of the parties. After their divorce, relations between the parties became acrimonious. Approximately four years after the separation agreement and six months before the expiry of the consulting agreement, the wife applied for sole custody, child support and spousal support under s. 15 (now s. 15.2) of the Divorce Act. The trial judge awarded the wife spousal support in the amount of $4,400 per month for a period of five years. The Court of Appeal upheld the award of support and removed the five-year term.
The following quote from the case gives a concise sample of the Supreme Court of Canada's thinking on this most controversial subject.
The Supreme Court of Canada held (7:2) that the appeal is allowed. In joint reasons, Mr. Justice Bastarache and Madame Justice Arbour wrote at pages 35 and 47:
...the positive obligation that the Act places on counsel to advise their clients of alternatives to litigation, noted above, indicates Parliament's clear conception of the new divorce regime as one that places a high premium on private settlement. Parliament's preference appears to be that parties settle their dispute ÉÉThe parties, or at least their counsel, will be conscious of the likely outcome of litigation in the event that negotiation fails. Consideration of the statutory entitlements will undoubtedly influence negotiations. But the mutually acceptable agreement negotiated by the parties will not necessarily mirror the spousal support that a judge would have awarded. Holding that any agreement that deviates from the objectives listed in s. 15.2(6) be given little or no weight would seriously undermine the significant policy goal of negotiated settlement. It would also undermine the parties' autonomy and freedom to structure their post-divorce lives in a manner that reflects their own objectives and concerns. Such a position would leave little room to recognize the terms that the parties determined were mutually acceptable to them and in substantial compliance with the objectives of the Divorce Act. Having said this, we are of the view that there is nevertheless a significant public interest in ensuring that the goal of negotiated settlements not be pursued, through judicial approbation of agreements, with such a vengeance that individual autonomy becomes a straightjacket. Therefore, assessment of the appropriate weight to be accorded a pre-existing agreement requires a balancing of the parties' interest in determining their own affairs with an appreciation of the peculiar aspects of separation agreements generally and spousal support in particular. ...Although we recognize the unique nature of separation agreements and their differences from commercial contracts, they are contracts nonetheless. Parties must take responsibility for the contract they execute as well as for their own lives. It is only where the current circumstances represent a significant departure from the range of reasonable outcomes anticipated by the parties, in a manner that puts them at odds with the objectives of the Act, that the court may be persuaded to give the agreement little weight.
You can read the entire decision here, but I ask you to call me to discuss how the case impacts your decision to litigate or mediate. Mediation is the writer's suggestion as the best way to resolve all matrimonial disputes.
October 2003