Dayal v. Dayal: Setting aside a separation agreement
In this case the Ontario Superior Court had to determine whether or not to set aside a separation agreement. The facts of this case created a situation where virtually every requirement to create a valid separation agreement was breached by the respondent husband.
The couple was married in Indian in 1991, and moved to Canada a year later. The couple were successful in Canada, obtaining two homes and employment despite the fact that neither of them ever developed much of a faculty in English or French. In 2002 the Husband coerced the wife into signing a separation agreement, which stated they had separated in 2001. They had not and actually continued living together until June of 2003. The husband paid and picked out a lawyer to provide the wife legal advice, but who was unaware she did not speak English. The husband also hid numerous assets and was abusive towards the applicant wife. The wife, under the separation agreement, was set to receive $100,000 less than she would have had there been an equalization of Net Family Property.
Setting Aside the Agreement
The applicant wife applied to the court to set aside the separation agreement under Section 56(4) of the Family Law Act, which states:
s.56 (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.
The court then analyzed whether or not it could set aside the contract based on any of these three grounds.
The court stated that the respondent had failed to make significant financial disclosure. The respondent attempted to argue that this requirement had been released by the contract. The court stated that the Family Law Act under section 56(7) expressly forbid any provision to such effect from being enforceable. This alone was enough to allow the court to set aside the contract, but the applicant satisfied further grounds as well.
The court also determined that the applicant did not understand the nature or consequences of the contract. This is normally a somewhat difficult thing for an applicant to prove, though in this case it was relatively straight forward. The applicant was not capable of reading the contract, as it was in English. Further, she received no independent legal advice in regard to the contract. The husband had paid for her lawyer, and she was not able to understand the legal advice he gave to her. The lawyer had failed to recognize that she did not understand him. Bound up with this point, the court stated that the contract was improvident to the applicant, and highly unfair. This could normally be remedied by the presence of independent legal advice, but that was not present in this case.
The court set aside the domestic contract for all of these reasons. It had accepted the applicant as credible and accepted her evidence whenever it was contradicted by the respondent. His continued attempts in court to try and explain, or hide, his various frauds destroyed what little credibility he possessed entering the proceedings. The case stands as a cautionary tale, particularly underlining the importance for legal professionals to ensure that their client is aware of the legal advice they are giving them.