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In this judgment of the Ontario Superior Court of Justice, Justice Mackinnon discusses the court’s considerations in setting aside a domestic contract pursuant to s. 56(4) of the Family Law Act (FLA).  Almost four years after the parties’ separation, the wife brought a motion to set aside the parties’ marriage contract and separation agreement, and to seek spousal support contrary to the provisions of the parties’ agreements.

This case provides us with a reminder of the court’s powers to set aside an agreement on the grounds of unconscionability or unfairness to one party, and of the uncertainty that can occur as a result.

Factual Background

The parties began cohabitating in June 1991 and married on July 23, 1994. During cohabitation but prior to marriage, the parties ensured their finances remained separate; this was evidenced by the fact that Ms. Desjardins paid Mr. Cuffe rent when she moved into his home.

Approximately one month prior to the parties’ union, Mr. Cuffe consulted with a lawyer about the preparation of a marriage contract. Mr. Cuffe wanted to ensure that his premarital equity in the matrimonial home would be protected; however, he also wanted the parties to waive spousal support in the event of separation.  Mr. Cuffe’s lawyer prepared the draft agreement, and provided same to Ms. Desjardins and her lawyer for review.  Ms. Desjardins reviewed the agreement and determined that she was accepting of the separation of property and protection of marriage date equity in the matrimonial home.

Ms. Miller, Ms. Desjardins’ lawyer, did warn, however, that “the full waiver of spousal support was not appropriate in the event that Ms. Desjardins might, in the future, remain at home with children.”

Correspondence between counsel in November 1994 suggested that the parties were in agreement regarding most provisions of the proposed marriage contract, and that the parties were agreeable to “softening” paragraph 13 of the agreement, dealing with spousal support. However, the agreement was not amended.  Ms. Desjardins testified, during the motion, that Mr. Cuffe had told her to sign the contract or else “we are done, you can leave.” She further testified that “he kept at her until finally she signed the contract.”

When the parties’ daughter was born in June 1997, the parties decided that Ms. Desjardins would remain home and care for her. Ms. Desjardins remained home full time for two-and-one-half-years and then returned work on a part-time basis for three years while she obtained her Bachelor’s degree through an online university program.  After that, Ms. Desjardins transitioned to work in the field of pharmaceutical sales, where Mr. Cuffe had been employed for some time making approximately double her income.
Stress on the marital relationship began in 2005, when the parties decided not to move to Nova Scotia as planned.  Ms. Desjardins further testified that Mr. Cuffe belittled her during the marriage in terms of her education and contribution to the family in the event that she expressed an opinion that differed from Mr. Cuffe. Ms. Desjardins’ dissatisfaction with the marriage and anger over the provisions of the parties’ contract relating to spousal support became increasingly difficult to deal with along with her depression.

As a result, she began looking for alternative living arrangements, and in March 2009, informed Mr. Cuffe that she had purchased a home and would be separating from him.

Following their separation, both parties retained counsel and a draft Separation Agreement consistent with the parties’ marriage contract was prepared. Ms. Desjardins testified that she was eager to sign the agreement, as she needed the proceeds from the sale of the matrimonial home for use in the purchase of her new home. Her new counsel, however, was wary of the draft separation agreement and advised Ms. Desjardins that the

…draft agreement was unfair because it did not provide for child or spousal support. She recommended that Ms. Desjardins seek amendments to the spousal waiver. She also discussed with her that the property division in the marriage contract appeared to be unconscionable and that she may have a case to set aside the contract.

On May 26th 2009, Mr. Cuffe advised Ms. Desjardins that his employment had been terminated and that he would be receiving a lump sum severance package. Although Ms. Desjardins’ lawyer voiced her concern regarding the spousal support release in the Agreement, Ms. Desjardins ultimately signed the agreement as is.

During the motion, however, she testified that Mr. Cuffe had threatened that she should sign the Agreement including the waiver of support as he was now in a position to seek child and spousal support from her given his current employment income.  In the Certificate of Independent Legal Advice, Ms. Desjardins’ then-lawyer struck out the words “without any fear, compulsion of influence” in the section that read: Ms. Desjardins “executed the agreement in front of me and confirmed that she was entering into the agreement of her own volition without any fear, threats, compulsion, or influence by Mr. Cuffe or any other person.”

Court’s Analysis

Justice Mackinnon began with an examination of whether Mr. Cuffe compelled or influenced Ms. Desjardins to sign the separation agreement.  Justice Mackinnon noted Ms. Desjardins’ fragile, upset state during the signing of the Agreement, but recognized, nevertheless, that Mr. Cuffe was only aware of her unhappiness and not her vulnerable mental state.  Justice Mackinnon further noted that Ms. Desjardins felt pressure to sign the agreement given that she required the funds from the sale of the matrimonial home to complete the purchase of her new home; he stated, however, that this was pressure of her own creation.

In the end, though, the court was convinced that Mr. Cuffe’s remark about pursuing child and spousal support from Ms. Desjardins was meant to pressure her into signing the agreement. Furthermore, the fact that the separation agreement did not provide for monthly child support payments was indicative of the unfairness of the support arrangements.

Justice Mackinnon then examined s. 56(4) of the FLA which outlines the circumstances under which a court may set aside a domestic contract or provision contained therein.  Noting that there was not any intentional non-disclosure, Justice Mackinnon turned to the issue of whether the contract itself was unconscionable.

If the bargain is fair the fact that the parties were not equally vigilant of their interest is immaterial. Likewise if one was not preyed upon by the other, an improvident or even grossly inadequate consideration is no ground upon which to set aside a contract freely entered into. It is the combination of inequality and improvidence which alone may invoke this jurisdiction. Then the onus is placed upon the party seeking to uphold the contract to show that his conduct throughout was scrupulously considerate of the other’s interests.

Ultimately, Justice Mackinnon found that Ms. Desjardins was accepting of the property provisions of the marriage contract even after receiving independent legal advice regarding same.

However, he concluded that “Mr. Cuffe pressured [Ms. Desjardins] into accepting the full spousal release by threatening that their recent marriage was off unless she left that clause unchanged. In this way, “he “preyed” upon her and pressured her into signing the agreement with that improvident clause in it.”

With regard to the parties’ separation agreement, Justice Mackinnon found that “Ms. Desjardins was influenced by her husband’s representation to her that he was in a position to seek child and spousal support from her. In reality he had no chance of obtaining either from her given his severance package.  This misrepresentation combined with her knowledge of the terms of the marriage contract, induced Ms. Desjardins to accept the full waiver of spousal support.”

As a result, Justice Mackinnon found that it was appropriate to set aside the waivers of spousal support and to uphold the balance of both agreements.

Finally, Justice Mackinnon reviewed the two-stage analysis set out by the court in Miglin, when an application is made pursuant to s. 15.2 of the Divorce Act for spousal support at variance from the terms of a pre-existing final agreement.

“Stage one of the analysis focuses on the circumstances in which the agreement was negotiated and executed to determine whether there is any reason to discount the agreement. The substance of the agreement is then to be considered to determine the extent to which its terms are in substantial compliance with the objectives of the Divorce Act.”  Justice Mackinnon concluded that “the existence of the marriage contract with the spousal support release in it resulted in a fundamental flaw in the negotiation phase of the separation agreement” that could not be made up by receiving independent legal advice.

Justice Mackinnon further noted that the failure to provide spousal support in the context of the parties’ net worth and omission of spousal support having regard to Ms. Desjardins child caring role and absence from the labour market were contrary to the objectives of the Divorce Act.  Justice Mackinnon ordered that Mr. Cuffe pay lump sum spousal support in the amount of $60,000.00 as well as ongoing periodic support in the amount of $1,800.00 per month for an indefinite duration.