Mary Ann and William had been married for 16 years when their marriage came to an end. They made the decision to write up their own separation agreement. Neither consulted a lawyer prior to signing the agreement. After the agreement was signed, William began to feel that the agreement did not favour him and sought to have it set aside. Mary Ann had taken the lead in drafting the agreement, although she did discuss its content with William. In essence, the couple agreed that Mary Ann and their two teenage children would stay in the matrimonial home and that William would pay $150 a week as child support. William would transfer his interest in the home to Mary Ann and she would provide him with an equity note payable on July 1, 2016.
The couple also agreed that each would keep their respective assets and liabilities and that they would have no claim against each other with respect to any personal assets or liabilities. Unfortunately, there were a few of Mary Ann’s assets that William was either unaware of or did not have a correct value for. These included:
These last assets were worth approximately $28,000.
To determine whether a separation agreement should be set aside, the Court engages in a two-stage analysis. Firstly, the applicant spouse must demonstrate that one or more of the circumstances set out in the Family Law Act has been engaged. Section 56(4) of the Act states that: A court may, on application, set aside a domestic contract (which includes separation agreements) 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.
Despite the one-sidedness of the agreement, the Court found that the parties in this case knew that they could or should obtain legal advice, but neither party chose to. As a result, William could not now complain that he was not aware of the legal consequences of the agreement. As a result, the case came down to whether or not Mary Ann had failed to disclose and accurately value her assets. The Court did find that William was entitled to rely on Mary Ann to provide a proper valuation of her pension, which she failed to do.
The Court did not accept Mary Ann’s reasons for not disclosing the mutual fund, stock options and bank accounts. (She claimed that she thought the stock options had no value and that the parties had agreed to leave the bank accounts out of the accounting despite the fact that her accounts had more than $11,000 and William’s lone account had $20.) The Court concluded that if William had been aware of all of Mary Ann’s assets and their values, that this would have affected his decision as to whether or not to enter into the agreement as it was written.
On this basis, the Court exercised its discretion and set the separation agreement aside. In addition, to the legal costs both parties incurred for this litigation, they are now back at square one with respect to the separation agreement. Much time, money and grief could have been avoided had they chosen to seek legal advice as soon as they realized their marriage was over. This case is another reminder of the importance of seeking professional assistance when your relationship has broken down. The lawyers in our family law group – Nicola Savin, Jacqueline Peeters and Natalie Derbyshire – have many years of experience and they would be happy to speak with you about your particular situation.
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