Can there still be variability after signing a Prenuptial or Separation Agreement?
- Certainly, otherwise what would be the need for lawyers and courts!
s.2(10) Family Law Act (FLA) enables contractual autonomy by enabling persons to contract out of rights and obligations otherwise under FLA.
- s.33(4) allows courts to set aside provision if:
- results in unconscionable circumstances, or
- shift prospective burden of supporting family dependents to public purse, or
- a domestic contract is in default at time of application for support under Part III of FLA.
- s.56 provides that the court has limited powers to vary a domestic contract, but is always able to set aside provisions that undermine BIC. Non-compliance with explicit requirements of Family Law Act do not necessarily preclude action on agreement at common law.
- Example: a contract made between the splitting couple, the court could alter the provision of the contract (for best interest of child or “BIC”) but the court is not destroying the entire contract.
- The onus to prove is on the party seeking to set aside the contract. Shair v Shair
Generally, courts may annul or modify contracts related to marriage under the following five circumstances.
FLA’s s.33(4) supplemented by s.56(1.1) empowers courts to disregard provisions respecting child support where the provision is unreasonable under the Federal and Provincial Child Support Guidelines
- In family law, there is always a paramount principle that supersedes all other rules, regardless of the time or context: the court’s primary objective and direction is to maximize the best interests of the child (“BIC”). Any established contract or agreement that potentially conflicts with this overriding direction will be unhesitatingly set aside or amended by the court.
As to the spousal support, the court’s jurisdiction to set aside or change the agreement is informed by the following considerations:
- When the provision and waiver of support could lead to an unconscionable result
- But the court is only interested in unconscionability at the time of application for support and not at the time of making the agreement. Scheel v Henkelman
- When the provision of the agreement is in favour of the dependent qualifying for public assistance (meaning the support will be out of the taxpayer’s pocket but not from the spouse)
- If there is already a default in support payment under the agreement at the time when an application to set aside the agreement is made under s.33.
FLA’s s.56(4)(a) empowers the court to set aside the whole contract or provision if parties fail to disclose significant assets or debts when the contract was made.
- It does not compel the court to set aside, though Shair v Shair
- Must be hiding a “significant asset” Demchuk v Demchuk
- The parties have to indicate the value of assets, not just list the assets, or full disclosure has not happened LeVan v LeVan
- The value may be disagreed upon, but the court will look to ensure the value set was not misleading or demonstrating a lack of care Greenwood v Greenwood
- The party’s right to income qualifies as an “asset” which needs to be disclosed Tadayon v Mohtashami
- Some asset value can be easily discerned (recognized and understood) by both spouses, which negates the need for disclosure.
- On the contrary, some complex business holdings may not be quickly and readily available or inexpensively assessed.
- On the contrary, some complex business holdings may not be quickly and readily available or inexpensively assessed.
- The onus to prove the other party’s failure to disclose is on the party seeking to rescind the agreement Demchuk v Demchuk
FLA’s s.56(4)(b) provides that a contract can be set aside when the party did not understand the nature or consequences of the contract or underlines the importance of independent legal advice.
- The court held that the husband interfered with the wife’s legal representation, and the wife did not receive effective or sound independent legal advice. The contract was set aside by the court because the wife did not understand the nature and the consequences of the contract. LeVan v LeVan
- A contract signed without independent legal advice may be ignored by the court Grossmann v Grossmann
- But having legal advice doesn’t mean the court will unconditionally uphold a contract. Woods v Woods
- One party taking advantage of inequality in spousal bargaining power indicates this is an “improvident bargain”, but a spouse simply making a bad deal does not make it “undue influence”. Rosen v Rosen
- Duress requires proof of coercion by threat, physical force, or mental pressure.
The last reason a contract may be deemed invalid by the court is due to issues with the form of the contract itself, such as the signing parties’ capacities, the format of the contract, language, signatures, witnesses, etc., not meeting legal requirements.
- Strict formality requirements may be relaxed where the court is satisfied that the contract was in fact executed by the parties, the terms are reasonable, and there is no oppression or unfairness in the circumstances surrounding the negotiation and the execution of the contract. Gallacher v Friesen
