Homemade separation agreement ends up costing time and money
Hiring an experienced family lawyer is a critical step when going through a separation or divorce. It may be tempting to attempt to cut costs by going through the process alone, but as one Ontario couple recently learned, doing things without legal representation can result in an expensive and time-consuming experience.
The couple were married on July 31, 2004, and separated during the Christmas holidays in 2013. At the time the case was heard, they had four children between the ages of five and thirteen years old. By the time they separated the couple was living in Bermuda. Shortly after their separation, they signed a separation agreement, drafted by the mother and signed by the father. While the agreement was written in English, French was the couple’s first language. There was no evidence that either party obtained independent legal advice.
The separation agreement
While the mother and father may have had the best intentions when signing their separation agreement, it contained what the court described as “a number of unusual provisions.” While most of those provisions did not have to be dealt with by the courts, there were a few that did.
The first was in regards to child support obligations. When the couple signed the agreement, the father was making more than $1 million tax-free annually. However, the agreement called for him to make child support payments as though he was making $300,000 annually. The agreement specifically said:
“To facilitate the payment of child support, the parties have agreed that the child support for the four children will be calculated on a minimum yearly imputed income for (the father) of approximately 302,000 $CAN.”
The agreement made no mention of Canada’s Child Support Guidelines, but it did state that the “minimum” annual child support obligation would be $70,000. The husband paid that amount for the first few years of the separation.
The husband’s retirement
Lack of clarity in the agreement came to a head when the husband decided to retire at age 40. It was at this time that his child support obligations became an item of dispute. It was the wife’s argument that when he was working, he had to pay child support based on the Child Support Guidelines, and that when he retired he would pay based on an imputed annual income of $300,000. The husband, meanwhile, argued the agreement required him to pay child support amounting to $70,000 a year, regardless of income, which is what he intended to pay.
The court’s interpretation of the agreement
The court began its analysis by stating, “This Agreement is far from clear. The Respondent was working at the time of its execution and, if the parties wanted to calculate child support based on this high income, they could have easily provided some projected calculations to demonstrate their understanding of the Guidelines.”
The court tried to find some indication of the couple’s intentions when they drafted the agreement. But even after reviewing additional material such as affidavits, the court was still left with contradictory evidence. The court found itself unable to interpret the agreement. The court recommended an application to set it aside at a later date.
If this case teaches us anything, it’s that separations and divorces are best handled with the assistance of a knowledgeable family law lawyer.