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Court upholds cohabitation agreement waiving spousal support

By Lisa Gelman

The Ontario Court of Appeal has upheld a cohabitation agreement that a woman signed decades ago without obtaining independent legal advice, finding no reason to overturn the agreement.

What happened?

The parties in question began to live together in 1997. The husband had previously had an acrimonious separation and wanted to avoid a similar situation again. Before purchasing a home with the wife he wanted her to sign a cohabitation agreement through which she released any claims to spousal support.

Although the wife was given an opportunity to obtain independent legal advice before she signed the agreement, she did not take advantage of this chance. The parties were married in 2003 before ultimately separating in 2013.

On separation, the wife sought to claim spousal support. At trial, the judge upheld the cohabitation agreement, dismissed the wife’s support claim, and determined the parties’ income for the purposes of child support for the couple’s two children (born 2001 and 2003). The wife appealed the dismissal of support and determination of income.

The analysis

On appeal, the wife argued that the trial judge had erred in upholding the cohabitation agreement because her waiver of spousal support does not meet the provisions of the Divorce Act. She relied on the Supreme Court’s decision in this casein which the Supreme Court set out a two-stage analysis in situations where spousal support was released.

The first stage of the analysis considers the circumstances at the time when the cohabitation agreement, prenup, or other contract was created and signed. This first stage of the analysis is divided into two parts:

  • A consideration of the circumstances surrounding the negotiation and execution of the agreement and a review of whether there is any reason to discount it; and
  • A consideration of the substance of the agreement to determine whether it is in substantial compliance with the general objectives of the Divorce Act at the time the agreement was formed.

The second stage of the analysis requires the court to consider whether, at the time of the application for spousal support, the applicant has established that the agreement no longer reflects the original intention of the parties, and whether the agreement continues to be in substantial compliance with the Divorce Act.

The Supreme Court decision further notes that the Divorce Act states that a spousal support order should:

  1. Recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown;
  2. Apportion between the spouses any financial consequences arising from the care of any child of the marriage over and above any obligation for the support of any child of the marriage;
  3. Relieve any economic hardship of the spouses arising from the breakdown of the marriage; and
  4. In so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time.

The wife argued that the trial judge did not consider important facts when applying the Supreme Court analysis to her application for support. She claimed, among other things, that:

  • there was a power imbalance between her and her husband;
  • she had not discussed spousal support with him;
  • financial disclosure was incomplete; and
  • she did not receive independent legal advice.

The wife did acknowledge that she had not been coerced into signing the agreement, but that the agreement did not align with the overall objectives of the Divorce Act both at the time she signed it and at the time she made her application since the parties had had an 18-year long relationship, she bore the primary responsibility for the children, and the husband’s income exceeded hers.

The Court of Appeal

The Court of Appeal did not accept the wife’s submissions as she had not established that there had been an error of law or a misapprehension of fact.

The Court noted that the original trial judge had carefully reviewed the analysis and made several findings of fact including:

a) The wife was aware of the husband’s desire to have a cohabitation agreement.

b) The parties had discussed the cohabitation agreement before the wife received it.

c) The wife was aware of all of the husband’s sources of income and assets and did not pursue further disclosure.

d) The wife skimmed over the cohabitation agreement and read some parts of it and not others.

e) There was no fraud, coercion, or duress.

f) Although given the opportunity, the wife did not seek independent legal advice even though – on her evidence – she had six weeks to do so.

g) At the time of signing the agreement, the wife thought it was fair and that it fairly outlined the parties’ discussions regarding the purchase of a house.

h) The agreement is in substantial compliance with the Divorce Act. Both parties suffered economic disadvantages arising from the marriage, and more importantly, even if the cohabitation agreement did not exist, the wife would not be entitled to spousal support.

The wife’s appeal was dismissed, and $12,000 in costs were made payable to the husband.

Lessons learned

Before signing a cohabitation agreementprenuptial agreement, or any other agreement with your partner, it is imperative to obtain independent legal advice and to ensure that you fully understand the terms of the agreement and what impact they will have on you going forward.

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