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When parties negotiate domestic contracts, it is important to ensure that each person fully understands the agreement, including their rights and responsibilities. As such, obtaining independent legal advice (also referred to as “ILA”) ensures that each party is aware of the legal and financial consequences that flow from signing the agreement in question. While it is not mandated that parties receive independent legal advice before signing an agreement, doing so can protect the parties and decrease the likelihood that an agreement may be set aside because a party did not understand what they were signing.
Independent Legal Advice Helps Parties Make Informed Decisions
Parties need to understand the contents of any agreement or settlement. Courts have explained that it is only with advice that someone can make an informed decision about how to organize their affairs. A lawyer’s involvement can also mitigate existing vulnerabilities within a relationship. In Anderson v. Anderson, the court explained that independent legal advice “helps compensate for imbalances or informational deficiencies that may result in a substantially unfair agreement to one or both parties”. Courts frequently remark on how financial disclosure is fundamental to the resolution of family cases, and in Anderson, the court noted that legal advice helps parties understand the significance and realize the benefits of disclosure.
Settlement May be Conditional on Receiving ILA
In McIntyre v. McIntyre, the parties negotiated a settlement. Counsel represented the wife throughout the process while the husband was not. The parties disagreed on whether the settlement led to a binding agreement. The wife argued that the negotiated terms formed a binding agreement and that all the elements needed to enforce the agreement were met. She suggested the husband’s actions and intentions following the settlement conference indicated that the terms for a binding agreement were reached. The husband denied there was a binding agreement. He claimed that he was disadvantaged, did not have access to ILA and did not understand the proposed settlement. He also believed that the terms negotiated were subject to the receipt of ILA and the execution of a written agreement.
The judge first looked at whether the parties reached a binding settlement at the settlement conference. The negotiated terms were clear, and the issues were fully and finally settled. There was also consensus on all of the essential terms of the agreement. This was not a case where the court was asked to make an agreement for the parties. But was the agreement subject to the execution of a formal contract? Justice Himel looked to Andrews v. Lundrigan. In that case, the Ontario Court of Appeal explained that the parties’ intention is important when considering whether a final agreement has been reached in contrast to a mere contract to make a contract. The court noted that if it is clear that the “execution of the contemplated formal document is not intended only as a solemn record or memorial of an already complete and binding contract but is essential to the formation of the contract itself, there is no contract.”
In this case, the husband indicated that he intended to retain counsel to review the draft of the Minutes of Settlement. He even requested that $100,000 be released to each party, or he could not retain counsel due to his significant debts. The wife agreed to this request. The judge did not accept that the release of the funds was conditional upon a binding final settlement. The husband had yet to receive or review the draft Minutes when the funds were released, and he intended and did use the funds to retain family law counsel. Instead, it was reasonable to conclude that the negotiated terms were only conditional on the husband having an opportunity to obtain advice concerning the agreement. Justice Himel added that “the opportunity to obtain, consider and act on family law advice is the cornerstone to the family law justice system and sustainable agreements.” This is particularly true for self-represented parties so that they can “make informed decisions and provide informed consent.” Here, there was no ILA waiver; instead, the husband was consistent and clear that his intention was to retain a family lawyer. After the husband received the ILA, he declined to accept the draft minutes. Although the parties reached a settlement at the Settlement Conference, that was not determinative, as the agreement was conditional on the husband reviewing his rights and retaining counsel. The consequences that followed the receipt of ILA were determinative, and there was no agreement because of the husband’s decision.
Courts Less Likely to Intervene if Parties Have Received ILA
Courts do uphold compliant domestic contracts where parties still need to obtain ILA. In these situations, courts can be less likely to intervene and to set aside an agreement if the party still needs to look out for their interests. As the Ontario Court of Appeal put it in Mundinger v. Mundinger, courts will not intervene to protect a party from their own “folly or carelessness” but will do so to protect them from “being taken advantage of by those in a position to do so because of their position.” These considerations arose in Yin v. Feng. The case concerned the validity of a separation agreement. The applicant received ILA, but he argued that it was substandard and did not appraise him of the risks and consequences of signing the document. His counsel testified that she explained that the separation agreement was a final arrangement between the parties. The judge found that the applicant understood or should have understood that he waived the right to further recourse by signing the agreement. Justice Black found that the applicant was anxious to complete the deal and proceed, which likely caused him to focus less on the details and risks in the separation agreement. Consequently, the judge would not find that he did not understand the nature and consequences of the separation agreement, which could have justified setting aside the agreement’s provisions.
In Gibbons v. Mulock, the husband sought to set aside the marriage contract. However, the judge dismissed the application, as the competency of the husband’s legal advice was an issue between him and his counsel. Any deficiency was not a reason to set aside the marriage contract “unless the wife knew the husband did not understand what he was signing.” That applied to the situation in Yin. There was no indication the respondent pressured the applicant to sign the agreement or that she thought he did not understand the agreement. Instead, the applicant wished to sign the agreement immediately as he was counting on the agreement so that he could qualify for mortgages and refinance some properties. Justice Black concluded that if the applicant was unclear about the consequences of the agreement, resulting from allegedly substandard advice from his counsel, then any recourse he had was against his counsel and not through setting aside the separation agreement.
Family Law Counsel Help You Understand Your Rights
Independent family law counsel can help parties assess their domestic contracts and ensure they understand their rights and will be protected in the future. Agreements are legally binding, and the failure to obtain ILA is not necessarily a justification to later set an agreement aside if it does not meet a party’s expectations. Individuals should consult a lawyer before signing an agreement to protect their interests.
Contact the Respected Windsor Family and Divorce Lawyers at Johnson Miller Family Lawyers
The family lawyers at Johnson Miller Family Lawyers in Windsor focus exclusively on family law matters and routinely guide parties in negotiations, ensuring that clients’ interests are served. We can represent parties in drafting family law agreements and can provide you with valuable information tailored to your situation. To discuss your matter further or arrange a consultation, contact us online or by calling 519-973-1500.
