Parties may enter into a domestic agreement before cohabitation or marriage. This agreement can set out the terms that would apply in the event of a future separation and may include customized provisions on how to deal with spousal support, for example, whether the parties have waived their rights to support or have limited their rights regarding support claims.
It is important to note that a waiver may not be absolute, and, despite the terms set out in the domestic contract, a court may set aside the waiver if it is later challenged. Limitations on a party’s right to claim support may fail if a court finds that upholding the contractual terms would be deemed unconscionable or if the agreement fails to meet the statutory objectives behind spousal support.
Courts May Set Aside Support Provisions in Valid Contracts
The presence of provisions in an agreement relating to spousal support is relevant but do not necessarily determine the outcome of an eventual claim for support. Section 33(4) of the Family Law Act gives courts the jurisdiction to set aside provisions for, or a complete waiver of, spousal support in a domestic contract where upholding such provision would result in unconscionable circumstances. As noted in Scheel v. Henkelman, courts have defined unconscionability in various terms, but it is most easily understood as a “shocking to the conscience of the court”, “harsh and unjust”, or “improvident or unfortunate.”
Evaluating whether a domestic contract should be set aside is complex and raises competing objectives. Miglin v. Miglin makes it clear that individual autonomy is at stake by giving parties the freedom to structure their own affairs with certainty and finality while also aiming to protect the vulnerable through judicial oversight.
Differences Between Setting Aside a Waiver of Spousal Support and Setting Aside a Domestic Contract
There are essential differences between setting aside a domestic contract under section 56(4) of the Family Law Act and setting aside a waiver of spousal support under section 33(4)(a) of the Family Law Act in circumstances of unconscionability. Section 33(4) operates even when there is a valid domestic contract; however, the issue of the provision itself creates unconscionable circumstances. Moreover, the test under section 56(4) is more stringent than for setting aside a waiver of spousal support.
In Scheel v. Henkelman, the Ontario Court of Appeal recognized that section 33(4) is not geared to unconscionable agreements, but instead towards unconscionable results. It was noted that “an agreement which was fair and reasonable when it was signed, may, through circumstances that occur in the future, result in unconscionable circumstances at the time of a support application.”
This differs from section 56(4), which allows for an agreement to be set aside where there were unconscionable circumstances surrounding the formation of the contract.
The Supreme Court of Canada outlined a two-stage approach in Miglin v. Miglin to determine whether an agreement purporting to limit a spouse’s support rights should be upheld. Under that process, the court first looks to the circumstances surrounding the negotiation and execution of the agreement to ascertain whether there is any reason to discount it, such as a party taking advantage of the other’s vulnerability. The second stage involves looking at the substance of the agreement to determine whether it still reflects the parties’ original intentions and whether the agreement is in substantial compliance with the objectives of the Divorce Act. In Miglin, the Court explained that a contract which represents the intentions and expectations of the parties and that complies with the objectives of the Divorce Act should receive considerable weight.
The Court outlined the general objectives of the Divorce Act to include an equitable sharing of the consequences of a marriage breakdown, as well as providing the parties with certainty, finality, and autonomy. The objectives behind an award of spousal support are found at section 15.2(6) of the Divorce Act and can be considered under the Miglin analysis. An order for spousal support should:
- recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown;
- apportion between the spouses any financial consequences arising from the care of any child of the marriage;
- relieve any economic hardship of the spouses arising from the breakdown of the marriage; and
- promote the economic self-sufficiency of each spouse.
Factors to be Considered when Making a Determination on Unconscionability
In Scheel v. Henkelman, the Court summarized a range of factors which may be considered when determining whether unconscionable circumstances would result from the application of a support waiver. This includes weighing:
- the circumstances surrounding the execution of the agreement, including the fact that each party was represented by competent counsel, the absence of any undue influence, the good faith and the expectations of the parties;
- the results of the support provisions of the agreement, including any hardship visited upon a party; and
- the parties’ circumstances at the time of the hearing, including their health, employability and ability to maintain their lifestyle.
Even when an agreement substantially complies with the objectives of the Divorce Act at the time of its creation, courts must still assess the extent to which the enforcement of the agreement continues to reflect the original intentions of the parties and whether it is still in compliance with the Divorce Act’s objectives.
In Miglin v. Miglin, it was suggested that there must be a significant change in the parties’ circumstances that could not have been anticipated at the time the agreement was made. The Court held that an applicant must show that “in light of the new circumstances, the terms of the agreement no longer reflect the parties’ intentions at the time of execution and the objectives of the Act. Accordingly, it will be necessary to show that these new circumstances were not reasonably anticipated by the parties, and have led to a situation that cannot be condoned.”
Injury Limiting Employment Not Contemplated by Parties
In Golton v. Golton, the applicant made a claim for spousal support, despite agreeing to a waiver of spousal support in the parties’ negotiated Cohabitation Agreement. The respondent opposed the claim and maintained that the contract was enforceable. However, during separation, the applicant suffered an injury and was off of work on long-term disability. She later tried to resume part-time employment but could not maintain it due to her injury.
The applicant’s insurer accepted that she could not work. The Court was satisfied that the waiver of spousal support in the Cohabitation Agreement did not contemplate the circumstances if one of the parties became incapable of maintaining employment due to their health.
Because of her health and expenses related to the injury, the applicant could not be self-dependent. Her financial statements demonstrated an ongoing need as she discontinued some medications because of the expense. The Court noted that the applicant had gone into debt in order to meet her ongoing modest expenditures. Overall, the Court held that the enforcement of the spousal support waiver in the agreement failed to comply with the objectives of the Divorce Act and the agreement no longer reflected the parties’ original intentions because of the unexpected and significant health issues.
Contact the Windsor Family Law Lawyers at Johnson Miller Family Lawyers for Advice on Spousal Support Claims
The experienced family lawyers at Johnson Miller Family Lawyers focus exclusively on family law matters and regularly assist clients in resolving spousal support claims and child support issues. Our family law team provides clients with honest advice tailored to your unique circumstances so that you know what to expect throughout the process and understand your rights and obligations, particularly before agreeing to contractual terms. To discuss your matter with a family law team member, please get in touch with us online or call us at 519.973.1500.