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DOMESTIC CONTRACTS AND SEPARATION AGREEMENTS - Release of statutory rights

Thursday, October 17, 2019 @ 8:48 AM  


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Appeal by the husband and cross-appeal by the wife from a spousal support award and a judgment refusing to set aside a separation agreement. The parties separated at the end of 2008 following an 18-year marriage. The following month, they executed a separation agreement. The agreement gave the husband a greater share of household debt in exchange for relieving him of child support obligations. Each party retained their own investments. The wife retained the matrimonial home and had a net worth exceeding $1 million. The husband's net worth was negative by $500,000 given his assumption of debts. The parties released all rights to spousal support. Although the husband earned a significant income, he was unemployed at the time of separation. After one year, the husband stopped paying the debts he had assumed. The wife assumed the debts, in addition to paying the mortgage debt on the matrimonial home. In 2012, the husband challenged the validity of the separation agreement and sought an equalization payment plus lump-sum spousal support. The trial judge found no basis to set aside the agreement but ordered the wife to pay the husband lump-sum spousal support of $143,933. The husband appealed the refusal to set aside the agreement. The wife appealed the spousal support award.

HELD: Appeal and cross-appeal dismissed. The trial judge did not err in finding the husband failed to satisfy the criteria for setting aside the separation agreement. In any event, the trial judge's conclusion that had the criteria been satisfied, he would not have exercised his discretion to set the agreement aside was reasonable. The trial judge appropriately considered the substantive effect of the agreement on the parties' rights to equalization in the context of the release of the husband from any obligation to pay child support. The circumstances surrounding the investigation of the husband by the securities commission and his debts supported the rational decision to place assets in the wife's name. The trial judge's finding that the spousal support release did not comply with the Divorce Act's objectives was supported by the evidence of the husband's hardship resulting from the marriage breakdown. The wife made a substantial income and retained assets with the awareness the husband lacked sufficient means to pay the debts he assumed. In determining the quantum payable by the wife, there was no material error, misapprehension of evidence or error of law.

Faiello v. Faiello, [2019] O.J. No. 4534, Ontario Court of Appeal, A. Hoy A.C.J.O., G.T. Trotter and M. Jamal JJ.A., September 10, 2019. Digest No. TLD-October142019008