This Div is a JS Trigger

#8 - Domestic Contracts

STANDARD

A lawyer who engages in the negotiation, drafting or review of a domestic contract, including a pre-nuptial agreement, a cohabitation agreement and a separation agreement should consider the factors and circumstances against which the documents may be tested if later challenged and subjected to judicial scrutiny.1


Reference Materials

Notes

1. Miglin v. Miglin, 2003 SCC 24 (CanLII), [2003] 1 S.C.R. 303; Hartshorne v. Hartshorne, 2004 SCC 22 (CanLII), [2004] 1 S.C.R. 550; Rick v Brandsema, 2009 SCC 10 (CanLII), [2009] 1 S.C.R. 295

Related Legislation

Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.) ss. 11(1)(b), 15.1 (5)(a), 15.1 (8), 15.2 (4)(c), 17 (6.2)(a), and s. 17 (6.5)
Matrimonial Property Act, R.S.N.S. 1989, c. 275, as amended 1995-96, c. 13, and ss. 23-29
Maintenance and Custody Act, R.S.N.S. 1989, c. 160 s. 4(c) and s. 52. (Nova Scotia Child Maintenance Guidelines)
Maintenance Enforcement Act, S.N.S. 1994-95, c. 6.
Testators Family Maintenance Act, RSNS 1989, c. 465  s. 16(2).
Law Reform (2000) Act
Vital Statistics Act, RSNS 1989, c 494

Additional Commentary

L.M.P. v. L.S., [2011] 3 SCR 775, 2011 SCC 64 (CanLII) - The Supreme Court of Canada clarified the test for changing an order under section 17 of the Divorce Act and at paragraph 36 confirmed that this also applies to separation agreements incorporated into an order.

Rick v Brandsema2009 SCC 10 (CanLII), [2009] 1 S.C.R. 295 - Unconscionable agreement - Full and honest financial disclosure - Mental state

Hartshorne v. Hartshorne2004 SCC 22 (CanLII), [2004] 1 S.C.R. 550. - discusses test to override a marriage agreement made pursuant to provincial matrimonial legislation

Miglin v. Miglin, 2003 SCC 24 (CanLII), [2003] 1 S.C.R. 303. - discusses test to override a separation agreement made arising from marriage breakdown.

In Webb v. Birkett, 2011 ABCA 13, the Alberta Court of Appeal held that the defendant solicitor Birkett was negligent in representing the plaintiff Webb in a collaborative family law settlement. The Alberta Court of Appeal held that CFL practitioners must meet the same standard of care required of other family law practitioners including taking appropriate steps to get the financial information needed to properly advise the client. A lawyer must obtain sufficient reliable information to be able to ascertain what the client would likely receive, or be required to pay, for spousal support, child support and matrimonial property division should the matter be resolved at trial, and so advise the client. A lawyer should tell a client who takes the position that he or she wants to settle without having received full information from the other side that they may therefore be accepting less, or paying more, than what would be required according to law, and provide to that client an assessment of the impact f the risk, including estimates of the value of what might be lost, or paid above what was necessary, to the extent possible, on the basis of the information then available. A prudent solicitor would put this advice in writing.

LeVan v. LeVan2008 ONCA 388 (CanLII) – Pre-nuptial contract – ILA obtained – Lack of financial disclosure – Egregious conduct of spouse. Leave to appeal dismissed without reasons and with costs: 2008 CanLII 54724 (SCC)

Stevens v. Stevens, 2012 ONSC 706 (CanLII) contract set aside. No initial consensus on fundamental term. Husband trying to take advantage of known drafting error. Affirmed 2013 ONCA 267.

Rizzo v. Rizzo, 2007 NSSC 358 (CanLII) –Separation Agreement found to be unconscionable.

R.P. v. R.C., 2011 SCC 65 - Application to vary spousal support order denied due to no finding of material change in circumstances. Husband did not provide evidence as to his circumstances at the time of the original Order. Without evidence of the husband's original circumstances, proving material change would not be possible. See also companion case of L.M.P. v. L.S., 2011 SCC 64; need to specifically define circumstances which will be considered material change.

Baker v. Baker, 2012 NSCA 24 (CanLII) - Need to demonstrate net effect of Separation Agreement provisions as a whole are not unduly harsh.

Langdon v. Langdon, 2015 MBQB 153 (CanLII): Review of various grounds to attempt to set aside a cohabitation agreement: Contra proferentum; non est factum, unconscionability, discussion value of detailed versus long release clauses (para. 186).

Ramdial v. Davis, [Litigation guardian of] 2015 ONCA 726 (CanLII): Trial judge justified in finding husband's representative did not take advantage of wife's health problems in negotiation process. Wife’s appeal of trial motion to set aside separation agreement dismissed.

Shair v. Shair, 2015 ONSC 5816 (CanLII): Marriage contract valid but waiver of spousal support set aside. Translator used for wife during negotiations. Translator called as witness. Pages 19 – 20 of decision contain example of letter from wife’s counsel where wife signed agreement against counsel’s advice.

FACTORS TO CONSIDER WHEN ADVISING A CLIENT (ADAPTED FROM Miglin (SCC), Hawthorne (SCC), Rick v. Bandsema (SCC) and MacLean (NSSC)):

Cases considered: Langdon v. Langdon, 2015 MBQB 153; Ramdial v. Davis, [Litigation guardian of] 2015 ONCA 726 (CanLII)

(1) Do you have a concern about the capacity of your client? Assessments of capacity should include whether any physical or mental health issues or any other particular vulnerability that impacts the client’s ability to enter into/understand the contract.

(2) Has there been complete disclosure of material information?

(3) Does your client suffer from any particular vulnerability that might reduce or negate the usefulness of that advice?

(4) Does your client appear to understand the provisions of the Agreement and its effect?

(5) Does the Agreement meet the objectives of the legislation with which it deals?

(6) Are the terms of the contract unclear or uncertain, such that the agreement could later be vulnerable to an argument about contra proferentum?

(7) Is your client a vulnerable person or under influence or stress that may lead him or her to sign a document against their interest?

(8) Is there any concern regarding fraud, misrepresentation or mistake?

(9) What is your client's understanding of the relationship, what are their intentions and their expectations for the future? What do they say as to their spouse or intended spouse's view on these issues?

(10) Under what circumstances is the contract being negotiated?

(11) What is your client's level of education, literacy level, understanding of financial issues? Is the contract in the client's first language?

DRAFTING PRESUMPTIONS: The fact that the first (or any) draft of this Agreement was prepared by counsel for one of the parties does not create a presumption when interpreting this Agreement and in particular shall not cause any ambiguities of wording to be construed against that party.

HEADINGS: Headings of paragraphs are inserted for ease of reference and have no further meaning, force, or effect.

Areas which may require expert assistance:

  • Tax;
  • Pension;
  • Medical & Psychological assessments;
  • Accounting (including electronic forensics accounting);
  • Corporate & Commercial matters; and
  • Property valuations

Practice Tips

When assessing checklists and/or case law remain aware that standards of fairness for division for dividing property and what is included in divisible property varies in the provincial matrimonial property legislation: Langdon v. Langdon, 2015 MBQB 153, paras. 156 – 157.

All agreements should specify how an unsuccessful reconciliation affects the the ongoing validity of the terms of the agreement: Langdon v. Langdon, 2015 MBQB 153.

A client who has concluded an Agreement and/or Order without financial disclosure may not be able to demonstrate a material change in circumstances for the purpose of future variation. If full sworn financial disclosure is not being exchanged, it is advisable to have your own client's financial information on file. Alternatively, you should obtain an acknowledgement from your client that you have advised in favour of full financial disclosure, explained the risk of NOT having full financial disclosure (including the problem of future variation) and that the client has declined your advice.

DOWNLOADS

Related Ethics

Nova Scotia Barristers’ Society, Code of Professional Conduct, Halifax: Nova Scotia Barristers' Society, 2012.

Checklists

Family Agreement Checklist (Law Society of British Columbia)

Family Practice Interview Checklist (Law Society of British Columbia)

How to Conduct an Interview to Prepare a Separation Agreement (Law Society of Upper Canada)

Marriage Agreement Checklist (Law Society of British Columbia)

Separation Agreement Checklist (Law Society of British Columbia)

Resources

CLIA (Canadian Lawyers Insurance Association): Loss Prevention – provides helpful links and Bulletins related to Family Law issues.

ARTICLES

McCutcheon, Beatrice C. / “Knowing Me, Knowing You: Drafting Agreements and Consent Orders that Provide for Review or Variation of Spousal Support”; National Family Law Program, Federation of Law Societies, 2014

Rogerson, Carol / “Spousal Support Agreements and the Legacy of Miglin”, (2012) 31 Canadian Family Law Quarterly 13

Siegel, Brahm D. / “The Compact: A Proposed New Way Forward for Marriage Contracts & Cohabitation Agreements,” March 30, 2015.

Approved by Council on March 25, 2011