Unfair Family Agreements Lawyers help parties set aside, vary, or enforce cohabitation, prenuptial, marriage and separation agreements. The Family Relations Act applied a test of “unfairness” and our new Family Law Act raised the bar and requires proof of “significant unfairness to vary a family property agreement. However, Unfair Family Agreements Lawyers can apply to set aside the agreement on common law grounds too. In today’s blog, Lorne N MacLean, QC our founder and high net worth separation lawyer, explains the law of unconscionability and how it can lead to family law agreement being set aside entirely. See the BC government explanation on Part 1 section 6 on agreements here.
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The recent case of Blunt v Lee dealt with an interesting case involving an unmarried common-law couple who entered into a cohabitation agreement. The court found that neither the Family Relations Act nor the Family Law Act applied to allow any variation of their agreement on the property in dispute. This case helps guide Unfair Family Agreements Lawyers dealing with common law cohabitation agreements made before the coming into force of the new Family Law Act. The decision is complex so be sure to contact one of our top-rated* Unfair Family Agreements Lawyers at any of our 6 offices across BC and in Calgary Alberta.
IV. UNCONSCIONABILITY
[42] Madam Justice Smith summarized the test for unconscionability in the family law context in J.A.H. v. R.H.,2005 BCSC 1713 at para. 115 where she quoted from her earlier decision in W.P.N. v. B.J.N., 2002 BCSC 53 at paras. 55-56:
[55] The test is stringent: (1) was there an “inequality in the position of the parties due to the ignorance, need or distress of the weaker, which would leave him in the power of the stronger”; and (2) is there “proof of substantial unfairness in the bargain”? (See Klassen v. Klassen, 2001 BCCA 445.) The burden is on the party applying to set aside the agreement with respect to both parts of the test. If that burden is met, it falls to the other party to demonstrate that the bargain was fair, just and reasonable, or that no advantage was taken.
[56] The policy of the law is to enforce agreements made by adult persons. Cases in which Separation Agreements have been set aside for unconscionability have involved substantial inequality of bargaining positions with the relative unsophistication or vulnerability of one party being exploited by the other party. Usually, there are factors such as asymmetrical access to financial information or undervaluation of family assets…; a party who was depressed or otherwise seriously incapacitated at the time of execution of the agreement…; hastily executed agreements without the opportunity for independent legal advice…; or threats, manipulation or deception. …
Cohabitation, Prenups, Marriage and Separation Agreements
Unfair Family Agreements Lawyers explain there are a number of factors to consider when setting aside agreements on common law grounds:
[43] A number of considerations arise from the case law, including:
i. Emotional Vulnerability: Circumstances falling short of unconscionability in the commercial law context may be relevant to assessing the parties’ vulnerability in the family law context: Miglin v. Miglin, 2003 SCC 24at para. 82; see also Rick v. Brandsema, 2009 SCC 10at para. 40. However, the emotional stress of separating from one’s spouse does not give rise to a presumption that the parties are incapable of making a valid agreement: Miglin at para. 82; McGregor v. Van Tilborg, 2005 BCCA 217 at para. 17. There must be evidence to ground a finding that one party’s vulnerability was exploited in the bargaining process: Miglin at para. 82.
ii. Duty of Disclosure: There is a duty to make full and honest disclosure of all relevant financial information when negotiating a separation agreement. Such disclosure protects the integrity of the bargaining process: Rick at paras. 47. As summarized by Mr. Justice Pearlman in Kawana v. Shemal, 2011 BCSC 377at para. 200, “[d]epending on the circumstances of each case, deliberate failure to make full disclosure may result in judicial intervention. The extent of the defective disclosure, the degree to which it was deliberate, and whether the agreement complies with statutory objectives are all relevant circumstances”.
iii. Professional Assistance: Vulnerabilities can be compensated for by professional assistance: Miglin at para. 83. However, depending on the circumstances, the court cannot always assume that the presence of professional assistance was sufficient to cure vulnerabilities: Rick at para. 60.
iv. Independent Legal Advice: The absence of independent legal advice is an important factor but is not, on its own, a ground for setting aside the agreement: Graham v. McCartney, 2013 BCSC 130 at para. 71.
The case is instructive for family law clients as well as for BC and Calgary Unfair Family Agreements Lawyers. In the end, result the court did not find the strict test had been met to set aside the agreement and both the “husband’s” property division claim and the spousal support claim were dismissed.
[158] I dismiss the claimant’s application for spousal support.
[159] I find that the Separation Agreement is valid and enforceable. Accordingly, I dismiss the claimant’s application to set aside portions of the Separation Agreement.
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