On April 17, 2003, the Supreme Court of Canada released the long-awaited judgment in Miglin v. Miglin [2003] S.C.J. No. 21, 2003 SCC 24, regarding separation agreements. All nine justices of the Supreme Court of Canada heard the appeal from the Ontario Court of Appeal. Judgment for the majority of seven justices was written by Mr. Justice Bastarache and Madam Justice Arbour. Mr. Justice LeBel wrote the dissenting reasons for himself and Mr. Justice Deschamps.
This decision has been awaited by family law practitioners because it represented an opportunity for the Supreme Court of Canada to clarify the proper approach to an application for spousal support under section 15.2 of the Divorce Act (Canada) where the spouses have executed a separation agreement releasing any future claim for spousal support. The state of the law regarding the certainty of separation agreements was previously governed by a trilogy of cases known as the Pelech trilogy. The cases in the Pelech trilogy were decided under the 1968 Divorce Act instead of the new 1985 Divorce Act.
The Pelech Trilogy stood for the proposition that where there are settlement agreements in place, an applicant for spousal support must establish a radical and unforeseen change in circumstances that is causally connected to the marriage before a court can interfere with the prior agreement and make or vary an order for spousal support. In Miglin, the Supreme Court of Canada stated that this narrow test is no longer appropriate given the significant changes in both statutory law and case law since the Pelech Trilogy was decided.
Instead, the majority of the Supreme Court in Miglin set out a two stage analysis to be applied by the courts in circumstances where there is an initial application for spousal support that is inconsistent with a pre-existing agreement.
The first stage of the analysis requires the court to look at the circumstances in which the agreement was negotiated and executed, including taking into account whether there was any oppression, pressure or other vulnerabilities, and the negotiating conditions, such as the duration and whether or not there was professional assistance for the parties. Unless there is evidence of a fundamental flaw in the negotiation process, fairly negotiated separation agreements should be viewed as expressing the substantive intent of the parties and the courts should be loathe to interfere. (Miglin, supra, para. 83)
Once the court has examined the circumstances in which the agreement was negotiated, the next step is to look at the substance of the agreement. The court must look at whether or not the agreement takes into account the objectives and factors set out in the Divorce Act. The court must assess whether or not the agreement substantially complies with these factors and objectives. If the agreement does not substantially comply, it does not mean that the entire agreement should be set aside; the agreement should still be considered as a factor in determining spousal support.
If the separation agreement was fairly negotiated and substantially complies with the factors and objectives set out in the Divorce Act, the majority of the Supreme Court of Canada stated that the court should defer to the wishes of the parties and afford the agreement great weight.
However, despite this promising statement of certainty, the majority also noted that between the time the parties negotiated the separation agreement and the time of an application for spousal support, the circumstances may have changed in ways that the parties had not contemplated.
This forms the basis for the second stage of the analysis, where the court must assess the whether or not the agreement is still in substantial compliance with the factors and objectives in the Divorce Act, the extent to which it still reflects the intentions of the parties. The majority stated that the intentions of the parties will be the backdrop against which the court must assess whether giving the agreement conclusive weight is still appropriate.
Were it not for the subsequent statements by the majority, this second stage of the analysis may possibly have left the door wide open for applicants to argue a wide range of changes in circumstances that could merit judicial interference. Fortunately, the majority stressed the fact that in most cases some degree of change is foreseeable, particularly in areas such as job market changes, parenting responsibilities or transition into the job market.
It should only be a significant change in circumstances from what could have been reasonably foreseen at the time of negotiation that should merit judicial interference with a fairly negotiated settlement agreement. As the majority in Miglin state, 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. (Miglin, supra, para 88)
Even if the court does find a change in circumstances that merits interference, the court cannot disregard the separation agreement entirely and must consider it as one of the factors in determining spousal support.
The majority in Miglin also expressed the opinion that this two stage analysis should be applied not only to separation agreements, but also to consideration of applications to vary an initial court order for spousal support under section 15.2 of the Divorce Act, and to vary an agreement incorporated into a court order under section 17 of the Divorce Act.
For family law practitioners, this may raise the question of whether or not it remains prudent practice to incorporate the terms of separation agreements into a consent order. This decision also raises the question of whether there may be wider applicability of the two stage analysis in Miglin to other aspects of separation agreements, such as property division. For example, Mr. Justice Fraser in Thomsett v. Thomsett [2001] B.C.J. No. 728 recommended that the parties insert a clause into a consent order for the division of assets stating that the division of assets did not derogate from the rights given to the parties under the B.C. Family Relations Act. Mr. Justice Fraser recommended this clause be included because in his view a consent order on property division should be subject to variation on the basis of unfairness in the same way that a separation agreement may be varied.
In summary, a fairly negotiated separation agreements will be given great weight in the event of a later application for spousal support, but the party seeking to enforce a waiver of spousal support will need an agreement that meets the criteria of the first stage of the analysis in Miglin.
If you are contemplating a separation agreement, the decision in Miglin emphasizes the importance of the negotiation process and of obtaining professional legal advice to ensure that the agreement substantially complies with the factors and objectives set out in the Divorce Act.
