Courts generally respect the arrangements negotiated by parties in separation agreements. However, under the Family Law Act, there are several grounds on which a court can “set aside” (cancel) a separation agreement. A party seeking to set aside a separation agreement must show the court their matter falls within one of these grounds and then convince the court to exercise its discretion in their favor and set aside the agreement.
A recent case illustrates two of the most common grounds to set aside a separation agreement: (i) if a party did not understand the nature or consequences of the domestic contract; and (ii) where there is duress, undue influence, fraud, misrepresentation, or for public policy reasons.
Radosevich v Harvey involved an appeal of a lower court decision. The appellant, Ms. Radosevich, had sued her former family law lawyer, Ms. Harvey, for being negligent in the negotiation of her separation agreement. She alleged Ms. Harvey did not adequately advise her of her right to retroactive spousal support and failed to advise her to obtain a valuation of her spouse’s business which could have increased the support payments she received.
The court noted that Ms. Radosevich appeared to have two bases on which to challenge the separation agreement under the Family Law Act:
- Her main allegations against Ms. Harvey regarding retroactive spousal support and not obtaining a business valuation could be seen as an argument that she did not understand the nature and consequences of the agreement as she did not know what she was and was not giving up.
- Radosevich also alleged there was a power imbalance between her and her former spouse. The court noted this could have led to a sense of duress, thus providing Ms. Radosevich with another argument to set aside the separation agreement.
Despite these findings, the court ruled against Ms. Radosevich on procedural grounds. It found that before suing her lawyer for negligence, she should have challenged the validity of the separation agreement under the Family Law Act.
Part II of this series will discuss a third common ground for setting aside a separation agreement: insufficient financial disclosure.
Please contact Gilbertson Davis LLP if you are considering a separation agreement, varying a separation agreement or having a separation agreement set aside. Our experienced family law counsel advises and represents clients drafting and negotiating separation agreements and other domestic contracts, including marriage contracts and cohabitation agreements. Our family law counsel is also well versed in varying agreements and court orders. Our family law counsel is a certified collaborative lawyer and a member of the Collaborative Divorce Toronto practice group.
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