Separation Agreements Can Get Rolled into A Court Order

There is a resulting and necessary interplay between dispute resolution methods and court processes, and sometimes legal conundrums develop.  The Supreme Court of Canada addressed the question of how to deal with an application to vary a court order that embodied the terms of a separation agreement that the spouses had negotiated themselves and freely agreed to.

In the case of L.M.P v. L.S, the couple married in 1988 and the wife was diagnosed with multiple sclerosis shortly after.  She never worked during the marriage, but instead cared for the children and looked after the household while the husband pursued his career.  They separated in 2002, reaching a comprehensive agreement to settle their affairs which included an obligation for the husband to pay the wife monthly spousal support indefinitely.  A year later, the terms of this agreement were incorporated into a formal court order by a judge.

Later, however, the husband brought an application under the Divorce Act to vary this order, claiming that the spousal support amount should be reduced and should ultimately end completely as of August 31, 2010.  The husband claimed that despite the indefinite nature of the agreement and the resulting order, the wife was now capable of working and had an obligation to become self-sufficient.  The court accepted the husband’s arguments as to the wife’s level of self-sufficiency and changed the order accordingly.

The wife was unsuccessful in appealing the matter to the Court of Appeal and the matter then came before the Supreme Court of Canada, which was asked to address an important legal question: In cases where the support terms of an agreement have been incorporated into a court order, what is the proper approach by a court to an application to vary it?

The Supreme Court observed that section 17 of the Divorce Act allows a court to vary any spousal support order, provided the court is satisfied there has been a “material change” in the “condition, means, needs, or other circumstances of either former spouse” since the original (or last variation) was made.  This section makes no reference to situations where the terms of the order are dictated by the parties’ own separation agreement. However, there is a belief that every court order, whether incorporating the separation agreement or not, is presumed to be in compliance with the Divorce Act and its various objectives.

When a court is faced with an application to vary an order, the mutually accepted separation agreement should not be ignored – such as the one reached by the parties. Nevertheless, it will only be one of several factors that goes into the threshold question of whether there has been a “material change” in circumstances since the initial order was made.  An agreement that contains only general terms, including a blanket statement of finality, will provide little guidance to a court that is given the task of assessing the importance to the parties of various subsequent life changes they may experience, and how their respective support rights/obligations might be affected.

With this legislative framework in mind, the Supreme Court determined that the trial judge had failed to apply the “material change in circumstances” test first, before assessing the wife’s ability to work. Similarly, the Court of Appeal had erred by making a finding that the wife was now able to work despite her multiple sclerosis, and that this amounted to the requisite material change in circumstances.  Both lower courts appeared to disregard the fact that the situation between the parties had not changed at all since 2003 when the separation agreement and resulting court order were made.  At that time, the wife was already suffering from multiple sclerosis, and was not expected to look for employment outside the home.  The parties had reached a comprehensive agreement that they intended would reflect their final, non-time-limited settlement of outstanding issues between them.

In short, there was no material change as required by section 17 of the Divorce Act, so there was no legal basis on which a court could vary the order.  The Supreme Court of Canada allowed the wife’s appeal and restored the original 2003 order that reflected the terms of the parties’ own separation agreement, including the indefinite spousal support.