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Domestic contracts are not always held up by the court

Section 56(4) of the Family Law Act (FLA) sets out the circumstances under which a court may set aside a domestic contract or a provision in it. 

In Cramer v Cramer the court set aside two provisions of the parties’ domestic contract that they had made together at their kitchen table. The first provision concerned the wife’s release of her entitlement to the husband’s pension.  The court found that at the time the agreement was executed neither party understood that a pension had a value to be shared on separation date.  The parties thought that a pension was merely a pay cheque provided after retirement and that there was no basis for the husband to share it with the wife. 

As a result, the court found that this provision was based on a mutual mistake and that pursuant to section 56(4)(c) of the FLA, it should be set aside in accordance with the law of contract. The second provision that the court set aside was the wife’s waiver of spousal support and a bar to any future claim for spousal support.  

The court considered the test set out in Miglin to determine what role the pre-existing agreement should play in determining an application for spousal support.  The court held that although the circumstances surrounding the execution of the contract were not circumstances of pressure or oppression, the contract did not comply with the general objectives of the Divorce Act.   The contract failed to consider the economic advantages or disadvantages to the spouses arising from the marriage or its breakdown, or apportion between the spouses any financial consequences arising from the care of their children. 

Accordingly, the court proceeded with an analysis of the wife’s entitlement to spousal support and of quantum and duration spousal support should be awarded.

Cramer v. Cramer, 2013 ONSC 4182 (Healey J.).