Miglin v. Miglin

Miglin v. Miglin
Collection
Supreme Court Judgments
Date
2003-04-17
Neutral citation
2003 SCC 24
Report
[2003] 1 SCR 303
Case number
28670
Judges
McLachlin, Beverley; Gonthier, Charles Doherty; Iacobucci, Frank; Major, John C.; Bastarache, Michel; Binnie, William Ian Corneil; Arbour, Louise; LeBel, Louis; Deschamps, Marie
On appeal from
Ontario
Subjects
Family law
Notes
SCC Case Information: 28670
Decision Content
Miglin v. Miglin, [2003] 1 S.C.R. 303, 2003 SCC 24
Eric Juri Miglin Appellant
v.
Linda Susan Miglin Respondent
Indexed as: Miglin v. Miglin
Neutral citation: 2003 SCC 24.
File No.: 28670.
2002: October 29; 2003: April 17.
Present: McLachlin C.J. and Gonthier, Iacobucci, Major, Bastarache, Binnie, Arbour, LeBel and Deschamps JJ.
on appeal from the court of appeal for ontario
Family law — Divorce — Corollary relief — Spousal support — Separation agreement — Spousal support release clause — Spouses executing final separation agreement containing release of any future claims for spousal support — Wife subsequently applying for spousal support under s. 15 of Divorce Act — Appropriate threshold for judicial intervention in separation agreement on application for spousal support — Weight to be attributed to spousal support release clause in separation agreement — Divorce Act, R.S.C. 1985, c. 3 (2nd Supp .), s. 15.2.
Trial — Fairness — Divorce — Corollary relief — Spousal support — Whether trial judge’s comments and interventions raised reasonable apprehension of bias.
Five years after the parties were married in 1979, they purchased a lodge in northern Ontario as equal shareholders, and ran it together as a family business. The parties each drew a salary from the business of $80,500 per annum. They had four children and the family divided their time between the lodge and the matrimonial home in Toronto. In 1993, the parties separated when the children were between 2 and 7½ years of age. The wife was then 41 and the husband 43 years old. After more than a year of negotiations, they executed a separation agreement containing a full and final spousal support release clause. It was agreed that the children would reside primarily with the wife, and that the husband would pay $60,000 per annum for their support. He also agreed to pay the mortgage on the matrimonial home. Pursuant to the agreement, the husband transferred his one‑half interest in the matrimonial home, valued at $250,000, to the wife, while the wife released her interest in the lodge, valued at $250,000, to the husband. In addition, the wife released any interest in his unvalued outfitting business. The parties also executed a consulting agreement between the wife and the lodge that provided her with an annual salary of $15,000 for a period of five years, renewable on the consent of the parties. After their divorce, relations between the parties became acrimonious. Approximately four years after the separation agreement and six months before the expiry of the consulting agreement, the wife applied for sole custody, child support and spousal support under s. 15 (now s. 15.2) of the Divorce Act . The trial judge awarded the wife spousal support in the amount of $4,400 per month for a period of five years. The Court of Appeal upheld the award of support and removed the five‑year term.
Held (LeBel and Deschamps JJ. dissenting): The appeal should be allowed.
Per McLachlin C.J. and Gonthier, Iacobucci, Major, Bastarache, Binnie and Arbour JJ.: The narrow test enunciated in the Pelech trilogy for interfering with a pre‑existing agreement is not appropriate in the current statutory context. Agreements concluded with the intent that they be final may, in limited circumstances, be overridden on grounds other than those defined in the trilogy, which established that a court was permitted to override a final agreement on spousal support only where there has been a radical and unforeseen change in circumstances that was causally connected to the marriage. Judicial and societal understandings of spousal support have changed since the release of Pelech, and recognize different models of support as appropriate in different circumstances. That the spousal support objectives in s. 15.2 often conflict suggests that Parliament intended to vest a significant discretion in trial judges to assess the weight to be given to each objective against the very particular backdrop of the parties’ circumstances. The trilogy’s singular emphasis on self‑sufficiency and a clean break is too crude; some circumstances will call for compensatory support, as in Moge, or for non‑compensatory support, as in Bracklow. Nevertheless, economic self‑sufficiency is a legislative objective, and the Act as a whole advances the objectives of certainty, finality and negotiated settlements. On an initial application for support under s. 15.2, the concept of a change in circumstances has no relevance, except to the limited extent that there might have been a pre‑existing order or agreement that must be considered. The 1985 Act militates in favour of a contextual assessment of all the circumstances, including the content of the agreement. The Court of Appeal erred in incorporating the material change test from s. 17 into s. 15.2. It is not the existence of change per se that matters but whether, at the time of the application, all the circumstances render continued reliance on the pre‑existing agreement unacceptable.
An initial application for spousal support inconsistent with a pre‑existing agreement requires a two‑stage investigation into all the circumstances surrounding that agreement, first at the time of its formation, and second, at the time of the application. Unimpeachably negotiated agreements that represent the intentions and expectations of the parties and that substantially comply with the objectives of the Divorce Act as a whole should receive considerable weight. Holding that any agreement that deviates from the objectives listed in s. 15.2(6) would inevitably be given little or no weight would seriously undermine the significant policy goal of negotiated settlement and would undermine the parties’ autonomy and freedom to structure their post‑divorce lives in a manner that reflects their own objectives and concerns. It would also render the direction to consider prior agreements in s. 15.2(4)(c) meaningless. In searching for a proper balance between consensus and finality on the one hand, and sensitivity to the unique concerns that arise in the post‑divorce context on the other, a court should be guided by the objectives of spousal support listed in the Act, but should also treat the parties’ reasonable best efforts to meet those objectives as presumptively dispositive of the spousal support issue. The court should set aside the wishes of the parties as expressed in a pre‑existing agreement only where that agreement fails to be in substantial compliance with the overall objectives of the Act, including certainty, finality and autonomy.
At the first stage, the court should look at the circumstances in which the agreement was negotiated and executed to determine whether there is any reason to discount it, including any circumstances of oppression, pressure or other vulnerabilities. Circumstances less than “unconscionability” in the commercial law context may be relevant, but a court should not presume an imbalance of power. Further, the degree of professional assistance received by the parties may be sufficient to overcome any systemic imbalances between the parties. Next, the court must consider the substance of the agreement to determine whether it is in substantial compliance with the Act. Assessment of an agreement’s substantial compliance with the entire Act will necessarily permit a broader gamut of arrangements than would be the case if testing agreements narrowly against the support order objectives in s. 15.2(6). Moreover, a determination that an agreement fails to comply substantially with the Act does not necessarily mean that the entire agreement must be set aside. Even an agreement not fully enforceable may still indicate the parties’ objectives and understanding of their marriage.
At the second stage, the court must assess whether the agreement still reflects the original intentions of the parties and the extent to which it is still in substantial compliance with the objectives of the Act. Accordingly, the party seeking to set aside the agreement will need to show that these new circumstances were not reasonably anticipated by the parties, and have led to a situation that cannot be condoned. Some degree of change in the circumstances of the parties is always foreseeable, as agreements are prospective in nature. Parties are presumed to be aware that health, job markets, parental responsibilities, housing markets, and values of assets are all subject to change. It is only where the current circumstances represent a significant departure from the range of reasonable outcomes anticipated by the parties, in a manner that puts them at odds with the objectives of the Act, that the court may be persuaded to give the agreement little weight.
Here, the separation agreement should be accorded significant and determinative weight. At the time of its formation, nothing in the surrounding circumstances indicated that the negotiations or execution of the separation agreement were fraught with vulnerabilities. Both parties had engaged the services of expert counsel and negotiations persisted over a lengthy period. Likewise, nothing in the substance of the agreement demonstrated a significant departure from the overall objectives of the Act. The division of assets in the agreement reflected the parties’ needs and wishes at the time and fairly distributed the assets acquired and created by them over the course of their marriage. Moreover, the quantum of child support was arrived at in full contemplation of the wife’s spousal support release. The quantum of child support established in the agreement was intended to provide the wife with a minimum amount of income in contemplation of her not working. The change to the obligations regarding childcare did not take the wife’s current position outside the reasonable range of circumstances that the parties contemplated in making the agreement. Finally, the consulting contract reflects the parties’ intention to provide the wife with a source of employment income for a limited time. The nonrenewal of the contract did not render continued reliance on the original separation agreement inappropriate. The contract stipulated that renewal required the consent of both parties, and there is no evidence of any damaging long‑term impact of the marriage on the wife’s employability or that, at the time of negotiation, she underestimated how long it would take to become self‑sufficient. In this sense, the facts in Moge are sharply distinguishable. The spousal support release must be assessed in the context of the financial arrangements that were made at the time the agreement was negotiated. Overall, these arrangements sought to redress any disadvantages arising from the marriage while facilitating a disentanglement of their economic lives and promoting finality, autonomy, and self‑sufficiency. The wife’s evidence regarding her circumstances at the time of her support application fails to demonstrate that the separation agreement fairly negotiated and substantially compliant with the objectives of the Act at its formation is no longer so and therefore should not continue to govern the parties’ post‑divorce obligations towards each other.
There is no reason to interfere with the Court of Appeal’s conclusion that although the trial judge’s comments were intemperate and his interventions at times impatient, they do not rise to the level necessary to establish a reasonable apprehension of bias.
Per LeBel and Deschamps JJ. (dissenting): In light of the 1985 amendments to the Divorce Act and the Court’s recent jurisprudence, it is inappropriate to continue to apply the trilogy’s approach. The 1985 Divorce Act created a fundamentally different statutory environment from the 1968 Act in two key aspects that are inconsistent with the trilogy: (1) the articulation in s. 15.2(6) of four specific spousal support objectives and (2) the inclusion of separation agreements in s. 15.2(4) as one of the factors relevant to the exercise of judicial discretion in an application for corollary relief. These provisions require courts to engage in a more nuanced analysis than that required under the 1968 Act, starting with the s. 15.2(6) spousal support objectives. The structure of s. 15.2(6) dictates that no single objective is paramount and that courts are required to apply all four of the objectives in an application for corollary relief under s. 15.2. The trilogy’s requirement of a radical and unforeseen change in circumstances that is causally connected to the marriage is thus incompatible with the requirements of s. 15.2(6). More broadly, s. 15.2(6) significantly qualifies the role of one of the key philosophies underlying the trilogy’s strict threshold: that parties should be required to achieve self‑sufficiency quickly and permanently in order to facilitate a “clean break”. While self‑sufficiency is referenced in s. 15.2(6), it is only one of four objectives. What flows naturally from the language of the 1985 Act is an approach that requires the court to evaluate the parties’ agreement at the time of the application for corollary relief to see if it meets the objectives for spousal support enumerated in s. 15.2(6). The support objectives, each of which is predicated on the philosophy of marriage as a socio‑economic partnership, can be seen as an attempt to achieve an equitable sharing of the economic consequences of marriage or marriage breakdown. The degree to which the agreement realizes these objectives in light of all of the parties’ circumstances at the time of the application will be the determining factor in according it “finality”. Moge and Bracklow both espouse a contextual approach to spousal support that is fundamentally inconsistent with the emphasis on absolute autonomy, formal equality, and deemed self‑sufficiency that grounded the trilogy’s privileging of finality, even at the expense of fairness.
Separation and support agreements are made in a unique context and aim to disentangle complex relationships and interdependencies. They are often negotiated in situations that are emotionally charged. They are also inherently prospective in nature and the parties may have difficulty accurately forecasting how the economic consequences of their marriage and its breakdown will play out over time. In cases of marriage breakdown, it is not appropriate to require that circumstances rise to the level of unconscionability before parties’ agreements will be reopened. Separation agreements are formed in environments where the assumptions underpinning the enforceability of freely chosen bargains do not apply to the same extent as in the commercial context. It is typically women who come to the bargaining table as the financially dependent spouse, and hence the more vulnerable party in the negotiating process. The unconscionability test is blind to the subtle ways in which the economic disparities between the parties and the parties’ respective familial roles, both of which continue to be gender‑based, may play into the negotiating process and significantly influence its outcome. Excessive deference to separation agreements because they are presumed to represent the objective expression of the parties’ free will is an undesirable policy. Even the presence of counsel may not be sufficient to redress the problems.
The appropriate threshold for overriding a support agreement in an application for corollary relief under s. 15.2, based on the language of the statute, is whether the agreement is objectively fair at the time of the application. This gives a court a broad jurisdiction and a duty to ensure that matrimonial agreements prove to be consistent with the objectives of the law. It also allows the reviewing court to intervene regardless of whether the unfairness at the time of the application stems from the unfairness of the initial agreement; the parties’ failure at the time the agreement was negotiated to accurately predict how the economic consequences of the marriage or its breakdown would play out over time; or changes in the parties’ circumstances. It places the emphasis on whether the support agreement has in fact brought about an equitable distribution of the economic consequences of the marriage and its breakdown. With its emphasis on an objective evaluation of the content of the agreement and the circumstances of the parties at the time of the application, this approach is also appropriately responsive to the unique nature of family law agreements. Finally, the objective fairness approach reflects Parliament’s driving consideration with respect to support awards: achieving an equitable disentangling of the parties’ economic relationship upon marital breakdown. It is inappropriate to allow parties, by way of private agreements, to subvert this statutory policy, and to require courts to sanction this subversion by mandating deference to unfair agreements.
A fair agreement is one that reasonably realizes the objectives codified in s. 15.2(6). The process of determining whether an agreement is fair will of necessity be fact and context specific. This will require trial judges to make case‑by‑case determinations based on the whole picture of the parties’ relationship. Because parties may attempt to achieve economic equity in a variety of ways, the entirety of the parties’ financial arrangement upon marital dissolution and not merely the spousal support provisions in their agreement must be considered. For an agreement to merit deference in an application for corollary relief under s. 15.2, it must recognize the parties’ lived reality and must genuinely attempt in light of this reality to equitably apportion the economic consequences flowing from the marriage and its breakdown. Provided that at the time of the application the arrangement falls within the generous ambit within which reasonable disagreement is possible in terms of realizing the objectives in s. 15.2(6), it will be enforced. Where an agreement fails to address the dependent spouse’s proven need arising from the breakdown of the marriage, however, it is appropriate for the court to intervene on the ground that the agreement is inconsistent with the objectives in s. 15.2(6), even if the agreement achieves some of the parties’ other goals in reaching a settlement.
While s. 9(2) recognizes that settlement is to be encouraged, it cannot be read independently from the very specific spousal support objectives outlined in s. 15.2(6). The legislated policy goal is the negotiation of fair settlements, with fairness evaluated according to the objectives of the 1985 Act. An objective fairness threshold for judicial intervention in spousal support agreements will allow parties considerable freedom to draft an agreement that accords with the s. 15.2(6) objectives and reflects their own preferences, fostering the genuine autonomy and dignity of both spouses. The awareness that reviewing courts will evaluate agreements in terms of the degree to which they realize the objectives in s. 15.2(6) should lead parties to prioritize reaching an equitable distribution of the economic consequences of the marriage and its breakdown. The inquiry into whether an agreement is objectively fair at the time of the application involves a probing, contextual analysis of the content of the agreement and the circumstances of the parties at the time of the application in order to determine whether the substantive effect of the agreement is an equitable distribution of the economic consequences of the marriage and its breakdown. The express wording of the 1985 Act and judicial developments since Pelech mandate that such agreements aspire to, and in fact achieve, substantive justice.
Here, it is clear the objectives of s. 15.2(6) were not met. The parties recognized the wife’s need for an income stream by the existence of the consulting contract and the fact that her need might continue beyond the contract’s five‑year term; but in providing her with only $15,000 per annum, the contract failed to address the significant financial deficit created by the loss of her position with the lodge. The resulting inequity was compounded when the husband failed to renew the consulting agreement, despite the fact that the wife was experiencing ongoing need arising in part from the childcare responsibilities that the parties had agreed she would assume both during and after the marriage. In losing her share in the parties’ successful business and her employment, the wife disproportionately suffered the economic disadvantages of marriage breakdown.
The wife also suffered disproportionate economic disadvantages arising from the roles that the parties adopted during their marriage, both in their business relationship and in their domestic lives. Because her employment since 1984 had been exclusively with the lodge, she did not leave the marriage with any of the advantages that typically would have flowed from long‑term employment outside of the family business, such as seniority or job security. Rather, the limited opportunities that she had to develop marketable skills in the family business will have a long‑term impact on her prospects for self‑sufficiency. Further, as the primary caregiver the wife’s day‑to‑day childcare responsibilities will continue to have significant, long‑term economic consequences for her, limiting both her opportunities for employment and her future earning capacity, thus impairing her capacity to become economically self‑sufficient. The parties’ financial arrangements were not appropriately attentive to the objective in s. 15.2(6)(b) of apportioning between the spouses the financial consequences arising from the care of the parties’ children, over and above any obligation for the support of the children of the marriage. The wife will have no income stream, other than the support that she receives for her children, for the foreseeable future unless she sells her home or divests herself of her RRSPs. Considered as a whole, then, the parties’ financial arrangements were insufficient to fall within the generous ambit within which reasonable disagreement is possible in terms of realizing the spousal support objectives in s. 15.2(6) at the time of the wife’s application. It was thus appropriate for the trial judge to intervene and award her corollary relief. While the wife has a responsibility to take steps towards achieving self‑sufficiency, this must be understood in light of the fact that she is raising young children on a full‑time basis. As the children grow older, her responsibility for finding employment may well increase, and the court retains the jurisdiction to intervene if it becomes clear that she is not making a serious effort to move towards self‑sufficiency.
As found by the majority, there is no reason to interfere with the Court of Appeal’s conclusion that the trial judge’s comments do not rise to the level necessary to establish a reasonable apprehension of bias.
Cases Cited
By Bastarache and Arbour JJ.
Applied: R. v. S. (R.D.), [1997] 3 S.C.R. 484; Committee for Justice and Liberty v. National Energy Board, [1978] 1 S.C.R. 369; distinguished: Pelech v. Pelech, [1987] 1 S.C.R. 801; Richardson v. Richardson, [1987] 1 S.C.R. 857; Caron v. Caron, [1987] 1 S.C.R. 892; considered: Moge v. Moge, [1992] 3 S.C.R. 813; Bracklow v. Bracklow, [1999] 1 S.C.R. 420; Leopold v. Leopold (2000), 12 R.F.L. (5th) 118; Boston v. Boston, [2001] 2 S.C.R. 413, 2001 SCC 43; referred to: Thibaudeau v. Canada, [1995] 2 S.C.R. 627; Corkum v. Corkum (1988), 14 R.F.L. (3d) 275; G. (L.) v. B. (G.), [1995] 3 S.C.R. 370; Willick v. Willick, [1994] 3 S.C.R. 670; Santosuosso v. Santosuosso (1997), 32 O.R. (3d) 143.
By LeBel J. (dissenting)
Pelech v. Pelech, [1987] 1 S.C.R. 801; Richardson v. Richardson, [1987] 1 S.C.R. 857; Caron v. Caron, [1987] 1 S.C.R. 892; Willick v. Willick, [1994] 3 S.C.R. 670; Moge v. Moge, [1992] 3 S.C.R. 813; Bracklow v. Bracklow, [1999] 1 S.C.R. 420; G. (L.) v. B. (G.), [1995] 3 S.C.R. 370; Messier v. Delage, [1983] 2 S.C.R. 401; Santosuosso v. Santosuosso (1997), 32 O.R. (3d) 143; Wilkinson v. Wilkinson (1998), 43 R.F.L. (4th) 258; Droit de la famille — 1404, [1991] R.J.Q. 1561; Droit de la famille — 1567, [1992] R.J.Q. 931; Droit de la famille — 1688, [1992] R.J.Q. 2797; Droit de la famille — 2249, [1995] R.J.Q. 2066; Droit de la famille — 2325, [1996] R.J.Q. 34; Droit de la famille — 2537, [1996] R.D.F. 735; D.V. v. J.A.F., [2002] R.J.Q. 1309; Leopold v. Leopold (2000), 12 R.F.L. (5th) 118; Corkum v. Corkum (1988), 14 R.F.L. (3d) 275; Nova Scotia (Attorney General) v. Walsh, [2002] 4 S.C.R. 325, 2002 SCC 83; Mundinger v. Mundinger (1968), 3 D.L.R. (3d) 338, aff’d (1970), 14 D.L.R. (3d) 256n; Champagne v. Champagne, [2001] O.J. No. 2660 (QL).
Statutes and Regulations Cited
Civil Code of Québec, S.Q. 1991, c. 64, arts. 414 et seq.
Divorce Act, R.S.C. 1970, c. D‑8, s. 11.
Divorce Act , R.S.C. 1985, c. 3 (2nd Supp .) [am. 1997, c. 1], ss. 9(2), 15.2(1) [formerly s. 15(2)], 15.2(4) [formerly s. 15(5)], 15.2(6) [formerly s. 15(7)], 17, 17(1), 17(4.1) [formerly s. 17(4)], 17(7).
Family Law Act, R.S.O. 1990, c. F.3, ss. 5, 33(4).
Family Relations Act, R.S.B.C. 1996, c. 128, s. 65(1).
Federal Child Support Guidelines, SOR/97‑175, ss. 15 to 20.
Authors Cited
Bailey, Martha J. “Pelech, Caron, and Richardson” (1989‑90), 3 C.J.W.L. 615.
Bala, Nicholas. “Domestic Contracts in Ontario and the Supreme Court Trilogy: ‘A Deal is a Deal’” (1988), 13 Queen’s L.J. 1.
Bala, Nicholas, and Kirsten Chapman. “Separation Agreements & Contract Law: From the Trilogy to Miglin”, in Child & Spousal Support Revisited, tab 1. Toronto: Law Society of Upper Canada, 2002.
Belley, Jean‑Guy. Le contrat entre droit, économie et société: Étude sociojuridique des achats d’Alcan au Saguenay‑Lac‑Saint‑Jean. Cowansville, Qué.: Yvon Blais, 1998.
Durnford, John W., and Stephen J. Toope. “Spousal Support in Family Law and Alimony in the Law of Taxation” (1994), 42 Can. Tax J. 1.
Friedman, Lawrence M. American Law in the 20th Century. New Haven: Yale University Press, 2002.
Goubau, Dominique. “La situation depuis la trilogie Pelech”, dans Droit de la famille québécois, vol. 2. Farnham, Qué.: Publications CCH/FM, 1985 (feuilles mobiles mises à jour 2001).
Goubau, Dominique. “Une nouvelle ère pour la pension alimentaire entre ex‑conjoints au Canada” (1993), 72 Can. Bar Rev. 279.
Grant, Stephen M. “The End of Finality” (1997), 27 R.F.L. (4th) 252.
Law Society of Upper Canada. Rules of Professional Conduct (effective November 1, 2000), rules 2.02(2), (3).
Martin, Craig. “Unequal Shadows: Negotiation Theory and Spousal Support Under Canadian Divorce Law” (1998), 56 U.T. Fac. L. Rev. 135.
McLachlin, Beverley. “Spousal Support: Is it Fair to Apply New‑Style Rules to Old‑Style Marriages?” (1990), 9 Can. J. Fam. L. 131.
McLeod, James G. Annotation to B. (G.) v. G. (L.) (1995), 15 R.F.L. (4th) 216.
McLeod, James G. Annotation to Leopold v. Leopold (2000), 12 R.F.L. (5th) 120.
Menear, Mike. “Miglin v. Miglin — Judicial Assault on Individual Liberty” (2002), 20 C.F.L.Q. 119.
Neave, Marcia. “Resolving the Dilemma of Difference: A Critique of ‘The Role of Private Ordering in Family Law’” (1994), 44 U.T.L.J. 97.
Payne, Julien D., and Marilyn A. Payne. Canadian Family Law. Toronto: Irwin Law, 2001.
Payne, Julien D., and Marilyn A. Payne. Dealing with Family Law: A Canadian Guide. Toronto: McGraw‑Hill Ryerson, 1993.
Shaffer, Martha, and Carol Rogerson. “Contracting Spousal Support: Thinking Through Miglin” (2003), 21 C.F.L.Q. 49.
Shaffer, Martha, and Daniel S. Melamed. “Separation Agreements Post‑Moge, Willick and L.G. v. G.B.: A New Trilogy?” (1999), 16 Can. J. Fam. L. 51.
Stotland, Gerald, and Margo R. Siminovitch. “Renunciation to Spousal Support — The Great Escape” (1996-97), 14 C.F.L.Q. 159.
Young, Alison Harvison. “The Changing Family, Rights Discourse and the Supreme Court of Canada” (2001), 80 Can. Bar Rev. 749.
APPEAL from a judgment of the Ontario Court of Appeal (2001), 53 O.R. (3d) 641, 198 D.L.R. (4th) 385, 16 R.F.L. (5th) 185, 144 O.A.C. 155, [2001] O.J. No. 1510 (QL), affirming a decision of the Superior Court of Justice (1999), 3 R.F.L. (5th) 106, [1999] O.J. No. 5011 (QL). Appeal allowed, LeBel and Deschamps JJ. dissenting.
Nicole Tellier and Kelly D. Jordan, for the appellant.
Philip M. Epstein, Q.C., Aaron M. Franks and Ilana I. Zylberman, for the respondent.
The judgment of McLachlin C.J. and Gonthier, Iacobucci, Major, Bastarache, Binnie and Arbour JJ. was delivered by
Bastarache and Arbour JJ. —
I. Introduction
1 This appeal concerns the proper approach to determining an application for spousal support pursuant to s. 15.2(1) of the Divorce Act , R.S.C. 1985, c. 3 (2nd Supp .) (“1985 Act”), where the spouses have executed a final agreement that addresses all matters respecting their separation, including a release of any future claim for spousal support. Accordingly, this appeal presents the Court with an opportunity to address directly the question of the continued application of the Pelech trilogy (Pelech v. Pelech, [1987] 1 S.C.R. 801; Richardson v. Richardson, [1987] 1 S.C.R. 857; Caron v. Caron, [1987] 1 S.C.R. 892) in light of the significant legislative and jurisprudential changes that have taken place since its facts arose and since its release.
2 In broader terms, the appeal raises the question of the proper weight to be given to any type of spousal support agreement that one of the parties subsequently wishes to have modified through an initial application in court for such support. In that sense, the matter is not restricted to spousal support agreements that contain a time-limited support arrangement or to agreements which contain a full and final release from support obligations by one or both parties.
3 The parties to this appeal, now divorced, entered into a final agreement that sought to settle all of their financial and personal affairs surrounding the breakdown of their marriage. In addition to property equalization, custody, access and support of their children, and a commercial contract between the respondent and the appellant’s company, the parties agreed to release one another from any claims to spousal support. This Court must determine the proper weight to be accorded that agreement where one party subsequently makes an application for spousal support under the Divorce Act .
4 As we explain below, we believe that a fairly negotiated agreement that represents the intentions and expectations of the parties and that complies substantially with the objectives of the Divorce Act as a whole should receive considerable weight. In an originating application for spousal support, where the parties have executed a pre-existing agreement, the court should look first to the circumstances of negotiation and execution to determine whether the applicant has established a reason to discount the agreement. The court would inquire whether one party was vulnerable and the other party took advantage of that vulnerability. The court also examines whether the substance of the agreement, at formation, complied substantially with the general objectives of the Act. As we elaborate later, these general objectives include not only an equitable sharing of the consequences of the marriage breakdown under s. 15.2, but also certainty, finality and autonomy. Second, the court would ask whether, viewed from the time the application is made, the applicant has established that the agreement no longer reflects the original intention of the parties and whether the agreement is still in substantial compliance with the objectives of the Act. In contrast, the trial judge’s and the Court of Appeal’s approaches failed to value a determination by the parties as to what is mutually acceptable to them. We would thus allow this appeal.
5 The appellant also asks this Court to determine whether the comments and interventions of the trial judge give rise to a reasonable apprehension of bias. We will deal with these two major issues in reverse order.
II. Background
6 Linda and Eric Miglin separated in 1993 after 14 years of marriage. At the time of separation, they were 41 and 43 years old respectively and had four children aged 2 to 7½ years.
7 Not surprisingly, the gloss with which the parties paint their marriage and their accounts of the roles and responsibilities assumed by each of them differ. Mr. Miglin claims that theirs was a modern marriage where both spouses were also equal business partners, with Ms. Miglin advancing her career and education during the marriage. Ms. Miglin characterizes the marriage as “traditional”, with Mr. Miglin managing the family’s finances, making the financial decisions and giving her money when she needed it, while she was responsible for raising the children and “helping out” with the family business. Although the characterizations differ, the basic facts are not in dispute.
8 The couple met while both were employed at the Toronto Dominion Bank. Ms. Miglin was employed in an administrative capacity. Mr. Miglin was employed as a management trainee, having recently completed his Master’s degree in Business Administration at Harvard University. Mr. Miglin left the Bank to operate concession stores in Algonquin Park. Ms. Miglin accepted his invitation to come help with the concessions and left her employment with the Bank to join him. They married a year later, in 1979. By 1983, Ms. Miglin had completed a Bachelor of Arts degree from the University of Toronto.
9 In 1984 the couple purchased the Killarney Lodge resort in northern Ontario. Mr. and Ms. Miglin were equal shareholders in the business Killarney Lodge Limited (the “Lodge”). Mr. Miglin was responsible for the financial and business aspects of the Lodge. Ms. Miglin was responsible for its day-to-day operations. Ms. Miglin characterizes this division of labour as mirroring the traditional roles each assumed in the marriage. The trial judge found that Ms. Miglin was an “effective and important component in the hotel business”, and was equally responsible for its success. At the time of separation, Mr. and Ms. Miglin each received a salary of $80,500 from the net profits of the Lodge. These salaries represented roughly one half of the declared earnings of the business.
10 During the marriage and before the children reached school age, the parties lived and worked at the Lodge from May to October. They hired a babysitter to look after the children while they worked. During the off-season months of November to April, the Miglins lived in Toronto. Once some of the children reached school age, Ms. Miglin commuted back and forth between Killarney and Toronto to accommodate the children’s schedules. Ms. Miglin was the children’s primary caregiver.
11 The parties separated in 1993. They both retained independent legal counsel and began the difficult process of negotiating a comprehensive separation agreement. Counsel were actively involved, and it is clear from their correspondence that both counsel were well informed of the latest developments in the law. After negotiating for 15 months, the parties executed a Separation Agreement dated June 1, 1994. Attached as Schedules to the Separation Agreement are a Parenting Plan and a Consulting Agreement between Ms. Miglin and the Lodge.
12 The Separation Agreement was intended, in its own words, “to settle, by agreement, all rights, claims, demands and causes of action that each has or may have against the other including, but not limited to claims of every nature with respect to property and support”. The Separation Agreement runs to 32 pages and includes 41 numbered headings. The Separation Agreement addressed, among other things, Mr. Miglin’s and Ms. Miglin’s living arrangements, custody, child support, medical and dental coverage, personal property, the Lodge, another corporation owned by Mr. Miglin, debts, variation and non-compliance. The Separation Agreement is a sophisticated legal document and contains, for example, explicit provisions contingent on the outcome in the appeal to this Court respecting tax treatment of child support in Thibaudeau v. Canada, [1995] 2 S.C.R. 627.
13 The Separation Agreement included a full and final release of any future spousal support claims. The release reads as follows:
10. RELEASE OF SPOUSAL SUPPORT
a. The Husband and the Wife each agree that neither shall be obliged to make any payment or payments in the nature of support, or any similar payment, whether periodic or by way of lump sum, directly or indirectly, to or for the benefit of the other. Without restricting the generality of the foregoing, the Husband and the Wife further agree that neither of them shall maintain, commence or prosecute or cause to be maintained, commenced or prosecuted any action against the other of them for support or interim support pursuant to the Family Law Act, the Succession Law Reform Act or any comparable Provincial legislation in force from time to time, or the Divorce Act , or any successor or similar legislation whereby a spouse or former spouse is given a cause of action against his or her spouse or the spouse's estate for relief in the nature of support.
b. The Wife specifically abandons any claims she has or may have against the Husband for her own support. The Wife acknowledges that the implications of not claiming support in this Agreement have been explained to her by her solicitor. At no time now or in the future, including any future divorce proceedings, or upon the Husband's death shall the Wife seek support for herself, regardless of the circumstances.
c. The Husband specifically abandons any claims he has or may have against the Wife for his own support. The Husband acknowledges that the implications of not claiming support in this Agreement have been explained to him by his solicitor. At no time now or in the future, including any future divorce proceedings, or upon the Wife’s death shall the Husband seek support for himself, regardless of the circumstances.
d. The parties are aware that this is a final Agreement and intended to be a final break between them. No further claims will be made against either party by the other arising from the marriage or upon the dissolution thereof, including any claims under Section 15 of the Divorce Act or upon the death of one of them. Both parties are aware of the possibilities of fluctuation in their respective incomes and assets, are cognizant of the possible increases and decreases in the cost of living and are aware that radical, material, profound or catastrophic changes may affect either of them. Each party is prepared to accept the terms of this Agreement as a full and final settlement and waive all further claims against the other, except a claim to enforce the terms of this Agreement or for dissolution of their marriage. The parties specifically agree and acknowledge that there is no causal connection between the present or any future economic need of either party and their marriage. No pattern of economic dependency has been established in their marriage.
e. The parties agree that the divorce judgment shall be silent as to spousal support.
14 The Separation Agreement appears exhaustive in its attempts to disentangle the economic affairs of Mr. Miglin and Ms. Miglin. Besides the full and final release of any spousal support, the Separation Agreement also includes a pension plan release and release of estates.
15 The Parenting Plan provided that the parents would share responsibility for the children, but th