You signed. Maybe it was two years ago, at a kitchen table, after a long argument. Maybe you had a lawyer and you trusted the numbers on the page. Now you have found out about a company you were never told about, or you have realized the agreement leaves you unable to pay rent. Can you undo it?
The short answer is that it is possible, but you should not count on it. Ontario courts want separating couples to be able to rely on the agreements they make, and a deal is not set aside simply because one person regrets it or could have done better in court. Yet the Family Law Act gives judges a specific power to step in. A separate set of provisions lets them override terms about children and support even when there is nothing wrong with how the agreement was made.
This article is general information, not legal advice, and timing can be critical. If you think an agreement might be challenged, by you or against you, have it reviewed by a lawyer soon.
First, is it a valid agreement at all?
Section 55 of the Family Law Act says a domestic contract, including a separation agreement, is unenforceable unless it is in writing, signed by the parties and witnessed. An exchange of emails or a handwritten note with no witness can raise real questions, although courts have some discretion in unusual cases and may look at what the parties actually did.
If you are trying to enforce something informal, or to escape it, this is the first thing to check. Do not assume that just because a document is called “Separation Agreement,” or that because a lawyer prepared it, it automatically satisfies every requirement. Also, an agreement can be valid without independent legal advice. There is no requirement in the statute that each party have a lawyer, although not having one may become relevant in a later challenge.
The main test: section 56(4)
Section 56(4) says that a court may, on application, set aside a domestic contract or a provision in it:
- (a) if a party failed to disclose to the other significant assets, or significant debts or other liabilities, existing when the domestic contract was made;
- (b) if a party did not understand the nature or consequences of the domestic contract; or
- (c) otherwise in accordance with the law of contract.
Subsection 56(7) adds that you cannot contract out of this. A clause saying “we waive any right to challenge this agreement” will not take this power away from the court.
The Court of Appeal for Ontario described this as a two-step process in LeVan v. LeVan, 2008 ONCA 388, and repeated it in Virc v. Blair, 2014 ONCA 392. First, the person challenging the agreement has to show that one of the section 56(4) circumstances applies. Second, the court asks whether it is appropriate to exercise its discretion to set the contract aside. A person can meet the first step and still lose at the second. A judge might look at things such as whether someone concealed assets, whether the other person knew about them anyway, how significant the nondisclosure was, and whether the person acted promptly when they found out.
Failure to disclose
This is the most common ground. Family law places a strong emphasis on full and honest financial disclosure, because people cannot make a meaningful deal about what they don’t know exists.
Situations that can fall within this ground include a hidden bank account, an undisclosed interest in a business or property, a pension left off the list, property abroad, or a large debt that was concealed. A deliberately low valuation can also lead to issues, as can a statement that hides what a company is really worth.
Some points to bear in mind:
- The asset or debt has to be significant, and it has to have existed when the agreement was made. An inheritance received a year later is not nondisclosure.
- Knowledge matters. If you knew about the cottage even though it was left out of the document, your argument may be weaker. But you are generally not expected to have uncovered what the other person hid.
- A clause saying that each party “waives further disclosure” can be an obstacle, but it does not automatically defeat a claim. It would depend, among other things, on what you were told, what you understood and whether you had advice.
- A case can involve both a nondisclosure and a false statement, and a court can consider the two together.
The question also isn’t just “was something left out?” Judges look at whether the omission mattered to the deal. Failing to disclose a small account in an otherwise large and carefully documented estate is different from failing to mention a company worth more than everything else combined. Consider a hypothetical: one spouse agrees to a small equalization payment after being told a family business was “barely breaking even,” and later discovers that it was sold shortly thereafter for a substantial sum. On those facts, a challenger would have a strong starting point, although the outcome would still depend on the evidence.
Not understanding the agreement
The second ground is that the person did not understand the nature or consequences of the contract. This might be because of language barriers, mental health, serious illness, or a lack of any meaningful explanation. Many families in Peel Region deal with legal documents in a second or third language, and an agreement written in English and signed without interpretation may raise real concerns, depending on the circumstances.
But this ground is narrower than it sounds. Merely not reading the document or not liking how things turned out will generally not be enough. A signature creates a real presumption that you accepted the terms. The fact that you had independent legal advice, and a certificate confirming the same, makes this argument harder, although it does not eliminate it, particularly if the lawyer never got full information. Equally, the absence of a lawyer does not automatically mean a person did not understand.
Contract law: duress, undue influence, unconscionability
The third ground brings in ordinary contract defences. Among them:
Duress. This generally involves threats or pressure that leave a person with no realistic choice. Being told “sign or you won’t see the kids again” may be relevant, particularly if there is family violence in the background. The stress of separation by itself is usually not enough. Nearly everybody signs these documents under stress.
Undue influence. One person uses a position of power or trust to get the other’s agreement. A court might look at the family dynamics, including financial control or a religious or family authority figure pressing someone to sign.
Misrepresentation and mistake. A false statement that induced someone to sign may provide a ground. So can certain mistakes, though it is hard to rely on a mistake if only one side made it, and they could have checked.
Unconscionability. Courts may look for an inequality in bargaining power and a result that is substantially unfair. The Supreme Court of Canada dealt with this in a separation agreement context in Rick v. Brandsema, 2009 SCC 10. That case came from British Columbia, and the Court said that spouses negotiating a separation agreement have a duty of full and honest disclosure, and that a person who knowingly exploits the other’s vulnerabilities cannot then rely on the resulting agreement. It remains an important point of reference across Canada. Notably, the Court recognized that vulnerabilities of this type may be connected with mental health or emotional stress, and that the fairness of negotiations matters.
Support: a different and often easier door
Even if the agreement otherwise stands, a court has other avenues for reviewing support terms. Under section 33(4) of the Family Law Act, a court can set aside a support provision or waiver and determine support, even where the contract says otherwise, if:
- The provision or waiver results in unconscionable circumstances.
- The provision is in favour of, or the waiver is by or on behalf of, a dependant who qualifies for an allowance for support out of public money.
- There is default in the payment of support under the contract when the application is made.
So someone who waived spousal support, and is now relying on Ontario Works, may have a path to court. “Unconscionable circumstances” is a high bar, though. An unfair or disappointing result will not automatically reach that level.
In a divorce, the federal Divorce Act also applies. In Miglin v. Miglin, 2003 SCC 24, the Supreme Court set out an approach for when a court should override a spousal support agreement: it looks at the circumstances in which the agreement was negotiated, whether its terms substantially complied with the objectives of the Act at the time of signing, and then whether unanticipated changes mean that it no longer does. A support waiver is not absolutely bulletproof, in other words, but people who sign one with advice and a fair process should expect it to carry significant weight.
Children: the court always has the last word
Provisions about children are in a different category altogether. Under section 56(1), a court may disregard a provision on decision-making responsibility or parenting time where to do so is in the child’s best interests. Under section 56(1.1), a court may disregard a child support provision that is unreasonable having regard to the child support guidelines and other support provisions of the contract.
Parents can’t bargain away a child’s right to proper support. So an agreement that says “no child support will ever be paid in exchange for the house” gives only limited protection. It does not need to be set aside as a whole for those parts to be disregarded. Yet the question of what happens to the rest of the deal, if one part fails, is worth looking at carefully.
Barriers to remarriage, and partial challenges
There is also a very specific ground in section 56(5). The court may set aside all or part of a separation agreement or settlement if the removal of barriers to remarriage within a spouse’s faith was a consideration in making it. This is most often discussed in relation to religious divorces. It may be relevant for some Peel Region families.
Keep in mind that a court may set aside “a domestic contract or a provision in it.” It is not always all or nothing. A judge might strike out one clause while leaving the rest of the agreement in place, though it will depend on how the terms relate to one another. Agreements usually have a severability clause.
Time limits
Delay is one of the greatest dangers in this area.
Under the Limitations Act, 2002, the basic limitation period for most civil claims is two years from discovery. How this applies to a particular challenge can be fact-specific, and there are different rules for different kinds of claim. Proceedings to obtain support under the Family Law Act, or to enforce support provisions in certain agreements, are treated differently under that statute. Equalization claims under section 7(3) of the Family Law Act have their own deadlines: the earliest of two years after a divorce, six years after separation, and six months after a spouse’s death. If you set aside an agreement but are out of time on the underlying property claim, you may have an additional problem.
Beyond the strict limitation periods, delay can hurt your case in other ways. A person who finds out about a hidden asset and waits three years, while accepting payments under the deal, may have trouble convincing the court to use its discretion in their favour. The moment you discover the problem, write down the date and get advice.
What to do if you may challenge an agreement
If you think you have grounds:
- Keep the signed agreement, drafts, emails, financial statements and any certificate of independent legal advice.
- Note what you were told, by whom and when.
- Gather whatever you have that shows the undisclosed asset, such as a corporate search, title search or statement.
- Be careful about taking steps that look like you are affirming the deal, such as taking further benefits, until you have been advised.
- Keep following existing obligations under the agreement, especially if it has been filed for enforcement. Don’t simply stop paying.
- Start in the correct court. A property challenge generally has to be heard in the Superior Court of Justice in Brampton.
If you are defending an agreement, gather the disclosure records and any correspondence showing what was exchanged and when. It helps to show that the other person got advice or had the opportunity to do so. Good process at the beginning is your best protection later.
Protecting a new agreement
If you are negotiating now, the same principles can protect you. Exchange sworn financial statements with supporting documents, and attach them as schedules. Do not rush. Have each side obtain separate legal advice, with a certificate, and make sure there is time to review the draft. Use an interpreter where needed. Describe why you reached the deal. Agreements put together that way are far harder to attack, whichever side you are on. Our family law page gives an overview of these issues, and our divorce page covers how an agreement fits within a divorce. For a review of an existing document, you can contact the office.