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The Ontario Court of Appeal recently considered whether the reconciliation of a married couple voided their separation agreement.

What Happened?

The couple married on October 16, 1997 and separated for the first time on July 22, 1999. They entered into a separation agreement dated January 18, 2002. 

The agreement contained a reconciliation clause that preserved the separation agreement if the reconciliation lasted less than 90 days, but voided the separation agreement if the couple reconciled for more than 90 days. As an exception to the voiding provision, “any payment, conveyance or act” done under the agreement would not be invalidated. 

The separation agreement also contained a number of releases, including a release by the wife of her rights in the husband’s Canada Post pension.

Following the first separation, both the husband and wife had relationships with new partners, but they never divorced each other. After the new relationships ended, the couple reconciled as of March 1, 2006 and remained together until they separated for the second time on December 7, 2014.

Issue

The main issue at trial and the only issue on appeal was the extent of the wife’s entitlement to share in the value of the husband’s Canada Post pension. 

The issue turned on the proper interpretation of the separation agreement and whether the release of the pension rights was voided when the couple reconciled. 

Lower Court Decision

The trial judge held that the specific pension release clause was not voided by the couple’s reconciliation. 

He relied on a common law rule that a separation agreement is void upon reconciliation “subject to a specific clause in the agreement that would override the common law or a clause that would be implied from the agreement that the intent of the parties was that transactions carried out under the agreement will remain in place”. 

The trial judge found that the wife’s release of any claim or right to the husband’s pension was a “specific release” and survived her reconciliation with the husband. He also found there was no evidence of the couple’s conduct that would set aside the clear terms of the agreement, and those terms were therefore a bar to the wife’s claim to share in the husband’s pension prior to their reconciliation.

Decision 

The court found that the trial judge had made two errors in his reasons.

The first error was that the trial judge had misapprehended the evidence regarding whether there was any “payment” for the value of the pension to carry out the terms of the separation agreement. The Court of Appeal found that, in fact, there was no such payment and therefore the exception to the voiding provision did not apply. 

The second error was that by finding that the pension release was not voided by the couple’s reconciliation, the trial judge had failed to give effect to the express term of the reconciliation clause that provided that the separation agreement became void if the couple reconciled for more than 90 days, stating:

“The language of the voiding clause in the separation agreement in this appeal clearly demonstrates the intent on reconciliation to return the parties to the position they were in prior to separation. The bargain they made on separation, whereby they released each other from future rights and obligations, is set aside and becomes void. The parties are meant to regain all the rights they had as spouses that were bargained away in the separation agreement.”

As a result, the  appeal was allowed and the wife was entitled to receive a share of the husband’s pension from the date of marriage to the date of the second separation, which amounted to almost $275,000.  

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Separation and divorce are challenging for everyone involved.  When dealing with custody or access disputes, matters involving spousal and child support, the division of assets, and other family issues, emotions can be your worst enemy. Having an experienced family lawyer on your side can help you stay focused and resolve disputes as quickly and amicably as possible.

At Campbell Bader LLP our family team has collectively spent more than twenty years advising clients about family disputes, including those involving high net worth individuals or complex matters.

We value and incorporate collaborative family law principles into our practice, but we’re smart enough to recognize when that approach won’t work for you and we adapt our strategy accordingly. To learn more about how we can help you, contact us online or at 905-828-2247.