P.D.B. v. J.A.B., 2010 ABQB 286

Court of Queen ’ s Bench of Alberta Citation: P.D.B. v. J.A.B., 2010 ABQB 286 Date: 20100505 Docket: 4801 130748 Registry: Calgary Between: P.D.B. Plaintiff - and - J.A.B. Defendant _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice W.P. Sullivan _______________________________________________________ Introduction [ 1 ] After 19 years of marriage the parties separated on August 14, 2005 and entered into a separation agreement on the 18 th day of May, 2006 (the “Agreement”). This Agreement was negotiated without the retained assistance of legal counsel.

After execution, both parties attended upon counsel to execute a Matrimonial Property Act Acknowledgement (“Acknowledgment”)

Section 38 certificate and obtained certificates of Independent Legal Advice from members of the Law Society of Alberta. Counsel also signed Affidavits of Execution.

[ 2 ] The primary issue to be decided in this Chambers application, viva voce , is the effect of the Agreement and whether the Agreement is binding on the parties and enforceable. Central to this question is the effect of both the Matrimonial Property Act Acknowledgement and the Certificate of Independent Legal Advice. Background [ 3 ] The parties were married on August 31, 1985 in England. There are three children of the marriage the oldest two were born in England, L.A.B., February, 1989 (aged 21), J.J.B., December, 1990 (aged 19) and T.J.B., June, 2000 (aged 9). They moved to Canada in 1998.

After 19 years of marriage the parties separated in August 2005. [ 4 ] Prior to moving to Canada, and the birth of the children, J.A.B. (“Ms.”) was employed in local government and had some limited qualifications with respect to business administration and local government management. After the birth of the first child, Ms. only worked part-time at a number of different jobs that were not long-term career oriented. [ 5 ] At the time of marriage, P.D.B. (“Mr.”) was qualified to be an assistant site superintendent at construction sites.

Early in the marriage, by agreement with his wife and with financial support from his wife, he returned to school full-time for three years to earn the qualifications of a mechanical engineer. When the parties moved to Canada they brought with them approximately $50,000 and used that amount to live on for a short period of time and buy a house. Mr. was soon employed as a mechanical engineer in Calgary, this employment paid $70,000 per year, a significant improvement over his employment in England. From then to the present, Mr.’s employment prospects and financial remuneration have steadily improved.

He is now a consultant, employed as a project manager, in the oil and gas sector. [ 6 ] At the time of separation on August 14, 2005 and at the time of the entering into the Agreement, Mr. warranted, in the Agreement, that he was earning $178,000 per year (although the parties then knew that his actual income was closer to $150,000.00 and knowingly based their settlement on the lower number). In 2009, he earned $175,724.37.

In 2010, he expects to work 48 weeks at a salary of $4,550.00 per week for an annual projected income of $218,400. [ 7 ] For a short period of time in 2009, Mr. was unemployed. [ 8 ] The Agreement contains among others the following recitals: The Husband and the Wife intend this agreement to be: (

I) a final settlement of their respective rights to and in property owned jointly and/or separately by them; (ii) a final settlement of the issues of custody, access, guardianship, and support. [ 9 ] The Agreement warranted in paragraph 22: “The Husband and the Wife further acknowledge and agree that: (

a) each and every recital of fact contained herein is true and accurate; (

b) they each have general knowledge of the other’s affairs, assets and liabilities; (

c) they have each read and understood this agreement;

(

d) they each sign this agreement as free agents; (

e) this agreement has been executed without any pressure, influence, or intimidation by anyone; (

f) they have each received, or are aware of the advisability of seeking full and independent legal advice with respect to this agreement and the alternatives available to the execution of it. [ 10 ] The Agreement set spousal support (based on Mr. earning $150,000.00 per year) for his wife at $3,400.00 per month commencing on the 1 st day of July, 2006 and continuing until the 1 st day of June, 2026. The parties also agreed to a reduction in child support to the amount of 75% ($2,396.00) of the amount listed in the 2006 Child Support Tables for Alberta.

This reduction recognized that Mr. has a fourth child from his subsequent relationship. Ms. agreed to this reduction recognizing the demands on Mr.’s finances. In addition, Mr. agreed to pay s. 7 expenses for the children in the amount of $100.00 per child per month until the age of 21 years, if the child is in full time education. [ 11 ] The Agreement also dealt with the debt of the matrimonial regime, excluding mortgage which was $94,000.00. Mr. paid all the matrimonial property debts from his share of the matrimonial home ($90,000) and a contribution of $4,000.00.

That is to say from the sale of the matrimonial home, Mr. agreed to accept $90,000.00 which would be used to pay off matrimonial debt and Ms. would receive $140,000.00 to be paid towards the purchase of a new smaller home, which she did, for herself and the three children that remained in her care and control. The two older children finish their post-secondary education this week and are now self supporting. [ 12 ] For a short period of time in 2009, Mr. was out of work. It was this loss of employment that crystalized his desire to seek to void or vary the Agreement.

Separation Agreement [ 13 ] The Agreement the parties negotiated and signed was prepared by Mr. and was a document he purchased at a book store. This document contains recitals. A critical one is identified above in paragraph 8. It contains general provisions with respect to the parties and their continuing relationship, deals with custody access and guardianship, with support and the identification of assets and liabilities. It also deals with the sale of the matrimonial home. The Agreement covered all the issues. [ 14 ] Ms. attended on Mr.

Edward Simper, a barrister and solicitor, to witness her signature on the document and execute an Acknowledgement. Mr. Simper then executed a Certificate of Independent Legal Advice in the usual form. [ 15 ] Mr. attended upon Mr. Darren J. Peterson to witness his signature to the Agreement and execute a Matrimonial Property Act Acknowledgment pursuant to

Section 38 of the Matrimonial Property Act, R.S.A. 1980, c. M-9 (the “ Act ”) and Mr. Peterson prepared a Certificate of Independent Legal Advice. [ 16 ] Sections 37 and 38 of the Act provide as follows: 37(1)

Part 1 does not apply to property that is owned by either or both spouses or that may be acquired by either or both of them, if, in respect of that property, the spouses have entered into a subsisting written agreement with each other that is enforceable under

section 38 and that provides for the status, ownership and division of that property.

(2) An agreement under subsection (1) may be entered into by 2 persons in contemplation of their marriage to each other but is unenforceable until after the marriage.

(3) An agreement under subsection (1) (

a) may provide for the distribution of property between the spouses at any time including, but not limited to, the time of separation of

the spouses or the dissolution of the marriage, and (

b) may apply to property owned by both spouses and by each of them at or after the time the agreement is made.

(4) An agreement under subsection (1) is unenforceable by a spouse if that spouse, at the time the agreement was made, knew or had reason to believe that the marriage was void. 38(1) An agreement referred to in

section 37 is enforceable if each spouse or each person, in the case of persons referred to in section 37(2), has acknowledged, in writing, apart from the other spouse or person (

a) that the spouse or person is aware of the nature and the effect of the agreement, (

b) that the spouse or person is aware of the possible future claims to property the spouse or person may have under this Act and that the spouse or person intends to give up these claims to the extent necessary to give effect to the agreement, and (

c) that the spouse or person is executing the agreement freely and voluntarily without any compulsion on the part of the other spouse or person.

(2) The acknowledgement referred to in subsection (1) shall be made before a lawyer other than the lawyer acting for the other spouse or person or before whom the acknowledgement is made by the other spouse or person. Issue: Is the Agreement enforceable? [ 17 ] Mr. now says that he did not fully understand the nature of the Agreement and that he did not receive adequate or independent legal advice from Mr. Peterson. He said that Darren J. Peterson was a friend of himself and of his wife Ms.. He also says that his wife exerted a tremendous amount of pressure on him to have the Agreement signed.

He now has second thoughts about signing the Agreement. He alleges that it turned out to be a mistake, that it resulted in an unequal division of matrimonial property which is unfair and resulted in him paying an unreasonable amount of spousal support. [ 18 ] Ms. says that the Agreement was freely negotiated between them and there was no pressure from her. According to Ms., Mr. wanted it executed so he could move on, and that there was no mistake.

Ms. dropped her claim for indefinite spousal support in exchange for a term of 20 years. [ 19 ] At the time of the execution of the Agreement on the 18 th of May, 2006, I find that the parties were anxious to have their affairs settled. Mr. who had already commenced a relationship with his present common-law partner was anxious to have the matter settled and Ms., who acknowledged and accepted the reality of separation was anxious to move on by obtaining a home for her and the three children and be settled. Ms. was as anxious then for the settlement as Mr.

There was no undue pressure on Mr. from Ms. and Mr. signed the deal he wanted. [ 20 ] Mr. and Ms. did not want to retain counsel and wished to proceed on their own without the advice of counsel in negotiating the Agreement. Ms. had determined that she wanted an indefinite term of spousal support at $3,400.00 per month. She hoped of marrying in the future and pursuant to the Agreement, her support would terminate. Mr. expected that she would marry as well and expected the same termination.

Of course they both expected that the children would grow up and child support would eventually come to an end. [ 21 ] Based on the child support amounts agreed to in the Agreement, there is certainly no error, if anything child support is low

and not in compliance with the guidelines. [ 22 ] Based on the spousal support amount payable in the Agreement, although it may be considered generous with respect to its duration, the monthly amount payable is not. The amount payable on a monthly basis and for its term therefore is not unconscionable or outside the range one would consider acceptable concerning Mr.’s employment and his employment prospects for the future and keeping in mind the significant disadvantage of Ms. and her ability to earn an income sufficient to maintain her.

Spousal Support [ 23 ] The first issue is to determine if the Agreement constitutes what is intended to be a full and final settlement. If it is the, principles for altering spousal support are those articulated in Miglin v. Miglin , 2003 SCC 24 , 1 S.C.R. 303. [ 24 ] I find that this Agreement was a “full and final settlement” of their respective rights. There is nothing in the Agreement that the parties did not agree to and neither party sought out or retained legal advice with respect to the terms of the Agreement.

There is no doubt that the Agreement entered into between Mr. and Ms. constitute what the parties intended to be a final settlement, notwithstanding that there was a paragraph in the Agreement that allows the Agreement to be amended by mutual consent or by Court order (paragraph 5). I find that there is nothing particularly special about paragraph 5.

The parties can amend agreements at any time by consent and if material changes take place the Court can intervene to see that justice is done. [ 25 ] In the Agreement, Mr. warranted that he understood the Agreement along with the other terms contained in paragraph 9 above. He now resiles from that position and asks the Court to find the Agreement invalid. [ 26 ] The principles articulated in Miglin are set out in Templeton v. Templeton, 2005 ABCA 133 , 363 A.R. 392. In Templeton , the husband applied to the Court to reduce his spousal support after been diagnosed with leukemia, and being forced to retire.

The husband’s application was denied by the trial judge and the appeal was dismissed. Chief Justice Fraser speaking for the Court explained the test as laid out in Miglin and said this at paras. 6 and 7 : There are two main issues here. The first is whether these Minutes constitute what the parties intended to be a final settlement. If they do, the principles for altering spousal support are those articulated in Miglin v. Miglin .

This test involves a consideration of whether the subject agreement was entered into voluntarily and fairly; the extent to which it still reflects the original intention of the parties; and the extent to which it is still in substantial compliance with the objectives of the Divorce Act . As part of this analysis, the Court is required to consider whether the party seeking to vary the agreement, in this case, Mr., has established that the new circumstances were not reasonably anticipated by the parties and have led to a situation that cannot be condoned: Miglin , supra , at para. 88 .

The purpose of these inquiries is to determine whether the situation of the parties at the time of the application makes it inappropriate to accord the agreement conclusive weight: Miglin, supra, at para.88. [ 27 ] In many respects this case is similar to Templeton .

That agreement contained these words: There shall be a complete, final and effective settlement of their respect rights in and to maintenance from each other. [ 28 ] Counsel for Mr. argues that Templeton is distinguishable from the present case as, in Templeton , it was not disputed that the Settlement Agreement was entered into fairly and reasonably.

Counsel argues that this is unlike Mr.’s lack of independent legal advice, as well as the pressure and the economic duress that he faced when entering the matrimonial settlement. [ 29 ] The Certificate of Independent Legal Advice executed by the barrister and solicitor is completely inaccurate. Counsel who executed the Certificate of Independent Legal Advice for Mr. acknowledged in evidence that he phoned Ms. to confer with her prior to seeing or meeting with Mr., was a friend of both Mr. and Ms., and did not explain to Mr. his legal rights and liabilities under the terms and conditions of the Act .

[ 30 ] The circumstances of the signing of the Agreement in the office of the respective barristers and solicitors does not void the Agreement, in certain circumstances it may make the Agreement voidable or call on the Court to vary the Agreement. [ 31 ] With respect to the lack of independent legal advice, Mr. cites Brosseau v. Brosseau (1989), 1989 ABCA 241 (CanLII) , 100 A.R. 15 (C.A.) in support of his argument.

In Brosseau , the court determined that “the finality rule should not be applied against a party who understood that her independent legal advice was a “rubber stamp” and thought she had been getting advice from a lawyer properly representing her interest.” However, the facts in Brosseau differ from the present case and I note that the Court of Appeal states at 6: “We do not say that independent legal advice is necessary in every case, but we do say that where the other spouse knows it is needed, it must be adequate”. [ 32 ] In Corbeil v.

Bebris, (1993) 1993 CanLII 9378 (AB CA) , 141 A.R. 215 (C.A.), the Court of Appeal distinguishes between “independent legal advice” in the context of s. 38 of the Act and a Certificate of Independent Legal Advice.

Section 38 does not require a lawyer to give independent legal advice about whether it would be wise for a person to execute an agreement, nor does the Act invalidate an agreement for lack of independent legal advice. A lawyer is merely required to make certain inquiries and to be satisfied that his or her clients acted freely, with full awareness of their rights and to an equal division and judicial review. [ 33 ] However, I note the following from Proia v.

Proia , 2003 ABQB 576 , 340 A.R. 363 at paras. 50 and 51 , that the Agreement will not necessarily be invalidated: As to the argument of Counsel for Mr. concerning non-compliance with the statutory formalities of s. 38 of the Matrimonial Property Act , I refer to and adopt the reasoning of Veit J. in Gardner v. Gardner , 2002 ABQB 471 at para.22: [ Corbeil deals] with specific Alberta pre-requisites to a matrimonial property agreement, whereas the term in dispute here, a waiver of spousal support, is not a matrimonial property issue.

As to the argument of Counsel for Mr. concerning the lack of independent legal advice, I heed the comments of Kerans J.A., for the Court, in Corbeil at para. 13 : The Act does not invalidate a contract for lack of independent legal advice. Moreover, no rule in equity or contract invalidates an agreement simply on account of a lack of independent legal advice. The function of the advice, in that context, is to remove a [taint] that, left unremoved, might, according to contract or equity law, invalidate the contract.

Judges cannot therefore simply say that an agreement is unenforceable for lack of independent legal advice. At the very least, they must first find a taint. [ 34 ] With respect to the spousal agreement, I do not think that the lack of independent legal advice has the effect of voiding the Agreement. As previously stated, in Corbeil , the Act does not invalidate a contract for lack of independent legal advice. Moreover, no rule in equity or contract invalidates an agreement simply on account of a lack of independent legal advice.

The function of the advice, in that context, is to remove a taint that, left unremoved, might, according to contract or equity law, invalidate the contract. On the evidence before me, I find that there was no taint. In spite of the lack of legal advice, Mr. entered into the agreement voluntarily, fairly and was under no duress, despite his claims that he felt under duress.

Furthermore, it is in substantial compliance with the Divorce Act and still reflects the original intention of the parties. [ 35 ] The second issue set out in Templeton is this: are there circumstances that were not reasonably anticipated by the parties that could have led to a situation that this Court cannot condone? The answer is - no. Mr. continues to work at an improved rate of income and lives with his common-law partner and their child. The common-law partner provides a substantial income to his household.

All the circumstances then that are before the Court today were either known or reasonably anticipated by Mr.. Mr. in the past has been unemployed for short periods of time and he can expect this to occur in the future. This was known by the parties at the time of negotiating the Agreement. Mr.’s position at the time of the Application is significantly improved. Ms.’s position is becoming precarious. [ 36 ] In paragraph 16 of Templeton, the Chief Justice stated :

...that any change in circumstances must be material in order to invoke the Court’s jurisdiction to vary any spousal support award. In other words, if the circumstances had been known at the time, they would likely have resulted in different terms being ordered by the Court.” [ 37 ] Mr. argues that his short period of employment in 2009 was unforeseeable. I disagree. Mr. argues that the 20 year term of spousal support was unreasonable. I disagree.

Although one could reasonably expect that the term payable for spousal support would last 10 or 11 years, the circumstances of this case, the 20 year term is not unreasonable. [ 38 ] Although the term of spousal support is on the long side with respect to Ms., the terms are not unacceptable. In Thomas v. Thomas 2004 ABQB 27 , 350 A.R. 58 at paras. 62 - 64 , affirmed, 2005 ABCA 24 , 363 A.R. 159, I said this: A balance must be struck in applying the principles above.

While accepting the economic disadvantages of the dependant party, and the resulting difficulties in attempting economic self-sufficiency, the spirit and incentive of the independent party must not be destroyed. In an attempt to support the promotion of both parties to the marriage, I believe there must be some form of a balance. It would be incredibly useful to have some incorporated balance to deal with any subtle changes in the conditions of the parties, preventing the need to continuously return to court.

While recognizing the income of the disadvantaged party, there ought to be an incentive to go beyond the income projections I have set out. If the income of the disadvantaged party goes above what I have estimated, then spousal support will be reduced, however not dollar for dollar. I propose a ratio of 70/30. This provides an incentive for the disadvantaged party to better their situation, without the fear of an equal loss in income. Thus, if Mrs. Abel earns more than $3,000.00 per month, and if Mrs.

Thomas earns more than $2,500.00 per month, the amount over and above this amount will be deducted from their spousal support payment at 30%. Mrs. Abel and Mrs. Thomas will retain 70% of the spousal support for each dollar earned over the amounts. This balancing method is used in separation agreements determined in a collaborative setting, and I wish to apply in a court setting. Matrimonial Property Division [ 39 ] With respect to the effect of ss. 37 and 38 of the Act the Court of Appeal in Diegel v. Diegel , 2008 ABCA 389 , 100 Alta.

L.R. (4 th ) 1 stated in para 30: We do not find it necessary or appropriate to expatiate at length here about the philosophy behind ss. 37 and 38 of the Act . Alberta’s legislative approach is not the same as the approach in Ontario: see, by comparison, LeVan v. LeVan (2008), 90 O.R. (3d) 1, [2008] O.J. No. 1905 (QL), 2008 ONCA 388 , leave denied [2008] S.C.C.A. No. 331 (QL). Nonetheless, we observe that a common feature of such legislation appears to be in recognizing two alternative modes of disposing of matrimonial property, namely by court order, or by agreement.

If matrimonial property is divided by agreement rather than by a Court through the processes set out in

Part 1 of our Act , such an agreement is to be accomplished by parties who have reasonable bargaining power and understanding of their legal rights. Accordingly, s. 38 sets out essential acknowledgments by the spouses which are necessary to make enforceable agreements under s. 37 of the Act . [ 40 ] On the evidence before me in this case it is clear Mr. executed a certificate pursuant to

section 38 of the Act acknowledging that he was executing the Agreement separate and apart from his wife, that he was aware of the nature and effect of the Agreement, that he was aware of his possible claims under the Act and that he executed the Agreement freely and voluntarily. That is to say he acknowledged all the essentials necessary to enforceable make the Agreement. [ 41 ] Keeping in mind Diegel , if matrimonial property is to be divided, it must be divided pursuant to the process set out in the Act . Mr. now says when he signed his Matrimonial Property Act Acknowledgment - he did not tell the truth.

Counsel did not tell the truth when he signed the Certificate of Independent Legal Advice. However, Mr.’s actions alone would not render this contract void.

[ 42 ] In spite of this finding, I find that with respect to the matrimonial property the requisite statutory formalities of ss. 37 and 38 have been met. I am satisfied that the agreement was entered into voluntarily and freely and it related to the intentions of the parties and met the needs of both Mr. and Ms. and the demands of the legislation. [ 43 ] However with respect to the spousal support which is not matrimonial property and not governed by the Act , I am satisfied that the following additional terms should be ordered: (

I) If in any future 12 month period Mr. is unemployed for four or more months, the spousal support arrangement between Mr. and Ms. may be reviewed by a Court to temporarily alleviate hardship on the part of the payor. (II) That every five years commencing May 1, 2010 until termination of the spousal support, the spousal support amount will be reviewed by the parties and to encourage Ms. to enhance her employment prospects such that the regime I ordered in Thomas is employed.

Thus if Ms. earns more than $3,400.00 per month the ratio of 70/30 will apply to the funds she receives in excess of $3400.00 per month. [ 44 ] Mr.’s payments of child support for his son T.J.B. are required by law to be based on current income and in accordance with the Child Support Guidelines. Ms. will honour her commitments regarding the leased van costs. Conclusion [ 45 ] The Separation Agreement entered into by the parties in May of 2006 is a valid agreement.

Its terms are enforceable and all payments are due pursuant to that Agreement, excepted as to the Order above regarding new income for Ms. [ 46 ] Costs may be spoken to. Heard on the 21 st day of April, 2010. Dated at the City of Calgary, Alberta this 4 th day of May, 2010. W.P. Sullivan J.C.Q.B.A. Appearances: Chad R. Johnson for the Plaintiff

Marc Zybutz for the Defendant