Spouse Cannot Take Advantage of An Error in a Separation Agreement
A separation agreement is often the first step in obtaining a divorce and legally ending a relationship. They are important because they are a way to protect your rights and assets when a marriage breaks down, and can prevent confusion or prolonged legal battles when divorce eventually occurs. However, like any written document, mistakes can be made when writing a separation agreement. The Ontario Superior Court of Justice looked at a case where a drafting error occurred and dealt with the question of whether one spouse can take advantage of a drafting error.
A significant investment in the home
The husband and wife, who had been married for 16 years before their marriage broke down, lived in a home that had been purchased using the wife’s money (a combination of gifts and inheritance). The wife was largely a work-at-home mother, managing the household and raising their children.
The couple drafted a marriage agreement when it was discovered that the husband was having an extramarital affair. The wife was interested in ensuring she would recoup the money she invested into the purchase of their home should the marriage breakdown – a sum of about $2 million. Aside from the money, it was the wife’s intent to give the husband one-half of the value of their home.
A mistake is made
However, the draft prepared by the wife’s lawyer contained a significant mistake. It stated that the wife would give the husband the full value of their home over two installments. However, the cover letter accompanying the draft stated she intended to give him just half, leaving a discrepancy in the document.
The husband and his lawyer were aware of the mistake in the contract but did not seek to have it clarified. The couple separated shortly after the agreement was made, and the husband quickly tried to have the contract enforced. The error had significant consequences. If he was to receive half the value of the home minus the wife’s investment, he would receive about $500,000. However, if he were to receive the full value of the home, he would receive approximately $2,500,000.
The court’s decision
The court looked at what the intention of the parties was. It found the evidence clearly established that the wife intended to give only half of the value of the home to her husband, and that the whole point of the agreement was for her to recoup money she invested in the home.
Additionally, the court was critical of the husband and his lawyer for failing to notify the wife and her lawyer of the mistake. The wife’s lawyer did not learn of it until the couple had already separated. The court wrote:
A simple phone call followed by a confirmation in writing is all that was necessary. I find that without that simple clarifying act, [the husband’s lawyer] and her client took advantage of the mistake and allowed the process to conclude, while knowing that there was no meeting of the minds on this very material issue.
The court ruled the contract to be unenforceable and ordered the wife to pay the husband an equalization payment of $798,453.10.
The lawyers at Arbesman Hamilton LLP can help you navigate the difficult experience of a breakdown of a marriage, including the review or drafting of a separation agreement in order to protect your rights and assets. Contact us online or by phone at 416-481-5604 to talk today.