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Miglin Decision

In a landmark family law decision known as Miglin v. Miglin, the Supreme Court of Canada has ruled that in certain but limited circumstances, a court may alter a separation agreement in order to provide support for a spouse who is in need. This is true even where that spouse has released any entitlement she or he may have to receive spousal support. Miglin overrules an earlier series of Supreme Court judgments known as the "Pelech Trilogy". The Pelech Trilogy has been roundly criticized by lawyers, scholars and judges for setting the bar for overturning agreements so high as to be unreachable.

In October of 2002, Epstein Cole's Philip Epstein travelled to Ottawa to argue Miglin v. Miglin before the nine judges of Canada's highest court. Mr. Epstein represented Mrs. Miglin on the appeal.

When Mr. and Mrs. Miglin separated after 14 years of marriage, they were joint owners of Killarney Lodge in Algonquin Park, a multimillion-dollar business. They signed an agreement in which Mrs. Miglin agreed to give up her interest in the business in exchange for Mr. Miglin's interest in the family home. She also agreed to raise the couple's four young children. Believing she would be able to get by on the child support she would be receiving from Mr. Miglin, as well as a small consulting fee he agreed to pay her for some work for the lodge, Mrs. Miglin also agreed to relinquish her right to spousal support.

Mrs. Miglin found it more difficult than she expected to get back on her feet while raising four children, and she applied to the Ontario Superior Court for spousal support. The court found that the agreement Mrs. Miglin had signed was unfair, and awarded her spousal support of $4,400.00 per month for 5 years.

Mr. Miglin appealed the trial judge's decision to the Ontario Court of Appeal. Mrs. Miglin was represented on the appeal by Mr. Epstein. The appeal court upheld the lower court's decision, although it went even further to award the support for an indefinite period of time. The court said that the very strict threshold established by the Pelech Trilogy was not appropriate, and that a "material change of circumstances" was sufficient to allow a court to review an agreement in order to determine whether support was warranted.

Mr. Miglin appealed this decision as well, this time to the Supreme Court of Canada. Mr. Epstein argued on behalf of Mrs. Miglin that the Pelech Trilogy was inconsistent with the object of the federal Divorce Act, which is to ensure that spouses share equitably in the distribution of resources upon marriage breakdown. It is the court's responsibility to see that this object is upheld by private parties, and that neither spouse leaves the relationship at an economic disadvantage. Even where a spouse freely agrees to release his or her entitlement to support, if that agreement is not fair, it should not be upheld by a court.

All nine of the Supreme Court justices agreed with Mr. Epstein that the Pelech Trilogy was inconsistent with the Divorce Act. They found that while judges should be reluctant to overturn private agreements and award support, there will be circumstances where it is appropriate for courts to do so. For example, where there has been a significant change in one of the parties' financial circumstances, a change that could not have been reasonably foreseen by the parties when they signed the deal, it would be appropriate for a court to review the terms of an agreement. The Supreme Court also agreed that courts must examine the fairness of an agreement not only at the time it was written, but also at the time of the application for support.

In the end, however, the majority of the Supreme Court reversed the Ontario Court of Appeal's decision to award Mrs. Miglin support. Seven judges held that in the specific facts of her case, the trial judge should not have re-opened the agreement. Two Supreme Court judges would have awarded Mrs. Miglin support, because the agreement did not take into account how difficult it would be for her to become self-sufficient while raising four young children.

The Miglin decision offers no precise guidelines as to when agreements may be opened and support may be awarded. Each case will have to be decided on its merits, and it will take years for a body of case law interpreting the decision to be developed, providing judicial direction to family law lawyers.

One thing is clear: in determining whether or not a deal is a deal, trial judges must strike a balance between the competing values of finality and fairness. In this way, Miglin strikes a blow both to those who would have liked the Supreme Court to rule out the possibility of ever opening agreements, and to those who agreed with the Court of Appeal that all that is required in order for an agreement to be reviewed is a material change in circumstances.

In the meantime, what should separating spouses take from all of this? Spouses who are releasing their entitlement to support should assume first and foremost that their deal is final. However, if unforeseen changes do occur that render the agreement unfair, and inconsistent with what the parties expected the future would hold, there may be room for a judge to re-open it.



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