Unconscionability & Essential Fairness – The Risks Associated With A One-Sided Agreement
It is every lawyer’s job to achieve the best deal as is possible for his or her clients. Of course, every client seeks an Agreement that is in his or her best interests. However, there are risks associated with striking “too good” of a deal.
In the recent case of Butler v. Butler, 68 R.F.L. (7th) 309 (Ont. S.C.J.), Justice Vogelsang heard a summary judgment motion to set aside a signed Separation Agreement. While very unusual for a court to set aside an Agreement by way of summary judgment, when the action is defended, upon a review of the evidence Justice Vogelsang determined there was very little disagreement about the facts and the signed Agreement was completely one-sided, in favor of the Husband. The Court set aside the parties’ separation Agreement.
The Agreement, drafted by the Husband’s lawyer, required the Wife to give up an equalization payment in excess of $150,000.00 as well as her share of the Husband’s very valuable pension, and accept just $40,000.00 in lieu of what would have been indefinite spousal support of at least $2,500.00 per month. The Wife signed the Agreement without independent legal advice. Although her lack of independent legal advice is not determinative of the issue, the Wife had relied on the Husband’s advice that because she left the marriage and had not worked during the marriage she was not entitled to anything. She had been a stay-at-home mother of two children, in a 34 year marriage.
While it is true that the Wife in this case took no steps to protect herself (the Husband had no duty to protect her), the Agreement was grossly unfair and Justice Vogelsang found that the Husband took advantage of the Wife, engaging in “predatory behavior” (if even without malicious intent) in protecting his own self-interest:
“His telling her what the result would be, in the context of her trust in him that he would be fair, represented a pressure on her will that left her no realistic ability to freely decide.”
This case is a good reminder that where bargaining power is demonstrably unequal, and terms of an Agreement obviously unfair, parties should exercise caution in their quest to cut themselves “too good” a deal.