On December 27, 2012, Justice Greer of the Ontario Superior Court of Justice set aside the spousal support release in the cohabitation agreement between Michael McCain and his wife, Christine McCain. In doing so, it was ordered that Michael McCain pay $175,000.00 in monthly spousal support. This spousal support award was specifically calculated to accommodate Christine's financial need to maintain the former matrimonial home and life style to which she had become accustomed. It is no surprise that this case marks the highest spousal support order in Canadian history.
The background to the record breaking decision is as follows: Michael and Christine McCain were married for thirty years. Together they have five children, three of whom are now financially independent and two whom are completing their post-secondary studies. During the marriage, the parties relocated between New Brunswick, Illinois and Toronto, all on account of Michael's career. Moreover, Christine had been out of the work force for 26 years so that she could raise the children and organize the family's social engagements, both personal and business.
Fifteen years into their thirty year marriage, Michael's father, Wallace McCain (of McCain Foods), insisted that all of his children enter into cohabitation agreements with their spouses or they would be disinherited. As a result, in 1996, Christine signed a cohabitation agreement which, among other things, provided that she would not be entitled to an equalization of family property and released all spousal support entitlements. Following the breakdown of their marriage, Christine applied to the Superior Court of Justice to set aside the spousal support provisions of the contract.
Upon considering her claim, Justice Greer agreed with Christine McCain that the contract was unfair, had been entered into under duress, and based on the parties' circumstances at the time of separation, could not be upheld as Christine had no way of projecting the future wealth of her husband at the time she signed the agreement.
At the time of the court hearing, Christine's financial circumstances were such that she had about $10,000.00 in monthly income derived from her investments of approximately $7,000,000.00 (received as a lump sum upon separation); her monthly expenses, however, were estimated at $118,800.00. In comparison, Michael McCain had an income of more than $800,000.00 per month, and a net worth in excess of $500,000,000.00.
The Spousal Support Advisory Guidelines, which are frequently relied on by judges to determine the amount of spousal support to be paid, provided for monthly support in the range of $299,375.00 and $398,986.00. Justice Greer, however, exercised her discretion to order support in an amount outside of the Guidelines, concluding that the sum of $175,000.00 would be sufficient to provide for her monthly needs. In reaching this conclusion, however, Justice Greer did comment on some discretionary expenses which Her Honour considered "somewhat generous."
This decision is clearly interesting for its record breaking spousal support order; however, the McCain decision also provides several lessons for spousal support matters in general.
Firstly, the McCain decision serves as a precedent for when the court may order an amount of support outside of the Guidelines in high income spousal support cases (being cases where the payor earns more than $350,000.00 per year). Although it may not always be appropriate, or desirable, to order an amount different than the Guidelines, the approach taken by Justice Greer in the McCain decision; being a close analysis of the actual needs of the recipient; is practical, especially on an interim basis.
Secondly, the McCain decision reminds lawyers and potential support recipients alike, that simply because there is an agreement waiving spousal support does not mean that spousal support is not an option. Any agreement dealing with support issues is only one factor to be considered by the Court and is not determinative. This means that even though you may have signed an agreement after exchanging financial disclosure with your partner, and receiving independent legal advice, it is not a foregone conclusion that the agreement will be upheld at a later date. In these cases, people should seek advice from a lawyer about all of the relevant factors that come into play when assessing the issue of spousal support, including the circumstances surrounding the agreement and the current circumstances of the parties to determine whether there are factors present that may trump the spousal support provisions of a cohabitation agreement or marriage contract.