Just When You Think It's Over: Material Change Clauses In Final Separation Agreements

• Published date: 27 May 2021
• Subject Matter: Family and Matrimonial, Family Law
• Law Firm: Clark Wilson LLP
• Author: Ms Chantal Cattermole and Jaicee Payette

Separation agreements are common place in 2021. However, the court had not previously considered a separation agreement that purported to be final, but contained a clause that considered a "material change in circumstances" as grounds to change the agreement. In Hall v Hall, 2021 BCCA 115, the Court of Appeal set aside a trial judgment varying spousal support in a final separation agreement. The Court of Appeal noted in Hall v. Hall that if such a clause is included in a final separation agreement, the agreement may be be varied or set aside after a holistic review of the agreement and the parties' intentions at the time of entering the agreement. The Court found that no such variation was warranted because the agreement, when reviewed as a whole, set out the parties' intentions in relation to material changes in circumstances. This important decision will inform the drafting of separation agreements to ensure the parties' intentions are accurately set out.

Mr. Hall and Ms. Hall entered into a separation agreement in 2015, which included a designated monthly amount of spousal support paid by Mr. Hall to Ms. Hall. Within the agreement, Mr. and Ms. Hall included a section that stated both parties intended this agreement to be the final settlement for any claim of support. The agreement also contained the catch-all term that the agreement is final as to all issues between the parties. However, within the agreement was a provision stating that subject to a material change in circumstances, Mr. Hall would pay spousal support to Ms. Hall until he reaches the age of 65. After the agreement was signed, both parties carried on, and the single child of the marriage surpassed the age of 19. In 2017, Mr. Hall was given a restricted stock unit (RSU) by his employer, which then vested stock options to him in 2018. The first vesting of the RSUs increased his income by $117,972. In addition, the evidence was that Mr. Hall's RSUs would vest to shares on a declining schedule slated to end in 2025.

Ms. Hall sought to establish a material change in circumstances due to the cessation of child support and the increase in Mr. Hall's earnings. Ms. Hall specifically relied upon a section in their separation agreement under the heading "Child Support", which required Mr. Hall to disclose financial statements "each year for so long as support is payable" (para 51). Ms. Hall claimed that the use of the term "support" without the modifier of "child" meant that the section also...