Agreement tackled issues like parenting time, asset division, disposition of building sale proceeds
The Ontario Court of Appeal saw no errors in a trial decision that found a separation agreement between former spouses in effect and operative, given that the agreement’s escrow condition had been satisfied and waived.
The parties, in this case, married in 2004 and had four children together. They owned a building through a corporation in which the husband owned 51 percent of shares and the wife owned 49 percent. They both had offices in the building, with the wife practising as a medical doctor and the husband as a chiropractor.
After they separated in May 2017, the former spouses disagreed over how to deal with the building. The ex-wife filed an application with the Commercial Court. A January 2019 order directed the corporation to accept a third-party offer to buy the building.
The parties and their family law lawyers negotiated and eventually reached a comprehensive separation agreement, also in January 2019. The agreement tackled issues such as parenting time, child support, asset division, spousal support, and the disposition of the proceeds from the building’s sale.
On Jan. 20, 2019, the ex-wife’s family law lawyer emailed the ex-husband’s lawyer a document dubbed the final draft of the separation agreement.
In the cover email, the ex-wife’s counsel asked the ex-husband’s counsel to confirm that “you will be meeting with your client today to execute five clean copies.” Upon receipt of the copies, the ex-wife would hold the agreement in escrow pending her corporate counsel’s review and approval of its commercial components.
On Jan. 24, 2019, the ex-husband signed the separation agreement and sent it back to the ex-wife’s counsel. The ex-wife did not get back to the ex-husband’s lawyer to send a countersigned copy or to advise regarding the satisfaction or waiver of the escrow condition.
However, the ex-wife took steps pointing toward the agreement being in effect. For instance, on Jan. 31, 2019, she sent a copy named “2019-01-25 Fully Executed Separation Agreement” to her corporate counsel.
About a month later, trouble arose when the ex-husband claimed that his ex-wife breached certain terms of the separation agreement, including the provisions on parenting time. She responded that she had never countersigned the agreement.
On Mar. 14, 2019, the ex-wife’s lawyer sent a new version of the separation agreement. Here, she requested the introduction of certain adjustments, including changes to the division of parenting time. The ex-husband refused and went to court to enforce the separation agreement dated Jan. 24, 2019.
The motion judge deemed the Jan. 24, 2019 agreement valid and called for a trial on the issue of whether the escrow condition was satisfied or waived. The trial judge held that the agreement was in effect, given that he found either a satisfaction or a waiver of different aspects of this condition.
On appeal, the ex-wife challenged the motion judge’s summary judgment order and the trial judge’s decision based on multiple errors that they allegedly made in upholding the separation agreement.
In Khani v. Araghi, 2025 ONCA 24, the Court of Appeal for Ontario dismissed the appeal because it found no errors in the trial judge’s decision.
The appeal court noted that the test to find the ex-wife’s waiver of the approval component of the escrow condition would involve an assessment of whether she fully knew about her corporate counsel’s concerns and her right to insist on revisions to the agreement before it became legally enforceable and whether she communicated a clear and conscious intention to abandon that right.
Here, the appeal court accepted that the trial judge did not explicitly mention this test. However, the appeal court decided that the trial judge’s analysis of the evidence met the test and supported his finding that the ex-wife’s conduct established a waiver of her right to make her corporate counsel approve the agreement’s commercial aspects beforehand.
The appeal court added that the trial judge carefully reviewed the evidence, which showed that the ex-wife fully knew about her corporate counsel’s advice and intended to act according to the agreement’s commercial aspects without requesting any amendments despite the absence of her corporate lawyer’s approval.
