This was an Action by the Plaintiff, RMK, for specific performance of a divorce settlement agreement that had been executed on March 30, 2017 (the “Agreement”) which had been repudiated by the Defendant, NK. At issue was whether the Agreement was unenforceable due to the Defendant’s lack of mental capacity during the Agreement’s formation/ The Defendant alleged that the Plaintiff and her counsel were aware of the Defendant’s lack of mental capacity, and seized upon in crafting an unfair agreement.

In January 17, 2017, prior to the Application at issue, the Plaintiff applied for an Order requiring the Defendant to deposit money into the Plaintiff’s account on a weekly basis until such time as the Defendant complied with a previous Order to provide an accounting of matrimonial assets that the Defendant had hidden. In the alternative, the Plaintiff sought an Order pursuant to Rule 10.54 to have the Defendant taken into custody and assessed for mental incapacity. The Plaintiff later testified that she had made the Rule 10.54 Application, not out of concern for the Defendant’s mental health, but in an attempt to have a guardian appointed to assist with his inability to follow Court Orders, and to manage his financial affairs.

Justice Goss was therefore required to assess whether the Plaintiff’s Rule 10.54 Application could be taken as evidence of the Plaintiff’s knowledge that the Defendant did not have capacity at the time the Agreement was formed. In finding that the Agreement was enforceable, Madam Justice Goss ruled that the evidence did not support a finding that the Plaintiff and her counsel knew that the Defendant did not possess capacity to contract. Evidence of the Defendant’s financial recklessness, deceitful diversion of funds, and refusal to comply with Court Orders was insufficient to overcome the presumption of capacity to contract.