Decision Outlines What Is Needed To Set Aside Marriage Contract
Marriage contracts, often called prenuptial agreements, are a way for people to predetermine what obligations they will have towards one another in the event of a separation or divorce. One of the benefits of a marriage contract is that it might serve to limit the likelihood of litigation if there are issues that need to be resolved. But as with many things in life, people sometimes have a change of heart when faced with dealing with an agreement made years before. This was the situation in a recent decision from the Ontario Superior Court of Justice where a wife sought to set aside a marriage contract.
The marriage and the contract
The wife was 58 and the husband was 78 when they began to date in December 2005. They decided to get married just four months later. The wife was employed by the City of Toronto and made a living off her salary of $75,000 as well as $39,000 in rental income from two investment properties. The husband was quite wealthy. Following their engagement, the wife took a leave of absence from her job and did not return.
Before getting married the husband asked the wife to sign a marriage contract. After negotiations, the final draft of the marriage contract stated the husband would pay one month of spousal support for every month of marriage. AS long as his annual income remained above $1,440,000 the spousal support would be capped at $12,000 per month. The initial draft had called for a one-time payment of $960,000.
The couple separated in September 2016, and the husband had been paying $12,000 per month in spousal support when the wife sought a declaration that the marriage contract was null and void and should be set aside. If she were to be successful in that pursuit, she also planned to ask for an equalization of net family property and spousal support based on the husband’s income.
Can the marriage contract be set aside?
In her application, the wife stated she “did not understand the process of negotiating a marriage contract”, adding she had only a limited opportunity to discuss it with a lawyer and she “believed she had no choice but to sign the contract.”
The court turned to a 2003 Supreme Court of Canada decision that applied a two-step test to determine if a court should uphold a marriage contract that limits a spouse’s support rights. The court summarized the test as follows.
At the first stage, the court should look at:
“(i) The circumstances in which the agreement was negotiated and executed to determine whether there is any reason to discount it, including any circumstances of oppression, pressure or other vulnerabilities. A court should not presume an imbalance of power and the degree of professional assistance received by the parties may be sufficient to overcome any systemic imbalances between the parties.
(ii) The substance of the agreement to determine whether it is in substantial compliance with the objectives of the Divorce Act at the time it was entered. The court considers if the agreement reflects an equitable sharing of the economic consequences of marriage and its breakdown. Only a significant departure from the objectives of the Divorce Act will warrant the court’s intervention.
“ At the second stage, the court must assess whether the agreement still reflects the original intentions of the parties and the extent to which it is still in substantial compliance with the objectives of the Divorce Act. It is unlikely that the court will be persuaded to disregard the agreement in its entirety, but for a significant change in the parties’ circumstances from what could reasonably be anticipated at the time of negotiation.”
The court applied this test to the facts of the case and determined the evidence did not raise a serious issue concerning the circumstances of the contract being signed, noting that several months went by where she was able to negotiate and consult her lawyer. In applying the second part of the test, the court found “The Marriage Contract reflects an equitable sharing of the economic consequences of marriage and its breakdown. For the duration of the marriage, (the husband) was financially responsible for (the wife). This allowed her to invest and grow her own assets.”
In light of this, the court dismissed the wife’s motion.
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