Marriage contracts (commonly called “prenups”) are important legal documents. However, they are not often a newly married couple’s priority. After all, marriage is about two people committing to spending a lifetime together. Unfortunately, separation and divorce are a reality that impacts a large number of marriages. For some people, agreeing on issues such as property division or spousal support before marriage might be an important step. However, questions about its validity may be raised even with a marriage contract. Therefore, to protect yourself and your assets, working with an experienced family law lawyer is important when negotiating and drafting a marriage contract.
In a recent decision from the Court of Appeal for Ontario, the Court was presented with a situation where the parties had signed a marriage contract before getting married in Quebec but later separated while living in Ontario. The wife sought to have the marriage contract set aside so she could pursue an equalization claim in Ontario. At the same time, the husband argued that the Quebec marriage contract prevented her from seeking equalization in Ontario.
In Torgersrud v. Lightstone, the parties met while attending university in Montreal and married in the Spring of 1987. After the wedding, the parties entered into a marriage contract as the husband’s father urged him to do so in order to protect his family’s business interests. Accordingly, the parties signed the contract in 1988. The document titled “Modification of Matrimonial Property Regime” stated that the husband and wife renounced their property rights as they were “separate as to property” and were not liable for one another’s debts. Under Quebec law, there would be no division of assets if the marriage broke down.
Two years later, a new law came into effect in Quebec, which provided that any family property would be divided equally between spouses upon a breakdown of the marriage. This excluded inheritances, gifts, and any of the parties’ respective property at the marriage date. The parties signed another document which opted out of this new legal regime.
The parties moved to Ottawa in 1993, and the wife decided to leave her job to look after their children. The family lived in Ottawa until the parties separated in 2015. Following the separation, the wife claimed equalization under Ontario’s Family Law Act. At the same time, the husband argued that the parties’ contracts, which were signed in Quebec, did not allow for any equalization.
Application judge says marriage contracts do not supersede Ontario legislation
At the original hearing, the application judge ruled that the marriage contracts from Quebec were valid but disagreed with the husband’s claim that they ousted the Family Law Act. Expert evidence from legal practitioners in Quebec indicated that the contracts would have been valid had the separation occurred in Quebec. Still, the judge noted a high threshold in place when asking if a marriage contract from one jurisdiction prevails over legislation. The application judge found that the contracts did not address renunciation, releases, or waivers and did not mention equalization outright. While the contracts stated the parties were “separate as to property,” the application judge did not find this sufficient to bar the wife’s claims.
The application judge noted that even if the Quebec contracts did oust the Family Law Act, they may be void because the husband had failed to disclose significant assets when they were signed. This meant the wife could not have appreciated either the nature or consequences of the contracts. The husband’s parents had died before the marriage, and the wife did not know that the husband had an approximate net worth of $4 million at the time of the marriage.
Using her discretion, the application judge set aside the Quebec contracts, finding that if they were enforced, the wife would not be entitled to any equalization despite the lengthy marriage.
Husband appeals decision; claims Quebec contracts should stand
The husband’s appeal was anchored in his claim that the contracts should have ousted the Family Law Act’s equalization provisions, arguing that they were legal under Quebec law, which should be enough.
However, in referencing the Family Law Act, the Court stated that the legislation allows courts to set aside a domestic contract or provision for several reasons, including if one of the parties fails to disclose significant assets, debts, or other liabilities to the other. A domestic contract can also be voided if one of the parties does not understand the nature or consequences of the contract.
Accordingly, the husband’s failure to disclose his complete asset list allowed the application judge to exercise that discretion. The Court of Appeal pointed out that while both Ontario and Quebec law allow inheritances to be excluded from property division, the fruits of such inheritances are not necessarily shielded. As such, the husband’s appeal was dismissed, which paved the way for the wife to pursue equalization in Ontario.
Contact Johnson Miller Family Lawyers for Advice on Domestic Contracts and Property Equalization
The trusted separation and divorce lawyers at Johnson Miller Family Lawyers in Windsor have extensive experience helping clients navigate various issues involving complex property division, separation agreements, and inheritance issues. We can provide you with the personal support and attention to detail you need in your high-asset divorce while protecting your rights and business assets. To schedule a consultation with a member of our team and learn how we can help you, contact our office at 519.973.1500 or reach out to us online.