With the increase in home prices, most Canadians have experienced over the last two years, it probably doesn’t come as a surprise that for most, the family home is the most valuable asset they own. A separation or divorce will usually result in the home being sold or purchased by one of the spouses. While this can lead to impasses that require the courts to resolve (see our previous blog, Husband Says Offer On Home Is Fraudulent), conflict can also arise in determining whether one of the spouses is entitled to the home or proceeds from it at all. This usually occurs when the home was purchased by one of the parties prior to the parties moving in together or getting married. In a recent decision from the Ontario Superior Court of Justice, the court was asked to determine if the husband in the relationship had any entitlement to the proceeds of the home, or if a marriage contract stating he has no entitlement can hold up.
Wife purchases home prior to entering relationship
The parties started dating in September 2011 and were married the following Spring. The marriage lasted close to seven years, with the parties having one child born shortly after the marriage.
Before the parties were married the wife had purchased a home and lived there with the two children she had from a previous relationship. Once married, the husband moved into the house, which became the matrimonial home.
Marriage contract states husband has no entitlement to home
Five years into their marriage the parties entered into a marriage contract dated November 30, 2016. In the marriage contract, the husband acknowledged the following:
- He read the marriage contract in its entirety and had full knowledge of the contents;
- He understood his respective rights and obligations under the marriage contract, the nature of the contract, and the consequences of that contract;
- He had made full and complete disclosure of his financial circumstances to (the wife), including but not limited to his income, assets, and debts;
- The terms of the marriage contract are fair and reasonable;
- He was not subjected to coercion or undue influence when he signed the contract; and
- He signed the marriage contract voluntarily.
The contract stipulated that the husband could not make any claim for any interest, present or future, vested or contingent, in the home. It also stated that the wife brought the home into the relationship and had no debt except for her mortgage. The husband had no property, but he did have some debts, which the wife helped pay off.
Family moves prior to separation
About one year prior to their separation the parties sold the family home and moved to a new one. The parties used the proceeds of the sale of their former home as a down payment on the new one.
The parties took title to the home as joint tenants, though the wife maintained that the husband did not contribute any funds to the acquisition of property. However, the husband stated that he did help make mortgage payments on it after they moved in. These payments amounted to $2,642.44 monthly.
Wife maintains that marriage contract applies to new home
The wife asked the court to find that the terms of the marriage contract related to her sole ownership of the home should carry forward to the new home. However, the husband said he did not understand what he had signed, was under undue influence, and that the wife failed to make proper disclosure as required by law.
The husband also said he helped pay down about $50,000 of the mortgage on the former home and also contributed to its increase in value. He argued that giving the wife sole interest in the new home would result in unjust enrichment. He sought an order granting him an interest in the equity in the home that was realized upon its sale.
Should the court set aside the marriage contract?
The court stated that a two-step process is needed to set aside a marriage contract. The first requires the husband to demonstrate one of the following:
- The wife failed to disclose significant assets, debts, or other liabilities when it was made;
- The husband did not understand the nature or consequences of the contract; or
- Contract law should determine the contract cannot stand.
The court found that the husband made no efforts to ascertain the value of the home, and furthermore, that the home was clearly carved out from equalization in the contract. The contract makes no mention that the wife could hold onto just the value of the home at that time. Instead, it simply references the house.
The court found no evidence to support the husband’s claim that he is entitled to a share of the proceeds from the sale of the home.
Call the family law lawyers at Howie Johnson Barristers & Solicitors if you need to explore property division following a separation
To speak with an experienced Windsor family law lawyer about property division following a separation, reach out to the team at Howie Johnson Barristers & Solicitors. We can be reached by phone at 519.973.1500, or contact us online. Many of our clients are referred to us by former and current clients, as well as by lawyers, accountants, and other professionals.