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Ontario Courts' Treatment of Marriage Contracts After the First Year of Marriage

February 28, 2022

Ontario

,

Canada

Issue

Is a marriage contract entered into after the parties had already been married for over a year valid?

Conclusion

Section 52 of the Family Law Act (the "Act") provides that marriage contracts may be entered into by two people who are married to each other or by two people who are not yet married but intend to marry. (Family Law Act)

No cases were identified that explicitly spoke to whether a marriage contract entered into more than one year after the marriage ceremony is valid. However, the caselaw below demonstrates Ontario courts' treatment of marriage contracts that were entered into after the parties' first year of marriage.

In De Zen v. De Zen, the husband and wife married in 1987. In 1998, after a separation, the couple reconciled and entered into a marriage contract. The couple later separated again. McWatt J. of the Ontario Superior Court of Justice noted that, as a result of the marriage contract, the issues addressed in the marriage contract did not need to be addressed at trial.

In Lehmann v. Lehmann Estate, the parties married on September 6, 1996 and signed a marriage contract dated December 6, 1997. The marriage contract was amended on November 15, 2022 and amended again on August 18, 2011. The Court dismissed the wife's application to set aside portions of the marriage contract after the death of the husband.

In Takhar v. Takhar, the husband and wife married in 1995. They entered into a marriage contract in 2005 and amended the contract in 2006. The Court was asked to rule on motions ordering disclosure and temporary spousal support. The Court held that, for the purposes of the temporary order, the Court was not required to determine what the husband’s entitlement to spousal support might otherwise be under the Divorce Act or the Family Law Act. Rather, for the purposes of the temporary order, the wife was obliged to pay support pursuant to the 2006 amendment to the marriage contract. The Court noted that, at trial, the marriage contract could be found to be unenforceable due to duress or unconscionability; however, the timing of the signing of the contract was not noted as a possible reason for unenforceability.

In Griffore v. Adsett, the husband and wife married in 1973. They entered into a marriage contract in 1988. The husband took the position that the marriage contract should be set aside for lack of financial disclosure and unconscionability. The Court held that the marriage contract was valid and dismissed the application to set aside the contract.

Law

Section 52 of the Family Law Act, RSO 1990, c F.3 (the "Act") provides that marriage contracts may be entered into by two people who are married to each other or by two people who are not yet married but intend to marry:

Definitions

51 In this Part,

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“marriage contract” means an agreement entered into under section 52

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Marriage contracts

52 (1) Two persons who are married to each other or intend to marry may enter into an agreement in which they agree on their respective rights and obligations under the marriage or on separation, on the annulment or dissolution of the marriage or on death, including,

(a) ownership in or division of property;

(b) support obligations;

(c) the right to direct the education and moral training of their children, but not the right to decision-making responsibility or parenting time with respect to their children; and

(d) any other matter in the settlement of their affairs.

Pursuant to s. 56 of the Act, a marriage contract may be set aside for the following reasons:

56

[...]

Setting aside domestic contract

(4) A court may, on application, set aside a domestic contract or a provision in it,

(a) if a party failed to disclose to the other significant assets, or significant debts or other liabilities, existing when the domestic contract was made;

(b) if a party did not understand the nature or consequences of the domestic contract; or

(c) otherwise in accordance with the law of contract.

No cases were identified that explicitly spoke to whether a marriage contract entered into more than one year after the marriage ceremony is valid. However, the caselaw below demonstrates Ontario courts' treatment of marriage contracts that were entered into after the parties' first year of marriage.

In De Zen v. De Zen, 2001 CanLII 28139 (ON SC), the husband and wife married in 1987. In 1998, after a separation, the couple reconciled and entered into a marriage contract. The couple later separated again. McWatt J. of the Ontario Superior Court of Justice noted that, as a result of the marriage contract, the issues addressed in the marriage contract did not need to be addressed at trial:

[3] Sergio De Zen was born on July 13, 1963. He is 37 years old. Sandra De Zen is 36 years old, having been born on August 27, 1964. Sergio and Sandra De Zen grew up on the same street. They met each other in their pre-teen years. Their families knew one another. They married on April 23, 1987. Both were in their early twenties at the time. Their eldest child, Brittany Alexander De Zen, was born on February 1, 1991. Their second child, Colby Miles De Zen, was born on September 6, 1994. On April 20, 1996, just short of nine years of marriage, the spouses separated for the first time. Within days of that separation, Mrs. De Zen learned that she was pregnant with the couple’s third child. That child, Sydney Hannah De Zen, was born December 19, 1996.

[4] An action for divorce was commenced and had been proceeding just after the first separation. That litigation involved, amongst other issues, child support claims for the, then, two children of the marriage. However, sometime after the birth of their third child and during litigation, the couple began a reconciliation which resulted in a reunion along with their entering into a marriage contract. On July 13, 1998, Mrs. De Zen relinquished her rights to spousal support and an equalization of net family property as part of the terms of a domestic agreement. As a result, this trial is to decide only the issues regarding the children.

[5] Both parties had worked during the first years of marriage. Mr. De Zen worked for his father’s company, Royal Plastics, and Mrs. De Zen worked for her father’s company. Mrs. De Zen stopped working once she began to have children about 10 years ago. Mr. De Zen remained with his father’s firm up until the end of 2000. He had worked there for approximately 20 years, prior to his resignation, where he learned the business from the “ground up” and finally became his father’s right hand man. When he resigned, he was Chief Operating Officer of the corporation. Only his father was more senior in the company.

In Lehmann v. Lehmann Estate, 2018 ONSC 3981 (CanLII) (affirmed Lehmann v. Lehmann, 2019 ONCA 357 (CanLII)) the parties married on September 6, 1996 and signed a marriage contract dated December 6, 1997. The marriage contract was amended on November 15, 2022 and amended again on August 18, 2011. Taylor J. of the Ontario Superior Court of Justice dismissed the wife's application to set aside portions of the marriage contract after the death of the husband. The timing of the parties' entering into the marriage contract was not at issue:

[5] The parties married on September 6, 1996 and signed a Marriage Contract which is dated December 6, 1997, effective as of the date of the marriage. Prior to the execution of the Marriage Contract, title to the Stoneheight property was converted to joint tenancy. The Marriage Contract provided that the Stoneheight property became the matrimonial home.

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[8] By way of an agreement dated November 15, 2002, the parties amended the Marriage Contract (“the First Amending Agreement”). The First Amending Agreement identified property located on Lobsinger Line in the Township of Wellesley as the matrimonial home and stated that the parties owned that property, and any property into which any sale proceeds could be traced, as tenants in common. The First Amending Agreement also provided that the survivor was entitled to retain possession of the matrimonial home until the earliest of the death of the survivor, the decision of the survivor to cease residing in the home and the sale of the home. Upon the sale of the matrimonial home, the proceeds were to be divided equally between the survivor and the estate of the deceased spouse. Before executing the First Amending Agreement, Anna obtained legal advice from the same lawyer who had provided her with advice regarding the Marriage Contract.

[9] By way of an agreement dated August 18, 2011, the parties further amended the Marriage contract (“the Second Amending Agreement”). The Second Amending Agreement stated that the parties had acquired a new matrimonial home and “other properties”. The Second Amending Agreement generically identified the new matrimonial home as the property occupied by the parties as their principal place of residence in the Province of Ontario and the “other properties” as 5905 Jessup Drive in Zephyr Hills, Florida (“the Florida property”) and a share in Forest Lakes Estates Co-op Inc. (“the Co-op Share”).

[10] The Second Amending Agreement provided that the survivor was entitled to retain possession of the matrimonial home and the Florida Property subject to the same triggering events as in the First Amending Agreement with the addition of the remarriage or cohabitation in a spousal relationship. Upon the death or remarriage of the survivor both the matrimonial home and the Florida Property were to be sold and the proceeds divided equally between the survivor and the estate of the deceased spouse. If the survivor no longer wished to reside in one of the properties, that property was to be sold and the proceeds divided equally between the survivor and the estate of the deceased spouse. Lastly, the Second Amending Agreement stated that the surviving spouse would become the owner of the Co-op Share free of any claims by the estate of the deceased.

[...]

[73] I am satisfied that the provisions of the Marriage Contract operated fairly towards Anna at the time of Bill’s death. It would have been in the contemplation of the parties that Bill would likely predecease Anna. Anna’s assets increased in value by more than $1 million over the course of the marriage. Anna was at all times aware of Bill’s objective to not be burdened with a spousal support obligation in the event of a separation or his death. The parties of course did not anticipate winning the lottery but that, in my view, was a significant factor in allowing the parties to enjoy the lifestyle and acquire the assets that they did. When Anna terminated her employment it must have been within her contemplation that Bill would likely predecease her and that she would have difficulty replacing the income that she had been earning by working full time.

[74] In both Miglin and Hartshorne, the Supreme Court of Canada recognized the importance of honouring agreements which were fairly negotiated and which do not operate unfairly even though the terms of the particular agreement might not result in exactly the same outcome if the case were left to be decided by a judge. In my view the Marriage Contract was fairly negotiated and its application upon Bill’s death does not result in unfairness to Anna. The result of the operation of the Marriage Contract would have been within the reasonable contemplation of Anna and Bill at the time it was executed and throughout the period of the marriage.

[75] Anna’s application to set aside the spousal support release in the Marriage Contract is therefore dismissed.

[76] Anna’s first alternative argument is that if the joint tenancy in the Foxboro property is severed then the spousal support release in the Marriage Contract cannot stand. The Marriage Contract was entered into on the basis that title to the Stoneheight property had been converted from a tenancy in common to a joint tenancy. But the Marriage Contract was also entered into on the basis that there was mortgage insurance which would pay off the outstanding mortgage in the event of Bill’s death. The mortgage insurance was no longer required after the mortgage was eliminated by way of the lottery winnings.

[...]

[81] For the foregoing reasons, Anna’s application to set aside the spousal support release contained in the Marriage Contract and for a support order in her favour is dismissed. Anna’s application for a declaration that she is the sole owner of the Foxboro property by right of survivorship is also dismissed.

In Takhar v. Takhar, 2009 CanLII 55327 (ON SC), the husband and wife married in 1995. They entered into a marriage contract in 2005 and amended the contract in 2006. The Court was asked to rule on motions ordering disclosure and temporary spousal support. Reilly J. of the Ontario Superior Court of Justice held that, for the purposes of the temporary order, the Court was not required to determine what the husband’s entitlement to spousal support might otherwise be under the Divorce Act or the Family Law Act. Rather, for the purposes of the temporary order, the wife was obliged to pay support pursuant to the 2006 amendment to the marriage contract. The Court noted that, at trial, the marriage contract could be found to be unenforceable due to duress or unconscionability; however, the timing of the signing of the contract was not noted as a possible reason for unenforceability:

[4] The parties met in England in late 1993 or early 1994 and after dating for about a year were married on January 4, 1995. There may be some dispute as to whether or not this was an “arranged” marriage, which dispute is irrelevant for purposes of determination of the current issues by this court. When they were married, the respondent/husband was apparently working as an engineer (although his exact education and qualifications are unclear). The applicant/wife was completing her medical training. Their first child, Pavandeep Kaur Takhar, was born on November 24, 1995. The applicant/wife completed her medical training and began her medical career in England.

[...]

[8] Regrettably, during their years in Canada, the marriage began to deteriorate. In February of 2005, they entered into a “marriage contract”, which provided, inter alia, for equal division of net family property. It also provided, in paragraph VIII that upon breakdown of the marriage, neither party would owe spousal support to the other.

[9] On the 13th of February 2006, the parties entered into an amendment to the marriage contract, which amendment was to be in force for a period of 36 months from the date it was signed by both parties, after which time the amendment to the original contract would be null and void. By this amendment, the applicant/wife agreed to pay to the respondent/husband, in the event of marriage breakdown, the sum of $6,000 per month for the rest of his life as spousal support. The applicant/wife now pleads a number of grounds on which this amendment to the marriage contract should not be enforced. She may raise on the return of her application grounds such as lack of appropriate legal advice, undue duress and unconscionability, as a basis for avoiding any presumptive obligation pursuant to the contract. However, for purposes of determination at this time, for reasons further enunciated below, the contract remains in full force and effect.

[10] The marriage continued to deteriorate. On November 6, 2006, police officers arrested the respondent/husband and charged him with threatening to cause death and two counts of assault. He was remanded in custody until he plead guilty to the charges on January 17, 2007, at which time sentence was suspended for three years concurrent on each of the counts and the respondent/husband was placed on probation, with effectively terms that he was not to contact or communicate with the applicant/wife or the children. The terms of the probation order (found at Volume I, Tab 20 (6) of the Continuing Record) are clear that the respondent/husband was expected to leave Canada a few days after his sentencing.

[...]

[20] For the purposes of this temporary order, this court is not required to determine what the respondent/husband’s entitlement to spousal support might otherwise be under the Divorce Act or the Family Law Act, although such legislation may well be a factor which the judge, on the hearing of the application will consider.

[21] Instead, I simply conclude that the applicant/wife is obliged pursuant to the contract she entered into on February 13, 2006, to pay to the respondent/husband $6,000 per month on an ongoing basis. When this issue is determined on a full hearing of the evidence, it may well be that her presumptive contractual obligation will be found to be unenforceable due to duress or unconscionability. It may be noted that paragraph VI of the agreement entered into by the parties on the 13th of February 2006 states as follows:

In the event that divorce proceedings are commenced by either party, both parties agree that the divorce will be conducted amicably with no disorderly behaviour or obstruction and in accordance with the marriage contract.

[22] On a hearing of the application, the applicant/wife may well argue that by his conduct at the time of separation and following separation, the respondent/husband violated this provision of their agreement and is thus disentitled from claiming the benefit of the spousal support provision in the same agreement. So too may the applicant/wife raise the argument on a hearing of the application that s.15.2(5) of the Divorce Act prevents the court in making an order for spousal support from taking into consideration “any misconduct of a spouse”, but that this prohibition relates only to “misconduct of a spouse in relation to the marriage”. The applicant/wife may well take the position that at least some of the conduct of the respondent/husband (such as his vigorous attack on her reputation) was misconduct that was not “in relation to the marriage”.

[23] These are issues that may well be considered by the court on a full hearing of the evidence when the application is properly before the court. In the interim, for the purposes of this temporary order, I determine that the applicant/wife is bound by her presumptive obligation pursuant to the agreement of 13 February 2006 to pay the respondent/husband $6,000 per month on an ongoing basis as spousal support. Given her comfortable income, the applicant/wife is able to afford this quantum of support. Although the respondent/husband’s claimed current income is disputed by the applicant/wife, this court does not have sufficient evidence upon which to impute to the respondent/husband an income greater than he currently claims, particularly as compared with the income of the applicant/wife. The respondent/husband has put forth a viable claim based on need. In all the circumstances, however, I decline to grant the respondent/husband any retroactive relief. Therefore, I simply direct a temporary order pending a hearing of the application that the applicant/wife shall pay to the respondent/husband $6,000 per month as spousal support. The first payment is due on the 1st of August 2009 and thereafter on the 1st of each following month.

In Griffore v. Adsett, 2001 CanLII 28207 (ON SC), the husband and wife married in 1973. They entered into a marriage contract in 1988. The husband took the position that the marriage contract should be set aside for lack of financial disclosure with respect to the pension, and unconscionabilityValidity of the marriage contract. Mackinnon J. the Ontario Superior Court of Justice held that the marriage contract was valid and dismissed the application to set aside the marriage contract:

[1] The parties were married on September 6, 1973. Their first child, Melissa, was born January 19, 1974. The two younger children, Anne and Alex, were born on May 7, 1984 and March 6, 1986, respectively.

[2] The date of separation was December 26, 1999. The central issues in the case are the validity of the marriage contract dated September 1, 1988, custody and access for Anne and Alex and depending upon the resolution of these two issues, questions of equalization of property, spousal support and child support also arise.

[...]

[12] When the respondent’s father died, he left her $75,000 by way of inheritance. She used the money to purchase a residential property at 4 Pansy Avenue, Ottawa, which, at the time, was a rental unit. It was subsequently decided that the family would move into the premises and the wife wished to obtain a marriage contract to protect the inheritance that she had used in order to acquire the house, which would become the matrimonial home.

[13] She retained a lawyer and a draft marriage contract was prepared in accordance with the respondent’s instructions. This contract provided a formula by which the husband would be entitled to share in potential equity in the house equal to one-half of any increase in the equity accruing between the date of the contract and the date of the breakdown of the marriage over and above the increase which the wife’s downpayment would have earned during the same period in a guaranteed investment certificate in the Bank of Nova Scotia. It is common ground between the parties that the result of this clause, at the date of separation, is that the husband would not be entitled to any share in the equity in the matrimonial home.

[...]

Setting Aside the Marriage Contract

[64] The applicant’s position is that the marriage contract should be set aside for lack of financial disclosure with respect to the pension, and unconscionability. The evidence satisfies me that there is no basis to set the contract aside due to lack of financial disclosure. The husband knew the wife had a pension. He had independent legal advice prior to signing the contract and the contract included an express clause indicating that he was satisfied with all the disclosure that had been made to him and that he had no questions or requests for information that had been left unanswered. In fact, he did not testify that he had requested a valuation of the pension and been refused one, or refused the opportunity to obtain one himself. He did not call his solicitor to give evidence.

[65] In my view, the fact that the pension may not have been valued at the time is insufficient grounds to set aside the marriage contract.

[66] With respect to the ground of unconscionability, the husband says firstly, that he and his wife were unequal because she was educated and controlled the family finances whereas he was a construction labourer who looked after the children and domestic duties.

[67] In my view, the evidence is insufficient to persuade me that the spouses were unequal in terms of their ability to understand the issues comprised in the marriage contract and to obtain legal advice with respect to those issues. Indeed, the husband had independent legal advice and he was satisfied with the advice he received. He fully understood the nature and consequences of the contract.

[68] I accept the husband’s submission that the contract was, in fact, improvident from his point of view. I accept that the contract strongly favours the wife and that its result, namely that he would receive one-half of the chattels at the conclusion of a marriage of some 26 years and in the circumstances of this marriage, is inequitable.

[69] However, the lest of unconscionability in terms of setting aside a contract requires, in addition to these facts, a finding that the respondent preyed upon the applicant at the time the agreement was signed by him or that undue influence was placed by her upon him, such that his signing of the contract was not an exercise of free will. See Bennett v. Bennett (1997), 1997 CanLII 12388 (ON SC), 34 R.F.L. (4th) 290 (Ont. Gen. Div.) at p. 300.

[70] The leading statement of the test is as quoted by the Ontario Court of Appeal in Mundinger v. Mundinger (1968), 1968 CanLII 250 (ON CA), [1969] 1 O.R. 606 (Ont. C.A.), at pp. 610:

If the bargain is fair the fact that the parties were not equally vigilant of their interest is immaterial. Likewise, if one was not preyed upon by the other, an improvident or even grossly inadequate consideration is no ground upon which to set aside a contract freely entered into. It is the combination of inequality and improvidence which alone may invoke this jurisdiction. Then the onus is placed upon the party seeking to uphold the contract to show that his conduct throughout was scrupulously considerate of the other’s interests.

[71] The evidence does not satisfy me that the applicant has met this test. I find as a fact that the husband signed the contract voluntarily. He directed very little evidence towards the issue of whether or how the respondent pressured him into signing the contract. I conclude from his evidence that the applicant, knowing what the respondent was like, made his own decision to sign the contract, even while he believed the contract to be unfair to him. This does not amount to the same thing as her placing undue influence upon him, preying upon him, or in effect, dominating his decision-making capacity to the point where he did not sign the agreement in an exercise of free will. The evidence that he did give, namely, he thought she would try to get him out of the house and that she threatened to keep the children from him, falls short of the evidence required to meet the legal test. It is to be contrasted with the facts in the case of Bennett v. Bennett, (supra). In that case, the wife who sought to set aside the contract, complained of continuous controlling behaviour on the husband’s part, stated that she felt overpowered throughout much of their relationship, was unable to assert herself and feared and was intimidated by her husband. Further, she testified that she felt she had no choice but to sign the contract and this was confirmed by independent evidence that she was experiencing emotional distress which left her convinced that she had no choice but to sign the contract.

[72] These facts are very different from the facts as I have found them in the case before me. In addition, the applicant’s lawyer has sworn an affidavit that, as far he was aware, the contract was signed by the husband voluntarily. He was not called by the husband to explain or qualify that statement. The husband had the contract for about a month and a half before he signed it.

[73] Therefore, the application to set aside the marriage contract is dismissed.

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