Can parties really rely on contracts they sign with respect to spousal support? In a recent case, an Ontario court considered a wife’s request to set aside a marriage contract she and her husband had signed approximately nine years before they separated.
The Background
The parties signed a marriage contract in May 2007, one day before they got married. They separated approximately nine years later, in September 2016.
Since their separation, the husband had been paying the wife spousal support in accordance with the terms of the marriage contract ($12,000 per month).
The wife claimed that the terms of the contract were unconscionable and that she signed it under duress and undue influence. More specifically, she alleged that the husband had pressured her into signing the contract even though it was “grossly unfair” and that she did not receive adequate financial disclosure from him.
The wife brought an application to set aside the marriage contract.
The Legal Principles With Respect to Setting Aside Marriage Contracts
There is a two-stage test the court must consider when determining whether it should uphold an agreement that limits or waives a spouse’s support rights. As the court explained, at the first stage, it has to consider:
- 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; and
- 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 next stage, the court has to assess if 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. The court will generally not disregard the agreement in its entirety, unless there was a significant change in the parties’ circumstances from what could reasonably be anticipated at the time of negotiation.
The Court’s Decision
In dismissing the wife’s application, the court found that there was no serious issue to be tried with respect to how the marriage contract was negotiated and executed. Specifically, the parties had negotiated the contract over many months, and the wife had lots of time to communicate with her lawyer and ask questions. In addition, the contract listed the husband’s assets and their values, and there was no evidence that he failed to provide the wife with adequate disclosure.
With respect to the second stage of the test, the court found that the marriage contract was in substantial compliance with the objectives of the Divorce Act at the time it was signed, and that it continued to reflect the original intentions of the parties. There had also been no significant change in the parties’ circumstances. The court noted:
While [the wife] may not be able to pay for the lifestyle that she enjoyed during the marriage, it was obvious when she signed the Marriage Contract that this would be the case. It cannot be said that she is financially disadvantaged. [The wife]’s existing circumstances were reasonably anticipated when she signed the Marriage Contract.
In the end, the court concluded that the monthly spousal support of $12,000 per month permitted the wife to maintain a reasonable lifestyle until trial.
Lessons Learned
It is unlikely that a court will set aside a marriage contract that was properly negotiated and executed. If you have questions about your rights, it is best to speak with a lawyer. At Gelman & Associates, our lawyers provide exceptional legal representation in all family law matters. Our goal is to always empower clients to make informed decisions about their future. We give all prospective clients a comprehensive family law kit during their initial consultation, as well as a copy of our firm’s handbook on separation and divorce. This information is full of resources that will help you understand and navigate the difficult and often complicated separation and divorce process.
With six offices throughout Aurora, Barrie, Downtown Toronto, Mississauga, North York and Scarborough, we are easily accessible by transit and off-highway. Our phone lines are open Monday to Friday from 8:00 a.m. to 8:00 p.m. Call us at (844) 736-0200, or contact us online to schedule an initial consultation.
