Is your marriage contract valid? Can you void a “prenuptial agreement”? An Ontario man found out when he challenged his agreement in the Ontario Superior Court of Justice.
The Canadian version of a prenuptial agreement is called a marriage or domestic contract. Marriage contracts can ease the worry of what will happen if your marriage fails.
Without a contract, you may have to rely on the uncertain outcome of a court or mediator-arranged settlement.
When should you sign a marriage contract?
If you have been divorced or in a long-term relationship before, you may have obligations like a child or spousal support. Or say you have substantial assets: cash, stocks and bonds or a home you want to preserve.
Your family may also want a say, especially if their money or jointly owned assets such as business interests are at stake.
You can make a contract before or after you marry. How you own or divide property, spousal support and how you educate or raise your children can all be included.
You may also make advance decisions on how to annul or dissolve the marriage if needed, how a separation would work and how assets would be divided on your death.
Since any wills are revoked when you divorce, including estate plans, can ensure assets are divided as you both intended. Among the few matters that cannot be included in a marriage contract are child custody and access. Those are left up to the court.
Is Your Marriage Contract Valid And What Happens If You Separate?
You may want to write into the contract that the value of a home you owned before you married will be deducted from its final worth when you separate or divorce.
Only any increase or decrease in the value of your matrimonial home (where you live after you marry) will be added to the property available to split after a marriage break-up.
Be aware family gifts or cash you put towards a shared home is usually divided equally.
If you are considering signing a marriage contract or are wondering if the marriage contract is valid, contact us. We will connect you with an attorney.
When you have a dispute
When a dispute arises around a marriage contract, you can call a mediator or go to court. Courts look at whether the contract is binding. For example:
- Did you have your own lawyer review it before you signed?
- Did the contract fully disclose all assets, debts or liabilities?
- Was the contract subject you to duress or fraud?
- Are the terms and their meanings clear?
- Is there anything in the contract not permitted by law?
Is the Marriage Contract Valid?
An Ontario couple signed a marriage contract six days before their wedding. The contract, downloaded from the Internet, waived spousal support.
The couple also agreed not to divide their net family property if they divorced or separated. A friend witnessed their signatures and the wife claimed they signed voluntarily.
The document stated the pair had legal advice, although neither did.
After a seven-year marriage, the couple separated in August 2012. The wife, who owned the matrimonial home, gave her spouse $1,600 to help with rent but said that was all he could expect.
The husband, who has a mental disorder, hired a lawyer in October 2012. Delays due to his health resulted in his application for spousal support and equalization of their property not being issued until August 2017, he said.
The husband asked to void or set aside the marriage contract.
The Limitations Act
The wife responded that his request was statute-barred by the Limitations Act. In other words, he was too late. She asked the court to make a decision without a trial, called a summary judgment.
Under the Ontario family law rules, a judge can do this if there is no genuine issue requiring a trial.
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The court reviews the facts
The judge heard the husband disputed that the couple had planned how they would “structure their lives” after marrying.
According to the husband, his wife had given him an ultimatum that she would back out of the marriage unless he signed. She did not suggest he get legal advice before signing, he said.
The wife disagreed. She said the couple had each been married before, with children from those relationships. Because of that and their different financial philosophies, they had decided to stay financially independent.
She told the court her husband left preparing the contract for her. He never mentioned feeling rushed or needing more time to think it over. He thought hiring a lawyer would be a waste of money, she stated.
Since they had each been married before, she felt they both understood family law. Her ex-spouse agreed but said she knew more than he did.
The discrepancies continued. Neither spouse had fully disclosed their financial affairs. The wife planned to keep her finances separate after marriage and considered disclosure unnecessary.
And yet, the contract, a standard Internet template, stated both had made “fair and reasonable” disclosure of their property and financial obligations.
Marriage Contract Valid
The judge ruled that the husband’s claim to equalize their property had been filed in time under the Family Law Act, which has no limitation period for spousal support claims.
However, when a couple makes a marriage contract, the contract is a defence to spousal support and property claims unless it is declared void or the court orders it be set aside.
Under the Limitations Act, an ex-spouse must apply to set aside a marriage contract within two years after their claim is “discovered” (the decision that a claim to the court could be made).
Despite their different accounts of how the marriage contract was made, it was up to the court to decide was whether the husband applied in time and whether, under section 7 of the Family Law Act, his mental disorder suspended the time limit.
The judge also considered the husband’s allegation that the contract was inadequate or improperly written.
Canadians are presumed to know the law
The court used the date the husband first saw a lawyer for the “discovery” of his claim. That was when he became aware of issues with the marriage contract.
Courts aren’t allowed to change when a claim is “out of time” and, the judge stated, citizens are “presumed to know the law of the land.” Since the husband failed to file his request to void the contract within two years of discovery (by October 2014), he lost on that point.
The judge also ruled the husband had no reliable medical or other evidence to support that having a mental disorder delayed his claim. His claim was denied on that count too.
Author: Alistair Vigier is the CEO of ClearWay Law