Both parties to this suit were lawyers. The husband has been previously married and said he would never again allow a division of his assets. His wife had withdrawn from legal practice to raise their children. Prior to the wedding, they discussed that the wife sign a marriage contract which kept their property separate, but with the wife earning a percentage of the matrimonial home each year she lived there. She obtained independent legal advice and was advised that the agreement was "grossly unfair", but nevertheless signed the agreement with a few amendments. He brought assets worth approximately $1.6 million into the marriage while the wife entered the relationship with no assets and heavily in debt. The parties separated after nine years. Under the agreement, the wife was entitled to property valued at $280,000 while the husband was entitled to property worth $1.2 million. The husband argued that the contract should be followed while the wife argued that the contract should be set aside of the division reapportioned due to unfairness under s. 65(1) of the British Columbia Family Relations Act (now replaced by the s. 93 of the Family Law Act).
The trial judge concluded that the agreement was unfair and ordered a reapportionment on a 60/40 basis in favour of the husband regarding most of the family assets with each party entitled to a half interest in the matrimonial home and contents. In addition, the husband was ordered to pay spousal support. The Court of Appeal upheld this judgement which the husband appealed.
- Can a marriage agreement, entered into after receiving independent legal advice, without duress, coercion or undue influence, later be found to be unfair?
Bastarache, writing for the majority, held that in order for a marriage contract to be enforceable it must operate fairly at the time of distribution. To determine whether the contract was substantively fair, the court must consider whether the circumstances of the parties at the time of separation were within their reasonable contemplation when the contract was formed and whether they made adequate arrangement to address those anticipated circumstances. In general, courts should respect the private arrangements made regarding division of property, especially where they obtained independent legal advice. In the case at bar, the financial and domestic arrangement unfolded just as the parties expected. The marriage contract was fair, in light of the relevant legislation, the provisions in the agreement for child and spousal support, and the circumstances of the parties at the time of separation.
Deschamps, dissenting in part, placed far less emphasis on the fairness of the negotiations, foreseeability and independent legal advice – unfair negotiations could result in a fair agreement, and vice versa. She held that the standard of "unfair" under the Family Relations Act was a lower standard than the "unconscionability" standard in Nova Scotia or the "grossly unfair" standard in Saskatchewan. Section 65(1) simply states that "[i]f the provisions for division of property ... would be unfair..." and the court should not elevate that to the higher standards in other jurisdictions. Fairness also is not the same as equal division; different parties bring different assets to a marriage and an even division might be unfair. Further, the evaluation of fairness should occur at the time of the application to the court, and not at the time when the contract was made.
- Test to determine the fairness of a marriage contract:
- Apply the agreement as written
- Award any other entitlements such as child or spousal support
- In light of the appropriate provincial statute and with regard to all the circumstances, is the outcome of the agreement unduly harsh?
- Courts should generally respect private arrangements made between parties.