Marriage agreements and cohabitation agreements may not be on the top of a couple’s mind as they prepare to build a life together. But they can be useful in avoiding costly and stressful litigation should the relationship ever come to an end. With that said, a contract isn’t necessarily a surefire way to avoid court in the event of conflict. A good example of this comes from a recent decision by the Ontario Superior Court of Justice.

The court actually provided a good primer on the risks of a marriage contract not properly planned, writing,

“Marriage contracts result in a world of second thoughts.  Often signed with marriage pending, they speak to business at a time when those types of thoughts are foreign to the parties.  Because of this, the negotiation of an agreement is often hasty and ill thought out.  Notwithstanding this, marriage contracts are often of long-lasting effect, both during the marriage and after.  The terms, which might have seemed fair at the time, may also result in seemingly inequitable situations resultant from waivers of spousal support or property claims after a long-term relationship, leaving one party in apparent poverty and without recourse to remedies that he or she might otherwise have on marriage breakdown.”

The agreements

The husband and wife began living together in 2008. They were married just under three years later on June 16, 2011. They signed a marriage contract the day before the wedding. Each party received legal advice and provided financial disclosure prior to the contract being signed. In addition to stipulating what would happen to their property in the event of a divorce, it also stated that neither party would seek spousal support.

Some of the requirements outlined in the marriage contract failed to materialize, including the purchase of a new matrimonial home in both of their names, or a splitting of the net proceeds from the sale of a business.

In March 2017 the wife was presented with a new contract (the “amending agreement.” It deleted some of the paragraphs of the original contract that had not been followed through with. It also contained a clause requiring the wife to release any claims on interest in the matrimonial home. It still contained a clause stating neither party would seek spousal support from the other. The wife signed it, though without obtaining legal advice or going through financial disclosure.

Second thoughts

The parties separated in 2017. It was at this time that the wife sought to set aside the amending agreement. She wanted to litigate the matter, but did not have enough money to properly do so. In order to address this she brought a motion for the husband to pay her interim costs and disbursements in the amount of $150,000. The husband, meanwhile, argued that the wife was entirely responsible for the position she found herself in and that she drank to excess and squandered her funds.

The court’s analysis

In order to create a level playing field for all involved in legal proceedings, courts have the discretion to compel one party to fund the expenses of litigation. A 2001 decision from the Ontario Supreme Court outlines the themes concerning the laws of granting such disbursements. They are as follows:

  1. The ordering of interim disbursements is discretionary;
  2. The claimant must demonstrate that the interim disbursements are necessary to pursue her case.  She must, according to Rogers J., “demonstrate that absent the advance of funds for interim disbursements, the claimant cannot present or analyse settlement offers or pursue entitlement.”
  3. The interim disbursements must be shown to be necessary;
  4. The claim advanced must be meritorious;
  5. The exercise of discretion should be limited to exceptional cases;
  6. Interim costs are for the purpose of leveling the playing field;
  7. Monies may be advanced against an equalization payment.

In applying the themes to the case at hand, the court found that the amended agreement was not something that a reasonable person would sign and that the wife’s claim was meritorious. However, the court limited the advance to $40,000.

Contact the exceptional Oshawa family lawyers at Borden Family Law if you are considering entering into a cohabitation agreement or marriage contract with your partner. We have more than 17 years of experience advising clients on family law matters and helping them plan proactively for the future.  We can help protect you in the event of a breakdown of your relationship. Call us at 905-576-6090 or contact us online for assistance drafting a marriage contract or cohabitation agreement. Ask about our flat fees and bundled services.