While people getting ready to become married may not want to discuss how they would like to handle a separation should one occur, there are very valid reasons to consider marriage contracts, which allow couples to determine what will happen to their assets in the event of a breakdown of the relationship. In a recent decision from the Ontario Superior Court of Justice, the court was asked to look at what time restrictions a person has when they attempt to set aside a marriage contract.
The relationship and separation
The couple began their relationship in the year 2000. They began cohabitating in June 2004. Two months later there was an engagement and a wedding day was set for July 20, 2005. The parties signed a marriage contract (also known as a “prenuptial agreement”) on July 14, 2005. The marriage contract waived spousal support, and indicated the parties would keep separate property, and would not be subject to an equalization of net family property in the event of a separation. Neither party obtained legal advice before signing the marriage agreement.
The couple separated on August 13, 2012. Following their separation, the husband moved out of the matrimonial home, which was owned by the wife. She provided the husband with $1,600 to help him with the first and last month’s rent on an apartment, telling him he could expect nothing further from her.
The husband retained a lawyer shortly after the separation, and an application for spousal support and equalization of property was issued on August 24, 2017, though in 2015 the husband’s counsel wrote to her indicating documents were being prepared. The wife responded to the application by asking to set it aside due to it being statute barred under the Limitations Act, 2002. Her argument was that the husband only had two years to bring his claim before the courts.
When did the clock start ticking?
The court had to determine three issues. The first was whether the husband’s request to set aside the marriage contract was a “claim” as it pertains to the Act. The second was whether the limitation period applied, and if so, if the husband filed his claim within the allowable timeframe.
The court quickly determined that the husband’s actions amounted to a “claim” and that the limitation period was applicable. As a result, the two-year limitation period was in play. The court explained that the clock starts ticking on those two years upon the “discoverability” of the husband’s right to bring an action, specifically from the date he realized he suffered loss, and that the appropriate way to deal with the loss was through the courts.
The court ruled that the discoverability occurred when the husband first retained counsel after the separation in 2012. In meeting with his lawyer, he became aware of the issues around the validity of the marriage contract (in which neither party obtained legal counsel before signing). He also knew that his wife planned to stick to the terms of the marriage contract. This all occurred more than two years before the actions were brought against the wife. The court found no genuine issue to require a trial and dismissed the husband’s claim that the 2005 agreement was void.
As we learned in this case, it is important to have legal advice if you are considering entering into a cohabitation agreement or a marriage contract. At Borden Family Law we have over 17 years of experience advising clients on family law matters and helping them prepare for the future. 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.