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Rich households aren’t any strangers to marriage contracts. However typically a proper settlement isn’t sufficient to fulfill the household legislation courts. That was one of many classes from a current high-stakes divorce battle that highlighted the completely different household legislation regimes in Ontario and Quebec.

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Following a 29-year marriage that began in Quebec and resulted in Ontario, a spouse sought a court docket order to put aside the wedding contracts into which she and her husband entered whereas residing in Quebec.

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If the spouse was profitable, she could be entitled to roughly $8 million from the husband on account of division of property. Not surprisingly, the husband resisted the spouse’s declare.

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When the events met in 1985, they had been each pursuing MBAs at McGill College in Montreal. On the time, the spouse was on a pupil Visa and didn’t have everlasting resident standing in Canada. Shortly after her commencement from McGill, the spouse was provided a job and was given 5 weeks to just accept the job provide. Sadly, her immigration standing prevented her from working in Canada. The couple sought authorized recommendation and got two choices: 1) pursue everlasting residence standing which can take time or 2) get married. Given the time sensitivity of the job provide, the couple married.

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One yr later, whereas nonetheless residing in Quebec, the husband’s household insisted the husband enter right into a contract together with his spouse that might defend the husband’s household enterprise. Regardless of the spouse’s discontent together with her in-laws’ interference, the couple signed a contract referred to as “Modification of Matrimonial Property Regime.” The contract supplied the couple was to be “separate as to property.” Owing to subsequent modifications to the laws in Quebec governing matrimonial property, the couple signed an extra contract two years later confirming the modifications wouldn’t apply to them. They remained separate as to property.

In 1993, the couple relocated from Quebec to Ontario, the place they lived till their separation in 2015. At the moment, the husband’s internet value was within the multi-millions, together with shares in personal firms lots of which had been actual property holding firms with pursuits in, for instance, buying malls in Montreal. The spouse’s internet value was only a fraction of the husband’s.

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Shortly after separation, the spouse commenced proceedings within the Ontario Superior Courtroom of Justice. The principal concern within the case was whether or not the contracts, signed in Quebec, act as a bar to the spouse’s claims to share within the husband’s internet value in accordance with the matrimonial property legal guidelines of Ontario. If that’s the case, the spouse could be disentitled to an equalization fee she estimated to be greater than $8 million.

Regardless of their disagreement, the couple agreed on one factor: if that they had separated whereas nonetheless dwelling in Quebec, the contracts would have totally blocked the spouse’s property claims towards the husband. In different phrases, the legislation of Quebec would have upheld the contracts. The couple’s relocation to Ontario and the ensuing utility of the legislation of Ontario to the Quebec contracts makes the contracts inclined to problem.

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After a two-day listening to in August 2022, Justice Adriana Doyle launched her determination in December. Because the couple resided in Ontario on the time of their separation, Justice Doyle utilized the legal guidelines of Ontario and rapidly discovered the Quebec contracts met the formal necessities of a home contract beneath Ontario’s Household Legislation Act. Particularly, the Quebec contracts had been “in writing, signed by the events and witnessed and handled features of property division.”

However Justice Doyle took a deeper take a look at the contracts and located that, whereas they met the formal necessities, they did “not include direct and cogent language” that might act as a bar to the spouse’s claims beneath the legal guidelines of Ontario for equalization of property. In accordance with Justice Doyle, in Ontario “there’s a excessive threshold that should be met earlier than discovering that an out-of-jurisdiction marriage contract prevails over the equalization provisions.”

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She discovered the contracts fell quick and didn’t override Ontario’s legal guidelines, which might enable for an equalization fee on household property. The spouse’s exact entitlement will probably be decided at an extra listening to.

Having achieved success within the listening to earlier than Justice Doyle, the spouse sought an order that the husband pay her authorized charges within the quantity of $408,665.51. The husband resisted, claiming that the spouse’s prices had been extreme and {that a} two-day listening to didn’t warrant the spouse’s legal professionals billing her for 680.8 hours of labor.

In her determination launched on March 13, Justice Doyle mentioned that whereas the stakes within the case had been excessive, the associated fee quantity was disproportionate, and lowered the associated fee award to $265,106.73

Given the more and more cellular inhabitants, it is vital for {couples} to think about the influence a transfer to a brand new jurisdiction could have on an present marriage contract. Such a transfer needs to be a catalyst for taking the wedding contract out of the desk drawer and having it reviewed by a lawyer within the new jurisdiction.

Adam N. Black is a accomplice within the household legislation group at Torkin Manes LLP in Toronto.

ablack@torkinmanes.com