Is a Verbal Marriage Contract Only Worth the Paper It’s Written On?
In an interesting case from British Columbia, the court was asked to rule on whether a verbal marriage agreement, purporting to govern the division of a couple’s assets, was valid and enforceable.
The backstory featured a rather lavish courtship between a now 59-year-old doctor and a 49-year-old lawyer, who got married in Las Vegas in 2011. As part of their contentious divorce about three years later, the court heard that the husband had led the wife to believe that he was financially well-off; in the months prior to their wedding, he had acted like a rich man, whisking her off to stay in 5-star hotels in destinations such as San Francisco, Palm Springs, Seattle, Europe, Los Angeles, Hawaii. In reality, he was overwhelmed with debt, owed money to Canada Revenue Agency, and had been repeatedly investigated and fined for improper billing in his medical practice.
Unaware of the true state of affairs, the wife proceeded with their wedding plans. At some point prior to the nuptials, she raised her concerns over a property she owned on Ross Street; she wanted it to be excluded from their family property since it was her only asset and she wanted to have something for her children from a previous relationship.
They verbally agreed that the husband would not make a legal claim to it in the event they separated; the wife’s faith in his promise was fortified by her assumption that the husband was well-off in his own right. They had also discussed her understanding that under Canadian family law the Ross Street home would not become family property unless they lived in it together (which they did not intend to do, post-marriage, since it was rented to a tenant). The couple also agreed verbally to each pay their own credit card debts and their own car expenses, but share household expenses equally.
However, years of lavish and impulsive spending by the husband both before and during the marriage took its toll; after the inevitable financial collapse, the wife was finally made privy to the true state of their precarious financial situation. The court described the next phase of their relationship this way:
She suggested to [the husband] that they move into Ross Street, but he would have to sign an agreement that recognized her sole right to that property and his sole obligation to pay his debts. [The husband] retorted that he would sign anything she wanted but she did not understand what it meant to be his wife. He suddenly asserted the marriage was over and he wanted a divorce. At the end of October 2014, [the wife] gave her Ross Street tenant notice and she moved into that home on January 1, 2015.
As part of the now-contentious divorce proceedings – and despite his verbal assurances to the contrary – the husband claimed against the wife’s Ross Street property nonetheless.
Ultimately the court issued a 132-paragraph ruling, which among other things considered in detail the provisions of the B.C. family legislation relating to the division of property. The ruling culminated in a finding that the verbal agreement between the former couple to exclude the Ross Street home was valid and enforceable.
Among the evidence in favour of this conclusion was the fact that throughout their marriage they had acted in a manner that was consistent with the existence of such an agreement: the wife paid all the expenses related to the property and kept any income derived from it; the husband was never added on the title, rarely attended at the property, and never made any financial or labour contributions to it (other than helping to power-wash the exterior on one occasion).
Although under Canadian law not all verbal agreements will necessarily be valid and enforceable, in this case, the husband’s lack of credibility likely sealed the deal: In a preface to its ruling, the court underlined its finding that the husband “is not a trustworthy person”, that he had “little respect for the truth”, and that his evidence was “generally … unreliable and incredible”. This no doubt informed the court’s conclusion on the agreement’s existence, despite the husband’s unbelievable claims to the contrary.
For the full text of the decision, see: