Marriage Contracts

For Marriage Contracts, Spouses Must Disclose Existence – But Not Necessarily Value – Of Assets

Written by Russell Alexander ria@russellalexander.com / (905) 655-6335

For Marriage Contracts, Spouses Must Disclose Existence – But Not Necessarily Value – Of Assets

In an interesting recent case, the court reflected on the nature of the financial disclosure that divorcing spouses must give each other, and concluded that there is a distinction between having to disclose the existence of an asset, and having to disclose its value.

The spouses started dating in September of 2011.  At that time, the wife owned and lived at a home on a street called Grey Owl Run that she had purchased in 2004. She had lived there during a prior marriage and divorce from another man. When she and the husband got married in 2012, the husband moved in to the Grey Owl Run property with her. He brought no assets into the marriage himself.

The couple entered into a marriage contract in 2016.  They ultimately separated in 2019, at which point the Grey Owl Run property was the sole asset in dispute between them.

The validity of the marriage contract was a key component of this dispute, because under its wording the Grey Owl Run property – and any increase in its equity – would be excluded from the equalization.  This naturally worked entirely in the wife’s favour, and precluded the husband from claiming any legal interest – present, future, vested or contingent – in the Grey Owl Run property. As the court explained:

The terms of the marriage contract confirmed that [the husband] did not have an interest in the Grey Owl Property, despite the fact it became the matrimonial home within the meaning of the Family Law Act (“FLA”).  The marriage contract expressly provided that the Grey Owl Property was to be excluded from any division of property, equalization calculation or other method whatsoever in the event the parties separated.

The husband asked the court to set the marriage contract aside.  He conceded having signed it in 2016, and obviously knew about the Grey Owl Run property because he was living there at the time.  However, his complaint focused on the fact that the wife had made no financial disclosure of the property’s value, which had increased significantly since she purchased it in 2004.  If the wife was allowed to entirely exempt the Grey Owl Run property from equalization, by extension any growth of equity of the property would also be exempted.   He asked to the court invalidate the contract, freeing the way for him to share in both.

The court reviewed the facts.  The husband had independent legal advice (ILA) at the time the marriage contract was signed, and it contained express acknowledgment that he had read it, understood his respective rights and obligations, and found the agreement “fair and reasonable.”  He freely admitted to signing it voluntarily, without being coerced.  The court accordingly rejected this argument as to a lack of ILA, noting that the husband did not produce “any evidence beyond his bare allegations”.

Next, the Family Law Act did permit these spouses to agree on their respective rights under the marriage or on separation, including property division.  The court could set aside their marriage agreement if it found one of several specified circumstances was in play, including a failure by the wife to disclose her assets.  The burden of proof for setting aside the marriage contract was on the person seeking to set it aside – in this case, the husband.

“In order to meet the requirements for upholding a marriage contract, the wife must indeed have adequately disclosed her assets. However, this did not necessarily mean she had to disclose the value” – Lori Dubin, Associate Lawyer

In assessing the wife’s level of disclosure, the court made an important distinction:  In order to meet the requirements for upholding a marriage contract, the wife must indeed have adequately disclosed her assets. However, this did not necessarily mean she had to disclose the value of an asset that the husband knew or ought to have known about – in this case, the Grey Owl Run property.  This remained true even if the property had gone up in value.

The husband certainly knew of the wife’s ownership of the Grey Owl Run property, since he had lived there with her.  He could have asked her for the valuation information he needed, or could have taken steps to ascertain it himself.   He was not entitled to enter into a marriage contract knowing beforehand that there were certain shortcomings in disclosure, and then later try to set the agreement aside by relying on those same shortcomings, and on his own failure to ask “obvious questions”.

In the end, the court declined to set the marriage contract aside, concluding that the spouses’ mutual intent at the time of signing was to allow the wife to preserve her interest in the Grey Owl Run property as at the date of marriage.

For the full text of the decision, see:

Capar v. Vujnovic, 2021 ONSC 4713

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About the author

Russell Alexander

Russell Alexander is the founder of Russell Alexander Collaborative Family Lawyers and is the firm’s senior partner. At Russell Alexander, our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues, including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders. We have locations in Toronto, Markham, Whitby (Brooklin), Oshawa, Concord, Lindsay, and Peterborough.

For more information, visit our website, or you can call us at: 905-655-6335.