In the case of Torgersrud v. Lightstone the questions for the Ontario court were relatively simple: Were two marriage contracts, signed by a couple in Quebec, still effective after they moved to Ontario? And did those contracts operate to oust the wife’s entitlement to about $8 million in equalization under the Ontario Family Law Act?
In 1987, the couple were living in Quebec. They eloped partly to take advantage of a work opportunity for the wife, who was from another country and did not have a work visa.
When the husband’s family found out about the elopement about a year later, they insisted he enter into a separation agreement that would protect the family business. In 1988 he and the wife signed such a document, titled “Modification of Matrimonial Property Regime.” The agreement stipulated that they were “separate as to property”, would not be liable for each other’s debts, and renounced their property rights to “partition of acquests” (the latter being the term used under Quebec law to refer to the property accumulated during marriage). They signed a second similar agreement in 1990, opting out of Quebec’s patrimony-based family law regime that had been recently enacted.
At the time of those 1988 and 1990 Quebec agreements, the wife had stopped working so she could take care of their children. Neither of them was aware of the considerable inheritances the husband would eventually be receiving over time, from various family members. When some of the initial funds started rolling in, the couple used them to buy a home together and for living expenses.
The couple moved to Ottawa in 1993, and were still living there when they separated after nearly 30 years. At that point the wife had $1.6 million in investments, while the husband – who did provide full financial disclosure – was estimated to have multiple millions at his disposal.
The wife applied for a court order, declaring that those Quebec agreements from the early days of their marriage did not operate to oust her right to an equalization under the Ontario Family Law Act (FLA). That legislation would give her the right to share in the husband’s assets, and yield her an equalization payment estimated to be around $8 million.
The court considered the wife’s argument. It considered the 1988 Quebec agreements, and found they were in were in full compliance the validity requirements in that province. Had they continued living there, the agreements would have operated to keep their property separate as intended.
But since they had moved to Ontario, the court had to look at whether they were also sufficient to form valid “domestic contracts” under Ontario law. The court concluded they did: They were in writing, signed by the parties, and witnessed. They also dealt with aspects of property division.
Importantly, however, the Quebec agreements did not operate to oust the wife’s right to equalization in Ontario, the court ruled. They did not contain direct, clear language that would oust the FLA’s equalization regime in Ontario. As the court explained, “there is a high threshold that must be met before finding that an out-of-jurisdiction marriage contract prevails over the [Ontario] equalization provisions.” A mere statement that the spouses were “separate as to property”, would not suffice.
There had to be clear language as to what the couple wanted to happen upon marriage breakdown, and a clear renunciation of their respecting rights in that event. In all the circumstances, the court decided it could exercise the discretion to set aside the Quebec agreements; this meant the wife could proceed with equalization. That process would take place at a separate hearing, but it was estimated that her net equalization payment would be in the range of about $8 million.
The important lesson from this unusual case, is that a marriage contract signed by a couple in one jurisdiction might not have the intended legal effect after they move to a new jurisdiction. For those who are considering a marriage contract, or who already have one, it’s important to get experienced legal advice on this narrow point.
Full text of the decision: Torgersrud v. Lightstone, 2022 ONSC 7084 (CanLII)
