Back a few months ago, we reported on a case called Torgersrud v. Lightstone. It featured divorcing spouses, now living in Ontario, who had signed two marriage contracts in the mid-1980s while living in Quebec. The upshot of those early contracts was to keep the spouses’ property separate upon later marriage breakdown; if declared valid, they would have ousted the wife’s access to at least $8 million in equalization under the Ontario Family Law Act (FLA).
An Ontario lower court judge ruled that the Quebec contracts did not preclude husband’s money from being counted in his Net Family Property. In terms of their legality, they qualified as “domestic contracts” in Ontario, but their wording did not clearly foreclose the FLA’s equalization regime. There was a high threshold to do that, and the mere statement that the spouses were to be “separate as to property” was not enough.
Now, the appeal of that ruling has been heard by the Ontario Court of Appeal. It declined to overrule the lower court judge’s conclusions.
The Appeal Court noted that after ruling on the interpretation of the Quebec contracts, the lower court judge had gone one step further: She said that even if she was wrong on that point, she would have used her judicial discretion under the FLA to refuse to enforce the Quebec agreements in Ontario. The judge found the wife had met her onus to show she could not have understood her entitlements under the law, nor the rights she was renouncing when she executed the contracts.
This was primarily because the husband had not been forthcoming about his finances when they were signed. Among other things, he was the sole heir to a multi-million dollar fortune from his mother’s estate, starting with an initial tranche of $4 million that he received a few months after the marriage when he was 25. He did not disclose this initial inheritance to the wife.
Also, the contracts had also been drafted at the urging of the husband’s uncle to protect the family business; the lower court judge found the wife had signed while at a clear disadvantage. As the Court of Appeal recounted the lower court judge’s findings:
She signed the contracts without discussion of the parties’ financial circumstances and without receiving an inventory of the husband’s assets. She was trying to keep the peace and appease the husband. She was hurt that the husband was putting his family above her but also trusted him when he said they needed to execute the contracts to protect his family’s business. …
In the end, Appeal Court found the lower court judge’s discretion-based decision, permitted by the FLA and supported by the evidence, was entitled to deference. The appeal was dismissed.
Full text of the decision: Torgersrud v. Lightstone, 2023 ONCA 580 (CanLII)
Lower court ruling: Torgersrud v. Lightstone, 2022 ONSC 7084 (CanLII)
