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Posts from the ‘Pre-Nups’ Category

Broken Engagement: Who Keeps the Ring?

Broken Engagement: Who Keeps the Ring?

We all know that not all relationships are meant to last – indeed, some of them don’t even get out of the starting gate. When an engagement is broken, there is the time-honored question of who gets to keep the ring.

In the older cases, some of which date back a century or more, the courts parse the question by considering who did the “breaking” – i.e. letting the jilted bride keep the ring, or allowing the rejected groom to insist it be returned to him, as the case may be. From a technical legal standpoint, sometimes courts will look at whether the ring was a “conditional gift”, meaning one that that presupposes that the marriage will actually take place.

In a more recent decision in a Small Claims Court case called Mastromatteo v. Dayball, the court takes a pragmatic approach to these kinds of situations:

Defendant [the putative groom] claims $4,000 for the engagement ring which he purchased and gave to plaintiff [the intended bride] when he proposed. …

The gift of an engagement ring to my mind is just that – a gift. The notion that the ring must be returned if the marriage does not occur appears to me to be inconsistent both with the nature of a gift and with the modern law relating to marriage.

The court pointed out that the modern-day provincial Marriage Act precludes actions for a “breach of promise to marry or for any damages resulting therefrom” and requires that any right to recover a gift made “in contemplation or conditional upon their marriage” must consider whether the person giving the gift was at fault for the marriage not happening. In observing that the common-law in this area was murky, the court added:

In the absence of any clear common law rule on whether a ring must be returned, I would incline to the position that a gift is a gift. Once perfected by delivery, it cannot be recovered. Since a promise to marry cannot be enforced, and long after divorce on a no-fault basis became accepted in Canada, the concept of a battle over ownership of the engagement ring appears artificial and anomalous at the very least. At a time when our law makes particular efforts to promote settlement, discourage litigation and narrow the scope of litigation when it is required in family law disputes, permitting ownership of gifted rings to be litigated based on a series of differing rules with no clear result, appears undesirable.

The promise of marriage is unenforceable and was unenforceable at the moment it was made along with the gifted ring. It appears undesirable for the law to permit enforcement in relation to only the gift part of that transaction when the larger transaction is itself unenforceable and in that sense legally faultless. If viewed as a matter of first impression I would find that the ring was a gift perfected by delivery and cannot now be reclaimed, whether as damages or as recovery of possession of the object itself.

The court did acknowledge there were a large number of prior (and often-inconsistent) court decisions, and summarized the upshot this way:

The net effect of the authorities appears to be this: the ring may or may not be recoverable; that decision may or may not turn on who broke off the engagement; and the donor may or may not be too late to claim recovery if he or she does not do so immediately upon breakup. No one could describe that state of the law as a model of clarity.

For the full text of the decision, see:

Mastromatteo v. Dayball, [2011] O.J. No. 1600 (Sm. Cl.)

At Russell Alexander Family Lawyers 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. For more information, visit us at RussellAlexander.com

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Even Judges Get it Wrong Sometimes

Even Judges Get it Wrong Sometimes

A few weeks ago, I wrote about a case called Butty v. Butty. This was a decision by Justice Pazaratz in which he considered how the parties’ separation agreement, which was intended to exempt the husband’s farm property from the normal property-equalization regime, should be interpreted after it came to light that the husband owned two separate parcels of land, rather than one as originally thought.

At trial, Justice Pazaratz had declared the separation agreement invalid, and set it aside for what he concluded was the husband’s failure – and the failure of his lawyer – to disclose the existence of the two properties. The husband’s property was then divided in keeping with the usual Family Law Act rules, notwithstanding what the parties’ separation agreement may have intended.

The husband appealed, successfully. The Court of Appeal disagreed with Justice Pazaratz’s assessment of the facts as to the alleged lack of disclosure, and reversed his ruling. For one thing, it found that the judge had been highly critical of the husband’s trial lawyer, Mr. Jaskot, accusing him of suppressing facts and deliberately misleading the court and opposing counsel. The Appeal Court found these accusations unwarranted, writing:

As we have mentioned, the trial judge believed that Mr. Jaskot tried to hide the fact that there were two separate properties. In his reasons for decision, he describes Mr. Jaskot as having purposely suppressed information in an attempt to mislead opposing counsel and the court into believing that the farm property was a single parcel of land.

In light of the foregoing evidence, this characterization of Mr. Jaskot is completely unfounded. Opposing counsel and the court had documents clearly showing that the farm property consisted of two separate properties.

As a result of the reasons for judgment, Mr. Jaskot has suffered unwarranted personal and professional embarrassment.

And rather than lay blame on the husband’s lawyer for hiding the information, the Appeal Court found that the parties actually shared in the mistaken initial belief that the there was only one piece of property at stake.   After noting that Justice Pazaratz could have easily remedied the procedural fallout from the parties’ mutual misapprehension at the trial itself, the Appeal Court said:

This court cannot truly repair the damage that Mr. Jaskot has suffered. Having said that, its comments are intended to serve as an unequivocal statement that there was nothing improper in his conduct in this matter. We regret what appears, on this record, to be unwarranted judicial criticism levied against him.

Next, the Appeal Court found that the parties’ mutual misapprehension did not detract from a key fact: The wife was aware that the separation agreement was designed to circumvent the normal property-division scheme under the Family Law Act, and that she was giving up all her claims to the entire tract of property, whether consisting of one lot or two. The Appeal Court also observed that the wife had not been under duress when she signed the agreement, and had received independent legal advice (which she did not heed) before doing so.

Based on this and other errors by Justice Pazaratz, the Appeal Court restored the parties’ separation agreement, and proceeded to divide their property in accord with its express terms.

For the full text of the decision, see:

Butty v. Butty, 2009 ONCA 852 (CanLII)

At Russell Alexander Family Lawyers 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. For more information, visit us at RussellAlexander.com

 

Wife Didn’t Get “Wish List”, But Pre-Nup Still Upheld

Wife Didn’t Get “Wish List”, But Pre-Nup Still Upheld

The husband, who was a wealthy 50-year-old man, met the 42-year-old wife online at MillionaireMatch.com. Their first face-to-face meeting was in Las Vegas, and after a short long-distance courtship decided to marry. It was his third marriage; it was her first.

The husband asked the wife to sign a pre-nuptial agreement, which she did 10 days before the wedding date. It had been drafted by the husband’s lawyer but because the wife had been unhappy with its terms, she had it reviewed by her lawyer, who managed to negotiate some changes in her favour. As the court described the outcome of those negotiations:

I accept that the Wife hoped the draft contract would be more generous to her; however, given the Husband’s stated position that he wanted to protect his assets, I do not accept that she genuinely expected the contract to fulfill this wish list.

The final version entitled the wife to $6,000 in monthly spousal support, a 10% interest in the husband’s home after a period of time, and the immediate designation of the wife as beneficiary of the husband’s $1 million RSRP’s in the event that he died prior to any separation.

The relationship was tumultuous, and within a month of the wedding had already begun to unravel. After a series of separations and reconciliations, together with several incidents in which the police were called, the couple finally separated for good after about three years.

In the aftermath of the ill-fated union, the husband claimed that the pre-nuptial agreement should be set aside. He claimed that because the marriage was very short, the various terms including the provision giving the wife graduated spousal support was far too generous to the wife in the circumstances.

The wife, on the other hand, wanted the support and other terms increased in her favour, because she learned that the husband had not been fully forthcoming about his finances, and that she had entered into the agreement under duress and without being aware of the full facts, just days before having 200 wedding guests who were flying in “from all over the world.”

After reviewing the facts and circumstances in detail, the court upheld the pre-nuptial agreement. There was neither non-disclosure, misrepresentation nor duress operating to call its validity into question.

Admittedly, the agreement had been reached without the wife having knowledge of the full extent of the man’s wealth, since he had never provided complete documentation in that respect. However, the wife had never actually asked for it. Moreover, formal disclosure by way of sworn financial statements is not the only way for the husband to fulfill his disclosure obligations; by law it was enough that the wife was generally aware of his assets.

Despite her attempts at trial to portray herself otherwise, the wife was an intelligent woman who had experience with contracts and had operated two businesses of her own, one of which conducted business internationally. She understood the nature and consequences of the pre-nuptial agreement, which had been the result of lawyer-assisted negotiations. There was nothing unfair in enforcing the agreement as it was written.

The court confirmed that the agreement was valid and binding, and ordered that in keeping with its terms, the husband’s support obligations to the wife had ended, with no further spousal support to be paid.

For the full text of the decision, see:

Balsmeier v. Balsmeier, [2016] O.J. No. 667, 2016 ONSC 950

At Russell Alexander Family Lawyers 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. For more information, visit us at RussellAlexander.com

Two Properties, or One? Justice Pazaratz Sorts It Out – For Now

Two Properties, or One? Justice Pazaratz Sorts It Out – For Now

Here’s another noteworthy ruling by Justice Pazaratz – and one that was ultimately reversed on later appeal. Written in his inimitable style, the judgment begins this way:

You wouldn’t think the singular or plural should be so complicated.

Property.

Properties.

The same word. Add an “s”.

You really wouldn’t think that in a nine day trial, involving four presenting counsel — and three more lawyers as witnesses — they couldn’t keep it straight.

Or, that the court wouldn’t find out until the end of the seventh day of evidence – from the very last witness — that all the time we were talking about “property”, we really should have been talking about “properties”.

The Applicant’s lawyer — apparently the only one who knew all along about the mistake — says whether it’s “one property or two” really doesn’t matter.

I’m not so sure he’s right. Or that what he did was right.

This is a story about two houses; 151 acres; a benevolent matriarch; a pregnant bride; and a marriage contract apparently suffering from too many “cut and pastes”. More importantly, it’s a story about two children, still trapped under the same roof with a mother and father who can’t agree on either the past or the future.

With that prologue delivered, Justice Pazaratz went on to examine the merits of the former couple’s dispute, which (at least on the property side of things) related to a 151-acre piece of land that the husband owned at the date of the marriage. The matrimonial home was one of two houses on the property, the other being the husband’s mother’s home.

In 1996, the spouses had signed a marriage contract providing that in the event that they separated, the husband was entitled to exclude the assets that he owned at the time of the marriage. Neither spouse (nor their lawyers) knew at the time that the 151 acres were actually two separate properties, rather than one, and that the husband owned them both.

When the true state of affairs came to after the parties’ separation light years later, the wife claimed that the husband’s non-disclosure about owning both properties invalidated the marriage contract that they had purportedly reached.

Justice Pazaratz agreed with the wife, and held that the marriage contract should be set aside due to the material misrepresentation. At the time the contract was drafted and signed, the wife and her lawyer were misled that there was only one property. This omission rendered the contract inadequate to satisfy the disclosure requirements of the Family Law Act since it undermined the factual basis of the parties’ ostensible deal, and left the wife unable to accurately assess her rights and options.

After setting the marriage contract aside, Justice Pazaratz proceeded to divide the parties’ assets through the normal equalization process. (That ruling was later reversed by the Court of Appeal, which included comment on a “serious matter arising from the reasons for judgment given by the trial judge.” The later appeal ruling will be the subject of an upcoming Blog].

For the full text of the decisions, see:

Butty v. Butty, 2008 CanLII 23946 (ON SC)

Appeal level:

Butty v. Butty, 2009 ONCA 852 (CanLII)

At Russell Alexander Family Lawyers 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. For more information, visit us at RussellAlexander.com

Was Your Marriage Contract Signed “Under Duress”?

duress

Was Your Marriage Contract Signed “Under Duress”?

About-to-be-married couples are wise to protect themselves by signing a marriage contract beforehand. But the key to having those agreements hold up is that they must be freely and voluntarily executed.

We’ve all heard stories of pre-nuptial contracts being signed by the happy couple on their wedding day, virtually on the altar. Or else cases where the couple are negotiating the agreement for months, against the backdrop of a year of planning and thousands of dollars in deposits laid down, and it’s finally signed at a time when pre-wedding stress is at an all-time high.

Are marriage contracts signed under these conditions worth the (embossed) paper they are written on?
In Ontario, the Family Law Act and the related jurisprudence says: “it depends”. First of all, the legislation lays out certain types of clauses that are never valid (such as a clause attempting to prohibit a spouse from remarrying after separation), and sets out various scenarios that can prompt the court set aside all or part of a marriage contract. Among those scenarios – by general reference to basic contract principles established in the cases – is the concept that a contract that was signed under duress will not be enforced in law.

“Duress” is colloquially regarded to mean those situations where one intended spouse has put some sort of pressure on the other spouse to sign what is usually alleged after-the-fact to be an unfavourable, unfair, or one-sided agreement.

Legally, the meaning is a bit more precise, even though the Family Law Act itself does not contain a definition for this term. However, in a case called Ludmer v. Ludmer, the court examined the nature of duress, stating:

Duress involves a coercion of the will or a situation in which one party has no realistic alternative but to submit to pressure. There can be no duress without evidence of an attempt by one party to dominate the will of the other at the time of the execution of the contract. To prove duress, the applicant must show that she was compelled to enter into the marriage contract out of fear of actual or threatened harm of some kind. There must be something more than stress associated with a potential breakdown in familial relations. There must be credible evidence demonstrating that the complaining party was subject to intimidation or illegitimate pressure to sign the agreement.

So what forms does “duress” take, in the real world? In the case we commented on last week, Shair v. Shair, the court considered whether the wife had been subject to duress in signing a marriage contract that she later complained had stripped her of certain support rights that she would otherwise have under the Family Law Act and Divorce Act.

However, the court rejected her claim that she signed the agreement out of duress, finding instead that she:

“…chose to sign it voluntarily as she wanted to be married and she trusted that the Applicant husband would treat her fairly independent of the clear language of the marriage contract. The option of not signing the marriage contract in the form as presented and returning to Romania, or extending her visa, were both open to her and she pursued neither.”

For the full text of the decisions, see

Ludmer v. Ludmer, 2013 ONSC 784, [2013] O.J. No. 699

Shair v. Shair, [2015] O.J. No. 4883, 2015 ONSC 5816

At Russell Alexander, Family Lawyers 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. For more information, visit us at RussellAlexander.com

Here’s a Tale of a Mennonite Dairy Farm, a Blind Lawyer and a Last Minute Deletion ….

blind leading

Here’s a Tale of a Mennonite Dairy Farm, a Blind Lawyer and a Last Minute Deletion ….

In this recent unusual case, the matter turned on a last-minute deletion of the wife’s name from an agreement of purchase and sale – and her decision to get independent legal advice from a lawyer who was effectively blind and could not see the domestic contract the wife had been asked to sign.

The couple had been married or living together for almost 20 years when they separated. About 10 years into the relationship, the husband’s Mennonite parents had offered them the chance to live on and manage the family dairy farm that the husband had grown up on (and that had been in the family for 180 years). The couple, the parents, and some community elders all participated in negotiating an agreement under which they couple would jointly purchase the farm from the parents for $500,000.

But unbeknownst to the wife, on the day before the farm sale was to close her name was deleted and title was put in the husband’s name alone. That same day the wife was told for the first time, while sitting at the lawyer’s office where they had arrived to execute the necessary documents, that she would have to sign a domestic contract in which she waived all her rights to the farm. She was told that the farm sale would not proceed unless she agreed to do so.
She was immediately sent to another lawyer for “independent legal advice”, but that lawyer was effectively blind and did not (and could not) read the domestic contract or review it with her. In fact, the entire session in the blind lawyer’s office (for which, incidentally, he did not charge her), consisted of the wife crying to herself. Ultimately she signed the document even though she knew it was not to her benefit.

The couple’s separation took place almost a decade later, triggered by their teenage daughter finding graphic sexual images of the husband and another woman on the husband’s computer. At this point, the husband sought to enforce the domestic contract that the wife had signed, in order to limit her entitlement to the family farm.

Not surprisingly, both the trial judge and the Court of Appeal found that the circumstances surrounding the wife’s signing of the domestic contract were unconscionable. The trial judge had found that the wife “had no clue about what the implications of such a significant document really meant,” and the Court of Appeal added that “[t]he fact that the [wife] appreciated that the domestic contract was not good for her does not mean that she understood either the nature or consequences of the domestic contract.”

The trial court had awarded the wife a one-half interest in the farm, but the appeal court overturned that portion of the judgment, ordering instead that the wife receive a large equalization payment, plus interest. (In the circumstances there were complex legal questions of whether the whole of the farm was a matrimonial home, and whether any of it was funded by gift or inheritance, which the Court took into account in making its award in the wife’s favour).

For the full text of the decision, see:

Martin v. Sansome, 2014 ONCA 14 (CanLII)

At Russell Alexander, Family Lawyers 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. For more information, please visit us.

 

More on Do-It-Yourself Agreements: What Not To Do

 diy

More on Do-It-Yourself Agreements: What Not To Do

Recently I wrote about the case of Cramer v. Cramer in The Dangers of “Kitchen Table” Separation Agreements – Court Does a Re-Write where a court essentially re-wrote parts of a divorcing couple’s “kitchen table” separation agreement. They had prepared it with the help of an office-supply store kit; unfortunately it not only overlooked some very key provisions, it also ran afoul of Ontario family law.

Another recent case, Demaine v. Racine, provides further illustration of how a couple’s attempt to minimize legal fees actually ended up with a costly day in court.

There, the couple had drafted their own cohabitation agreement in 2005, based on a sample they found on the Internet. Once again, the agreement was created without benefit of independent legal advice on either side. (This was an attempt to save money: They had both recently ended prior relationships, and had spent substantial funds to extricate themselves). The goal was to protect their respective pre-relationship assets in advance of their 2006 marriage, which consisted mainly of the wife’s cottage, and the husband’s military pension. It was signed at their Ottawa home in presence of the wife’s friend, who served as the witness.

But when they separated in 2011, the husband denied ever signing the agreement at all. He applied to the court to have it set aside, and claimed that even if he did sign it, it was not fair or reasonable. Not surprisingly, the wife asked to have it declared enforceable.

The court found in the wife’s favour: The agreement was a valid domestic contract.

For one thing, the court found the husband’s claim that he was even in town at the time to be unconvincing, and found his evidence lacking:

17 The [husband] testified that he may not have even been at home in Ottawa on the date the Cohabitation Agreement was allegedly signed as he had been away a lot in Petawawa, in Toronto and in other locations at that time on pre-deployment training. He stated that he could have requested proof of his travel expenses submitted to the military for that time period but that it would have taken considerable time to get them just as it apparently took 13 months to get his pension information. However, the [husband] testified that he did not request the travel expense information until 3 months ago even though the [husband] has been aware of this issue for over 18 months. The [husband] stated that he could have called people who were on course with him to testify regarding the dates but he didn’t want to put them in a difficult position as they also know the [wife]. In summary, the [husband] produced no proof that he was away from Ottawa at that time and I am unable to find that he was away from Ottawa at that time.

(In fact, the court concluded the signature matched certain sample documents that had been signed by the husband.)

Next, the court concluded that there were no legal grounds for setting aside the agreement at all: the couple had each adequately (though not perfectly) disclosed their financial information to the other prior to signing the agreement; there was no evidence of duress; and no misrepresentations on either side. It complied with all the legal formalities required by Ontario law (i.e. an agreement in writing, signed by both parties, and witnessed). Both parties benefited under the agreement; it was not tilted in anyone’s favour.

Finally, the court dismissed the husband’s claim that he did not understand the nature or consequences of the agreement because he did not have independent legal advice. This was the husband’s choice, as he was keen to save legal costs. (In any case, the court found that the husband understood the agreement and its ramifications even without a lawyer). This alone was not a reason to set aside the agreement, absent other factors. The agreement was fair, freely-negotiated, and valid.

For the full text of the decision, see
Demaine v. Racine, 2013 ONSC 2940 (CanLII) http://canlii.ca/t/fxj2f

At Russell Alexander, Family Lawyers 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. To learn more visit us at www.RussellAlexander.com

 

Thinking of entering into a marriage contract or prenuptial agreement? Make sure you also consider estate planning considerations.

estate

Thinking of entering into a marriage contract or prenuptial agreement? Make sure you also consider estate planning considerations.

This was an issue canvassed by Donna Neff in her blog “When to Make a Marriage Agreement Part of Your Estate Planning”. Donna noted that her advices was “to have a marriage agreement or contract prepared which spells out what the husband and wife agree to do with their assets if one of them dies or if their marriage ends in separation or divorce.” Good point Donna that often gets overlooked.

You can read Donna’s full blog here.

We will be featuring Donna Neff this Friday as a part our interview series with lawyers from across Canada (and beyond).

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