Unfair marriage agreement
Do you think you signed an unfair marriage agreement? If you need to speak with a family lawyer in Victoria BC, please contact our Victoria law firm at (250) 388-9477. We have additional offices in Vancouver, Calgary, Toronto, and Los Angeles. We offer 30 minute consultations.
In the recent decision of K.D.R.A. v. Y.J.A.A., 2014 BCSC 2310, the Claimant wife sought a divorce, spousal support and an order dividing family assets after an 8 year relationship. The major issue at the trial concerned whether the provisions of a marriage agreement entered into between the parties were fair and, if not, the relief to which the claimant was entitled.
Family Relations Act or Family Law Act?
The old Act, the Family Relations Act, applies in this case because of the transitional provisions of the Family Law Act which state that a proceeding to enforce, set aside or replace an agreement respecting property division made before the coming into force of this section must be started (or continued) under the FRA, unless the parties agree otherwise. The marriage agreement in this case was dated July 31, 2004, and the Family Law Act did not come into force until March 18, 2013.
Circumstances Around the Execution of the Marriage Agreement
The Respondent husband had a friend provide the marriage agreement to his soon-to-be-wife on the evening before their wedding, telling the Claimant that the wedding would not go ahead the next day if she did not sign the agreement. At the time, she had not seen the agreement before and felt under pressure to sign it because the arrangements for the wedding had all been made for the following day and a large number of guests had attended from out of town. She signed the agreement, and married the Respondent the next day.
The marriage agreement provided that:
• the property that each party had when entering into the relationship would remain that party’s separate property;
• the other party would not obtain any interest in or have the right to compensation by reason of any contribution to property owned by the other even if that property was used for a family purpose;
• the Respondent would pay the Claimant $5,000 for each year between the marriage date and the date the parties’ relationship ended as a property settlement, and
• the Claimant would have no other claim to the Respondent’s property.
The agreement also contained a limited provision for spousal support where the Respondent would pay the Claimant $500 per month for 12 months if the relationship ended before he retired and the Claimant was earning less than $20,000 gross per year.
Consideration of the s.65(1) FRA Factors
While the wife put forward a number of common law bases for why the agreement should be set aside or varied, the Court determined that it did not have to enter into that analysis even though it found that the circumstances under which she signed the agreement to be coercive and that her signature was obtained under undue influence, as the Claimant had satisfied the Court that the agreement would be unfair having regard to the following factors:
(a) the duration of the marriage,
(b) the duration of the period during which the spouses have lived separate and apart,
(c) the date when property was acquired or disposed of,
(d) the extent to which property was acquired by one spouse through inheritance or gift,
(e) the needs of each spouse to become or remain economically independent and self sufficient, or
(f) any other circumstances relating to the acquisition, preservation, maintenance, improvement or use of property or the capacity or liabilities of a spouse,
The evidence established that the Claimant had curtailed her working hours so that she could pick up the children from school and take them to their activities. She also contributed, directly and indirectly, to the improvement of the farm property, to the operation of the Respondent’s business, and to the parenting of the parties’ respective children.
Conclusion on unfair marriage agreement
The Court ended up varying the agreement in the following ways under s. 65(1) of the FRA by awarding the Claimant the following:
a) a 30 percent interest in the family residence (that was purchased by the Respondent) as a tenant in common, with leave to apply for an Order of Sale under s. 66 of the FRA;
b) a 30 percent interest in the net rents collected from the family residence since the date of the s. 57 declaratory judgment;
c) a 50% interest in the increase in value from the date of their cohabitation to the date of the s. 57 declaratory judgment of the Respondent’s pension and CPP, which would be offset by the Respondent’s 50% interest in the increase in value for the same time period of the Claimant’s CPP; and
d) a lump sum spousal support award of $30,000.
Would this have been decided differently under the FLA?
Under the FLA, a Court may set aside or replace all or part of an agreement if it is satisfied that one or more of the following circumstances existed when the parties entered into the agreement:
a) a spouse failed to disclose significant property or debts, or other information relevant to the negotiation of the agreement;
b) a spouse took improper advantage of the other spouse’s vulnerability, including the other spouse’s ignorance, need or distress;
c) a spouse did not understand the nature or consequences of the agreement;
d) other circumstances that would, under the common law, cause all or part of a contract to be voidable.
The Court may also set aside or replace with an order all or part of an agreement if satisfied that none of the circumstances described above existed when the parties entered into the agreement but that the agreement is significantly unfair on consideration of the following:
a) the length of time that has passed since the agreement was made;
b) the intention of the spouses, in making the agreement, to achieve certainty;
c) the degree to which the spouses relied on the terms of the agreement.
In K.D.R.A. v. Y.J.A.A., it is arguable that the Respondent took improper advantage of the Claimant’s vulnerability in having her sign the marriage agreement on the eve of their wedding day and that the Court would be able to set aside or replace part of the agreement on that basis under the FLA.
The moral of the story is that in order for a family agreement to be binding, it needs to be fair. Given the unique complexities of negotiating an agreement in the family context, it is this principle that I hope and expect our Courts will uphold.
Do you think you signed an unfair marriage agreement? If you need to speak with a family lawyer in Victoria BC, please contact our Victoria law firm at (250) 388-9477.