“The Cohabitation Agreement provided, and s. 53(2) of the Family Law Act confirms, that upon marriage, the Cohabitation Agreement became a marriage contract. In either case, the agreement is a “domestic contract” as defined in s. 51.
Public policy underpinning family law legislation supports the making of domestic contracts. Such contracts will not be lightly interfered with: Deroon v. Deroon, (1980), 115 D.L.R. (3d) 182 (Ont. C.A.); LeVan v. LeVan, 2006 CarswellOnt 5393 (Ont. S.C.J.) at para. 199, aff’d 2008 ONCA 388 (Ont. C.A.).
Courts should respect private arrangements made by spouses for division of their property on breakdown of their relationship, particularly where the agreement was negotiated with independent legal advice: Hartshorne v. Hartshorne, 2004 SCC 22 (S.C.C.) at para. 9.
There is no presumption that courts will be hesitant to enforce a pre-nuptial agreement: Dougherty v. Dougherty, 2008 ONCA 302 (Ont. C.A.). By the same token, there is no “hard and fast” rule that marriage contracts will be afforded greater deference than separation agreements: Hartshorne.
Section 56(4) of the Family Law Act permits a court to set aside a domestic contract, or a provision in it, (1) if a party failed to disclose significant assets or liabilities existing when the contract was made, (2) if a party did not understand the nature or consequences of the contract, or (3) otherwise, in accordance with the law of contract.
The onus rests on the party seeking to invalidate the domestic contract to satisfy one or more of the criteria in s. 56(4). Even where that threshold is met, the court has a discretion whether or not to set aside the agreement: LeVan v. LeVan at para. 33. A two-stage analysis is required.
In Virc v. Blair, 2014 ONCA 392 (Ont. C.A.), the Court of Appeal framed the analysis as follows:
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- Can the party seeking to set aside the agreementdemonstrate that one or more of the s. 56(4) circumstances is engaged?
- If so, is it appropriate for the court to exercise its discretion to set aside the agreement?
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In addition to s. 56(4), s. 33(4) of the Family Law Act permits the court to set aside a provision for support or a waiver of a right to support in a domestic contract if (1) the provision for support or waiver of the right to support results in unconscionable circumstances, (2) the provision or waiver is by or on behalf of a dependent who qualifies for an allowance out of public monies, or (3) there is default in the payment of support under the contract when the application is made.”