“Section 52(1) of the Family Law Act provides that two persons who are married to each other may enter into an agreement in which they agree on their respective rights and obligations under the marriage or on separation. This includes the rights and obligations of the parties in relation to the ownership in, or division of property.
Any challenge to set aside or to nullify a marriage contract in Ontario is brought under s. 56(4) of the Family Law Act. Section 56(4) reads as follows:
Setting aside domestic contract
(4) A court may, on application, set aside a domestic contract or a provision in it,
(a) if a party failed to disclose to the other significant assets, or significant debts or other liabilities, existing when the domestic contract was made;
(b) if a party did not understand the nature or consequences of the domestic contract; or
(c) otherwise in accordance with the law of contract.
The proper approach on an application to set aside a marriage contract under s. 56(4) involves a two step process. First, the party seeking to set aside a marriage contract must demonstrate to the court that one of the listed circumstances within s. 56(4) has been engaged. Second, the court must then consider whether it is appropriate to exercise its discretion in favour of setting aside the agreement or a provision within it. When exercising discretion under this second step, fairness between the parties is a guiding consideration. See Moses Estate v. Metzer, 2017 ONCA 767 and LeVan v. LeVan, 2008 ONCA 388.
It is reasonable for the court to rely on the plain reading of the marriage contract for the purpose of determining whether the court should uphold the agreement or to enforce its terms: Peerenboom v. Peerenboom, 2020 ONCA 240 at para 62 and Hartstein v. Ricottone, 2016 ONCA 913.
In Toscano v. Toscano, 2015 ONSC 487, Blishen J. of this court confirmed that the burden of proof to set aside a domestic contract is on the party seeking to set it aside.
Mr. Capar submits that Ms. Vujnovic made no financial disclosure of the value of the Grey Owl Property she was seeking to exclude from any equalization process at the time they entered the marriage contract. This is the sole asset at issue on the marriage contract issue in the application, and on this motion.
Ms. Vujnovic argues that, to the contrary, awareness of the other party’s assets is sufficient to avoid setting aside an agreement: Quinn v. Epstein Cole LLP, 2007 CanLII 45714 (ON SC); and Butty v. Butty, 2009 ONCA 852. As Raikes J. observed in Golton v. Golton, 2018 ONSC 6245, those authorities make it clear that a party cannot enter a marriage contract knowing of shortcomings in disclosure beforehand, and then rely on those shortcomings when attempting to set the agreement aside. Individuals are expected to conduct their due diligence in a timely fashion, and will be held accountable for their failure to ask obvious questions.”