Marriage contracts, often referred to in day-to-day conversation as “prenups” are agreements between to people entering a marriage that outlines certain details about their finances and property in the event the relationship breaks down. They’re an effective way to protect assets should this occur, and while it might not be easy to bring up, a prenup can potentially save a couple from conflict down the road. However, avoiding conflict is sometimes easier said than done. A recent decision from the Ontario Court of Appeal looks at a situation where a husband tried to have a prenup set aside, but a lower court ruled the two-year limitation period had expired.
The parties entered into a marriage contract one week before they were married in 2005. While the contract stated that each of the parties had “retained their own lawyer and has received independent legal advice,” the husband later said this was not true. The agreement stated the parties intended to keep their assets separate and that they would waive any future rights to spousal support.
When the couple separated in 2012, the husband began to experience mental health issues, and did not commence a proceeding until August 2017. At this time he brought an application for spousal support, equalization of net family property, and financial disclosure. The wife leaned on the marriage contract and said such claims were not warranted.
The motion judge, referring to the Limitations Act, determined a two-year limitation period applied to the contract. The husband had argued that a section of the Act providing there is no limitation period for “a proceeding for a declaration if no consequential relief is sought” should apply. However, the motion judge found that the husband’s claims for spousal support constituted consequential relief.
The husband appealed the motion judge’s decision, stating they erred in setting aside the marriage contract on the basis that consequential relief was being sought.
The court looked at the Limitations Act along with the Family Law Act, which it stated must both be taken into account when looking at limitation periods as they pertain to marriage contract.
The court noted that the Family Law Act provides broad grounds for a court to set aside a marriage contract. Reasons to set a marriage contract aside can include provisions resulting in unconscionable circumstances, one party failing to properly disclose assets and property, or one party not understanding the nature or consequences of the contract.
Additionally, the Family Law Act contains no limitation periods (except concerning equalization payments, which has a six-year limit), which means the Limitations Act must be relied on. While the limitation period of two years is clear, the court found that it must be looked at separately from the husband’s request for spousal support and other relief. The husband’s attempt to set the marriage contract aside does not in and of itself include consequential relief. While it may be obvious that he intends to seek it if successful, it’s a matter of there being two independent steps as opposed to a single one.
At NULaw in Toronto, we can review a pre-existing marriage agreement or draft a new agreement. We will also fight to enforce marriage contracts if necessary and help you secure what you are entitled to. We are dedicated to protecting you and your assets, and helping you plan for your new life. Contact us online or at 416-481-5604 to book a consultation.