Parties to a relationship may choose to enter into a domestic agreement to regulate their affairs in the event of a separation or divorce. These agreements can be entered into by common-law partners, couples planning to get married, or after a separation has occurred. These agreements are customized and tailored to the unique circumstances of each relationship and can address issues including property division and spousal support.
So, does the presence of an agreement settle the parties’ entitlements once and for all, or can it be set aside? This article explores this issue in relation to domestic agreements respecting property division and spousal support. This blog post will also look at a recent decision of the Supreme Court of British Columbia in which a wife sought to get out of a marriage agreement that she signed, on the basis that she signed it under duress and that it was operationally unfair.
Property division agreements can be set aside if procedurally unfair or significantly unfair
Partners are able to enter domestic agreements to alter the default family law rules that apply to various issues upon the parties’ separation. For example, the parties may agree to a different outcome than the default position of equal division of family property.
However, under the Family Law Act (the “FLA”) of British Columbia, the Supreme Court is able to set aside such an agreement respecting the division of property and debt in certain circumstances.
Section 93 of the FLA gives the Court the power to set aside an agreement if it is procedurally unfair, specifically if:
- a spouse failed to disclose significant property or debts, or withheld information,
- a spouse took improper advantage of the other’s vulnerability,
- a spouse did not understand the nature or consequences of the agreement, or
- other circumstances applied which would cause the agreement to be voidable under the common law.
The FLA also allows the Court to set aside the agreement if it is significantly unfair, in consideration of:
- the length of time that has passed since the agreement was made;
- the intention of the spouses to achieve certainty through the making of the agreement; and
- the degree to which they relied on the agreement.
Spousal support agreements can be set aside on similar grounds
Section 164 of the FLA allows the Supreme Court to set aside a written agreement respecting spousal support on the same grounds of procedural unfairness.
The Court can also set an agreement aside if it is significantly unfair, in consideration of the factors above, plus:
- any changes in the conditions, means, needs or other circumstances of a spouse; and
- the degree to which the agreement meets the legislated objectives of spousal support.
Wife sought spousal support and division of property, despite marriage agreement
In S.B.F. v D.G.F., the wife applied to the Supreme Court of British Columbia for spousal support and property division. The couple did not have children together.
The wife’s ex-husband defended the application by pointing to a marriage agreement signed a week before the parties were married.
When the husband entered into the relationship, he owned several properties. The parties’ agreement stated that the wife had no claim to these properties (including any increase in value), that any property acquired during the relationship was owned by the person that bought it unless it was registered in both their names, and that neither was entitled to spousal support unless they had children together.
Wife argued that the agreement was procedurally and operationally unfair
One month before their wedding, the husband stated that he needed a prenuptial agreement. He retained a lawyer to prepare a draft and paid for a different lawyer to provide advice to his wife.
The wife was uncomfortable with spousal support being tied to her ability to have a child. Her lawyer’s file note included:
“says she will sign as choice is now between signing or cancelling wedding.
I advised [that] she seems to be signing under duress and the fact that she received [independent legal advice] and is still signing will make it difficult for her to challenge it in the future.
she said she understood.”
She claimed that the agreement was unfair for various reasons, including that she signed it under duress to get married in accordance with their wedding plans, and that she did not understand its contents.
The agreement was not procedurally unfair
At the time of trial, Justice Murray decided that the wife did not sign the marriage agreement under duress. While the wife thought cancelling the wedding would be embarrassing, her Honour was satisfied that the wife received legal advice, considered her options and freely entered into the agreement. She knew he wanted an agreement and she was “strong, capable and intelligent.”
The evidence also showed that the wife fully understood the agreement. As a result, the Court found that the agreement was not procedurally unfair.
The agreement was not tainted by significant unfairness
Justice Murray assessed all the factors set out in the FLA and determined that the marriage agreement was not significantly unfair.
For example, even though the wife made bi-weekly contributions to the husband’s bank account, which was used to pay for everything including the mortgages, these did not cover her share of household expenses. She did not contribute to the properties.
Regarding spousal support, her Honour noted that the wife worked full-time during the marriage and had lower living expenses as a result of the marriage. Her Honour rejected the wife’s arguments in favour of compensatory and non-compensatory spousal support, finding for example that there was no evidence of a stark imbalance in their lifestyles.
The Court dismissed the wife’s application and held that the marriage agreement was valid.
Contact Meridian Law Group in Vancouver for Advice on Family Law Matters Including Domestic Agreements
The experienced family lawyers at Meridian Law Group will look out for your interests and help you with the family law aspects of your divorce or separation. We draft and review domestic agreements, to reduce the chances of prolonged litigation, and also advise on their enforceability in the event of a separation. To organize a confidential consultation with a member of our team, please call (604) 687-2277 or contact us online.