Setting Aside a Marriage Contract in Ontario Property Disputes

Many people sign a marriage contract before or during a marriage and later feel it should not stand. Maybe you signed in a rush before the wedding, did not see the other person's finances, or did not really understand what you were giving up.

Courts do not simply undo a contract because it turns out badly for one spouse. This article explains how the process generally works, how grounds such as non-disclosure, duress and incapacity fit in, and what to do if you are considering a challenge.

Why the contract matters in a property dispute

Without a contract, married spouses are generally subject to the equalization rules. The spouse with the lesser net family property is entitled to one-half the difference between the two net family properties. A marriage contract can change that outcome. For example, property the spouses have agreed in a domestic contract is not to be included is excluded from net family property.

That is why a challenge can be high stakes. If the contract stands, its property terms may replace the default rules. What happens if it is set aside depends on what is set aside and what the contract says, so it is worth confirming with a lawyer.

The two-step test

Under s. 56(4) of the Family Law Act, setting aside a domestic contract is a two-step process.

Meeting step one is necessary but not sufficient. That means you can prove a recognized problem and still not succeed if the court decides not to exercise its discretion. The court can also look at a provision within the contract, not only the whole document.

The Court of Appeal applied this test in a case about a cohabitation agreement, and it applies to domestic contracts generally, including marriage contracts.

Common grounds people raise

The exact circumstances that qualify are set out in s. 56(4), and the wording matters, so a lawyer should check the current text against your facts. In plain terms, people usually raise concerns like these:

• Non-disclosure: one spouse did not reveal significant assets, debts or income before the other signed, so the other did not have a true picture of what they were agreeing to.
• Duress or pressure: the signing was rushed, threatened or forced, for example by pressure close to the wedding date.
• Incapacity or lack of understanding: a spouse did not understand the nature or consequences of the contract. This one is expressly an example of a s. 56(4) circumstance.
• Problems with how the contract was made, such as missing legal advice, unclear terms, or terms that were not what was discussed.

Only lack of understanding of the contract's nature or consequences is confirmed here as a listed example. Whether the other concerns fit within s. 56(4) depends on the statute's wording and your facts, and a lawyer can confirm that.

How courts treat fairness

At the second step, fairness is an appropriate consideration. That does not mean any unequal deal gets undone.

It helps to keep this separate from a different rule. When a court is asked to vary the equal share of net family property without a contract, it can do so only if equalizing would be unconscionable, a high threshold where mere unfairness is not enough. That is the test for varying equalization under the Act, not the test for setting aside a contract, but it shows how reluctant courts can be to depart from the legislated scheme.

Evidence will drive both steps. Things that often matter include when you first saw the contract, whether you had your own lawyer, what financial information you were given, what you were told it meant, and how you behaved after signing.

What to do if you want out

Act early and keep things organized. Whether any time limits apply depends on your situation, so ask a lawyer promptly about deadlines.

• Find the signed contract and every draft, email and text about it.
• Write a timeline of when you were first asked to sign, who was present and what you were told.
• Collect any financial statements, disclosure or lists of assets that were exchanged, and note what was missing.
• Note whether you had independent legal advice and, if so, from whom.
• List the property affected: homes, accounts, pensions, businesses, gifts and inheritances.
• Do not sign anything new or move assets without advice.
• Book a meeting with a family lawyer to review the contract's wording and your options.

A lawyer can tell you whether a s. 56(4) circumstance is realistically engaged, whether to challenge the whole contract or a single clause, and what the default rules would mean for you if it is set aside.

Frequently asked questions