Domestic Contracts
| Author | Julien D. Payne, Marilyn A. Payne |
| Pages | 58-89 |
Domestic Contracts
A. TYPES OF DOMESTIC CONTRACTS
e following ana lysis will focu s on “domestic contracts” insofar a s they have
been statutorily de ned in Ontario. Even in the abse nce of statutory provi-
sions, however, married and u nmarried cohabitants are legally entitled to
enter into binding and enforceable contract s. In some circumstances, the law
restricts the e xtent to which spouses or unm arried cohabitants can contrac-
tually wa ive rights that would ot herwise vest in t hem pursuant to statute.
For example, the splitt ing of credits under the Canada Pension Pla n between
divorced spouses cannot be c ircumvented by a spousal contract or sepa ration
agreement, except where provi ncial legislation speci cally permits such con-
tracting out. In addition, courts a re entitled to override the terms of spou sal
contracts that pur port to waive child support ri ghts and obligations.
Domestic contracts, as dened u nder provincia l and territoria l statutes
in Canada, a re formal written contracts sig ned by the parties and witnessed ,
whereby married couples and unmarried coh abitants may regulate t heir
rights and obligations du ring their relationship or on its term ination. In On-
tario, there are ve d ierent kinds of domestic contracts: () mar riage con-
tracts; () cohabitation agreements; ( ) separation agreements; () paternity
agreements; and () fa mily arbitration agreements.
See Chrispen v Topham (), RFL (d) (Sask QB), a ’d (), RFL (d) (Sask
CA). See als o Anderson v Luoma (), RFL (d) (BCS C).
An Act to Amend the C anada Pension Plan and the Federal Cour t Act, RSC (d Supp),
c , s ; see also An A ct to Amend the Canada Pension Plan (Sp ousal Agreement), SC ,
c . See Gie sbrecht v Gies brecht, SKQB .
Richardson v Richardson (), RFL (d) (SCC).
See Family Law Act, R SO , c F., s . And see text acc ompanying note , below.
Chapter : Domestic Cont racts
e right of men and women to enter into agreements or domestic con-
tracts to regu late their aai rs is expressly recogn ized by statute in severa l
provinces and territories but the legislation is not uniform throughout Can-
ada. Because space does not per mit a detailed descript ion of the dierent prov-
incial and ter ritorial statutes, the fol lowing analysis w ill exam ine the Ontario
legislation, whic h has provided the precedent for simila r legislation in several
other provinces. Before doing so, however, it is pert inent to review the judg-
ments of the Supreme Court of Canad a in Hartshorne v Hartshor ne and Rick
v Brandsema. Although both of these cases focused on the Br itish Columbia
Family Relations Act and th at statute has now been superseded by t he Family
both cases wi ll continue to strongly inuence courts acros s Canada, including
those in British Columbi a, with respect to the ee ct of prenuptial and post-
nuptial agreements on mat rimonial proper ty rights. e former ca se dealt
with the impact of a ma rriage contract on an application for spou sal property
division. W hile the judgment spec ically addresses that particu lar topic, it
also provides insi ght into how such contracts might be inter preted and ap-
plied under statutory proper ty regimes in other provinces and terr itories. In
Hartshorne v Hartshor ne, the parties cohabited for t welve and one-half yea rs
and were married for n ine of those years. It was a second mar riage for both
of them. ey had two ch ildren. After the birt h of their rst child, the w ife, a
lawyer, withdrew f rom the practice of law to assume a ful l-time homemaking
and child ca regiving role. e husband, also a l awyer, made it clear to her prior
to their marr iage that he would never again allow h is property to be div ided
by reason of a marr iage breakdown. e husband brought assets of . mil-
lion into the marr iage, which included his law practice, wherea s the wife had
no assets and was heavi ly in debt at the time of the mar riage. At the hus-
band’s insistence, the spou ses executed a marr iage agreement decla ring the
See Matrimonial Property Act, RSA , c M-, ss –; Family La w Act, SBC , c ,
ss –; Mar ital Property Act, SNB , c M-., s s – (marri age contracts, cohab i-
tation agree ments, separation ag reements); Family Law Act, R SNL , c F-, ss –
(marri age contracts, cohabit ation agreements, sep aration agreements); Matr imonial
Property Act, RSNS , c , ss – (mar riage contract s, separation agre ements);
Family Law Act, SN WT , c , ss – (marr iage contracts, coh abitation agreement s,
separation ag reements); Family Law Act, R SO , c F., ss – (marri age contracts,
cohabitation ag reements, separat ion agreements); Family Law Ac t, SPEI , c , ss –
(marri age contracts, cohab itation agreements, se paration agreeme nts); Matrimonial
Property Act, , SS , c M-., ss – (interspousal cont racts); Family Property
and Support Ac t, RSY , c , ss – (marri age contracts, cohabit ation agreements,
separation ag reements).
[] SCR .
SCC .
SBC , c .
parties separ ate as to property, subject to the wife bein g entitled to a percent
interest in the matri monial home for each year of marri age up to a maximum
of percent. e wife received independent lega l advice that the agreement
was grossly unfa ir but signed it with a few amendments, inc luding her right to
spousal support. P ursuant to the agreement, the w ife was entitled to property
valued at , on the spousa l separation and the husband’s entitlement
was to property wor th . mill ion. In subsequent divorce proceedings, t he
husband sought to rely on the agreement to avoid the operat ion of the statu-
tory property reg ime in British Columbia wh ile the wife contended th at the
agreement should be set aside on common law pr inciples or that the distribu-
tion of assets should be reapport ioned under section () of the Family Rela-
tions Act (BC) b ecause the agreement was u nfair. e trial jud ge concluded
that the agreement was u nfair and ordered a : reapportionment of most
of the assets, includi ng the husband’s law practice, in f avour of the husband.
Each spouse was held ent itled to a one-half interest in the matr imonial home
and contents. is judgment was upheld by a m ajority judgment (–) of the
British Columbia Cour t of Appeal. On further app eal to the Supreme Court of
Canada, t he husband’s appeal was al lowed by a majority of –. In the major-
ity judgment, Basta rache J, with whom McLachl in CJ and Iaccobucci, Major,
Arbour, and Fish JJ concurred , formulated the following princ iples:
) e primar y policy objective underlyi ng the statutory property reg ime in
British Columbia is to ac hieve fairness.
) Marria ge agreements are expressly recog nized by the Family Relat ions
Act (BC) as providin g an appropriate means of regulating t he division of
property upon the brea kdown or dissolution of mar riage. As a prerequi-
site to enforceability, however, any such agreement must oper ate fairly
at the time of the propert y division. Other wise, judicia l reapportion-
ment of the property pursu ant to section () of the Family Relations Act
will be ava ilable to achieve fairness.
) To implement the legislative intention, courts must encourage pa rties to
enter into marria ge agreements that are fair and to respond to ch anging
circumsta nces by revisiting and rev ising their agreements from time to
time to ensure continued fai rness. Parties should a lso be encouraged
to take personal control over t heir own na ncial well-be ing upon the
dissolution of marr iage and courts should be re luctant to second-guess
the arrangement upon whic h both spouses reasonably expected to rely.
Spouses may choose to struc ture their na ncial aa irs in a number of
ways and it is their prerogative to do so, prov ided that the legal bound-
aries of fair ness are observed.
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