Domestic Contracts

AuthorJulien D. Payne/Marilyn A. Payne
Chapter 4
Domestic Contracts
e following ana lysis will focus on “ domestic contracts” insofar as t hey have
been statutorily de ned in Ontario. Even in the absence of statutory provi-
sions, however, married and u nmarried cohabitants1 are legally entitled to
enter into binding and enforceable contracts . In some circumstances, the law
restricts the extent to which spouses or unm arried cohabitants can contrac-
tually wa ive rights that would otherwise 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.2 In addition, courts a re entitled to override the terms of sp ousal
contracts that pur port to waive child support rig hts and obligations.3
Domestic contracts, as dened under provincial 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 their
rights and obligations during their rel ationship or on its termination. In
Ontario, there are ve dierent kinds of domestic contracts: (1) marriage
1 See Chrispen v Topham (1986), 3 RFL (3d) 149 (Sa sk QB), a’d (1987), 9 RFL (3d) 131 (S ask
CA). See als o Anderson v Luoma (1986), 50 RFL (2d) 127 (BC SC).
2 An Act to Amend the Cana da Pension Plan and the Federal Courts A ct, RSC 1985, c30 (2d S upp),
s 23; see also A n Act to Amend the Canada Pens ion Plan (Spousal Agreement), SC 1991 , c 14.
See Giesbrec ht v Giesbrech t, 2013 SKQB 16. As to contracti ng out of the splittin g of credits
under the Canada Pen sion Plan in Alber ta, see Cerra v Zarowny, 201 8 ABQB 239 at paras 9 –11.
3 Richardson v Richardson (1987), 7 RFL (3d) 304 (SCC).
Canadi an family law56
contracts; (2) cohabitation agreements; ( 3) separation agreements; (4) pater-
nity agreements; and ( 5) family arbitration agreements.4
e right of men and women to enter into agreements or domestic con-
tracts to regul ate their aairs is expressly recognized by statute in severa l
provinces and terr itories5 but the legislation is not uniform throug hout Can-
ada. Because space does not per mit a detailed descr iption of the dierent
provincial a nd territorial statutes, the following a nalysis wi ll examine the
Ontario legis lation, which has provided the precedent for simil ar legislation
in several other prov inces. Before doing so, however, it is pertinent to review
the judgments of the Supreme Court of Canada in Hartshor ne v Hartshorne6
and Rick v B randsema.7 Although both of these cases focu sed on the British
Columbia Family Relations A ct and that statute has now been superseded by
the Family Law Act,8 which ca me into force on 18 March 2013, the reasons for
judgment in both cases w ill continue to strongly inuence court s across Can-
ada, including t hose in British Columbia, with respect to the eec t of pre-
nuptial and post-nuptia l agreements on matrimon ial property r ights.9 e
former case dealt with the impact of a marr iage contract on an applicat ion
for spousal propert y division. Alt hough the judgment speci cally addresses
that particular topic, it also prov ides insight into how such contracts m ight
be interpreted and applied under st atutory property reg imes in other prov-
inces and territories. I n Hartshorne v Hartshorne, the parties cohabited for
twelve and one-ha lf years and were mar ried for nine of those years. It was
a second marria ge for both of them. ey had two ch ildren. After t he birth
of their rst chi ld, the wife, a law yer, withdrew from the pract ice of law to
4 See Family Law Act, RSO 1990, c F.3, s 51. And see text accompa nying note 5, below.
5 See Matrimonial Property Act, RSA 2 000, c M-8, ss 37–38; Family Law Act, SBC 2011, c 25,
ss 92–93; Mar ital Property Act, SNB 1980, c M-1.1, s s 33–41 (marri age contracts, cohabi -
tation agree ments, separation ag reements); Family Law Act, RSNL 1990, c F-2 , ss 61–71
(marri age contracts, cohabit ation agreements, sep aration agreements); Matr imonial
Property Act, RSNS 198 9, c 275, ss 23–29 (mar riage contracts , separation agree ments);
Family Law Act, SNWT 1997, c 18, ss 2–13 (marri age contracts, cohabit ation agreements,
separation ag reements); Family Law Act, RSO 1990, c F.3, ss 51–60 (marriage c ontracts,
cohabitation agreements, separation agreements); Family Law Act, SPEI 1995, c 12,
ss 50–58 (ma rriage contract s, cohabitation agre ements, separation ag reements); Mat-
rimonial Proper ty Act, 1997, SS 1997, c M-6.11, ss 3 8–42 (interspousa l contracts); Family
Property and S upport Act, RS Y 1986, c 63, ss 58–64 (ma rriage contrac ts, cohabitation
agreements, separation agreements).
7 2009 SCC 10; see Reid v R eid, 2017 BCCA 73; Rya n v Ryan, 2018 NSSC 289; Boe chler v
Boechler, 2019 SKCA 120 at para 25 .
8 SBC 2011, c 25. See also Liu v Xu, 2 020 BCSC 92 citing sec tion 93 (property) a nd section
164 (support) of the Family Law Act.
9 See McAdie v McA die, 2019 BCSC 578.
Chapter 4: Domestic Cont racts 57
assume a ful l-time homemaking and ch ild caregiving role. e husband, a lso
a lawyer, made it clear to her prior to their marriage 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 $1.6 mil lion into the marriage, wh ich included
his law practice, whereas t he wife had no assets and was heavily in debt at
the time of the mar riage. At the husband’s insistence, the spouses e xecuted
a marria ge agreement declar ing the parties se parate as to property, subject
to the wife being entit led to a 3 percent interest in the matrimonial home
for each year of marr iage up to a maximum of 49 percent. e wife received
independent legal advice t hat the agreement was grossly unfair but signed
it with a few amendments, inc luding her right to spousal support. Pursu ant
to the agreement, the wife was entitled to propert y valued at $280,000 on
the spousal sepa ration and the husband’s entitlement was to propert y worth
$1.2 million. I n subsequent divorce proceedings, the husband sought to rely
on the agreement to avoid the operation of the stat utory property regime in
British Columbia whi le the wife contended that the agreement should be set
aside on common law principles or th at the distribution of assets should be
reapportioned under section 65(1) of the Family Relations Act (BC) because
the agreement was unf air. e trial judge concluded that the agreement wa s
unfair and ordered a 60:40 reapp ortionment of most of the assets, including
the husband’s law practice, in favour of the husband. Each spouse w as held
entitled to a one-half interest in the matrimoni al home and contents. is
judgment was upheld by a majorit y judgment (2:1) of the British Columbia
Court of Appeal. O n further appea l to the Supreme Court of Canad a, the
husband’s appeal was a llowed by a majority of 6:3. In the majority judg ment,
Bastarache J, with whom McLachlin CJ and Iaccobucci, Major, Arbour, and
Fish JJ concurred, formul ated the following principles:
1) e primar y policy objective underlyi ng the statutory property reg ime in
British Columbia is to ac hieve fairness.
2) Marriage agreements are expressly recognized by the Family Relat ions
Act (BC) as providin g an appropriate means of regulating t he division of
property upon the breakdown or dissolution of mar riage. As a prerequi-
site to enforceability, however, any such agreement must operate fa irly at
the time of the propert y division. Otherwise, judicial reapportionment
of the property pursu ant to section 65(1) of the Family Relations Act will
be available to ach ieve fairness.
3) To implement the legislative intention, courts must encoura ge parties to
enter into marria ge agreements that are fair and to respond to ch anging
circumstances by revisiting and rev ising their agreements from time to
time to ensure continued fai rness. Parties should also be encouraged

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