Domestic Contracts

AuthorJulien D. Payne,Marilyn A. Payne
Date25 July 2022
Chapter 4
Domestic Contracts
e following analysis will focus on “domestic contracts” insofar as how they
have been statutorily def‌ined in Ontario. Even in the absence of statutory
provisions, however, married and unmarried cohabitants1 are legally entitled
to enter into binding and enforceable contracts. In some circumstances, the
law restricts the extent to which spouses or unmarried cohabitants can con-
tractually waive rights that would otherwise vest in them pursuant to statute.
For example, the spliing of credits under the Canada Pension Plan between
divorced spouses cannot be circumvented by a spousal contract or separation
agreement, except where provincial legislation specif‌ically permits such con-
tracting out.2 In addition, courts are entitled to override the terms of spousal
contracts that purport to waive child support rights and obligations.3
Domestic contracts, as def‌ined under prov incial and territoria l statutes
in Canada, are form al wrien contracts sig ned by the parties and witness ed,
whereby married couples and un married cohabitants may regulate their
rights and obligations dur ing their relationship or on its term ination. In
Ontario, there are f‌ive dif‌ferent kinds of domestic contracts: (1) marriage
1 See Chrispen v Topham (1986), 3 RFL (3d) 149 (Sask QB), a’d (1987), 9 RFL (3d) 131
(Sask CA). See also Anderson v Luoma (1986), 50 RFL (2d) 127 (BCSC).
2 An Act to Amend the Canada Pension Plan and the Federal Courts Act, RSC 1985, c30 (2d
Supp), s 23; see also An Act to Amend the Canada Pension Plan (Spousal Agreement), SC
1991, c 14. See Giesbrecht v Giesbrecht, 2013 SKQB 16. As to contracting out of the split-
ting of credits under the Canada Pension Plan in Alberta, see Cerra v Zarowny, 2018
ABQB 239 at paras 9–11.
3 Richardson v Richardson, [1987] 1 SCR 857.
Canadian family law58
contracts; (2) cohabitation agreements; (3) separation agreements; (4) pater-
nity agreements; and (5) fam ily arbitration agreements.4
e right of men and women to enter into agreements or domestic con-
tracts to regulate their af‌fairs is expressly recognized by statute in several
provinces and territories.5 but the legislation is not uniform throughout
Canada. Because space does not permit a detailed description of the dif‌fer-
ent provincial and territorial statutes, the following analysis will examine the
Ontario legislation, which has provided the precedent for similar legislation
in several other provinces. Before doing so, however, it is pertinent to review
the judgments of the Supreme Court of Canada in Hartshorne v Hartshorne6
and Rick v Brandsema.7 Although both of these cases focused on the British
Columbia Family Relations Act and that statute has now been superseded by
the Family Law Act,8 which came into force on 18 March 2013, the reasons
for judgment in both cases will continue to strongly inf‌luence courts across
Canada, including those in British Columbia, with respect to the ef‌fect of pre-
nuptial and post-nuptial agreements on matrimonial property rights.9 e
former case dealt with the impact of a marriage contract on an application
for spousal property division. Although the judgment specif‌ically addresses
that particular topic, it also provides insight into how such contracts might be
interpreted and applied under statutory property regimes in other provinces
and territories.
In Hartshorne v Hartshorne, the part ies cohabited for twelve and one-half
years and were married for nine of those years. It was a second marriage for
both of them. ey had two children. Aer the birth of their f‌irst child, the
4 See Family Law Act, RSO 1990, c F.3, s 51. And see text accompanying note 5, below.
5 See Matrimonial Property Act, RSA 2000, c M-8, ss 37–38; Family Law Act, SBC 2011,
c 25, ss 92–93; Marital Property Act, SNB 19801980, c M, ss 33–41 (marriage contracts,
cohabitation agreements, separation agreements); Family Law Act, RSNL 1990, c F-2,
ss 61–71 (marriage contracts, cohabitation agreements, separation agreements);
Matrimonial Property Act, RSNS 1989, c 275, ss 23–29 (marriage contracts, separation
agreements); Family Law Act, SNWT 1997, c 18, ss 2–13 (marriage contracts, cohabit-
ation agreements, separation agreements); Family Law Act, RSO 1990, c F.3, ss 51–60
(marriage contracts, cohabitation agreements, separation agreements); Family Law
Act, SPEI 1995, c 12, ss 50–58 (marriage contracts, cohabitation agreements, separ-
ation agreements); Matrimonial Property Act, 1997, SS 1997, c M-6.11, ss 38–42 (inter-
spousal contracts); Family Property and Support Act, RSY 1986, c 63, ss 58–64 (marriage
contracts, cohabitation agreements, separation agreements).
7 2009 SCC 10; see Reid v Reid, 2017 BCCA 73; Ryan v Ryan, 2018 NSSC 289; Boechler v
Boechler, 2019 SKCA 120 at para 25.
8 SBC 2011, c 25. See also Liu v Xu, 2020 BCSC 92 citing section 93 (property) and section
164 (support) of the Family Law Act.
9 See McAdie v McAdie, 2019 BCSC 578.
Chapter 4: Domestic Contracts 59
wife, a lawyer, withdrew from the practice of law to assume a full-time home-
making and child-caregiving role. e husband, also a lawyer, made it clear to
her prior to their marriage that he would never again allow his property to be
divided by reason of a marriage breakdown. e husband brought assets of $1.6
million into the marriage, which included his law practice, whereas the wife
had no assets and was heavily in debt at the time of the marriage. At the hus-
band’s insistence, the spouses executed a marriage agreement declaring the
parties separate as to property, subject to the wife being entitled to a 3 percent
interest in the matrimonial home for each year of marriage up to a maximum
of 49 percent. e wife received independent legal advice that the agreement
was grossly unfair but signed it with a few amendments, including her right to
spousal support. Pursuant to the agreement, the wife was entitled to property
valued at $280,000 on the spousal separation and the husband’s entitlement
was to property worth $1.2 million. In subsequent divorce proceedings, the
husband sought to rely on the agreement to avoid the operation of the statu-
tory property regime in British Columbia, while the wife contended that the
agreement should be set aside on common law principles or that the distribu-
tion of assets should be reapportioned under section 65(1) of the Family Rela-
tions Act (BC) because the agreement was unfair. e trial judge concluded
that the agreement was unfair and ordered a 60:40 reapportionment of most
of the assets, including the husband’s law practice, in favour of the husband.
Each spouse was held entitled to a one-half interest in the matrimonial home
and contents. is judgment was upheld by a majority judgment (2:1) of the
British Columbia Court of Appeal. On further appeal to the Supreme Court of
Canada, the husband’s appeal was allowed by a majority of 6:3. In the major-
ity judgment, Bastarache J, with whom McLachlin CJ and Iaccobucci, Major,
Arbour, and Fish JJ concurred, formulated the following principles:
1) e primary policy objective underlying the statutory property regime
in British Columbia is to achieve fairness.
2) Marriage agreements are expressly recognized by the Family Relations
Act (BC) as providing an appropriate means of regulating the division of
property upon the breakdown or dissolution of marriage. As a prerequi-
site to enforceability, however, any such agreement must operate fairly at
the time of the property division. Otherwise, judicial reapportionment of
the property pursuant to section 65(1) of the Family Relations Act will be
available to achieve fairness.
3) To implement the legislative intention, courts must encourage parties to
enter into marriage agreements that are fair and to respond to changing
circumstances by revisiting and revising their agreements from time to

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