LeVan v. LeVan,

• Jurisdiction: Ontario
• Judge: Doherty, Borins and MacFarland, JJ.A.
• Neutral Citation: 2008 ONCA 388
• Citation: 2008 ONCA 388,(2008), 239 O.A.C. 1 (CA),90 OR (3d) 1,51 RFL (6th) 237,[2008] CarswellOnt 2738,[2008] OJ No 1905 (QL),167 ACWS (3d) 934,239 OAC 1,(2008), 239 OAC 1 (CA),90 O.R. (3d) 1,[2008] O.J. No 1905 (QL),239 O.A.C. 1
• Date: 07 January 2008
• Court: Court of Appeal (Ontario)

LeVan v. LeVan (2008), 239 O.A.C. 1 (CA)

MLB headnote and full text

Temp. Cite: [2008] O.A.C. TBEd. MY.065

Erika Margaret LeVan (applicant/respondent) v. Richard Bruce LeVan (respondent/appellant)

(C46049; 2008 ONCA 388)

Indexed As: LeVan v. LeVan

Ontario Court of Appeal

Doherty, Borins and MacFarland, JJ.A.

May 15, 2008.

Summary:

Upon application by the wife, the Ontario Superior Court, in a decision reported [2006] O.T.C. 794, ordered as follows: (1) the pre-nuptial marriage contract between the parties was set aside for failure to comply with s. 56(4) of the Family Law Act (Ont.); (2) the husband was to pay the wife an equalization payment of $5.3 million as well as retroactive spousal support of $163,340; (3) post-judgment interest was to accrue on the entire equalization payment and the lump sum spousal support from the date of the judgment; (4) the husband was to pay monthly spousal support of $6,640 based on the husband's yearly income of $370,000 commencing June 1, 2006, to be reduced pursuant to a formula in accordance with receipt of the equalization payment and to be credited against post-judgment interest; (5) the husband was also to pay child support for two children in the amount of $4,544 monthly, and retroactive child support of $43,792; and (6) the wife was awarded costs of $646,602.20. The husband appealed.

The Ontario Court of Appeal dismissed the appeal.

Family Law - Topic 868.3

Husband and wife - Marital property - Distribution orders - Equalization payments - [See both Family Law - Topic 875 ].

Family Law - Topic 875

Husband and wife - Marital property - Distribution orders - Statutes requiring equal division - Exceptions (incl. judicial reapportionment) - Section 5(6)(g) of the Family Law Act (Ont.) provided as follows: "5(6) The court may award a spouse an amount that is more or less than half the difference between the net family properties if the court is of the opinion that equalizing the net family properties would be unconscionable, having regard to, [...] (g) a written agreement between the spouses that is not a domestic contract" - In the present case, in which the trial judge set aside a pre-nuptial marriage contract, the husband argued that s. 5(6)(g) applied to support an unequal division of matrimonial property, and hence, an unequal equalization payment - The trial judge rejected the argument where the marriage contract had been set aside in its entirety - The Ontario Court of Appeal agreed with the trial judge - Section 5(6)(g) was not designed to include a marriage contract that had been set aside by the court - See paragraphs 38, 41, 63 to 65.

Family Law - Topic 875

Husband and wife - Marital property - Distribution orders - Statutes requiring equal division - Exceptions (incl. judicial reapportionment) - Section 5(6)(h) of the Family Law Act (Ont.) provided as follows: "5(6) The court may award a spouse an amount that is more or less than half the difference between the net family properties if the court is of the opinion that equalizing the net family properties would be unconscionable, having regard to, [...] (h) any other circumstance relating to the acquisition, disposition, preservation, maintenance or improvement of property" - In the present case the trial judge set aside a pre-nuptial marriage contract because the husband failed to comply with his financial disclosure obligations under s. 56(4)(a) - The husband argued that s. 5(6)(h) applied to allow the judge to take into account the post-separation (and hence post-valuation date) decrease in the value of the shares he had in the family companies - The Ontario Court of Appeal answered as follows: there seemed to be room within s. 5(6) to consider post-separation circumstances in limited situations, such as where the conduct of one spouse post-separation had resulted in a significant depletion of assets - Nevertheless, the cases that considered post-valuation date fluctuations in a spouse's net family property were uniform that this factor did not come within the stipulated grounds in s. 5(6) - However, in this case, it was not appropriate to consider the decrease in the value of the husband's assets subsequent to the valuation date where (1) the husband's failure to disclose and his misrepresentations put him into the situation of having his property and the value of the shares subject to the Act's equalization provisions, (2) the husband could have disposed of his shares to hedge against the setting aside of the contract, and (3) no one would suggest that any ordinary creditor, such as the wife here, should share the burden of a debtor's reversal of fortune - See paragraphs 66 to 80.

Family Law - Topic 3382

Separation agreements, domestic contracts and marriage contracts - Grounds for setting aside - Material nondisclosure - A Voting Trust Agreement and a Unanimous Shareholders' Agreement required the husband and his siblings to enter into a pre-nuptial marriage contract if they wanted to marry and also retain their shares in the family-owned corporations - A model marriage contract was supplied - The model contract protected the family's control but did not require the prospective spouse to agree to exclude assets from equalization or limit support rights - Here, the husband told his prospective spouse to sign a pre-nuptial marriage contract otherwise there would be no marriage - The marriage contract he proposed did not contemplate equalization of net family property and "significantly compromised" the wife's ability to claim spousal support - The husband's disclosure statement, while indicating that he owned certain assets, did not state the husband's income - No values were inserted for his interest in the family companies or for his contingent beneficial interest in the family trust - In addition, the husband did not disclose his ownership of shares in two of the family companies - Marriage contract drafts were exchanged between the respective lawyers for the husband and wife - The wife signed the contract, after the husband instructed his lawyer not to have any further contact with the wife's first lawyer and after the wife's second lawyer advised her without complete financial information from the husband - An application judge set aside the marriage contract where the husband breached his obligation, pursuant to s. 56(4)(a) of the Family Law Act (Ont.), to provide financial disclosure to the wife, and the wife, as provided by s. 56(4)(b), failed to understand the nature and consequences of the contract - The Ontario Court of Appeal upheld the decision - The court indicated that the husband's failure to disclose values for his interests in the family companies and the family trust was not critical to the disclosure analysis - There was abundant evidence that the husband had failed to comply with his disclosure obligation apart from his failure to disclose values for these assets - This failure was compounded by the serious misrepresentations respecting the extent and value of certain of the assets disclosed - See paragraphs 1 to 62.

Family Law - Topic 3384

Separation agreements, domestic contracts and marriage contracts - Grounds for setting aside - Inequitable result or unfairness - Section 56(4) of the Family Law Act (Ont.) provided that a court "may" set aside a domestic contract or a provision in it, if certain conditions were met - The Ontario Court of Appeal stated that s. 56(4) set up a two-part process: (1) determine whether the conditions were met; and (2) determine whether it was appropriate to exercise discretion in favour of setting aside the agreement - The court added that although there was nothing in the governing legislation that suggested that fairness was a consideration in deciding whether or not to set aside a marriage contract, it could not see why fairness was not an appropriate consideration in the exercise of the court's discretion in the second stage of the s. 56(4)(a) analysis (setting aside for failure to make financial disclosure) - See paragraphs 41 to 62.

Family Law - Topic 3397

Separation agreements, domestic contracts and marriage contracts - Grounds for setting aside - Lack of understanding - [See Family Law - Topic 3382 ].

Cases Noticed:

Dochuk v. Dochuk (1999), 89 O.T.C. 41; 44 R.F.L.(4th) 97 (Gen. Div.), refd to. [para. 33].

Stone v. Stone et al. (2001), 156 O.A.C. 345; 55 O.R.(3d) 491 (C.A.), refd to. [para. 40].

Berdette v. Berdette (1991), 47 O.A.C. 345; 3 O.R.(3d) 513 (C.A.), refd to. [para. 40].

Hartshorne v. Hartshorne, [2004] 1 S.C.R. 550; 318 N.R. 1; 194 B.C.A.C. 161; 317 W.A.C. 161, refd to. [para. 50].

Demchuk v. Demchuk (1986), 1 R.F.L.(3d) 176 (Ont. H.C.), consd. [para. 51].

Patrick v. Patrick, [2002] O.T.C. 131; 112 A.C.W.S.(3d) 302 (Sup. Ct.), consd. [para. 52].

Dubin v. Dubin, [2003] O.T.C. Uned. 126; 34 R.F.L.(5th) 227 (Sup. Ct.), consd. [para. 53].

Warne v. Warne (1992), 8 O.R.(3d) 571 (Gen. Div.), consd. [para. 69].

Kelly v. Kelly (1986), 50 R.F.L.(2d) 360 (Ont. H.C.), refd to. [para. 70].

Arndt v. Arndt (1992), 6 O.R.(3d) 97 (Gen. Div.), affd. (1993), 66 O.A.C. 4; 15 O.R.(3d) 389 (C.A.), consd. [paras. 70, 72].

Skrlj v. Skrlj (1986), 2 R.F.L.(3d) 305 (Ont. H.C.), refd to. [para. 70].

Heon v. Heon (1989), 69 O.R.(2d) 758 (H.C.), refd to. [para. 70].

Serra v. Serra, [2007] O.T.C. Uned. 177; 36 R.F.L.(6th) 66 (Sup. Ct.), consd. [para. 73].

Merklinger v. Merklinger (1996), 26 R.F.L.(4th) 7 (Ont. C.A.), refd to. [para. 74].

Davies v. Davies (1988), 13 R.F.L.(3d) 278 (Ont. H.C.), refd to. [para. 74].

McCutcheon v. McCutcheon (1986), 2 R.F.L.(3d) 327 (Ont. Dist. Ct.), refd to. [para. 74].

Perrin v. Perrin (1988), 17 R.F.L.(3d) 87 (Ont. Dist. Ct.), refd to. [para. 74].

Macedo v. Macedo (1996), 19 R.F.L.(4th) 65 (Ont. Gen. Div.), refd to. [para. 74].

Jamal v. Moolla Dawood Sons & Co., [1916] 1 A.C. 175 (P.C.), refd to. [para. 79].

Hickey v. Hickey, [1999] 2 S.C.R. 518; 240 N.R. 312; 138 Man.R.(2d) 40; 202 W.A.C. 40, refd to. [para. 86].

Koiter v. Koiter (1996), 21 O.T.C. 3; 67 A.C.W.S.(3d) 1152 (Gen. Div.), refd to. [para. 88].

Statutes Noticed:

Family Law Act, R.S.O. 1990, c. F-3, sect. 5(6)(g), sect. 5(6)(h), sect. 52(1), sect. 56(4) [para. 5].

Authors and Works Noticed:

Ontario, Law Reform Commission, Report on Family Law (1993), generally [para. 42].

Stark, Hugh G., and MacLise, Kirstie J., Domestic Contracts (2nd Ed. 2006), p. 1-52 [para. 50, footnote 1].

Counsel:

Alan J. Lenczner, Q.C. and Gerald P. Sadvari, for the appellant;

Philip M. Epstein, Q.C. and Ilana I. Zylberman, for the respondent.

This appeal was heard on January 7, 2008, by Doherty, Borins and MacFarland, JJ.A., of the Ontario Court of Appeal. The following decision of the Court of Appeal was delivered by Borins, J.A., and released on May 15, 2008.