Court File and Parties

COURT FILE NO.: FC-13-2977

DATE: 2014/06/27

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Hamdi Hakan Tunc
Applicant

– and –

Jacqueline Monica Portugese
Respondent

Self-Represented

E. Jane Murray, for the Respondent

HEARD: June 18 and 19, 2014

AMENDED DECISION ON MOTION

Amended decision: The text of the original judgment was corrected on July 7, 2014 and the description of the amendment is appended.

PHILLIPS J.

[1] The parties in this case signed a marriage contract on their wedding day. At issue is the validity and enforceability of that agreement. The Applicant submits the contract should be set aside, raising several grounds pursuant to section 56 (4) of the Family Law Act. In particular he alleges:

(a) Insufficient financial disclosure from the Respondent;

(b) A lack of independent legal advice;

(c) Coercion and duress resulting from the circumstances in which the contract was signed;

(d) Unconscionability and inherent unfairness of the contract terms.

Background facts:

[2] The Applicant was born in Istanbul, Turkey, and lived there until he was 28 years old. The Respondent is Canadian. The parties met in 1992 when they were both graduate students in the United Kingdom. The Respondent returned to Canada in the summer of 1995 and the Applicant moved to Pennsylvania in 1993 to pursue postgraduate studies. In 1998, after a long distance relationship, the parties decided to get married. Apparently as a result of concerns about the Applicant having had a recent affair, the Respondent insisted upon a marriage contract to limit the financial consequences to her should the marriage not work out. Using another marriage contract as a template she prepared a document for the Applicant to review and presented it to him some three weeks before they were to be married. While the Applicant agrees that he read it, he did not seek any advice from anyone about it. In any event, the document was signed by both parties as part of the marriage ceremony, a small civil service involving only two witnesses held on January 30, 1999.

[3] The couple did not live together full-time until 2003. They separated on January 3, 2012.

Issues:

(a) Did the Respondent fail to disclose to the Applicant significant assets or significant debts or other liabilities?

(b) Did the Applicant fail to understand the nature or consequences of the contract?

(c) Was the Applicant under duress when he signed the contract?

(d) Does the enforcement of any term of the contract lead to an unconscionable result?

Analysis:

Did the Respondent fail to disclose to the Applicant significant assets or significant debts or other liabilities?

[4] The Applicant asserts that the Respondent did not tell him prior to the signing of the marriage contract that she had roughly $20,000 in savings. He says that had he known that fact he would not have signed the document.

[5] Section 56(4)(a) of the Family Law Act provides that a court may, on application, set aside a domestic contract or a provision in it, if a party failed to disclose to the other significant assets, or significant debts or other liabilities, existing when the domestic contract was made.

[6] In Quinn v. Epstein Cole LLP 2007 45714 (ON SC), [2007] O.J. No.4169, at paragraph 47, Brown J. summarized the law in this area as follows:

A court should employ a two-stage analysis when considering a claim to set aside a domestic contract for nondisclosure:

(i) first, the party seeking to set aside the agreement must demonstrate that the other party failed to discharge its duty to disclose significant assets. The failure to disclose significant assets includes the making of a material misrepresentation about the true value of assets, and the failure to disclose changes in income. The significance of an asset is assessed by measuring the value of the asset against the parties disclosed net assets. To conclude that a party has failed to disclose a significant asset, there must be some evidence to verify the value or extent of the parties assets either at the date of marriage or the date of the agreement;

(ii) If a court finds that a party has failed to disclose a significant asset, the court must determine, in light of the facts of each case, whether it should exercise its discretion to rescind the domestic contract. The burden of proof lies on the party seeking to set aside the contract to persuade the court to exercise its discretion in its favor. The court will take into account a variety of factors in exercising its discretion:

(a) Whether the party who did not make full disclosure was asked to refuse to do so; whether that party misrepresented or concealed financial facts; whether the other party had full financial information in any event; and, whether the other party would’ve signed the contract even if the disclosure had occurred;

(b) whether the party relied on the nondisclosure or misrepresentations in entering into the separation agreement in the sense that the party would not have entered the agreement had he known the true value of the assets;

(c) whether a party consented to incomplete disclosure, or was otherwise aware of the asset and had the means to ascertain its value;

(d) whether one party took benefits under the contract and then moved to set aside; and,

(e) whether there had been duress, or unconscionable circumstances; whether the petitioning party neglected to pursue full legal disclosure; whether he moved expeditiously to have the agreement set aside; and whether the other party had fulfilled his obligations under the agreement.

[7] I do not agree that nondisclosure by the Respondent of $20,000 in savings at the time of the signing of the marriage contract warrants setting aside that contract. The evidence is clear that the Applicant was well aware of the Respondent’s savings prior to the couple’s wedding. In fact, the parties had jointly signed a document in April 1999 to assist with the Applicant’s immigration to Canada which set out in full detail the Respondent’s financial position. If he was unclear about the full extent of her financial position, it was because he did not ask for more detail. Parties are expected to use due diligence in ascertaining the facts underlying their agreements. A party cannot fail to ask the correct questions and then rely on a lack of disclosure (see: Harnett v. Harnett (2014) ONSC 359 at para 89; also: Clayton v. Clayton (1998) CarswellOnt 2088 (Ont. Gen Div.) .

[8] In any event, I do not find the amount of savings to be of great significance in the overall context. This is especially so since the Respondent’s pre-marriage savings, even in the absence of the marriage contract, would be excluded from any net family property calculations. The savings were, therefore, effectively immaterial to the contract. I do not accept the Applicant’s evidence that he would have governed himself any differently had he been told again closer to the marriage date about information he already knew.

Did the Applicant failed to understand the nature or consequences of the contract?

[9] The Applicant argues that since he was not urged by the Respondent to seek independent legal advice and because English is not his first language, he did not sufficiently understand what he was doing when he signed the contract.

[10] Section 56(4)(a) of the Family Law Act provides that a court may, on application, set aside a domestic contract or a provision in it, if a party failed to understand the nature or consequences of the contract.

[11] The Applicant is a very intelligent and very highly educated man. Prior to the marriage, he had worked in journalism, in English. He had shown himself to be a gifted student, well on his way to obtaining a PhD, in English. He had studied and taught at Ivy League schools in the United States, in English. His studies and life experience involved university level courses in law generally and contracts in particular. I do not accept that his language abilities were such that he was incapable of understanding what he was doing when he signed the marriage contract. The fact that he chose not to seek legal advice was a decision that was his to make. While he may regret that choice now given how things have turned out, regret about a choice made is not the test for setting aside a contract. In the final analysis, I find that in view of the Applicant’s impressive personal characteristics and life experience, it is not open to him to rely upon the defense of non est factum.

Was the Applicant under duress when he signed the contract?

[12] Pursuant to section 56(4)(c) of the Family Law Act, a court may, on application, set aside a domestic contract or a provision in it, if the contract is not in accordance with the law of contract.

[13] I cannot accept that the Applicant was under duress when he signed the contract. The Applicant was a university educated PhD student with international work experience. He was an independent, highly accomplished man who had the wherewithal to look out for his own best interests. He was no shrinking violet. While it is true that the Respondent made it clear that she would not marry him if he did not sign the agreement, he always had the choice not to do so. The bottom line is that nothing forced the Applicant to get married when he did and in the way that he did. I was struck by the following exchange between the Respondent’s counsel and the Applicant during the examination for discovery which was tendered in evidence:

Q. All right. I am going to suggest to you that you did have a choice. You had the choice not to sign the contract. Is that correct?

A. There is always choice in life, yes.

Does the enforcement of any term of the contract lead to an unconscionable result?

[14] Any party to any agreement runs the risk that they are making a poor bargain. As things turn out, any agreement can be revealed as foolhardy and regrettable. I am mindful of the words of the Ontario Court of Appeal in Rosen v. Rosen 1994 2769 (ON CA), [1994] O.J. No.1160 at paras 12, 13:

… was there an inequality between the parties, a preying of one upon the other which, combined with improvidence, cast the onus upon the husband of acting with scrupulous care for the welfare and interests of the wife? I think not.

We must always remember that it is not the ability of one party to make a better bargain that counts. Seldom are contracting parties equal. It is the taking advantage of that ability to prey upon the other party that produces the unconscionability. I can find nothing in the reasons for judgment quoted above to do note that advantage was taken.

[15] I find that there was general equality between the parties at the time of the execution of the contract. No one was preying upon anyone else, nor was anyone taken advantage of. For instance, the difference between the parties’ financial positions at the material time was negligible - their annual incomes were just a few thousand dollars apart. In addition, beyond any financial considerations, there was no meaningful circumstantial inequality in the relationship or in the larger social context of the marriage. This contract was a meeting of minds. It may not have turned out advantageously for both, but such a result does not equate to a finding of unconscionability.

[16] I cannot help but note that both parties are leaving the marriage with comparable incomes. The parties kept their assets separate throughout the marriage and thus behaved in a way consistent with the contract throughout. To the extent that the Respondent may now be in a better position than the Applicant with respect to ownership of some real property, it is worth noting that the Applicant did not contribute toward the purchase of those properties.

[17] In the final analysis I find that the results are within the range of what the parties freely intended. It must never be forgotten that the ability to contract is a pillar of a free society.

[18] There is one other issue requiring disposition. There is dispute with respect to the length of the contract itself. The Respondent presents a contract with four pages while the Applicant insists it only had three. Ultimately, the issue here is one of credibility. I prefer the evidence of the Respondent on this point. I do not believe the Applicant when he says the contract did not speak to property division issues in the context of the dissolution of the marriage. To believe him would be to believe that the Respondent drew up a contract to protect her interests and did so in all respects except where it would really matter.

[19] I find that the Applicant is disingenuous when he states that he was unaware of the Respondent’s finances at the time of their marriage and that he did not know what “property” meant when he signed the document (a definition of that term is on the document itself). I reject the Applicant’s evidence that his English comprehension rendered him incapable of understanding the contract he signed. The evidence is overwhelming that his English comprehension ability at all material times was more than sufficient. In sum, I do not find the Applicant to be credible. I find the contract was signed in the format presently presented by the Respondent.

[20] More importantly, I find the contract to be valid and enforceable.

[21] The Respondent has been successful on this motion. Thus, she is entitled to costs. If the parties cannot agree as to quantum, written submissions may be submitted within 30 days.

Amendment made July 7, 2014: The words “the Applicant drew up a contract to protect her interests” were replaced with “the Respondent drew up a contract to protect her interests” in paragraph 18.

Mr. Justice Kevin B. Phillips

Released: June 27, 2014

COURT FILE NO.: FC-13-2977

DATE: 2014/06/27

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

Hamdi Hakan Tunc

Applicant

– and –

Jacqueline Monica Portugese

Respondent

DECISION ON MOTION

PHILLIPS J.

Released: June 27, 2014