Gibbons v. Mulock, 2018 ONSC 4352

NEWMARKET COURT FILE NO.: FC-14-46359-00

DATE: 20181003

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Nathan Edward Gibbons

Applicant

– AND –

Lindsay Cawthra Mulock

Respondent

L. Wickham, Counsel for the Applicant

P. Schmidt/R. Organ, Counsel for the Respondent

HEARD: June 21, 22, 25, 26, 27, 28, 29, 2018

REASONS FOR DECISION

JARVIS J.

Introduction

1The applicant (“the husband”) and the respondent (“the wife”) were married on October 16, 2004 and separated on August 9, 2013. There are no children of the marriage. Several days before their marriage, the parties signed a marriage contract. That contract provided, among other things, that each party waived their entitlements to division, or equalization, of their net family properties under the Family Law Act and also waived rights to spousal support upon a breakdown of marriage. Both parties were represented by lawyers when the contract was signed. The husband seeks an Order setting aside the contract.

2In his Application the husband catalogued his allegations that the parties’ contract failed to meet the statutory and contractual requirements for a valid and enforceable marriage contract, few of which had an evidentiary or legal foundation at trial. At its core, the husband's complaint was that the wife failed to make proper financial disclosure by overestimating the value of her net worth when they married and that he did not understand what he had signed. For the reasons which follow, the husband's application is dismissed.

Relevant and Admitted Facts

3The parties were in their early 20s when they met socially in 1998 or 1999. They began dating in the following year or two and then cohabited in a series of residential properties in the Toronto area before, and until shortly after, they married. Each came from a different socioeconomic background. The husband was born and raised in cottage country northeast of Toronto and described himself as coming “from a middle class, hard-working family.” He worked variously as a professional massage therapist, personal trainer and as a location assistant in the film business until he was injured in a motor vehicle accident in 2003. He started a reptile breeding business in August/September 2004 shortly before the marriage.

4The wife was born in the Newmarket area. Her family had a substantial net worth. When the parties met, the wife was working but after she received $600,000 in mid-2003 as part of an inheritance from her grandfather, she did not work. There is no dispute that the wife’s family wanted, and the parties discussed, a marriage contract to be signed before the marriage to protect the wife's assets. The husband acknowledged that the issue of a marriage contract was raised about two months after the parties’ engagement. It is not disputed that no steps were taken to have a marriage contract prepared until less than a month before the planned marriage date.

5On September 28, 2004, the wife consulted Philip Epstein, a family lawyer in Toronto, about a marriage contract. Mr. Epstein was made aware that the wife was the beneficiary of very substantial estates and that she wanted future protection from having to share her interest in those estates. Since the wife was going to inherit “significant money” she was prepared to waive any support rights. Mr. Epstein was instructed to draft a contract that waived all property and spousal support claims.

6After that meeting, the following steps were taken:

(a) an associate with Mr. Epstein's offices was tasked with drafting the contract, which she did the following day;

(b) Mr. Epstein contacted a Trust Officer with TD Private Client Group to obtain information about the wife's investments and trust interests;

(c) by letter dated September 29, 2004, the Trust Officer asked the wife for her authorization to send to Mr. Epstein copies of the wife's portfolio of investment holdings, her Trust¹ and a joint account with her sister. That letter also noted that the wife had interests in two other Trusts and possibly in her late great-grandfather's estate;²

(d) on September 29, 2004, the wife was sent a draft marriage contract for her review. Mr. Epstein asked for the name of the lawyer retained by the husband and advised the wife that TD Private Client Group would not release her financial information without her written authorization;

(e) between September 29, 2004 and October 1, 2004 the wife obtained the financial information from the TD Trust Officer and sent it to Mr. Epstein;

(f) the wife told the husband that he needed to retain a lawyer. Her unchallenged evidence was that she found the name of Donald Baker, a family lawyer, in the Yellow Pages. There is no dispute that the husband attended at Mr. Baker's offices on October 1, 2004. There is considerable dispute about what happened then. The husband said that he appeared at Mr. Baker's offices without an appointment and talked to a secretary there. He said that he did not see Mr. Baker on that occasion. The wife said that she drove the husband to Mr. Baker's office, that Mr. Baker introduced himself to the parties, and then took the husband into his office for a meeting lasting about 50 minutes while the wife sat outside in the waiting room.³ Mr. Baker testified that he met with the husband on October 1, 2004 and a preliminary discussion was held about a marriage contract;

(g) between October 1 and 4, 2004 the wife spoke to Mr. Epstein's associate who reviewed with the wife her financial information and drafted, then amended, a net worth statement for the wife;

(h) the husband admitted that on or about October 5, 2004, Mr. Baker received from Mr. Epstein a net worth statement for the wife, a copy of the letter from the TD Trust Officer to the wife enclosing the financial information referenced in that letter (but not information relating to the two other Trusts in which the wife had an interest or her great-grandfather's estate), a statement from TD Private Client Group with respect to the estate of the wife's grandfather and a copy of the draft marriage contract for Mr. Baker's review;

(i) the husband admitted that on or about October 7, 2004, Mr. Baker received four original copies of a marriage contract for the husband's signature and later remittance to Mr. Epstein's offices for signing by the wife;

(j) the husband had an appointment to see Mr. Baker on October 12, 2004. He said that he could not recall who made that appointment but that no one from Mr. Baker's offices had called him between October 1 and 12, 2004. There is considerable dispute between the husband and Mr. Baker about what was discussed and what happened at that meeting. The husband said that there was no discussion about the Family Law Act, no explanation about marriage contracts, he was not given anything to read and that Mr. Baker read the contract to him. The husband saw no Schedules of net worth for him and the wife when the contract was reviewed and then signed. Mr. Baker testified that he reviewed the contract in detail with the husband before the husband signed it, that he had a copy of the wife's net worth statement and the husband saw that before signing the contract;

(k) the husband admitted that on October 12, 2004, Mr. Baker sent to Mr. Epstein four copies of the marriage contract signed by the husband. The last paragraph to Mr. Baker's covering letter stated that he had “included schedule B (being the husband's Net Worth Statement) and that you include your schedule A (being the wife's Net Worth Statement) and return two signed copies of the agreement”;

(l) the wife signed the marriage contract on October 13, 2004;

(m) on October 13, 2004, Mr. Epstein returned four copies of the marriage contract to Mr. Baker. Schedule A was attached to the contract. Mr. Epstein requested that the husband re-attend Mr. Baker's offices to re-sign the contract. Mr. Epstein said that he “wanted to make sure that…the net-worth statement was attached to the contract and although Mr. Baker had an earlier one, I wanted to make sure that it was attached to the contract and his client initialled it”;

(n) the husband admitted that by letter dated October 14, 2004, Mr. Baker advised Mr. Epstein that the husband had seen the wife's Schedule A statement of her Net Worth when he signed the contract, that it was the same schedule as earlier sent to Mr. Baker, and that Mr. Baker's offices would make every effort to have the husband re-attend to initial it;

(o) the parties married on October 16, 2004;

(p) the husband said that he never returned to Mr. Baker's offices after October 12, 2004. Mr. Baker testified that between October 17 and November 2, 2004 the husband re-attended Mr. Baker's offices and initialed Schedule A. The wife said that on November 1 or 2, 2004 she drove the husband to Mr. Baker's offices because the husband told her that he “needed to initial something… a Schedule A”;

(q) on November 2, 2004, Mr. Baker sent to Mr. Epstein two fully signed copies of the parties’ marriage contract “with schedule “A” initialed by our client”;

(r) the husband has denied that he ever saw Schedules A or B to the marriage contract before he signed it and that the initials purporting to be his on the Schedule A returned to Mr. Epstein are not his; and

(s) Mr. Epstein reported to the wife on November 4, 2004 that the husband had initialled her Net Worth statement and that his services were concluded. Mr. Baker did not send to the husband his copy of the marriage contract containing the initialled Schedule A until July 18, 2005. He attributed this to office oversight because the husband’s account had been paid by then.

7After they married, the parties moved out of Toronto into a residence whose title was registered in the wife’s name. The husband worked at developing his reptile business, first in rental premises then later in premises that he purchased in Richmond Hill in or about 2007. The wife guaranteed a line of credit for the business and, according to her and unchallenged by the husband, she often worked there. The business did well after its inception until it closed in 2010 and the wife agreed that the husband could bring his reptiles for a short time to the basement of the matrimonial home. She was concerned that this was contrary to local by-laws.

8In late 2011/early 2012 the wife was hospitalized for what the husband pled in his Application were psychiatric reasons but said at trial were “problems.” While the parties dispute how long the wife was hospitalized, the husband acknowledged that while the wife was away he found a copy of the marriage contract in the basement of the matrimonial home and took it to a female lawyer in Aurora for advice. He said that the contract that he found did not contain the parties’ net worth Schedules. Finding that he was “in a pretty bad situation” he confronted the wife. She said that the husband presented her with a one page typewritten document invalidating the marriage contract. She refused to sign it and called the lawyer and told her that she would not sign anything. Neither party was able to recall the lawyer’s name. The husband denied presenting the wife with anything to sign and that she was present when she called the lawyer. The parties separated about 18 months afterwards when the wife left the matrimonial home.

The Marriage Contract

9The parties married on October 16, 2004. The husband signed the marriage contract on October 12, 2004 and the wife signed it the next day. The contract was drawn from a standard office precedent and principally dealt with releases of property and support rights. Paragraphs 1.3 and 1.4 of the contract set out what the parties intended.

1.3 The parties intend by this domestic contract, to govern their respective rights and obligations regarding the possession, ownership and division of property, including equalization of net family property, and other matters between them, including support, during their marriage, on separation, death or otherwise.

1.4 The parties intend by this domestic contract, except as otherwise stated in this agreement, to override the provisions of the Family Law Act, the Succession law Reform Act, the Divorce Act, and any other related legislation or laws of Ontario or any other jurisdiction.

10Paragraph 5 dealt with property rights.

5. PROPERTY REGIME ON BREAKDOWN OF THE MARRIAGE

5.1 The parties agree that all of their respective property and their respective rights and obligations with respect to their property will be governed as follows:

(a) each hereby waives his or her entitlements, if any, under the Family Law Act, under the provisions of any other statute which provides for the division of property between spouses in the event of a breakdown of the marriage, under the Succession Law Reform Act, and under the common law, with respect to the property of the other; and

(b) each hereby agrees that none of their individually held property will be included in any Net Family Property calculations for any purposes and that neither of them will be entitled to any amount or any other relief from the other relating to property, pursuant to the Family Law Act and any other legislation or law of Ontario or of any other jurisdiction, including the common law. For greater certainty, the parties further covenant and agree that:

(i) all property now owned by either of Nathan or Lindsay, or any increase in its value during the marriage, will be forever free from any claims by the other;

(ii) all titled property acquired in the future by either Nathan or Lindsay by any means, including, but not limited to, gift bequest, or devise will be forever free of claims from the other;

(iii) all untitled property acquired in the future by either Nathan or Lindsay shall not be considered as part of the parties’ respective Net Family Property; and

(iv) their respective Net Family Property will always be deemed to be zero.

5.2 Each party waives all rights, and releases and discharges the other’s estate from all claims that he or she has or may arise in the future under the laws of any jurisdiction, and particularly under the Divorce Act, Succession Law Reform Act, Family Law Act, or Trustees Act, entitling him or her upon the death of the other:

(i) to a division of property owned by the other or to one-half the difference between their net family properties or to any other share of this difference, or to any share of the property of the other;

(ii) if either party dies leaving a Will, to elect against taking under the Will in favour of receiving an entitlement equalizing their net family properties, or in favour of any other benefits;

(iii) if either party dies intestate, to elect to receive an entitlement in intestacy or to receive an entitlement equalizing their net family property;

(iv) if either party dies testate as to some property and intestate as to other property, to elect to take under the Will and to receive an entitlement in intestacy, or to receive an entitlement equalizing their net family properties;

(v) to share in the Estate of the other under a distribution in intestacy in any manner whatsoever;

(vi) to receive support as a dependant from the estate of the other in any manner whatsoever; and

(vii) to act executor or administrator of the estate of the other, unless clearly named.

11Paragraph 6 dealt with spousal support.

6. NO SPOUSAL SUPPORT ON BREAKDOWN OF THE MARRIAGE

6.1 The parties waive their rights to spousal support should a breakdown of their marriage occur. The parties agree that:

(a) Nathan and Lindsay are financially independent of each other and release his or her rights to spousal support from the other forever. Nathan and Lindsay intend this Agreement to be forever final and non-variable.

(b) This Agreement has been negotiated in an unimpeachable fashion and fully represents the intentions and expectations of the parties. Both parties have had independent legal advice and all the disclosure they have asked for and need in order to understand the nature and consequences of this Agreement and to come to the conclusion, as they do, that the terms of this Agreement including the release of all spousal support rights, constitutes an equitable sharing of both the economic consequences of their relationship and its breakdown.

(c) The terms of this Agreement substantially comply with the overall objectives of the Divorce Act and the Family Law Act now and in the future and the parties’ need to exercise their autonomous rights to achieve certainty and finality.

(d) The terms of this Agreement and, in particular this release of spousal support, reflects their own unique particular objectives and concerns. Amongst other considerations, the parties are also depending, in particular, upon this full, final and non-variable release of spousal support upon which to base their future lives.

(e) Nathan and Lindsay do not want the courts to undermine their autonomy as reflected in the terms of this Agreement, which they intend to be a final and certain settling of all issues between them. They wish to be allowed to get on with their separate and independent lives in the event of a breakdown of the marriage, no matter what changes may occur. Nathan and Lindsay specifically anticipate that one or both of them may lose their jobs, have substantially less income than the other, be unable to live in the style to which they had become accustomed during the marriage, become ill and be unable to work, find their financial resources diminished or exhausted whether through their own fault or not, or be affected by general economic and family conditions changing over time. Changes in their circumstances may be catastrophic, unanticipated, or beyond imagining. Nevertheless, no change, no matter how extreme, will alter this Agreement and their view that the terms of this Agreement reflect their intention to always be separate financially. Nathan and Lindsay fully accept that no change whatsoever in their circumstances will ever entitle either of them to spousal support from the other.

12After setting out terms dealing with the primacy of the contract over prevailing family law and related legislation, and a more general but expansive release of all rights arising out of the parties’ relationship, paragraph 9 dealt with financial disclosure.

9. FINANCIAL DISCLOSURE

9.1 Each party:

(a) has fully and completely disclosed to the other the nature, extent and probable value of all his or her significant assets and all his or her significant debts or other liabilities existing at the date of this contract, and in addition to this disclosure;

(b) has given all information and particulars about his or her assets and liabilities that have been requested by the other;

(c) is satisfied with the information and particulars received from the other; and

(d) acknowledges that there are no requests for further information or particulars that have not been met to his or her complete satisfaction.

13Paragraph 18 provided as follows,

18. INDEPENDENT LEGAL ADVICE AND FINANCIAL DISCLOSURE

19.1⁴ Nathan and Lindsay each acknowledges that he or she:

(a) has had independent legal advice, Lindsay by Philip Epstein of Epstein Cole LLP, and Nathan by Donald S. Baker of Baker & Baker;

(b) has read the agreement in its entirety and has full knowledge of the contents;

(c) understands his or her respective rights and obligations under this agreement, the nature of this agreement and the consequences of this agreement;

(d) has made full and complete disclosure of his or her net worth to the other;

(e) acknowledges that the terms of this agreement are fair and reasonable;

(f) is entering into this agreement without any undue influence, fraud or coercion whatsoever; and

(g) is signing this agreement voluntarily.

14The parties signed their names on page 13 of the contract. Both signatures were witnessed by their lawyers.

15The parties dispute whether, following page 13, Schedules disclosing their net worth formed part of the contract, but the wife's copy of the contract evidenced an unnumbered Schedule A containing her disclosure, a numbered page 15 containing the husband's Schedule B disclosure and pages 16 and 17 certifying that each party had Independent Legal Advice when they signed the contract: Mr. Baker signed page 16 and Mr. Epstein signed page 17. The general contents of both certificates were the same. Mr. Baker’s certificate, signed on October 12, 2004 stated,

I, D.S. Baker, of the City of Toronto in the Province of Ontario, Barrister & Solicitor, HEREBY CERTIFY, that I was consulted in my professional capacity by Nathan Gibbons, named in this agreement, dated the _____ day of September⁵, 2004, as to his obligations and rights under this agreement. I acted solely for him and explained fully to him the nature and effect of the agreement and he did this day acknowledge and declare that he fully understood its nature and effect and did execute it in my presence. He acknowledged and declared that it appeared to me that he was executing the agreement of his own volition and without fear, threats, compulsion or influence by any other person.

Net Worth Schedules

16Schedule “A” to the marriage contract was entitled “Lindsay’s Net Worth Statement.” It identified the wife's investment holdings, her Trust and the joint account shared with her sister, all of which had been referenced in the September 29, 2004 TD Private Client Group letter to the wife, and it also disclosed values for those assets, which were corroborated in the accompanying documents. The Schedule also disclosed that the wife owned an automobile, jewelry, held a personal chequing account and that she was a beneficiary in her late grandfather's estate. Values were also attributed to these assets. In the case of the personal chequing account, an asterisk beside its $10,000 value noted that the amount was “likely to be increased to $50,000” on the wife's birthday. The value of the wife's beneficial interest in her grandfather's estate was recorded as “[p]otentially $25 million” and a double asterisks beside that value noted that “documents have been disclosed to Nathan's lawyer.”

17The wife sent to Mr. Epstein the financial information which she had received from the TD Private Client Group. In addition to the account statements for her investments, trust and joint account shared with her sister, she also sent to Mr. Epstein a copy of a Certificate of Appointment of Estate Trustee with a Will relating to her grandfather, a copy of the Will and two codicils to it and a 28 page Record of Trust prepared by The Canada Trust Company which summarized the deceased's assets and liabilities as of his September 2, 2002 date of death, a little over two years before the parties married. The revised probate value of the estate was $49,450,216.27. The wife's grandmother and aunt were beneficiaries of the estate and, together with her brother and sister, the wife was paid a legacy and was named as a life tenant and capital beneficiary of a share of the residue of the estate.

18All of the documents generated by the TD Private Client Group were sent by Mr. Epstein to Mr. Baker on October 5, 2004. No documents supporting the values of the wife's automobile, jewelry and personal chequing account were provided but their aggregate value was $100,000. The wife was the source of information with respect to these latter assets.

19Mr. Epstein conceived the potential value of $25 million for the wife's interest in her grandfather's estate,

“…so that number was created by me. I knew that Ms. Mulock was a beneficiary of significant estates but it would’ve been impossible to value them precisely back in 2004 because some of it depended on who died and in which order. Some were not yet vested and some were highly contingent. So I wanted to create a number so that Mr. Gibbons, or whoever was advising Mr. Gibbons, would be well aware of what he potentially was giving up in the marriage contract. So I looked at the original documents… and considered… what might be a number beyond which no one could argue that Mrs. Mulock was going to receive because there is no penalty for over-estimating but there's a significant penalty for under-estimating. So I used $25 million.”

20Mr. Epstein assumed the risk that the figure of $25 million was not high enough. In cross-examination he reiterated that he,

“…came up with a number of $25 million because given all of the various estates I considered that Ms. Mulock would not get an amount of money that exceeded $25 million. I was trying to err on the very high side. I did not add up different components. I picked a global number for all of the estates and interests contingent, vested or otherwise.”

21Mr. Epstein did not send to Mr. Baker the September 29, 2004 letter which had been copied to him by the Trust Officer from the TD Private Client Group but Mr. Baker had a copy of that letter in his file and he forwarded that to the husband's trial lawyer in this case when asked in 2013. Mr. Baker also confirmed the receipt by his offices on October 5, 2004 of all of the financial information which supported the values for the assets in the wife’s Schedule A (save and except, of course, the documents relating to the wife's automobile, jewelry and personal chequing account).

22Schedule B to the marriage contract was entitled “Nathan's Net Worth Statement.” It identified the husband's assets as comprising a business interest having an “estimated value” of $250,000 and miscellaneous assets worth $1,000. The husband said that the first time he saw Schedule B was in late 2013 when it was shown to him by his lawyer who had obtained the husband's file from Mr. Baker. The husband acknowledged that he told Mr. Baker…

“I was starting a reptile company, Northern Reptile, and we chatted about the business and what was entailed with it. After that he asked me what my value was. It kinda caught me off guard. I was unprepared. It was the first time I was in. So I sat back and kind of put an estimate together for using the assets I had, the value of my reptiles, the vehicle I had and I came up with approximate $250,000.”

23The husband acknowledged in cross-examination that the files of Mr. Baker and Mr. Epstein contained copies of the marriage contract that included the parties’ initialled net worth Schedules.

24The evidence is that the wife overestimated the marriage date net worth of her estate interests. She estimated $25,000,000: the evidence of her experts at trial was that those interests were worth $13,500,000.

Analysis

25Section 56(4) of the Act sets out the court's jurisdiction to set aside a domestic contract which, by definition, includes a marriage contract.

Setting aside domestic contract

(4) A court may, on application, set aside a domestic contract or a provision in it,

(a) if a party failed to disclose to the other significant assets, or significant debts or other liabilities, existing when the domestic contract was made;

(b) if a party did not understand the nature or consequences of the domestic contract; or

(c) otherwise in accordance with the law of contract. R.S.O. 1990, c. F.3, s. 56 (4).

26Considerable deference is due to a domestic contract. In Rosen v. Rosen⁶, the Ontario Court of Appeal explained the rationale for this principle, at p. 644:

I start with the proposition that it is desirable that the parties should settle their own affairs if possible. I think that they are more likely to accept their own solution to their problem than one imposed upon them. A more pedestrian reason for encouraging parties to settle their own affairs is that the courts may simply be incapable of dealing with the ever-increasing mass of matrimonial disputes.

It is, I think, obvious that the settlement of matrimonial disputes can only be encouraged if the parties can expect that the terms of such settlement will be binding and will be recognized by the courts. In my respectful view, as a general rule in the determination of what is fit and just, courts should enforce the agreement arrived at between the parties⁷.

27In LeVan v. LeVan,⁸ another decision of the Ontario Court of Appeal, the court dealt with a challenge to a marriage contract involving section 56 (4) of the Act:

50Section 56 (4) of the FLA was designed to address and codify prior concerns maintained by courts that both parties fully understood their rights under the law when contracting with their spouses.⁹ It has been characterized as the “judicial oversight” provision of marriage agreements: Hartshorne v. Hartshorne, 2004 SCC 22, [2004] 1 S.C.R. 550, [2004] S.C.J. No. 20, at para. 14. The provision is of such significance that, in accordance with s. 56 (7), it cannot be waived by the parties.

51The analysis undertaken under s. 56 (4) is essentially comprised of a two-part process: Demchuk v. Demchuk, 1986 CanLII 6295 (ON SC), [1986] O.J. No. 1500, 1 R.F.L. (3d) 176 (H.C.J.). First, the court must consider whether the party seeking to set aside the agreement can demonstrate that one or more of the circumstances set out within the provision have been engaged. Once that hurdle has been overcome, the court must then consider whether it is appropriate to exercise discretion in favour of setting aside the agreement…

28The husband bears the onus of persuading the court that one or more of the subsections of section 56(4) apply and, if so, whether the court should exercise its discretion to set aside the marriage contract. In guiding the exercise of that discretion, there is no exhaustive set of factors but the following have been consistently considered, as first identified in Demchuk:

(a) whether there had been concealment of the asset or material misrepresentation;

(b) whether there had been duress, or unconscionable circumstances;

(c) whether the petitioning party neglected to pursue full legal disclosures;

(d) whether he/she moved expeditiously to have the agreement set aside;

(e) whether he/she received substantial benefits under the agreement;

(f) whether the other party had fulfilled his/her obligations under the agreement; and

(g) whether the non-disclosure was a material inducement to the aggrieved party entering into the agreement.

29In this case, there is material evidentiary conflict between the parties, and between the husband and his lawyer, in particular about the sufficiency of the wife’s disclosure and the circumstances surrounding the husband’s signing of the marriage contract. Resolution of that conflict pivots on the credibility of the parties, their witnesses and the supporting documentary record.

Credibility

30In Ouellette v Uddin¹⁰ Shelston J. summarized some of the considerations involved when assessing credibility,

(a) assessing credibility is, in every respect, a holistic undertaking incapable of precise formulation;

(b) the trial judge need not believe or disbelieve a witness’s testimony in its entirety;

(c) the trial judge may believe none, part or all of a witness’s evidence, and may attach different weight to different parts of a witness’s evidence; and

(d) the trial judge can assess credibility by considering different factors that include internal and external consistency of witness testimony with the testimony of other witnesses and the documentary evidence, motive, self-interest, clarity and logic of narrative, witness presentation (distinguishing candour from evasive or strategic testimony) and, to a lesser degree, witness demeanour. This list is not exhaustive.¹¹

31When dealing with important events critical to his claim, the husband was not a credible witness. There are many examples, the first of which involves the husband’s deliberate non-compliance with a production Order of the court.

32On July 13, 2016 Bennett J. ordered the husband to deliver an Affidavit of Documents on or before August 31, 2016. No affidavit was delivered. The husband said that the decision not to comply with the Order was made by his lawyer. There was no evidence that the husband made any effort to ascertain the lawyer’s identity before or after Bennett J.’s Order even though it must have been obvious to the husband, if not before he started these proceedings then certainly after pleadings were exchanged, and right up to and including trial, that the lawyer may have had evidence relevant to the critical issue in this case, namely a copy of the marriage contract that did, or did not, contain the parties’ disclosure Schedules that the husband claims that he never saw or initialled in 2004 and possibly, too, the lawyer’s notes or other account of that meeting.

33The circumstances described by the husband of how he engaged the services of Mr. Baker, how he got to the lawyer’s offices and how many times that the two met was unpersuasive, inconsistent with the evidence of Mr. Baker and the evidence of the wife, and implausible.

34The husband gave the court the impression that his choice of lawyer was made randomly on October 1, 2004 because the lawyer’s offices and the parties’ residence were so close to each other,

“…so I ended up at Baker for the first time…I went in and just said I was told I need to speak to someone regarding a marriage contract and I talked to the secretary. I was walking home, because it was literally down the street from us…it wasn’t far. A few blocks maybe, south of-it was on Mt. Pleasant, if I recall, south of where I am. So just walked down.”

35Later, in cross-examination, the husband said that the wife made the appointment.

36Not only did the husband misplace the location of Mr. Baker’s offices (they were located near the former Summerhill train station, now LCBO, on Yonge Street in Toronto and not, as the husband said, on Mt. Pleasant Road, a distance of slightly less than five kilometers away, or about an hours’ walking distance¹²) but he was also wrong about the location of the parties’ residence (about six kilometres away, or an hour and 15 minutes walking distance¹³). It was located in the Leaside area of the city. I accept the evidence of Mr. Baker about the Summerhill location of his offices at all times material to the events in this case and the evidence of the wife that the parties were then residing in Leaside and that it was she who found Mr. Baker’s name in the Yellow Pages and drove the husband to Mr. Baker’s offices.

37The husband said that he never met Mr. Baker on October 1, 2004. The wife said that because the husband had no car she drove the husband to Mr. Baker’s offices on October 1. She accompanied the husband to Mr. Baker’s offices and there met the lawyer in the office reception area. Mr. Baker and the husband then retired to an interior office for what the wife estimated was about a 50 minute meeting: she sat in a waiting area. Mr. Baker testified that he believed that he had a first meeting, or a preliminary discussion, with the husband about a marriage contract-there was no draft contract then available-and in cross-examination he referenced an October 1, 2004 opening client ledger entry that Mr. Baker agreed tied in with a first meeting with the husband to discuss the marriage contract.

38The husband claimed that he only met Mr. Baker on one occasion, that being October 12, 2004 when he signed the marriage contract. He could not recall how that appointment was made, only that he was told by an unidentified third party that he had an appointment with Mr. Baker that day. According to the husband, no one from the Baker law firm had called him after he first walked into those offices on October 1 and before he went there again on October 12. The wife said that she again drove the husband to Mr. Baker’s offices on October 12, and waited while he met with Mr. Baker.

39The husband said that he never spoke to Mr. Baker after he signed the marriage contract on October 12. The wife said that she drove the husband to Mr. Baker’s offices on November 1 or 2, 2004. The husband was there for only a few minutes: she waited in the car across the street. When the husband rejoined her, she said that he told her that he had initialled her net worth Schedule to their marriage contract. Mr. Baker said that he met with the husband three times and that the last time was also on November 1 or 2, 2004 after the wedding. The parties agreed that on November 2, 2004 Mr. Baker couriered to Mr. Epstein the wife’s Schedule A “initialled by our client.”

40Relevant to the husband’s credibility are his disclaimers about ever having seen the wife’s Schedule A before or shortly after he signed the marriage contract, and who initialled it. The husband said that the wife never made disclosure even though he signed the contract after reading it or having it read to him, paragraph 9 of which acknowledged that complete and full disclosure had been made. The husband speculated that it was Mr. Baker who forged the husband’s initials on Schedule A before he sent it to Mr. Epstein. Mr. Baker’s client account ledger records a disbursement event on November 1, 2004 but not an event description and his letter to Mr. Epstein enclosing the initialled Schedule is consistent with the wife’s evidence that she drove the husband to Mr. Baker’s offices for the express purpose of initialling the Schedule. The husband called Mr. Baker as his witness: there was no basis for, nor was any request made, to have Mr. Baker declared a hostile witness. The husband said that Mr. Baker’s Certificate of Independent Legal Advice confirming that he had “…explained fully to [the husband] the nature and effect of the agreement…” and that the husband “did…acknowledge and declare that he fully understood its nature and effect…” was a lie.

41Given the presumptive importance of the wife’s disclosure to his case and the seriousness of his allegations about Mr. Baker’s professional conduct, it is puzzling that the husband would not have reported Mr. Baker to the Law Society of Upper Canada (as it was then known) or, at the very least, put the lawyer’s insurer on notice, neither of which the husband did. It is suspicious that the husband never engaged the services of a forensic handwriting expert to testify about the initials on Schedule A.

42I do not believe the husband. Mr. Baker testified in a forthright manner: he acknowledged some administrative deficiencies in his offices not material to the core of the husband’s case. His evidence was supported by event entries in his client ledger, although they were not as descriptive as might have been preferable and his record of his communications with Mr. Epstein is consistent with the evidence of the wife and Mr. Epstein. Mr. Baker was a credible witness.

43By contrast, the husband’s evidence was riddled by a litany of inconsistencies with Mr. Baker’s evidence, his witness; unsupported by any evidence other than his own testimony about the wife’s disclosure; he deliberately disobeyed the production Order made by Bennett J.; and he made serious allegations about his lawyer’s professional, and possibly criminal, conduct the consequences of which the husband seemed oblivious. Although the husband called his mother as a witness about the parties’ relationship, particularly in late 2011 after the wife was hospitalized, none of that evidence was relevant to the circumstances surrounding the signing of the marriage contract about which she was asked no questions.

44The wife was a credible witness. Her evidence was consistent with that of Mr. Baker and Mr. Epstein about the narrative, and confirmed by the record, of the events that led up to and followed the signing of the contract and Schedule A. Her recollection of the parties’ relationship before and after the parties married, then separated, was far more fulsome and plausible than that of the husband. Her evidence was not impugned in cross-examination and is to be preferred wherever there is a conflict between the parties. In a revealing admission made during his cross-examination, the husband said that he would have signed the contract regardless of what financial disclosure would have been provided to him.

Section 56(4)

45Each of the statutory disqualifications for a valid and enforceable marriage contract shall be examined.

(a) Failure to Disclose Significant Assets, Debts or other Liabilities – Section 56(4) (a)

46It is axiomatic that the more fulsome the disclosure, the more likely it is that a domestic contract will withstand challenge. In Virc and Blair¹⁴, this court reviewed the general principles which inform the analysis of this subsection:

(a) a party has an immediate obligation to disclose significant assets, debts or other liabilities existing when a domestic contract is made. This obligation will vary according to the type of contract involved. In the case of a marriage contract, that will include disclosure of assets, debts and other liabilities as proximate in time as possible to the proposed marriage date;

(b) the value of the asset, debt or liability must be disclosed: Demchuk and LeVan;

(c) failure to disclose a significant asset includes the making of a material misrepresentation about its value: Quinn v. Epstein Cole LLP¹⁵;

(d) the significance of an asset, debt or other liability is assessed by measuring its value against the value and extent of its owner’s net worth: Demchuk; Murray v. Murray¹⁶; Rempel v. Smith¹⁷; Quinn;

(e) inaccurate, misleading or false financial disclosure may, not necessarily will, render a domestic contract vulnerable to judicial intervention – that will depend on the circumstances of each case: Rick v. Brandsema¹⁸;

(f) a party cannot rely on disclosure shortcomings to set aside a domestic contract if the party signed the contract aware of them: Butty v. Butty¹⁹; and

(g) a party cannot resile from the consequences of a decision to waive more robust financial disclosure unless that party can demonstrate that the other party’s disclosure was inaccurate, misleading or false: Quinn.

47Apart from the husband’s claim that he was unaware of the wife’s net worth before or shortly after he signed the marriage contract, which evidence I reject, his lawyer focused on the references in the September 29, 2004 letter from the TD Private Client Group to other trust and estate interests in which the wife may have had an interest and about whose value in the context of the wife’s overall net worth Mr. Epstein said were not as relevant as was putting a reasonable value on what the wife had. That approach, or practice, was taken so as to,

“… give the other side a fair indication of the size of the estate they’re dealing with on the other side so that they would know what they’re giving up. So that’s the approach I used with Ms. Mulock because I knew that trying to value these estates in 2004 would’ve been next to impossible…”

48Archie Rabinovitch, a lawyer with the Litigation and Dispute Resolution group of the Dentons’ law offices in Toronto and whose practice focusses on estates and trusts law was qualified as an expert about the nature of the wife’s estate interests and whether the value of those interests was quantifiable. He described his engagement as being the most complex of his career in terms of the order of testamentary events, contingencies and terms of the Wills involved. Mr. Rabinovitch needed, and was authorized to retain, the services of Christopher Nobes HBA, CPA, CA, CBV, a co-founder of Campbell Valuation Partners Limited, a firm having expertise in asset valuations including the areas of family and succession law and David Wolgelerenter, a principal of DSW Actuarial Services Inc. and Fellow of the Canadian Institute of Actuaries. The husband acknowledged the expert qualifications of both of these witnesses. Mr. Nobes was qualified to provide expert evidence about the value of the wife’s interests in various trusts and estates as of October 13, 2004 and Mr. Wolgelerenter was qualified to give expert evidence about mortality probabilities relating to her interests in the estates of her deceased grandfather and great grandfather.

49Each of the wife’s experts detailed the relevant scope of their engagement and the information upon which they relied in forming their opinions. None of these experts’ evidence was impugned in cross-examination. No expert evidence was called by the husband in rebuttal. It is not necessary in the circumstances of this case to say more than that after taking into account the input from Mr. Rabinovitch and Mr. Wolgelerenter and based on all of the documentation provided to them and filed in evidence at trial, Mr. Nobes valued the pre-tax undiscounted value of the wife’s combined interests in the estates of her grandfather and great grandfather as being $13,500,000, a figure less than the $25,000,000 referenced in the wife’s Schedule A net worth statement. I accept that value.

50The wife disclosed her net worth when the parties signed their contract and at no time did she or her lawyer provide misleading or false financial disclosure that would invite the court’s intervention. That the wife overestimated her net worth in the context of a waiver of property and equalization rights is of no assistance to the husband.

51The evidence is unchallenged that there was no request from Mr. Baker to Mr. Epstein seeking more information about the wife’s trust and estate interests other than contained in the disclosure provided by Mr. Epstein. Had such a request been made Mr. Epstein said that he and the wife would have had to “…consider what to do about the date of the wedding or whether to do a different kind of contract.” The evidence is unchallenged that it was the wife’s family who was paying for the wedding.

52In Quinn, a case in which a wife claimed that a separation agreement should be set aside for non-disclosure, D. M. Brown J. (as he then was) observed,

A general awareness of the assets of the other party may be sufficient to avoid setting aside an agreement. 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.²⁰

53The Court of Appeal upheld the decision of Brown J. to grant the husband summary judgment dismissing the wife’s claims. In entering into the parties’ agreement without seeking to compel further financial disclosure from the husband, the court ruled that,

…[the wife] could not resile from the consequences of that decision unless she demonstrated that [the husband’s] financial disclosure was inaccurate, misleading or false.²¹

54The wife’s appeal was dismissed even though the wife had also challenged the nature and adequacy of her lawyer’s advice.

55In Virc, the Court of Appeal focused on deliberate misrepresentation of the value of assets and liabilities knowing those representations to be untrue as a ground to set aside a domestic contract, in that case a separation agreement. There was no deliberate misrepresentation by the wife in this case. The husband’s claim that the wife failed to disclose her significant assets, debts or other liabilities when the parties signed their marriage contract is dismissed.

(b) Failure to Understand the Nature and Consequences of the Separation Agreement – Section 56(4) (b)

56The husband claimed that he did not understand the nature and consequences of signing the marriage contract. That claim was made in the context of an allegation that he had not received effective, Independent Legal Advice. There is no merit to this claim.

57The evidence is clear that at all material times the husband knew what he was being asked to sign and the consequences of signing the contract. He testified that he knew that the wife’s family wanted her and her family’s money protected by a contract and that was the reason why he had to see a lawyer. He said that Mr. Baker read through the contract with him, even leaving him alone in the room for a short time “while I was going through it.” This evidence contradicted his pleading that he had not read the contract before signing it.

58The husband said that he “really didn’t understand the wording to some degree” because he had ADD, which the court understood to mean an attention deficit disorder. There was no evidence that the husband ever communicated this diagnosis, if in fact any diagnosis was ever made, to anyone at any time. There was no suggestion made at any time during the trial that even if the husband had this disorder he could not enter into a marriage contract.

59The husband acknowledged that when he and Mr. Baker were reading the contract, he never asked any questions about its contents except whether he could add a clause about the wife’s possible infidelity after marriage because “… I had a business. I had vehicles. It was doing very well.” Why the husband would raise such an issue is consistent with the purpose of the meeting to protect each of the party’s assets. He also told Mr. Baker about the value of his business, which value was reflected in his Schedule B net worth statement.

60The wife said that before the parties married, she and the husband had discussed a marriage contract. She said she would pay for his legal costs. After the husband signed the contract and emerged from his meeting with Mr. Baker, he told the wife that he had “signed to zero”, meaning that he had not asked for anything. The reason for the November meeting between the husband and Mr. Baker was to “initial something.” The husband confirmed to the wife immediately after that meeting that he had initialled a Schedule A. She waited outside Mr. Baker’s offices. I believe her.

61There is nothing in the evidence that suggests that the husband was ever mislead by the wife or anyone else about his need to consult a lawyer about a marriage contract and its purpose. Regardless what was done, or not done, by Mr. Baker and what financial disclosure may, or may not, have been provided to him, the husband admitted that he would have signed the contract anyway.

62The issue of the competency of legal advice given to him is an issue between the husband and Mr. Baker, and is not a reason to set aside the marriage contract unless the wife knew that the husband did not understand what he was signing: Mantella v. Mantella.²² He understood.

(c) Otherwise in Accordance with the Law of Contract – Section 56(4) (c)

63In Ward v. Ward²³, the Court of Appeal affirmed that section 56(4) (c) permitted a court to set aside a domestic contract on grounds such as duress, unconscionability, uncertainty, undue influence, mistake and misrepresentation. None of these grounds was proven in this case.

64The husband claimed that the marriage contract was not the product of the parties’ wishes and agreement, that it was the product of a collaboration between the wife’s family members and their lawyers, namely Mr. Epstein’s law firm. He also claimed that the contract was procured by the undue influence of the wife’s extended family, that certain declarations in the contract were deliberately false and that the contract was unconscionable because it was one-sided and went far beyond what was necessary to protect the wife’s financial interests. There is no merit to any of these fanciful claims.

65The evidence of the wife and Mr. Epstein was clear and unchallenged by any evidence to the contrary by the husband that no member of the wife’s family had ever retained the services of the Epstein Cole law firm before the wife retained Mr. Epstein’s services and during the course of that retainer that ended with the signing of the contract. There was no collaboration and no undue influence.

66The husband complained that drafting errors or deficiencies were false and misleading. Mr. Epstein acknowledged that the parties’ marriage contract was adapted from a standard office precedent and particularized to the parties. There were minor errors dealing with a paragraph’s numbering and a date but these were immaterial.

67Finally, the husband complained that the contract was unconscionable. In Toscano v. Toscano²⁴ a wife challenged the validity of a marriage contract, claiming (among other allegations) that the terms of the contract were unconscionable in light of the husband’s net worth 18 years after the contract was signed. Blishen J. observed that,

…in general the doctrine of unconscionability with respect to domestic contracts focuses on whether or not there were unconscionable circumstances surrounding the formation of the contract. It is the circumstances at the time of the drafting and signing of the contract which must be examined, not the results, under this criterion.

Matrimonial negotiations occur in a unique environment and therefore unconscionability in the matrimonial context is not equivalent to unconscionability in a commercial context (Rick v. Brandsema, 2009 SCC 10, [2009] 1 S.C.R. 295 (S.C.C.), at para. 43 [Brandsema]). The question to be asked is whether there were “any circumstances of oppression, pressure, or other vulnerabilities, and if one party’s exploitation of such vulnerabilities during the negotiation process resulted in a separation agreement that deviated substantially from the legislation.²⁵

68There was no circumstance of oppression, pressure or vulnerabilities in this case. The wife’s family was paying for the wedding. She paid for the husband’s lawyer. That the wedding was only a few days away when the husband signed the contract in no way means that he was so emotionally stressed that he was incapable of understanding or assenting to a binding agreement. He never said that.

69The husband’s claims that the marriage contract should be set aside because it was procured by undue influence, that its declarations were false and misleading and that it was unconscionable are dismissed.

Has the Husband Satisfied Section 56(4) of the Family Law Act?

70The husband has failed to prove that any of the grounds for setting aside the parties’ marriage contract applies in this case.

Exercise of Discretion

71Even if I am wrong about whether the husband has proven any of the grounds for invalidating the parties’ marriage contract, I decline to exercise my discretion in his favour. The evidence of Mr. Baker, the husband’s witness, and that of the wife and Mr. Epstein are preferred to that of the husband in all areas where there is a dispute between the parties. The evidence is clear that the husband was under no disability when he signed the contract, he knew its purpose and did not care about adequacy or accuracy of the wife’s disclosure until after the parties’ relationship began to unravel. None of the Demchuk considerations guiding the exercise of the court’s discretion applies in this case.

Disposition

72The husband’s claim to set aside the parties’ marriage contract is dismissed.

73The parties may make arrangements through the trial office for an appointment before me to argue costs of these proceedings.

Footnotes

1. 1Testamentary trust from the Estate of the wife’s grandfather, Thomas Homan Mulock (died September 12, 2002)
2. 2Estate of William Pate Mulock (died August 25, 1954)
3. 3Mr. Baker said that he did not meet the wife but I accept her evidence as being more reliable on this point.
4. 4Mr. Epstein said that his office used a standard firm precedent for the marriage contract and that during the copy process a misnumbering occurred.
5. 5Mr. Baker acknowledged that the time pressure before the proposed marriage date explained the cross-out and corrected dates in the contract.
6. 61994 CanLII 2769 (ON CA), 18 O.R.(3d) 641
7. 7ibid, p. 644 (O.R.)
8. 82008 ONCA 388, 90 O.R. (3d) 1
9. 9H. Stark and K. MacLise, Domestic Contracts: A Comprehensive Guide to Marriage Cohabitation and Separation Agreements in British Columbia and Ontario, 2nd ed. (Toronto: Thomson Carswell, 2006), at p. 1-52).
10. 102018 ONSC 4520
11. 11ibid, para. 9
12. 12Exhibit 17
13. 13Exhibit 18
14. 142016 ONSC 49, 80 R.F.L. 124, aff’d 2017 ONCA 394
15. 152007 CanLII 45714 (ON SC), 87 O.R. (3d) 184, aff’d 2008 ONCA 662, 92 O.R. (3d) 1
16. 162003 CanLII 64299 (ON SC), 40 R.F.L. (5th) 244
17. 172010 ONSC 6740, 98 R.F.L. (6th) 473
18. 182009 SCC 10, [2009] S.C.R. 295
19. 192009 ONCA 852, 99 O.R. (3d) 228
20. 20supra #15, para. 48 (CarswellOnt)
21. 212008 CarswellOnt 5760, 2008 ONCA 662, [2008] W.D.F.L. 4887, [2008] O.J. No. 3788, 169 A.C.W.S. (3d) 1071, 55 R.F.L. (6th) 241, 92 O.R. (3d) 1(para. 4, CarswellOnt)
22. 222006 CarswellOnt 2204, paras 37 and 39
23. 232011 ONCA 178, 104 O.R. (3d) 401
24. 242015 CarswellOnt 836, 2015 ONSC 487, [2015] O.J. No. 315, 57 R.F.L. (7th) 234
25. 25ibid, paras 63 and 64