Court File and Parties
SUPERIOR COURT OF JUSTICE-ONTARIO
RE: EDDY STEVEN ODORICO, Applicant
AND:
TINA-MARIE ODORICO, Respondent
BEFORE: Gibson J.
COUNSEL: James D. Almas, counsel for Applicant
Olayemi Ayoola, counsel for Respondent
HEARD: July 28 and July 30, 2021
ENDORSEMENT
Overview
1The Parties started living together in 2009, were married in 2012, and separated in 2015. They have two children together, Olivia, who was born in 2010, and Eddy, who was born in 2011.
2This was a focused hearing on the issue of the validity of the marriage contract that the parties signed on March 15, 2012, the day before their marriage on March 16, 2012.
3The marriage contract was drafted by Luigi De Lisio, a lawyer who was also a friend of the Applicant.
4The Respondent Tina-Maria Odorico (“the Respondent”) contends that the marriage contract is invalid and should be set aside. She submits that the marriage contract was signed under pressure and duress; that it is unconscionable and unreasonable; that she received no independent legal advice prior to signing the document, and was not advised that she should; that counsel who prepared the document is a friend of the Applicant; that there was no negotiation of the terms of the contract; that there was inadequate financial disclosure; and that she did not understand the consequences of the agreement. She relies upon s.56(4) of the Family Law Act.
5The Applicant Eddy Steve Odorico (“the Applicant”) resists the Respondent’s contentions and disputes their accuracy and applicability.
6In addition to their affidavits, the parties gave evidence-in-chief and were cross-examined at a focused hearing held by Zoom on July 28 and July 30, 2021. Evidence was also received from Luigi De Lisio, the lawyer who drafted the marriage contract at issue. Counsel then made submissions on behalf of the parties.
Issue
7The issue to be determined by the Court on this focused hearing is whether the marriage contract between the parties signed on March 15, 2012 is invalid and should be set aside.
Law
8Section 52(1) of the Family Law Act provides that two persons who are married to each other may enter into an agreement in which they agree on their respective rights and obligations under the marriage or on separation. This includes the rights and obligations of the parties in relation to the ownership in or division of property.
9Any challenge to set aside or to nullify a marriage contract in Ontario is brought under s. 56(4) of the Family Law Act. Section 56(4) reads as follows:
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.
10As recently noted by Emery J. in Capar v. Vujnovic, 2021 ONSC 4713, the proper approach on an application to set aside a marriage contract under s. 56(4) involves a two step process. First, the party seeking to set aside a marriage contract must demonstrate to the court that one of the listed circumstances within s. 56(4) has been engaged. Second, the court must then consider whether it is appropriate to exercise its discretion in favour of setting aside the agreement or a provision within it. When exercising discretion under this second step, fairness between the parties is a guiding consideration: Moses Estate v. Metzer, 2017 ONCA 767, and LeVan v. LeVan, 2008 ONCA 388.
11It is reasonable for the court to rely on the plain reading of the marriage contract for the purpose of determining whether the court should uphold the agreement or to enforce its terms: Peerenboom v. Peerenboom, 2020 ONCA 240 and Hartstein v. Ricottone, 2016 ONCA 913.
12In Toscano v. Toscano, 2015 ONSC 487, Blishen J. confirmed that the burden of proof to set aside a domestic contract is on the party seeking to set it aside.
13In Verkaik v. Verkaik (2009), 2009 CanLII 6843 (ON SC), 68 R.F.L. (6th) 293, (Ont.S.C.), Seppi J. found that perceived embarrassment, such as having a child out of wedlock, is not a valid basis to find duress or coercion.
Position of the Respondent (Moving Party)
14The Respondent submits that all three prongs of s.56(4) are engaged in this case, and that the marriage contract signed by the parties on March 15, 2012 should be set aside.
15She submits that the parties discussed a draft agreement in 2010, and had no other discussion before March 2012. She was presented with an ultimatum the day before their planned wedding: sign the agreement and be married, or refuse to sign, no marriage. She was fully engaged in preparations for the marriage ceremony. She had two young children. This, she submits, amounts to coercion. She says that she did not understand the consequences of the agreement. She asserts that the assets listed have no documentation. In particular, she submits, the most significant asset, Newport Collision, has no valuation listed on the agreement. She did not obtain independent legal advice, and says that she was not advised that she should do so. She asserts that the entire exercise was one designed to “drag her on the floor,” and that it would be unreasonable and unconscionable to uphold its validity.
Position of the Applicant (Responding Party)
16The Applicant submits that the Respondent fails on all three elements set out in s.56(4). He submits that there is no question that Ms. Odorico fully understood the nature and consequences of the agreement, and that the situation was otherwise in accordance with the law of contract.
17He submits that Louis De Lisio did not purport to offer her legal advice, that he encouraged her to get independent legal advice, and did nothing to interfere with her doing so.
18The Applicant says that Ms. Odorico was fully aware of the shortcomings of the financial disclosure regarding the value of Newport Collision, and that there was no material misrepresentation here. Parties are expected to use due diligence, and cannot fail to ask questions, then later rely on shortcomings of disclosure. Ms. Odarico was a real estate agent and not unsophisticated in financial or contract matters.
19He submits that there was no duress on the facts. Mr. Odarico stated his position plainly: he was not going to get married, absent a signed marriage contract. But if they did not get married, then nothing would have really changed. The status quo would have continued, the Applicant submits, and the parties would have continued to live together with their children in the same way that they had previously. Perceived embarrassment is an insufficient basis to establish duress or coercion, he asserts. Further, Ms. Odarico did not pursue any dispute with dispatch, but rather waited until the parties were in litigation.
Analysis
Step One: grounds under s. 56(4)
Ground One: non-disclosure
20In Butty v. Butty, 2009 ONCA 852, the court held that adequate disclosure of assets was necessary to meet the requirements to uphold a domestic agreement, but not necessarily the value of an asset that the party challenging the validity of the agreement knew or ought to have known.
21The Respondent knew that the Applicant owned Newport Collision as his business, and had visited the premises of the business.
22On the application of this principle, I find that the Respondent broadly knew the state of the Applicant’s financial affairs, and that it was incumbent upon her to exercise due diligence to insist on further particulars of the valuation of the business if she had a concern. A general awareness of the assets of the other party may be sufficient to avoid setting aside an agreement: Quinn v. Keiper et. al, Quinn v. Epstein Cole LLP et al., 2007 CanLII 45714 (ON SC), 87 O.R. (3d) 184.
23I find that insufficient evidence has been advanced to demonstrate on the balance of probabilities that s. 56(4)(a) is engaged as a ground to set aside the marriage contract.
Ground Two: failure to understand
24Ms. Odarico entered the marriage contract with her eyes wide open and in more or less an equal bargaining position. I have determined that she had the ability and the resources to gather the information she now finds lacking and to understand the nature of the transaction.
25The Respondent was a real estate agent and not unsophisticated in financial matters or unfamiliar with the nature of contracts.
26There is insufficient evidence to find on the balance of probabilities that Ms. Odarico was misled, or misunderstood what she was giving up by signing the marriage contract. I therefore find that she has not put any persuasive evidence before the court to engage s. 56(4)(b) as a ground to set aside the marriage contract.
Ground Three: undue influence or duress
27The law of undue influence requires a special relationship where one party has unfair influence over another.
28The law of duress, on the other hand, requires a finding where that party having an equal or unequal standing with another exerts a form of illegitimate pressure, either physical, financial or otherwise that amounts to the coercion of the other to perform an act involuntarily. In Toscano v. Toscano, it was held that “[D]uress involves a coercion of the will of one party or directing pressure to one party so they have no realistic alternative but to submit to the party”.
29Ms. Odarico argues that Mr. Odarico stated flatly that he would not proceed with the marriage ceremony absent a signed agreement. Mr. Odarico confirms that this was indeed the case.
30It is understandable that in these circumstances Ms. Odarico may have felt some discomfort and pressure to enter into the marriage contract. However, her own perception of the family dynamics does not meet the threshold for duress. See M.D. v. A.C., 2017 ONSC 6260 (SCJ) at paragraphs 82-83, and Butty v. Butty at paragraphs 224-227.
31Perceived embarrassment is not a valid basis to find duress or coercion: Verkaik v. Verkaik, 2009 CanLII 6843 (ON SC), 68 R.F.L (6th) 293 (Ont. S.C.); Toscano v. Toscano, 2015 ONSC 487.
32In Toscano, Blishen J. discussed the elements of undue influence, at para. 59, in the following terms:
“In considering undue influence, the court must inquire into whether there was: (i) an improvident bargain, and (ii) if so, whether there was inequality in bargaining power (see Hyldtoft v. Hyldtoft (1991), 1991 CanLII 12868 (ON SC), 33 R.F.L. (3d) 99 (Ont. Gen. Div.) at paras. 26-28). To establish undue influence or inequality in bargaining power, "the plaintiff must prove the ability of one person to dominate the will of another, whether through manipulation, coercion, or outright but subtle abuse of power."
33It was evident from her demeanour during her testimony that the Respondent is not a person who is reluctant to express her views, or who would be easily pushed around in any context. I conclude that Ms. Odarico now regrets that she signed the marriage contract now that she is in family litigation. The grounds she relies upon to set the marriage contract aside under s. 56(4)(c) for undue influence or duress are attempts to invoke doctrines under the law of contract that she believes might fit the circumstances.
34In my view, this is not a proper application of s. 56(4)(c). A marriage contract should not be set aside principally because one of the parties to the contract regrets he or she signed it. As Spence J. observed in McCall v. Res, 2013 ONCJ 254:
23I do appreciate that parties, in their understandable desire to finalize litigation, will sometimes enter into a consent that they afterwards wish to tweak, or that they later feel does not adequately address all of their concerns. However, in the absence of a subsequent consent, it is not open to the court to change those orders simply because one parent or the other later experiences buyer’s remorse. And, as I have discussed, in the absence of a material change in circumstances, which is the case here, the parties must live with the existing order.
35I find as a fact that Ms. Odarico did not sign the marriage contract while subject to the undue influence of Mr. Odarico. Nor did he exert illegitimate pressure over Ms. Odarico to sign the marriage contract to raise duress as a ground. Ms. Odarico is now experiencing the remorse of a party who has signed a marriage contract and seeks to leverage her litigation position in the aftermath of a separation.
36I should make clear that there is nothing in the evidence that has been presented to me in this focused hearing that would lead me to conclude that Mr. De Lisio in any way acted improperly. I found him to be a credible witness and I accept his evidence entirely. It was clear that he was advising Mr. Odorico only, and there was nothing in his interaction with either party that gives rise to any concern about the propriety of his actions as a lawyer in this matter.
Step Two: discretion
37I conclude that Ms. Odarico has not proven on the balance of probabilities that the marriage contract should be set aside on any ground enumerated under s. 56(4) of the Family Law Act. She has therefore failed to satisfy the first part of the test under LeVan.
38Even had the Respondent met one of the statutory reasons for setting aside the marriage contract, I would have exercised my discretion on the second part of the test to find it was valid and enforceable.
39In Turk v. Turk, 2018 ONCA 993, the Court of Appeal confirmed the criteria set out in Dochuk v. Dochuk (1999), 1999 CanLII 14971 (Gen. Div.) as a useful guide for later courts to follow when exercising this discretion. In Dochuk, Lack J. adopted the factors set out by Clarke L.J.S.C. in Demchuk v. Demchuk (1986), 1986 CanLII 6295, which are as follows:
(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.
40There is no basis to find that any of the factors affirmed by the Court in Turk would have been engaged to exercise the discretion of the court to set aside the marriage contract. The evidence that supports a finding on any one factor is also relevant to the others in a manner consistent with findings I have already made on the first part of the test. In particular, I find that:
a. there has been no concealment of an asset or material misrepresentation by the Applicant. Ms. Odarico knew at all times that the Applicant owned Newport Collision, and in particular she knew this at the time of marriage and upon entering the marriage contract;
b. the claims of Ms. Odarico that she was under duress, or that she was subject to undue influence when she entered the marriage contract have not been made out;
c. The Respondent chose not to obtain independent legal advice, and Mr. De Lisio did nothing to prevent her from doing so. Paragraph 26 of the Marriage Contract stated plainly:
The parties hereto acknowledge that this Marriage Contract has been drafted by Luigi De Lisio, who at all times has been the solicitor for Eddy and has acted solely on his behalf. Tina-Marie acknowledges that the said Luigi De Lisio has advised Tina-Marie that he cannot represent her in conjunction with the negotiation of this agreement and has urged her to obtain her own independent legal advice with regard to the terms of the agreement. Tina-Marie hereby further acknowledges that she has not sought any legal advice from the said Luigi De Lisio as to the legal rights and obligations arising from the said agreement.
d. The Respondent did not move expeditiously to have the marriage contract set aside. It was signed on March 15, 2012. Ms. Odarico did not take steps to challenge the marriage contract until well after this proceeding was commenced, and some 54 weeks after the parties separated;
e. The Respondent was content in July 2012 to use the provisions of the marriage contract to persuade the plaintiff in a motor vehicle personal injury suit filed against her not to pursue the matter, as the existence of the marriage contract precluded her from sharing in the value of the house or Mr. Ordarico’s business, and there would be no significant assets for the plaintiff to realize on;
f. There is no evidence that Mr. Odarico has not fulfilled his obligations under the marriage contract; and
g. The marriage contract was not executed under unconscionable circumstances and enforcing the marriage contract does not produce an unconscionable result. To establish that unconscionability, it must be proven that the parties to the impugned agreement were in unequal bargaining positions, and that one of the parties “preyed” upon the other such that the resulting contract was improvident on its face: See Dochuk at para. 5, and Rosen v. Rosen (1994), 1994 CanLII 2769 (Ont. C.A.).
41After considering all the evidence, and on hearing the submissions made on behalf of the parties, I find that their mutual intention behind entering the marriage contract was to agree to allow the Applicant to preserve the assets he had entering the marriage in the event of separation. In a framework within which private parties are permitted to take personal responsibility for their financial well-being upon the dissolution of marriage, courts should be reluctant to second-guess the arrangement on which they reasonably expected to rely. Individuals may choose to structure their affairs in a number of different ways, and it is their prerogative to do so: Hartshorne v. Hartshorne, 2004 SCC 22.
42I conclude that the marriage contract between the parties signed on March 15, 2012 is valid, and that it should not be set aside.
Order
43The application of the Respondent to set aside the marriage contract is dismissed.
Costs
44The parties are encouraged to agree upon appropriate costs. If the parties are not able to agree on costs, they may make brief written submissions to me (maximum three pages double-spaced, plus a bill of costs) by email to my judicial assistant. The Applicant may have 14 days from the release of this decision to provide his submissions, with a copy to the Respondent; the Respondent a further 14 days to respond; and the Applicant a further 7 days for a reply, if any. If no submissions are received within this timeframe, the parties will be deemed to have settled the issue of costs as between themselves. If I have not received response or reply submissions within the specified timeframes after the Applicant’s initial submissions, I will consider that the parties do not wish to make any further submissions, and will decide on the basis of the material that I have received.
M. Gibson J.
Date: November 3, 2021