Court File and Parties

COURT FILE NO.: FC-16-2183

DATE: 2022/12/16

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

KIRSTEN TORGERSRUD Applicant

– and –

ALBERT MAXWELL LIGHTSTONE Respondent

COUNSEL:

Michael Rankin and Marie-Eve Jean, Counsel for the Applicant

Philip Augustine and Shawn Duguay, Counsel for the Respondent as agents for Carol Crawford

HEARD: August 29 and 30, 2022, with written submissions provided by November 18, 2022

REASONS FOR JUDGMENT

Justice A. Doyle

Overview

1The court presided over a two-day focused hearing ordered by Justice V.J. Mackinnon. Affidavits and documents were filed into evidence and cross-examinations of the parties and their experts took place.

2The main questions for the court to determine are:

1. Do the two Quebec legal instruments signed by the parties oust the Applicant wife’s claim for equalization of net family properties?

2. If so, should the court set aside the legal instruments in accordance with the Family Law Act, R.S.O. 1990, c. F.3, as amended, s. 56(4) (“Act”).

3If the two Quebec legal instruments are not enforceable, or are set aside, the wife will be owed an equalization payment in the range of $5 million to $8 million from the Respondent husband.

4For the reasons that follow, the court makes the following rulings:

• Both Quebec instruments comply with all of the essential and formal validity requirements under both Quebec law and the Act.

• The provisions of the Quebec instruments do not oust the application of Part 1 of the Act.

• In the event that the Court is not correct in this finding and the internal law of Quebec must govern the effect of the Quebec instruments, and the instruments oust the equalization application under the Act; then:

• The court finds that the wife has met the onus to show that the following elements under s. 56(4) apply: she failed to appreciate the nature and consequences of the Quebec instruments and the husband failed to provide financial disclosure.

5Having considered all of the circumstances, the court will exercise its discretion to set aside the Quebec instruments and the wife is permitted to proceed with her claim for an equalization payment of net family properties under the Act.

Background

Introduction

6The parties were married on March 31, 1987, and separated on August 22, 2015. The husband is 60 years old and the wife is 62 years old.

7The parties have three children who are currently 31, 28 and 26 years of age.

8The wife is from Norway and came to Canada on a scholarship in 1982. In 1984, the wife earned a B.A. in Management from Fresno State University. She has been a Canadian permanent resident until obtaining her Canadian citizenship in 2020.

9The parties met in 1985 at McGill University where they were both attending graduate school to obtain their respective Master of Business Administration. They both graduated in 1986. The wife specialized in management and finance while the husband’s speciality was in marketing.

10The wife moved into the husband’s apartment in Montreal in the fall of 1986. At the time, the husband was working at the marketing department of Hardt Equipment and the wife was pursuing French language courses.

11In 1987, the wife was offered a job as a financial analyst with Gillette but the wife, who was on a student visa, did not have Permanent Residency status which was required to be able to work in Canada.

12The wife had five weeks to accept the job offer with Gillette. The parties’ evidence diverged as to who called the law firm, Stikeman Elliott, to obtain legal advice and available options.

13One of her options was to apply for a residency permit that would take a period of time. Alternatively, the parties were told that a marriage would permit her to work.

14The parties could marry at Montreal city hall in the husband’s hometown, only after providing a 30-days’ notice advertising the wedding.

15The wife indicates that the husband was worried his family might discover the upcoming marriage whereas the husband stated that they were worried about delays, and it was highly unlikely that his family would routinely check city hall marriage postings.

16Since time was of the essence, the parties participated in a civil wedding in Virginia on March 31, 1987. This took place within one week of the job offer from Gillette.

17The husband is from a very traditional Jewish family who expected him to participate in a traditional religious wedding ceremony and marry someone of his faith. He stated that family members would have ex-communicated him if he did not have a religious wedding.

18Therefore, his family was not told of the parties’ elopement and instead the parties planned to have a more formal religious ceremony in the future after taking conversion classes.

19The husband’s uncle held an engagement party for the parties after their wedding at the end of 1987. The parties attended conversion classes in anticipation of a religious wedding. Those classes ended and on the husband’s evidence it was due to disagreements he had with various Rabbis.

20The wife wished to tell the husband’s family about their marriage in 1987.The husband in the interest of not hurting their feelings, planned to tell them after the Norway trip in the summer of 1988. The husband admitted that the wife did not want to be part of this ruse.

21The fact that he did not have a religious wedding ceremony and married out of faith remains a source of friction with his family.

22The wife did not return to work after the birth of their first child and the wife was a fulltime homemaker for most of the marriage.

23In 1993, the family moved from Montreal to Ottawa. They bought a property in joint names in Nepean and then, in 2009, purchased the matrimonial home located on Dufferin Road.

The inheritances and the Quebec instruments

24The husband’s mother, Bess Lightstone (nee Dubrovsky) died in 1971 and in accordance with her will, the husband was to receive 1/3 of her estate when he turned 25 years old (July 1987), 1/3 of the estate when he turned 30 years old (1992), and the final 1/3 of her estate at age 35 years. (1997).

25The husband’s father, Wolfe Lightstone, died in 1984 and upon the sale of the father’s home in 1990, the husband used the proceeds from the estate to purchase the parties’ first family home. The sole source of funds for the family home was the husband’s inheritance. The transfer of the property contains an acknowledgment that the parties are separate as to property.

26The husband also received inheritances from his uncle, Sam Dubrovsky, (Uncle Sam) who died on September 3, 2004.

27The husband’s uncle, Louis Dubrovsky, (Uncle Lou) died on May 7, 2005, and the husband received his inheritance in 2017 when Uncle Lou’s wife died.

28The parties travelled to Norway in the summer 1988. Despite objections from his wife, the husband told his uncle and the rest of his family that they had been married in Norway. The husband stated that this was a way to avoid a religious wedding.

29In 1988, after the announcement of the marriage in Norway, the husband’s Uncle Lou discussed with the husband that the parties sign an agreement that would protect the husband’s family business. The husband does not recall if he or his uncle initiated the discussion. His uncle recommended Sheldon Merling, a well-known notary. The husband stated that there was no pressure from his family to obtain a marriage contract. They were already married so he states there was little that the family could do. He acknowledged that his family wanted an agreement in place. The wife was upset about the interference of the husband’s family.

30The parties signed a Quebec instrument on September 7, 1988 (hereinafter referred to “the 1988 instrument”) with the father’s family notary, Mr. Merling.

31The 1988 instrument is titled “Modification of Matrimonial Property regime” which provides that the parties have:

• Renounced their property rights to a “partition of acquests”;

• Declared that they were “separate as to property”; and

• Acknowledged that they would not be liable for each other’s debts.

32The parties’ experts agree on the relevant Quebec property regime:

• In 1988 and 1989, the default matrimonial property regime in Quebec was the Partnership of Acquests and parties could opt out of this regime by signing a marriage contract;

• Under the Partnership of Acquests regime, there is a sharing of each parties’ acquests at the end of the marriage unless the parties had decided to renounce the partition;

• Acquests are all property except private property which is defined as assets held by a party at the time of marriage and inherited property; and

• Under the separation as to property, under the matrimonial regime in Quebec, there is no division of assets of any nature upon marriage breakdown. Each party keeps their own property.

33On December 11, 1990, the parties signed a second Quebec instrument (hereinafter referred to as the “1990 instrument”) where the parties agreed to opt out of the family patrimony regime that had been recently legislated in Quebec.

34The experts agree that the following are the features of the family patrimony:

• Marriage entails the establishment of a family patrimony consisting of certain property of the spouses regardless of who holds the ownership of that property and this family patrimony is only triggered upon the termination of the marriage;

• The property in the family patrimony includes the family residence, movable property, vehicles, retirement plan benefits, and registered earnings under the Quebec pension plan;

• Inheritances or gifts provided to one of the parties before or during the marriage is excluded from the family patrimony;

• Upon marital breakdown, the net value of the family patrimony of the spouses is divided equally between them unless the parties have executed an Exclusion Convention before a Notary;

• Once the total net value of the family patrimony has been determined at the time of separation, divorce or nullity of the marriage (market value of the property and debts contracted for the acquisition, maintenance, or preservation of the property), each spouse has a claim against the other corresponding to half of the partitionable value;

• Additional deductions include a consideration for the property existing at the date of marriage and contributions made out of property devolved by succession or gift or its reinvestment; and

• Once the total net value of the family patrimony has been determined, each spouse has a claim against the other corresponding to half of the partitionable value.

The parties

35The wife worked as a Manager of Financial Planning at Gillette Corporation and took maternity leave on the birth of the parties’ first child. She did not return to the paid workforce after the parties’ eldest son was born and her maternity leave ended in 1992.

36The husband worked in distribution until he was dismissed and then worked with the Canada Revenue Agency as a manager until he retired in 2021. His most recent filed financial statement dated February 28, 2022, indicates an approximate annual income of $345,000, which includes an annual pension income of roughly $64,000. He also earns interest and investment income, rental income, and dividends which are generated from his inherited funds/assets and shares in the private companies that he has inherited over the years.

37The husband received specific bequests of money from inheritances. Prior to receiving his first tranche from his mother’s estate at the age of 25, the husband received funds to help pay for his living expenses. These funds would be deposited into the parties’ joint account. The wife acknowledged that this allowed her to save her employment income from Gillette.

38However, he largely received his inheritances in the form of shares in private companies.

39The husband has ownership in various corporations including full ownership of a holding company, Ankama Inc. (“Ankama”). Ankama holds shares in various companies that hold a percentage of various real estate holdings and investments including shopping centres in Montreal. Ankama also holds investments in other companies which generate income for the husband. The husband states he has a minority interest and no control over the declaration of dividends.

40At the time of the signing of the 1988 instrument, neither party was aware of the value of the inheritances that the husband would ultimately receive. The husband did not possess any documents to confirm the value of the bequests he received.

41The husband and the children of the marriage are shareholders of the company and monies from the company have been used to fund living expenses and the children’s education.

42By the time that the parties signed the 1990 instrument, the parties knew:

• The husband had received his first tranche of his mother’s inheritance and used funds to pay for living expenses;

• The parties were discussing whether the wife should return to work in 1992 and those discussions had financial considerations; and

• In 1990, the husband received monies from the sale of his parents’ home and the funds were used to buy the parties’ first home.

43At the time of the separation, the parties had the following joint assets: matrimonial home on Dufferin Street in Ottawa and personal household items. The wife had approximately $1.6M in investments. The husband’s net worth is in dispute, but it is at least valued in the multi-millions.

44The parties have been engaged in litigation since 2015. This matter was case managed by Justice Mackinnon, who directed a focused hearing in advance of the main trial. The focusing hearing deals with the legal effect of the 1988 and 1990 instruments.

Wife’s position

45The wife seeks a declaration that the two Quebec instruments do not prevail over the wife’s right to claim an equalization of net family property.

46Specifically, the 1988 instrument provides the parties are to be “separate as to property” but does not provide specific terms as to what would occur on marriage breakdown. The 1990 instrument provided that the parties would not be bound by the changes to the Quebec Civil Code which invokes a new family regime under “Family Patrimony.”

47Alternatively, she is requesting that the instruments be set aside pursuant to s. 56(4) of the Act because:

• The husband failed to provide financial disclosure;

• The wife did not receive independent legal advice (“ILA”);

• The wife did not understand the nature and consequences of the instruments; and

• The terms of the Quebec instruments are unconscionable as there was unequal bargaining power and, that the results are unconscionable in light of the parties’ long traditional marriage.

48The wife claims that she is owed an equalization payment of over $8M.

49In essence, the wife argues that the Quebec instruments do not oust the Ontario equalization regime provided for in the Act, as they do not deal with property issues set out in the Act in clear and cogent language in relation to the economic positions of the parties upon marriage breakdown.

50She relies on Bosch v. Bosch (1991), 1991 CanLII 7177 (ON CA), 84 DLR (4th) 626 where the Court of Appeal held that contracts that simply establish a “separation as to property” regime are not a bar to an equalization claim as the contracts do not explicitly or by necessary implication deal with property issues akin to the equalization provisions of the Act. The Court reiterated that contracts must address, in clear and cogent language, the relative economic positions of the parties on marriage breakdown.

51In Bosch, the Ontario Court of Appeal found that a marriage contract which provides only for ownership of property during the marriage, does not provide for a division of property under Part I of the Act.

52The wife submits there is no jurisprudence finding that a marriage contract that simply establishes the parties to be “separate as to property” prevails over the Act’s equalization regime.

53The wife denies that they ever discussed obtaining a marriage contract before they were married whereas the husband indicated that they did discuss it but not in depth.

54The wife was not advised by the notary that the instruments were marriage contracts and that she would have no property entitlements to the husband’s assets upon marriage breakdown. The instruments were drawn up hurriedly.

55The wife’s evidence is that the impetus for the instruments to be signed was from the husband’s family when they found out in 1988 that the parties were married. The husband was concerned of hurting his family’s feelings since they had not married in a religious Jewish service and he feared being ex-communicated.

56She testified that Uncle Lou told the husband that he needed a marriage contract and told him to attend Sheldon Merling’s office (the family’s long-standing notary who handled commercial and corporate related transactions for the Lightstone family for decades). The husband’s family had extensive business and real estate holdings in Montreal.

57The parties understood that the purpose of the marriage contract was to protect the husband’s inheritances as he was the sole heir to his parents’ estate.

58The parties agree that they did not receive a copy of the marriage contract before they attended Mr. Merling’s office in 1988. They never received an advice letter regarding the marriage contract. The wife says that he gave a brief explanation and she said she did not understand the document. He provided further explanation. She signed it because her husband said it was to protect his inheritances relating to the family business and if she did not sign it he would be angry. She testified that she felt very hurt that he chose his family over her and that he was not sensitive to her feelings.

59At the time of the marriage contract, the husband’s assets were in excess of $4M as he was about to receive his 1/3 of the mother’s estate in July 1987 when he turned 25 years of age. In accordance with his most recent financial statement, he indicates his pre-marital assets include $3.7M from his mother’s inheritance, $653,000 in bank accounts, securities and investments and $72,000 owed to him.

60The wife states that she had no sense of the husband’s net worth, nor did she have specifics or details.

61Regarding the 1990 instrument, the husband received a call from Mr. Merling who told him that they required a new contract to be signed to ensure that the couple opted out of the new Quebec laws dealing with Family Patrimony which would mean certain property would be subject to partition regardless of the marriage contract.

62The wife indicates that the husband set up a meeting with Mr. Merling and again no copy was provided in advance nor was an advice letter provided. There was no financial disclosure nor ILA.

63The wife’s expert, Gerald Stotland, provided a comprehensive affidavit outlining the matrimonial property regimes of Partnership of Acquests and Separation as to Property in Quebec.

64He spoke about the duties owed by notaries given their unique arrangement of acting for both sides on the signing of a marriage contract.

65Mr. Stotland opined that Mr. Merling did not meet his professional obligation to remain impartial. He should have ensured that the parties were provided informed consent regarding the consequences upon marriage breakdown and that there be complete financial disclosure.

66Mr. Stotland opined that Mr. Merling, the notary, failed to meet his professional obligations to the parties because:

• Mr. Merling was in a conflict of interest in acting for both parties given what was at stake in the instruments and the fact that he had represented Mr. Lightstone’s family on their business interests.

• Both instruments were beneficial to the husband and the notary should have recused himself or at least explained the instruments and its implications more thoroughly.

• Mr. Merling should have discussed that without the instrument, she would be entitled to a partition of acquests upon marriage breakdown and the default matrimonial regime did offer a protection to the husband’s inheritances but not the fruits of the inheritances.

• He did not explain the purpose and effect of the inheritances to the parties.

• There should have been financial disclosure.

67Mr. Stotland further testified that the Family Patrimony regime only applies to matrimonial proceedings occurring in Quebec for spouses who are domiciled in Quebec at the time of separation. The Family Patrimony regime provides that family patrimony must be subject to partition upon marriage breakdown which includes family residences, moveable property vehicles, pensions, and other assets.

68If the court finds that the instruments are valid and enforceable in Ontario, then the wife submits that they should be set aside as the wife did not receive financial disclosure, was not aware of the nature and consequences of the instruments, and that the circumstances of the execution of the instruments were unconscionable and if upheld they would create an unconscionable result.

69The wife contends that she was in an unequal bargaining position as the Quebec instruments were prepared by a long-standing family Quebec notary, Mr. Merling, who was in a conflict of interest.

70Given the above circumstances, the court should exercise its discretion and set aside the instruments which would allow the wife to proceed with her claim for an equalization payment of net family properties.

Husband’s position

71The husband argues that:

• The Quebec instruments are valid and binding domestic contracts under the laws of Ontario and Quebec as they meet the requirements for formal and essential validity, i.e., s. 58(a) of Act and Civil Code of Quebec (“CCQ”);

• The laws of Quebec should govern the effect of these domestic contracts;

• The Quebec instruments and the Quebec matrimonial property regimes of “Partnership of Acquests” and “Separate as to Property” deal with property upon the breakdown of marriage and prevail over the matters addressed under Part 1 of the Act in accordance with ss. 2(10) and 58 of the Act;

• The wife has failed to satisfy the onus upon her to demonstrate that the Quebec instruments should be set aside in accordance with s. 56(4) of the Act; and

• In the event that the wife can prove that s. 56(4) of the Act applies to the Quebec instruments, the court should not exercise its discretion to set aside the instruments but rather uphold the instruments so as to give effect to the parties’ intention to be separate as to property and preserve the husband’s inherited assets from equalization.

72According to their expert, Ms. Brigitte Garceau, the marriage contract followed all the necessary steps under Quebec law to take the parties out of the “partnership of acquests’ which is a regime that is a close parallel to Ontario’s equalization regime.

73Her evidence was clear, credible, detailed, and unchallenged. The operation of the matrimonial property regime in Quebec parallels Part 1 of the Act and that there is a mechanism through which the parties may change their matrimonial regime in accordance with the Quebec law.

74The parties acting in accordance with the law of Quebec entered into two contracts while residing in Quebec to opt out of the default matrimonial property regimes and to affirm that it was their intention to keep their property separate. Both experts confirmed that the two contracts explicitly address what was to occur to the parties’ assets upon the breakdown of their relationship.

75As explained by the experts, the inherited property is part of an individual’s “private property” under the partnership of acquests in Quebec, and the fruits of that private property are acquests which both parties agreed to exclude by entering into the two contracts.

76The parties agreed to the following regarding the separate as to property regime:

• The purpose of the instruments was for the parties to adopt the regime as to separate as to property;

• Income generated by inherited property would remain private property and not be subject to division;

• There was no tracing exercise under the separate as to property regime;

• There was no need to prepare a valuation of inherited assets for property; and

• Quebec law does not require these instruments to be prepared by lawyers.

77Further, she stated that it was normal for only one notary to be involved in preparing the instruments and that notary has a duty to act impartially and must be disinterested and frank.

78The husband submits that the fact that Mr. Merling had previously acted for the husband’s family did not render him biased and it was not incumbent on the notary to require ILA.

79The husband argues that the wife took no steps to challenge the validity of the notarial act as there were no improbation proceedings to challenge the authenticity of the notarial deed and there was no claim in the wife’s pleadings in this matter requesting an order setting aside the Quebec instruments.

80The husband submits that the wealth accumulated during the marriage derives entirely from the value of his holding company, Ankama, which is an inheritance rather than a result of the parties’ efforts or any type of business carried out by the husband.

81In addition, the wife has failed to satisfy her onus of demonstrating that the circumstances surrounding the formation of the contracts necessitate the application of sections 58(b) and 56(4) of the Act to set aside the Quebec contracts because:

• Both parties are highly educated and sophisticated;

• The wife was aware of the availability of legal advice as she sought out the same when she needed to secure her residency status in Canada to enable her to accept employment with Gillette;

• The formation and execution of the contracts followed the relevant processes in place in Quebec at the time;

• Other than his right to receive his inheritances, the husband had few assets at the time of the signing of the marriage contract;

• Both parties were aware of the other’s financial circumstances;

• There was no imbalance of powers, duress, or coercion between the parties;

• At the signing of the 1990 instrument, the parties had an even greater level of insight into each of their financial circumstances;

• There was no misrepresentation or concealment by the husband regarding his financial circumstances;

• The parties were free to obtain financial disclosure or ILA;

• Two years had passed between the signing of both contracts affirming the parties’ intentions to remain separate as to property; and

• The wife did not take any steps to challenge the instruments in a timely manner.

82The husband argues that the court should accept his evidence over the wife’s evidence because his evidence was clear, credible, and detailed with his recollection of events whereas the wife’s evidence was vague and inconsistent, and she qualified her statements and stated “I would have said” and she did not have specific recollection. For example, when asked about whether she was seeking to obtain a share of the husband’s property, she was evasive first stating “absolutely not” before adjusting her response to say “we never talked about it,” (transcript at A 1773).

83In addition, the husband argues that:

• Regarding her knowledge at the 1988 signing, in answer to the question about when she knew about the husband’s inheritances at the time, she responded “I don’t know what I knew at that time,” (see transcript at A 1774). Among other alleged inconsistencies, the husband refers the court to cross-examination, where she confirmed that: “I said we didn’t speak” and “we were not speaking to each other,” (transcript at A 1783-1794);

• At the signing of the 1990 instrument, when asked whether she asked any questions, she said “I had resigned myself that I had to sign the document” and “I think I put a certain amount of protection around me” (transcript at A1785-1786); and

• She understood that the 1990 instrument was to confirm the terms of the 1988 instrument, (transcript at A1797).

84The husband’s lack of candour with his family regarding the parties’ elopement, which was motivated by his desire not to hurt his family’s feelings and his extra-marital affairs, are of no relevance to the issues before the court. The husband acknowledged and explained his course of conduct and this should have no bearing on this court’s findings regarding credibility.

85She also made admissions to support the husband’s position that: she understood English; she acknowledged she read and signed the agreements and knew that the instruments were legally binding contracts that would be registered with the Quebec Ministry of Justice.

86At the signing of the 1988 instrument, the husband recollects that the meeting was not lengthy but that the agreement was straightforward and short, and that there was enough time to review it so they could understand it. He understood it and the 1988 instrument confirmed the parties’ intention to adopt the separate as to property matrimonial regime, i.e. not to share or divide the value of their properties at the time of separation.

87During their marriage, they kept property separate and at the same time, he intentionally placed certain property in joint tenancy. The husband indicates that the fact that some assets were placed in joint names confirms that the parties were to remain separate as to property and that there were specific assets that were placed in joint names so that the wife would share in the value of those assets. The current matrimonial home valued at approximately $2M in Rockcliffe is in joint names.

88With respect to the 1990 instrument, the husband was contacted by Mr. Merling and informed of the change of law in Quebec and that if the parties wished to opt out of the Family Patrimony scheme, they needed to sign another document to confirm and reinforce the terms of the 1988 instrument. He recalled that this change in matrimonial law had been published in newspapers and was aware that this would apply to the parties. The husband discussed this with the wife and after several weeks, the parties attended Mr. Merling’s office on December 11, 1990.

89He does not have much recollection of the meeting in 1990 but recalls the wife was not upset about signing this contract and they in fact went to lunch after the meeting with Mr. Merling.

90The parties’ discussions during the marriage confirmed that the husband would continue to pay for all living expenses and she would not need to return to work.

91The wife understood the nature and consequences of the instruments and was aware of the parties’ financial assets and status.

92In the alternative, the husband argues that should the court find that the wife has met the onus of one of the scenarios under s. 56(4), the court should refuse to exercise its discretion to set aside the Quebec instruments pursuant to s. 56(4) of the Act.

93Both parties and the entire family received benefits from the husband’s inherited assets. The wife has accumulated approximately $4M worth of assets. There is no unconscionability that has arisen from the circumstances in this case. The husband argues that the wife’s ability to accumulate wealth in her own name was consistent with the parties’ intention that the parties would remain separate as to property.

94In addition, he argues that the calculations in the wife’s Net Family Property Statement do not recognise the husband’s interest in his parents’ estates at the date of marriage. This results in a significant overstatement of what is at stake in this proceeding. The husband further submits that the vast majority of assets being sought to equalize relate to his interest in Ankama, which owns shares in private companies, and the investment of proceeds from those shares and the source is all from inherited property.

95Nothing that the wife seeks to equalize is as a result of the parties’ joint effort during the marriage.

96The wife will be entitled to spousal support regardless of the court’s decision in this hearing as the Quebec instruments do not deal with the wife’s right to claim spousal support. The husband has met his financial responsibility as he continues to pay for all the matrimonial home expenses and the wife’s Visa card.

Analysis

Introduction

97The court will discuss each of the following questions:

(a) Are the Quebec instruments marriage contracts?

(b) Do the Quebec instruments oust the application of the Act?

(c) Has the wife met her burden to demonstrate the existence of one of the requisite elements under s. 56(4) of the Act?

(d) Even if the wife satisfies one of the elements under s. 56(4), should the court exercise its discretion to set aside the Quebec instruments?

(a) Are the Quebec instruments marriage contracts?

98Firstly, the Quebec instruments satisfy the formal requirements according to Quebec law and are therefore marriage contracts.

99The instruments were in writing, signed by the parties and witnessed by the notary. They were subsequently filed with the central registry of Quebec’s Ministry of Justice.

100This satisfies the formal validity requirements under Article 440 of the CCQ that requires a marriage contract to be established by a notarial act and registered by the officiating notary.

101Pursuant to s. 52 of the Act, parties may enter into a marriage contract in which they can agree on their rights and obligations during the marriage or on separation including the ownership and division of property, support obligations, and other matters in the settlement of their affairs.

102The court finds that the instruments are “domestic contracts” as understood by the Act, Part IV.

103The Quebec instruments met the formal validity requirements of Ontario under s. 55(1) of the Act as they contain the following formalities: they were in writing, signed by the parties and witnessed and dealt with aspects of property division.

(b) Do the Quebec instruments oust the application of the Act?

Introduction

104Firstly, the court finds that the parties’ last common habitual residence was Ontario.

105Section 15 of the Act provides:

The property rights of spouses arising out of the marital relationship are governed by the internal law of the place where both spouses had their last common habitual residence or, if there is no place where the spouses had a common habitual residence, by the law of Ontario.

106The parties were cohabiting in Quebec when the instruments were executed. They moved to Ottawa in 1993 and had lived in Ottawa for 22 years before their separation in 2015. Therefore Ontario is their last common habitual residence.

107Next, turning to Section 58 which reads:

58. The manner and formalities of making a domestic contract and its essential validity and effect are governed by the proper law of the contract, except that, (a) a contract of which the proper law is that of a jurisdiction other than Ontario is also valid and enforceable in Ontario if entered into in accordance with Ontario’s internal law.

108Section 58 deals specifically with domestic contracts made outside of Ontario. In Mittler v. Mittler (1988), 17 R.F.L. 8645 (Ont. S.C.), McKinlay J. stated that:

The introductory portion of s. 58 states the basic common law conflict of laws rule that the proper law of the contract governs the manner and formalities of making a domestic contract and its essential validity and effect.

109See also Mohammadi v. Safari, 2017 ONSC 4696 at para. 36.

110In this case, both experts agree the effect of the Quebec instruments would be that the parties would not be subject to the Family Patrimony. They would be separate as to property which would mean that all assets registered in the husband’s name would remain his sole property and all assets registered in the wife’s name would remain her sole property. There would be no transfer of ownership of property or value of the other party’s property.

111To determine whether the instruments oust the equalization provisions of the Act, the court must consider section 2(10) of the Act which reads:

(10) A domestic contract dealing with a matter that is also dealt with in this Act prevails unless this Act provides otherwise.

112This section provides that a contract is determinative of the rights between the parties unless the Act provides otherwise: Loy v. Loy (2007), 2007 CanLII 46709 (ON SC), 45 RFL (6th) 296 (Ont. S.C.J.).

113The leading case, Bosch at para. 40, states that for these instruments to oust the equalization provisions of the Act, the instruments:

“…must deal, explicitly or by necessary implication, with ‘a matter’ akin to the equalization provisions of the FLA. An agreement as to ownership of property, without more, is insufficient. For the marriage contract to prevail over the equalization provisions of the FLA, the contract must contain provisions which address, in their intent if not in their explicit language, the relative economic position of the parties upon the dissolution of the marriage, through the distribution of assets between them on the basis of ownership, or otherwise. This can be done either through an agreement that a given property be excluded from a spouse’s net family property, under 4(2) para. 6 of the FLA or through an agreement in a domestic contract which deals with equalization-type rights, so as to bring s. 2(10) into effect. “

Discussion

114For the reasons that follow, I conclude that the Quebec instruments do not oust the equalization provisions under Part 1 of the Act.

115The court finds that the instruments deal with ownership in that they confirm the husband’s property would remain his and the wife’s property would remain hers.

116Also, the experts agreed that by choosing the separate as to property regime in the 1988 instrument, the parties were opting out of the partnership of acquests matrimonial regime which divides the spouses’ acquests upon marriage breakdown except inheritances (but not fruits from inheritances).

117As discussed above, the separation as to property regime deals with the parties’ assets and their value during the marriage and upon marriage breakdown.

118The 1988 instrument sets out the parties’ intentions that they wished to change the matrimonial regime so that upon breakdown or dissolution of their marriage they would not divide their assets nor transfer value.

119The 1990 instrument confirmed this choice of matrimonial regime.

120In determining this question as to why the instruments do not oust the provisions under the Act, I will discuss how these contracts would be applied in Quebec and then, the Ontario matrimonial regime and the equalization process.

Quebec law

Introduction

121The court benefited from an in-depth overview of the Quebec law on matrimonial property as explained by the experts, Mr. Gerald Stotland and Ms. Brigitte Garceau. Both were qualified as experts on the matrimonial property regime as they operate in Quebec and with respect to the two Quebec instruments signed by the parties.

122The CCQ provides for the administration of property belonging to spouses during the marriage and the division of accumulated value of said property following the dissolution or breakdown of the marriage.

123Prior to the Family Patrimony law amendments in 1989, spouses could elect to opt into one of the two matrimonial regimes, either partnership of acquests or the regime of separation as to property.

124Marriage contracts must be established by a notarial act en minute and must be filed in the register of personal and movable real rights. Parties may change their matrimonial regime in another marriage contract.

125Notarial acts are qualified as authentic acts by the Quebec legislator. A notice of a marriage contract shall be entered in the Register of Personal and Movable Real Rights. The marriage contracts are enforceable against third parties. Both instruments were notarial acts and are presumed authentic acts in virtue of Quebec law.

Partnership of Acquests

126The regime of partnership of acquests arises upon divorce, death, or modification of the matrimonial regime that leads to the right of dissolution and partition.

127Under the matrimonial regime of partnership of acquests, the value of the spouses’ assets (which are deemed acquests accumulated during the marriage) is divided equally except for the value of their private property. Private property is property owned or possessed by that spouse when the regime comes into effect and property which devolves to that spouse during the regime by succession and the fruits and income derived from it if the testator or donor has so provided; property acquired to replace private property and any insurance indemnity, rights, or benefits devolved to a spouse as a subrogated holder or as a specified beneficiary, clothing, personal papers, wedding ring decorations, and diplomas and instruments required for spouse’s occupation. Fruits from private property such as inherited property are acquests and are subject to division.

128Property acquired with both private property and acquests is also private property subject to compensation if the majority of the acquisition cost is paid by using private property.

129At the time of the partition of the spouses’ acquests, a statement is prepared setting the compensation owed by the mass of private property of the spouse to the mass of its acquests and vice versa. Once the calculation of net compensation between masses is completed, the net value of the mass of acquests is determined evenly, divided between the spouses.

Separate as to property

130Under the separate as to property regime, each spouse has sole authority regarding the administration, enjoyment and full disposal of all his or her property. This regime is established by a simple declaration in a marriage contract or any judicial application.

131Each spouse retains ownership of their property and there is no partition of any property acquired during their marriage upon the dissolution of the marriage. If they are unable to establish their exclusive right of ownership, then it is deemed to be an undivided co-ownership. There is no partition upon the dissolution of the marriage of assets or a division of their value (Article 486, CCQ).

132This regime is established by a simple declaration in a marriage contract or by judicial application. In the parties’ 1988 instrument, the parties agreed to this property regime. Further, given that the parties signed an instrument in 1990 that opted out of the family patrimony, this property regime is applicable in this case.

133If a spouse is unable to establish ownership, the asset is presumed to be held by both in undivided co-ownership, one-half each.

Family Patrimony

134On July 1, 1989, amendments to the Quebec Civil Code and other legislative provisions respecting the economic equality of spouses (L.Q. 1989, c. 55) came into effect, creating family patrimony.

135The 1989 Family Patrimony provisions are applicable automatically to spouses married before the coming into force of the legislation unless, within 18 months of the coming into force, they express by notarial deed en minute their wish not to be subject to them. This deed or notarial act must be registered in the central registry of matrimonial regimes.

136Regarding inherited property received before or during the marriage, the family patrimony regime provides that it is excluded from the composition of family patrimony. A deduction of the net value of the family patrimony can be made if there has been contribution by a spouse towards the acquisition or improvement of that property.

137The family patrimony stipulates that the sole owner of any property can dispose as he/she chooses. Property of the family patrimony includes:

• Family residence;

• Movable property;

• Motor vehicles;

• Benefits accrued in a retirement plan; and

• Registered earnings in Quebec pension plan.

138In accordance with Article 415 of the CCQ, upon the termination of the marriage or separation or death, the net value of the family patrimony consisting of the mass of property as determined in Article 415 is divided equally between the spouses regardless of the matrimonial regime adopted by the spouse. The net value of the family patrimony is the market value and the debts accrued for the acquisition, improvement maintenance, or preservation of the property.

139In accordance with Article 418, there are deductions for:

• the increase in value of the property acquired during the marriage, from the acquisition to the date of evaluation, proportionate to the ratio existing at the time of the marriage between the net value and the gross value of the property; and

• the net value of a contribution made by one of the spouses during the marriage for the acquisition or improvement of a property included in the family patrimony, whether the contribution was made out of the property devolved by succession or gift, for its reinvestment in addition to the increase in value acquired from the contribution to the evaluation date, proportionately to the ratio existing at the contribution between the value of the contribution and the gross value of the property.

140However, if the parties signed an Exclusion Convention before a notary within the prescribed legislative timeframe, as the parties did here, there will be no division of family patrimony assets.

Quebec instruments

141The parties were subject to the partnership of acquests at the time of their marriage as they did not adopt a matrimonial regime in a marriage contract before the solemnization of their marriage.

142The parties had adopted the separate as to property regime, which according to the Quebec law, means that their property will not be divided in accordance with the partnership of acquests.

143The 1988 instrument replaced the default matrimonial regime of the Partnership of Acquests (which applies to spouses who either married in Quebec and were domiciled at the date of marriage or established their first common residence in Quebec), to a regime of Separate as to Property. Modification must be executed by notarial act and is effective on the date of the execution of the instrument.

144The parties must dissolve the matrimonial regime of partnership of acquests for there to be a renunciation to the acquests.

145According to their expert, Ms. Garceau, the marriage contract followed all the necessary steps under Quebec law to take the parties out of the “partnership of acquests” which is a regime that is a close parallel to Ontario’s equalization regimes.

146The parties had until December 31, 1990, to execute an Exclusion Convention to ensure that the family patrimony did not apply to them. The 1990 instrument signed on December 11, 1990, allows the parties to opt out of the regime of Family Patrimony and confirms their matrimonial regime as being separate as to property.

147In conclusion, based on the opinions of the experts, the Quebec instruments are recognized by Quebec Law.

148However, the wife raised the issue of whether the circumstances that existed at the time of entering into the Quebec instruments should nullify the instruments according to Quebec law. Mr. Stotland, the wife’s expert, opined that Mr. Merling’s conflict of interest (as the husband’s family lawyer for decades) resulted in his work in this case being below professional standards. Hence, according to Mr. Stotland, the Quebec instruments would not stand in Quebec law.

149Certainly, Mr. Merling’s longstanding history with the husband’s family and intricate involvement with the family business for decades raises the court’s concern of his impartiality and whether he could be in a position to provide impartial legal advice to both parties, or whether he should have taken other steps to ensure that the parties fully understood the contracts and its implications.

150I am not prepared to determine the question of whether the notary’s legal involvement was below the standard of professional conduct in accordance with the Quebec courts and their processes which would have the effect of its validity and enforceability in Quebec. I am not sitting as a Judge of a Quebec tribunal.

151However, the circumstances existing at the time of the execution of both instruments is relevant in the discussion under s. 56(4) of the Act. Hence, this issue will be discussed in more detail below when dealing with the wife’s assertion that she did not understand the nature and consequences of the instruments.

Ontario Law

152Part I of the Act sets out the equalization scheme. The objective of the Act is to divide assets fairly as a marriage is an equal partnership. The parties must calculate their respective net family properties (“NFP”) as set out in the definition at s. 4 and the differences are equalized. Certain other provisions apply, including that pensions earned during the marriage are property and included in the NFP calculation; there are deductions for assets at the date of marriage; and debts/liabilities, inheritances and gifts received do not to fall into the division of property as they are considered excluded property. Also, the matrimonial home has a special status under the Act.

153The relevant provisions are:

4 (1) In this Part,

“net family property” means the value of all the property, except property described in subsection (2), that a spouse owns on the valuation date, after deducting,

(a) the spouse’s debts and other liabilities, and

(b) the value of property, other than a matrimonial home, that the spouse owned on the date of the marriage, after deducting the spouse’s debts and other liabilities, other than debts or liabilities related directly to the acquisition or significant improvement of a matrimonial home, calculated as of the date of the marriage; (“biens familiaux nets”)

“property” means any interest, present or future, vested or contingent, in real or personal property and includes,

(a) property over which a spouse has, alone or in conjunction with another person, a power of appointment exercisable in favour of himself or herself,

(b) property disposed of by a spouse but over which the spouse has, alone or in conjunction with another person, a power to revoke the disposition or a power to consume or dispose of the property, and

(c) in the case of a spouse’s rights under a pension plan, the imputed value, for family law purposes, of the spouse’s interest in the plan, as determined in accordance with section 10.1, for the period beginning with the date of the marriage and ending on the valuation date; (“bien”)

“valuation date” means the earliest of the following dates:

1. The date the spouses separate and there is no reasonable prospect that they will resume cohabitation.

2. The date a divorce is granted.

3. The date the marriage is declared a nullity.

4. The date one of the spouses commences an application based on subsection 5 (3) (improvident depletion) that is subsequently granted.

5. The date before the date on which one of the spouses dies leaving the other spouse surviving. (“date d’évaluation”) R.S.O. 1990, c. F.3, s. 4 (1); 2006, c. 19, Sched. C, s. 1 (2); 2009, c. 11, s. 22 (1-4); 2009, c. 33, Sched. 2, s. 34 (1).

Net family property, liabilities

(1.1) The liabilities referred to in clauses (a) and (b) of the definition of “net family property” in subsection (1) include any applicable contingent tax liabilities in respect of the property. 2009, c. 33, Sched. 2, s. 34 (2).

Excluded property

(2) The value of the following property that a spouse owns on the valuation date does not form part of the spouse’s net family property:

1. Property, other than a matrimonial home, that was acquired by gift or inheritance from a third person after the date of the marriage.

2. Income from property referred to in paragraph 1, if the donor or testator has expressly stated that it is to be excluded from the spouse’s net family property.

3. Damages or a right to damages for personal injuries, nervous shock, mental distress or loss of guidance, care and companionship, or the part of a settlement that represents those damages.

4. Proceeds or a right to proceeds of a policy of life insurance, as defined under the Insurance Act, that are payable on the death of the life insured.

5. Property, other than a matrimonial home, into which property referred to in paragraphs 1 to 4 can be traced.

6. Property that the spouses have agreed by a domestic contract is not to be included in the spouse’s net family property.

7. Unadjusted pensionable earnings under the Canada Pension Plan. R.S.O. 1990, c. F.3, s. 4 (2); 2004, c. 31, Sched. 38, s. 2 (1); 2009, c. 11, s. 22 (5).

(3) The onus of proving a deduction under the definition of “net family property” or an exclusion under subsection (2) is on the person claiming it. R.S.O. 1990, c. F.3, s. 4 (3).

(4) When this section requires that a value be calculated as of a given date, it shall be calculated as of close of business on that date. R.S.O. 1990, c. F.3, s. 4 (4).

(5) If a spouse’s net family property as calculated under subsections (1), (2) and (4) is less than zero, it shall be deemed to be equal to zero. R.S.O. 1990, c. F.3, s. 4 (5).

5 (1) When a divorce is granted or a marriage is declared a nullity, or when the spouses are separated and there is no reasonable prospect that they will resume cohabitation, the spouse whose net family property is the lesser of the two net family properties is entitled to one-half the difference between them. R.S.O. 1990, c. F.3, s. 5 (1).

(5) Subsection (4) applies even though the spouses continue to cohabit, unless a domestic contract between the spouses provides otherwise. R.S.O. 1990, c. F.3, s. 5 (5).

(7) The purpose of this section is to recognize that child care, household management and financial provision are the joint responsibilities of the spouses and that inherent in the marital relationship there is equal contribution, whether financial or otherwise, by the spouses to the assumption of these responsibilities, entitling each spouse to the equalization of the net family properties, subject only to the equitable considerations set out in subsection (6). R.S.O. 1990, c. F.3, s. 5 (7).

154Since the parties completed the appropriate steps to modify their matrimonial regimes under the law of these instruments, this engages s. 2(10) of the Act and the regime of “separate as to property,” the court must consider whether this choice of matrimonial regime prevails over part 1 of the Act.

Case Law

155As stated by the Ontario Court of Appeal in Berdette v. Berdette (1991), 1991 CanLII 7061 (ON CA), 81 DLR (4th) 194, the intention of the Act is to establish a partnership and equal sharing of property accumulated during the marriage.

156In Barbeau v. Barbeau (1989), 1989 CanLII 8777 (ON SC), 26 RFL (3d) 282, Justice Sirois was dealing with a marriage contract that in accordance with the CCQ provided that the parties would be separate as to property and that there would be no community of property, partnerships of acquests, legal or otherwise. The husband was to assume all household expenses, "including the necessary personal expenses of the Second Party and ... the maintenance and education of the child or children that may be born of the ... marriage.” In consideration for the wife’s renunciation of all rights of community of property, or partnership, the husband would pay the wife the sum of $50,000 to be paid to her at any time at the option of the husband after the solemnization of the marriage and during the life together. There, the court found that there was a provision that gave the wife right to property rights in a jurisdiction outside of Quebec. Accordingly, he found that she was entitled to property rights under the Act.

157In Bosch v. Bosch, the Ontario Court of Appeal specifically stated that domestic contracts that deal only with the right of ownership to a particular asset is not sufficient to oust the equalization provisions of the Act which dealt with value. Following Kerr v. Kerr (1983), 1983 CanLII 3100 (ON CA), 35 R.F.L. (2d) 363 (Ont. C.A.), the court stated that merely specifying that a spouse would continue to own a specific asset such as a vehicle, does not address and may not be enough to displace the provisions of the Act. Those provisions contemplate valuation assets of each spouse as of the date of separation and provide for an equalization by payment of money and deals with their economic position coming out of the marriage. In that case, the court found that the clause provided that the husband would retain ownership of the matrimonial home upon marriage breakdown but also found that nothing in the terms of the contract, whether expressed or implied, set out the intention of the parties that the wife would be deprived of any entitlement present or future to share in the financial worth of the husband.

158In Sinnett v. Sinnett (1980), 1980 CanLII 3790 (ON SC), 15 RFL (2d) 115, the court found that the following wording in a marriage contract did not oust the husband’s claim under the Act: “There shall be no matrimonial community, communauté, de biens, or other community whatsoever between the said parties … but on the contrary they shall be and remain separate as to property as permitted by the Civil Code of Lower Canada.”

159In Webster v. Webster (2006), 2006 CanLII 22941 (ON SC), 28 RFL (6th) 79 (Ont. S.C.), Robertson J. found that the marriage contract did not provide for the distribution of wealth between the parties on a basis other than in accordance with ownership. The court stated:

[22] The case law discloses a high threshold that must be met before finding that an out of jurisdiction marriage contract, such as the one in question, prevails over the equalization provisions of the FLA. Here is a sample:

The Webster’s marriage contract does not provide for the distribution of wealth between the Websters on a basis other than in accordance with ownership. Further, it contains no renunciation of equalization or similar rights. Section 2(10) is applicable only when a matter in the domestic contract is also “dealt with” under the FLA. However, I find that the content of the marriage contract in question does not specifically “deal” with or release equalization claims or election issues upon the death of one of the spouses. Further, the marriage contract does not on its face expressly address substantive rights to equalize property upon the dissolution of marriage as required. Accordingly, I find the marriage contract does not bar Mrs. Webster from making an equalization claim. However, the Estate could certainly raise the marriage contract as an apparent defense to her claim.

160In Oskalns v. Oskalne, 2016 ONSC 1676, [2016] O.J. No. 4429, the parties had signed a marriage contract in Latvia which was to protect the wife’s property from her husband. Justice Jarvis found that the language in the contract was not sufficient to oust the equalization provisions under the Act.

[56] Despite the fact that the Marriage Contract was registered on title, there was no evidence from either of the lawyers consulted by the parties or the notary involved in the contract, and no expert evidence, about the law of Latvia governing domestic contracts. Absent any such evidence, Ontario's internal law, as codified by sections 55 and 56 of the Act, governs the validity and effect of the parties’ Marriage Contract.

[60] The marriage contract provided, “…That all property, money, and rights of every nature and kind held by the parties hereto, whether held at the time of the marriage or obtained afterwards, shall remain the property of the respective parties but each shall contribute equally to the upkeep and maintenance of the household (and children).

… For the marriage contract to prevail over the equalization provisions of the Act, the contract must contain provisions which address, in their intent if not in their explicit language, the relative economic position of the parties upon the dissolution of the marriage, through the distribution of assets between them on the basis of ownership or otherwise… (emphasis added)

161I note that in Lay v. Lay (2000), 2000 CanLII 5669 (ON CA), 47 O.R. (3d) 779 (Ont. C.A.), the Court of Appeal found that the parties’ marriage contract was sufficient to oust the equalization provisions of the Act. There, the parties agreed that:

The wife will retain sole ownership, control and enjoyment of the Property free from any claim by the husband. […] All rights and obligations of the husband and the wife, whether arising during the marriage either before or after separation, or upon and after divorce or annulment, including the rights and obligations of each of them with respect to:

(a) Possession of the Property; and

(b) Ownership in or division of the Property,

are governed by this agreement which prevails over all provisions of the Family Law Reform Act (Ontario) or any successor.

162In Lay, Justice Abella stated at paras. 13-15:

[13] In the contract before us, property was defined as the wife's shares and capital in two corporations. The parties agreed in para. 4 of the contract that the wife would retain sole ownership of this property "free from any claim by the husband." In my view, this unambiguous provision, along with para. 5 of the contract, make the parties' intentions irrefutably clear and satisfy the requirements in s. 70(3) of the Family Law Act.

[14] Under para. 5, "all rights and obligations" of the husband and wife in connection with the possession, ownership, or division of the designated property are to be governed by the terms of the agreement. The agreement is to prevail over "all provisions of the Family Law Reform Act (Ontario) or any successor", necessarily including ss. 4 and 8.

… The issue, then, is not the absence of a reference to these sections, but whether, based on the terms of the contract, the parties can be said to have directed their minds to whether the property would be subject to -- or exempt from -- the governing statutory regime. Since the essence of this regime was set out in ss. 4 and 8, it is a necessary inference that the parties directed their minds to the content of those sections.

163In Aubin v. Koerber, 2021 ONSC 5125, the court was dealing with a cohabitation agreement which provided that the parties agreed to a division of property based on ownership of property for the equalization formula. Justice Broad found at para. 129 that the wording: “[t]here shall be no division of property except by legal ownership, although expressed negatively” was sufficient to “meet the high threshold required to show that the parties intended to substitute a division of property scheme which would prevail over the equalization provisions of the FLA.”

164The court found that the husband clearly expressed to the wife that he was protecting the assets that he had brought into the relationship. The marriage contract was a condition of marrying her and the contract was a formal legal document with the legal effect on the wife’s entitlement to advance a future claim on the husband’s property. There was clear language that there were no property entitlements upon marriage breakdown.

165In Assinck v. Assinck (1998), 57 O.T.C. 74 (Ont. Gen. Div.) at para. 13, the court applied Bosch and held that the parties’ Dutch domestic contract did not deal with the economic consequences flowing from the parties’ separation. Also, there was no specific language which could be said to deal with such rights. Therefore, the wife was entitled to a claim for an equalization payment.

166In Calvert (Litigation guardian of) v. Calvert (1998), 1998 CanLII 3001 (ON CA), 37 O.R. (3d) 221, the Ontario Court of Appeal followed Bosch by confirming that certain requirements must be met before a domestic contract can oust a claim to an equalization payment. In that case, the parties had signed a contract in Ontario but the court held that the terms did not oust the equalization regime under the Act.

Discussion

167I have had the benefit of experts in Quebec matrimonial law who have both confirmed that the Quebec instruments intend that marriage breakdown will not permit a division of property. Property in each spouse’s name remains with each spouse.

168However, the Quebec instruments on their own do not contain direct and cogent language to oust the equalization scheme under the Act.

169As stated in Webster, there is a high threshold that must be met before finding that an out of jurisdiction marriage contract prevails over the equalization provisions of the Act.

170Here there was no renunciation or releases or waivers in the instruments.

171Section 2(10) is applicable only when a matter in the domestic contract is also “dealt with” under the Act.

172The above case law confirms that more is needed to oust the provisions of the Act. Unlike the facts in the Lay matter, there was no clear intentions in the instruments, nor can the court conclude that the intentions were “irrefutably clear” (para. 13).

173The husband has led evidence that he argues that the instruments deal with more than just ownership of property found in the Bosch case. He suggests that there is implied language that the parties will not share their assets upon marriage breakdown.

174I find that the content of the instruments does not specifically “deal” with or release equalization claims.

175Most importantly, the instruments do not, on their facts, expressly address substantive rights to equalize property upon the dissolution of marriage as required.

176This is case is similar to the facts in Sinnett and Assinck and Oskalns. Jarvis J. in Oskalns held that the contract did not address the parties’ intentions of the relative economic position of the parties upon dissolution of the marriage.

177In Aubin, the contract contained explicit provisions dealing with releases and clarifying that neither party would have a right to a division of the other’s property.

178In my view, the mere statement that the parties are “separate as to property” is not enough. There is no clear language as to what is to happen on marriage breakdown and a clear renunciation of their property rights upon marriage breakdown.

179There were no specific clauses or waivers and releases that are found in some domestic contracts to confirm that the parties have renounced their future rights. I will have more to say about lack of waivers and releases later in my discussion of the wife’s lack of understanding of the nature and consequences of the instruments. These releases and waivers are not mandatory, but in my view, advisable.

180Accordingly, I find the instruments do not bar the wife from making an equalization claim under the Act.

(c) Has the wife met the onus to establish one of the requisites in s. 56(4) of the Act?

Introduction

181In the event that I am wrong and the instruments oust the equalization provisions under the Act, for the reasons that follow, the instruments should be set aside on the basis that the husband failed to disclose significant assets and the wife’s lack of understanding of the nature and consequences of the instruments.

182This is a clear case where the court should exercise its discretion and set aside the Quebec instruments.

Legal Framework

183Section 56(4) of the Act reads:

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.

184Parties should be able to settle their own affairs: Farquar v. Farquar (1983), 1983 CanLII 1946 (ON CA), 1 D.L.R. (4th) 244 (Ont. C.A.) and courts generally loathe setting aside domestic contracts.

185Parties 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: Clayton v. Clayton (1998) 1998 CanLII 14840 (ON SC), 40 OR (3d) 24 (Ont. S.C.).

186The court is less likely to interfere when the party seeking to set aside the agreement is not the victim of the other, but rather his or her own failure to self-protect. The Ontario Court of Appeal in Mundinger v. Mundinger (1968), 1968 CanLII 250 (ON CA), [1969] 1 O.R. 606 (Ont. C.A.) says that the court will step in to “protect him, not against his own folly or carelessness, but against his being taken advantage of by those in a position to do so because of their position.”

187The court must look not at which party made the better bargain but rather, whether one party took advantage of their ability to make a better bargain. In a case where a party takes such an advantage, unconscionability is possible: See Rosen v. Rosen (1994), 1994 CanLII 2769 (ON CA), 3 R.F.L. (4th) 267 (Ont. C.A.).

188In S.(J.) v. S.(D.B.), 2016 ONSC 1704, 79 R.F.L. (7th) 409 (Ont. S.C.), I summarize Skarica J’s observations found at paras. 34-41 respecting the issue of non-disclosure:

(a) Non-disclosure must relate to “significant” assets. The court must determine whether the disclosure was “significant” such that its financial effect would have caused the party alleging non-disclosure to rethink her or his position. The term “significant” must refer to and be measured in the context of the entire relationship between the parties (para. 34);

(b) Disclosure must include not merely the existence of significant assets but also their extent or value. However, the court must consider whether the party alleging non-disclosure had just as much ability to value the assets in question as the opposing party. In addition, a general awareness of the other party’s assets may be sufficient to avoid setting aside the contract (para. 35);

(c) There is a distinction between disclosing assets and liabilities, and their values believing the disclosure to be true, and deliberately misrepresenting the values of assets and liabilities knowing them to be untrue. However, the use of the term “failure” in s. 56(4) implies that proof of intent or mala fides is unnecessary (para.36);

(d) Every spouse has a positive duty to make complete, fair and frank disclosure of all financial affairs before the contract is entered into regardless of whether or not there has been a request for information and this obligation is not to be construed narrowly. However, disclosure may be adequate in reasonably setting out the nature and value of the assets and debts of the parties, even though it may not have been perfect. If this is the case, the court may find that non-disclosure is an insufficient ground to set aside the agreement. Sworn financial statements may not be necessary for marriage contracts and cohabitation agreements; statements of net worth with an indication of how value was arrived at may be sufficient (para. 37);

(e) Parties must be diligent in ascertaining the facts underlying their agreements and they cannot fail to ask reasonable questions and then complain about a lack of disclosure from the other side (para. 39);

(f) Even where party’s non-disclosure was wilful, it may not be sufficient to set aside the agreement if the other party was not completely misled and could have made further inquiries (para. 41).

189Skarica, J. added the following observations respecting the lack of independent legal advice at paras. 42-46:

(a) The fact that a party did not receive independent legal advice does not necessarily result in an agreement being set aside. It is only one factor the court must consider where the challenge to the agreement is based on some other contractual grounds. The absence of ILA can support the claim that a party did not understand the nature and consequences of a contract (para. 43);

(b) It is incumbent on the parties to read the agreement carefully before signing it and to obtain ILA if he or she did not understand it. If, on the balance of probabilities, the court finds that the party understood the nature and consequences of the agreement even though he or she did not have legal advice, and he or she chose not to obtain ILA then s.56(4(b)) is not satisfied;

(c) The fact that a party appreciates that a domestic contract is not good for him or her does not mean that he or she understood the nature or consequences of the domestic contract.

190However, in the above case, the court found that the applicant was fully aware of the nature of the respondent’s assets at the time that the Agreement was entered into. Specifically, she was aware that the respondent owned the home, its purchase price, that the home was subject to a mortgage, that he owned a carpet supply and installation business gifted to him by his parents, including the building from which the business operated, inventory and equipment. She also knew that one or both of the respondent’s corporations (one of which operated the business and one of which owned the building) held certain investments. She was also aware of the respondent’s vehicles.

191Skarica J. found that non-disclosure must be significant such that it would have caused the spouse to rethink their position in the context of their relationship. Drafts had been exchanged and the wife had an ongoing legal relationship with a lawyer dealing with her motor vehicle accident claim. In any event, he would not have exercised his discretion to set aside as none of the factors to be taken into account identified by Brown, J. in Quinn favour the exercise of the court’s discretion to set aside the Agreement.

192In Quinn v. Epstein Cole LLP (affirmed at 2008 ONCA 662), the court stated at para. 47 that it should employ a two-stage analysis when considering a request to set aside a domestic contract for non-disclosure. See also Levan v. Levan, 2008 ONCA 388, 51 R.F.L. (6th) 237.

193Firstly, the party must demonstrate that the other party failed to disclose significant assets which can include material misrepresentations about the value of the assets with consideration of the value of those assets against the party’s disclosed net assets. Secondly, the court must determine, in the light of the facts, whether it should exercise it discretion. The court sets out various factors such as:

• Whether the party was asked or refused to provide disclosure or misrepresented or concealed facts and whether the other party would have signed the contract even if the disclosure had been provided;

• Whether the party relied on the non-disclosure and would not have entered into the agreement if she had known the true value of the assets;

• Whether the party consented to incomplete disclosure or was aware of the asset and had the means to ascertain the value;

• Whether the party took the benefits flowing from the contract and then moved to set it aside; and

• Whether there was duress, unconscionable circumstances, whether the party failed to seek ILA and whether she moved expeditiously to have the agreement to set aside.

194In considering these factors, a court should not narrowly construe the obligation of spouses to make full disclosure because the Act imposes a positive duty on both parties to disclose. Sworn financial statements are not necessary but there should be an awareness of the other party’s assets.

195The court may also consider whether the wife has as much ability to value the assets as the opposing party. Armstrong v. Armstrong (2006), 2006 CanLII 17248 (ON CA), 28 C.P.C. (6th) 12 (Ont. C.A.) para. 2 and R.C. v J.B, 2015 ONSC 2589 at para. 86.

196Regarding understanding the nature and consequences of the contract, the court may consider whether the moving party could have obtained ILA but chose not to. The lack of ILA does not create a presumption that the moving party did not understand the nature and consequences of the contract: Geishardt v. Ahmed, 2017 ONSC 5513, 1 RFL (8th) 152 at para. 136 and Dougherty v Dougherty, 2008 ONCA 302, 51 RFL (6th) 1 at para. 10.

Discussion

Preliminary issues

197The husband argues that the wife has not challenged the instruments in Quebec nor claimed relief in her Ontario pleadings requesting that the instruments be set aside. In my view, this does not diminish the wife’s claim as the court documents filed provide the parties’ respective positions on this issue and this issue was further fully explored with the case management Judge. This issue is properly before the court.

198The husband argues that the court should draw an adverse inference as the wife did not call Mr. Merling as a witness nor provide a reason why he did not provide evidence.

199The wife argues that since the onus is on the husband to show that the parties’ Quebec instruments oust the equalization regime, then he should have called him to prove the contract terms and circumstances.

200In MacMaster (Litigation Guardian of) v. York (Regional Municipality) (1997), 42 O.T.C. 167 (Ont. Gen. Div.) (aff’d in 98 A.C.W.S. (3d) 1163) at para. 28, the court stated:

An adverse inference with varying weight attached to it may occur in circumstances where a party fails to call a material witness, and [if] it is apparent from all the other evidence in the case that the witness, who was particularly and uniquely available to that party, would have been able to help the court by giving evidence on a material issue.

201In Parris v. Laidley 2012 ONCA 755, the court found that a party who asks the court to draw an adverse inference must demonstrate that:

• There is no legitimate explanation for not calling the witness;

• The witness is not equally available to both parties; and

• The witness has key evidence to provide and/or is the best person to provide evidence on this issue.

202In this case, the court will not draw an adverse inference against either party. Both parties could have proffered Mr. Merling’s evidence. His evidence would have been helpful to the court to either confirm or supplement the evidence before the court regarding the circumstances at the time of the execution of the instruments.

203Mr. Merling certainly had a history with the husband’s family and would not have necessarily been helpful to the wife. He failed to respond to questions from the wife’s counsel at questioning regarding his evidence as he claimed solicitor-client privilege for discussions he had with the husband in the presence of his counsel.

204For the above reasons, this is not a case for the court to draw an adverse inference.

Section 56(4)(a)

205There is some evidence regarding the circumstances of the execution of the instruments.

Evidence regarding the execution of the 1988 and 1990 instruments

206A detailed overview of the circumstances arising out of the execution of the Quebec instruments is helpful at this point.

207In their respective affidavits and their evidence at trial, the parties differ on the circumstances regarding the execution of the Quebec instruments.

208The wife testified that, in the fall of 1988, after the husband’s family found out that they were married, his family insisted that they sign a document to protect the business interests of the husband’s family. The husband says it was suggested but he did not insist.

209She was told that she and the husband were to attend Sheldon Merling’s office who was the notary for husband’s family in Montreal.

210In his pleading, the husband states that the main intention of the marriage contract was to protect his inheritances from his family business rather than to keep their properties separate.

211Neither party saw the 1988 instrument before they attended the meeting with Mr. Merling. They were presented the document and given a short explanation.

212According to the wife, it was a 10-minute meeting. There was no financial disclosure, and she did not understand the nature of the marriage contract and its legal implications.

213On the other hand, the husband says that they discussed signing a marriage contract many times before their wedding and their meeting with Mr. Merling. It was not an in-depth conversation.

214She emphasized how upset she was that her husband prioritized his family’s wishes over her feelings, and how she went along with the execution in order to not upset the husband who would get angry if things did not go his way. She felt she had no choice.

215According to the husband, neither party was aware of the true value of his inheritance, but they were both aware of his family’s interests in shopping malls located in Montreal where she shopped.

216At the meeting with Mr. Merling in 1988, at the time of the execution of the marriage contract, Mr. Merling explained the contract. The wife asked questions and both parties signed the marriage contract in Mr. Merling’s presence. The marriage contract was short and straightforward. His understanding was that they would be separate as to property and that was the intention throughout the parties’ marriage.

217Both parties agree that with respect to the 1990 agreement, the husband received a call from Mr. Merling indicating that there was an opting out period if the parties did not wish to be bound by the changes to the Quebec law that provided for a family patrimony scheme.

218Again, they both attended Mr. Merling’s office, did not receive a copy beforehand and he explained the 1990 agreement. They both signed it in his presence.

219The wife was not shown the contract until the meeting, did not receive an advice letter at any time, and only had one brief meeting. She did not have the opportunity to obtain ILA.

220The 1990 instrument confirmed that the parties wished to maintain the property regime that they would be separate as to property.

221Mr. Merling did not send an advice or reporting letter to the parties after the execution of either agreements.

222The husband however, indicated that the parties did discuss it several weeks before they met with Mr. Merling on December 11, 1990 and that Mr. Merling’s explanation was clear and neither party asked questions.

223The husband testified that the wife knew that he had received 1/3 of his mother’s estate when he turned 25 years and that the husband would continue to pay for the household expenses. Her employment income from Gillette would be saved and be kept separate. He contributed to her TFSA and spousal RRSP.

224The funds from the sale of his father’s home were used to buy a home for the family.

Credibility

225In considering the evidence as to the circumstances surrounding the signing of the Quebec instruments, the court will assess the credibility and reliability of the evidence and the testimony of the parties.

226Credibility has to do with the honesty or veracity of the testimony of a witness, whereas reliability has to do with the accuracy of the testimony of the witness. The reliability of the testimony of a witness is often gauged by the ability of the witness to observe, recall, and recount the events at issue: see R. v. Sanichar, 2012 ONCA 117, 92 C.R. (6th) 303, at para. 70, citing R. v. H.C., 2009 ONCA 56, 244 O.A.C. 288, at para. 41.

227Firstly, I find both parties were not able to recall certain details because understandably these events occurred decades ago.

228In fact, the parties appear to agree on many facts that:

• They attended Mr. Merling’s office together;

• They did not see the instrument ahead of time;

• Mr. Merling presented the instrument to them at the meeting;

• Mr. Merling explained the instrument;

• The wife asked a question and Mr. Merling answered it; and

• The parties signed the 1988 instrument in Mr. Merling’s presence.

229In my view, subject to my comments below, both parties attempted to relay their recollection to the best of their ability.

230The husband’s general lack of truthfulness in recounting his daily living and human interactions is given no weight in determining his credibility in this trial. His lack of candour with his family admitted by him does show a history of misrepresentation of facts and a propensity to lie when he had to deal with his family but does not factor into my assessment of his credibility. He was not under oath at those times.

231It is worthy to note that he encouraged the wife to pretend that they were not married and the wife’s evidence that she disliked this deceit and she had told her own family. I accept the wife’s evidence that she was not pleased that the parties were required to do something by his family.

232However, the husband did admit to misrepresenting the facts in his pleading as he alleged that the marriage contract was put in place to protect the wife’s assets in Norway. In fact, she did not receive the inheritance of property with her sister until 2014.

233Overall, I find that the husband’s testimony was overall fair but at time he was vague in his answers.

234Specifically, he did not provide the details of when the parties discussed the marriage contract before the marriage.

235The husband recalls that during the time they were living in his apartment in Quebec and before they were married, he had a recollection of them discussing the need for a marriage contract. He indicates that the parties acknowledged that he would inherit substantial assets and they would need a marriage contract. He said they were also considering the fact that the wife would be receiving an inheritance from family in Norway. They had discussed that they would keep everything separate. He acknowledged that these were brief discussions and that they discussed inheritance, his family and that it was important to him and his family to have an agreement in place and that it would be something that the parties would have to do.

236I accept the wife’s evidence over the husband on this issue because:

• The wedding was decided quickly in order for the wife to work at Gillette and it would seem logical that the signing of a marriage contract would not have been a priority;

• The issue of the marriage contract came up only after the husband had told his family that they were married, almost 1.5 years after the wedding date;

• I do not accept that the marriage contract had been discussed before the 1988 meeting with Mr. Merling to protect the wife’s assets, as the property in Norway was only acquired by the wife and her sister in 2013-2014; and

• The husband’s evidence on the details of the discussions were vague and sparse although he admitted they were brief and “not heavy duty.”

Conclusion

237Each party testified about what they believed the 1988 instrument meant. There is evidence that the husband had consistently articulated the reason for the signing of the instruments was to protect his inheritances from his family’s business. The instrument goes beyond this objective.

238The notary did not testify nor does the court have the benefit of his notes or file.

239The husband argues that the wife is an intelligent and sophisticated party who, in 1988 at the time of the signing of the instrument, was working in a senior role as a financial analyst at Gillette. She had already sought legal advice when she was exploring the immigration issues to be able to work. She knew she was signing an important document.

240The husband argues that the wife was aware that the husband would be receiving inheritances and aware that he would have an interest in shopping malls. The husband provided specific examples including their wedding gift selection registry at one of the shopping malls and that the wife bought her clothes at a discount at his cousin’s store at the Place Versailles mall.

241The husband argues that both parties are highly educated and sophisticated parties both having achieved earning their MBAs at McGill University and the wife had a history of obtaining prior legal advice pertaining to her residency status. At the signing of the 1990 agreement, the parties had an even greater level of insight into each of their financial circumstances and there was no misrepresentation or concealment by the husband regarding his financial circumstances.

242I accept her testimony that she understood the plain language of the instruments but not the legal jargon and that only recently she came to understand the implications of the instruments in the context of these proceedings.

243Given the circumstances of the execution of both instruments, the wife was not given an opportunity to understand it, to reflect upon it and to consider obtaining ILA.

244I find that the wife did not understand she was signing marriage contracts and that she was renouncing her rights to a division of property upon marriage breakdown because:

• Both meetings with Mr. Merling were short meetings with little time to reflect;

• The instruments were very short with legalese language;

• The instruments did not contain details of the exact process at the marriage breakdown;

• The instruments did not provide detailed waivers and releases which would have directed her to understand that she was waiving and releasing her rights to make any claims on the husband’s property;

• There was not a list of assets in the 1988 instrument which the husband had that would make it clear that she would not benefit from them nor the income or “fruits” from those assets;

• There was no acknowledgement by her that she understood the agreement, was signing voluntarily and that there was no pressure put upon her;

• The whole process and circumstances of the execution of both instruments were hastily done, without an opportunity to review the agreement, no opportunity to take it home to discuss it, no details in the meeting regarding it, and no advice or reporting letter regarding the agreement;

• The court accepts that she did not understand that she was signing that she would be waiving a claim on her husband’s property and she had no idea what he even had nor the details of the inheritances;

• I also do not find that the wife had an obligation to go inquire with his family about more details; and

• In my view, the evidence discloses a reluctant wife going along to keep the peace with no idea of what she was really giving up and no idea that it would affect her rights completely upon marriage breakdown.

245In conclusion, the wife had met her onus under s. 56(4)(a).

Section 56(4)(b)

246I find that the husband failed to disclose the value of assets as of the date of the marriage contract, specifically that he was about to receive 1/3 of his mother’s estate (as declared in his financial statement and NFP statement, for a total of approximately $4M). This is not a paltry sum.

247The court notes that the husband did not know the value of what he would be receiving either, but under our legislative framework and what is established in Ontario family law, financial disclosure does not have to be given in formal financial statements, but at least a list or schedule of approximate value. The fact that she knew that he would someday obtain an interest in shopping malls in my view does not satisfy me that she knew enough about the husband’s inheritances and the family business;

248The husband argues that:

• The vast majority of the value is attributable to the inheritance he was about to receive when he turned 25 but he was not aware of the value of that inheritance and he did not receive it until 1990;

• Other than this inheritance, he had little else;

• The wife’s position is inconsistent as she also argues that the value of his assets at marriage for the purposes of determining the equalization payment is inflated;

• At the time of the signing of the 1988 instrument, she was aware of his assets and that he was to be receiving a substantial inheritance; and

• There is no evidence that the discussions of the exact value of his assets would have affected her decision to sign the Quebec instruments.

249At his cross-examination, he admitted that the wife did not know the extent of the value of his assets.

250Financial disclosure is very important in family law cases. See Roberts v. Roberts, 2015 ONCA 450, 65 RFL (7th) 6.

251It is clear from the husband’s recent financial statement that he disclosed that he had over $4M assets at the date of marriage. The wife knew about the shopping malls but had no conception of the value and the ownerships interests. Even the husband knew little himself about the business as his family had been selective of what information they provided him. He said the instruments were to protect the family business, but he did not make the inquiries necessary to enable him to fulfil his duty and obligation of complete financial disclosure.

252The wife had no idea of the financial position her husband was in at the time of the execution of both instruments.

253The wife’s knowledge of the husband’s assets at the time of the signing of the two agreements was sparse.

254Although she knew that the husband’s family had an interest in Cavendish Mall and Place Versailles shopping centres in Montreal, she was not made aware of the details of the ownership and values that would be required under a marriage contract that would eliminate her right to a division of property upon marriage breakdown.

255The wife was not aware of the values and she later learned that the husband had assets worth over $4M at the date of the Quebec instruments.

256The husband confirmed that he did not know the value of his inheritance from his father and that he did not obtain the full amount of his mother’s estate until he was 35 years old.

257He had not seen a copy of his mother’s will until this proceeding commenced. The husband confirmed that his uncle had not provided him with financial details of the estate until later in his life and he was not aware of the value of the estate prior to signing the Quebec instruments.

258The wife was told about the husband’s meeting with the accountant when he received his first tranche of his inheritance.

259The husband’s failure to provide his net worth of approximately $4M at the date of the marriage and the extent of his assets and potential worth with the upcoming inheritances satisfies s. 56(4)(b) of the Act.

260I find that the wife would have rethought her position and what she was giving up if she knew she was renouncing her future rights to a division of property of that magnitude.

Section 56(4)(c)

261Regarding s. 56(4)(c), in the leading case of Ward v. Ward, 2011 ONCA 178, 104 OR (3d) 401 at para. 121, the court stated:

[121] Section 56(4)(c) of the FLA permits a court to set aside a domestic contract "in accordance with the law of contract", which [page407] counsel agree would include grounds such as unconscionability, duress, uncertainty, undue influence, mistake and misrepresentation. In addition to the common law grounds, ss. 56(4)(a) and (b) permit a court to set aside a domestic contract in the face of significant non-disclosure or where a party "did not understand the nature or consequences of the domestic contract".

262As stated in Toscano v. Toscano, 2015 ONSC 487, 57 RFL (7th) 234 at para. 69, to establish undue influence, the wife must prove that there was (i) improvident bargain and (ii) if so, whether there was inequality in bargaining power. In that case, Justice Blishen also described “[duress] involving 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.”

263Misrepresentation was found to be material so that a reasonable person would consider it relevant when deciding whether to enter into the agreement. It must also be an inducement to enter the agreement. See Dougherty v. Dougherty at para. 32.

264In my view, upon reviewing the whole circumstances, there is nothing to suggest that there was coercion or duress. Certainly, the wife was unhappy about the situation she was in and annoyed that the husband’s family was interfering with their family life, but not to the point where the court finds that there was duress in the sense as defined by Justice Blishen in Toscano. She felt ‘resigned’ to the fact that she had to sign the agreement.

(d) Should the court exercise its discretion?

265The court must now determine, in the light of the facts, whether it should exercise it discretion.

266The husband argues that there was no concealment or misrepresentation of assets. Specifically, the wife knew of the assets, there was no duress or unconscionable circumstances, she did not seek further disclosure, she knew that he had inheritances as he paid for all living expenses, and she saved her employment income. If she had learned about the value of his estate at the date of signing of the instruments, there is no evidence that she would not have signed. She did not move expeditiously to set them aside, she received the benefit due to the structuring of their financial affairs and he complied with the obligations under the contract.

267The leading cases of Dochuk v. Dochuk (1999), 1999 CanLII 14971 (ON SC), 44 R.F.L. (4th) 97 (Ont. S.C.) and Demchuk v. Demchuk 1986 CanLII 6295 (ON SC), [1986] 1 R.F.L. (3d) 176, stipulate that the court must consider whether it is appropriate in the circumstances to set aside the contract.

268At page 90, Justice Clarke set out the following factors:

(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; and

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

269At para. 89, Justice Blishen in Toscano stated:

[89] Fairness is an additional factor the courts may consider when exercising discretion. The Ontario Court of Appeal in LeVan notes at para. 60 that once the statutory preconditions are met under the first stage of the s. 56(4) analysis, a judge can also consider “the fairness of the contract together with other factors in the exercise of his or her discretion…a judge would be more inclined to set aside a clearly unfair contract than one that treated the parties fairly”.

270Similarly, there is the possibility of an effective policy argument: although these pre-nuptial agreements to opt out of community property have been quite common in Quebec, they have never been common in Ontario, and are therefore not the type of “domestic contract” envisaged by Ontario’s Family Law Reform Act. I make no further comment in this respect.

271As stated in Demchuck v. Demchuk (1986), 1986 CanLII 6295 (ON SC), 1 R.F.L. (3d) 176, first the court must consider whether the party attempting to set aside the marriage contract can demonstrate one or more of the circumstances set out in the s. 564. Once that hurdle has been met, then the court must consider whether it is appropriate to exercise discretion in favour of setting aside the agreement.

272In Virc v. Blair 2016 ONSC 49 (affd. 2017 ONCA 394), the trial Judge emphasized the importance of adequate financial disclosure as stated by the Ontario Court of Appeal in Roberts v. Roberts 2015 ONCA 450.

273In Martin v. Sansome 2014 ONCA 14, 43 RFL (7th) 306, the Court of Appeal upheld the lower court decision to set aside the agreement at para. 42:

[42] In this case, the trial judge found that the respondent had in effect no independent legal advice and "held the mistaken belief that it did not matter whether her name was on the property or not and that it did not matter that she willingly signed a formal agreement". He found that the respondent "had no clue about what the implications of such a significant legal document really meant. All she knew was that she had to sign it if the deal was going to close". As noted above, the trial judge also found that she mistakenly believed at the time that she signed the contract that once the couple received a clear execution certificate such that having her name on title no longer posed a barrier to financing, she would at that time go on title.

[43] The evidence supporting these findings was overwhelming. It included evidence from the lawyers who acted on the sale transaction and provided "independent legal advice" to the respondent.

[44] In effect, the trial judge found on the evidence that the respondent "did not understand the nature or consequences of the domestic contract" as provided by s. 56(4)(b) of the FLA.

[45] The fact that the respondent appreciated that the domestic contract was not good for her does not mean that she understood either the nature or consequences of the domestic contract. I see no error in the trial judge's finding that she did not.

Discussion

274In considering the factors set in Dochuk, the court will exercise its discretion and set aside the instruments.

275I have found that the husband failed to disclose significant assets existing when the domestic contract was made. There was no discussion of the parties’ financial circumstances nor did the wife receive an inventory of the husband’s assets. No attachments setting out the parties’ respective assets were attached.

276The court has considered the fact that, although the wife did not pursue disclosure, she was not told about this right. She did not receive any benefits under the instruments.

277The wife was told that she could obtain ILA.

278The evidence indicates that neither party was aware of the impact of Articles 462.1 and 462.13 of the CCQ which was referenced in the 1990 instrument.

279The court accepts that the wife was told that she needed to sign the document and she did so without appreciating its nature and consequences.

280The other fact that is apparent in her testimony is that in signing both agreements, the wife was trying to keep the peace and appease the husband’s insistence that they be signed and avoid him being angry. She was aware that his family was adamant that these agreements be signed and in her testimony, she articulated her hurt about his family coming before her. She also trusted her husband and he told her that they needed to do this to protect the family business.

281The wife knew some of the details during the marriage, as she was aware:

• That the husband was receiving $900 per month

• In 1990 when he received his inheritance, they used the funds to purchase their first home in Dollard-des-Ormeaux, Quebec.

282They were together for 28 years. The parties have accumulated substantial assets including their matrimonial home which is worth approximately 2M.

283The husband has ownership interests in various corporations including Ankama Inc., a holding company, which along with a family trust, holds the husband’s inherited assets. In this way, funds are invested and preserved, and funds are generated in a tax efficient manner for the benefit of the husband and the children. These funds paid for the children’s education and living expenses.

284The husband is a minority shareholder in Ankama and is not involved in the day-to-day operations nor responsible for the declaration of the dividends.

285The parties’ assets include:

• Jointly owning the matrimonial home

• Their personal property and contents which will be divided; and

• The wife has personal investments of approximately 1.5M and the husband personal investments are $1.6M.

286A majority of the husband’s value in NFP is in the form of shares in private family companies over which he had no control as he is a minority shareholder.

287The wife is educated and was employed during the first part of the marriage. The parties agreed that she would be a full-time caregiver for the children. She managed the family household and was the primary caregiver of the children.

288The husband argues that from the outset of the marriage, they discussed how they would manage household finances and that he would pay for all the living expenses from the joint bank account and he would be the sole source of the funds in that account. Initially, the account was funded from monthly amounts paid to the husband from the estate before he received his first tranche from his mother’s estate and later it was funded from that inheritance. The wife kept her earnings from her short employment.

289The first home in Montreal was jointly owned and so was the matrimonial home.

290The purchase of the home in Rockcliffe Park was completed with a $1M payment from a inheritance received by the husband as a result of the passing of Uncle Sam. The parties also used the funds from their Nepean home to purchase the Rockcliffe Park home.

291The wife accrued substantial assets in her name even though she did not return to work after the birth of the parties’ first child.

292The husband argues that the separate as to property related to his interest in the family business. No efforts were made to place the wife’s name on any inherited property, nor make her a shareholder, director or office of the companies or trustee or beneficiary of the trust.

293By the same token, the wife kept her inheritance in a separate account except for a joint account used to fund her parents’ visits to Canada.

294At times, the parties used the joint line of credit to pay for expenses.

295Certainly, the court recognizes that the parties enjoyed a high standard of living during the marriage. Throughout the marriage, the wife benefited from the husband’s payments of all living expenses and children’s education from his estate. They were able to live in their Rockcliffe home and enjoy regular trips to Norway with the family. In addition, the wife benefited from the husband using his inheritance monies to invest in RRSPs and other investments and placed those investments in the sole name of the wife. This includes maximizing her RRSP and TFSA accounts. This allowed the wife to accumulate wealth in her own name of approximately $4.2M as at the date of separation.

296However, fairness dictates that the instruments be set aside. In the circumstances of this case, the court exercises its discretion to set aside the instruments.

297Here, after a 29-year marriage, if the Quebec instruments were determined to be valid, the wife would receive no property settlement. She would be deprived, after a long traditional marriage, from a share of the property owned by the husband in accordance with the objectives set out in the Act.

Conclusion

298Accordingly, the court renders a declaration that the two Quebec instruments do not prevail over the wife’s right to claim an equalization payment of net family properties under the provisions of the Act.

299The wife, as the successful party, is presumptively entitled to costs. If the parties cannot agree on the costs, then the wife shall provide her 2-page costs submission along with any offers to settle and bill of costs by January 27, 2023, the husband shall provide his 2-page costs submissions along with any offers to settle and bill of costs by February 18, 2023. The wife will have a right to file a one-page reply by March 3, 2023.