The article discusses the high profile case of McCain v. McCain (currently on appeal to the ONCA). After 15 years of marriage, the spouses entered into a marriage contract under which the wife waived her equalization and support rights. The husband’s father was prepared to disinherit him if the agreement was not signed. After 30 years of marriage and 5 children the couple separated. The wife was left with a $7 million settlement, and all property in her name - a house and 2 cottages which were all heavily mortgaged (by the husband). The husband was worth $500 million at the time of separation.
Waivers of any rights in a marriage contract may be considered unenforceable by a court under the Ontario Family Law Act if (1) one spouse did not provide full and proper financial disclosure to the other regarding assets, income and debts (including their values); (2) one spouse did not understand the nature or consequences of the contract (e.g., each spouse should have proper independent legal advice prior to signing); or (3) the contract or the making of it somehow offends contract law rules (such as the presence of fraud, duress, undue influence or unconscionability) .
In an interim order, the Court found that the contract was entered into under duress, and posed the question: “How could [she] have possibly refused to sign under those circumstances?” The wife was awarded $175,000 per month in spousal support - the highest amount ever awarded by a Canadian court. The decision will be appealed to the Ontario Court of Appeal.
This case is a reminder that the process of entering into a marriage contract is extremely important. If the circumstances are such that one spouse, to their detriment, had no real choice but to enter into the agreement, a later challenge by that spouse of the enforceability of a waiver of equalization rights and/or spousal support clause may be successful.
Takeaway:
- If one of the parties to the marriage contract “had no real choice but to sign”, that party might succeed (often years later) in challenging the enforceability of a waiver of spousal support and equalization rights. This will be especially likely if the wealthier spouse was too ‘greedy’ and the contract is so one sided that it does not even come close to what the other spouse would have received under the statutory regime.