There are many reasons you should sign a marriage or pre-nuptial agreement, including protecting yourself if the marriage breaks down and doing so cost-effectively. It also provides some sense of the expectations of the parties upon the breakdown of a marriage. Therefore, it is important to consider the elements that will make a marriage agreement enforceable if it is challenged in court.
This article will discuss the elements of an enforceable marriage agreement to outline key considerations for ensuring that your marriage agreement will be upheld if challenged in court. We will also discuss an example of a case (Hicks v. Gazley, 2020 ABQB 178) in which the court upheld a marriage agreement signed by the parties, although the wife’s lawyer had advised her not to do so.
Under s. 38 of the Family Property Act, RSA 2000, c F-4.7, parties who are signing a marriage agreement are required to attach acknowledgments that they are:
The s. 38 acknowledgments would be signed before a lawyer who would confirm that the elements were met.
It is important to ensure adequate disclosure of the assets held by each party when drafting a marriage agreement. As explained in the Hicks case below, it is important to promptly request further disclosure before signing the agreement if the disclosure appears inadequate.
Parties to a marriage agreement should consider obtaining independent legal advice before signing the agreement. It is important for the parties to properly and fully consider their rights and what they may be giving up in signing the marriage agreement.
Also, this goes hand in hand with full disclosure, as a lawyer may only be able to properly provide advice on the marriage agreement with the full context.
In the Hicks case, the wife argued that the marriage agreement was unenforceable. Before signing, her lawyer had advised her not to sign it, as there was inadequate disclosure from the husband, and it did not comply with the statute (formerly the Matrimonial Property Act). However, he did not explain further why this was his opinion.
Following the Supreme Court of Canada case, Hartshorne v. Hartshorne, 2004 SCC 22, which involved similar circumstances, the court found that the wife could not rely on the lawyer’s advice that the marriage agreement would not be upheld because it was deficient for lack of disclosure and lack of independent legal advice. In other words, the court would not allow her to avoid the obligations to which she willingly agreed in the marriage agreement because the court did not accept her claim that she intended the agreement not to be binding and only signed it on the belief that the agreement was unenforceable and would not be upheld in court.
The court in Hicks found that the wife acknowledged the agreement’s nature and effect by signing the s. 38 acknowledgments. Also, the court found that the agreement was quite simple: it involved splitting the property equally, other than assets that were set aside for the husband (his two identified corporations, any future corporation, or his identified assets) or the wife (her financial assets or any future corporation). In this case, the wife was also a university-educated professional, so the court did not accept that she was not aware of the nature and effect of the agreement.
The court also found that she was aware that she was giving up potential future rights to the husband’s assets that were set aside in the agreement and that it was not necessary for the future assets to be identified at the time of signing, as this would be speculation.
Also, the court considered the fact that the wife had multiple options available to her, including:
Through her conversations with the two lawyers, the wife was also aware of the disclosure concept. Therefore, she could have made further requests for disclosure from the husband before signing and completing the acknowledgments. The court found that she was waiving the right to do so by not seeking further disclosure.
The wife requested further disclosure of when the separation occurred years after the agreement was signed. The court decided that it was too late for the wife to seek further disclosure at that point in time.
There was no evidence to suggest that the wife was pressured into signing the agreement other than to please her husband. This was not enough to find that she signed under duress.
In the Hicks case, even though the lawyers advised the wife that there may have been inadequate disclosure, it was the wife’s responsibility to seek further disclosure and further legal advice once that disclosure was provided. Also, even though the lawyers had advised her that she should not sign the agreement, she did so and signed the s. 38 acknowledgments, which do not require further disclosure or independent legal advice.
Before signing a marriage agreement, seeking further disclosure and obtaining independent legal advice based on the additional disclosure is important. Even if a lawyer advises that further disclosure may be needed, more is needed to invalidate a marriage agreement if requests for disclosure are made. Also, the requests for disclosure should be made before the agreement is signed. It is too late to ask for further disclosure, such as after the separation in the Hicks case.
It is important to carefully consider whether appropriate disclosure has been made and obtain independent legal advice before signing a marriage agreement, as the court will not allow you to rely on a belief that the agreement would be unenforceable anyways if you have already signed the agreement and fulfilled the s. 38 acknowledgment requirements.
If you or your partner are considering a marriage agreement, you should speak with one of our dedicated family lawyers before you sign the agreement. We are experienced in assisting individuals with marriage agreements and can help provide important advice before signing to avoid issues if the marriage breaks down.
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