Case reference: LeVan v. LeVan, 2008 ONCA 388 (CanLII)
This historical case summary discusses the decision identified above. Later decisions and legislative changes may affect how it applies today. Obtain legal advice about your circumstances.
Family law — Domestic contracts — Setting aside – Husband deliberately failing to disclose existence of certain assets to wife prior to entering into marriage contract – Husband seriously misrepresenting extent and value of some of disclosed assets — Husband misrepresenting nature and terms of marriage contract to wife — Wife not receiving effective independent legal advice — Contract extremely unfair to wife – Trial judge not erring in setting aside contract under s. 56(4) of Family Law Act — Family Law Act, R.S.O. 1990, c. F.3, s. 56(4).
Family law — Property — Equalization of net family property — Unconscionability — Marriage contract which court has set aside under s. 56(4) of Family Law Act not constituting written agreement between spouses within meaning of s. 5(6)(g) of Act — Market-driven decrease in value of asset after valuation day not engaging s. 5(6)(h) of Act — Family Law Act, R.S.O. 1990, c. F.3, ss. 5(6)(g), 5(6)(h).
The parties were married for seven years and lived together for one year before marriage. The husband and his family owned the majority of shares in W Inc. The husband’s father wished to ensure that shares of that company stayed within the family. Family members entered into certain agreements which provided that any family member who wished to continue to hold shares in W Inc. had to enter into a marriage contract. Before the parties’ marriage, the husband informed the wife that a marriage contract had to be signed or the wedding would not take place. He told her that the sole purpose of the contract was to keep shares of W Inc. in the family. The contract was drafted by B, a matrimonial lawyer at the same firm as the family’s corporate lawyers. The contract excluded all of the husband’s business interests from net family property and severely restricted the wife’s right to support. R, the lawyer initially retained by the wife, advised the wife that the contract was unconscionable. R was fired. Four days before the wedding, B asked another lawyer, H, to provide the wife with independent legal advice. H had acted for B in B’s own family law matter. This was not disclosed to the wife. H met with the wife on one occasion, for approximately one hour, before the contract was signed. The wife sought to set aside the marriage contract under s. 56(4) of the Family Law Act. The husband submitted that if the contract were set aside, the equalization payment claimed by the wife would be unconscionable. He relied on ss. 5(6)(h) and 5(6)(g) of the FLA. The trial judge set aside the marriage contract under s. 56(4) of the FLA and rejected the husband’s unconscionability argument. The husband was ordered to pay the wife an equalization payment of $5.3 million, in addition to spousal and child support. The husband appealed.
Held, the appeal should be dismissed. [page2 ]
The trial judge did not err in setting aside the marriage contract under s. 56(4) of the FLA. She did so on the following grounds. The husband did not disclose that he held certain significant assets and he did not disclose the value of the assets which he did disclose. The wife did not receive effective independent legal advice, and some advice provided was wrong. The wife did not understand the nature and consequence of the marriage contract, and the husband misrepresented the nature and terms of the marriage contract. The husband’s failure to disclose his entire assets to his wife was deliberate. The husband interfered with the wife’s receipt of legal assistance from R. While the husband argued on appeal that the trial judge erred in importing the concept of “value” into s. 56(4), the husband’s failure to disclose value for certain interests was not critical to the disclosure analysis. There was an abundance of evidence indicating that the husband had failed to comply with his disclosure obligations apart from his failure to disclose value for those assets. This failure was compounded by the serious misrepresentations respecting the extent and value of certain of the assets disclosed. The marriage contract itself was misleading. The wife had no chanceof understanding what she was giving up when she signed the contract. In deciding how to exercise her discretion under s. 56(4), the trial judge considered the “fairness” of the contract. Fairness is an appropriate consideration in the exercise of the court’s discretion under s. 56(4). Once a judge has found one of the statutory preconditions to exist, he or she should be entitled to consider the fairness of the contract together with other factors in the exercise of his or her discretion. There was no reason to interfere with the trial judge’s exercise of her discretion.
The “written agreement between the spouses that is not a domestic contract” referred to in s. 5(6)(g) of the FLA does not include a marriage contract that has been set aside by the court.
The significant market-driven decline in the value of the husband’s shares in W Inc. after the separation was not a circumstance warranting unequal division within the meaning of s. 5(6)(h).
There was no error in the trial judge’s awards of child and spousal support.
The trial judge did not err in awarding post-judgment interest on the equalization payment and the lump sum spousal support.
*source: Canlii
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