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DOMESTIC CONTRACTS AND SEPARATION AGREEMENTS - Prenuptial and marriage contracts - Enforcement

Tuesday, April 13, 2021 @ 6:15 AM  

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Appeal by the wife from the trial judgment refusing to set aside the parties’ 2008 marriage agreement. Pursuant to the agreement, each side would keep their own assets and the husband would pay the wife $450,000 to acquire a new home. The schedule to the agreement of the husband’s assets did not hint at the fact that the unvalued business assets and the additional residential property that was not on the list had a value almost equal to that of the net assets for which a value was provided. Adding up the wife’s assets and receipt of spousal support, she was left with $950,000. The husband was left with net assets of $3,483,073. The agreement was entered shortly before the marriage. The parties separated in 2016. The trial took place in 2018. The wife, a university professor from India, gave up her academic career there to move to B.C. This was a second marriage for both spouses. The judge rejected any notion that the agreement was provided to the appellant at the last minute, or that the appellant was vulnerable. The judge accepted the respondent’s evidence that the appellant had concerns about where she might live if on her own and terms were added to the agreement to address these concerns. Although the agreement provided for no spousal support, the husband agreed at trial that the wife was entitled to support. The judge determined the reasonableness and quantum of spousal support first, before considering the division of property. When considering the operation of the agreement as at the time of trial, the judge considered that the husband agreed to pay spousal support of $3,000 per month for seven years, which the judge found was reasonable.

HELD: Appeal allowed in part. The lump sum payment to the wife was increased to $525,000 to provide for equal sharing of the increase in value of the family home over the course of the marriage. The trial judge did not err in finding the agreement enforceable at the time it was made but erred in finding that it operated fairly. The judge weighed the spousal support in a way that was unduly balanced in the husband’s favour, because it had the effect of making the division of property by operation of the agreement appear fairer than it truly was. She wrongly found that the circumstances at trial were as contemplated when the agreement was made by failing to take into account the unforeseen extraordinary rise in value of the parties’ home over the marriage, by not considering the deficiencies in the husband’s disclosure of the value of his assets when the agreement was made, and by factoring in spousal support as though it mitigated the division of property under the agreement. The agreement was not fair in its operation because it allowed the husband to keep the entire increase in value of the family home. A fair result would provide for equal sharing of the increase in value of the family home over the course of the marriage. Spousal support would not adequately mitigate the unfairness of the wife having to bear an increase in real estate prices of more than 100 per cent without sharing in the growth in value of the family home during the period of the marriage and without any adjustment in the lump sum payable to her under the agreement.

Dhaliwal v. Dhaliwal, [2021] B.C.J. No. 278, British Columbia Court of Appeal, H. Groberman, S.A. Griffin and DeWitt-Van Oosten JJ.A., February 19, 2021. Digest No. TLD-April122021003