The Importance Of Properly Drafting a Marriage Contract

Stevens v. Stevens a decision of the Ontario Court of Appeal

The parties had married in 1991, and separated on June 30, 2007, in effect, a 16 year marriage. There were three children born of the marriage. The wife, aside from volunteer work and doing a small amount of work for her husband's company, really did not work during the marriage.

The wife had come from a wealthy background and had received a significant amount of money as part of her inheritance, which was partially utilized by the wife to renovate the home and partially to put into a family trust, belonging to the parties, for purposes of educating the children, in effect, the interest earned from her inheritance funds would be used to pay for university.

The husband was a successful computer entrepreneur. But it was the wife's, close to a million dollars, which was put into the family trust.

The Marriage Contract arose during the marriage, as a result of the wife finding out about the husband's affair. In total the wife also put approximately two million into the home. The money that the wife put into the Stevens family trust was covered by a demand promissory loan.

An issue arose with respect to a drafting error in the agreement, even though it was very clear that the wife intended the husband to receive one half of the value of the home, the agreement reflected that the husband receive the entire equity in the home. Even though the covering letter sent with the agreement clearly reflected that the husband was to receive only half the value of the equity in the home.

The Court made negative findings against the husband, because he, as one of the parties, knew the other side made a mistake in terms of the draft agreement and remained silent and concluded the contract on mistaken terms. The mistake was obvious, to a reasonable person, and the husband instead sought to benefit from it.

In addition, the husband had received an e-mail from his wife, which explained the intent of the Marriage Contract, so he could not possibly pretend to be unaware of the error in the drafting.

In addition, the contact did not return to the wife her inherited money and indeed the husband was paying out significant monies from his corporation to himself at the same time that he was utilizing the wife's inherited funds.

The Honourable Mr. Justice Harper found the contract void ab initio (no contract existed as there was no meeting of the minds).

The Court of Appeal upheld Mr. Justice Harper. The court below had found that the husband's behavior had been inappropriate and made significant findings against him on credibility. None of this was disturbed in the Court of Appeal.

It is of the utmost importance the Marriage Contacts be properly drafted.