The case of In Torgersrud v. Lightstone, 2023 ONCA 580 serves as an example of the complexities in family law, especially when interjurisdictional issues come into play.
Kirsten Torgersrud and Albert Maxwell Lightstone met at university in Montreal and married on March 31, 1987. They signed two marriage contracts in Quebec, primarily to protect the husband’s family business interests. These contracts stated that the parties were “separate as to property” and would not be liable for each other’s debts (Torgersrud v. Lightstone, para. 2-3).
The Issue: Interjurisdictional Complexities
After moving to Ottawa in 1993 and separating in 2015, the wife applied for equalization under Part I of Ontario’s Family Law Act (“FLA”). The husband contended that the Quebec marriage contracts should take precedence.
“The husband asserted that the Quebec marriage contracts ousted the provisions of the FLA” (Torgersrud v. Lightstone, para. 4).
This raises critical questions about the applicability of contracts signed in one jurisdiction over the laws of another.
Paramountcy of the FLA?
The Application Judge in Ontario concluded that the Quebec contracts did not override the FLA’s provisions.
“There is a high threshold for finding an out-of-jurisdiction marriage contract prevails over the FLA’s equalization provisions: Webster v. Webster (2006)” (Torgersrud v. Lightstone, para. 6).
“The contracts did not contain explicit renunciations, releases, or waivers that directly addressed equalization claims. This aligns with jurisprudence, emphasizing a high threshold for out-of-jurisdiction marriage contracts to prevail over the FLA’s equalization provisions.” (Torgersrud v. Lightstone, para. 6)
Unfortunately, the Court of Appeal demurred on this issue, perhaps being satisfied with the standard established in Webster v. Webster referred to above. Approving of the results of the Application Judge’s decision, the Court of Appeal instead focused on the Application Judge’s alternative analysis and exercise of judicial discretion.
“We do not need to decide this issue. The application judge’s alternative analysis involves discretionary decisions, which are entitled to deference and disclose no error. Accordingly, regardless of the result on the first issue, the appellant cannot succeed” (Torgersrud v. Lightstone, para. 10).
“The application judge determined that s. 56(4) of the FLA was engaged and exercised her discretion under that section to set aside the contracts” (Torgersrud v. Lightstone, para. 11).
Particular Reasons for Setting Aside the Contracts
The Court of Appeal dismissed the husband’s appeal, thereby affirming the lower court’s decision to set aside the contracts. The contracts were set aside for the following key reasons:
Lack of Financial Disclosure:
The husband failed to disclose significant assets, specifically a large inheritance, at the time of signing the marriage contracts. This lack of full financial disclosure was a critical factor in the court’s decision to set aside the contracts.
“The application judge found, at para. 246, that the husband failed to disclose the value of assets as of the date of the marriage contract, specifically that he was about to receive 1/3 of his mother’s estate (as declared in his financial statement and NFP statement, for a total of approximately $4M). This is not a paltry sum.” (Torgersrud v. Lightstone, 2023 ONCA 580, para 13)
Lack of Clarity and Understanding:
The wife did not fully understand her legal entitlements under the law, partly because the Quebec marriage contracts were not explicit enough in detailing what rights she was renouncing. The contracts did not contain explicit renunciations, releases, or waivers that directly addressed equalization claims under Ontario’s Family Law Act.
“The wife did not understand her entitlements under the law and therefore did not understand what rights she was renouncing in signing the Quebec marriage contracts.” (Torgersrud v. Lightstone, 2023 ONCA 580, para 14)
The Application Judge invoked section 56(4) of the FLA, stating:
“A court may, on application, set aside a domestic contract or a provision in it, if a party failed to disclose to the other significant assets, or significant debts or other liabilities, existing when the domestic contract was made” (Torgersrud v. Lightstone, para. 12).
Analysis and Conclusion
The Court’s decision underscores the importance of full financial disclosure and understanding the implications of marriage contracts. It also highlights the challenges of navigating interjurisdictional issues in family law.
“Fairness dictates that the instruments be set aside” (Torgersrud v. Lightstone, para. 21).
Key Points to Remember
- Interjurisdictional Issues: Contracts signed in one province may not necessarily override laws in another.
- Paramountcy of the FLA: Ontario’s Family Law Act has a high threshold for being overridden by out-of-jurisdiction contracts.
- Importance of Full Disclosure: Lack of financial disclosure can lead to the setting aside of a marriage contract.
For family law practitioners in Ontario, this case serves as a cautionary tale. It highlights the need for meticulous drafting of marriage contracts, especially when clients have connections to multiple jurisdictions. Practitioners must now consider not only the laws of Ontario but also how those laws interact with the laws of other jurisdictions. This is particularly important for couples who may move between provinces, or outside of Canada.
Let’s continue to elevate the practice of family law in Ontario!
Disclaimer: The information provided in this blog post is intended for general informational purposes only and should not be considered as legal advice. Consult with a qualified family law attorney for advice regarding your specific situation. Goldhart Mediation & Arbitration is not responsible for any actions taken based on the information presented in this blog.