Court overturns domestic contract: Recent case law

When a domestic contract is enforceable is the main issue in a recent case – Martin v Sansome 2014 ONCA 14 – decided by the Court of Appeal for Ontario.

The parties were married for 10 years. The husband’s parents owned a dairy farm and milk quota and offered the couple the opportunity to live on and manage the farm. The husband’s family belonged to a tight-knit religious community that played an active role in the personal lives of its members. The parents sold the farm to their son (Mr. Martin) and his wife (Ms Sansome), but the day before the sale was to close, the wife was told that she could not have her name on title. Apparently, her name was still attached to a past debt the couple had incurred, and Mr. Martin’s parents said they did not want this debt to become attached to the family farm. She was also told that the church committee would not allow the sale of the farm to proceed unless her name was removed from the title to the farm.

Ms Sansome was told she had to sign a domestic contract waiving all her rights to the farm. The husband’s family sent her for so-called independent legal advice to a lawyer who was visually impaired and who could not and did not read the domestic contract himself or review it with her. The lawyer spent only 20 minutes with Ms Sansome, who was highly emotional and distraught throughout the appointment. She signed the contract. Tellingly, the lawyer did not charge her for this appointment, which further strengthens the argument that he was working for the husband’s family and was not providing independent legal advice.

Over the court of the next several years, the milk quota and herd were sold, and both Mr. Martin and Ms Sansome began to work exclusively off the farm. Ms Sansome paid all the household expenses from her income and deposited any remaining money in a bank account bearing only her husband’s name.

The parties separated when their teenage daughter found photos online of her father engaged in sexual activity with someone other than her mother.

When the husband applied for a divorce, the wife responded by making a claim for, among other things, a 50 per cent interest in the farm. The husband argued that the domestic contract did not give her any interest in the farm.

At trial, the judge found that the wife had not received independent legal advice and that she “held the mistaken belief that it did not matter whether her name was on the property or not and that it did not matter that she willingly signed a formal agreement.”

He found that she had “no clue about what the implications of such a significant legal document really meant. All she knew was that she had to sign it if the deal was going to close.”

Accordingly, he found that the domestic contract was not enforceable. The Court of Appeal upheld this finding. It did not, however, agree with the trial judge’s remedy, which had been to grant Ms Sansome a 50 per cent interest in the farm, so substituted a monetary award in place of that decision. Mr. Martin was required to pay Ms Sansome the sum of $390,646.77 as an equalization payment plus both pre- and post-judgment interest. Ms Sansome was permitted to remain in the matrimonial home until Mr. Martin made such payment to her.

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