By Douglas J. Manning, Partner, Certified Specialist in Family Law
A recent, highly publicized, spousal support decision sheds light on how the “other half” live (and how they end up paying their support).
Michael McCain, one of the children of Wallace McCain (a wealthy businessman in the food industry) and his wife of 30 years separated in 2011. They had 5 children, only 2 of whom remained dependent at the time of separation. Ms. McCain had not worked outside of the home for about 26 years.
About 16 years into the marriage, the husband’s father demanded that each of his children and their spouses sign marriage contracts that would protect the assets he would pass on during his lifetime or upon his death. Essentially he wanted his estate to remain within his bloodline and not be available to any of his children’s spouses in the event that any of them separated. The story was the husband’s father demanded these agreements on pain of the husband being ignored in his father’s Will.
In the agreement signed by Michael and Christine McCain in 1997, Christine agreed to release her entitlement to what is called an Equalization Payment and in exchange she would receive a fixed amount of money which was to be a maximum of $7,000,000 (and a $300,000 payment one year after the agreement was signed) and she was to receive the matrimonial home. The wife also waived what she might have been entitled to in spousal support.
The Court was asked to order the husband to pay the wife temporary spousal support even though the Marriage Contract released her entitlement to spousal support.
The Court undertook an analysis of the facts and the law on this issue. The Court was of the view that the release of spousal support did not meet the criteria set out in the Divorce Act when considering an appropriate amount of spousal support – such as the means and circumstances of the parties, the length of the marriage, the roles assumed during the marriage, etc.. The Court was also aware that the wife’s property entitlement was far less than she would have otherwise been entitled to if she had not entered into the agreement.
If is worth noting that the wife had independent legal advice at the time that she was given the Marriage Contract to sign and she signed the Contract in light of the legal advice she received. Even with legal advice, the Court was satisfied that the Ms. McCain was under sufficient duress to sign the Contract that it should be set aside. The duress took the form of her father-in-law’s threat to “disinherit” his son if the Marriage Contract was not signed. The Court stated that the “duress was subtle and psychological, in that she appeared to be the key to the husband remaining as one of his father’s heirs”.
The Court asked the question: “Was the bargain (Contract) acceptable?” I am not sure this is the precise question that needs to be answered. But the Court took into consideration that the marriage existed for another 15 years after it was signed; that there were no income projections done as to what the husband might be earning in the future and no projections as to lifestyle changes that took place as the years went by.
Once the Court was of the view that it would consider the agreement as only one factor in determining whether it would order support or not, then it became a decision on what was an appropriate amount of support to award. The Court went on to state that each spouse should be able to live in a fashion that does not require the wife to sell the matrimonial home, to use up her capital, to support her expenses.
In the result, the Court ordered the Husband to pay temporary spousal support of $175,000 per month until the matters could be more fully examined and dealt with.
The takeaway point for me from this is – don’t be too greedy in what you ask for in your Marriage Contract. If it is found to be too one-sided and does not come close to what the law might provide to your spouse without a Contract then there is an increased possibility that the Contract might be judged to be invalid at least to the extent that the unfairness is manifest and significant.