The Supreme Court of Canada has refused to rewrite a marriage agreement that left a Vancouver woman with just a small portion of the family assets that built up during her nine-year marriage.
A 6-3 majority ruled that the couple - both lawyers - knew exactly what they were doing when they hammered out an agreement that ultimately left Kathleen Hartshorne with only $280,000 of the $1,415,000 family assets.
The court emphasized that judges will be loath to interfere with fair prenuptial agreements negotiated by couples who obtained proper legal advice and made a conscious decision. The ruling cements a judicial move toward creating greater certainty and finality for both married and unmarried partners.
"Once an agreement has been reached ... the parties thereto are expected to fulfill the obligations that they have undertaken," Mr. Justice Michel Bastarache said in Friday's ruling. "A party cannot simply later state that he or she did not intend to live up to his or her end of the bargain."
Judge Bastarache said that when couples take personal responsibility in this way, "the courts should be reluctant to second-guess the arrangement on which they reasonably expected to rely. Individuals may choose to structure their affairs in a number of different ways, and it is their prerogative to do so."
At the same time, he added, courts will continue to ensure fair treatment for spouses who would be left in genuine financial hardship or who are incapable of returning to career they have interrupted for the benefit of the family unit.
Judge Bastarche said that many marriage agreements are specifically designed to safeguard the unequal assets of a couple planning to marry. Others simply fail to anticipate the twists and turns of a couple's financial affairs as their marriage progresses and may eventually require judicial restructuring to return a measure of fairness.
Ms. Hartshorne, 50, and her ex-husband - Robert Hartshorne - lived together for three years before deciding to get married in 1987. Both were lawyers. Together, they had two children.
"He brought assets worth approximately $1.6-million into the marriage, including his law practice, while the respondent entered the relationship with no assets and heavily in debt," Judge Bastarache noted in the ruling.
Having lost a great deal of assets after the breakdown of his first marriage, Mr. Hartshore, 57, had insisted on a contract to avoid any repetition of the experience. Their contract kept their property entirely separate, allowing only for Ms. Hartshorne to gain 3 per cent interest annually in the family home.
Ms. Hartshorne signed the agreement after receiving legal advice that while the terms were "grossly unfair," the contract probably would be overturned by the courts if the couple ever decided to separate.
After the couple separated in 1998, Ms. Hartshorne went to court arguing that the original agreement was signed under duress and failed to reflect her career sacrifices for their family.
A trial judge agreed, saying Mr. Hartshorne's legal practice had thrived in part because his wife was at home bringing up their two children. Ms. Hartshorne was awarded assets worth $654,000 - approximately 46 per cent of the family assets. They included a share of their vacation property, RRSPs, savings and Mr. Hartshorne's law practice. She also received spousal support payments.
The Supreme Court said Friday, however, that the couple's financial history closely mirrored what they ought to have anticipated. It said Ms. Hartshorne can attempt to partly remedy disparity through a renewed application for support payments.
(The minority judges in yesterday's ruling - Madam Justice Marie Deschamps, Mr. Justice Ian Binnie and Mr. Justice Louis LeBel - founded their dissent on the trial judge's having incorrectly awarded a share of Mr. Hartshorne's law practice to Ms. Hartshorne.) "Where, as in the present case, the parties have anticipated with accuracy their personal and financial circumstances at the time of distribution - and where they have truly considered the impact of their choices ... a finding that their agreement operates unfairly should not be made lightly," Judge Bastarache wrote.
Independent contracts are permitted in most provinces, allowing partners to depart from general provincial rules governing the division of assets. They can, however, be overturned by the courts should they later be found unfair to one of the parties.
In a major ruling last year - Miglin v. Miglin - the court spoke in favour of certainty - but not rigidity - in relation to interpreting separation agreements a party later wishes to modify. Friday's decision applied similar reasoning to agreements reached prior to a marriage.
"The parties obtained independent legal advice," Judge Bastarache said. "The respondent was told by her lawyer that the agreement was unfair and that the courts would likely set it aside if the parties separated. The respondent nonetheless signed the agreement (after making a few small amendments) on their wedding day, at the appellant's insistence."