In Stevens v. Stevens, a stay-at-home wife with significant inherited funds that were invested into the matrimonial home, intended that her husband would receive one-half the value of the matrimonial home in the event of marriage breakdown after receiving her inherited funds first.
Husband disclosed that he was having an affair with another woman to the wife. This admission put the wife into a highly emotional state, wanting her to reconcile the relationship and at the same time, prepare a Marriage Contract in the event that marriage breakdown was unavoidable.
Wife’s lawyer sent a draft Marriage Contract to the husband’s lawyer together with a cover a cover letter which stated that the wife wanted to give the husband one-half of the value of the matrimonial home. Without a Marriage Contract, the husband would have received an amount in the range of $500,000 to $700,000 under theFamily Law Act in accordance with the statutory equalization scheme. Under the Marriage Contract (which contained a fundamental drafting error per below), the husband stood to gain $2,500,000 – a significant benefit to the husband.
The interesting part of this case is that the clause relating to the matrimonial home contained a fundamental drafting error: it stated that the wife would give the husband the full value of the matrimonial home in two installments on separation rather than one-half as the wife intended. Husband knew that it was his wife’s intention to recoup her inheritance funds that she had invested in the matrimonial home and split the balance of the property equally.
The Court ruled it equitable to set aside and void the Marriage Contract. The Court found that the husband and his lawyer knew of the inconsistency between the draft Marriage Contract and cover letter, yet failed to seek clarification. In addition, the Court accepted evidence that demonstrated the wife suffered from bipolar disorder and was experiencing an episode of hypomania during the negotiations of the Marriage Contract. In other words, the Court decided that the husband could not be aware of the mistake and take advantage of it. The Court explained in its ruling that not only should the Marriage Contract be found void because it was grounded on a fundamental mistake that was taken advantage of by the husband, but also because the husband took advantage of the wife while she was vulnerable due to her suffering from hypomania. The Court ruled that the wife was in a vulnerable state throughout the negotiation process and that husband ought to have known that the wife was acting exceptionally out of character for her.
– Summary prepared by Carolyn Warner