Carmelo Anthony: Setting Aside a Prenuptial Agreement
As reports emerge that NBA star Carmelo Anthony, and his wife, La La Anthony, may be heading for a divorce, news is also emerging with respect to what the financial arrangements may be for their $200 million plus fortune. As TMZ reports, the couple signed a prenuptial agreement before their marriage in 2010, and the contract apparently protects Carmelo's interests significantly more than La La's. Currently, Carmelo is signed to a $124 million contract with the Knicks, and has earned over $200 million so far in his career. At the time the couple met, La La was a host with MTV, and she has continued working as an actress, model, and producer during the marriage, earning some cash on her own, but not quite reaching the level of income earned by Carmelo.
Before getting married, Carmelo's lawyers would likely have advised him to enter into a prenuptial agreement, however, as noted by TMZ in their report, and despite rumors to the contrary, prenuptial agreements are far from concrete; they can be challenged, and often are.
In Ontario, the law for setting aside marriage contracts is set out in section 56(4) of the Family Law Act, which provides that 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;
- If a party did not understand the nature or consequences of the domestic contract; or
- Otherwise in accordance with the law of contract.
The Supreme Court of Canada decision in Miglin v. Miglin 2003 SCC 24 set out the test for courts to consider when determining if an agreement should be upheld. The Court notes that while the principles of finality and certainty which an agreement provides should be upheld whenever possible, there are circumstances when it would not be appropriate. The Court will consider two main factors;
- the formation of the agreement, and
- the intention of the parties.
With respect to the first factor, if the agreement was thoroughly negotiated and the parties were represented by counsel, it increases the likelihood that a Court will uphold the contract. The contract will also be examined for substantial compliance with the objective of the Divorce Act, both at the time the contract was entered into, and at the time of review. With respect to the second factor, the main consideration is whether the parties could foresee the current circumstances at the time the agreement was entered into; in other words, if the parties' anticipated that the current circumstances might occur, but signed the agreement anyways, this would increase the likelihood of the agreement being upheld.
In the case of Carmelo and La La, assuming the parties were assisted by counsel and disclosed their assets in accordance with the law, provision (a) and (b) may not apply. However, provision (c) as outlined above is an important clause, as it makes the law of contract applicable to family law, and a doctrine of contract law is unconscionability, meaning that if an agreement is unfair to the point of unconscionability, it may be set aside. Whether something meets the test of unconscionability has been developed by the case law, and unfortunately for those hoping to rely upon overly strict provisions of a prenuptial agreement, there are many instances when the Court has set aside an agreement, or part of an agreement, due to it being unconscionably unfair, or failing to be in compliance with the objectives of the Divorce Act. If the reports are true that the prenuptial agreement heavily favours Carmelo, it's possible that there could be a claim to have it set aside due to unconscionability. However, if Carmelo can establish that he and La La intended this agreement to be binding, and that his current success and accumulation of wealth was anticipated by the parties, he may be able to establish that the agreement should be upheld, in consideration of the principles of certainty and finality.
In summary, it remains to be seen whether the prenuptial Agreement in the case of Carmelo and La La will be upheld. If La La chooses to challenge the validity of the agreement, the Court will likely consider the circumstances surrounding the negotiation of the agreement, whether the agreement is unfair to the degree of unconscionability, and whether or not the parties' anticipated their current circumstances, and intended to enter into the agreement anyways.