Disclaimer: This article aims to provide educational information surrounding domestic contracts. It is not intended to serve as legal advice. Consult with a lawyer and exercise your discretion before taking action based on the information provided in the blog.
In family law, couples sometimes bargain and negotiate their separations themselves. This results in agreements that lawyers typically call “kitchen table agreements.” Are these domestic contracts enforceable? What happens if they lack some of the typical safeguards the law encourages?
This was discussed in Anderson v. Anderson, 2023 SCC 13 (CanLII). This article will discuss this case and what it means for you.
Background in Anderson v. Anderson
The Saskatchewan couple was married for three years with no children. Each brought significant property into the marriage, and when the marriage ended, a “kitchen table” agreement was prepared and signed in the presence of friends. The agreement outlined the division of family property. The husband immediately signed the Separation Agreement despite the wife’s advice to seek legal counsel.
When the wife initiated divorce proceedings 17 months later, the husband contested the agreement and sought to have it nullified, citing alleged duress and lack of independent legal advice.
The trial judge deemed the Separation Agreement unenforceable, citing the absence of independent legal advice. Instead, it ordered property equalization per the Family Property Act, with a deduction for the husband’s delay, resulting in the wife owing roughly $90,000.
However, the Saskatchewan Court of Appeal set aside the Trial judge’s decision, deeming the Separation Agreement binding and deserving significant weight. It also specified that property values for division should reflect those closest to the Agreement’s date and ordered the husband to pay the wife $4,914.95.
The Court of Appeal’s decision was brought to the Supreme Court of Canada in 2023.
Supreme Court of Canada (SCC) Decision
In the Supreme Court’s decision, the court addressed the enforceability of an “informal” Separation Agreement between spouses, which lacked financial disclosure and independent legal advice and had witnesses who were friends of the parties. Contrary to the lower court’s decision, the Supreme Court found the Agreement legally binding despite the absence of traditional safeguards. The Court emphasized that the crucial factor was the fairness and informed choice made by the parties at the time of the Agreement.
This decision emphasizes the willingness and mutual understanding of the parties entering into family law agreements rather than strict legal correctness. The Supreme Court highlighted that fairness and informed choice do not require the Agreement to be legally perfect but that both parties willingly enter the Agreement, understand their financial situation and objectives, and reach a mutually satisfactory and non-prejudicial deal. The Court underscored the importance of respecting parties’ autonomy, self-sufficiency, and the finality of their decisions, balancing legal provisions with personal choice.
Applying the Anderson Case to Ontario Family Law
In Canada, family law uses both federal and provincial legislation. For example, spousal support falls under the Divorce Act, for married couples, a federal statute and under the Family Law Act, for common couples, a provincial statute. However, property equalization falls under the Family Law Act, a provincial statute. This case originated in Saskatchewan, whose legislation differs from Ontario’s.
Saskatchewan’s Family Property Act (FPA) identifies two types of domestic contracts related to family property: interspousal agreements and other domestic contracts. According to Section 38 of the FPA, interspousal contracts can be enforceable if they adhere to specific formal requirements, including independent legal advice (ILA).
Ontario’s Family Law Act does not require that each party seek independent legal advice before signing an agreement (although we certainly recommend it!)
Does that mean that this case does not apply to agreements in Ontario? Not necessarily.
Is your separation agreement or domestic contract enforceable?
Whether your separation agreement is enforceable depends on several factors. While Saskatchewan’s law differs from Ontario’s, the principles established by this Supreme Court of Canada decision can still provide helpful guidance.
In this case, the Supreme Court found an agreement binding due to the fairness between the parties at the time it was made. The key was that both parties made an “informed choice.” This means they willingly entered the agreement, fully understood their financial situations and objectives, and reached a mutually satisfactory deal without significantly disadvantaging either side.
Remember, “fairness” and “informed choice” don’t mean the agreement has to perfectly align with legal standards. It’s about both parties being on the same page and making a decision that works for them.
However, figuring out if your separation agreement is enforceable can be tricky and depends on many factors. It’s a complex issue that requires professional legal advice.
Protecting Your Interests with Plat Simionati LLP
Whether you are negotiating your separation agreement, deciding what to do with the family home, or drafting a domestic contract to avoid future litigation, you need strategic family law advice.
At Plat Simionati LLP, we specialize in family law, covering everything from domestic contracts to divorce and all the complexities that come with it. Our experienced lawyers are well-versed in Ontario law and dedicated to protecting your rights and interests. Contact us today to ensure your legal matters are handled with expertise and care.