ARTICLE
12 April 2024

Will Courts Enforce A Separation Agreement That Is Not In Writing, Signed And/or Witnessed?

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Mills & Mills

Contributor

Mills & Mills
In Ontario, the Family Law Act, RSO 1990 c F 3, governs domestic contracts, including separation agreements.
Canada Family and Matrimonial
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Strict Interpretation: Unenforceable Unless in Writing, Signed and Witnessed

In Ontario, the Family Law Act, RSO 1990 c F 3, governs domestic contracts, including separation agreements.

Section 55(1) of the Act provides that "A domestic contract and an agreement to amend or rescind a domestic contract are unenforceable unless made in writing, signed by the parties and witnessed".

While this language may suggest that these elements are necessary conditions a domestic contract must meet to be enforceable, the case law which has developed regarding this provision makes clear that is not always the case, and for good reason.

The purpose of section 55(1), at its most fundamental, is to require certain formalities to protect against fraud. For example, in Geropoulos v. Geropoulos, 1982 CanLII 2020 (ON CA), the court compares the requirements of a domestic contract to similar provisions found in the Statute of Frauds. This purpose, however, is undermined, and arguably turned on its head, when parties try to rely on those same lack of formalities to resile from a fair and justly negotiated agreement in bad faith. To reconcile and balance these competing considerations which, in a sense, further the same goal of ensuring the true intentions of the parties is preserved, the courts have developed an approach to determine under what circumstances strict compliance with section 55(1) ought to be relaxed.

The "Relaxed" Interpretation

In Gallacher v Friesen, 2014 ONCA 399, the Ontario Court of Appeal held a separation agreement enforceable that was not witnessed but was executed by the parties. The Court of Appeal rejected the appellant's narrow interpretation, or strict reading, of section 55(1), reiterating that the legislature intended to encourage rather than discourage domestic contracts and that setting aside the subject agreement in that case would only further the latter.

The Court of Appeal pointed to a "substantial body of case law in Ontario" where the court has "relaxed" the strict requirements of section 55(1) in cases where there is no evidence of oppression or unfairness surrounding the negotiation and execution of the contract.

In as recent a case as El Rassi-Wight v. Arnold, 2024 ONCA 2, the Ontario Court of Appeal affirmed the test and factors to be applied in Gallacher remain good law. The Court expressly held that it was open to the lower court to "relax" the section 55(1) requirement, it simply concluded that the factual matrix in El Rassi-Wight did not warrant it, holding that "the trial judge properly considered the factors identified in Gallacher".

Enforceable As a Settlement

Consistent with Gallacher, there are also several cases that have enforced settlement agreements made in the family law context where the formalities of section 55(1) were lacking, including the requirement of execution by the parties. While these cases have mostly occurred within the context of ongoing litigation, as the court astutely noted in Gorman v Gorman, 2021 ONSC 2577, there is no principled rationale for distinguishing between settlements made before commencement of litigation and those which come after.

Does the Supreme Court of Canada's Decision of Anderson v Anderson Apply in Ontario?

In Anderson v Anderson, 2023 SCC 13, the Supreme Court of Canada held a separation agreement enforceable made in Saskatchewan that did not include a lawyer's acknowledgment or financial disclosure, notwithstanding such features are seemingly required pursuant to Saskatchewan's Family Property Act.

Some have argued that the Supreme Court's decision in Anderson was confined solely to Saskatchewan due to the existence of a specific clause in its legislation that does not feature in the Ontario FLA. S.40 of The Family Property Act, SS 1997, c F-6.3 reads that "The court may, in any proceeding pursuant to this Act, take into consideration any agreement, verbal or otherwise, between spouses that is not an interspousal contract and may give that agreement whatever weight it considers reasonable." However, as noted above in El Rassi-Wight v. Arnold, 2024 ONCA 2, there is already a well-established test in the jurisprudence for relaxing the provisions of section 55(1) in Ontario that the has been affirmed post-Anderson.

In this author's opinion, the courts are correct to recognize that domestic contracts are to be encouraged rather than discouraged and that when the appropriate circumstances obtain—no evidence of oppression or unfairness in the bargain—section 55(1) should not be interpreted in such a manner as to undermine the legislature's intent. To do otherwise would, as the Court of Appeal for Ontario cautioned in Geropoulos, supra permit parties to "withdraw at will from compromises properly entered into".

Ultimately, the question about the enforceability of a separation agreement is highly complex, fact specific and requires expert legal advice.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

ARTICLE
12 April 2024

Will Courts Enforce A Separation Agreement That Is Not In Writing, Signed And/or Witnessed?

Canada Family and Matrimonial

Contributor

Mills & Mills
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