In a recent landmark decision, the Supreme Court of Canada has offered some important direction on how courts should approach informal separation agreements that are crafted by spouses without the help of lawyers.
The decision is called Anderson v. Anderson, and involves a separated Saskatchewan couple who had been married only three years and had no children together.
In the company of two friends from their church – who were encouraging them to work things out – the wife presented the husband with a homemade separation agreement covering the division of their property. The draft agreement stipulated they would each keep whatever property was already in their own names, and would relinquish any claims to property held by the other, aside from their matrimonial home and shared household goods. There were no spousal support issues whatsoever.
The husband and wife both signed the agreement in the presence of their church friends. Importantly, neither of them had obtained independent legal advice before doing so, and neither went to the trouble of making full financial disclosure to the other, as is usually required in these circumstances.
Later, when the wife asked for a divorce, the husband decided to contest the separation agreement’s validity. He complained that he was under duress when he signed, and had not obtained independent legal advice in advance.
The dispute wound its way through the courts: At trial, the agreement was declared non-binding and of no weight; on later appeal, the court reversed.
Before a 7-judge panel of the Supreme Court of Canada, the separation agreement in this case was declared fair, equitable and binding. It was not out of line with the objectives of the provincial Family law regime that applied to it.
Admittedly, the Supreme Court said, the circumstances around its signing were not ideal. However no unfairness arose from them. The spouses had known about the state of each other’s finances when they married, so the technical lack of financial disclosure was not a concern. Nor was there evidence that either of them misunderstood the agreement’s legal effect, or that one spouse was taking advantage of the other.
From a broader perspective, the Supreme Court added that well-meaning, informal separation agreements like this one can still be given substantial weight by courts asked to resolve property-related issues between couples. It emphasized, however, that separation agreements dealing with property (as was the case here) are subject to slightly different legal standards as compared to those dealing with spousal support agreements, for example. The latter involves longer-term ongoing obligations, and is different in character than an agreement covering a one-time final division of marital property.
While stressing that every domestic agreement should still strive to adhere to the formal requirements set by the governing provincial Family legislation, the Supreme Court of Canada offered up the following refinements:
- Domestic contracts should generally be encouraged and supported by courts, within the bounds permitted by the legislature.
- Even if a couple’s agreement is in imperfect form, a court can still consider and give it substantial weight, unless there is a compelling reason to discount it altogether.
- Ideally, to ensure fairness there should be safeguards in place, such as each spouse giving full and frank disclosure to the other, and each of them receiving independent legal advice. But not having these in place is not always fatal to the agreement’s validity.
- Courts must also keep in mind the emotionally stressful context in which such agreements are cobbled together. The spouses are usually under acute emotional stress, and one of them might be vulnerable or at risk of being taken advantage of.
- Courts must ultimately approach such homemade agreements with a view towards balancing the values of contractual autonomy and certainty, against concerns over fairness.
This makes sense, the Court added, because ironically one of the objectives of the justice system is to encourage couples to avoid having to go to court. Canadian Family courts should accordingly encourage those couples who can resolve their issues through self-directed means, such as a separation agreement or mediation.
The Court summed up its conclusions this way:
In sum, our jurisprudence on domestic contracts … values the principles of autonomy and certainty by encouraging parties to arrange their intimate affairs outside the court system. But the emotional complexities of family dynamics make contracting over domestic affairs unlike regular arm’s length transactions. The unique context out of which these agreements arise requires courts to approach them with keen awareness of their potential frailties to ensure fairness, having regard for the integrity of the bargaining process and the substance of the agreement.
While the Supreme Court of Canada is certainly not encouraging separating couples to abandon getting legal advice and representation entirely, the Anderson case offers some good news for situations where there are minor technical flaws in what is otherwise a fair agreement negotiated in good faith by willing ex-partners.
Full text of the decision: Anderson v. Anderson, 2023 SCC 13
