Subsection 55(1) of the Family Law Act (‘FLA’) provides that domestic contracts (which includes cohabitation agreements and separation agreements) are unenforceable unless made in writing, signed by the parties and witnessed. Previously, I might have been tempted to compare this requirement with the requirements in the Succession Law Reform Act, which create strict rules around the witnessing of the execution of Wills. Based on these provisions, one would think that domestic contracts that are not signed by a witness, who was actually there to see the party sign the agreement, would be unenforceable. Well, the Ontario Court of Appeal disagrees.
In two separate decisions, recently released by the Ontario Court of Appeal, the Court has found that the language of subsection 55(1) of the FLA is less strict than the requirements in the Succession Law Reform Act when it comes to the requirements for witnessing the execution of a Will.
The Court noted that the purpose of requiring a signature is:
- To ensure a measure of formality in the execution of a domestic contract;
- To provide proof that it was in fact signed by the parties; and
- To ensure that it is free from undue influence, coercion or duress.
The Court reminds us that the requirements in the FLA requiring a witness can be relaxed where:
- The contract is in fact executed by the parties;
- Where the terms are reasonable; and
- Where there was no oppression or unfairness in the circumstances surrounding the negotiation and execution of the contract.
In short, if the only thing wrong with a domestic contract is that there is no witness, to the signature of one or both of the parties or there is some mistake in formality of witnessing the agreement, it is not enough to have the agreement set aside. Where the parties both admit to signing a domestic contract, but there are problems with the formality of the signature, then the court will consider the entire context of the execution of the document to determine the enforceability of the contract In doing so, the Court may consider the following factors:
- Whether the parties received independent legal advice;
- Whether the parties exchanged full financial disclosure before signing of the contract;
- The sophistication of the parties;
- The education of the parties
- Whether one of the parties was acting under duress, lacked capacity or suffered other vulnerabilities that could negate the propriety of the contract;
- Whether the parties accepted the benefits provided under the agreement; and
- The length of time that passed before one or both of the parties disputed the validity of the agreement.
These cases do not mean it is not important to comply with the formal requirements for witnessing your domestic contract. If you fail to have your contract properly witnessed, and it is called into question for with some other reason, the failure to have it witnessed could be a significant factor leading to have the agreement set aside.
If you want to know more about this issue, read the cases:
If you have more questions about setting aside domestic contracts, read my article on domestic contracts.
