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When An Off Then On-Again Relationship Comes With Strings: The Effect of Reconciliation on Domestic Contracts.
Whether before, during or after long-term relationships, spouses may wish to enter into a domestic contract to protect their rights and clarify their obligations upon a potential separation. Spouses often seek assistance from lawyers to draft Marriage Contracts, Cohabitation Agreements and Separation Agreements.
Despite the terms of a domestic contract following a separation, some spouses will attempt to reconcile and resume life as a couple. It is important for any party considering a domestic contract to be aware of the implications of reconciliation on the terms of the contract.
Separation Agreements:
Separation Agreements are generally void upon reconciliation.1
However, Separation Agreements may remain in force following reconciliation in light of a specific term in the agreement that overrides this presumption.2 For example, many Separation Agreements provide that the Agreement will remain in force if the parties attempt to reconcile unsuccessfully for a period of 90 days or less.
In addition, the Court may infer from a clause in the Agreement that the parties intended for certain completed transactions to remain in place in the event of reconciliation.3 For example, a specific release of all rights to a particular property can be viewed as evidence that the parties considered the disposition of the property to be final and binding, regardless of any reconciliation in the future.4
In Emery v Emery, the parties signed a Separation Agreement following the breakdown of their relationship.
The parties agreed in the Separation Agreement that “in lieu of the Wife receiving the net proceeds of sale of the matrimonial home…the Wife hereby releases any claim she may have against the pensions or retirement savings plans of the Husband”.5
The Court held that this clause “clearly set out the parties’ intention” for the wife to release her interest in the husband’s pension and retirement savings plans, even following the period of reconciliation. There was no evidence demonstrating that the parties’ intentions changed following reconciliation. As such, the provisions regarding the pension remained valid.6
The parties had also agreed in the Separation Agreement that the husband would pay child support and that neither party owed the other party spousal support.
Regarding these provisions, the Court noted that child support payments discontinued upon reconciliation. Family finances were handled in the same manner as before the first separation and the husband continued to be the primary income provider. Expenses were incurred and paid as a family unit. The wife and children returned to being dependant on the husband. As such, the parties’ intentions were clear that the agreement regarding support was terminated upon reconciliation.7
Marriage Contracts and Cohabitation Agreements:
Couples may choose to enter into a Cohabitation Agreement or Marriage Contract to determine how they will deal with issues like the division of property and spousal support in the event of a separation. These agreements are domestic contracts intended to provide couples with clarity on what their respective financial consequences are if they separated.
When a couple with a Marriage Contract or Cohabitation Agreement separates and subsequently reconciles, what impact will the reconciliation have on their Cohabitation Agreement or Marriage Contract?
This was the question that the Ontario Court of Appeal dealt with in Krebs v Cote8. The parties had an “on-and-off-again” relationship with numerous separations and reconciliations. The parties entered into a Cohabitation Agreement during a period of reconciliation that provided that Mr. Krebs would pay Ms. Cote $5,000.00 and she would move out of his home in the event of a separation. The parties did separate before reconciling again and marrying. The parties separated on a final basis in January of 2019.
After the separation, Ms. Cote brought a Motion for an Order that the Cohabitation Agreement was invalid and not binding on the parties. The Motions Judge concluded that the Cohabitation Agreement was of no force and effect. Mr. Krebs appealed the decision to the Ontario Court of Appeal.
The Appellate Court found that the common law exception that reconciliation would render a Separation Agreement null and void did not extend to Cohabitation Agreements. The Court encouraged parties to enter into Agreements that define their rights and obligations. When parties to a Cohabitation Agreement reconcile, they return to the same state they were in when the Agreement was entered into.
The Court found that the applicability of a Cohabitation Agreement following periods of separation and reconciliation will depend on the intention of the parties and the interpretation of the Agreement.
Conclusion:
Domestic contracts are intended to promote certainty and finality; however, unclear domestic contracts can have the opposite effect.
Parties in family law matters may be distraught to discover that their good faith attempt to reconcile has voided their hard-fought Separation Agreement. An unclear Cohabitation Agreement or Marriage Contract may also be scrutinized in the face of multiple separations and reconciliations. Special care must be taken to ensure that domestic contracts clearly set out the parties’ intentions regarding potential reconciliation.
This article was written by Family Law Lawyers, Aaron Ender and Hilary Jenkins. For additional information, please do not hesitate to contact aaron.ender@mckenzielake.com or hilary.jenkins@mckenzielake.com.
If you require assistance with any Family Law matter, speak to a Family Lawyer at McKenzie Lake Lawyers LLP by calling (519) 672-5666.
1 Sydor v Sydor, 2003 CanLII 17626 (ON CA) at para 22.
2 Ibid.
3 Ibid.
4 Ibid at para 24.
5 2008 CanLII 8605 (ON SC) at para 49.
6 Ibid at paras 49, 63-64.
7 Ibid at para 73-76.
