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29

Challenging a Cohabitation Agreement (terminates upon marriage) in Alberta (Part 6)

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Common Law Alberta

Please note that the information provided herein is not legal advice and is provided for informational and educational purposes only. If you need legal advice with respect to a cohabitation agreement in Alberta, you should seek professional assistance.

In this blog, I’ll discuss some court cases to show examples of how people in Alberta have challenged cohabitation agreements. In previous blogs, I’ve written about the financial implications of being in a common law relationship in Alberta – for example spousal support obligations under the Family Law Act, rights to possess the Primary Home under the Family Law Act, unjust enrichment claims to property under equity, and rights to the other person’s estate under the Dependants Relief Act and the Intestate Succession Act).

How can a Cohabitation Agreement be challenged?

A Cohabitation Agreement can be challenged in the ways that ALL contracts can be challenged – that is, based on SUBSTANTIVE (i.e. problems with the terms and conditions of the agreement) or PROCEDURAL deficiencies (i.e. problems with the way in which the agreement was entered into). For more information about this topic, please refer to the DL Guide entitled “Is My Legal Form Valid and Enforceable?” that comes with your purchase of a Cohabitation Agreement in Alberta. Examples of substantive deficiencies include: lack of consideration (e.g. one party waiving their rights in exchange for the other party waiving their rights) and vague and incomplete terms. Examples of procedural deficiencies include: duress, undue influence, unconscionable bargain, mistake, and misrepresentation (innocent, negligent, or fraudulent).

In what is to follow, some Alberta cases dealing with challenges to Cohabitation Agreements will be examined.

In Orcheski v. Hynes, [2007] A.J. No. 341, the Alberta Court of Queen’s Bench had to decide whether a Cohabitation Agreement was invalid on the basis that Ms. Orcheski had entered into it under duress. She claimed that she was under duress because: Mr. Hynes had “assured her that the Agreement would not be relied upon”; Mr. Hynes had promised to marry her and had bought her an engagement ring; and She was given the Cohabitation Agreement to sign a few days prior to moving with Mr. Hynes to
Edmonton and was told that, if she did not sign, the relationship was over and she would not accompany him to Edmonton.

The Court ultimately rejected the argument that Ms. Orcheski was under duress on the basis that she:

  • had received independent legal advice prior to entering into the agreement;
  • clearly understood that she would never be entitled to support to or property as a spouse;
  • had a well-paying job with very good benefits that would have supported and did continue to support her;
  • was free to choose not to go to Edmonton with Mr. Hynes; and
  • was free to pursue a career and to continue to work and to place funds in investment that would provide her with property and a secure income.

In Sporring v. Collins, [2009] A.J. No. 944, the Alberta Court of Queen’s Bench had to decide whether Mr. Sporring and Ms. Collins’ Cohabitation Agreement was valid. Mr. Sporring tried to attach the validity of the Cohabitation Agreement in a number of ways. First, he argued that independent legal advice was necessary, but the Court rejected this: there is no authority in Alberta that requires couples who enter into agreements concerning the ownership and division of property to receive independent legal advice before they enter into such an agreement or permits the court to set aside such an agreement simply because it was entered into without independent legal advice. Next, Mr. Sporring argued that a witness was needed (no witness had signed the Cohabitation Agreement). The Court rejected that argument, holding that “[t]here was no authority provided to support the proposition of the need for witnesses nor is there such a requirement in the circumstances of this case.” Next, Mr. Sporring argued that Ms. Collins did not make full disclosure of her assets and liabilities. The Court rejected this argument, saying that there was no evidence that the failure to provide disclosure was material to Mr. Sporring decision to enter into the agreement; indeed, Mr. Sporring never suggested that there was concealment or misrepresentation. Next, Mr. Sporring argued that the Nevis Property was improperly described; but the Court found that the reference to the property in the Cohabitation Agreement “was intended to refer to the Nevis property”. Next, he claimed that there was no consideration for the agreement, nor was it executed under seal. The Court rejected this claim on the basis that “a promise for a promise is good consideration and consideration needs to have value, but that value does not have to provide proportionate benefit” (i.e. consideration must be sufficient, but it need not be adequate). In other words, the consideration provided by Mr. Sporring is the waiver of his rights in exchange for the waiver of Ms. Collins’ rights. Finally, Mr. Sporring argued that he entered the Cohabitation Agreement under duress and that it was an unconscionable agreement: he was pressured at the time the agreement was signed because he had no other place to go (he was unemployed and never received independent legal advice). But the Court rejected this argument too on the basis that he had a second residence for a majority of the time and had no problem finding another place to live when he was asked by Ms. Collins to leave. Furthermore, Mr. Sporring was well educated, understood what the agreement said, and both parties had equivalent work experience. Hence, there was no duress and the Cohabitation Agreement was not unconscionable.

In Dickieson v. Dickieson, [2011] A.J. No. 365, the Alberta Court of Queen’s Bench had to determine whether a separation agreement (a type of family law agreement entered into by a married couple who are separating) was valid. In this case, the wife argued that the separation agreement should be set aside on the grounds of undue influence, unconscionability, and failure by the husband to make full and frank financial disclosure to her. The parties married in 1996 and separated in 2005 after the wife admitted having an affair. The agreement was signed a few months after separation. She received independent legal advice before signing the agreement. The agreement did not provide for spousal support. The wife argued that she was under stress after separation which affected her ability to make a sound decision and meant that she did not voluntarily enter into this agreement. The husband argued that the agreement was negotiated in good faith and that no undue influence was exercised on the wife to induce her to sign it. She alleged that she had a claim for spousal support, a significant claim for property settlement, and a claim to the husband’s pension. The Court rejected all of the wife’s arguments. With respect to duress or undue influence, the wife had not established that she was unaware of what she was signing or that she signed involuntarily. She was not forced by any actions of the husband. She knew what she was signing and had a fundamental understanding of the rights she was giving up and the responsibilities she was accepting when she signed the agreement. As such, the wife’s claim for spousal support was not established. On the issue of unconscionable bargain, although the husband received everything and the wife nothing in terms of property, the husband also took on all of the significant marital debts incurred in acquiring the personal property in the agreement. Hence, the agreement was not unconscionable. Finally, the evidence did not establish that the wife was unable to make proper decisions regarding the financial and other matters contained in the agreement. She signed the agreement with a lawyer. There were notes demonstrating that she was aware of the husband’s financial circumstances at the time she signed the agreement, as she had been throughout the marriage. As such, the Court concluded that the parties had reached a settlement that was justifiable and fair under all of the circumstances.

Now, apart from attacking a Cohabitation Agreement on the basis of substantive or procedural deficiencies, when it comes to SUPPORT provisions, the Alberta Family Law Act specifies a number of ways in which a party can challenge the terms and conditions of a Cohabitation Agreement. Specifically, a Court can make an adult interdependent partner SUPPORT ORDER that DIFFERS from the terms of a Cohabitation Agreement IF it is satisfied that that agreement is INEQUITABLE and any of the following circumstances exist:

  • the adult interdependent partner who challenges the Cohabitation Agreement or any part of the agreement entered into the agreement without receiving independent legal advice;
  • after an adult interdependent partner entered into the Cohabitation Agreement, they married their partner; or
  • one of the adult interdependent partners is in receipt of government financial assistance without reasonable support from the other adult interdependent partner.

Worth mentioning is that, under Ontario’s Family Law Act, a Cohabitation Agreement can be challenged on the basis that: it was not witnessed, a party did not understand the nature or consequences of the agreement, or that a party failed to disclose to the other significant assets, debts or other liabilities that existed when the domestic contract was made. Similar requirements are NOT found in Alberta’ Family Law Act.

Worth noting is that, if the Cohabitation Agreement survives marriage (i.e. continues to be valid and enforceable after the parties marry each other), then there are a number of ways in which that Agreement can be challenged. Specifically, if the Cohabitation Agreement was not in writing or the spouse did not make the required written acknowledgment before a lawyer (as discussed above), then that Agreement can be challenged for not complying with sections 37 and 38 of the Matrimonial Property Act. This was discussed by the Court of Appeal in Hanson v. Hanson, [2009] A.J. No. 623 at paragraphs 11 and 12:

11 Section 37 of the MPA permits parties to avoid its operation if they have entered into an enforceable contract. In order for the contract to be enforceable, section 38 requires each spouse to acknowledge certain things in writing, apart from the other spouse, before an independent lawyer.

12 “The purpose of the statutory formalities of execution is to offer some protection to spouses from agreements that are not the result of free and informed consent.”: Corbeil v. Bebris (1993), 141 A.R. 215 at para. 32, 105 D.L.R. (4th) 759 (C.A.). However, “[e]ven if the statutory formalities of execution are met, the contract may be invalid or unenforceable for a reason sounding in contract law …”: ibid at para. 15. In other words, a contract under the MPA will not be enforceable absent the statutory formalities.

By the way, if you’re looking for a Cohabitation Agreement in Alberta that either terminates upon marriage or survives marriage (and becomes a prenuptial agreement or marriage contract), then you’ve come to the right place:

Cohabitation Agreement – Terminates Upon Marriage

This legal form can be used by non-married couples in Alberta who wish to avoid creating obligations through their cohabiting (i.e. living together) with each other. This particular cohabitation agreement waives support obligations and divides property according to legal ownership (in other words, what’s mine is mine; what’s yours is yours). This cohabitation agreement terminates when the parties get married to each other. If you want the cohabitation agreement to continue past marriage (i.e. continue to be valid and enforceable past marriage), then you can check out the cohabitation agreement below:

Cohabitation Agreement – Continues Past Marriage

This legal form can be used by non-married couples in Alberta who wish to avoid creating obligations through their cohabiting (i.e. living together) and their marriage to each other. It essentially becomes a Prenuptial Agreement or Marriage Contract when the parties marry each other. This particular cohabitation agreement waives support obligations and divides property according to legal ownership (in other words, what’s mine is mine; what’s yours is yours). This cohabitation agreement continues to be valid and enforceable past marriage.

Remember: all of our legal forms are lawyer-prepared, customizable (they come in .doc, .wpd, and .rtf formats), and affordable (prices range from $17 to $97, depending on the legal form packages). The legal forms are regularly updated. Best of all, they come with guidance in the form of a video tutorial (watch an example of how to customize the legal form) and two written guides (one that addresses the legal issues you should be aware of and a second which is entitled “Is My Legal Form Valid and Enforceable?”).

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