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29

Common Law Contracts Alberta (Part 5): enforceable?

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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.

This is the fifth of a series of blogs I’m writing about common law relationships and marriages in Alberta. As previously discussed, being in a common law relationship (or an “adult interdependent relationship”) can have significant financial implications. In this blog, I’ll be discussing how Alberta courts and the Supreme Court of Canada has approached Cohabitation Agreements and other domestic contracts like Prenuptial Agreements and Marriage Contracts.

How have the courts approached Cohabitation Agreements?

Alberta courts have shown a willingness to enforce Cohabitation Agreements. In Orcheski v. Hynes, [2007] A.J. No. 341, the Alberta Court of Queen’s Bench enforced a Cohabitation Agreement that prevented Ms. Orcheski from being entitled to spousal support or to a division of property owned by Mr. Hynes. In Scherf v. Nesbitt, [2009] A.J. No. 777, the Alberta Court of Queen’s Bench enforced a Cohabitation Agreement that gave Dr. Scherf a one-half interest in the net proceeds of the sale of a home which she and Mr. Nesbitt had bought together. The Cohabitation Agreement clearly stated that the parties were to have an equal interest in that property despite their unequal contribution to its acquisition, and the Court respected that Agreement. Finally, in Schild v. Kassian, [2010] A.J. No. 1085, the Alberta Court of Queen’s Bench relied upon a Cohabitation Agreement entered into between the parties to distribute their property upon a breakdown of their relationship. That Cohabitation Agreement allowed the parties to equally share in the value of certain property (i.e. title to their residence, jointly held property, an interest in a gas well, etc.), while preventing one party from sharing in the value of certain exempt property (i.e. inheritances, gifts, RRSPs).

What has the Supreme Court of Canada said?

It is also worth mentioning what the Supreme Court of Canada has said about Marriage Contracts (a type of family law agreement entered into by married couples). In Hartshorne v. Hartshorne, 2004 SCC 22, the Supreme Court held the following concerning a dispute over a Marriage Contract (on appeal from B.C.):

  • Parties are permitted and encouraged to take personal responsibility for their own financial well being on the dissolution of marriage and courts should be reluctant to second guess the arrangement,particularly where independent legal advice has been obtained.
  • Spouses may choose to structure their financial affairs in a number of ways and it is their prerogative to do so, provided that the legal boundaries of fairness are observed.
  • Once an agreement has been reached, the parties are expected to fulfill the obligations under that agreement. A party cannot simply later state that he or she did not intend to live up to his or her end of the bargain.
  • In addressing the issue of judicial deference to spousal agreements in the context of property division on marriage breakdown, a court should be loathe to interfere with a pre-existing agreement unless it is convinced that the agreement does not comply substantially with the overall objectives of the governing legislation.
  • Furthermore, the court must look at the agreement or arrangement in its totality, bearing in mind that all aspects of the agreement are inextricably linked and that the parties have a large discretion in establishing priorities and goals for themselves.

Now, even though the Supreme Court’s statements were made in the context of a Marriage Contract in a decision on appeal from British Columbia, those statements have been cited with approval in various Alberta cases (e.g. Hinton v. Hinton [2004] A.J. No. 551, B.A.R. v. C.J.S., [2006] A.J. No. 715, Tardif v. Campbell, [2008] A.J. No. 1463, and Hollingshead v. Hollingshead, [2008] A.J. No. 1424).

In the next blog, I’ll talk about how a Cohabitation Agreement can be challenged…

FYI, if you’re looking for a Cohabitation Agreement that avoids creating financial obligations and that either terminates upon marriage or continues past marriage, then check out our Cohabitation Agreement packages for Alberta.

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