By: Rebecca Rosenberg
An established common law principle (law made by judges) dictates that a separation agreement (a legal contract outlining how a couple will settle issues around their separation) becomes void if the parties reconcile. The idea behind this rule is that it doesn’t make sense to enforce an agreement if the very basis of it – a couple separating from each other – is no longer true.
At issue in Krebs v. Cote, 2021 ONCA 467 is whether this rule should be applied to cohabitation agreements – agreements between couples that allow them to share rights in each other’s property. The parties in Krebs started an on-again, off-again relationship in 2006. In late 2012 or early 2013, the two entered into a cohabitation agreement, subsequently marrying in 2014. The pair finally broke off their relationship in 2019 at which time the respondent sought to invalidate the agreement on the grounds that their 2014 reconciliation broke their contract.
The Ontario Court of Appeal (ONCA) decided that the common law rule does not apply to cohabitation agreements, meaning a reconciliation does not automatically disturb a legal contract.
In her reasoning, the Hon. Gladys I. Pardu wrote about the outdated beliefs that form the foundation of the common law principle. Pardu described the rule as “ancient” and reminiscent of times when living together while unmarried was considered a sin. Since modern marriage contracts are more complicated, Pardu emphasized that people should be encouraged to create agreements that outline their rights and obligations to their significant others.
However, the court did not go so far as to say that judges should always back a cohabitation agreement. Instead, courts must look to the parties’ intentions at the time they agreed to the contract, noting the surrounding circumstances of that particular partnership.
So, when deciding to share your property with someone else, remember to be clear about the terms you are agreeing to. Expressly stating your intentions in these types of familial contracts can help you avoid going to court in the future.
