A Shift in Divorce: separation agreements without lawyers

Canadian divorce law has just experienced a fundamental shift. If you want to divorce without lawyers, keep reading to learn how you can share your property without involving these professionals, and have the court give deference to what you’ve decided.

Diana and James Anderson had been married three years when they concluded their marriage wasn’t working. It was a second marriage for each of them, and they knew the signs.

They decided to separate.

Members of their church wanted to help them. One day, Diana and James met with two members of the congregation. The goal was to see if they could work through their differences, with the help of this couple.

At the end of this meeting, Diana handed James a short agreement and asked that he sign it. Basically, the agreement stated that Diana and James would keep their own property, including investments. As they had bought a new house and furniture, the agreement also said that Diana would keep the house and furniture, and would pay James half the equity.

In other words, the agreement followed the principle “what’s mine is mine and what’s yours is yours”. As they had both contributed to buying the family home and furniture, they agreed to equally share what the house and these items were worth, less the amount owing on the mortgage.

Diana never shared documents regarding her personal property.

Diana and James signed this agreement that day. The couple from their church acted as witnesses.

The Andersons never consulted lawyers.

It turns out their agreement didn’t follow the law. In Saskatchewan, when a marriage breaks down, all the property acquired during a marriage is to be shared equally. Diana’s property had increased in value more than James’.

In Saskatchewan, to ensure a court follows an agreement, each divorcing spouse must have a lawyer explain the agreement and its consequences, and then the person signs it in front of the lawyer.

Agreements such as the one Diana gave to James, and that they both signed … if they are challenged, the court can decide how much weight to give the agreement or not.

The rationale behind this legal regime, which came into existence in 1980, is very paternalistic. The thought process is that people who are divorcing are so emotional and distraught that they can’t think straight. They need a lawyer to explain the law, and to guide them from doing something foolish.

After Diana began the court process to divorce James, he challenged the agreement they had reached, on the basis they had not consulted lawyers.

Diana defended.

The trial court refused to attach any weight to the agreement. Instead, the court found that the statutory provisions needed to be followed. This meant Diana owed James approximately $90,000.

Diana appealed. The Saskatchewan Court of Appeal looked at the rationale for the legislation, and commented on when it is appropriate to follow an agreement such as this one, instead of following the statutory regime.

The court said their was no evidence of unfairness, or that Diana had taken advantage of James. At this level, their agreement was to be followed, more or less. James was ordered to pay Diana $5,000.

James then appealed to the Supreme Court of Canada. The SCC upheld the decision made by the Court of Appeal, with one change. The Court found it appropriate to value the house and household goods at the trial date instead of at the separation date as Diana and James had agreed. This meant that Diana was ordered to pay James approximately $43,000.

The Supreme Court wrote what needs to be present for a couple to divide their family property without involvement of lawyers.

So … if you want to figure out how to share your property without lawyers, make sure these elements are present:

1        looking at the agreement from the lens of ordinary contract principles (an exchange of a promise for consideration, if you have questions, consider booking a complimentary call), is it a valid agreement?

2        Procedural integrity is evident. This means there is no evidence of:

a.      any undue pressure;

b.      exploitation of a power imbalance; or

c.       exploitation of any other vulnerability.

In other words, the process must be fair, without one spouse taking advantage of any weakness of the other party.

This is the test for creating and following an agreement without involvement of lawyers. As the decision was made by the Supreme Court of Canada, we’re going to see courts in other provinces considering this test.

For a copy of the SCC’s decision, send me an email with “Anderson” in the subject line. Email to use is kim@kimkorven.com.