The Validity and Enforceability of Domestic Contracts
Gallacher v Friesen, 2014 ONCA 399
This case addresses the issue of the validity and enforceability of domestic contracts.
The parties cohabited from September 14, 2007 until November 20, 2012. The parties have one child together. The Respondent “had substantially greater assets and income than the appellant. She [also] owned the home in which they resided” (paragraph 3). In 2008, the Respondent asked the Appellant to sign a domestic contract. The Appellant took the contract to a lawyer for legal advice and claims that he signed the contract in his car on the way home from the lawyer’s office. After the parties separated, the Appellant brought an Application which stated that the Respondent had been unjustly enriched from his contributions to her home and claimed a constructive trust in said property, or, in the alternative, that he be paid for his work. The Respondent brought a summary judgment motion to dismiss the Appellant’s claims. The motion judge found there was no genuine issue requiring trial and dismissed the Appellant’s claims.
The Ontario Court of Appeal commenced its analysis by considering whether the domestic contract was enforceable. As the Appellant claims that his signature was not witnessed, the enforceability of the domestic contract was at issue. The Motion Judge stated:
I accept that Debbie McKnight signed the document as a witness. Her presence at the time the Father signed is the only fact that is disputed however it is not fatal to the Agreement in any event.
The Ontario Court of Appeal upheld such logic, providing at paragraph 19:
In the circumstances of this case, it was unnecessary to resolve the issue whether Ms. McKnight witnessed the appellant’s signature. Even assuming the appellant’s signature was not witnessed, we agree that the domestic contract is enforceable.
The Court of Appeal held that Part IV of the Family Law Act is intended to “permit couples to formalize their financial and familial relationships in order to resolve differences and avoid disputes” (paragraph 21). The Court continued its analysis by conserving section 55(1) of the Family Law Act, which provides:
A domestic contract and an agreement to amend or rescind a domestic contract are unenforceable unless made in writing, signed by the parties and witnessed.
The Court held that the purpose of the above-quoted provision is to “ensure a measure of formality in the execution of a domestic contract, to provide proof that it was in fact signed by the parties, and to ensure that it is free from undue influence, coercion or duress” (paragraph 24). The Appellant submitted that the Court ought to interpret the meaning of section 55(1) strictly.
However, the Court of Appeal held that the Appellant’s approach to section 55(1) of the Family Law Act was “inconsistent with this court’s observation in Bosch v Bosch that the legislature intended to encourage rather than discourage domestic contracts” (paragraph 26). Further, the Ontario Court of Appeal found, at paragraph 27, that the strict requirements of section 55(1),
may be relaxed where the court is satisfied that the contract was in fact executed by the parties, where the terms are reasonable and where the was no oppression or unfairness in the circumstances surrounding the negotiation and execution of the contract.
The Court found, at paragraph 29, that:
Both parties signed the domestic contract; the respondent’s signature was witnessed by Ms. McKnight; both parties certified they had received ILA before singing the domestic contract; there was full financial disclosure before execution of the domestic contract; both parties are sophisticated and educated; and there was no duress, lack of capacity, vulnerability or any other circumstance that would vitiate the domestic contract.
Given all the above and after dispensing with the Appellant’s submission that the domestic contract was ambiguous and that the Respondent repudiated same, the Ontario Court of Appeal upheld the Motion Judge’s decision, finding that the domestic contract was enforceable and represented a “complete bar to the Appellant’s claims” (paragraph 20).