The appellant, Mr. Krebs appeals the decision of a motion judge who declared that a cohabitation agreement that was made with the respondent, Ms. Cote was of no force and effect. The appellant submits that the motion judge made three main errors: concluding that reconciliation terminates a cohabitation agreement, failing to interpret the whole of the plain language of the contract in the factual context existing when it was signed, and in concluding that a payment made pursuant to the agreement exhausted the terms of the agreement. The respondent supported the motion judge’s decision that the cohabitation agreement was of no force or effect.
The parties began a “on-again-off again” relationship in 2006. In late 2012 or early 2013, they decided to resume cohabitation and sign a cohabitation agreement. Not long after the respondent moved out of the appellant’s home and the appellant paid her $5,000 in accordance with the provisions of their cohabitation agreement. In June of 2014, the parties reconciled, married, and resumed cohabitation. The relationship broke down for a final time in January of 2019. The main question of law to be answered by the Court of Appeal was as to whether a separation followed by reconciliation terminated a cohabitation agreement.
Justice Pardu began this analysis by looking to the common law rule on separation agreements. While it is well-established that at common law a separation agreement becomes void upon reconciliation of the parties, the same is not necessarily true of cohabitation agreements. The Court of Appeal did not go so far as to say that there is a presumption in favor of the cohabitation agreement’s validity following reconciliation, but instead that the applicability of this agreement would depend on the interpretation of that agreement and the intentions of the respective parties. Deference is owed to lower courts on interpretation of contracts, however only absent extricable errors of law. The Court of Appeal held that it was an extricable error of law to presume that the common law test for separation agreements also applied to that of cohabitation agreements. Furthermore, it was an error to not analyze the intentions of the parties at the time they entered into the agreement and the contractual language itself. The Court of Appeal made a key distinction in this case that while certain contracts (e.g., employment contracts) can be exhausted by triggering events, cohabitation agreements may persist despite these triggering events having already unfolded.
The appeal was granted, and the cohabitation agreement was upheld. Proving that unlike separation agreements, cohabitation agreements might be less likely to be voided upon reconciliation.
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