1st December 2023
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The Supreme Court of Canada in Ottawa, on June 17, 2021. The Supreme Court has ruled in favour of couples who draft separation agreements on the division of property without the help of lawyers.Justin Tang/The Canadian Press

Separating couples who wish to divide their property without the help of lawyers received a boost Friday when the Supreme Court ruled that such agreements should be upheld unless they are unfair or exploitative.

The 7-0 ruling in the case of James Anderson v Diana Anderson of Saskatchewan will help with a wider movement to encourage couples to avoid costly and destructive courtroom battles.

Separation agreements, which go by various names around the country, “should generally be encouraged and supported by courts,” Justice Andromache Karakatsanis wrote for the court, referring to property division.

“This deference flows from the recognition that self-sufficiency, autonomy and finality are important objectives in the family law context. Not only are parties better placed than courts to understand what is fair within the context of their relationship, but the private resolution of family affairs outside the adversarial process avoids the cost and tumult of protracted litigation.”

Lawyers for the parties said the court had given encouragement to those who wish to resolve their property disputes in mediation, or with the help of members of their religious community or extended families.

“I think the Supreme Court is giving the parties more control over separating,” Christopher Butz, a lawyer for Ms. Anderson, said in an interview.

David Couture, a lawyer for Mr. Anderson, said the ruling “encourages people to come up with agreements outside of the court process.”

All provinces have laws requiring the equal division of property – and most allow couples to contract out of the requirement. Under Saskatchewan law, such agreements are legally binding if the parties sign in front of legal counsel asserting that they understand the terms. In agreements in which legal counsel were not involved, courts have discretion over whether to uphold them. (The principle in the ruling is expected to have wide application across Canada, though the precise rules vary by province.)

The Andersons were married three years. Both had assets, they had no children together and there was no issue of spousal support. (Under Saskatchewan law, the ruling would apply equally to unmarried couples who had lived together continuously for two years or more.)

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At a meeting with two friends from their church, who encouraged them to reconcile, Ms. Anderson presented a draft of an agreement to Mr. Anderson, in which both would keep the property they had when they married. Some issues, such as the division of their home and household goods, were left until later. Their friends witnessed the agreement.

Mr. Anderson later went to court, arguing that without legal advice or financial disclosure, the pact was unfair and unlawful. The trial judge agreed with him, and the province’s appeal court disagreed. He appealed to the Supreme Court of Canada.

The court said it values autonomy and certainty, but also recognizes the emotional stress and vulnerabilities in the drafting of separation agreements.

The person challenging an agreement made without legal counsel, Justice Andromache Karakatsanis wrote for the court, “must point to evidence that suggests that the agreement was tainted by undue pressure,” or other unfairness. Otherwise, the agreement is binding.

Both parties in the case knew the assets of the other when they entered the marriage, so the lack of formal disclosure did not cause unfairness, the court said. There was no evidence one party took advantage of the other, or didn’t understand the terms.

Robert Leckey, dean of McGill Law School, said in an interview that couples who “make reasonable agreements even without legal advice may find themselves bound by them.”

Carol Rogerson, a professor at the University of Toronto Faculty of Law, said the decision “emphasizes that courts should be sensitive to situations where one party is exploiting the other, but that they should uphold fairly negotiated agreements that are consistent with the substantive values underlying the governing legislation.”

In the Supreme Court’s view, judges should be less willing to interfere with property division than with spousal- or child-support agreements, which reflect continuing obligations, she said.

The court ordered Ms. Anderson to pay Mr. Anderson $43,000. The trial judge had ordered a $90,000 payment from her to him, while the appeal court had ordered Mr. Anderson to pay Ms. Anderson $5,000.