Canada: On Again, Off Again: Effects Of Reconciliation On Separation Agreements

Combining and seperating two lives is complicated. We always hope that a relationship will be forever and ever, but sometimes that is not the case. Effective planning needs to occurat the beginning of a relationship, or at its conclusion. This requires each spouse to carefully consider their income, assets, liabilities, and children. Many couples navigate this complexity using cohabitation agreements, marriage contracts, and separation agreements to add a certain amount of predictability to their post-separation lives.

Complicating matters further, starting and ending a relationship isnot always a one-time event. Many couples try their hardest to make their relationships work, despite their challenges. Oftentimes, two spouses break up and resume their relationship at a later date. In family law, this is referred to as a "reconciliation."

During the time when spouses separate, they may have negotiated a separation agreement, to resolve financial issues arising in their relationship on a final basis. This complicates matters if the couple reconcile and separate again. Should the arrangement from their initial separation agreement stay in place? If so, on what basis, and which parts?

Generally speaking, in Ontario, when a couple separates, enters into a separation agreement, and then later reconciles, the agreement becomes void. However, courts in Ontario have held that, where a separation agreement deals with an issue on a permanent basis, such as the sale of property, the terms relating to these matters may survive the parties' reconciliation.¹

Lawyers need to consider rules and their exceptions very carefully. If reconciliations do not always void agreements, then we must advise our clients whether they could – even hypothetically – fall into one of the exceptions. In the case of reconciliations, this means that we need to advise our clients about the possible effects of reconciling with their former spouses. To our clients, this may not seem like the best use of their time and money. From the perspective of a person who has just gone through a separation and negotiated an agreement resolving all of their family law issues, the relationship is clearly over, so why should they care about the effects of a reconciliation that they believe will never happen? This is a fair question.

In Miaskowski v MacIntyre the Ontario Court of Appeal provided a useful cautionary tale that demonstrated why lawyers need to talk to their clients and get the reconciliation clauses in separation agreements right. In that case, the dispute concerned the wife's entitlement to her now ex-husband's pension. The couple had separated, reconciled, and later separated for a second time after nine more years together. The separation agreement they entered into after their first breakup contained two provisions that were affected by their reconciliation:

1. A release of the wife's interest in the husband's pension; and
2. A term voiding the agreement if the couple reconciled for longer than 90 days, except with respect to any "payment, conveyance or act".

In light of these clauses, the Court of Appeal needed to decide whether the wife's interest in the pension was released by the first clause, was voided by the reconciliation, or fell into the exception for a "payment, conveyance or act".

The Court of Appeal ruled that the reconciliation clause trumped the exception and pension clauses. In the Court of Appeal's view, the parties had considered whether the agreement as a whole should apply if they ever had a "true" reconciliation (which they defined as being greater than 90 days).

It is doubtful whether or not the parties in Miaskowski v MacIntyre had in fact turned their minds to how they would deal with the wife's right to the husband's pension if they reconciled for more than 90 days. There is no doubt, however, that courts must find meaning in the contracts which they are tasked to interpret. The lawyers who draft those contracts are responsible for creating that meaning, preferably in clear, unambiguous language.

As family lawyers, we may feel somewhat sheepish asking our clients to turn their minds to how they would deal with an asset if they were to reconcile with their former spouse. But it is our job to ensure that our clients understand what effect their domestic contracts will have on their lives, including in the event that they find themselves resuming a relationship with the person whom we have come to think of as the "opposing party."

Footnote

1. Krebs v Cote, 2021 ONCA 467 at para 17.