Dealing with Pets after Separation

Family law is about how serious cohabiting relationships start and end, how children are cared for after separation, how the bills are paid after separation, and how the property and debts that accumulated during a relationship are split when it ends. Despite the folks who’d very much like to apply for custody of or access to their pets after separation, the law on custody and access, and guardianship and parenting arrangements, only applies to human children. In the eyes of the law, pets are personal property, like a coffee cup, a cow or a car. I’m not saying this is right, mind you, just that this is how it is; no matter how attached you might be to your pet, your pet is property. As the adjudicator in Gardiner-Simpson v Cross, a 2008 case from Nova Scotia, said:

“[4] Emotion notwithstanding, the law continues to regard animals as personal property. There are no special laws governing pet ownership that would compare to the way that children and their care are treated by statutes such as the [statutes on family law]. Obviously there are laws that prohibit cruelty to animals, but there are no laws that dictate that an animal should be raised by the person who loves it more or would provide a better home environment.”

The laws that apply to the ownership of pets, both before and after separation, are the same laws that apply to the ownership of all personal property. This even includes the new Family Law Act, to the extent that a pet qualifies as “family property” or “excluded property” under that law; I’ll talk about that in a bit.

I last wrote about this in January 2012, in a post called “Provincial Court Releases Decision on Pet Custody Battles” about the British Columbia case of Kitchen v MacDonald. That post continues to be widely read and has lately been the subject of an increasing number of comments lately, and it seems to me that a summary of the law on the care, control and ownership of pets following separation would be useful.

Before continuing, I’d like to first emphasize the importance of remembering that pets are property, or, to put it another way, pets are not people. If you have an issue about a pet following separation, it will probably help to make a point of mentally substituting “the toaster” for “the dog” when you’re thinking about the problem. Unplugging your emotions from problems like this can often make it easier to work your way through them. I'll take my own advice for the rest of this post.

A. THE BASIC LAW ABOUT PERSONAL PROPERTY

Here are the general rules about owning and co-owning personal property.

1. In general, the person who bought the toaster owns the toaster.

There are some exceptions to this rule, like if you found the toaster wandering the streets or you bought the toaster as a gift for someone else. However, in general, if you bought it, you own it.

If you bought the toaster, you can provide evidence of the purchase, and your ownership, through a sales receipt, or a bank statement or credit card statement, showing the details of the purchase. If you don’t have paper evidence of the transaction, you may be able to demonstrate ownership by being the person:

1. who is listed as the owner at the vet’s office; 
2. whose name is on the city ownership licence; or, 
3. who is identified on a kennel club registration or breeder’s certificate. 

2. In general, a person who receives a toaster as a gift owns the toaster.

Making a gift of something is one of the more common ways, along with selling or trading the property, that an owner of property can transfer ownership to someone else. Someone who buys a toaster, and then gives it to someone else, loses the right to have and use the toaster; the person to whom the toaster is given, on the other hand, becomes the owner of the toaster, and, with ownership, gains the right to have and to use the toaster.

If you received the toaster as a gift, you may be able to prove that ownership of the toaster was gifted to you by providing:

1. letters, notes or cards that might have accompanied the gift; 
2. evidence of what the giver said to you about the gift, like “happy birthday, I bought you this ferret;” 
3. evidence of what the giver said to others about the gift, like “I bought Sandra a ferret for her birthday;” or, 
4. evidence that the giver has given similar gifts in similar circumstances, like “I give all of my children ferrets for their sixteenth birthdays.” 

As you can see, proving that something was a gift is about proving the intention of the owner to make a gift. The transfer of ownership isn’t a gift without that intention!

Say your boyfriend stops caring for or feeding the toaster, stops taking it for walks and stops taking it to the vet, and say you’ve started doing all those things. Although it’s true that you’re doing all the work, it doesn’t mean he’s necessarily given the toaster to you unless he actually says, “take the toaster, it’s yours.” However, there are some exceptions to this. Read on.

3. You might be able be able claim ownership of toasters that are stray or abandoned.

The basic rule is that an owner’s rights in personal property are never lost unless the owner intends to get rid of the property. But what if the owner of a stray toaster can’t be found? What if the owner has abandoned the toaster?

I won’t say much about owning stray toasters, since this post is about property rights between couples who are separating. I’ll just say that you may be able to keep a toaster that you find, as long as you don’t know who the proper owner is and never find out who the proper owner is. If, over time, you become the person who normally cares for the toaster you might gain a right to have the toaster that is enforceable against everyone else, except the proper owner.

Now it might be possible for you to argue that the proper owner has abandoned the toaster, especially if the owner has stopped caring for or feeding the toaster, stopped taking it for walks and stopped taking it to the vet, and you’ve taken over all those chores. Arguing that your partner has abandoned the toaster can be challenging, however, and it’s up to you to prove that she’s abandoned the toaster.

Here’s how an adjudicator from Nova Scotia described the law of abandonment in the 2014 case of Chiasson v Kennedy:

“[16] … Abandonment occurs when there is ‘a giving up, a total desertion, and absolute relinquishment’ of private goods by the former owner. It may arise when the owner with the specific intent of desertion and relinquishment casts away or leaves behind his property … abandonment involves … an intention to relinquish title, ‘that is, an indifference as to the fate of the chattel, coupled with sufficient acts of divestment’…”

And that, in a nutshell, is what you have to prove to show that your partner has abandoned her toaster.

“Chattel,” by the way, is another term for personal property.

4. If you can’t claim ownership of the toaster even though you’ve been the only one caring for it, you may be able to claim compensation for your contributions.

If you’ve wound up doing a lot of the day-to-day work associated with the toaster or paying for a lot of the toaster’s expenses, like food, vet bills and grooming costs, and you can’t find a way to claim that you own the toaster, you can ask for the next best thing: compensation for your contributions to the maintenance of the toaster. This is called an “unjust enrichment” claim.

Although we normally see unjust enrichment claims in the context of someone’s contributions to “real property,” such as houses, condominiums and cottages, I don’t see any reason why the claim couldn’t be made with respect to personal property. The idea behind claims like this is that you’ve made contributions to property owned by someone else for which you’d normally be paid in some way. There are three things you have to prove to establish unjust enrichment:

1. the owner was enriched because of your contributions to the toaster (for example by not having to buy toaster food or pay for someone to walk the toaster); 
2. you lost something as a result of your contributions (like the money you spent feeding the toaster or the money you could have made walking someone else’s toaster); and, 
3. there is no legal reason for the owner to be enriched by your contributions (like a contract which required you to care for the toaster). 

If you’re successful, you’ll then have to prove the amount by which your efforts enriched the owner. Although you won’t get to keep the toaster, unless there’s no other way for the owner to pay out what he or she owes you, at least you’ll be partially repaid for the time and money you’ve spent on the toaster.

5. More than one person can own a toaster.

Finally, it’s important to know that more that one person can own a toaster, just like more than one person can own a car or a house. This might happen if both people put money into buying the toaster, if the toaster is bought using money from a joint account or if the toaster is bought using money borrowed from a joint credit card. It might also happen if the person buying the toaster meant that both people would own the toaster.

Ideally, you’d prove joint ownership with a sales slip that demonstrates joint contribution to the purchase by saying something like “received for the purchase of Sam, the four-month-old purebred toaster, $100 from Sandra and $100 from Kaitlyn.” This would create a presumption that both of the buyers own the toaster. However, sales slips rarely say anything so useful, and most buyers never think of asking for it. Absent this sort of proof, you’ll need to demonstrate that you both intended to jointly own the toaster. Just like gifts, intention is everything.

Things like sales receipts that show both names (“Sam, sold to Sandra and Kaitlyn for $200”), city licences in both names, statements from joint bank accounts and credit cards showing the purchase all tend to support the argument that both of you meant to jointly own the toaster, but none conclusively prove that this was your shared intention. You might be able to prove you had this intention through:

1. letters, notes or cards that you might have exchanged around the time of the purchase; 
2. evidence of what your partner said to you about the purchase (“I’m so happy we bought Sam together”); and, 
3. evidence of what your partner said to others about the purchase (“Sandra and I bought Sam together”). 

However, it’s not always an advantage to co-own a toaster, as we’ll see in a moment.

B. COURTS THAT CAN DEAL WITH PROPERTY CLAIMS

Okay that’s the important stuff. Assuming this doesn’t help you and your ex come to an understanding, you may find yourself having to go to a mediator, an arbitrator or a judge. If you’re going to court, which can sometimes be cheaper although it’s always a lot slower, the courts you can go to to ask for orders about toasters are:

1. Small Claims Court.

This branch of the Provincial Court is able to deal with disputes about the ownership of personal property under the common law, including the law of contracts but excluding the law of trusts, and under most of the provincial legislation that deals with the ownership of personal property.

The Provincial Court can’t make orders about property under the Family Law Act, however, and if you have other issues relating to your separation you’re likely in Family Court, another branch of the Provincial Court, dealing with those issues under the Family Law Act. That said, I don’t see any particular reason why you couldn’t be in Family Court dealing with support and parenting problems at the same time you’re in Small Claims Court dealing with the toaster.

2. The Supreme Court. 

The Supreme Court can deal with all disputes about the ownership of personal property, including property that may be family property or excluded property under the Family Law Act.

C. ORDERS ABOUT PERSONAL PROPERTY

Alright, so let’s say that you’re in stuck court. That’s too bad, but there you go. The sorts of orders you can and can’t ask the court to make about toasters include these.

Remember that because toasters are personal property, the best interests of the toaster at issue aren’t relevant. Nor is who loves the toaster more or, usually, who would provide the toaster with a better home. What counts is ownership. As the adjudicator in Hawes v Redmond, a 2013 decision from Nova Scotia, put it:

“[26] I have no doubt that the dog currently has a good home with Dr. Hawes and her family, but that is not the point. This case is not about the best interest of the dog; it is about who has the better claim to legal ownership. The analysis is no different than it would be if we were talking about a bicycle.”

Bicycle; toaster. Whatever. 

1. You can’t ask for custody of the toaster.

“Custody” is a Divorce Act term that applies to children. Human children.

What you’re probably looking for is an order that gives you the right to have the toaster that’s enforceable against your ex; more on this a bit later. You might also be asking the court to declare that you’re the owner of the toaster.

2. You can ask the court to make a declaration about who owns the toaster.

If you do this, you're asking the court to decide who the owner of the toaster is. This is helpful when there are doubts about who owns the toaster. Besides, being the owner of the toaster usually lets you say where the toaster lives… like, for example, with you.

If you lose, however, the court will most likely declare that your ex owns the toaster. The court isn’t likely to not make a declaration about who owns the toaster once the issue has been brought up.

3. You can’t ask for access to the toaster.

“Access” is also a Divorce Act term that only applies to human children.

The closest I can put the idea of access into an order about property is an order that would give each person the right to possess the toaster on a regular, alternating basis. Although there’s nothing stopping anyone from agreeing to that in a contract like a separation agreement, and the court would probably make an order like that if everyone agreed to it, the idea of a right to the periodic possession of property doesn’t fit well with the law on personal property or the general principle that court orders should resolve, or at least decrease, the conflict between litigants.

First off, if you’re not the owner of the toaster you don’t have the right to have the toaster, on a periodic basis or otherwise, unless you’ve got a contract with the owner. Second, if you’re the owner and you don’t have a contract requiring you to let someone have the toaster from time to time, there’s nothing I can imagine that could oblige you to do so.

Third, if the two of you both own the toaster and can’t agree to share it, the court won’t make you share it. Here’s what the court said about it in C.S. v D.S., a 2005 case out of Newfoundland and Labrador:

“[44] ... The dog is a matrimonial asset but it is, without being facetious, indivisible. ...”

Accordingly, the court’s options are these:

1. decide which of you will be entitled to own and keep the toaster, and possibly require the person keeping the toaster to pay compensation to the person who doesn’t get to keep the toaster; or, 
2. make you sell the toaster, and then divide the sale proceeds between you. 

The compensation potentially payable in the first case would likely be based on the current fair market value of the toaster – what a neutral stranger would pay to buy the toaster, at its current age and in its current health, from you.

4. You can ask the court to make an order about who should possess the toaster.

Owning something is sometimes different than having something. Landlords, for example, own the apartments they rent out but don’t have the right to possess their apartment; the right to have the apartment is what they sell to their renters. Orders for the possession of things are useful because they say that you have the right to have those things, whether you own them or not.

If you’re asking the court for a decision about who owns the toaster, you could ask for an order for the possession of the toaster at the same time and kill two birds with one stone. This will be especially useful if you’re the owner and your ex is keeping the toaster from you.

5. You can’t ask for an order that you jointly own the toaster or continue to jointly own the toaster.

Although you can make an agreement that you’d continue to jointly own the toaster, and the court would probably make an order that you jointly own the toaster with your agreement, the court is not likely to make an order that you jointly own the toaster over someone’s objection. This would create, or perpetuate, pointless conflict. If you can’t agree that both of you will continue to own the toaster together, the court’s options are to:

1. decide which of you will be entitled to own and keep the toaster, and possibly require the person keeping the toaster to pay compensation to the person who doesn’t get to keep the toaster; or, 
2. make you sell the toaster, and then divide the sale proceeds between you. 

Again, the compensation potentially payable in the first case would likely be based on the current fair market value of the toaster.

6. You can ask that you be compensated for the money you spent feeding and taking care of the toaster.

If you don’t own the toaster, you can ask the court to make a declaration that the owner of the toaster was unjustly enriched by your contributions to the care and maintenance of the toaster. If the court decides the owner was unjustly enriched, and you can somehow prove what you spent on the toaster and what your non-monetary contributions were worth, the court may then make an order that your be compensated for your contributions. Non-monetary contributions might include taking the toaster for walks, bathing it, grooming it and so on.

Proof of your spending might include grocery bills and receipts from the vet, but few people take the trouble to keep all of these receipts and you’ll likely be out some money. It will be difficult to establish the value of your non-monetary contributions, but you can get some idea by looking at what commercial services charge for things like toaster-walking, grooming and so on.

7. You can ask that you be compensated for the money you put into buying the toaster.

If you’re not the toaster’s owner, or the court isn’t likely to decide that you are, but you still put money into buying the toaster, you can ask to be repaid for what you paid toward its purchase.

This isn’t an unreasonable order to ask for, but I'd imagine that most toasters are depreciating assets. The amount you’d pay for a very young toaster with years of life ahead of it is not what you’d pay for a middle-aged or elderly toaster. If you’re arguing about a four-year-old toaster, should the person keeping it be obliged to give you back your original investment or a proportion of that investment based on the toaster’s current value? The current value might be fairest, especially if you also enjoyed the toaster.

8. You can ask for an order that the toaster be sold, and that the money from the sale be split between you.

This is the scorched-earth option. It’s saying “fine, if I can’t have the toaster, you can’t either.” It reflects your strong emotional bond to the toaster and how upset you are at not being able to keep it, but also disrespects your ex’s emotional bond and attachment to the toaster. It also comes across as rather petty.

The adjudicator in Gardiner-Simpson summarized the problem with this approach as follows:

“[8] In matrimonial cases, parties often agree to sell jointly owned assets (whether realty or personalty) and split the proceeds. The problem would take on a Solomonic quality, where splitting the asset (be it a dog or a child) destroys the thing for both of them. Selling the dog to an outsider would only double the pain.”

I can’t imagine too many judges making this sort of order. In fact, I can really only imagine this order being made as a way of signalling the court’s frustration with the behaviour of everyone involved.

D. THE FAMILY LAW ACT

Under the Family Law Act, certain property is excluded from division between married and unmarried spouses, namely property brought into the relationship and certain kinds of property received during the relationship, namely gifts, inheritances and personal court awards. The property spouses share is property brought during the relationship as well as the increase in value of excluded property.

1. Toasters as excluded property.

In most cases, a toaster that’s brought into a relationship will be excluded from division between the spouses and remain the sole property of the owner, as will a toaster that’s inherited by a spouse or a toaster that’s given to one of the spouses during their relationship. Toasters are, however, assets with depreciating value, which means that it most cases there won’t be any increase in the value of a toaster that the owner must share with the other spouse.

Curiously, spouses are also obliged to share family debt, and "family debt" is defined as including “all financial obligations” incurred by a spouse during their relationship. As a result of this definition, debts incurred with respect to excluded property, like a toaster’s unpaid vet bills, might qualify as shared debt that both spouses are responsible for.

2. Toasters as family property.

Toasters bought during a relationship will qualify as family property, as long as the purchases aren’t made using excluded property. Toasters that are family property are subject to “division” between spouses regardless of which spouse bought them.

In family law, family property is usually divided so that each spouse is left with a roughly equal share of the family property (“you keep the car, and I’ll keep the ride-on mower and the Lionel Ritchie boxed CD set”), sold and the proceeds divided between the spouses (“we’ll sell the house, use the sale money to pay out the mortgage and our credit cards, and we’ll split what’s left over between us”), or some combination of the two (“I’ll keep the Lionel Ritchie set, and you keep more of the money from the sale of the house in exchange”). Since selling the toaster isn’t really practical, this means that one of the spouses is going to wind up keeping the toaster and compensating the other for the value of his or her interest in the toaster.

Now, just because toasters may qualify as family property and can be divided under the Family Law Act doesn’t mean they should be divided under the act. In Ireland v Ireland, a 2010 case from Saskatchewan, the parties’ lawyers agreed that a toaster was family property and divisible under the family law legislation, however the court commented that:

“[9] It is an unacceptable waste of these parties’ financial resources, the time and abilities of their two very experienced and capable legal counsel and most importantly the public resource of this Court that a dispute of this kind should occupy all in a one-day trial involving three witnesses, including an expert called by one of the parties. It is demeaning for the court and legal counsel to have these parties call upon these legal and court resources because they are unable to settle, what most would agree, is an issue unworthy of this expenditure of time, money and public resources. 

“[10] Except in the most compelling of circumstances (perhaps to avoid a breach of the peace or potential harm that parties may do to one another), the court should not be engaged with interim applications or the trial of an issue such as this.”

Really, the judge’s observation in this case goes beyond dividing toasters by application under the family law legislation; the point that arguing about such claims in court is a waste of litigants’ financial resources seems to me to apply to all court claims involving toasters. As the court said in Warnica v Gering, a 2004 Ontario case:

“[19] … Whether in the Family Court or otherwise, I do not believe that any court should be in the business of making custody orders for pets, disguised [as property orders] or otherwise. …”

E. RECENT CANADIAN CASES

Here’s a summary of some of the Canadian court decisions on pet custody claims made in the last decade or so. There are very few of them.

1. It was a gift!

In the Hawes v Redmond decision, no one had any documents demonstrating ownership. The dog in wasn’t registered with the city or a kennel club, and the vet bills were paid by whomever brought the dog in. Redmond claimed that Hawes bought the dog as a gift for her, Hawes claimed that the dog was bought as a gift for the family as a whole.

“[23] In the case here, I am satisfied that Dr. Hawes intended to make a gift of [the dog] to Ms. Redmond, at the important time in the analysis - namely at the beginning. I have no doubt that she knew that the dog would be a welcome addition to this very dog-focused household, but she appears to have been principally motivated by a desire to strengthen or salvage her relationship with Ms. Redmond. She used the term gift and connected it to Ms. Redmond’s birthday. Ms. Redmond clearly accepted the gift, and in her Facebook posts presented the dog to her friends as hers, in the singular sense. 

“[24] I find it significant that when Ms. Redmond went to visit her mother, she brought the two dogs that she regarded as hers. She did not bring four dogs (unmanageable though that might have been). All of this clearly points to her belief that the dog had been gifted to her by Dr. Hawes, a belief that Dr. Hawes never sought to deny until the time of separation. 

“[25] On the other side of the equation, there is very little evidence that would negate the gift. The fact that much of the care fell to her, and that the dog would become bonded to Dr. Hawes and her children, is equivocal, as I have noted. This was a function of family dynamics.”

This case shows how important the buyer’s intentions are, in particular the buyer’s intentions when the property purchased, and how people’s beliefs can be inferred from their behaviour.

2. It wasn’t a gift!

A similar problem arose in the Gardiner-Simpson v Cross case. Cross bought the dog and registered it with the city and the vet. Gardiner-Simpson said that Cross bought the dog as a Christmas present for her. Cross said that if the dog was a gift, if was a gift to the family. Either way, Gardiner-Simpson and Cross shared responsibility for the dog while they lived together, and neither refused to participate in the care of the dog on the basis that it wasn’t his or hers.

“[32] The concept of a gift is legally more complex and problematic than most people may realize. The law is suspicious of alleged gifts, especially under circumstances where the donor is no longer alive or otherwise able to corroborate the intention to make a gift. Perhaps sadly, it is more consistent with human nature to find people acting in their own interest and not being motivated by pure generosity. 

“[33] This is not a matter where the alleged donor is unavailable to speak to his intention, so the matter becomes more of a straightforward question of fact, namely: was there a clear intention on the part of the alleged donor … to vest the property interest in [the dog] in [Gardiner-Simpson]? 

“[34] I am unable to conclude on the evidence before me that there was any intention on the part of the [Cross] to make a gift to [Gardiner-Simpson] and vest the property right in her alone. If it was a gift at all, it was a gift to them both. I do not give any real weight to statements allegedly made to family members about [the dog] being the [Cross’] Christmas present to the [Gardiner-Simpson]. I do not accept that that was the true intention. In substance the purchase of the dog was an acquisition for their joint enjoyment. 

“[35] [Cross] purchased the dog in his own name. All of the documents are consistent with that. The dog’s vet records throughout continued to name the [Cross] as her owner. The fact that [Cross] made payments on the credit card does not carry any weight with me, because I accept that this was just a way of splitting the bills equitably. 

“[36] The only supportable conclusion that I can reach is that the ownership interest in the dog was a joint one. Upon her acquisition, [the dog] became the property of both [parties] jointly.”

This case shows that a person’s intention to make a gift must be clear and unequivocal before the buyer will lose ownership of the property. However, in this case, the circumstances also didn’t support the idea that the buyer was the sole owner of the property. In case you’re curious, the court didn’t have to decide who had the better claim to the dog to resolve the joint ownership problem, as the parties had a separation agreement that resolved the issue.

In Kitchen v MacDonald, the issue was whether MacDonald’s father made a gift of a dog to both parties or to just MacDonald. MacDonald was involved in selecting the dog and was solely responsible for taking the dog to the vet, paying the vet bills and registering the dog with the city. However, MacDonald also made sure that Kitchen spent time with the dog and other evidence suggested an attitude that the dog belonged to the two of them.

“[6] … [MacDonald] admits that the dog did spend time with Mr. Kitchen. In fact, she corrected him if he referred to the dog as his, and stopped contact when he posted a photo of ‘his’ dog on the internet. He worked nearby and was willing from time to time to come and take the dog, some times for a few nights at a time. … At trial, Mr. Kitchen acknowledged that he did not play a role in the selection or purchase of the dog. He also acknowledged, although he said that he purchased dog food and other items for use at his home, he did not otherwise contribute to the upkeep of the dog. He believed the dog was his because she called him [the dog’s] daddy, he took care of it often and they treated it as theirs when they were in a relationship. 

“[7] There is uncontroverted evidence that Ms. MacDonald referred to Mr. Kitchen as the dog’s ‘daddy’. There is an undated letter on file as well reporting to be from [the dog] to ‘my daddy’, apparently following a break-up where Ms. MacDonald writes on behalf of the dog that she is sorry she cannot make them a family. It suggests ways that he can come and see the dog while she is out of the house at work. It concludes by saying ‘I know there is no way mommy would ever keep you from seeing me – that’s just not the kind of mommy she is. She wants us to both be happy.’ There were also gifts and cards over the years addressed from the dog to his ‘daddy’. Ms. MacDonald also encouraged Mr. Kitchen continuing to look after the dog during the day. She encouraged the visits and the exercise and the companionship. She was receiving by-law tickets with respect to the barking and it was obviously a relief to her to have someone entertaining the dog to help address this problem. By anthropomorphizing this dog, Ms. MacDonald led Mr. Kitchen to, and Mr. Kitchen allowed himself to be possessed of an expectation that, the dog was ‘the child’ of both of them. This, however, despite the sentimental aspects, does not create a beneficial or legal interest in a dog. 

“[8] … Mr. Kitchen was able to enjoy the benefits of the dog’s companionship without the burdens of its ownership. He was not asked to nor did he expect to contribute to the costs of the dog. In fact, it was her parents who assisted her when she required financial assistance for the care and keeping of the dog. This alone would not resolve the issue of ownership. However, all of the factors in the mix conclusively determine that Deanna MacDonald is the sole owner of the border collie. Richard Kitchen’s interest is merely a sentimental one. That does not bestow any right of possession on him.”

The importance of this case is that emotional interests do not create legal interests. In order for Kitchen to be a joint owner of the dog, MacDonald’s father would have had to have intended to make a gift of the dog to them both.

In Warnica v Gering, the dog in question was found not to have been a gift to Warnica on the basis that Gering bought the dog and the dog had always lived with Gering.

“[26] They do not contest that the dog, a mixed breed, was purchased from the local pound in 1996 for $100. They do not contest that [Gering] purchased the dog. They do not contest that the dog always lived with [Gering], except for a period of a few months after the parties ceased to have a relationship, when they shared possession back and forth. 

“[27] It would seem odd, if the dog was purchased as a gift for [Warnica], that it always lived with [Gering] prior to the termination of the parties’ relationship. Assuming a ‘he said, she said’ situation otherwise, that is the best evidence on the gift allegation and it stands against [Warnica]. 

“[28] It would appear as if [Warnica’s] involvement with the dog was totally dependent upon his relationship with [Gering]. [Warnica] may have spent money for such things as dog food and the like and he may have spent time caring for the dog. I do not consider that to be relevant to who owns the dog.”

Note that Warnica’s contributions to the costs of maintaining the dog didn’t bear on the ownership issue.

3. It’s family property. Who should keep it?

In the Ireland v Ireland case, the parties agreed the dog was family property, as a result of which both of them were entitled to the keep the dog. The question the court had to decide was which of them would be entitled to possess the dog. Both were involved in the dog’s care, both “derived companionship” from the dog and both exercised with the dog.

“[14] In this case, the court awards ownership and possession of [the dog] to Diane for, among other reasons, the following:

1) The evidence convinces me that it was primarily on Diane’s initiative that the parties acquired this pet and that she was principally involved in its early training and care; 

2) Although both parties have become very attached to their pet and share activities with her in their present circumstances, [the dog’s] companionship is more important to Diane than it is to David; 

3) David has his current partner who owns two dogs of the same breed as [the dog]. Although David does not have the same attachment to them, nevertheless he has the benefit of their presence and companionship including the one with whom he runs; 

4) Diane expects to retire from her profession as a nursing manager at the Moose Jaw hospital. She plans to spend extended periods of time in the winter in a “dog friendly” southern United States location. A continuation of the “shared possession” would be unworkable in these circumstances; 

5) The parties have had one or two difficulties during the exchange of [the dog’s] possession which prompted, on one occasion, a threat to call the police. The parties deserve to be spared these interactions, the potential for breaches of the peace and further unacceptable reliance upon public resources to settle disputes between them should they arise.”

Diane was required to pay $350 to David, being half of the dog’s purchase price.

This case suggests some of the factors the court might consider in deciding which spouse should be entitled to keep a family pet, including: the degree of attachment between the spouses and the pet; and, the availability to each spouse of similar pets.

F. SUMMARY

I don't know that there's a particularly meaningful way to wrap up this post, except to emphasize that, in court, pets are property and will be dealt with according to the same laws that apply to all other kinds of personal property. I acknowledge, of course, that the emotional attachments people develop toward their pets makes arguing about Fluffy wholly different than arguing about Aunt Mabel's silver spoon collection. It's exactly this emotional attachment which makes the law on personal property something that's best avoided if at all possible.

If you have a disagreement about the care of your pets after separation, negotiation, mediation and collaborative settlement processes are all better ways of resolving your dispute than court. Although the law is always relevant to how people manage a legal dispute, these out-of-court processes allow you to take into account all of the intangible values, interests and emotions that go into a relationship with a pet in crafting a settlement of your dispute.

The comments to my post "Provincial Court Releases Decision on Pet Custody Battles" demonstrate the huge range of legal problems that couples with pets can have after their romantic relationships have come to an end. If you can't resolve things by talking to each other, please consider hiring a professional to help you find a solution without going to court. The cold and impersonal rules about personal property that apply perfectly well to watches, wheelbarrows and winches aren't likely to acceptably address disputes about pets.

Supreme Court Releases Decision on Property Claims, Separation Agreements and Indepedent Legal Advice

The Supreme Court has recently released its decision in Giebelhaus v. Giebelhaus, a case in which the husband asked the court to divide property, in the face of a separation agreement he had signed on the subject, under s. 65 of the Family Relation Act. As usual, I'm not so much interested in the particular facts of the case as I am in the court's review of the law.

The court reviewed two important decisions, J.K.T. v. A.J.T., a recent case of our Supreme Court, and Hartshorne v. Hartshorne, a 2004 case of the Supreme Court of Canada. In J.K.T., the court outlined the principles to be considered on applications under s. 65:

[88] ... the onus is on the party seeking to vary the agreement to establish that it is unfair; fairness is not to be equated with equality or near equality. ... 

[89] ... in relation to the division of family property, that such a division may have to be unequal in order to be fair. ... 

[90] ... the question of fairness in family property matters ought not to be approached from a commercial perspective. It is necessary to examine whether the agreement reached was actually fair. ... 

[91] ... s. 65 of the FRA does not permit the Court to set aside agreements; it only authorizes reapportionment on the basis of unfairness.

The court then quotes Hartshorne for the basic test to determine the fairness of marriage agreements (important bits in bold):

[47] ... in determining whether a marriage agreement operates unfairly, a court must first apply the agreement. In particular, the court must assess and award those financial entitlements provided to each spouse under the agreement, and other entitlements from all other sources, including spousal and child support. The court must then, in consideration of those factors listed in s. 65(1) of the FRA, make a determination as to whether the contract operates unfairly. At this second stage, consideration must be given to the parties’ personal and financial circumstances, and in particular to the manner in which these circumstances evolved over time. Where the current circumstances were within the contemplation of the parties at the time the Agreement was formed, and where their Agreement and circumstances surrounding it reflect consideration and response to these circumstances, then the plaintiff’s burden to establish unfairness is heavier. Thus, consideration of the factors listed in s. 65(1) of the FRA, taken together, would have to reveal that the economic consequences of the marriage breakdown were not shared equitably in all of the circumstances. This approach, in my view, accords with the underlying principle of the FRA, striking an appropriate balance between deference to the parties’ intentions, on the one hand, and assurance of an equitable result, on the other.

The court in Giebelhaus then applied the first stage of the Hartshorne test to see what the parties would be left with under their separation agreement and concluded that the husband would be left with assets totalling $130,265 while the wife would receive, including the family home, assets totalling $242,564.

The court then applied the second stage of the Hartshorne test to see whether the separation agreement was fair in light of the factors set out in s. 65(1) of the Family Relations Act. This is what s. 65(1) says:

If the provisions for division of property between spouses under section 56, Part 6 or their marriage agreement, as the case may be, would be unfair having regard to

(a) the duration of the marriage, 

(b) the duration of the period during which the spouses have lived separate and apart, 

(c) the date when property was acquired or disposed of, 

(d) the extent to which property was acquired by one spouse through inheritance or gift, 

(e) the needs of each spouse to become or remain economically independent and self sufficient, or 

(f) any other circumstances relating to the acquisition, preservation, maintenance, improvement or use of property or the capacity or liabilities of a spouse,

the Supreme Court, on application, may order that the property covered by section 56, Part 6 or the marriage agreement, as the case may be, be divided into shares fixed by the court.

Considering the length of the parties' 14 year marriage, the needs of each spouse to become or remain economically independent and self sufficient, and the general s. 65(1)(f) catch-all factor, "any other circumstances relating to the capacity or liabilities of a spouse," the court concluded that the separation agreement was unfair and its division of assets therefore "outside of a reasonable range." The court awarded the husband a further $45,000, leaving him with $175,265 and the wife with $197,564... not exactly an equal division but significantly better than the original agreement.

There was, however, one other wrinkle in this case: the husband had obtained independent legal advice in signing the agreement — a fact relied on by the wife in her defence of the agreement. The husband claimed the advice he received was in adequate and that, as a result, he did not fully understand the wife's financial circumstances when he made the decision to sign the separation agreement.

This gave the court the opportunity to discuss the meaning and necessary content of independent legal advice when executing family law agreements (cites omitted):

[44]         The meaning of independent legal advice in the family law context was well described by Pitfield J. in Gurney v. Gurney, 2000 BCSC 6:

[29]      In the family law context, providing independent legal advice must mean more than being satisfied that a party understands the nature and contents of the agreement and consents to its terms. The solicitor should make inquiries of the party so as to be fully apprised of the circumstances surrounding the agreement. The party should be advised of his or her legal rights and obligations in relation to the subject matter of the agreement and advised of the consequences associated with a refusal to sign. The solicitor should offer his or her opinion on the question of whether it is appropriate for the party to sign the agreement in all of the circumstances. It is only with that kind of advice that the party can make an informed decision about the advisability of entering into the agreement as opposed to pursuing some other course. ...

[45] In Bradshaw v. Bradshaw, 2011 BCSC 1103, which refers to Gurney, the Court summarized the principles concerning independent legal advice in the family law context as follows:

[49] Independent legal advice, in the family law context, is important because it ensures that the spouses are fully aware of their statutory and common law rights and obligations. It safeguards against one spouse taking unfair advantage of another and redresses or at least minimizes disparity of bargaining power between them... In Gurney, Pitfield J. found that "the lack of independent legal advice in this case is not fatal and the agreement should not be set aside because of its absence" (at para. 30). Indeed, the absence of independent legal advice will not, by itself, invalidate an agreement ... Nor will the receipt of independent legal advice automatically cure or neutralize one or both spouses' vulnerabilities; in other words, it will not protect an otherwise invalid or unfair contract ...

[46] I return to s. 65(1)(f) and the factors of the capacities or liabilities of a spouse. I have found the claimant did not have an accurate understanding of the respondent’s income as he had no idea of the value of her pensions. ... In the words of Bradshaw, he was not "fully aware" of his rights and obligations. When these facts are taken into account, I conclude the agreement is unfair. The respondent received the matrimonial home and retained all her pensions. She gave up little. The claimant gave up much. In the result, the statute permits the Court to divide the property appropriately.

The lesson from Giebelhaus for counsel is simple:

• ensure you understand the circumstances surrounding the agreement;
• advise the client as to his or her rights and obligations in relation to the topics covered in the agreement;
• advise the client as to the consequences of not signing the agreement; and,
• give the client your opinion as to whether it is appropriate for the client to sign the agreement in all of the circumstances.

The lesson for parties seeking independent legal advice is more important:

• not having legal advice will not necessarily let you out of an agreement you have signed; however,
• having legal advice will not leave you stuck with an invalid or unfair contract, especially if the advice you got was substandard.

In other words, although ensuring that your spouse gets independent legal advice will help to prevent your spouse from claiming "I didn't know what I was doing" to get out of an agreement, if the agreement is fundamentally bad or unfair, all the legal advice in the world won't bullet-proof your agreement.

Court of Appeal Releases Decision on Capacity

On Friday, the Court of Appeal released its decision in Wolfman-Stotland v. Stotland, a case about the mental capacity required to obtain a declaration of irreconcilability. There have been a number of cases like this over the last few years, and I expect that as our population ages, cases on other elder law issues will become increasingly commonplace.

In Wolfman-Stotland, the parties were both in their 90s and each had lived in a separate assisted living facility for several years before the wife commenced proceedings in June 2010. In October 2010, counsel for the wife applied for a declaration, under s. 57 of the Family Relations Act, that the parties had no reasonable prospect of reconciling with one another. Although this declaration is really about protecting property and has nothing to do with separation or qualifying for a divorce, it nevertheless requires to the court to make a conclusion about the wife's intention to end the marriage and therefore about her capacity to form such an intention. The court summarized the issue with this quote from Mental Disability and the Law in Canada by Gerald Robertson:

"Where it is the mentally ill spouse who is alleged to have formed the intention to live separate and apart, the court must be satisfied that that spouse possessed the necessary mental capacity to form that intention."

After discussing the evidence on this point, particular that of a mental health expert, the court cited with approval the discussion of capacity set out in a 1997 case out of Ontario called Calvert v. Calvert:

"Separation is the simplest act, requiring the lowest level of understanding. A person has to know with whom he or she does or does not want to live. Divorce, while still simple, requires a bit more understanding. It requires the desire to remain separate and to be no longer married to one’s spouse. It is the undoing of the contract of marriage.

"The contract of marriage has been described as the essence of simplicity, not requiring a high degree of intelligence to comprehend ...

"There is a distinction between the decisions a person makes regarding personal matters such as where or with whom to live and decisions regarding financial matters. Financial matters require a higher level of understanding. The capacity to instruct counsel involves the ability to understand financial and legal issues. This puts it significantly higher on the competency hierarchy. It has been said that the highest level of capacity is that required to make a will ... While Mrs. Calvert may have lacked the ability to instruct counsel, that did not mean that she could not make the basic personal decision to separate and divorce."

It has always been curious in my view that the mental capacity to enter a marriage should be so low compared to the mental capacity required to leave a marriage; doubtless this is a result of the social and religious stigmata formerly associated with divorce. In any event, on the strength of the expert's conclusion that the wife had the mental capacity to instruct counsel on the financial aspects of the parties' divorce, the court of appeal concluded that the wife also had the capacity to "to form the intention to live separate and apart" and therefore also the capacity to apply for the s. 57 declaration.

Another good case on a related issue is the Supreme Court's 2005 decision in M.K.O. v. M.E.C., which involved the capacity of a party to apply for a divorce where the divorce action is commenced by the party's litigation guardian. This decision is very well written and worth a read. More information about s. 57 declarations can be found in an older post, "The Ins and Outs of Separation."

Separated with Children Financial Workshop

The Justice Education Society is hosting two workshops in the new year to help parents deal with the legal, emotional, social and financial turmoil of separation. The workshops will deal with:

• becoming financially independent
• dealing with your ex and children about money
• budgeting and debt issues
• child support, spousal support and property divisions issues

The workshops are free. You just need to register ahead of time. Call the society at 604-775-0856 in the lower mainland or at 1-800-775-0856 from elsewhere.

Vancouver
Monday 21 February 2011, 6:30 to 9:30 pm

Port Coquitlam
Wednesday 23 March 2011, 6:00 to 9:00pm

The Ins and Outs of Separation... Part IV:Section 57 Declarations

Important Update: The Family Law Act was introduced on 14 November 2011 and contains a number of provisions which are critical to the comments made in this post. See my post "Family Law Act Introduced!" for more information.

A "section 57 declaration" is a judicial declaration, pursuant to s. 57 of the Family Relations Act, that a married couple have "no reasonable prospect of reconciliation with each other" and is often made when a couple have started a legal action. This sort of declaration probably seems a bit pointless, and it would be completely pointless except for s. 56 of the act:

• s. 56(1) says that a married spouse is entitled to "an interest" in the family assets when declaration under s. 57 is made
  
• s. 56(2) says that the interest is "an undivided half interest in the family assets as a tenant in common"
  

While a couple are married, the legal ownership of their assets is as the asset is owned. If the car is registered in Jane's name, it's Jane's car as far as ICBC, her creditors and her trustee in bankruptcy are concerned. Although s. 56 of the Family Relations Act says that Jane and John are each presumptively entitled to half the value of Jane's car (and s. 65 allows either of them to ask for more than half), the value won't distributed until trial or settlement. The effect of a s. 57 declaration is to divide the legal ownership of the car right away; it crystallizes each spouse's presumptive one-half interest in the family assets until the property is dealt with at trial or settlement.

The legal effect of a s. 57 declaration

As you likely guess, s. 57 declarations can be really important. The declaration:

1. converts the ownership of property spouses own as joint tenants into equal ownership as tenants in common;
2. where property is owned by only one spouse, vests a half interest in each spouse as tenants in common;
3. fixes the pool of property available for distribution between the spouses; and,
4. sets a date for the valuation of the property, including the presumptive termination date of each spouse's interest in the other spouse's pension.
   

Let me explain the bit about owning property as joint tenants and tenants in common. When two or more people own something as joint tenants, they all own the whole thing. There isn't one-half or one-quarter to point to and say "this part here is mine." When a joint tenant dies, his or her interest simply evaporates and the surviving joint tenants continue to own the whole property. When two or more people own something as tenants in common, however, they each own their individual slices of the pie. They can sell or borrow against their shares of the property as they each see fit, and when a tenant in common dies, his or her interest transfers to his or her estate, to be dealt with according to the tenant's will.

Let me also explain the bit about fixing the pool of property available for division. Although property acquired after the date of a s. 57 declaration often remains the separate property of the spouse who bought it, this isn't the case for property bought with a family asset. In general, if the new property is bought with a family asset, like a new car bought using the family car as a trade-in, the new property will also qualify as a family asset and be subject to division.

When you want a s. 57 declaration and when you don't

You would particularly want a s. 57 declaration if your spouse has lots of creditors who might want to seize your spouse's property or if your spouse is likely going to go bankrupt. Once a s. 57 declaration has been made, a creditor can only take your spouse's half of the family assets and only half will vest in your spouse's trustee in bankruptcy.

On the other hand, might not want a s. 57 declaration if your spouse is likely to die and you and your spouse own valuable assets, like the family home, as joint tenants. If your spouse dies while you are joint tenants, you would continue to own the whole property after your spouse's death; if you have a s. 57 declaration, you will own the property as tenants in common and after your spouse's death, you would keep your half of the property while your spouse's half would go to his or her estate.

The law about s. 57 declarations can be complicated, and you really must speak to a lawyer to get proper advice about when you should be asking for a s. 57 declaration and when you shouldn't.

Update: 9 January 2011

Curiously, I've just bumped into two cases which illustrate the importance of s. 57 declarations, both of which concern pensions.

In Peck v. Peck, the parties separated in 2003 but a divorce action didn't get started until 2009. The wife sought a share of the husband's pension, and the husband argued that her interest in his pension should have ended in 2003 when they separated, not six years later when a s. 57 declaration was made in the divorce action. The court held that there was no reason to depart from the asset division scheme set out in the Family Relations Act and divided the pension as of the 2009 triggering event.

Similarly, in Wong v. Wong, the parties separated in 2005 but a divorce action didn't get going until 2008. At the trial in 2010, the husband asked the court to value his pension from the date of separation, not five years later at the trial. The court held that there was no reason to depart from the usual practice of dividing the pension as of the triggering event. In this case, the triggering event was the divorce trial as there hadn't been an earlier s. 57 declaration.

Update: 13 January 2011

And yet another recent case in a similar vein!

In Johnston v. Johnston, the parties married in 1985 and separated in 2005. The wife received half of the husband's pension accumulating during this period, as well as during the five year period which elapsed between separation and trial as there had been no prior triggering event. (In a somewhat unusual circumstance, the court also awarded the wife a half share of the husband's pension which accumulated during the three years that the parties lived together before marrying.)

Future posts

Separation is a surprisingly broad topic. If there's a topic you'd like me to discuss, please say so in a comment to this post.

Okay, so there's (probably) a new law coming. Now what?

Important Update: The Family Law Act was introduced on 14 November 2011. See my posts "The Early and Unlamented Deaths of ss. 90 and 120.1: Government takes quick action on parental support and unmarried persons' property agreements" and "Family Law Act Introduced!" for more information.

Readers of this blog, or any local newspaper really, will know that the provincial government is planning on introducing a brand new Family Law Act sometime in 2011 that will revolutionize family law in British Columbia. I've summarized the proposed new Family Law Act in a previous post.

In September, I published another post which talked about how bill becomes a law and how a law comes into force. One of the points I was trying to make was that the Family Law Act described in the government's White Paper (PDF) doesn't have any legal effect at present and may not look anything like the Family Law Act that comes into force, and a result you shouldn't make any decisions on assumptions drawn from the White Paper.

That being said, I was recently consulted by a fellow who wanted a cohabitation agreement. (I have written at length about why cohabitation agreements are a really bad idea under the current law if the point of the agreement is supposed to be about protecting property; read my post on the subject, "Why you DON'T want a cohabitation agreement," before continuing.) This is an important problem because if the new law looks anything like the White Paper's proposal, the property interests of common-law couples and married couples are going to look very different than they do right now and, either way, the dilemma posed by s. 120.1 of the Family Relations Act will no longer exist.

So what do you do now? Frankly, I'm not sure, and any answer is going to involve an awful lot of assumptions.

If the Family Relations Act is replaced and if the new act looks like the White Paper's proposal, lots of things are going to be different:

• common-law couples will have the same property entitlements as married couples
• the value of property brought into the relationship will be excluded from sharing, as well as certain other kinds of property like court awards and inheritances
• property bought with excluded property will also be excluded from sharing
• agreements about property will only be set aside where there is a defect in the agreement or how the agreement was entered into, such as a misunderstanding about the nature of the agreement or a failure to disclose the existence of an asset

In circumstances like this, it's not clear what a marriage or cohabitation agreement about property might accomplish. Perhaps such agreements would more clearly define which assets are excluded from sharing, or address how excluded property will used during the relationship. Perhaps they would attempt to regulate how property acquired during the relationship will be paid for, or how such property would be divided at the end of the relationship.

Whatever winds up happening, the only thing we know for certain is that the Family Relations Act is the law of the land, and this is the law you need to be thinking of when planning a new relationship. We can't say for certain that the Family Relations Act will be replaced; if it's replaced, we don't know what the replacement is going to look like or when it will come into effect. We also don't know how the replacement will deal with relationships that are ongoing when it comes into effect. Will there be an exemption for existing relationships? If the new law applies to existing relationships, will it apply right away or will there be a grace period?

I think that if you are planning on a new cohabiting relationship and need to be absolutely sure about the law that will apply to your relationship, you're best off waiting until the bill passes final reading. Your second best choice would be to have an agreement not about property but an agreement to negotiate an agreement about property when the content of the new law is known.

Why you DON'T want a cohabitation agreement

Important Update: The Family Law Act was introduced on 14 November 2011 and contains a number of provisions which are critical to the comments I've made in this post. See my posts "The Early and Unlamented Deaths of ss. 90 and 120.1: Government takes quick action on parental support and unmarried persons' property agreements" and "Family Law Act Introduced!" for more information. I've also added a new post, "Cohabitation Agreements and the new Family Law Act," about why unmarried couples probably DO want cohabitation agreement.

Questions about cohabitation agreements come up fairly often in my line of work, and it seems that I'm constantly dealing with this one particular issue: how cohabitation agreements do and do not help to protect assets brought into a relationship. This issue's come up yet again, and I thought I'd write about it in a broader context.

People often think they need a cohabitation agreement when they move in with someone in romantic relationship. That's not true; you don't need a marriage agreement when you marry someone and you don't need a cohabitation agreement when you begin to live with someone.

That being said, there are a handful of good reasons why you might want a cohabitation agreement: if you or your partner are bringing children into the relationship; if you or your partner want to ward against the chance of a spousal support claim when the relationship ends; or, if you want to protect the property you're bringing into the relationship. The last reason is the most common reason people want a cohabitation agreement, and while this strategy may work in other provinces, it doesn't work in British Columbia. In fact, it makes things worse. A lot worse.

To be completely clear: you do not want a cohabitation agreement if you live in British Columbia and the agreement is meant to protect property. Here's why.

The British Columbia Family Relations Act treats married and unmarried couples very differently when it comes to property. For married couples, the act says they should both have an equal share of all of the family assets, regardless of who owns the asset or whether it was brought into the relationship or bought afterward, and most assets will qualify as family assets. For unmarried couples, including common-law couples, the act says nothing at all; unmarried couples are expressly excluded from the parts of the FRA that divide property. Unmarried couples are limited to making property claims under the law of trusts, and that usually produces results that are far, far less generous than the equal split married couples get under the FRA.

In summary...

1. Married Couples: The Family Relations Act presumes that each spouse gets half of all the assets, and almost all assets wind up being part of the pool of assets that get divided. Although this presumption can be challenged, most of the time the assets are split equally or near-equally.

2. Unmarried Couples: The parts of the Family Relations Act that deal with the division of assets don't apply to unmarried couples. Unmarried couples can only make claims against each other's property under the law of trusts, and those claims are tough to prove and hardly ever result in a division close to the division that would have resulted if the couple had been married

This is where s. 120.1 of the Family Relations Act comes into things.

Under s. 120.1, the parts of the FRA that divide property between married couples apply to agreements between unmarried couples that deal with property and would be a marriage agreement had the couple been married. Making things worse, under s. 65 the court has the express authority to order a division of assets other than a marriage agreement calls for if it thinks the terms of the marriage agreement are unfair... and what's unfair? Often a division of assets that is different than the equal split prescribed for married couples.

In other words: if an unmarried couple make a cohabitation agreement about property, the rules about property division for married couples apply to the agreement and the court can divide property using the standards that apply to married couples.

Now, instead of the crappy trust law claims an unmarried couple would have had to suffer through in making a claim to divide assets, the couple have all the benefits of the rules that apply to married couples, including the presumption that a fair division of assets is an equal division of assets. This is hardly the effect most unmarried couples assume a cohabitation agreement is going to have; instead of protecting their assets from division, the agreement has exposed the assets to a potential claim which is much worse than the claim that would have been available without the agreement! A bit counterintuitive, isn't it?

Important Update: The Family Law Act was introduced on 14 November 2011 and contains a number of provisions which are critical to the comments I've made in this post. See my posts "The Early and Unlamented Deaths of ss. 90 and 120.1: Government takes quick action on parental support and unmarried persons' property agreements" and "Family Law Act Introduced!" for more information. I've also added a new post, "Cohabitation Agreements and the new Family Law Act," about why unmarried couples probably DO want cohabitation agreement.

Supreme Court of Canada Releases Important Decision

On 19 February 2009, the Supreme Court of Canada released its judgment in Rick v. Brandsema (2009 SCC 10), a case about the duty of honesty and fair play spouses owe to each other when they are negotiating a separation agreement.

The court's judgment in this case follows the reasoning it established six years earlier in Miglin v. Miglin (2003 SCC 24), a case about separation agreements and spousal support. In Miglin, the court decided that the rules about commercial contracts shouldn't apply to separation agreements because of

"the particular ways in which separation agreements generally and spousal support arrangements specifically are vulnerable to a risk of inequitable sharing at the time of negotiation and in the future"

which largely result from the unique negotiating environment of separation agreements, an environment of

"intense personal and emotional turmoil, in which one or both parties may be particularly vulnerable."

As a result, the court held that not only must the spousal support provisions of an agreement be fair in themselves, they must be negotiated in a scrupulously fair manner, without either spouse being subject to "circumstances of oppression, pressure or other vulnerabilities."

In Rick, the court took this line of reasoning a bit further, and decided that agreements must also be negotiated with full and complete financial disclosure:

"A duty to make full and honest disclosure of all relevant financial information is required to protect the integrity of the results of negotiations undertaken in these uniquely vulnerable circumstances [of separation]. The deliberate failure to make such disclosure may render the agreeement vulnerable to judicial intervention where the result is a negotiated settlement that is substantially at variance from the objectives of the governing legislation."

The "objectives of the governing legislation" might be the objectives of a spousal support order, as set out in the Divorce Act, or it might be the presumption of an equal entitlement to share in family assets, as set out in the Family Relations Act.

To boil all this down, the cumulative effect of Miglin and Rick is that agreements must be negotiated with procedural fairness (fairness in the conduct of the negotiations) and must ultimately reflect substantive fairness (conformity with any relevant legislative goals) or court may set aside or vary an agreement:

1. The freedom of spouses to negotiate a fair settlement at the conclusion of their marriage depends on the integrity of the bargaining process.

2. The integrity of the bargaining process is at risk when a spouse pressures or manipulates the other spouse, or takes advantage of the vulnerability or weakness of the other spouse, to acheive a good deal. (Miglin)

3. The integrity of the bargaining process is at risk when a spouse fails to make full and complete financial disclosure. (Rick)

4. The integrity of the bargaining process can also be jeopardized simply by the stressful emotional circumstances of separation. (Miglin and Rick)

5. The court will intervene where the bargaining process was flawed and the terms of the agreement are at odds with the objectives of the Divorce Act or the Family Relations Act.

The court's summary is perhaps best:

"[T]he more an agreement complies with the statutory objectives, the less risk that it will be interfered with. Imposing a duty on separating spouses to provide full and honest disclosure of all assets, therefore, helps ensure that each spouse is able to assess the extent to which his or her bargain is consistent with the equitable goals in modern matrimonial legislation, as well as the extent to which he or she may be genuinely prepared to deviate from them.

"In other words, the best way to protect the finality of any negotiated agreement in family law, is to ensure both its procedural and substantive integrity in accordance with the relevant legislative scheme."