A New Perspective on Cohabitation Agreements from the Ontario Court of Appeal
Krebs v Cote, 2021 ONCA 467, a new case out of the Ontario Court of Appeal, sheds some light on the status of a cohabitation agreement after a couple separates and then reconciles and then separates once more.
In this case the couple had a turbulent relationship in which they had separated and then reconciled several times prior to signing a cohabitation agreement. After the agreement had been signed the parties got married and then filed for divorce in 2019.
Honourable Justice G. Pardu, writing for a unanimous 3 judge panel, states that a cohabitation agreement is not subject to the common law rule that it becomes void upon reconciliation. Justice Pardu explains that the goal of the court should be to encourage parties to enter into contracts or agreements that define their rights and obligations.
To advance that goal, Justice Pardu determines that cohabitation agreements should be examined on the basis of contract interpretation. At paragraph 23 Justice Pardu states, “the goal is to ascertain the objective intent of the parties and the scope of their understanding, reading the contract as a whole, giving the words used their ordinary and grammatical meaning consistent with the surrounding circumstances known to the parties at the time of the formation of the contract.”
The wording of the cohabitation agreement at issue in this case restricts the agreement’s ability to bind the parties. The agreement was intended to be long lasting and, crucially, an “ordinary person reading this agreement would consider that if the parties cohabitated under any circumstances, the agreement applied” (para 27).
Justice Pardu also took the context of the agreement into consideration. This was a couple whose relationship was frequently interrupted by periods of separation and reconciliation. These periods occurred before and after the signing of the cohabitation agreement. It was reasonable that the parties considered separation and reconciliation at the creation of the contract.
In this case, the cohabitation agreement was determined to be in force despite multiple periods of separation and reconciliation. This is not an absolute rule, however. The wording of the agreement is paramount when considered with the context of the nature of the relationship itself.
Time will tell if the courts in Alberta will take the same approach.