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Reunited might not feel so good if you signed a prior separation agreement

Special to Financial Post

Elizabeth Taylor, Elon Musk and Frida Kahlo all have something in common: they married the same person twice. Only Kahlo stayed together with Diego Rivera ‘til death did them part, but if you have signed a cohabitation agreement, marriage contract or separation agreement, reconciling can be legally complicated.

Cohabitation agreements and marriage contracts usually set out how a couple’s property will be dealt with. Often, they also set out limitations on spousal support in the event of a separation or death.

A separation agreement is entered into after a common-law or married couple separates. In addition to resolving issues about children, such an agreement also deals with the division or equalization of the couple’s property and payment of spousal support.

Over the past two years, the Ontario Court of Appeal has considered the effect of a couple’s reconciliation on their legal rights. In one case, the couple reconciled after signing a separation agreement, and in the other, the couple signed a cohabitation agreement, separated and then reconciled. In each case, the court had to decide whether the agreements signed prior to reconciliation were still binding.

In Miaskowski v. MacIntyre, the separation agreement contained a standard clause that said the agreement was void if the parties reconciled for more than 90 days. There was, however, an exception to that clause that said “any payment, conveyance or act” done under the agreement would not be invalidated.

The couple did not divorce after separating, although they each lived common law with someone else after they separated. The parties then reconciled and stayed together for nine more years.

Just before the couple’s first separation, the husband started contributing to a pension plan. Although a pension is property under the Family Law Act, the wife’s evidence at trial was that given the few contributions he had made, they did not bother to have the pension valued and included in the first equalization calculation.

Justice Kathryn Feldman specifically considered the clause that voided the agreement after a 90-day reconciliation, observing that the parties were “meant to regain all the rights they had as spouses that were bargained away in the separation agreement.”

There was, however, a very specific clause in which the wife released her interest in the husband’s pension. The husband argued that as he had the pension at separation and the wife specifically agreed to release her rights to it, she shouldn’t be able to equalize it after the second separation, especially since both had been living common law with others for seven of the years the pension accumulated.

Feldman agreed with the wife, holding that the entire pension accumulated between marriage and the second separation should be equalized, but said these sorts of circumstances require a case-by-case analysis and exceptional circumstances could lead to another result. Regrettably for the husband, however, she did not find these circumstances to be “exceptional.”

Legal issues in another volatile relationship found their way to the Ontario Court of Appeal in 2021. In Krebs v. Cote, the parties lived together on and off for about six years. During one of their later reconciliations, they signed a cohabitation agreement that required a payment by the wife to the husband if they separated. The couple separated again and the wife made the payment.

Thereafter, they reconciled again, married and lived together for about five years before they separated for, presumably, the last time.

Justice Gladys Pardu of the Court of Appeal considered the effect of the parties’ reconciliation on the mutual releases of property and support claims in the cohabitation agreement the couple had signed. In Ontario, because a cohabitation agreement becomes a marriage contract if the couple later marries, the couple’s marriage was not relevant to the legal outcome.

In finding that the releases against property and support in the cohabitation agreement continued to apply, Pardu summarized the different treatment between separation agreements and cohabitation agreements.

“Notwithstanding the sea change in family law over the past century, the common-law reconciliation rule remains a part of Canadian common law and continues to make some sense. Where the raison d’être of the agreement is separation and parties reconcile, the foundation for the separation agreement dissolves,” she said. “I see no basis to extend this logic so as to void a cohabitation agreement following a reconciliation of the parties. Under such circumstances, the reconciled parties have returned to the very state contemplated by the cohabitation agreement.”

Pardu cautioned that there is no automatic presumption of validity for a cohabitation agreement after a reconciliation, but she was clear that unless the language of the agreement expresses a different intention, if a cohabitation agreement applies on separation, a separation followed by a reconciliation would not ordinarily cause the agreement to be void.

One can only hope that Elizabeth Taylor and Elon Musk had good family law advice before they remarried.

This article was originally posted in the Financial Post