We have frequently written about domestic agreements given their importance in relationships by allowing couples to agree on their family law rights and responsibilities in case of a divorce or separation. The benefit of preparing these agreements is that the parties may agree to terms which are different from the default arrangements that would otherwise apply under the applicable legislation.
Domestic agreements can be made before cohabitation or marriage, or upon separation. Meridian Law Group can help you by drafting or reviewing domestic agreements, or by advising on their enforceability, whether they are unfair or were based on inaccurate financial disclosure.
This blog post focuses on whether couples can rely on oral domestic agreements or need to be in writing. While this is an interesting question, it is always encouraged to have any agreement in written form with proper execution.
Domestic agreements under the Family Law Act in British Columbia
The British Columbia Family Law Act (referred to as the “FLA”) allows spouses to make agreements about different things. For example, section 92 of the FLA allows spouses to make agreements with respect to the division of property and debt. Further, section 148 of the FLA only allows child support agreements to be made after separation, or in anticipation of separation only to become effective after separation. Finally, section 163 of the FLA provides for spousal support agreements to be made.
Does the domestic agreement need to be in writing?
There is no requirement under the FLA for domestic agreements to be in writing. However, depending on whether the agreement is oral or in writing can have an impact on the outcome of the issue at hand.
Challenging the agreement
Firstly, the process of challenging a domestic agreement varies depending on whether it is an oral or written agreement. Under sections 93 and 164 of the FLA, the Supreme Court is allowed to set aside written property or spousal support agreements signed by each spouse in the presence of a witness, in certain specified circumstances.
Unwritten agreements may also be challenged, but not under the same provisions. For example, in order to challenge a verbal property agreement, the spouse seeking to challenge the agreement must apply to the Supreme Court under section 95 of the FLA. This provision allows a court to order that an unequal division of property is permitted if it would be significantly unfair to divide the family property equally, after considering various factors, such as an agreement between the spouses.
Secondly, written domestic agreements pertaining to spousal support or child support can be filed with the court for enforcement purposes, whereas oral agreements do not have the same ability.
Proving the existence of an oral agreement is difficult
Further, proving the mere existence of a domestic agreement is difficult if there is no written evidence of the terms agreed upon or the signature of both parties. Therefore, the party seeking to rely on an alleged oral agreement must provide sufficient evidence that the agreement existed.
In some circumstances, proving that an oral domestic agreement existed may be impossible to do. This issue arose in the recent decision of Voitchovsky v Gibson before the Court of Appeal for British Columbia.
Respondent argued that there was a oral agreement to keep their assets separate
In this case, the applicant and respondent were in a long-term marriage-like relationship for 30 years before separating in 2018. They had each been married before this relationship and accumulated their own assets before meeting.
The couple eventually bought a property as tenants in common in Qualicum Beach to reside in together. The relationship ended when the applicant left this home. She then applied to the Court seeking an equal division of family property and advanced a claim for spousal support.
In relation to the property claim, the respondent claimed that she and the respondent had an oral agreement to keep their assets separate from each other in the event of a separation. The respondent also argued that it would be significantly unfair to equally divide their property given this agreement.
Courts found existence of an oral agreement
The trial judge decided that the parties did have an oral agreement to hold their assets individually and not to share joint ownership, except for specific items, such as their Qualicum Beach property. This conclusion was based on the parties’ testimony and evidence pertaining to how the parties managed their financial affairs.
The Court of Appeal explained that:
“When the court is faced with an alleged oral agreement, it is necessary to look not only at the words used, but also at whether the parties’ conduct is consistent with the oral agreement. The test for a binding and enforceable agreement is “whether the parties have indicated to the outside world, in the form of the objective reasonable bystander, their intention to contract and the terms of such contract”.”
The Court of Appeal agreed with the trial judge that the evidence supported the existence of an oral agreement and that the parties’ conduct indicated that they intended to abide by it.
Significantly unfair to divide family property equally
The trial judge explained that most of the parties’ relationship was during the time when outdated British Columbia family legislation was in force. Under this legislation, the law did not presume equal property distribution for unmarried couples.
While this presumption has now changed under the FLA, the judge decided that it would be unfair to divide the parties’ property equally where the relationship began before the FLA. It would have also been unfair, due to their oral agreement to separate their assets, which they used to conduct their financial affairs during the relationship.
The Court of Appeal agreed with the trial judge’s conclusion that dividing the parties’ property equally would be significantly unfair. As a result, the parties kept their own property while the Qualicum Beach home was divided equally.
Contact Meridian Law Group in Vancouver for Trusted Advice on Domestic Agreements
The skilled family lawyers at Meridian Law Group are ready to help you resolve your family law matters so that you can move forward. Whether you are seeking to create a comprehensive domestic agreement to help protect your interests, or are looking for advice regarding the enforceability of an existing agreement, our trusted family law team is here to help. It is important to have an experienced family lawyer prepare your domestic agreement to help reduce the risk of future disputes and minimize the chance of your divorce proceedings resulting in time-consuming, emotional and expensive litigation. To organize a confidential consultation with a member of our family law team, please call our office at (604) 687-2277 or reach out to us online.