Court of Appeal declines to apply common law reconciliation rule to void a cohabitation agreement

Cohabitation agreement can benefit from specific provisos on separation, reconciliation: judge

Court of Appeal declines to apply common law reconciliation rule to void a cohabitation agreement

While reconciliation dissolves an agreement’s foundation if the agreement’s raison d’être is separation, such logic should not extend to void a cohabitation agreement following reconciliation, given that the reconciled parties have returned to the state contemplated by the agreement.

In Krebs v. Cote, 2021 ONCA 467, the parties, who had an off-and-on-again relationship starting in 2006, resumed cohabitation sometime in December 2012 or January 2013 and executed a cohabitation agreement. Shortly afterward, the respondent moved out of the appellant’s residence and received $5,000 from the appellant for vacant possession of his home, pursuant to the agreement. In 2014, the parties reconciled, married and lived together again in the appellant’s residence. In January 2019, the relationship ended for the final time.

In a motion seeking an order for summary judgment, the respondent asked the court to decide whether, as a matter of law, separation followed by reconciliation would terminate a cohabitation agreement and to determine that the parties’ cohabitation agreement was invalid, not binding and of no force or effect. The motion judge declared that the cohabitation agreement was of no force or effect because, among other reasons, the common law principle holding that reconciliation would terminate a separation agreement should apply to cohabitation agreements.

The Court of Appeal for Ontario, ruling favourably on the appellant’s appeal and awarding him costs of $2,500, set aside the motion judge’s declaration and substituted it with a declaration that the parties’ rights and obligations were governed by the cohabitation agreement.

The appeal court described the common law rule, which states that a separation agreement becomes void upon the parties’ reconciliation unless the agreement expressly or impliedly provides otherwise, as dating from a time when there were very different views about marriage, cohabitation, separation and divorce. The appeal court noted that the common law rule is not absolute and is dependent upon an interpretation of the parties’ intentions, as evinced by the totality of the agreement.

The appeal court, reading the agreement as a whole and in the context of the parties’ relationship at the time of signing, ruled that the agreement was meant to apply despite a separation and a subsequent reconciliation preceding the final separation. The agreement, which employs broad language and which was intended to be long-lasting, contemplated marriage, divorce, separation, death and cohabitation in general, including cohabitation following a separation and reconciliation, the appeal court found.

One reading the agreement could conclude that the agreement would apply if the parties cohabited under any circumstances and that the $5,000 payment was meant to help the respondent move to her own accommodation, the court said, adding that private arrangements regarding the division of property upon a relationship’s breakdown should be respected especially if independent legal advice was sought during negotiation.

“Unquestionably, it would have been better if the cohabitation agreement had contained specific provisos dealing with the possibility of separation and reconciliation, making unnecessary this interpretive process,” wrote Justice Gladys Pardu for the appeal court.

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