The Ontario Court of Appeal declared an agreement invalid due to non-compliance with the Family Law Act (FLA)

In the property rights dispute of El Rassi-Wight v. Arnold, 2024 ONCA 2, the Ontario Court of Appeal declared an agreement made by a former couple as invalid due to their non-compliance with the Family Law Act (FLA) requirements for formalities. In this case, the parties purchased a house as joint tenants during their relationship, the value of which increased substantially from $29,000 to $102,000 at the date of separation. The parties drafted an agreement which provided that the respondent father would transfer his interest in the house to the appellant mother in exchange for $10,000 and a motorcycle. After the respondent father refused to adhere to the agreement, the appellant mother brought an application seeking a declaration that the agreement was a valid and binding domestic contract, and for an order that the respondent father’s interest in the house be transferred to her.
The main issue in this case was whether the agreement the parties executed constituted a valid domestic contract in accordance with the provisions of the FLA. When the application was brought before the Superior Court of Justice, although the parties had a video recording of the respondent father signing the document, the judge ruled that the agreement was not valid as it was not properly witnessed under section 55(1) of the FLA. The judge further stated that independent legal advice was not sought by the respondent before signing the agreement, and that the language used in the document was broad and vague. While the judge iterated that formalities under the FLA can be relaxed depending on the circumstances of the case, this was not such a case.
The appellant mother challenged the trial judge’s findings on appeal which was dismissed by the Ontario Court of Appeal. The Court of Appeal reiterated the trial judge’s findings of fact and agreed that the agreement did not comply with the requirements of formality under the FLA. The Court specifically noted the trial judge’s finding that the respondent father did not understand the agreement due to the language used. In reaching their decision, the Court highlighted the importance of formalities in a valid domestic contract as such formalities act as a safeguard to both ensure parties understand the terms to which they agree, and that parties have an equal position when negotiating the contract. The Court of Appeal also reaffirmed the availability of the test for relaxing the requirements under section 55(1). For section 55(1) requirements to be relaxed, the parties must execute a contract, ensure that the terms are reasonable, and there cannot be circumstances of oppression or unfairness when negotiating and signing the document. As the circumstances in this case did not meet those minimum requirements, the Court of Appeal did not overturn the lower court’s decision and rendered the agreement unenforceable under the FLA. The appeal was dismissed.
This case acts as a reminder that while the formalities under the FLA can be relaxed in certain situations, this will not always be so as it varies depending on the circumstances of the case. The formalities under the FLA must be considered when entering into a domestic contract to ensure that any agreement reached is valid and enforceable.
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