How to Consider Agreements Between Spouses: SCC Grants Leave in Anderson v Anderson
There is a presumption of equal distribution of family property upon divorce under the Saskatchewan Family Property Act, SS 1997, c F-6.3 [FPA]. However, parties can contract out of this presumption by executing an agreement which outlines terms for dividing their family property. While parties can ensure the enforceability of their agreement by preparing a formal “interspousal contract” that meets certain requirements under the FPA, the FPA also allows courts to use their discretion to consider agreements between spouses that do not meet those requirements. The Saskatchewan Court of Appeal (“SKCA” or “Court of Appeal”) considered such an agreement in Anderson v Anderson, 2021 SKCA 117 [Anderson]. On April 7, 2022, the Supreme Court of Canada (“SCC“) granted the application for leave to appeal in this case.
Facts and Background
James Allan Anderson and Diane Anderson married in May 2012 (Anderson, para 4). Both parties brought considerable assets into the marriage, and in early 2013, they jointly purchased a house (“family home”) in White City, Saskatchewan (Anderson, paras 4-5). They later separated in May 2015 (Anderson, para 7).
About one month after separation, Ms. Anderson invited Mr. Anderson to a “reconciliation meeting” with mutual friends, where she presented him with a separation agreement that she had drafted, dated July 19, 2015 (“2015 Agreement”) (Anderson, para 8). Among other terms, the 2015 Agreement stated that “[all] assets/property/income/savings/investments/pets and any other of the like accrued prior to the marriage” and “[all] income, pension, investments, benefits and any other of the like earned/accumulated prior and during the marriage” would “remain solely with that individual” (Anderson, para 8). In addition, the agreement stipulated that the division of the family home would be determined at a later date (Anderson, para 8). The parties signed the 2015 Agreement in the presence of two witnesses without receiving any independent legal advice on the agreement (Anderson, paras 8-9).
Shortly after the parties signed the 2015 Agreement, Ms. Anderson instructed her legal counsel to prepare a formal interspousal contract to “make things more legal” (Anderson, para 10). Mr. Anderson refused to sign that agreement and was not responsive to Ms. Anderson’s requests to engage in discussion (Anderson, para 10). On December 10, 2015, Ms. Anderson filed a petition seeking divorce and costs, but not property division. In her petition, Ms. Anderson claimed that the 2015 Agreement “dealt with all of our property as well as spousal support” (Anderson, para 11). On May 5, 2017, one and a half years later, Mr. Anderson filed an answer and counter-petition to Ms. Anderson’s petition, acknowledging the 2015 Agreement but stating that it was “signed with no legal advice and under duress” (Anderson, para 12). The matter proceeded to trial in 2018, with one of the primary issues being the legal effect of the 2015 Agreement (Anderson, paras 13-14).
The Trial Decision
At the Queen’s Bench for Saskatchewan (Anderson v Anderson, 2019 SKQB 35 [Trial Decision]), the trial judge found that the 2015 Agreement was not a formal interspousal contract under the meaning of section 38 of the FPA, which lays out numerous requirements that an interspousal contract has to meet, including the involvement of lawyers (Anderson, para 16). However, the trial judge considered the legal effect of the 2015 Agreement under section 40 of the FPA, which allows courts to “take into consideration any agreement, verbal or otherwise, between spouses that is not an interspousal contract” and “give that agreement whatever weight it considers reasonable” (Anderson, para 16; FPA, section 40).
Upon reviewing the evidence, the trial judge was especially concerned about the absence of legal representation at the time the parties executed the 2015 Agreement, finding that this factor alone was sufficient to make the 2015 Agreement unenforceable (Trial Decision, para 108). For the trial judge, the 2015 Agreement was “more akin to an agreement to agree than a contract,” and there was no consensus ad idem, i.e., a meeting of the minds, to make the agreement enforceable (Trial Decision, paras 114-115).
The trial judge ultimately gave nominal weight to the 2015 Agreement when deciding the division of family property. The trial judge’s decision significantly disadvantaged Ms. Anderson, who was ordered to pay a hefty sum of $62,646.98 and either an RRSP rollover of $37,089.69 or a further cash payment of an additional $27,817.27 to Mr. Anderson (Trial Decision, para 280). Ms. Anderson subsequently appealed to the SKCA.
The SKCA’s Decision
At the SKCA, Ms. Anderson raised six grounds of appeal from the Trial Decision, but the principal issue was whether the trial judge correctly decided that the 2015 Agreement was unenforceable (Anderson, paras 25 and 28). After examining the relevant case law, the SKCA laid out the following framework that courts need to follow when considering agreements under section 40 of the FPA:
1. Is there an agreement in the contractual sense of consensus ad idem?
i) Was there a meeting of the minds that would be “manifest to the reasonable observer”?
ii) Did the parties achieve consensus on the “essential terms of the agreement”?
iii) Was the agreement intended to be “conditional upon, and subject to,” the execution of a more formal contract? (Anderson, para 58, citing Tether v Tether, 2008 SKCA 126 [Tether], para 62)
2. Do the circumstances provide any reason to discount the agreement? (Anderson, para 58)
3. Is the substance of the agreement “fair and reasonable in the sense that they are in substantial compliance with the general objectives of the FPA”? (Anderson, para 58)
4. Has a new or changed circumstance arisen such that the agreement “no longer reflects the parties’ intentions at the time of execution”? (Anderson, para 58, citing Tether, para 88)
Absence of Independent Legal Advice
Before applying the framework, the SKCA addressed the trial judge’s finding that the absence of legal advice alone was sufficient to make the 2015 Agreement unenforceable. The Court of Appeal noted that section 40 of the FPA allows courts to consider “any agreement that is not an interspousal contract,” confirming that courts can consider an agreement even if it does not meet the requirements of section 38, such as the requirement of legal representation (Anderson, para 66, emphasis in original). The SKCA found that the trial judge erred in principle as his conclusion directly contradicted legislation (Anderson, para 71).
Consensus Ad Idem
The SKCA then applied the framework for considering agreements under section 40 of the FPA. Upon review of the evidentiary record, the Court of Appeal found that there was a meeting of the minds between the parties; Mr. Anderson never indicated to Ms. Anderson that he disagreed with the terms of the 2015 Agreement and even elected to sign the agreement without legal advice despite Ms. Anderson’s suggestion that he consult a lawyer first (Anderson, paras 75 and 77).
The SKCA recognized that the trial judge was concerned that the parties had not finalized all the essential terms in the 2015 Agreement, in particular, the division of the family home (Anderson, para 81). In response, the SKCA referred to case law, which differentiates between an agreement to agree and “an agreement to divide personal possessions by reference to an objectively verifiable method” (Anderson, para 91, citing Tether, para 63, emphasis in original). In the 2015 Agreement, the parties had agreed to address the division of the family home at a later date, but they had agreed to specific methods for the division, including obtaining an independent evaluation of its market value (Anderson, para 91). As the 2015 Agreement contained an objectively verifiable method to address the division of the family home, the SKCA held that the parties achieved consensus on the essential terms of the agreement.
Under this prong of the framework, the SKCA also addressed whether Ms. Anderson’s instruction to her legal counsel to draft a section 38 interspousal contract showed that the 2015 Agreement was subject to the execution of a more formal agreement. The Court of Appeal concluded that it was not, finding that Ms. Anderson and her counsel were simply looking to draft a contract in conformity with section 38 to “make things more legal” (Anderson, para 97, emphasis in original). Ms. Anderson’s approach did not undermine the legality or the finality of the 2015 Agreement. As it was an agreement in the contractual sense of consensus ad idem, the SKCA held that the 2015 Agreement could be considered under section 40 of the FPA.
Circumstance, Substance, and Intention
The SKCA next had to determine the weight to be given to the 2015 Agreement. Upon review of the circumstances leading to the agreement, the SKCA found that Mr. Anderson was not in a vulnerable position when he signed the 2015 Agreement, nor was there any evidence that he signed the agreement under duress (Anderson, paras 103 and 104). In regards to whether the substance of the 2015 Agreement was fair and reasonable, the SKCA held that the agreement was consistent with the objectives of the FPA, pointing to the relatively balanced financial positions of the parties and their mutual desire to “make a clean break by having each party retain the property they owned at the time of their marriage” (Anderson, para 106). Lastly, the SKCA found that the 2015 Agreement still reflected the parties’ intentions, finding that any changes in the value of the parties’ assets from the date of the agreement to the date of adjudication were foreseeable and should have been anticipated (Anderson, paras 111-119). Based on those reasons, the SKCA concluded that the 2015 Agreement was enforceable.
After addressing two other minor issues, the SKCA unanimously issued an order dividing the family property according to the values established by the trial judge for December 2015, which bore the closest temporal connection to the date of the 2015 Agreement and achieved the most balanced result. Based on those values, the court ordered Mr. Anderson to make an equalization payment of $4914.95 to Ms. Anderson. Mr. Anderson appealed the SKCA’s decision to the SCC.
Analysis & Future SCC Decision
To set aside the trial judge’s decision, the SKCA relied on two broad avenues of reasoning: refuting the legal errors of the trial judge and closely examining the circumstances surrounding the execution of the 2015 Agreement. When relying on the importance of spouses obtaining legal advice before signing an agreement, the trial judge failed to recognize that section 40 of the FPA clearly allowed for the possibility of agreements made between spouses without the assistance of counsel. The SKCA correctly characterized this mistake as an error of law as the trial judge failed to follow the legislation. The Court of Appeal also identified that the trial judge went against established jurisprudence in his reasoning, specifically the SKCA case of Tether, which explicitly contrasted an agreement to agree with an agreement that stipulates the division of property by a specific method. The SKCA was able to overturn the trial judge’s decision partly because some aspects of the trial judge’s decision were not based on the established law but on the trial judge’s views on what the law ought to be.
The SKCA also made many observations of the evidentiary record to ascertain the context surrounding the 2015 Agreement and, in turn, support its conclusion that the agreement was enforceable. Key points of the context included Mr. Anderson’s lack of objection to the agreement, the environment in which the parties signed the agreement, and the comparable financial positions of the parties. An excellent example of the SKCA using context to support its conclusion was when it relied on Ms. Anderson’s testimony to understand and establish that she intended the terms of the 2015 Agreement to be the final terms even when she instructed her counsel to prepare a more formal interspousal contract. It was important for the SKCA to consider the context provided by the evidence as it provided crucial information for applying the framework for considering agreements under section 40 of the FPA. Context is often critical when deciding contractual issues, including issues concerning agreements between spouses.
Another important takeaway from the case was the importance of respecting the contractual autonomy of the parties. As a general principle, it is in the best interest of parties in family law to preserve the freedom to contract as it promotes certainty and finality in contractual dealings. But it is necessary to consider contractual autonomy in conjunction with what the context provides. This is especially necessary for family law matters, as parties in family law “may be particularly vulnerable” during a “time of intense personal and emotional turmoil” (Miglin v Miglin, 2003 SCC 24, para 73). In this case, as Mr. Anderson signed the 2015 Agreement willingly and could not provide evidence of duress, there was no reason not to respect the contractual autonomy of the parties. There is a presumption of upholding the parties’ freedom to contract, but courts can rebut that presumption if the circumstances provide compelling reasons to do so.
Overall, the SKCA’s decision was well-reasoned; its conclusions were supported by the legislation and case law and the context revealed by the evidentiary record. It also achieved a balance in emphasizing contractual autonomy while taking careful consideration of the circumstances surrounding the contract. For those reasons, when the time comes, the SCC should uphold the reasoning and judgment of the SKCA.