Marriage and Agency: Swift v Tomecek Roney and a Statement Against Assumptions

After a custom built home was found to have significant structural defects, the homeowners (“the Swifts”) sued the designer of the home (“the Architects”). This case provides clear guidance on the law of agency in the context of matrimonial relationships. As such, Swift v Tomecek Roney Little & Associates Ltd., 2014 ABCA 49, provides invaluable insight for parties who contract with couples.

Facts

The Swifts each made separate claims against the Architects. Mr. Swift sued in contract and tort. Ms. Swift sued only in tort. The agreement with the Architects (“the Agreement”) contained a clause that limited the Architect’s liability to $500,000. However, only Mr. Swift signed the Agreement. Ms. Swift did not sign the contract. According to the Swifts, this meant that the limitation clause did not apply against Ms. Swift because she was not a party to the agreement.

Issue

This case concerned several issues. However, this post focuses on the Alberta Court of Appeal’s (“ABCA”) consideration of whether Mr. Swift was Ms. Swift’s agent when he signed the Agreement. This determination partly determined who was bound by the limitation clause.

Decision Below

The Alberta Court of Queen’s Bench decided that the homeowners suffered approximately $1.9 million in damages and that Ms. Swift was a party to the Agreement because Mr. Swift signed for her as an agent.

The ABCA Decision

The ABCA held that there was nothing in the conduct of the homeowners to ground a conferral of express, implied, or apparent authority. As a result, no agency relationship could be found.

This decision was predicated on the law as it stands today. Agency relationships normally arise from an express contract between agent and principal or an implied authority that stems from power otherwise granted. That said, implied authority does not necessarily require the foundation of an express conferral of authority. Instead, a court can imply an agency relationship, absent express authority, where “there is clear unequivocal evidence that demonstrates that a principal has in fact consented to the agent’s having authority to act on his or her behalf” (para 22).

Another way to establish an agency relationship is to show that the principal represents to a third party that someone is his or her agent and the third party relies on that representation. This type of relationship is known as apparent agency.

Given the evidentiary record, it was impossible to find either express or apparent authority. As a result, the ABCA assumed that the trial judge based his findings on implied authority. This was found to be a mistake in law.

It was determined that the lower court predicated its finding on the marriage of the Swifts, their joint tenancy, Ms. Swift’s agreement with the project, and the fact that Mr. Swift normally signed family documents on Ms. Swift’s behalf. In other words, the assumption of the lower court was that married couples who appear to live as partners are each other’s agents.

The ABCA disagreed. A marriage cannot be seen, without more, to create an agency without ignoring the separate legal identity of each spouse. Such a determination would run contrary to the general trend of 21st century law. Nor could joint tenancy imply such a relationship; such an arrangement merely establishes a separate and indivisible proprietary interest. The facts that Ms. Swift was “on board” with the project and knew of the Agreement were equally unpersuasive. Those two factors did not amount to a conferral of authority to her husband.

Further, there was insufficient evidence to establish that “it was typical of the Swifts’ family arrangements for Mr. Swift to sign on Ms. Swift’s behalf” (para 34). While there was some evidence that Mr. Swift typically provided the sole signature, other instances indicated that Ms. Swift also signed family documents and sometimes obtained independent legal advice.

There was simply insufficient evidence to establish an agency relationship. In so holding, the ABCA remarked that “[c]ourts should be cautious in relying on inferences to find agency between spouses and must recognize the pitfalls of relying on subjective assumptions about marital relationships” (para 35).

Conclusion

This decision stands as a warning to everyone involved in the construction of shared property. In this case, the home was intended to be communal. It was designed and built specifically for the married Swifts. This situation, however, was not enough to create an implied agency relationship for the purposes of the construction. To some, it may seem reasonable to assume that a couple is bound when half a married unit signs a contract to build a home both spouses helped plan. The law disagrees. Therefore, it is advisable for parties who contract with a married couple to get both spouses’ signatures. Otherwise, as was the case here, the entire bargain can be circumvented.