Should I have a Cohabitation Agreement

For common law couples, support is not an issue for three (3) years of cohabitation, unless there is a relationship of some permanence and a child is born.

Until the last year, there were not the same rights as for married couples (who automatically share the growth in all assets after marriage).

So in many cases, we would defer a Cohabitation Agreement to a Marriage Contract just prior to the wedding. If the parties had a Cohabitation Agreement, it automatically became a Marriage Contract, on marriage.

This all changed earlier in 2011 with the release of two (2) Supreme Court of Canada cases by the names of Kerr v. Baranow and Vanasse v. Seguin. In these two cases, the Court changed the law of cohabitation and found that in the lengthy relationships that were common law, the Court could make a finding of unjust enrichment of the wealthier spouse and the deprivation of the poorer spouse and as a result, make a finding that there had been a joint family venture and that the poorer spouse’s contribution as a result of this joint venture, created wealth and that a monetary award ought to follow which is calculated according to a share of the accumulated wealth proportionate to the poorer spouse’s contributions.

While the Court found that cohabiting couples are not a homogeneous group, the Court will look at four (4) main headings which include:

1. Mutual effort;
2. Economic integration of affairs;
3. Actual intent to so integrate; and
4. Prioritizing of the family.

The hallmark of these is whether the parties worked collaboratively towards common goals, such as the pooling of efforts and teamwork; the decision to have and raise children together; and the length of the relationship which may all point towards the extent, if any, to which the parties have formed a true partnership and are jointly working towards important mutual goals.

The more extensive, the integration of the couple’s finances, economic interest and economic wellbeing, then the more likely it is that they should be considered to have engaged in a joint family venture: for example, did they maintain a “common purse”.

The intentions of the parties may be expressed, or may be inferred from their conduct. Courts may infer from the parties’ conduct that they intend to share the wealth that they jointly created. Even if title to assets is in the name of one of the parties, the party’s conduct may lead to an inference that there was an intention to share the wealth or not share the wealth.

The final category of factors to be considered in determining whether the parties were, in fact, engaged in a joint family venture is whether and to what extent they have given priority to the family in their decision making. Has there been a reliance on the relationship by one or more of the parties for the sake of the family, particularly if financial sacrifices are made by the parties for the welfare of the collective or family unit? Whether the roles of the parties fall into the traditional homemaker/wage earner division, or whether both parties are employed and share domestic responsibilities: it is often the case that one party relies on this sense of a joint future to their own economic detriment, such as leaving the workforce for a period of time to raise children, or relocating for the benefit of the other party’s career.

At the end of the day, the Court found, as a result of these two (2) decisions, that there should be a significant sharing of assets and support. What can be inferred from these decisions is that more and more the Courts, in recognition of the realities of modern life, will be treating long term common law relationships just like marriage.

As a result, Cohabitation Agreements have become more important than ever before.

Judith Holzman is a collaboratively trained family lawyer who has practiced for over 33 years in the Toronto and York Region area. She has participated in amendments to the Family Law Act (provincial) and the Divorce Act (federal) in the area of religious divorce.