A recent Court of Appeal decision, El Rassi-Wight v. Arnold, 2024 ONCA 2, provides important guidance for family law lawyers in Ontario on the enforceability of informal domestic contracts under the Family Law Act (“FLA”).
The case involved an unmarried couple, Aleya El Rassi-Wight and Scott Arnold, who purchased a home together in 2019. When their relationship ended in 2020, they signed a handwritten agreement stating that Arnold would transfer his interest in the home to El Rassi-Wight in exchange for $10,000 and a motorcycle. However, Arnold later refused to transfer the property.
El Rassi-Wight brought an application seeking to have the agreement declared a binding domestic contract. The application judge held that the agreement did not comply with s. 55(1) of the FLA, which requires domestic contracts concerning property to be witnessed. Her Honor declined to relax the formal requirements and found the agreement invalid.
The Court of Appeal upheld the application judge’s decision. It confirmed that even video evidence showing a party signing an agreement does not necessarily substitute for the FLA’s witnessing requirement. The purpose of s. 55(1) is not just to prove signing, but also to impress upon parties the significance of domestic contracts.
The Court of Appeal also affirmed that the test for relaxing s. 55(1) is whether: 1) the parties in fact executed the contract; 2) its terms are reasonable; and 3) there was no oppression or unfairness when it was negotiated and signed. Additional factors identified in Gallacher v. Friesen, 2014 ONCA 399, 371 D.L.R. (4th) 522, also apply.
Applying this test, the court found the agreement vague and ambiguous. It noted the parties received no legal advice and the respondent did not understand key terms. As a result, it upheld the judge’s finding that s. 55(1) should not be relaxed.
Finally, the Court of Appeal stated the trial judge could also have set the contract aside under s. 56(4) because the respondent did not understand its nature and consequences. This provides an additional basis for invalidating improperly formalized domestic contracts.
The decision in El Rassi-Wight v. Arnold highlights some key lessons for family law lawyers:
- Informal domestic contracts face significant hurdles to enforceability under the FLA
- Compliance with s. 55(1) should not be assumed to be a mere technicality
- Courts may still invalidate vague, ambiguous, or unfair agreements even if properly formalized
- Obtaining independent legal advice is prudent and highly recommended before signing any domestic contract
Ensuring clients understand the implications of domestic contracts remains paramount. Where informal agreements are made, lawyers should caution that they may not withstand judicial scrutiny. Overall, this case reinforces the importance of formalizing domestic contracts properly under the FLA.
Let’s continue to elevate the practice of family law in Ontario!
Disclaimer: The information provided in this blog post is intended for general informational purposes only and should not be considered as legal advice. Consult with a qualified family law attorney for advice regarding your specific situation. Goldhart Mediation & Arbitration is not responsible for any actions taken based on the information presented in this blog.