The Dangers of Do-It-Yourself Agreements

There are many pitfalls in a do-it-yourself approach to drafting a separation agreement.

In the case of Cramer v. Cramer, the court largely rewrote parts of the divorcing couple’s “kitchen table” separation agreement which they prepared using an office-supply store kit.  Unfortunately, the agreement they prepared not only overlooked some very key provisions, it also ran afoul of Ontario Family Laws.  Ultimately, both parties had to hire lawyers anyways and resulted in a judge having to redraft the agreement to bring it in line with the law and the parties true wishes.

The husband insisted that lawyers should not be involved, when the couple separated after 19 years of marriage.  Instead, he and the wife sat down and prepared a draft agreement while having coffee and tea using a separation agreement ‘kit’ they purchased at an office store.  After some revisions and going over the agreement on a clause-by-clause basis, they initialled the changes before creating a final version.  The agreement stated on its face that it was intended to be a “full and final settlement” and the parties signed the agreement in the presence of two witnesses.

Although their agreement covered certain necessary items such as listing assets, bank accounts and insurance policies, division of household contents, etc, it neglected to deal with spousal support for the wife and did not provide for a fair division of the husband’s pension.  Later, when the wife realized she did not receive a fair settlement under their “do-it-yourself” agreement, she brought the matter to court to have it remedied.

The court reviewed the document as well as the circumstances in which it was negotiated and signed.  Although both parties had received the benefits of the separation agreement and fulfilled their respective obligations, they lacked very fundamental information at the time as neither had an accurate understanding of the agreement or its ramifications. From a legal stand- point, the agreement did not comply with the statutory scheme of property division and support that was envisioned by the Ontario Family Law Act.

In light of this fundamental misunderstanding and mutual mistake, the court had the authority to correct the agreement’s terms.  This included ordering the husband to assign and transfer about $80,000 to his wife from his pension with interest.

In this case, the couple went the “do-it-yourself” route in order to save money. Instead, they each had to hire lawyers and had to spend a costly day in court.

Another case, Demaine v. Racine, provides further illustration of how a couple’s attempt to minimize legal fees actually ended up with a costly day in court.

In 2005, the couple had drafted their own cohabitation agreement based on a sample they found online.  Once again, in an attempt to save money, their agreement was created without the assistance of independent legal advice for either party.  Their goal for their agreement was to protect their respective pre-relationship assets in advance of their 2006 marriage.  The agreement was signed at their Ottawa home in the presence of the wife’s friend, who served as the witness.

However, when the couple separated in 2011, the husband denied ever signing the agreement at all.  He applied to the court to have it set aside, claiming that even if he did sign it, it was not fair or reasonable.  The court found in the wife’s favour, that the agreement was enforceable as it was a valid domestic contract.  In addition, the husbands claim that he did not sign the agreement was found to be unconvincing.  The court concluded that there were no legal grounds for setting aside the agreement.

The couple had each adequately disclosed their financial information to the other prior to signing the agreement; there was no evidence of duress; and no misrepresentations on either side. The agreement complied with all the legal formalities required by Ontario law and both parties benefitted under the agreement.  Additionally, the court dismissed the husbands claim that, as he did not have independent legal advice, he did not understand the nature or consequences of the agreement.  The “do-it-yourself” agreement was the husband’s choice in order to save on legal costs.  The court found that he understood the agreement and its ramifications even without a lawyer.  The agreement was fair, freely negotiated and valid.