“An unenforceable agreement may have some effect. For example, had the parties gone ahead and transferred title to the Respondent’s name, the court might not unwind that transaction simply because it was based on an unenforceable agreement. An unenforceable agreement might be given some weight if a court is asked to make related discretionary decisions, such as for spousal support or an unequal division of net family property. No such claims were made here. An unenforceable contract may be of some legal use, but it nonetheless lacks the vital characteristic of enforceability.
The Respondent provided two cases where judges of this court have purported to exercise discretion to enforce an unenforceable domestic contract, despite the clear wording of s. 55(1) of the FLA. The cases were: Sessions v. Froude, 2010 ONSC 2010 (Sup. Ct.) (CanLII) and Lecot v. Lecot, 1995 CarswellOnt 1396, 19 R.F.L. (4th) 14 (O.C. J. Gen. Div.). With respect, I do not agree that any such free standing discretion exists.
There is a well recognized exception to compliance with the formal requirements set out in s. 55(1); namely, for settlement agreements negotiated under legal advice. The leading case in Ontario is Geropoulos v. Geropoulos (1982), 1982 CanLII 2020 (ON CA), 35 O.R. (2d) 763 (C.A.). The Court of Appeal, at para. 15, upheld a settlement agreement that was reached through the exchange of lawyers’ letters that “was complete, definite and intended to be binding.” Geropoulos relied upon the policy of encouraging settlements and the importance of preserving valid settlements that have been freely and properly entered into with legal advice.
Harris v. Harris, [1996] O.J. No. 2430 (O.C.J. Gen. Div.) is another case that has been cited as an example of a freestanding discretion to enforce an agreement despite its noncompliance with s. 55(1). In Harris, discretion is said to be exercisable on a case-by-case basis. Harris was relied upon in Pastoor v. Pastoor, 2007 CanLII 28331 (ON SC), [2007] O.J. No. 2851, 48 R.F.L. (6th) 94 (Sup. Ct.), to extend the Geropoulos principle to a situation where Minutes of Settlement were negotiated freely, with legal advice, but before litigation was commenced. The facts in Harris emerge from paras. 11, 12 and 15:
In the case at Bar the parties and their respective counsel at a meeting in the offices of the plaintiff’s solicitor negotiated terms of a proposed settlement. By doing so it is obvious to me that unless one of the parties was not bona fide, the purpose of the meeting was to finalize some or all of the outstanding issues in the presence of and with guidance from legal counsel. Both parties solicitors are experienced and well respected and, from the evidence, can be taken to have advised the parties as to the purpose of the meeting which was to attempt to finalize issues and avoid litigation. It cannot be said that either party was at any disadvantage at the meeting or thereafter.
Counsel for the defendant, during the meeting, prepared a handwritten summary of matters that were agreed to and confirmed them in a letter the following day. Indeed, counsel begins his letter by stating: “I confirm the basis on which the parties are prepared to settle all matters”, and then sets out in more detail the content of the handwritten notes. He concludes the letter with:
I trust that the above reflects the results of our four way meeting. I shall proceed to prepare a draft agreement for your consideration. In the meantime, the proceedings may be adjourned to Tuesday, May 21st, 1996, as I may wish to have some of the terms of agreement incorporated into an order.
…
The essence and meaning of the correspondence is clear. The parties intended to settle matrimonial issues in dispute and believed they had done so. On my reading of the correspondence of defendant’s counsel, if his secretary had not been ill the formal agreement incorporating the terms of settlement would probably have been completed and may very well have been signed. The evidence does not support the view of the defendant that “there was no ‘backing out’ of the agreement as there never was an agreement ‘back out from’” (sic). What is clear to me is that the Respondent concluded an agreement, had second thoughts about it later, and then relied on the provisions of subsection 55(1) of the Family Law Act in an attempt to vitiate it.”