The new Family Law Act codifies a regime whereby the assets that spouses own prior to their relationship are considered excluded property. Issues have arisen however depending on what has happened to the excluded property during the relationship and in certain circumstances the exclusion can be lost. Because of this it is still extremely important that spouses sign marriage or cohabitation agreement in order to protect their property.
An interesting question arises however where there is no written agreement but where the spouses reached an oral agreement that some or all of their pre-relationship property would be excluded in the event of a divorce.
In a recent decision Brown v. Brown (2016 BCSC 1037) the B.C. Supreme Court upheld an oral agreement that the spouses made when their relationship began. The court looked at the conduct of the parties during the relationship and found that they acted in a way that was consistent with their oral agreement during their relationship.
This is a very unusual decision as oral agreements are notoriously difficult to prove. By the time spouses are separating they each will have a completely different idea of what they did and did not agree to at the beginning of their relationship and the onus or burden of proving the existence of the oral agreement will be on the person alleging the existence of an agreement. Without a written documents the exact terms of the agreement will usually be unclear and consequently even if an oral agreement is found to exist the agreement will be void because the terms of it are uncertain.
Oral agreements should not be considered a reliable way to protect property that spouses own prior to their relationship and a properly drafted written agreement which is signed by both spouses after receiving independent legal advice is still the best protection available.
Deborah A. Todd