Interest at Closing TimeJune 18, 2011
Government Changes Estate Planning RulesJanuary 21, 2012
Clients often ask me as a family law lawyer to help them get agreements they have made themselves, formalized and signed. Sometimes these clients ask me to draft a Contract showing the agreement they have reached. Sometimes these clients have had another lawyer draft the Contract and simply want me to give one of the former partners Independent Legal Advice.
This is a more complicated task than it might seem. I have a legal obligation to my client to make sure:
- that the agreement is well-drafted and clear,
- that the client understands what a Judge would do in his or her situation; and
- what the consequences are of doing something different than that.
I am unable to give that legal advice if I do not have an understanding of what each of the people owns and owes.
In 2010, the Alberta Court of Appeal heard a case started by Ms. Webb against her lawyer, Ms. Birkett. Mr. Webb owned a company which was worth quite a lot of money. The Webb’s became frustrated by how long it was taking to settle their matter, and came to an agreement between themselves to divide their property. Ms. Webb instructed her lawyer that she wanted to sign a Contract which gave up Ms. Webb’s interest in the company for a set amount of money. Unfortunately, Mr. and Ms. Webb chose not to get a formal valuation of the company. The only evidence about the value of the company was Mr. Webb’s belief of what it was worth. Ms. Webb sued Ms. Birkett for agreeing to Ms. Webb signing the Contract without evidence about the value of the company. The Court of Appeal said Ms. Webb was correct and Ms. Birkett was should have had this information before Ms. Webb signed the Contract. The lesson family law lawyers have taken from this case is that we must have all of the information about the value of assets and debts before we can give proper legal advice about the property agreement the parties have made, even if the parties themselves say they do not want the information.
As a result of the Matrimonial Property Act and cases like Webb v. Birkett, family lawyers have a duty they must complete. This duty is to obtain and review documents showing the value of all of the assets and debts of both our own client and the client’s spouse. If we do not have that information, we can be successfully sued for giving bad legal advice. So, even if you have reached an agreement with your spouse, and even if you do not care about the value of each individual item, it is my duty as your lawyer to insist you have this information before you sign a Matrimonial Property Contract.