I just went through this when applying for passports for my two DS's. I emailed Passport Canada with the very same question you had, and this was their response:
"The policy for issuing passports for children under 16 years of age is based on Section 7 of the Canadian Passport Order. Both parents must participate: one as applicant while the other must provide his or her written acknowledgement or consent. It is therefore necessary to determine that each of the individuals is a parent and has custody of the child. The policy applies to all individuals, regardless of their marital status.
Determining parenthood can be difficult because the conditions that a person must meet to be considered a parent vary from province depending on the marital status (single, married, common-law, widowed, divorced, separated). Passport Canada requires documentary evidence showing both parents in every case, except in the most straightforward situation, that is, the applicant and the person who acknowledges the passport application form were married at the time of the birth of the child. This policy recognizes the presumptions in provincial law that a male person married to the mother of a child at the time of the birth of that child is the father of the child."
Having their father sign was a little easier for me, though, as they see him every other weekend. I just had him sign it at one of our pickups.
I also had to get new birth certificates for the two of them. Passport Canada suggested I get a long-form birth certificate for each of them, showing the parents information. And definitely take your custody papers with you when you go to the passport office. They read every line of every page of our agreement!
Good luck!!
