Breakdown of Marriage
Unequal Division of Family Property: Part II
Last week we blogged about unequal division of family property. This week we explore this topic in more detail. A recent decision from the Ontario Court of Appeal illustrates the challenges that parties seeking unequal division of property under the Family Law Act face, largely due to the difficulty in meeting the test for “unconscionability” under s. 5(6) of the Act.
The spouses in question separated in January 2010 following approximately 15 years of marriage. The family had resided in a matrimonial home which had been purchased with funds provided jointly, but which had thereafter been maintained by the husband’s income as a lawyer. The home was registered in the wife’s name.
At the initial trial, the wife’s claim for unequal division of net family property was dismissed. Instead, the trial judge granted the husband’s claim for a 50% beneficial interest in the matrimonial home on the basis of a resulting trust (i.e- he had made financial contributions to the home while the family resided there).
On appeal, the wife did not contest the trial judge’s finding about the husband’s beneficial interest in the matrimonial home, nor did she contest the dismissal of her claim for unequal division of property. However, she argued that the trial judge should have awarded her a 50% interest in the husband’s RRSP based on the same resulting trust/beneficial interest principles used to grant him the 50% interest in the matrimonial home.
The Court of Appeal dismissed the wife’s Appeal.
The Court’s Reasoning
The Court raised two concerns with the wife’s claim for interest in the husband’s RRSP. The first was related to procedural fairness, and the second was related to the “integrity of the net family property regime under the Family Law Act.”
The Court stated that the wife had, at the original trial, failed to establish unconscionability under s. 5(6) of the Family Law Act, and that it would be “unfair to permit her to seek essentially the same relief, dressed up as a different claim on appeal”. The Court was concerned that this was an attempt by the wife to
…recast her unsuccessful claim for an unequal division of net family property- ostensibly in part to balance out the trial judge’s fining that the [husband] is entitled to a 50% beneficial interest in the matrimonial home, based on their joint contributions- in the guise of a different claim for a post-separation proprietary remedy and adjustments for the same kind of contributions and payments that would justify a s. 5(6) order.
The Court concluded that it would be impermissible and “wrong in principle” to permit the wife to “accomplish indirectly what she failed to do directly under the Act.”
What Does this Mean?
It is challenging to meet the test to establish unconscionability, and therefore to obtain an order for unequal division of family property. Where such a request is made, and not granted, it is unfair to attempt to achieve the same result using an alternative approach on appeal.
Here, the wife had not been successful at obtaining an unequal division of property at the original trial. Even though the matrimonial home was in her name, and she and the husband had contributed equally at the time it was purchased, he had been able to obtain a 50% interest in it due to the money he had contributed to the upkeep of the home while they were living there.
On appeal, the wife attempted to offset the loss she suffered through the husband receiving the 50% interest in the home by arguing that she ought to receive a 50% interest in his RRSP savings. The Court was not impressed with her attempt at a “second kick at the can” and dismissed her appeal.
If you have questions about separation, divorce, or equalization of property please contact Jason P. Howie, online or at 519.973.1500. We have experience advising on complex property division matters, including on unequal division of family property.