Unequal division of matrimonial assets

BY: VALERIE DYE

Can a court order that upon termination of a marriage one spouse should be awarded less than half of the value of the net family assets? The answer to that is yes.

Section 5 (6) of the Family Law Act of Ontario makes provision for unequal division of assets where the court is of the opinion that equalizing the net family assets would be unconscionable.

Some of the most common reasons for the court to order an unequal division of assets  is where one spouse has intentionally or recklessly depleted the family asset; where one spouse has recklessly incurred significant debts during the marriage; where one spouse has failed to disclose significant debts he or she had at the time of marriage; or where the amount one spouse is entitled to receive is disproportionately large in relation to a cohabitation period of less than five years.

One of the many cases in which the courts in Ontario have ordered the unequal division of net family assets is the case of Dillon vs Dillon. Mr. Dillon managed his family’s finances and incurred a substantial amount of debt due to his alcoholism. His wife only became aware of the debts when creditors began pursuing him. The family’s debts led to an impoverished lifestyle. The wife also had to borrow money from relatives to pay some of the debts incurred by the husband. After the couple separated the court agreed that given the number of debts incurred by Mr. Dillon during the marriage it would be unconscionable for the family assets to be divided equally. After calculating the net family assets, the wife owed an equalization payment of $62,000 to the husband. The court reduced this amount by $50,000 and the husband only received $12,000.00.

Where cohabitation has lasted for less than five years the courts have also ruled that there should be an unequal division of net family assets. In Gomez vs McHale, the parties began dating in 2007 and began living together in September 2009 in the Respondent husband’s home. They married in June 2013 and separated in February 2014. Their period of cohabitation was less than five years. The applicant agreed that she was not entitled to the full equalization payment calculated at $288,566.61 but argued that she should receive forty percent of that amount. The court took all the circumstances into consideration (including the fact that the house was owned prior to cohabitation and that the husband made significant improvements to the house during the period of cohabitation with no contribution from the wife) and awarded the wife $60,000.00.

It should be noted that even though equalization and division of net family assets apply only to married couples, section 5(6)(e) of the Family Law Act considers the length of cohabitation and not the length of the marriage. As such, even if a marriage lasts for only one year but cohabitation began more than five years before the marriage, an unequal division of net family assets will not be justified on the basis of a short marriage.  At the same time, a period of dating will not be considered a period of cohabitation.

In determining whether or not to award an unequal division of assets the court focuses on the unconscionability of an equal division. In other words, it must shock the conscience of the court that, given the conduct of the defaulting spouse, he or she should still benefit from fifty percent of the net family assets of the other spouse.