Gambling Losses During Marriage and Equalization Ontario

Gambling can empty a savings account or build a mountain of credit card and line of credit debt, often in secret. When the marriage ends, the other spouse is left asking a hard question: do I share in these losses, or does the spouse who gambled bear them alone?

The answer in Ontario depends on how equalization works and on how much a court will depart from the standard approach. This article explains the basic mechanics, what is and is not settled, and what to gather before you speak with a lawyer.

How debts fit into the equalization calculation

Equalization compares each spouse's net family property. That figure is the value of all property the spouse owns on the valuation date, except excluded property, less debts and liabilities. A gambling debt is a liability, so as a starting point it can reduce the net family property of the spouse who owes it.

Once both figures are known, the spouse with the lesser net family property is entitled to one-half of the difference. The result is that a large debt in one spouse's name can reduce the equalization payment owed to the other spouse. That is why a spouse in your position may feel that the other spouse's losses are being shared.

Savings that were gambled away before the valuation date are different from debt. The money no longer exists, so it is not counted as property on that date. The effect is similar: the spouse who lost it has less to equalize.

Can the losses be added back?

The usual route to asking for something other than an equal result is s. 5(6) of the Family Law Act. A court can vary the equal share only if equalizing would be unconscionable. The threshold is high, and mere unfairness is not enough.

So the fact that gambling losses are painful, or that they were hidden, does not by itself change the outcome. How this applies to your case depends on your particular facts, so it is worth confirming with a lawyer.

There is no formula. Courts need not apply a time-weighted formula, and the 10% payment upheld in one short-cohabitation case was tied to its own facts.

Joint accounts, the home and shared assets

Gambling often touches shared property. If money was held in a joint bank account, the law starts from a presumption of joint ownership, but evidence can rebut it. Who put in the money and how it was treated can matter.

The matrimonial home is treated specially. It is property in which a person has an interest and which the person and spouse ordinarily occupied as their family residence at separation. If gambling put the home at risk, for example through a loan secured against it, speak to a lawyer promptly.

If the home is held by joint tenants, a joint tenant has a prima facie right to force a sale under s. 2 of the Partition Act, and the party resisting sale must show that the other is acting in a malicious, vexatious or oppressive fashion. In one case, a sale order was upheld where the occupant could not or would not buy out the other owner.

Evidence that helps

Gambling disputes are won or lost on records. Many people discover the problem only after separation, so start by collecting what you can lawfully access.

• Statements for chequing, savings, credit card and line of credit accounts for several years
• Online gambling account histories, casino records or e-transfer records, if available to you
• Loan applications and any documents showing a home was used as security
• Messages showing whether you knew about the gambling or discussed it
• A list of every debt, who it is owed to and when it was incurred
• Any marriage contract or separation agreement

What to do next

Protect yourself first. Check your credit report, make sure you are not newly liable for debts, and talk to a lawyer before you sign anything that deals with debt or the home. If a marriage contract exists, remember that property the spouses agreed to exclude is excluded from net family property, and that setting a contract aside requires showing a statutory ground and then persuading the court to exercise its discretion.

• Write a short timeline of when you learned about the gambling
• Collect statements and debt records into one folder
• Ask a family lawyer how the debts would be treated in your calculation
• Ask whether support for the gambling problem, such as counselling, should be part of any settlement discussion
• Avoid taking on joint debt or moving money without advice

Frequently asked questions