Can a Court Divide Property Unequally on Separation in Ontario?

You may be separating from a spouse and feel that splitting the value of your property equally would be unfair. Perhaps they ran up debts, spent savings, or the marriage was very short. Many people ask whether Ontario courts can divide property unequally.

The short answer is yes, but only in narrow circumstances. This article explains how equalization works, the high bar for departing from it, each factor a court looks at, and related tools and deadlines.

How equalization works and why it assumes equal sharing

When spouses separate with no reasonable prospect of resuming cohabitation, or a divorce is granted, the spouse with the lower net family property is entitled to one-half the difference between the two net family properties. Equalization is a payment of money. It is not a split of each asset.

The law starts from equality because child care, household management and financial provision are treated as joint responsibilities, and each spouse is seen as contributing equally to them, whether financially or otherwise. Each spouse's net family property is the value of all property they own on the valuation date, minus excluded property, their debts and other liabilities, and the net value of property (other than a matrimonial home) they owned on the date of marriage.

A spouse whose debts exceed their assets does not end up with a negative number. A negative net family property is deemed to be zero, and the other spouse does not take on any of that shortfall.

The high bar: what "unconscionable" means here

A court may award more or less than half the difference between the net family properties, but only if equalizing would be unconscionable, having regard to the factors listed in s. 5(6) of the Family Law Act. Ontario.ca describes unequal division as available only in very special situations, where an equal split would be extremely unfair to one spouse.

Being unhappy with the result, or believing you contributed more, is not enough on its own. How often a court will find the threshold met depends heavily on the facts, and a lawyer can give you a realistic view of your situation.

The eight factors, with everyday examples

The factors in s. 5(6) are listed below. Each one comes with a simple, made-up illustration to help show the idea.

• (a) Failure to disclose debts existing at the date of marriage: a spouse hid a large debt when marrying, and the other later finds it affected the numbers.
• (b) Debts incurred recklessly or in bad faith: a spouse ran up credit card debt on spending unrelated to the family, shortly before separating.
• (c) The part of net family property that consists of gifts from the other spouse: one spouse gave the other a valuable gift, and equalizing would count it back against the giver.
• (d) Intentional or reckless depletion of net family property: a spouse gambled away or hid savings.
• (e) An amount disproportionately large for a period of cohabitation of less than five years: after a short time living together, an equal payment would be far out of proportion.
• (f) One spouse having incurred a disproportionately larger share of debts for the support of the family: one spouse borrowed heavily to cover household costs while the other did not.
• (g) A written agreement between the spouses that is not a domestic contract: an informal signed note about property that does not meet the formal requirements of a contract.
• (h) Any other circumstance relating to the acquisition, disposition, preservation, maintenance or improvement of property: a catch-all for other situations about how property was handled.

A court weighs these factors together. Having one of them present does not automatically lead to an unequal result, because the test remains whether equalizing would be unconscionable.

Related tools: protecting property and acting early

If spouses are still living together but there is a serious danger that one may improvidently deplete their net family property, the other spouse may apply to have the net family properties equalized as if they were separated.

In an equalization or title application, the court may make an interim or final order to protect a spouse's claim, such as restraining dealings with property or requiring security. The court may also make an order restraining the depletion of a spouse's property that would impair or defeat a claim.

Time limits for an equalization claim

An equalization application cannot be brought after the earliest of these dates: two years after a divorce or judgment of nullity; six years after separation with no reasonable prospect of resuming cohabitation; or six months after the first spouse's death.

A court may extend a time limit in the Act if there are apparent grounds for relief, the relief is unavailable because of delay incurred in good faith, and no person will suffer substantial prejudice because of the delay. That is discretionary, so do not count on it.

What to do next

• Write down your date of marriage and your date of separation.
• List your assets and debts as of the separation date, and what you owned on the date of marriage.
• Gather statements, loan records and any written agreements between you and your spouse.
• Note any spending, hidden accounts or debts that worry you, with dates.
• Check your deadlines under the limitation periods.
• Speak with a family lawyer before you decide whether to argue for an unequal result.

Whether your facts could meet the unconscionability bar is a question a lawyer can assess once they see your documents.

Frequently asked questions