Unequal Division of Net Family Property in Ontario: The High Bar

If you are separating and the numbers feel unfair, you may be wondering whether a court can change the split. Perhaps your spouse ran up debts, or the marriage was short, or you brought far more into it. Ontario's equalization system is built around a default result, and departing from it is unusual.

This article explains how the default works, what "unconscionable" means in this setting, which factors a court looks at, and what is not enough on its own. It applies to spouses as the Family Law Act defines them, which covers people married to each other and people who entered a void or voidable marriage in good faith. Every situation turns on its own facts, so a lawyer can confirm how this applies to you.

The starting point: an equal sharing of the difference

When a divorce is granted, a marriage is declared a nullity, or spouses separate with no reasonable prospect of resuming cohabitation, the spouse with the lower net family property is entitled to one-half of the difference between the two spouses' amounts.

Net family property is the value of all property a spouse owns on the valuation date, except excluded property, minus the spouse's debts and other liabilities and minus the net value of property, other than a matrimonial home, that the spouse owned on the date of marriage. If the result is less than zero, it is treated as zero.

This is a calculation, not a judgment about who was a better spouse. A court can change the equal split only if equalizing would be unconscionable.

What "unconscionable" means

The court may award more or less than half the difference, but only if equalizing would be unconscionable. In plain words, the bar is high: the law is aimed at unusual cases, not at every result that feels unfair or unwelcome to one spouse.

Ontario.ca describes the same idea: a court can divide property unequally only in very special situations where an equal split would be extremely unfair to one spouse. How this applies to your own circumstances depends on the facts, so it is worth confirming with a lawyer.

Factors a court can consider

The Family Law Act lists situations a court may weigh when deciding whether equalizing would be unconscionable:

• Debts or liabilities that were not disclosed.
• Debts incurred recklessly or in bad faith.
• Intentional or reckless depletion of a spouse's property.
• Cohabitation of less than five years.
• One spouse assuming a disproportionately large share of family debts.

Listing a factor does not guarantee a different result. A court still has to be satisfied that equalizing would be unconscionable in the circumstances. If you think assets are being run down, a court can also make interim or final orders restraining the depletion of a spouse's property.

Things that often surprise people

Some rules about what counts in net family property can catch people off guard:

• A home that is a matrimonial home, meaning property the spouses ordinarily occupied as their family residence, still counts at full value even if you owned it before marriage, because no date-of-marriage deduction is allowed for a matrimonial home.
• A gift or inheritance used to buy or pay down the family home loses its protection.
• Gifts between spouses are not excluded property, although a court may consider them when deciding whether to vary the equal share.
• A marriage contract term that tries to limit a spouse's matrimonial home rights is unenforceable.

A signed, witnessed domestic contract can also change how property is divided, because a domestic contract prevails over the Act unless the Act provides otherwise. A court may set one aside if a party failed to disclose significant assets or debts that existed when it was made.

What to do next

If you think an unequal split may apply, start by building the factual picture. The spouse claiming a deduction or exclusion has the onus of proving it, and each party must serve a sworn statement of property, debts and other liabilities covering the date of marriage, the valuation date and the date of the statement. How these rules apply to a request for an unequal split depends on your situation, so it is worth confirming with a lawyer.

• Write down the date of marriage, the date of separation and any dates that may matter for the valuation date.
• Gather statements for bank accounts, investments, debts and property from the date of marriage onward.
• Keep records of any debts you say were reckless, hidden or lopsided.
• Note any domestic contract, and whether it was in writing, signed and witnessed.
• Check your deadline to start a claim, which is covered in a separate article, and speak with a lawyer early.

Frequently asked questions