When married couples are separated, the general rule for property division, according to Ontario’s Family Law Act, is that wealth accumulated during the marriage is divided equally between the spouses, but there are some exceptions to this rule. Below, we have given you some examples of what the Family Law Act refers to as “Variation of Share”.
Generally speaking, section 5(6) of the Family Law Act provides a very limited scope for exceptions regarding the unequal division of family property and sets a very high threshold for the court to apply the exception. In short, unequal division of net family property will only be awarded when the equal division would otherwise “shock the conscience of the court”.
Financial Disclosure of Debts
Providing full and frank financial disclosure by both parties is extremely important when separating or when entering into a marriage contract. If the court determines that a spouse failed to properly disclose his or her debts and liabilities on the date of marriage, then the court may decide it is not fair to the other spouse to divide their net family properties equally on the date of separation.
Also, if one spouse claims debts and liabilities on the date of separation, that were claimed in bad faith or recklessly incurred to essentially lower one’s net family property, then the court may determine that an equal sharing of those debts is not appropriate, and order the spouse to be solely responsible for the bad debts.
In a case where a large portion of one spouse’s property on the date of separation consists of gifts made by the other spouse, the court may order an unequal division of net family property in favour of the spouse who made the gifts.
The courts are generally not accepting of a spouse’s recklessness in debt accumulation. If one party is reckless in accumulating debt or intentionally incurs debt in an effort to deplete their net family property (for example, borrowing against the matrimonial home and spending the borrowed funds on gambling), then the court may determine that an equal division is not fair to the other spouse.
Short Cohabitation Period
If spouses have cohabited for a period less than 5 years prior to separation, the court may order unequal division of their net family properties if one spouse’s entitlement to an equalization payment is disproportionately large in relation to the length of their cohabitation.
Unequal Debt Accumulation
If it can be proven and shown that one spouse accumulated much more debt than the other to support the family, the court may award a higher amount to that spouse.
The court may also order an unequal division of the parties’ net family properties if there is a written agreement between the spouses (that is not an official marriage contract or a separation agreement) that the court finds important for consideration. Moreover, certain circumstances relating to how property was bought, sold, kept or taken care of during the marriage and between spouses may suggest that an unequal division would be appropriate.
While these exceptions to equal division of family property exist under the Family Law Act, it is important to note that they are not automatic and it requires an analysis of the facts of each particular case. It is always best to speak to a family law professional when planning to enter into a domestic contract, separate or divorce. At Hummingbird Lawyers LLP, our team of lawyers specialize in this area of law, and can advise you on your legal rights and obligations, to ensure that you receive the best settlement possible. Contact our offices today and we will be happy to assist you, guide you and walk you through every step of this process.