Ontario’s Family Law Act creates a presumption in favour of an equal division of net family property on marriage breakdown. In some circumstances, courts can deviate from this general rule and award an uneven division. It is not uncommon for spouses to question the equalization procedure in short-term marriages where the parties have cohabitated for less than five years. A large equalization payment resulting from a short-term marriage can raise doubts about how equitable the process is. Courts routinely face these issues balancing a view of the marital relationship as one of equal contribution entitling spouses to equitable sharing of property with recognition that spouses may make disproportionate financial contributions in short-term marriages.
How Should Courts Address an Uneven Property Division in Short-term Marriages?
In Booth v. Bilek, the parties separated after four years of marriage. Prior to marriage, the couple had cohabitated for four months. They looked to the courts to determine how their net family property should be divided. The trial judge declined to follow the default rule in section 5(1) of the Family Law Act, which states that the spouse whose net family property is the lesser of the two net family properties is entitled to equalization upon marriage breakdown. Instead, the trial judge awarded the appellant wife $10,627.45 which amounted to 10% of the full equalization sum which would have totalled $106, 274.49. The judge relied on section 5(6) of the Family Law Act which enables a court to vary a spouse’s share of the net family property if they are of the view that an equal share would be unconscionable. In assessing whether equalization would be unconscionable, the Family Law Act lists factors courts must consider, one of which is whether the amount a spouse would receive is disproportionately large in relation to a period of cohabitation that is less than five years.
The threshold for unconscionability is high. Nevertheless, the trial judge determined a strict equalization was not appropriate, noting that:
- There were no children from the marriage;
- There was an age disparity (the husband was 69 and the wife was 46);
- Ms. Bilek received $199,302 – half the value of the matrimonial home – to which she had made no direct contribution;
- Ms. Bilek’s sole financial contribution was to pay 10% of the renovations to the matrimonial home, but the funds she contributed came from a condominium the husband financed before the marriage;
- The difference in net family properties was largely due to growth in the husband’s investments over the marriage which compromised the bulk of his retirement funds.
Ultimately the wife was better off financially than when she entered the marriage with little financial contribution on her part.
Unequal Division of Family Property is not Founded on Mathematical Formulas
The wife appealed the original decision, arguing against the finding that a full equalization would be unconscionable, while also alleging that the trial judge did not properly explain how she determined an equalization figure of 10% would be appropriate. The Court of Appeal disagreed, noting the presumption of a full equalization can be displaced if spouses have not been together for a period of at least five years. The five-year term specified in the legislation “promotes certainty about equalization for marriages longer than five years” and provides notice to parties married less than five years that courts may “take a closer look at whether equalizing would be unconscionable” in a shorter marriage. The factors the trial judge weighed were relevant and she could properly find the wife was already better off financially than when she entered the marriage and that a full equalization would be unconscionable.
If an uneven division was appropriate, the wife suggested that consideration should be given to the length of the marriage and asked for an unequal division of 87%. This would pro-rate the equalization payment according to the length of the spouse’s cohabitation and marriage, which in this case amounted to 52 months out of 60. For the Court of Appeal, relying on a mathematical formula based on the length of marriage does provide some certainty, but it is not a rule judges are required to follow. This is consistent with the Court’s previous finding in Gomez v. McHale, which held that judges are entitled to fix reasonable amounts for equalization if they determine an equal division would be unconscionable based on the backgrounds of the parties. The trial judge’s decision to award the wife 10% of a total equalization was reasonable in the circumstances of their marriage.
Treatment of the Matrimonial Home in Short-Term Marriages
A marriage of fewer than five years does not automatically result in an uneven division of net family property. The court must find equalization would be unconscionable which means more than unfair or simply unjust.
Kucera v. Kucera was a case where a spouse brought a matrimonial home into a short marriage. Equalization recognizes marriage as a partnership and that wealth accumulated throughout the partnership should be shared equally. Yet, the court also acknowledged that the equalization process can also share the value of specific assets such as a matrimonial home that was acquired by a spouse prior to marriage, and in very short marriages “this represents an unjustifiable windfall to the non-titled spouse.” Section 5(6) can be used to remedy that unfairness, with the court outlining the following factors to guide whether redress is justified:
- Whether the home was purchased before the marriage, and the contributions of the non-titled spouse;
- Whether the home was improved during the marriage in any way;
- Whether the titled spouse covered maintenance costs, as well as other living expenses for both parties;
- Whether the bulk of the presumptive equalization payment is a result of the value of the matrimonial home;
- Whether the non-titled spouse improved their financial position even without the presumptive equalization payment, including repayment of debts brought into the marriage; and
- Whether there are children of the marriage.
Based on those factors, it was unconscionable to award the wife equalization generated from a matrimonial home the husband brought into a short marriage when the wife had made no contributions towards the home’s maintenance.
Courts Can Award Unequal Division in Short-Term Marriages
Collectively, these cases highlight how courts can exercise their discretion and implement an uneven sharing of wealth to address unfair property distribution stemming from short-term marriages. Determining an unequal division of property will be fact-specific and based on the financial circumstances between the spouses in each case.
Contact Boulby Weinberg LLP in Toronto for Property Division Matters Following Divorce and Separation
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