The Ontario Court of Appeal may have expanded the sphere of equalization litigation with its recent decision in Ward v. Ward. As the decision wasn't unanimous, I believe it's important to consider the dissent as well.
The parties involved had been married for about 11 years. They had children together and although Carolyn Ward had earned a high income prior to having kids, the parties decided she would leave the workforce and stay home with them. Murray Ward was a high-income earner as well.
The marriage had been tumultuous for about four years before the separation. Three months before the parties separated, Carolyn received a cash gift from her father of $200,000.
According to her evidence, the father didn’t want her to share the money with her husband. Her inclination was to save the money for retirement, but Murray wanted her to use the funds to pay down the line of credit registered against the family home.
She agreed to that and put $180,000 of the gifted funds down on the line of credit. Three short months later, Murray told Carolyn he had bought a condo and was leaving. (His evidence was that the decision to separate was mutual.)
Carolyn, then, sought an unequal division of net family property under s. 5(6) of the Family Law Act. The trial judge agreed with her position and ordered an equalization payment payable to her plus a further $90,000 amounting to half of the money she used to pay down the line of credit.
On a general reading of the facts of this case, it appears that the decision largely came down to the short timespan between the financial transactions and the separation.
A cursory reading of the facts may lead one to believe that Carolyn may have been duped into a financially detrimental decision. The majority of the Court of Appeal involving justices Kathryn Feldman and Robert Sharpe agreed with the trial judge's decision.
Justice Janet Simmons, however, wrote a compelling and careful dissent that in my view correctly applies Ontario's legislated property scheme. The crux of the decision revolves around the concept of unconscionability. Was the fact that Murray profited by $90,000 three months before the separation unconscionable?
I agree, as many people would, that all other things being equal, the situation may not be fair to Carolyn. She gave evidence that she applied the funds in part because she wanted to try to save her rocky marriage.
Certainly, there was never a guarantee that doing so would achieve her desired result. There was no evidence proffered at trial that Murray unduly pressured her to do what she did. This wasn't an abusive relationship, psychologically or physically, or at least there was nothing in the record suggesting this.
It's not as though Carolyn derived no benefit from using the funds as she did as her equity in the home also increased. At the same time, it’s not as though Murray gambled the money away after she gave it over.
Was he enriched by the transaction? Certainly. Is there an element of unfairness to that enrichment? Certainly. Should it shock the conscience of the court? My respectful view is that it shouldn't.
The decision may not have been a wise one on Carolyn's part, particularly given her father's warnings not to share the money. But it was a risk and one that was hers to take.
Section 5(6) of the Family Law Act clearly states: "The court may award a spouse an amount that is more or less than half the difference between the net family properties if the court is of the opinion that equalizing the net family properties would be unconscionable having regard to" a list of factors.
A number of enumerated factors follow. In my view, only two factors listed in s. 5(6) apply: first, the part of a spouse's net family property consisting of gifts by the other spouse and second, any other circumstance relevant to the acquisition, disposition, preservation, maintenance or improvement of property.
The driving force, however, is still whether equalization would be unconscionable.
Faced with a stringent standard or review issue related to the deference given to trial judges on discretionary findings, Simmons goes to great pains to surmount that obstacle by sorting carefully through the evidence actually presented at trial.
I think she aptly gets over the hurdle. It will be interesting to see how this decision affects future jurisprudence under s. 5(6) and claims related to unequal division of property.
Marta Siemiarczuk is a lawyer practising family law litigation and collaborative family law at Nelligan O’Brien Payne LLP in Ottawa. She can be reached at firstname.lastname@example.org.
[This article is reprinted with permission and first appeared in the October 2012 issue of The Law Times.]