In a recent Ontario Court of Appeal decision, the court dismissed a wife’s appeal after she was awarded only 10% of the couple’s net family property, due to a finding of unconscionability.
Wife Awarded 10% of Net Family Property in Divorce
The husband and wife separated after four years and four months of cohabitation and did not have any children.
In their divorce proceedings, the trial judge refused to award the wife an equal part of the couple’s net family property pursuant to s. 5 of the Family Law Act (“the Act”). Specifically, s. 5(6) permits a court to vary a spouse’s share of net family property “if the court is of the opinion that equalizing the net family properties would be unconscionable”.
In the couple’s case, the trial judge ultimately found that it would be unconscionable to award the wife more than 10%, or $10,627, of the parties’ net family properties because the husband had been the major contributor to the property they owned during the marriage and a majority of the wife’s net family property had been derived from gifts from the husband. Additionally, the trial judge took into account the couple’s relatively short period of cohabitation. Finally, the trial judge noted that the wife had already received approximately $200,000 from the sale of the matrimonial home.
The wife appealed the decision.
Ontario Court of Appeal Clarifies Unconscionability Principle
The Ontario Court of Appeal began by reviewing the legal standard for a finding of unconscionability in equalization cases, stating:
“[T]he threshold for unconscionability under s. 5(6) of the Act is high and not satisfied by a finding of mere unfairness…. The high bar for unconscionability precludes trial judges from undertaking a minute parsing of the parties’ relative contributions to the marriage. It also promotes the goal of certainty in family law disputes.
For the vast majority of cases, s. 5(1) sets the default rule that upon marriage breakdown, the spouse whose net family property is the lesser of the two net family properties is entitled to equalization. This presumption can only be displaced where equalization would be unconscionable, as assessed using the criteria set out in s. 5(6) and guided by the purpose articulated in s. 5(7).
Section 5(6)(e) of the Act specifically identifies that a period of cohabitation less than five years is relevant to whether full equalization may be unconscionable. This promotes certainty about equalization for marriages longer than five years. It also provides notice to parties who have been married for less than five years that a court may take a closer look at whether equalizing would be unconscionable in the specific circumstances of a shorter marriage.”
As such, the court held that the trial judge had not erred in identifying the relevant legal principles nor in applying them to the case at bar. The court found that the trial judge had considered the relevant criteria, applied them to the facts before her, and had come to a reasonable conclusion in finding that equalizing the parties’ net family properties would be unconscionable. While the court noted that the trial judge had misapprehended the evidence relating to the wife’s return to work, it held that this error was not overriding.
Finally, the court noted:
“[T]he [wife] made little contribution to the acquisition and maintenance of the matrimonial home (or other family assets), and received a sizable benefit from its sale.
It is also relevant that the trial judge found that the [wife] was much better off financially than she was at the beginning of the marriage, ‘with little if any financial contribution on her part’, while the [husband] had become dependent for his living expenses on income from investments made prior to the marriage.”
The court further held that the trial judge had not erred in awarding the wife 10% of the parties’ net family property. Although the wife argued that the trial judge should have applied a mathematical formula based on the length of the marriage, the court stated that neither the Act nor relevant case law requires a trial judge do so.
As such, the court dismissed the wife’s appeal and awarded the husband $20,000 in costs.
At Feigenbaum Law, our goal is to help you move forward following the breakdown of a relationship while retaining as much financial stability as possible and ensuring your children are provided for. Mark Feigenbaum is able to counsel his clients on all potential risks that may result from a family law dispute, not just those related strictly to the breakdown of a marriage. Contact Mark online or call him at (905) 695-1269 or toll-free at (877) 275-4792 to book a consultation.