Property – Unequal Division of NFP

Are you entitled to an unequal division of net family properties because of the short duration of a marriage?

The parties began living together in their jointly owned home in October, 2011; married in June, 2012; and separated in August, 2014. They were married for 25 or 26 months and cohabited for a total of about 34 months.

Section 5(6)(e) of the Family Law Act provides for unequal division of spouses’ net family properties if the parties’ cohabitation was short. Section 5(6)(e) reads:

(6) 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:

(e)  the fact that the amount a spouse would otherwise receive under subsection (1),(2) or (3) is disproportionately large in relation to a period of cohabitation that is less than five years;

“Cohabitation” in s. 5(6)(e) includes cohabitation before the parties married: Pope v. Pope, [1999] O.J. No. 242, 43 R.F.L. (4th) 209 (sub nom. MacNeill v. Pope), 42 O.R. (3d) 514 (C.A.). In assessing whether equalization of net family properties would be unconscionable, the total length of cohabitation must be considered, even when the total is less than five years. The difference between 26 months and 34 months could be material.

Cohabitation of less than five years does not automatically result in an unequal division of net family properties. The court has discretion to award an amount other than half the difference. The criterion is unconscionability. In Serra v. Serra, 2009 ONCA 105, 93 O.R. (3d) 161, 61 R.F.L. (6th) 1, [2009] O.J. No. 432, the court said, at para. 47:

47        In this regard, the threshold of “unconscionability” under s. 5(6) is exceptionally high. The jurisprudence is clear that circumstances which are “unfair”, “harsh” or “unjust” alone do not meet the test. To cross the threshold, an equal division of net family properties in the circumstances must “shock the conscience of the court”: see Merklinger v. Merklinger (1992), 11 O.R. (3d) 233 (Ont. Gen. Div.), aff’d (1996), 30 O.R. (3d) 575 (C.A.); Roseneck v. Gowling (2002), 62 O.R. (3d) 789 (C.A.); McDonald v. McDonald (1988), 11 R.F.L. (3d) 321 (Ont. S.C.); and LeVan (S.C.J.).

The cases in which the court awarded an unequal division of net family properties in a “short marriage” situation are generally those where one spouse brought the matrimonial home into the marriage or the total period of cohabitation was extremely short.

For example, see Kucera v. Kucera, [2005] O.J. No. 1514, 16 R.F.L. (6th) 250, 2005 CarswellOnt 1564 (S.C.J.). The marriage had a duration of ten months. The husband brought the matrimonial home into the marriage and, of course, could not deduct it from his net family property. Moreover, he owed $70,000 on a loan incurred to build the house that was not registered on title or otherwise directly linked to his equity. That debt reduced his date of marriage deductions. The bulk of the equalization payment the husband would have owed resulted from the increase in the value of the home. The wife was entitled to share equally the increase in the value of assets other than the home. She received one sixth of the increase in the value of the matrimonial home, as the parties were married for one sixth of the five year threshold period.

In contrast, see Murphy v. Murphy, [1987] O.J. No. 1729, 17 R.F.L. (3d) 422 (Dist. Ct.); affd, [1991] O.J. No. 2905 (C.A.). The parties cohabited for four years and one month. The husband brought the matrimonial home into the marriage. The house appreciated in value during the marriage from $59,000 to $64,000. Both parties assumed and discharged their joint responsibilities as married partners. The wife’s earnings paid the couple’s living expenses, while the husband paid the mortgage and house-related expenses. Apart from the matrimonial home, their net family properties were more or less equal. The trial judge determined that equal division would not be unconscionable, despite the husband’s inability to deduct the home, and awarded the wife the full equalization payment of $30,119.50. The Court of Appeal dismissed the husband’s appeal.

In your client’s case, the parties brought a jointly owned home into the marriage. Neither can deduct the value of her/his interest from NFP. Neither party is prejudiced or benefitted more than the other by the non-deductibility of the matrimonial home.

I am not aware of any factors that would “shock the conscience of the court” in this case. Without more information about the Ms. White’s and Mr. Black’s finances and property, it is not possible to form a more definite opinion about whether a court would consider equal division to be unconscionable. Given the high threshold for a finding of unconscionability, I am inclined to think equal division would be ordered, subject to more complete information that would lead to a different conclusion.

Maryelle Symons

Barrister  & Solicitor