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1761 10077299 5 



m UNIVERSITY OF TORONTO 
El FACULTY OF LAW 


FAMILY LAW 


Cases and Materials 


Volume II 


Brenda Cossman &Carol Rogerson 
Faculty of Law 
University of Toronto 


2016-2017 



KE 

538.5 

.C672 

2016 

V.2 


These materials are distributed solely for classroom use 
by students in the Faculty of Law, University of Toronto 






















BORA USKIN LAW LIBRARY 

NOV - 1 2016 


FACULTY OF LAW 
UNlVE.nSnY OF TORONTO 



FAMILY LAW 


Cases and Materials 


Volume II 


Brenda Cossman &Carol Rogerson 
Faculty of Law 
University of Toronto 


2016-2017 


* * * 


These materials are distributed solely for classroom use 
by students in the Faculty of LaWy University of Toronto 


Digitized by the Internet Archive 
in 2018 with funding from 
University of Toronto 


https://archive.org/details/familylawcasesm02coss 


FAMILY LAW VOLUME II 
Table of Contents 

Page No. 

rV. THE ECONOMICS OF MARRIAGE BREAKDOWN 

A. The Economics of Marriage 

Statistics Canada “Study: Employment patterns of families with children, 1976-2014”, 

The Daily, June 24, 2015.297 

Statistics Canada, “Paid Work” in Women in Canada 2010-2011 .299 

Statistics Canada, “Economic Well-Being” in Women in Canada 2010-2011 .302 

“Having Kids Costly for Educated Moms”, Globe and Mail, April 8, 2009.306 

Robert Leckey, “Families in the Eyes of the Law: Contemporary Challenges and 

the Grip of the Past” IRPP, Choices, vol 15(8), July 2009, pp. 6-7.307 

B. The Economic consequences of Divorce 

Note: the Economic Consequences of Divorce.308 

Robert Leckey, “Families in the Eyes of the Law: Contemporary Challenges and 

the Grip of the Past” IRPP, Choices, vol 15(8), July 2009, pp. 7-9, 30.309 

“Income Profile of Couple Families” and “Incomes of Lone-parent Families” from Vanier 

Institute of the Family, Profiling Canada’s Families IV, 2010, at 98-9, 104-5.311 

Vanier Institute of the Family, The Current State of Family Finances: 

2013-2014 Report, 12,28,31.314 

V. MATRIMONIAL PROPERTY 

A. Historical Overview 

(a) Common Law and the Regime of Separate Property 

Ontario Law Reform Commission, Report on Family Law, Part IV: Family Property 

(1974), pp. 1-2, 17-20.316 

(b) Trust Doctrine 

LRCC, Working Paper 8, Family Property (1975) pp. 9-11.318 

Note: Murdoch v. Murdoch, [1975] 1 S.C.R. 423 2 LnA Rathwell v. Rathwell, 

[1978]2S.C.R. 436.319 

Pettkus V. Becker, [1980] 2 S.C.R. 834.323 

“Woman’s Suicide Ends Fight for Rights”, Globe and Mail, Nov. 12, 1986.329 

“Ontario Fee System Cited in Woman’s Legal Woe”, Globe and 

Mm7,Nov. 13, 1986.330 

“Payout ends tragic story of farm wife’s legal battle”. Globe and 

Mail, May 26, 1989.331 

Note: Sorochan v. Sorochan, [1986] 2 S.C.R. 38.331 

Peter V. Beblow, [1993] 1 S.C.R. 980.333 

Note: Constructive Trust Post Peter v. Beblow .346 

Kerr v. Baranow, 2011 SCC 10, [2011] 1 SCR 269.347 

Notes and Questions.367 

Note: Kerr v. Baranow on Rehearing, 2012 BCSC 122, 22 RFL (7'*’) 335.368 

Ibbotson V. Fung, 2013 BCCA 171.373 

Lemoine v Griffith, 2014 ABC A 46.375 

Wazonek v. Page, 2015 ONSC 4374.384 

(c) Statutory Reform and the “Partnership Principle” 

Winnifred Holland, “Reform of Matrimonial Property Law in Ontario” 

(1978) 1 CJ.F.L. 1 at 9-12.387 




























IV 


John Eekelaar, “Adjustment on Divorce”, ch 6 in Family Law and Social Policy, 2"^^ ed 

(1984), pp. 100-197.388 

Martha Fineman, “Implementing Equality” [1983] Wisconsin L. Rev. 789 at 790-793, 

811, 813-814, 820-826, 832-833.391 

(d) Statutory Reform in Ontario: the 1978 FLRA to the 1986 FLA 

Lome Wolfson, The New Family Law Act (1987), pp. 2-7.394 

Note; 2009 Amendments to Part I of the FLA.397 

B. Part I of Family Law Act, 1986 

(a) Application 

Note: Application of the FLA to Unmarried Couples.398 

Note: Application of Matrimonial Property Law to Aboriginal Women.399 

(b) Overview of the Family Law Act 

Ontario Law Reform Commission, Report on Family Property (1993), pp. 9-13.401 

Law Reform Commission of British Columbia, Working Paper on Property 

Rights on Marriage Breakdown (1989), pp. 74-78, 80-83, 85-86, 91-96.404 

(c) Applying the FLA: Calculating the Equalization Payment 

Susanne Goodman, “Matrimonial Property”, ch. 5 in LSUC, Family Law (Bar Admission 

Course Materials, 1999).408 

Skrlj V. Skrlj, (1998) 2 R.F.L. (3d) 305 (Ont. H. C.).419 

Note: Equalization Schemes and Bankmptcy (discussing Schreyer v. 

Schreyer, 2011 SCC 35, [2011] 2 SCR 605).423 

(d) Valuation and Valuation Date Assets 

(i) Valuation Date 

Note on cases.424 

(ii) Determining Ownership of Assets 

M. A. Fredricks, “The Ownership Conundmm”, CBAO, Matrimonial Affairs, May 1990.427 

Notes (including Rawluk v. Rawluk, Caratun v. Caratun, Lowe v. Lowe, 

Stone V. Stone and OLRC).428 

(iii) Valuation 

Berend Hovius and Timothy Youdan, “Valuation of Property” from The Law of Family 

Property (1991), pp. 291-299.433 

Blackv. Black{\9m), 18 R.F.L. (3d) 303 (Ont. H.C.) .436 

Susanne Goodman, “Tax Obligations and other Costs of Dispostion” from LSUC, 

Family Law (Bar Admission Course Materials, 1999).437 

Note; 2009 Amendments and Notional Disposition Costs.439 

(e) Deductions and Exclusions 

Berend Hovius and Timothy Youdan, “Negative Net Family Property” from The Law 

of Family Property (1991), pp. 383-389.440 

Note (family loans—debt or gift?; contingent liabilities; hindsight evidence).443 

Zavarella v. Zavarella, 2013 ONCA 720.443 

Note: Jackson v. Jackson, 2013 ONSC 7884.448 

Folga V. Folga (1986), 2 R.F.L. (3d) 358 (Ont. H.C .).448 

Note; Nahatchewitz v. Nahatchewitz (1999), 1 R.F.L. (5^'’) 395 (Ont.C.A.).450 

Note: Linov v. Williams, 2007 CanLII 7407 (ONSC).451 

Note (differences in treatment of DOM property and excluded property).451 

Blackv. Black 18 R.F.L. (3d) 303 (Ont. H.C.).452 
































V 


Note; Proposed Amendments to the FLA re Exclusions, Deductions and Special 

Treatment of the Matrimonial Home.452 

Some Notes on Tracing Excluded Property (discussing Oliva v. Oliva (1998), 

12 REE (3d) 334 (ONCA), Townshend v. Townshend, 2012 ONCA 868 and 

Martin v. Sansome, 2014 ONCA 14).453 

(f) Continued Relevance of Constructive Trust 

Note.455 

Rawlukv. Rawluk, [1990] 1 S.C.R. 70.456 

Note: Reverse Constructive Trust.462 

Note: OLRC 1993 Recommendations.463 

Martin v Sansome 2014 ONCA 14.464 

Berend Hovius, “Unjust Enrichment Claims by Spouses upon Marriage Breakdown: 

Achieving a Measure of Fairness or Causing Uncertainty and Complexity” (2014), 

33 CJ.F.L. 140 at 170-172.470 

(g) Sample NFP Problems 

Berend Hovius, “Sample Problems” from Hovius, Family Law Cases and Materials 

(1992), pp. 365-366.473 

(h) Departures from Equalization 

(i) Short Marriage 

Berend Hovius, “Unequal Sharing of Net Family Properties under Ontario’s 

Family Law AcF (2009) 27 C.F.L.Q 147 at 177-182.474 

Futia v.Futia (1990), 27 R.F.L. (3d) 81 (Ont. H.C.J.).476 

Pope V. Pope (1999), 43 R.F.L. (4*) 209 (Ont. C.A.).478 

(ii) Debts and Depletion of Assets (and Extent of Court’s Power under s. 5(6)) 

Berend Hovius, “Unequal Sharing of Net Family Properties under Ontario’s 

Family Law AcF (2009) 27 C.F.L.Q 147 at 170-177.482 

Note: Consentino v. Consentino, 2015 ONSC 271.486 

Von Czieslik v. Ayuso, 2007 ONCA 305, 36 R.F.L. (6*) 231 (Ont. C.A.).487 

(iii) Unequal Contributions 

LeBlanc v. LeBlanc (1988), 12 R.F.L. (3d) 225 (S.C.C.).493 

Kim Zarzor, “A New Day in a Hard Life”, The Toronto Star, Feb. 16, 1988.496 

Berdette v. Berdette (1988), 14 R.F.L. (3d) 398 (Ont. H.C.).498 

Notes: Mclnnis v. Mclnnis, unreported, Gen.Div. 1990; Martin v. Martin, 2007 

2007CarswellOnt 683 (Ont. S.C.J.), and Dillon v. Dillon, (2010) ONSC 5858.502 

Berend Hovius, “Unequal Sharing of the Economic Gain During Marriage in 

Ontario: An Update” (2012)31 C.F.L.Q 155 at 170-171.503 

Note: Tort Awards for Spousal Misconduct.504 

(iv) Effect of Special Rules Relating to the Matrimonial Home 

Ward V. Ward, 2012 ONCA 462.505 

(v) Post-Separation Conduct and Anticipated Future Needs 

Note: Merklinger v. Merklinger, (1992), 43 R.F.L. (3d) 109 (Ont. Gen. Div.), aff d. 

(1996), 26 R.F.L. (4th) 7 (Ont. C.A.); Tamitegama v. Tamitegama, 

unreported, 1993, Ont. Gen Div.507 

Berend Hovius, “Unequal Sharing of Net Family Properties under Ontario’s 

Family Law AcF (2009)27 C.F.L.Q 147 at 190-192.508 

(vi) Post-Separation Changes in the Value of Property 

Serra v. Serra, 2009 ONCA 105, 61 R.F.L. (6*) 1 (Ont. C.A.).510 

































VI 


Berend Hovius, “Unequal Sharing of the Economic Gain During Marriage in 

Ontario: An Update” (2012) 31 C.F.L.Q 155 at 174-176.524 

Notes and Questions.526 

OLRC, Report on Family Property (1993), pp 68-71 .526 

VI. THE MATRIMONIAL HOME 

A. Introduction 

Berend Hovius, “The Matrimonial Home: An Analysis of Part II of the Family Law 

Act, ;P5d”(1988), 16 R.F.L. (3d) 31 at 31-32.528 

B. Overview of Part II of the Family Law Act, 1986 

Lome Wolfson and Barry Corbin, “The Matrimonial Home Under the FLA” (1987), 

2 Money and Family Law, pp. 1-8.529 

Note: Debora v. Debora (2006), 33 R.F.L. (6*) 252 (Ont. C.A.).532 

MacFarland v. MacFarland, 2009 CarswellOnt 2949 (Ont. S.C.J.).532 

C. Orders for Exclusive Possession 

Lome Wolfson and Barry Corbin, “The Matrimonial Home Under the FLA” (1987), 

2 Money and Family Law, p. 6.537 

Pifer V. Pifer (1986), 3 R.F.L. (3d) 167 (Ont. Dist. Ct.).538 

Hill V. Hill (1987), 10 R.F.L. (3d) 225 (Ont. Dist. Ct.).539 

Menchella v. Menchella, 2012 ONSC 6304, 2012 CarswellOnt 13842.542 

Note: Exclusive Possession and Issues of Violence.543 

Note: Restraining Orders.546 

Justice Geraldine Waldman, “The What and the Why of the Proposed Integrated 

Domestic Violence Court”, CBAO, 22 (2) Matrimonial Affairs, November 2010.547 

Berend Hovius, “The Family Home: Legal Treatment in Ontario” (2010), 

29 C.F.L.Q. 120 at 157-160 


549 


















I 





308 


Moreover, as figure 1 shows, women spend much more time out of the workforce after the arrival 
of their youngest child than do men, which affects the work experience and earnings of women 
relative to the men with whom they are in a relationship. As well, during the marriage, that role 
may condition the spouses’ choices, and may establish a pattern in which the woman has a larger 
role in child care; should the marriage end, that pattern may influence a judge’s allocation of 
child custody. Family law regimes do not, explicitly, channel women toward domestic work over 
paid work relative to men. Yet the different roles spouses perform during marriage give critical 
importance to the distributive rules that apply when a relationship breaks down. 


Rgure 1 

Age of Youngest Child When Parents Go Back to 
Work after the Birth of a Child, Canada, 2006 


70—, 


m—. 


Fatte 


Mother 



Urtdef ' '&-11 12-47 ^ 


1 


snd ote 


Source: Besypr^ snd Cloutier (2007, chart 4|. 


B. The Economic Consequences of Divorce 
Note: The Economic Consequences of Divorce 

In her book The Divorce Revolution (New York: Free Press, 1985) Lenore Weitzman 
documented a dramatic decline in the economic circumstances of women and children 
after divorce: 

This research shows that, on the average, divorced women and the minor children in their 
households experience a 73 per cent decline in their standard of living in the first year 
after divorce. Their former husbands, in contrast, experience a 42 per cent rise in their 
standard of living. 

It subsequently came to light that Weitzman’s research was flawed and that the 
gender-gap in post-divorce standards of living in her sample was not as extreme as she 
had reported. Replications of her analysis produced estimates of a 27 percent decline in 
women’s standard of living (rather than 73 percent) and a 10 percent increase in men’s 
standard of living (rather than 42 percent): see Richard Peterson, “A Re-evaluation of 





















309 


the Economic Consequences of Divorce” (1996), 61 Am. Soc. Rev. 528. In her reply to 
Peterson [at 537 of the same issue of the Am. Soc. Rev.] Weitzman acknowledges the 
errors in her research but states: 

...I urge that we not lose sight of the major finding of The Divorce Revolution — 
and of all other research in this area—that women and children are unfairly and 
disproportionately burdened by divorce. While it is likely ...that the gender gap is 
less than I reported, even if the post-divorce standards of living, as Peterson 
contends, drop an average of only about 30 percent for women, and rise only 
about 10 percent for men, that is still a 40 percent difference between the two — 
and that outcome is unconscionable for a legal system and a society committed 
to fairness, justice, and equality. 

Studies from the 1990s confirmed that the economic consequences of divorce in 
Canada conform to the general patterns found in the United States, Australia and 
Britain, i.e., significant gender disparities in post-divorce standards of living and in rates 
of impoverishment. A 1990 study by the federal Department of Justice, based on 
interviews with 599 divorced or divorcing persons in four different sites, found that 
women’s average income following divorce, including support, was 69 percent of men’s 
income, after paying support. Some 46 percent of women had incomes below the 
poverty line, in contrast to only 13 percent of men. Using a larger sample of 
approximately 1500 court files in divorce cases, the Department of Justice study found 
that, taking support payments into account, two-thirds of the women had incomes that 
put them below the poverty line. See Department of Justice, Canada, Evaluation of the 
Divorce Act, Phase II: Monitoring and Evaluation, May 1990. 

Ross Finnie, using data based on Canadian tax files—the Longitudinal 
Administrative Database (LAD)—found that both men and women experienced a decline 
in family income after divorce. Men’s family income dropped on average by 20 percent 
while women’s dropped by 40 percent in the first year of divorce. However, in terms of 
economic well-being, measured by income-to-needs ratios which take into account the 
number of persons in a household, he found sharp divergences between men and 
women. Men experienced modest improvements in economic well-being (20 percent on 
average) while women experienced a 30 percent decline. Finnie found an overall post¬ 
divorce poverty rate of 17 percent for men and 43 percent for women. See Ross Finnie, 
“Women, Men and the Economic Consequences of Divorce: Evidence from Canadian 
Longitudinal Data”{^993), 30 Can. Rev. Soc. and Anthr. 204. 

Have the economic consequences of divorce changed since 1993 as a result of 
significant law reform efforts, increased government benefits for low income families 
with children and increased rates of labour force participation for women? The materials 
that follow suggest that the answer is both yes and no. 


Robert Leckey, “Families in the Eyes of the Law: Contemporary Challenges 

and the Grip of the Past” 

Institute for Research on Public Policy, Choices, Vol. 15 (8), July 2009, at 7-9, 30 
(footnotes omitted), available on-line at http://irpp.org/rcscarch-studies/choices-voll5-no8/ 

From one household to two 

After Parliament enacted a divorce law in the 1960s, the divorce rate increased significantly... 

Divorce produces effects of many kinds for spouses, children and extended family members. Its 
chief legal effect, one with instrumental and symbolic resonance, is the change in the marital 
status of the spouses. Its chief economic effect is the division of property and income between 
two households. Divorcing spouses may take into account a wide range of rules, including 



332 


She and Lothar Pettkus had put years of work into developing a small beekeeping farm at 
Franklin Centre, Que., 120 kilometres (75 miles) east of Ottawa. 

Becker never collected a cent. Although the farm was sold and she was to have netted 
$68,000, her lawyer, Gerald Langlois, claimed the money to cover his fees. 

Becker committed suicide in 1986, leaving a note saying her death was a protest against a 
legal system that had left her penniless. 

Trustees for the Becker estate agreed to the $13,000 settlement from Pettkus, said Samuel 
Schwisberg, lawyer for Pettkus. 

Becker named as beneficiaries Fred and Joyce Schwalb and Louis Flexie, who were among 
her friends. 

How much of the $13,000 would actually get to her beneficiaries was not clear. 


Note: Sorochan v. Sorochan 

In Sorochan v. Sorochan, [1986] 2 S.C.R. 38, 2 R.F.L.(3d) 225, the Supreme Court of 
Canada held that the doctrine of constructive trust can apply to assets acquired before a 
relationship began. The parties in this case lived together for 42 years, between 1940 
and 1982, on a farm in Alberta. During that time, they jointly worked a farming operation 
and had six children. The parties never married. In addition to performing all of the 
domestic labour associated with running the household and caring for the children, the 
wife worked long hours on the farm, for which she received no remuneration from the 
husband. The family lived in modest circumstances. At the time the parties began living 
together, the husband was the owner of the land, along with his brother. Subsequently, 
the land was divided between the two brothers. From 1942 to 1945, and from 1968 to 
1982, the husband worked as a travelling salesperson. During these periods, the wife 
often assumed responsibility for doing all of the farm chores on her own. Following their 
separation in 1982, the wife brought an action for an interest in the farmland owned by 
the husband. 

The trial judge found that the doctrine of constructive trust was available in these 
circumstances and awarded the wife title to one-third of the farm property by way of 
constructive trust and monetary relief of $20,000. The Alberta Court of Appeal reversed 
the trial judge’s ruling, holding that no constructive trust had been created because there 
was no link between the husband’s acquisition of the property in question and the wife’s 
labour. The Supreme Court of Canada allowed the wife’s appeal and restored the trial 
judge’s award. 

Dickson C.J.C., speaking for the Court, found that the three requirements necessary to 
the finding of unjust enrichment, outlined in Pettkus v. Becker Rathwell v. Rathwell, 
were present in this case. The Court found that the husband was enriched through the 
wife’s many years of labour in the home and on the farm and for which he did not 
provide remuneration. In addition, through the wife’s labour, the farm was maintained 
and preserved as valuable farm land. Dickson C.J.C. noted that the farm would have 
deteriorated in value through neglect or disuse in the absence of the wife’s faithful and 
long years of labour. He found that these years of labour constituted the wife’s 
corresponding deprivation. Finally, Dickson C.J.C. found that there was no juristic 
reason for the enrichment. The wife was under no obligation, contractual or otherwise, 
to perform the work and services in the home or on the land. The wife had prejudiced 
herself with the reasonable expectation of receiving something in return and the 
husband had freely accepted the benefits conferred by the wife in circumstances where 
he knew or ought to have known of that reasonable expectation. In particular, in 1971 
the wife had asked the husband to transfer land into her name. 


333 


Having concluded that the three pre-conditions for unjust enrichment were satisfied in 
this case, Dickson C.J.C. then considered whether it was appropriate for a court to 
impose a constructive trust: 

[T]he first issue to be considered is the causal connection requirement, upon which the Court of 
Appeal’s decision turned....In my view, the constructive trust remedy should not be confined to 
cases involving property acquisition. While it is important to require that some nexus exist between 
the claimant’s deprivation and the property in question, the link need not always take the form of a 
contribution to the actual acquisition of the property. A contribution relating to the preservation, 
maintenance or improvement of property may also suffice. What remains primary is whether or not 
the services rendered have a “clear proprietary relationship”....When such a connection is present, 
proprietary relief may be appropriate. Such an approach will help to ensure equitable and fair relief 
in the myriad of familial circumstances and situations where unjust enrichment occurs. As stated in 
Pettkus.. ."'The equitable principle on which the remedy of constructive trust rests is broad and 
general; its purpose is to prevent unjust enrichment in whatever circumstances it occurs.” 

In the present case, Mary Sorochan worked on the farm for 42 years. Her labour directly and 
substantially contributed to the maintenance and preservation of the farm preventing asset 
deterioration or divestment. There is, therefore, a ‘clear link’ between the contribution and the 
disputed assets. 

Dickson C.J.C. then added other considerations to be taken into account in assessing 
whether to impose a constructive trust: 

In addition to the causal connection requirement, it is often suggested that the reasonable 
expectation of the claimant in obtaining an actual interest in the property as opposed to monetary 
relief, constitutes another important consideration in determining if the constructive trust remedy is 
appropriate....A reasonable expectation of benefit is part and parcel of the third pre-condition of 
unjust enrichment (the absence of a juristic reason for the enrichment). At this point, however, in 
assessing whether a constructive trust remedy is appropriate, we must direct our minds to the 
specific question of whether the claimant reasonably expected to receive an actual interest in 
property and whether the respondent was or reasonably ought to have been cognizant of that 
expectation. As concluded above, Mary Sorochan did have a reasonable expectation in obtaining 
an interest in the land and Alex Sorochan was aware of her expectation in this regard. 

In assessing whether or not an in rem remedy is appropriate, a final consideration in this case is 
the longevity of the relationship. The appellant worked the farm for 42 years of her life. In my 
opinion, this constitutes a further compelling factor in favour of granting proprietary relief 


Peter v. Beblow 

[1993] 1 S.e.R. 980, 44 R.F.L. (3d) 329 

[This case is most notable because of the clear confirmation that contributions of domestic 
services can give rise to a claim in unjust enrichment. The majority reasons in this case were 
written by McLachlin J. The reasons of Cory J., which appear first, support the result reached by 
MeLachlin J., but his analysis of the doctrine of constructive trust differs from hers, most notably 
with respect to the remedial issue. The issue of how to read the majority reasons of McLachlin J. 
with respect to determining the appropriate remedy—monetary or proprietary—once unjust 
enrichment has been found continued to give rise to confusion and disagreement in the case law 
until 2011, when the SCC attempted to clarify the issue in Kerr v. Barranow, found below.] 

CORY J. (L’HEUREUX-DUBE and GONTHIER JJ. concurring):—The issue in this appeal is 
whether the provision of domestic services during 12 years of cohabitation in a common law 
relationship is sufficient to establish the proprietary link which is required before the remedy of 
constructive trust can be applied to redress the unjust enrichment of one of the partners in the 


346 


while they were living at the house and maintenance of the property. The testimony of the 
plaintiffs son provides a general idea of her contribution to the family enterprise: 

Q. What sort of things did she do? 

A. She did all the motherly duties for all of us.... 

A. When [the defendant’s] two sons and my brother and I were there still, even when my sisters 
were there, that was quite a long time ago, I was quite young, so there was nothing really bad then, 
but after the sisters left, she took care of all the duties, cooking and stuff like that, cleaning, 
laundry. She had her ringer washer, she would do the laundry, she'd worked in the garden, things 
like that. She took care of all things around the house, when he was gone especially.... 

Q. Do you remember what work your mother did in the yard outside? 

A. M’hm, they both got together doing the garden, he would do the roto-tilling, they would both 
take care of the planting and stuff; when he was gone, she would do all the weeding and keeping 
up. They would share the watering of the garden. She put together three or four flower gardens all 
herself, except for the hard heavy work, like lifting rocks, when she first started, that was shared by 
all of us, including the kids. 

Of all the chores performed around the property, the son states that the various siblings had 
minor chores, such as chopping wood and making beds. “Everything else, the major stuff, she 
would take care of.” Other evidence, including testimony from Catherine Peter and William 
Beblow, supports this picture of the appellant’s contribution. The trial judge held that while the 
respondent worked in the construction business: 

...he would be away from home during the week and would return on the weekend whenever 
possible. While he was absent, the Plaintiff would care for the property in the home and care for 
the children while he was away... 

In effect, the Plaintiff by moving into the Respondent’s home became his housekeeper on a 
full-time basis without remuneration except for the food and shelter that she and the children 
received until the children left home. 

The respondent also contributed to the value of the family enterprise surviving at the time of 
breakup; he generated most of the family income and helped with the maintenance of the 
property. 

Clearly, the appellant's contribution—the “value received” by the respondent—was 
considerable. But what then of the “value surviving”? It seems clear that the maintenance of the 
family enterprise through work in cooking, cleaning, and landscaping helped preserve the 
property and saved the respondent large sums of money, which he was able to use to pay off his 
mortgage and to purchase a houseboat and a van. The appellant, for her part, had purchased a lot 
with her outside earnings. All these assets may be viewed as assets of the family enterprise to 
which the appellant contributed substantially. 

The question is whether, taking the parties’ respective contributions to the family assets and 
the value of the assets into account, the trial judge erred in awarding the appellant a full interest 
in the house. In my view, the evidence is capable of supporting the conclusion that the house 
reflects a fair approximation of the value of the appellant's efforts as reflected in the family 
assets. Accordingly, I would not disturb the award. 

Appeal allowed. 


Note: Constructive Trust Post Peter v. Beblow 

Shortly after the Peter v. Beblow decision many courts (especially in British Columbia, 
but also to some degree in Ontario) began to show a greater willingness to award 
constructive trusts upon termination of common law relationships. They began to 
eschew measuring the respective contributions of the parties with precision, and did not 
reject constructive trust claims simply because the untitled spouse received some 
benefit during the relationship. Instead, courts approximated the respective contributions 


347 


and determined the property interest on that basis. Although the untitled spouse did not 
always receive a 50% interest in the property in issue, a pattern of fairly generous 
awards was developing. 

However, over the course of the last decade significant tensions appeared in the law of 
constructive trust. Courts split over the way to measure the respective contributions of 
the parties to the relationship in determining whether or not there had been unjust 
enrichment and over the appropriate remedy if unjust enrichment was found. Some of 
this tension focussed on the choice between the “value received” and “value survived” 
methods of measuring the parties’ contributions, which in turn was complicated by on¬ 
going confusion after Peter v. Beblow about the way in which these different ways of 
measuring contributions related to a monetary or proprietary remedy. 

The Supreme Court of Canada’s ruling in Nova Scotia (Attorney General) v. Walsh, 
[2002] 2 S.C.R. 325, found in volume I of these materials, that the exclusion of 
unmarried couples from schemes of matrimonial property legislation does not violate s. 
15 of the Charter, also had some impact on the evolution of the law of constructive trust. 
Some cases suggested that the “choice” argument so strongly endorsed in Walsh was 
responsible for the evolution of constructive trust doctrine in a more restrictive direction. 

In February of 2011 the Supreme Court of Canada issued another major decision on the 
use of trust doctrines in the domestic context. In the Kerr v. Baranow decision, found 
below, the Court attempted to answer some of the questions that continued to surround 
the application of the law of unjust enrichment and constructive trust in the domestic 
context and took the opportunity, as well, to clarify the role of the common intention 
resulting trust. 


Kerr v. Baranow 

2011 see 10, [2011] 1 SCR 269, 328 DLR (4*) 577, 93 RFL (6*) 1 

The judgment of the Court was delivered by CROMWELL J. (McLachlin C.J. and Binnie, 
LeBel, Abella, Charron, and Rothstein JJ. concurring) 

I. Introduction 

[1] In a series of cases spanning 30 years, the Court has wrestled with the financial and property 
rights of parties on the breakdown of a marriage or domestic relationship. Now, for married 
spouses, comprehensive matrimonial property statutes enacted in the late 1970s and 1980s 
provide the applicable legal framework. But for unmarried persons in domestic relationships in 
most common law provinces, judge-made law was and remains the only option. The main legal 
mechanisms available to parties and courts have been the resulting trust and the action in unjust 
enrichment. 

[2] In the early cases of the 1970s, the parties and the courts turned to the resulting trust. The 
underlying legal principle was that contributions to the acquisition of a property, which were not 
reflected in the legal title, could nonetheless give rise to a property interest. Added to this 
underlying notion was the idea that a resulting trust could arise based on the “common intention” 
of the parties that the non-owner partner was intended to have an interest. The resulting trust 
soon proved to be an unsatisfactory legal solution for many domestic property disputes, but 
claims continue to be advanced and decided on that basis. 


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[160] Second, there is the finding of the Court of Appeal that the trial judge failed to take into 
account evidence of Mr. Seguin’s numerous and significant non-fmancial contributions to the 
family. I respectfully cannot accept this view. The trial judge specifically alluded to these 
contributions in her reasons. Moreover, by confining the period of unjust enrichment to the three 
and one-half year period, the trial judge took into account the periods during which Ms. 
Vanasse’s contributions were not disproportionate to Mr. Seguin’s. In my view, the trial judge 
took a realistic and practical view of the evidence before her and gave sufficient consideration to 
Mr. Seguin’s contributions. 

D. Disposition 

[161] I would allow the appeal, set aside the order of the Court of Appeal, and restore the order 
of the trial judge. The appellant should have her costs throughout. 

V. The Kerr Appeal 

[In the case of the Kerr appeal, which involved very complicated facts combined with a serious 
misunderstanding of the facts on the part of the trial judge, the Court concluded that the 
appropriate remedy was to send the case back to the trial judge. The case involved claims of 
unjust enrichment by both Kerr and Baranow arising from their common law relationship of 25 
years (Baranow’s defense to Kerr’s claim was a counterclaim for unjust enrichment on his part). 
The Court found that the record did not provide sufficient evidence to determine whether or not 
their relationship constituted a joint venture. This case, which raised the issue of whether unjust 
enrichment could be established, was contrasted with the Vanasse appeal, where unjust 
enrichment was conceded and the trial findings of fact closely corresponded to the joint family 
venture analytical approach proposed by the Court. The result of the re-hearing in Kerr is 
discussed below.] 


Notes and Questions 

1. Where does the concept of joint family venture come into the analysis? Does it only 
come in at the stage of determining the appropriate remedy, after there has been a 
finding of unjust enrichment, or does it come in at the very beginning of the unjust 
enrichment analysis because it shapes the way unjust enrichment is conceptualized (i.e. 
as based not on a contribution to a specific asset or on unpaid services but based on 
the accumulation of a pool of wealth as result of joint efforts); see paras. 59 and 60. 

2. What role is left for the proprietary remedy of constructive trust in unjust enrichment 
claims between unmarried partners? Will a monetary remedy quantified on a value- 
survived basis become the typical remedy? When quantifying the monetary remedy, 
what date will be used for valuing the assets? 

3. Does Kerr v. Baranow have implications for the legislative extension of matrimonial 
property rights to unmarried couples? Recall the different ways the constructive trust 
remedy was portrayed in Walsh v. Bona where the S.C.C. rejected the argument that 
the exclusion of unmarried couples from matrimonial property laws constituted 
discrimination under s. 15 of the Charter. Justice Bastarache saw the constructive trust 
as a fine-tuned remedy capable of generating an equitable result tailored to the facts of 
the case. Justice L’Heureux-Dube, on the other hand, saw it as a highly uncertain, costly 
and inadequate remedy. Assuming that Justice L’Heureux-Dube’s comments captured 
to some degree the reality of the situation before Kerr v. Baranow, to what extent has 
Kerr eliminated those difficulties? Will Kerr give legislatures more justification for 
refusing to extend matrimonial property? Or does Kerr signal a shift in legal perceptions 




368 


of the nature of common law relationships and of the fair redistribution of wealth in such 
relationships when they breakdown? 

4. For an analysis both of the Kerr decision and of the subsequent applications of Kerr 
framework by lower courts see Berend Hovius, “Property Disputes Between Common- 
Law Partners: The Supreme Court of Canada’ Decisions in Vanasse v. Seguin and Kerr 
V. BaranoW' (2011) 30 Can. J. Fam. Law 129. 

5. The result of the rehearing in Kerr v. Barranow by the B.C. S.C. was released in 
2012: see Kerrv. Baranow, 2012 BCSC 1222, 22 RFL (7*^) 335), discussed in the note 
below. 


NOTE: Kerr v. Baranow on Rehearing {Kerr v. Baranow, 2012 BCSC 1222, 
22 RFL (7"') 335)) 

Kerr v Baranow was a complicated case factually. The parties lived together for 25 
years. When they met in 1981, they were both 40 years old. Mr Baranow, who had 
never been married, had a net worth of approximately $72,000. He owned a house (the 
Wall St. property) which was valued at $55,000 with a mortgage of $16,000, and had 
additional savings of $33,000. At the beginning of their relationship they lived in the Wall 
St. property. Ms Kerr was a divorced mother of two teenaged children with no savings 
and debts of $15,000. (Two years later, in 1983 she declared bankruptcy.) Ms Kerr had 
received the equity in her former matrimonial home (the Coleman property) under her 
separation agreement, but was about to lose the property because of foreclosure 
proceedings by her former husband’s creditors as she did not have the funds to redeem 
the property. 

On her lawyer’s advice Ms Kerr transferred the Coleman St. property to Mr. Baranow for 
a nominal consideration ($2), who would then use his funds to redeem it from forfeiture. 
(At that time the house was worth $170,000 with an equity of $40,000. Mr. Baranow 
invested his savings and took out a mortgage of $100,000). The couple then lived in the 
Coleman St. property for four years and Mr. Baranow rented out the Wall St. property. 
Eventually the Coleman St. property was sold (in a falling market-for $130,000). 
Meanwhile, the Wall St. house was totally rebuilt as their “dream home”, with Mr. 
Baranow taking out an additional mortgage and infusing additional funds of 
approximately $100,000. Ms. Kerr assisted with the decoration of the property. The 
parties moved into that property in 1986 and lived there until the end of their 
relationship. 

Both parties worked full time for the first ten years of the relationship, with Mr. Baranow 
earning approximately $50,000 - $60,000 per year as a longshoreman and Ms. Kerr 
earning approximately $30,000 as a secretary for the port authority. Ms. Kerr paid for 
most of the groceries, house insurance and the utilities, and did the bulk of the 
housework and cleaning while Mr. Baranow paid the mortgages and property taxes on 
both the Coleman and Wall St. properties. The parties kept separate bank accounts and 
paid their separate vehicle expenses. In 1991 Ms. Kerr suffered a massive stroke and 
cardiac arrest and was required to stop working. Her income remained relatively the 
same as she received a disability pension, and thus she continued to pay for much of 
the food and utilities. However, over time her mobility became more and more limited 
and Mr. Baranow had to take over more and more of the household chores and her 
personal care (including driving her to all of her appointments). In 2002 Mr. Baranow 
took early retirement, in part to be able to provide additional care to Ms. Kerr. By 2006 


369 


he had started to experience care-taker fatigue; and after Ms. Kerr was hospitalized he 
indicated that he was not prepared to take Ms. Kerr back into the Wall St. property. Ms. 
Kerr was placed in a four bed ward in an extended care facility. She was extremely 
resentful that she had been placed in a care home against her will and could not forgive 
Mr. Baranow. The relationship essentially ended then. Ms. Kerr wished to move to a bed 
in a private facility which would cost approximately $4000 -$5000 per month. 

Ms. Kerr commenced proceedings against Mr. Baranow in 2007 seeking spousal 
support and claiming unjust enrichment and an interest by way of resulting trust in the 
Wall St. property. Mr. Baranow brought a counter-claim in unjust enrichment on the 
basis of the services he had provided to Ms. Kerr after her stroke. At the end of the 
relationship Mr. Baranow owned the house, which had appreciated in value significantly 
and was appraised at $960,000 (with no mortgage), and had further assets (savings and 
RRSPs) of almost $800,000. Ms. Kerr had assets (savings and RRSPs) of 
approximately $270,000. Mr. Baranow’s annual income was approximately $70,000 and 
Ms. Kerr’s was $29,000. 

The trial judge awarded Ms. Kerr a 1/3 interest in the Wall St. property by way of both 
resulting trust and unjust enrichment and significant spousal support ($1700 per month). 
The Court of Appeal set aside the rulings on trust, concluding that the trial judge had 
seriously misapprehended the evidence in concluding that Mr. Baranow had been 
enriched to the extent of the $40,000 initial equity in the Coleman St. property. On 
further appeal to the Supreme Court of Canada, the Court concluded, as noted above in 
its decision in Kerr v. Baranow, that the case should be sent back to the trial judge for a 
redetermination in light of the new framework the court had set out. The results of that 
re-hearing can be found in Kerr v. Baranow, 2012 BCSC 1222, 22 RFL (7“^) 335, 
portions of which are reproduced below. 

Justice Gerow first dealt with Ms. Kerr’s claim and concluded that Mr. Baranow was 
unjustly enriched by Ms. Kerr’s contributions to the relationship: 


[30] The matter was sent back for a new trial to determine whether the claimant made other 
contributions which would establish a claim for unjust enrichment. 

[33] In my view, the claimant has established that she made a financial contribution to the 
acquisition of the Wall Street property. She paid for a number of the expenses, including the 
food, the house insurance and the utilities when the couple lived in the Coleman property 
from 1981 to 1985. Living in the Coleman property allowed the respondent to rent the Wall 
Street property and obtain some tax benefits. ... 

[36] It is apparent from a review of the financial information that the respondent could not 
have paid the amounts he did on the mortgages if the claimant had not paid for the bulk of 
the food and the household utilities. In my view, the claimant contributed to the acquisition 
of the Wall Street property as a result. 

[37] I accept the claimant’s evidence that she also contributed through the construction 
period, both by cleaning on the construction site itself and by taking care of the bulk of the 
household duties and cooking, so that the respondent could deal with the management of the 
construction. ... 

[38] Since the claimant was paying for the food, the household utilities and the house 
insurance during the time they lived in the Coleman property, the respondent was able to use 
the bulk of his income to more quickly pay off the mortgages registered against the Coleman 
property and the Wall Street property. ... 


370 


[41] As well, as stated earlier, the claimant did most of the cooking and cleaning of the house 
during that time, thereby freeing up the respondent to work more shifts in order pay the 
mortgages off more quickly. 

[42] ...[I]t is clear from the evidence that the respondent took on the majority of the 
household duties and assisted the claimant in a very significant manner after the claimant’s 
stroke, especially as her mobility became more limited. 

[43] However, I find [nonetheless] that the claimant has satisfied the first and second steps of 
the unjust enrichment analysis. The respondent was enriched by the claimant in that he was 
able to both acquire extra income - from the rental of the Wall Street property and working 
extra shifts - and have his food and utilities paid for. As a result, he had more funds to put 
towards the mortgages on the Coleman property and the Wall Street property. As well, the 
claimant helped with the construction of the Wall Street property by cleaning the worksite at 
the end of the day, and helping with the decoration. The respondent agreed that until her 
stroke, the claimant did the majority of the cooking and the housecleaning. 

[44] The claimant also contributed by providing furnishings, and buying some of the 
household items for the Wall Street property. The respondent had the benefit of claiming a 
disability tax exemption as a result of the claimant’s disability for his municipal taxes for the 
Wall Street property. 

[45] At the same time, the claimant suffered a corresponding deprivation. She did not use her 
income to purchase her own real estate or apply her housekeeping efforts or the time she 
spent helping during the construction solely to her own benefit. 

There was found to be no juristic reason for the benefit and deprivation, hence Ms. Kerr 
had established unjust enrichment. It should be noted that the court did not deal with 
Mr.Baranow’s counter-claim at this stage, but only at the remedy stage. 

Moving onto the appropriate remedy, Gerow J. had no difficulty find that the parties were 
engaged in a joint family venture and therefor that a monetary award based on 
proportionate share of assets accumulated during the course of the relationship would 
be appropriate: 

[66] The first issue is whether the parties engaged in a joint family venture. There can be no 
presumption of a joint family venture. At para. 89, Cromwell J. sets out four broad 
evidentiary headings to be considered in making this determination, namely: mutual effort; 
economic integration; actual intent; and priority of family. ... 

D. Mutual Effort 

[68] ... the evidence supports a finding that the parties worked as a team to build their lives 
together. They refinanced the Coleman property and Wall Street properties to take advantage 
of lower interest rates. As stated earlier, the claimant paid for the utilities, food and house 
insurance for the Coleman property during the time the respondent was paying off the 
mortgages registered against both properties. That allowed the respondent to use the bulk of 
his income to reduce the mortgages more quickly than he would otherwise have been able to 
do. As well, she did the majority of the shopping and cooking, which freed the respondent up 
to work more shifts to pay the mortgages off more quickly. 

[69] The parties worked together to plan, build and maintain their Wall Street property. ... 
The claimant continued to be responsible for the utilities and the food after they moved into 
the Wall Street property, and the respondent paid off the mortgage on the Wall Street 
property. ... 

E. Economic Integration 

[70] The parties did not have joint bank accounts; however, they did have the power of 
attorney over each other’s bank accounts from 1984 until 2006, when the claimant changed 


371 


the power of attorney to her son. As well, the claimant acted as a guarantor for the mortgages 
on the Wall Street property and the Coleman property when the properties were refinanced to 
take advantage of a lower interest rate. As mentioned earlier, the respondent took advantage 
of tax savings resulting from the claimant’s disability. While their finances were not 
integrated, there is evidence that they placed importance on each other’s welfare by having 
joint powers of attorney, entering into joint mortgages, shared health and dental plans, and 
structured certain aspects of their tax identities as an integrated unit. 

F. Actual Intent 

[72] ...[I]t is clear from the evidence that both parties intended to build a dream house in 
which they could live out their lives together on the Wall Street property. They held 
themselves out as a couple, and shared dental and health plans. The length of their 
relationship spanned 25 years. 

[73] In addition to the above, the evidence shows that from the beginning of their 
relationship, the parties intentionally were focused on reducing debt, paying down the 
mortgages and building a life together on the Wall Street property. Both parties worked 
towards this common goal which is consistent with an actual intent to be involved in a joint 
family venture. 

G. Priority of Family 

[99] As I see it, giving priority to the family is not associated exclusively with the actions of 
the more financially dependent spouse. The spouse with the higher income may also make 
financial sacrifices (for example, foregoing a promotion for the benefit of family life), which 
may be indicative that the parties saw the relationship as a domestic and financial 
partnership. ... 

[75] As stated earlier, the parties held themselves out as a couple. The claimant’s two sons 
continued to live with the couple for a period of time at the Coleman property. One of her 
sons came and lived with them in the Wall Street property and paid rent to the respondent. 
The respondent lent money to one of the claimant’s sons. 

[76] They got along well together. They entertained and went on holidays together. The 
focus was on the two of them enjoying their lives together, even after the claimant’s stroke. 
They went on a cruise and on a camping trip down the Oregon coast after her stroke for 
example. 

H. Conclusion about joint family venture 

[77] In my view a consideration of the four factors supports the view that the parties were 
involved in a joint family venture. 

I. Is there a link between the claimant’s contributions and the accumulation of 
wealth? 

[78] As set out earlier, the arrangement the couple entered into, whereby the claimant would 
pay for the food and utilities, allowed the respondent to use the bulk of his income to reduce 
the mortgages taken out on both the Coleman property and the Wall Street property. When 
the Coleman property was sold, there was no mortgage owing. The respondent was able to 
take the net sales proceeds of $130,000 and use it to construct the new home on the Wall 
Street property. 

[79] There was a concerted effort by both parties to work hard to be debt free. In my view, 
the evidence establishes that the claimant’s contributions are linked to the accumulation of 
the parties’ wealth. The claimant transferred the Coleman property to the respondent and the 
parties lived in the house, thereby allowing the respondent to collect rental income from the 
Wall Street property. Her contribution in paying the house insurance for the Coleman 


372 


property, the food and the utilities allowed the respondent to use the bulk of his income to 
pay off the mortgage quickly. 

[80] There is no doubt that the respondent worked very hard, including extra shifts in order 
to pay off the mortgage. However, the claimant’s shouldering of the bulk of the cooking and 
cleaning freed up the respondent to spend more time working. Although the respondent 
contributed more monetarily than the claimant, the claimant worked hard and contributed to 
her ability. After her stroke, she continued to pay for the utilities and much of the food. 

[81] I have concluded as a result that the claimant has shown that there was a joint family 
venture and there is a link between her contributions to it and the accumulation of assets, 
namely the Wall Street property. 

Gerow J. then went on to deal with the issue of the benefits Mr. Baranow conferred on 
Ms. Kerr during the course of the relationship contributions to the relationship. Gerow J. 
ruled that the fact that the benefits were conferred out of love and without expectation of 
compensation did not mean that they could not give rise to a claim for unjust 
enrichment. However, given the reasonable expectations of the parties that they were 
involved in a life partnership Gerow J. concluded that it was just that Ms. Kerr be 
allowed to retain at least some of the benefits. Thus some but not all those benefits 
should be accounted for in reducing Ms. Kerr’s claim. Gerow J. refused to put a value on 
the services. The appropriate remedy was determined to be a monetary amount 
equivalent to 25% of the 2007 value of the Wall St. property (leaving Ms. Kerr with 
approximately 30% of the wealth accumulated during the course of the relationship): 

Conclusion 

[106] In my view, the facts demonstrate that both parties conferred benefits on the other, and 
both have established that they made contributions to the other to their own detriment. The 
evidence establishes that the parties entered into a joint family venture where they 
accumulated assets, namely the new home on the Wall Street property and their personal 
savings. At the same time, they kept their finances separate and any resolution should 
demonstrate that. 

[107] The claimant has established a link between the claimant’s contributions and the 
construction of the new house on the Wall Street property. In my view, it would be unjust for 
the respondent to retain that entire asset given the claimant’s contributions. 

[108] However, the respondent’s very significant contributions to the claimant’s welfare and 
care, particularly after the stroke, must also be taken into account and go to reduce the 
amount the claimant would otherwise be entitled to. 

[109] As Cromwell J. stated at para. 102: 

... While determining the proportionate contributions of the parties is not an exact science, 
it generally does not call for a minute examination of the give and take of daily life. It 
calls, rather, for the reasoned exercise of judgment in light of all of the evidence. 

[110] Having considered all of the circumstances, and both the claims of the claimant and the 
respondent, I have concluded that the claimant is entitled to a monetary award to offset her 
contribution to the Wall Street property equivalent to 25% of its appraised value of 
$960,000, which was done prior to the 2007 trial. Accordingly, the claimant is entitled to 
$240,000. As well, I have concluded that both parties should retain the savings in their name. 


397 


Note: 2009 Amendments to the Part I of the FLA 

Some difficulties were experienced in the operation of the FLA’s scheme for equalization 
of property in the first few years after its enactment, indicating a need for further 
reforms. In its 1993 Report on Family Property, the Ontario Law Reform Commission 
made a number of recommendations to improve the fairness and efficiency of the 
scheme and to ensure that the Act better met its objectives. The Commission’s 1995 
Report on Pensions as Property: Valuation and Division proposed reforms to deal with 
the problems raised by the sharing of a particular type of property that has distinct 
characteristics and raises special problems—the pension. 

These proposals for reform were not acted upon for many years. In some cases judicial 
interpretation of the Act resolved the problems. Then in 2009, as part of a compendium 
bill amending many pieces of to family legislation, some changes were made to Part I of 
the FLA, the most significant of which was the introduction of amendments to simplify 
the valuation and division of pensions; see the Family Statute Law Amendment Act, 
2009, S. O. 2009, c. 11 (Bill 133). The bill received Royal Assent on May 14, 2009. 
Some of the provisions came into force immediately: with respect to others, such as 
those relating to pension division, implementation was delayed. In the case of pension 
division, the delay was necessary to allow regulations working out the details of the 
scheme to be drafted. The final draft of the pension regulations was published on June 
24, 2011 and came into force on January 1,2012. 


398 


B. Part I of The Family Law Act, 1986 

(a) application 

Note: Application of the FLA to Unmarried Couples 

In its Report on the Rights and Responsibilities of Cohabitants under the Family Law Act 
(1993), the Ontario Law Reform Commission recommended that the definition of spouse 
found in s. 1(1) of the Ontario Family Law Act, which applies for the purposes of 
property division upon marriage breakdown, be amended to include unmarried, 
heterosexual cohabitants who have cohabited for a period of at least three years or who 
have had a child. This recommendation has not been implemented and unmarried 
couples thus do not receive the benefit of a presumption of equalization of net family 
property based on the partnership principle. 

The use of s. 15 of the Charter to challenge to the continued exclusion of unmarried 
cohabitants from statutory rights to a division of matrimonial property has been 
unsuccessful: recall the Supreme Court of Canada’s decisions in Nova Scotia (Attorney 
General) v. Walsh, [2002] 2 S.C.R. 325, 32 R.F.L. (5‘^) 81 (sub nom Walsh v. Bona) and 
Quebec (Attorney General) v. A, 2013 SCC 5, both found in volume I of these materials. 
Given that extension of matrimonial property rights to unmarried couples is not 
mandated by the Charter, the choice remains with the provincial legislatures. 

Some Canadian jurisdictions extended matrimonial property legislation to unmarried 
couples before the S.C.C.’s decision in Walsh. The Northwest Territories was the first. In 
1997 the definition of spouse for the purposes of matrimonial property rights was 
extended beyond married couples to include a man and woman who had cohabited for a 
period of at least two years or had cohabited in a relationship of some permanence and 
were together the natural or adoptive parents of a child. The N.W.T. legislation was 
subsequently adopted by Nunavut. In June of 2002, the definition of spouse was 
amended to include individuals in same-sex relationships. In 2001 Saskatchewan 
changed the definition of spouse for the purposes of the Family Property Act to cover 
any two persons who have cohabited for a period of not less than two years. In 2004 
Manitoba followed suit, extended property rights to common law partners of either sex. 
The definition of “common law partner” covers any two persons who have cohabited in a 
conjugal relationship for at least three years or for a period of at least one year where 
the parties are together the parents of a child. 

Several other provinces chose to partially extend property rights to unmarried couples 
by allowing them to “opt in” to the legislative scheme of property division governing 
married couples. Newfoundland was the first to choose this route in the 1990s, 
extending the “opt-in” to unmarried same-sex couples in 2001. In 2000, Nova Scotia 
enacted a more extensive scheme providing for registered domestic partnerships. The 
scheme allows unmarried couples, whether same-sex or opposite-sex, to register their 
relationships and be subject to many of the rights and obligations as married persons, 
including property division upon breakdown of the relationship. Quebec passed similar 
legislation in 2002 providing for “civil unions”; initially civil unions were confined to same- 
sex couples, but were subsequently opened up to opposite-sex couples as well. 

The Supreme Court of Canada decision in Walsh produced legislative inertia with 
respect to any further inclusion of unmarried couples in matrimonial property legislation 
for many years. However British Columbia recently departed from this pattern. As part of 
a bold program of family law reform, B.C. enacted a new Family Law Act, S.B.C. 2011, 
ch. 25, replacing its existing, highly discretionary matrimonial property regime (based on 


399 


the distinction between family assets and non-family assets) with a deferred community 
scheme that shares the wealth accumulated during the marriage. Unmarried couples 
who have cohabited for 2 years (or less time if they have a child) are included in the 
legislation, which came into force in March of 2013. See; 
http://www.aq.qov.bc.ca/leqislation/familv-law/index.htm 

Ontario has not taken any such legislative initiative. Absent a cohabitation agreement 
providing for sharing of property, unmarried couples in Ontario must rely on doctrines of 
unjust enrichment and constructive trust to receive a share property other than 
according to legal title, although the Kerr v. Baranow decision has made such claims 
somewhat easier when the parties’ relationship can be characterized as a joint family 
venture. 


Note: Application of Matrimonial Property Law to Aboriginal Women 

In Derrickson v. Derrickson, [1986] 1 S.C.R. 285, the Supreme Court of Canada ruled 
that provisions in British Columbia's Family Relations Act dealing with division of 
matrimonial property were not applicable to lands on First Nations reserves. The Court 
concluded that the partition of reserve lands under provincial family legislation would be 
an encroachment on the federal authority over “Indians and Lands reserved for Indians” 
found in s. 91(24) of the Constitution Act, 1867 and furthermore, that the provisions 
were in conflict with the provisions of the Indian Act which give the Minister the right to 
control the possession and occupation of lands on reserves by issuing certificates of 
possession and occupation. (The Indian Act did not provide for marriage breakdown, 
property division, or for situations of domestic violence and protective orders to keep the 
abuser out of the family home.) The Court did not consider the underlying issue of why 
the dispute was one of the division of powers over First Nations lands and not a matter 
of Aboriginal custom regarding marriage breakdown and its land consequences. As a 
result of this ruling, Mrs. Derrickson's application, pursuant to the B.C. Family Relations 
Act, for an undivided one-half interest in the properties on the reserve for which her 
husband held certificates of possession was dismissed. She was, however, granted a 
monetary compensation order in lieu of an order directing actual division of property. 

While the ruling in Derrickson meant that provincial matrimonial property laws were 
inapplicable to lands on First Nations reserves to the extent that they attempt to deal 
with the ownership, possession, or occupation of land, it left open the possibility that 
schemes of matrimonial property such as Ontario's Family Law Act, which are more in 
the nature of debtor-creditor legislation and which provide for the sharing of the 
monetary value of property rather than sharing of the actual property itself, would be 
applicable to Aboriginal persons living on reserves. However provincial law with respect 
to possessory rights in the matrimonial home is clearly inapplicable and courts may not 
make orders for the disposition of interests in the matrimonial home. (This is discussed 
further in Chapter VI of the materials, below, which deals with the matrimonial home.) 

Mary Ellen Turpel ("Home/Land" (1991), 10 Can. J. Fam. L. 17) states that it is not the 
commodity character of matrimonial property that is vital to Aboriginal women: 

The fair division of the matrimonial home upon marriage breakdown is seen to save women and 
children from financial breakdown and impoverishment. While this is undoubtedly the case for 
non-aboriginal people, when the context of aboriginal marriages is considered, especially when the 
spouses are living on the reserve, the situation must be appreciated as being different because of a 
combination of economic, cultural and linguistic factors. 

Access to matrimonial property does not save aboriginal women from impoverishment 
because the value of a possessory interest in reserve land is circumscribed by restrictions on 



400 


alienation and the limited interest (mortgagability) in the property. Moreover, aboriginal peoples 
on reserves already live far below the poverty line in Canada. Consequently, theories of economic 
partnerships and a woman's access to the home as an important commodity do not apply to 
aboriginal peoples as they would in a non-aboriginal context. Indeed these theories arguably 
devalue the significance of the matrimonial home for aboriginal women. 

The significance of matrimonial property for aboriginal women must be understood in the 
context of what the reserve represents: it is the home of a distinct cultural and linguistic people. It 
is a community of extended families, tightly coimected by history, language and culture. It is often 
the place where children can be educated in their language and with culturally-appropriate 
pedagogies. The reserve home is generally not that of a nuclear family—parents, grandparents, 
brothers, sisters and others in need will all share a home. The home may be the only access a 
woman and her children have to their culture, language and family. The economic value of the land 
is secondary to its value as shelter within a larger homeland—the homeland of her people, her 
family. 

The second aspect of matrimonial property theory that infuses this area, the notion of equality 
of the spouses, is similarly, not entirely applicable in the aboriginal matrimonial contest. In most 
aboriginal communities, the belief is that women, children and elders come before men and the 
responsibility of the men is to live life as a good helper toward women, children and elders. 
Traditional tribal control of property did not lead to the victimization of aboriginal women.... 

[The decision in Derrickson sanctions] a situation which is completely opposite to that of the 
customs of many tribes. There are no obligations on aboriginal men now recognized at law to 
provide shelter for women, children or elders. Indeed, customary law has no place in matrimonial 
property disputes as Canadian law will not recognize it—it is the federal or provincial government 
which exercises jurisdiction over Indians upon marriage breakdown. The impact of this oppression 
of aboriginal custom on communities caimot be underestimated. When men no longer have to 
fulfill their responsibilities to women, children and elders, the social control network of the 
community disintegrates and respect for social responsibilities is lost. 

The federal government attempted for many years to pass legislation dealing with 
matrimonial property on reserves. The legislation was contentious and many times the 
draft legislation died on the order paper when a parliamentary session was dissolved. 
Finally, however, the Family Homes on Reserves and Matrimonial Interests or Rights 
Act, S.C. 2013, c. 20 received royal assent on June 19, 2013. Some provisions came 
into force on December 16, 2013, but the majority came into effect a year later, on 
December 16, 2014. For more information on the new act see; http://www.aadnc- 
aandc.ac.ca/ena/1317172955875/1317173115233 . 

Briefly, the Act applies to matrimonial real property (i.e. homes and other immovable 
assets) on reserves. The legislation puts in place provisional federal rules regarding 
matrimonial real property and also creates a mechanism for First Nation communities to 
enact their own matrimonial real property laws. (There was a 12 month transitional 
period after proclamation to allow First Nations communities to enact their own laws.) 

The default federal provisional rules provide for joint possessory rights in the 
matrimonial home while spouses (both married and common law-based on one year of 
cohabitation) are living together and impose controls on disposition and encumbrance of 
interests in the home during the relationship without the consent of the other spouse. 
Orders may be granted excluding one spouse from the home in cases of family violence 
and after the relationship has broken down to meet the interests of children who reside 
in the home. On the breakdown of the relationship each spouse is entitled to an amount 
equal to one half of the value of the interest or right that is held by one of them in the 
family home and any other matrimonial interests or rights. Claims under the Act can be 
brought in the provincial and territorial superior courts. 




423 


NOTE: Equalization Schemes and Bankruptcy 

Matrimonial property laws in Canada are of two different sorts. Some provincial 
matrimonial property regimes are actually “property division” schemes in that property 
interests vest on the occurrence of a triggering event, such as separation; this would 
include the schemes in B.C., Alberta, Saskatchewan, Nova Scotia and New Brunswick. 
The other provinces, like Ontario, have equalization regimes, under which a triggering 
event such as separation simply gives rise to an entitlement to an accounting, the result 
of which will be an order for a monetary payment to effect equalization. No property 
interests arise as a result of separation; the act creates a debtor-creditor relationship. 
The recent decision of the Supreme Court of Canada in Schreyer v. Schreyer, 2011 
see 35, [2011] 2 SCR 605, which arose in Manitoba, another equalization province, 
illustrates one of the disadvantages of equalization schemes: if the titled spouse claims 
bankruptcy after separation and before the equalization payment has been made, the 
untitled spouse’s claim to equalization will simply be treated as a claim provable in 
bankruptcy and can be released (i.e. wiped out) by the bankruptcy, leaving the claimant 
spouse without a remedy. In Schreyer, the SCC called for legislative reform to ensure 
that the principles of bankruptcy law and family law are compatible rather than operating 
at cross-purposes. For further discussion of this issue see Susan Boyd and Janis Sarra, 
“Out in the Cold; Schreyer v. Schreyer's Call for Law Reform” (2011) 27 Canadian 
Journal of Family Law 97. 


424 


(d) Valuation and Valuation Date Assets 
(i) Valuation Date 

The first step in the calculation of NFP is for each spouse to list and add up all of the 
assets they own on the valuation date (referred to as “V-day”). This requires determining 
the valuation date. Although s. 4(1) of the FLA lists five potential valuation dates 
depending on the circumstances of the case, the most frequent will be the first listed, 
i.e., "The date the spouses separate and there is no reasonable prospect that they will 
resume cohabitation." Although some of the cases draw on case law under the Divorce 
Act defining "living separate and apart", the analogy may not be exact, given the 
additional requirement of no reasonable prospect of the resumption of cohabitation. As 
well, because it is tied to the valuation of property, the issue of date of separation may 
have a different significance in the matrimonial property context than in the divorce 
context. For example, in a situation of rising property values, a later rather than earlier 
separation date will result in a larger value of property to be divided. What follows is a 
brief review of cases dealing with how courts have handled this issue under the FLA. As 
well, you should refer back to the discussion of valuation date in Goodman, “Matrimonial 
Property,” above. 

Czepa V. Czepa (1988), 16 R.F.L. (3d) 191 (Ont. H.C.) 

The parties were married in Poland in 1971. The husband moved to Ontario in 1981 to 
take up employment with the intention to rejoin his wife later with money to upgrade their 
lifestyle. In 1982 he became involved with another woman. When his wife found out 
about the relationship in 1984, he attempted to mollify her instead of acknowledging the 
marriage was over and reassured her he would be returning. In 1986 the husband 
petitioned for divorce and the wife claimed a division of matrimonial property. Killeen 
L.J.S.C. held that given the husband's conduct and representations to the wife, there 
was a reasonable prospect of reconciliation until the husband petitioned for divorce, and 
so set the separation date as the date on which the husband filed for divorce (in spite of 
the fact he had entered into a new relationship several years previously). For a 
contrasting result in a case where the husband misled the wife as to the possibility of 
reconciliation in order to obtain an agreement with respect to custody see Caratun v. 
Caratun (1987), R.F.L. (3d) 337 (Ont. H.C.). There Van Camp J. found that there was 
never any intention on the husband’s part to reconcile and that there was thus no 
reasonable prospect that they would resume cohabitation after separation. 

Lessany v. Lessany (1988), 17 R.F.L. (3d) 433 (Ont. Dist. Ct) 

The parties were separated in Dec. 1986. The husband missed the children and 
suggested reconciliation in the summer of 1987. The parties lived together for two 
months but things deteriorated quickly. McCart D.C.J. held the separation date to be 
December 1986, concluding that from Dec. 1986 until Aug. 1987 there was no 
reasonable prospect of reconciliation, just a faint hope. The nature of the renewed living 
together was not "cohabitation". 

Ricci V. Cacciatore-Ricci (1989), 16 A.C.W.S. (3d) 435 (Ont. H.C.) 

The parties were married in 1980. A few months later, the husband left for Italy to do 
research for his Ph.D., and subsequently he worked in both Sudbury and Ottawa. All the 
while, his wife remained in Toronto. The parties spent time together on weekends and 
holidays. In October 1985, after a heated telephone argument, they severed further 
communications. For the purposes of the valuation date, the husband argued the 
separation took place in Sept. 1982, when he went to Ottawa to teach. He claimed that 
the time spent together on weekends, holidays, and vacations in Italy were attempts at 



425 


reconciliation rather than cohabitation. Cusson L.J.S.C. held that the parties separated 
in Oct. 1985, and stated that cohabitation was a state of mind and that a couple could 
be cohabiting even if they physically lived in separate locations for considerable lengths 
of time. The wife did not consider herself separated until Oct. 1985. The husband's 
actions were not those of a man who considered himself separated. 

Oswell V. Oswell (1990), 28 R.F.L. (3d) 10 (Ont. H.C.J.) 

The parties were married in 1977 on the day before the husband's 55th birthday. The 
wife was 33. It was a second marriage for both of them. After the wife committed 
adultery in 1984, the husband wanted to separate, but the wife did not. The husband 
contended that he and his wife lived separate and apart under the same roof since that 
date. The wife contended that they did not begin to live separate and apart until March 
1988 when the petition for divorce was filed. 

The parties attended social activities together. They took vacations together in 1985, 
1986, and 1987. Although the parties stopped having sexual intercourse after Aug. 
1985, and the husband moved out of the master bedroom, yet on vacations, or when 
they had overnight guests, the parties occupied the same bed. The parties went to 
marriage counselling and to a therapist together, to improve their communication. The 
husband gave the wife a fur coat in the winter of 1986-1987. In March 1987 the husband 
went with the wife to London to help out at her father's funeral. In 1987 the husband 
threw a party for the wife to celebrate her graduation from college, and flew her mother 
over from London to attend. The parties often shared meals and grocery shopping until 
early 1988. If the husband was not going to be home for dinner, he would let his wife 
know. The wife continued to do some hand laundry for the husband until the petition for 
divorce was served. They had a joint subscription to the opera until the 1988 opera 
season, and attended the opera together three times in Jan. 1988. They shopped for 
gifts for the husband's family together, and the wife also bought presents for the 
husband's daughters on her own. The husband did not begin to see other women 
socially until after the petition for divorce was served. In 1987 and 1988 the husband 
indicated on his tax returns that his status was married, rather than separated, and he 
deducted a portion of his wife's tuition as an expense. As late as January 1988 there 
was some discussion of reconciliation. 

Weiler J. set out the basic principles to be applied in determining the date of 
separation under the FLA: 

Various indicia are set out in several cases under the Divorce Act ... which contains 
similar phraseology, to assist a court in determining when spouses who occupy the same 
premises are living separate and apart. 

(1) There must be a physical separation. Often this is indicated by the spouses occupying 
separate bedrooms: ... Just because a spouse remains in the same house for reasons of 
economic necessity does not mean that they are not living separate and apart... 

(2) There must also be a withdrawal by one or both spouses from the matrimonial obligation 
with the intent of destroying the matrimonial consortium ... or of repudiating the marital 
relationship... 

(3) The absence of sexual relations is not conclusive but is a factor to be considered ... 

(4) Other matters to be considered are the discussion of family problems and communication 
between the spouses; presence or absence of joint social activities; the meal pattern ... 

(5) Although the performance of household tasks is also a factor, help may be hired for these 
tasks and greater weight should be given to those matters which are peculiar to the husband 
and wife relationship outlined above ... 

Under the Family Law Act, 1986, the court must have regard to the true intent of a 
spouse as opposed to a spouse's stated intent ... An additional consideration to which the 
court may have regard in determining the true intent of a spouse as opposed to that 
spouse's stated intentions is the method in which the spouse has filed income tax returns 


426 


... If a mediator is consulted, the purpose for which the mediator was consulted may also 
be of assistance .... 

When a spouse makes plans for his or her assets as a separated person, the courts 
consider this to be indicative that there is no real prospect of resumption of cohabitation 
under the Family Law Act, 1986: “One reason for the postponement of the valuation date 
after separation until the date when there was no reasonable prospect of resumption of 
cohabitation would be that only on that latter date would each of the spouses make plans 
for their assets as a separated person”: Caratun, supra at p. 364 O.R. 

Applying these principles to the facts of the case, the court found the separation 
date to be Jan. 1988.The husband's appeal with respect to the date fixed by the trial 
judge as the separation date was dismissed in brief reasons by the Ontario Court of 
Appeal: see (1992), 43 R.F.L. (3d) 1800. 

Torosantucci v. Torosantucci 32 R.F.L. (3d) 202 (U.F.Ct.) 

The husband moved out of the home in early 1983 to live with his father-in-law. The 
father-in-law died in June of 1983 and the husband moved back into the home to be 
near the children and because it was cheaper than living on his own. From the time he 
moved back until the date when he moved out of the house in 1989 the parties led 
largely separate lives under the same roof. The wife argued, however, that there was a 
reasonable prospect of reconciliation at least until late 1988 or early 1989 and that 
during this period she continued to hope that things would work out. The court ruled that 
the valuation date—the date the parties separated with no reasonable prospect of 
reconciliation—was June 1983. The court’s comments on the test of “reasonable 
prospect of reconciliation” (at p. 206) have often been referred to subsequent cases: 

A reasonable prospect of reconciliation must be more than wishful thinking on the part of either 
party. There must be more than residual affection that may linger by one or both of the parties. The 
Act does not speak of a “prospect” of reconciliation but a “reasonable prospect”. The Oxford 
Concise Dictionary 7th Edition, defines prospect as “expectation, what one expects.” The question 
is whether a reasonable person, knowing all of the circumstances, would reasonably believe that 
the parties had a prospect or expectation of resuming cohabitation. I do not doubt that Mr. and 
Mrs. Torosantucci wished that their marriage would have been otherwise than it was. I accept, on 
the part of Mr. Torosantucci, that he retained, and continues to retain, some degree of affection for 
her. But wishful thinking is not the stuff of reconciliation. There must be some indication or step 
taken by both of them in that direction. In this case, no attempt was made to mediate or reconcile 
their differences, no counselling from third parties was sought and most importantly no meaningful 
discussions ever took place between them as to if, how or when their marriage might be put back 
together. 

Bilas V. Bilas (1994), 3 R.F.L. (4th) 354 (Ont. Gen.Div.) 

In this case, the fact that the parties continued to see a marriage counsellor precluded a 
finding that they lived separate and apart under the same roof. 


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These rules are not bad rules. They are simple to state and accord with a lot of people’s 
intuition about ownership. I also believe they are the law. Applying them to families is a 
nightmare. Let’s start at the beginning and see how long it takes for chaos to prevail. 

Bob and Jane are dating. He buys her flowers and gives them to her. No problem they are 
hers. The flowers work and they move in together. No property changes hands except one fork 
looks pretty much like the next and dam, no inventory. Still not serious. 

Bob’s couch is pretty ratty so Jane says your couch is history, we will use mine. Common 
intention? Maybe, but who cares about an old couch. Not many, but they will fight about the new 
one that replaced it. Bob and Jane go to the Brick. They see a television. One of them decides it 
will be bought, or was it the salesman who decided? Well any way Bob’s Visa is a bit full since 
he charged all the restaurant meals that month (which is not consistent with their deal of 50/50 
for most things), so Jane puts the down payment on hers. They both sign the conditional sales 
contract. On the way home the contract blows out the window of the car. It was a 48 month 
contract and although no one can remember it, Jane made most of the payments. We are not sure 
how the deal on restaurants went after that. So who owns the T.V.? I dunno. 

Then they get engaged. They get lots of presents, some were given at a Bridal shower, some 
at a Jack and Jill. That’s where the reversible 3/8” rechargeable electric drill came from. 
Remember, these are pre-marriage acquisitions! There were a lot of wedding presents too, some 
came before the wedding, some after. The blenders all had tags that said “to Bob and Jane” they 
are pretty easy, but clients never fight about blenders. The Chippendale loveseat which has been 
in the family for 400 years didn’t have a tag but everyone heard Dad say that he was so glad to 
pass the heirloom on knowing that the bride and groom would pass it on to their first bom too. I 
guess it is in tmst for somebody but what if they (luckily) split before the first bom is bom? 

Then of course there’s the $50,000.00 cheque. Its card said “for the love nest”. It came from 
the bride’s father, but it was made out to the man of the house, the Groom, and it was given at the 
stag 10 days before the wedding and actually was deposited in the Groom’s margin account at 
Scotia McLeod. The love nest was not acquired until two years later, after the crash. The real 
estate lawyer was real busy the day they went to sign.... Bob remembers that she said if Jane 
died, he would get his whole house back again. The deed says joint tenants. The down payment 
came from all over the place and Bob made all the payments because he had more money. In fact, 
over the years the couple spent all their income of which Bob made exactly 65%. Do I have to 
say more to convince you that no one knows who owns what in that family. Yet that is where it 
all starts and finishes, on the old 70K and we have not even started to think about valuation, 
disposal costs, and the impact of GST. 


NOTES 

1. The use of constructive trusts to shift “ownership piles” on V-day is dealt with in more 
detail below; see Rawluk v. Rawluk, [1990] 1 S.C.R. 70. 

2. In the early years of the FLA there was much debate and uncertainty about whether 
professional degrees and licences acquired during the course of the relationship should 
be regarded as property and if so, how they should be valued (i.e. should they be valued 
on the basis of the enhanced future earning capacity they gave the spouse who 
acquired them. In Caratun v. Caratun, (1999) 42 RFL (3d) 113 (ONCA) (leave to appeal 
to the see denied), which involved a situation where the wife made significant financial 
contributions to the husband’s acquisition of a dental license during the marriage, the 
Ontario eourt of Appeal decided that they were not to be treated as property and that 
one spouse’s contributions to the other’s post-separation earning capacity were best 


429 


dealt with through an award of compensatory spousal support. McKINLAY J.A. (Robins 
and Catzman JJ.A. concurring) reasoned as follows: 

In determining the issue of whether a professional licence constitutes “property,” the cases and the 
numerous articles written on the subject concentrate primarily on two aspects of the problem: first, the 
nature or characterization of a licence, and, second, the difficulty of valuing a licence in the family 
property context. 

(i) Characterization of Licence 

The broad definition of property in the F.L.A. clearly encompasses many forms of intangibles - a 
classification into which a licence must fall if it is to be considered property. The common law has 
never had any difficulty in dealing with property evidenced by pieces of paper representing bundles of 
rights - such as a share certificate with its attendant rights to dividends, voting privileges, and 
distribution of assets on corporate dissolution. If a licence to practice a profession is property, what are 
its attendant rights? Apart from possible benefits, such as the right to join professional groups and clubs 
- which are not relevant in this context - the only real right conferred on the holder of the licence is a 
right to work in a particular profession. That right, assuming it is held at the time of separation, is a 
present right to work in the future, and it will continue for as long as the holder of the right is 
professionally and personally able to perform the activity involved. It is the nature of the right given by 
the licence which, in my view, causes insurmountable difficulties in treating such a licence as property 
for matrimonial purposes. Those difficulties arise, first, because it is not a right which is transferable; 
second, because it requires the personal efforts of the holder in order to be of any value in the future; 
and third, because the only difference between such a licence and any other right to work is in its 
exclusivity. 

(a) Non-transfer ability 

One of the traditional indicia of property is its inherent transferability. That transferability may, of 
course, be precluded either by law or by contract. ... 

It is clear that many rights or things which are restrained from transfer by law are, by agreement or 
otherwise, inherently transferable and are of value to their owners. Such rights or things fall within the 
normal legal definition of property, and would clearly fall within the statutory definition of property in 
the F.L.A. However, rights or things which are inherently non-transferable, such as the right to practise 
a profession, clearly do not constitute property in any traditional sense. 

(b) Requirement of Personal Efforts of the Licensee 

Under the F.L.A. the types of property included in the statutory definition are very broad-ranging. 
The definition is in the F.L.A. for the purpose of determining the value of the property to be included in 
arriving at “net family property” to be equalized under s .5.1 see no way in which that definition can be 
interpreted to include work to be performed by either spouse in the future. It goes without saying that 
without the personal efforts of the licensee, the licence will produce nothing. The only provisions in the 
F.L.A. that allow one spouse to share in the firiits of the other spouse’s future labours are the support 
provisions, which do not form a part of the equalization payment under s. 5. ... 

(c) Right to Work in General 

The only difference between a professional licence and the ability and right of any individual to 
perform a particular type of work is in the exclusive nature of a professional licence. Only those who 
have successfully survived the rigors of professional training have the right to practice their profession. 
Nonetheless, the difference between the right to practice a profession and the right to work at any job 
which requires special skill or knowledge is a right which differs only in scope, but not in substance. A 
plumber, carpenter, or an electrician spends a substantial period of time in apprenticeship before 
becoming proficient at his trade; a salesman spends a substantial period of time developing a clientele 
in order to enhance his income; a business executive may spend a substantial period of time in 
university and then working his way up the corporate ladder to attain his level of income. Should the 
law consider all of these attainments as property for the purposes of determining the equalization 
payment under the F.L.A.? Clearly not. I see no interpretation of the F.L.A., either specifically under s. 
4, or generally, which would allow the court to treat such attainments as property. 

(ii) Valuation of Licence 

It is clear from the considerations referred to above that there are substantial difficulties, both 
practical and conceptual, in treating licences as “property.” In addition, the valuation of such a right 
would be unfairly speculative in the matrimonial context. A myriad of contingencies, including 


430 


inclination, probability of success in practice of the profession, length of physical and mental capability 
to perform the duties of the profession, competition within the profession, and many others all render a 
fair valuation of the licence unusually difficult. But a further potential inequity arises; support orders 
may be varied if circumstances change, but no amendment of an equalization payment is possible 
regardless of changed circumstances. 

The valuation approach approved by the trial judge in this case was to compare the appellant’s 
actual professional income since attaining his dental licence up to September 1986 with the average 
earnings of an honours university graduate of the same age during the same period. His future 
professional income from 1986 until his expected retirement age of 65 was determined, based on his 
actual income level adjusted by the rate of growth of income for dentists according to the American 
Dental Association. The difference between his projected future earnings and those of honours 
graduates was valued at an annual discount rate of 2.5 per cent according to the Rules of Civil 
Procedure. Based on this approach, a valuation of the dental licence as of valuation date, July 18, 
1981, was found to be $379,965. This valuation did not take into account any of the contingencies of 
the type referred to above. Another method of valuation, which resulted in the figure of $219,346, was 
to compare the expected career earnings of the average dentist obtaining his licence in July 1981 and 
retiring in November 2013, to the average earnings of honours university graduates for the same 
period. 

Either valuation approach is logical, if the licence if “property.” However, it would be equally 
logical to treat a university degree as property, and then value that degree by comparing incomes of 
university graduates with those of high school graduates. In the matrimonial context, the fallacy lies in 
treating a licence as property on valuation date, when most of its value depends on the personal labour 
of the licensed spouse after the termination of the relationship. That future labour does not constitute 
anything earned or existing at the valuation date. 

For all of the above reasons, it is my view that a professional licence does not constitute property 
within the meaning of s. 4 of the F.L.A. 

3. Other cases have also raised the issue of whether future streams of income should 
be characterized as “property” under Part I of the FLA or as post-separation streams of 
income to be redistributed by means of spousal support claims. The FLA specifies that 
employment pensions are to be treated as property, but what about an entitlement to 
disability benefits? In Lowe v. Lowe, (2006) 22 RFL (6‘^) 438 (ONCA) the Ontario Court 
of Appeal ruled that an entitlement to disability benefits that would continue to be paid 
out post-separation, in that case worker’s compensation benefits to replace lost 
earnings, should not be capitalized and included as family property under Part I of the 
FLA. Sharpe J.A. (Laskin and MacFarland JJ.A. concurring) reasoned as follows: 

[12] The definition of “property” in the FLA, s. 4 is admittedly broad. It includes, for example, a 
stream of income derived from a trust: see Brinkos v. Brinkos (1989), 69 O.R. (2d) 225, [1989] O.J. 
No. 1140 (C.A.). However, the definition of property is not without limits. ... 

[14] ... In keeping with the “modem” approach to statutory interpretation, s. 4 should not be read as 
including any and every interest, even those bearing no relationship to the marriage partnership, simply 
because that interest is not specifically excluded. While the scheme of the FLA is to give a broad 
definition to property and then exclude certain specific types of property, ... the definition of property 
itself must be given meaningful content and that meaningful content imposes limits on the definition of 
property limits apart from the specific exclusions. ... 

[16] ... [I]n Hamilton v. Hamilton, [2005] O.J. No. 3050, 18 R.F.L. (6th) 115 (S.C.J.), Aitken J. 
[concluded that] Canada Pension Plan (“CPP”) and private insurance disability pensions [were not 
property within the meaning of s. 4] after a detailed and comprehensive review of the authorities. I find 
Aitken J.’s analysis compelling and agree with her conclusion that disability benefits should not be 
considered family property for equalization purposes. 

[17] I agree with Aitken J.’s statement at para. 113 that “the purpose of the disability payments is to 
replace in whole or in part the income that the person would have earned had he or she been able to 
work in the normal course”. This makes disability benefits “more comparable to a future income stream 
based on personal service” than to either a retirement pension plan (explicitly included in family 


431 


property by s. 4(1)), or to a future stream of payments from a trust (held to constitute property in 
Brinkos). A retirement pension is, as Wilson J. put it in Clarke v. Clarke, [1990] 2 S.C.R. 795, [1990] 
S.C.J. No. 97, at p. 814 S.C.R., “analogous” to a savings account and has value even when not in pay, 
while a disability plan has value only as income protection in the event of accident or illness. It is true 
that, in some case, disability benefits may be properly categorized as property in that they are “part and 
parcel of an overall employee pension benefit plan totally ftmded by the company”; see McTaggart v. 
McTaggart, [1993] O.J. No. 2533, 50 R.F.L. (3d) 110 (Gen. Div.), at para. 19. Ordinarily, however, 
disability benefits replace income during the working life of the employee and therefore are 
appropriately treated as income for purposes of equalization and spousal support. ... 

[24]... In the end, the central point is that disability benefits represent income replacement and, from 
the perspective of family property and spousal support, are more appropriately treated on the same 
basis as income for employment. 

4. Only assets that exist on V-day can be included in calculating NFP. If a spouse has 
disposed of an asset before V-day there is no power in the Act to “claw back” the asset 
and include it in NFP. Intentional or reckless depletion of assets is a basis for departing 
from equalization under s. 5(6) of the Act, but any remedy is capped by the spouse’s 
NFP. (See further discussion of this issue below in the materials that deal with s. 5(6) 
and departure from equalization.) It may, however, be possible in some circumstances 
to use the Fraudulent Conveyances Act to undo the disposition of the asset. This 
occurred in Stone v. Stone (2001), 18 R.F.L. (5**^) 365 (Ont. C.A.) where the Ontario 
Court of Appeal allowed the use of the Fraudulent Conveyances Act to set aside a 
husband’s dispositions of property to third parties. In Stone, the parties had been 
married for 24 years. It was a second marriage for each. Just before his death, and 
unknown to the wife, the husband had transferred the bulk of his assets, worth $1.9 
million, to his children from his first marriage. Under his will, he had left the wife 
$250,000. The wife elected not to take under the will, but rather to bring a claim for 
equalization under Part I of the Family Law Act. In the course of her equalization claim 
the wife argued that the transfers to the husband’s children were made with the intent to 
defeat her equalization claim and were void as against her under the Fraudulent 
Conveyances Act. Section 2 of the Fraudulent Conveyances Act provides: 

2. Every conveyance of real property or personal property and every bond, suit, judgment and 
execution heretofore or hereafter made with intent to defeat, hinder, delay or defraud creditors or others 
of their just and lawful actions, suits, debts, accounts, damages, penalties or forfeitures are void as 
against such persons and their assigns. 

The trial judge allowed the wife to rely upon the Fraudulent Conveyances Act in this 
way, with the result that the property that was the subject of the transfers was included 
in the net family property of the husband’s estate. The Court of Appeal upheld the 
decision of the trial judge. 

The major issue in the case was whether the wife, at the time of the transfers, fell with 
the category of “creditors or others” under the Fraudulent Conveyances Act, given that 
under the FLA there is no entitlement to a claim for equalization until one of the 
triggering events has occurred. The children argued that no claim to equalization arose 
until the husband’s death. The Court of Appeal reasoned that had the wife known of the 
transfers, she would have been able to apply for equalization under s. 5(3) of the FLA 
(the improvident depletion triggering event), and hence that she was a “creditor or other” 
at the time of the transfers. 

5. In its Report on Family Property Law (Toronto, 1993) the Ontario Law Reform 
Commission recommended amendments to Part I of the FLA to strengthen the 
measures available to deal with a spouse who intentionally depletes assets prior to 
separation in order to avoid an equalization claim. The Commission recommended a 


432 


"claw back” of the value of an asset where a spouse has disposed of it to avoid the 
legislated sharing, and also proposed that where no “claw back” was possible because 
of inadequacy of assets, the injured spouse should be entitled to seek to undo the 
transaction which deprived him or her of a share. This latter solution would require the 
demonstration of intent on the part of the transferee to assist the transferor with 
avoidance of the operation of the Act, but the Commission also recommended that 
where such transactions take place within three months of that spouse initiating a 
separation, there should be a presumption of intent on the part of the transferring 
spouse. The Commission’s recommendations are summarized below; 

The Effectiveness of Provisions Enforcing Spousal Family Property Rights 

10. Part I of the Family Law Act should be amended to provide as follows; 

(a) where a spouse transfers an asset with the intent to defeat a claim that his or her spouse may have 
under the Act, the value of that asset should be included in his or her net family property; 

(b) where a spouse has insufficient assets to satisfy an equalization claim calculated on the basis of the 
value of an asset transferred with the intent to defeat a claim that his or her spouse may have under 
the Family Law Act, and the transferee knew, or ought to have known, of his or her intent to defeat 
the claim, the following rules apply: 

(i) the transaction is voidable as against his or her spouse; 

(ii) where the transaction is avoided, 

a. the property in the asset is revested in the spouse; 

b. the transferee is entitled to restitution for the value given in consideration of the 
transfer, subject to a deduction for the value of any benefit received from the use or 
enjoyment of the property; and 

c. the transferee is liable for any depreciation in the value of the asset fi’om the date of 
the transfer; 

(iii) where the transaction is avoided and, prior to avoidance, the asset has been further 

transferred: 

a. to a bona fide purchaser for value without notice, the transferor is liable for the 
proceeds of the transfer, or, in the event that the transfer was undertaken in bad faith, 
for the market value of the asset whichever is higher; and 

b. to a subsequent transferee not acting in good faith, or to a donee, the subsequent 
transferee or donee is liable in the same manner as the first transferee; 

(c) where a spouse transfers an asset within three months of initiating a separation, a rebuttable 
presumption arises that he or she intended to defeat a claim that his or her spouse may have under 
the Act; and 

(d) where a spouse applies to have a transaction avoided under paragraph (b), the transferee should 
receive notice of this application and have the rights of a party to the application (at 99-100) 

These recommendations have never been implemented. 


439 


The question still remained as to how imminent the disposition of an asset must be before a 
court would deduct the notional costs of disposition. It seemed clear that if an asset must be 
disposed of to enable a person to make the equalization payment, such costs would be deducted. 
It was also likely that if assets had actually been listed for sale prior to the valuation date or were 
clearly going to be sold in the not-too-distant future, such costs would likely be deducted. 

In Sengmueller v. Sengmueller,^^ the Ontario Court of Appeal has again addressed the issue 
of the deduction of notional costs of disposition. The Court approved the general terms of 
McPherson. It held that it is appropriate to take the notional costs of disposition into account in 
determining a party’s net family property if there is sufficient evidence, on a balance of 
probabilities, that a disposition will take place at a particular time in the future and if it is clear 
that such costs will be inevitable when the owner disposes of the assets or is deemed to dispose 
of them. If this is the case, then the costs are not speculative and should be allowed. The Court 
stated that for the purposes of determining a party’s net family property, any asset is worth only 
the amount that could be obtained on its realization, regardless of whether the accounting is done 
as a reduction in the value of the asset or as a deduction of a liability. Allowances for tax are not 
restricted to situations where the payor of the equalization payment must dispose of an asset that 
would attract tax liability in order to make the payment. 

McKinlay J.A. noted that RRSPs, in particular, are taxed in full, regardless of the time of 
their realization, whether they are cashed in total, or taken by way of annuity. She also noted that 
in dealing with businesses, one should fairly consider the nature of the business, the possible 
requirement that the business could only operate if the owner spouse continued to be involved, 
any shareholders’ agreement which required the sale of a party’s shareholding in specified 
circumstances, and myriad other possible considerations in the individual case. Different 
considerations will be relevant in dealing with other types of assets. 

Therefore, three basic principles will apply in determining whether and what costs of 
disposition will be deducted in determining each party’s net family property; 

(1) One must apply the overall principle of fairness that the costs and benefits of the 
disposition of assets should be shared equally. 

(2) One must deal with each case on its own facts, considering the nature of the assets 
involved, evidence of the expected time of the disposition, the likely disposition cost 
at that time and the present value of those costs as of the valuation date. 

(3) One must deduct the disposition costs before arriving at the equalization payment, 
except where it is not clear when, if ever, there will be a realization of the property. 

[The most recent statement of the Ontario Court of Appeal on the treatment of 
contingent tax liabilities is in Buttar v. Buttar, 2013 ONCA 517. After endorsing the 
principles found in Sengmueller and McPherson, the Court formulated the test as 
“whether it was more likely than not that the assets would be sold” and thus incur 
disposition costs (para 9).] 

NOTE: 2009 Amendments and Notional Disposition Costs 

Note that the 2009 amendments to the FLA added a new s. 4(1.1) which indicated that 
any applicable contingent tax liabilities in respect of property are to be included within 
the notion of a spouse’s debts and liabilities. This amendment both acknowledges that 
such costs are to be considered but also suggests that they are not part of the valuation 
process, but rather of the subsequent step of deducting from the value of assets the 
value of debts and liabilities. 


Sengmueller v. Sengmueller (1994), 2 R.F.L. (4th) 232 (Out. C.A.). 





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Section 5(6) might, therefore, be available once again to redress gross inequity caused in 
some particular circumstances by section 4(5). However, as noted above, it is questionable 
whether section 5(6) can be used to order one spouse to pay a sum that is greater than that 
spouse’s net family property. It is possible, therefore, to conceive of situations where section 5(6) 
would provide no remedy for a spouse who has used ante-nuptial property to provide for family 
expenses even though equalization of net family properties seems unfair. A modified version of 
the example given above serves to illustrate the point: 

A husband has a investment valued at $50,000 at the time of the marriage. During the marriage he 
gradually uses this investment to supplement the funds needed for family expenses. He has assets 
worth only $10,000 on the valuation date. His N.F.P. would be -$40,000 but for section 4(5) which 
deems it to be $0. Meanwhile, his wife has acquired assets by inheritance during the marriage 
valued at $50,000 on the valuation date. Her N.F.P. is $0. 

Since the wife has no net family property, it is likely that section 5(6) does not permit the court 
to order her to pay any amount to the husband even though she leaves the marriage with a net 
gain of $50,000 and her husband has a net loss of $40,000. 

In light of this example, a legislative amendment to Part I might be considered appropriate. 
Either section 5(6) could be modified to indicate clearly that a court can order payment of a sum 
that is greater than the spouse’s net family property or section 4(5) could be altered to permit the 
court to recognize a negative net family property where it is equitable to do so. 


Several other issues can arise with respect to the treatment of V-day or DOM debts in 
the calculation of NFP. Is a “loan” from parents a real debt or a gift? How should 
contingent liabilities (i.e. liabilities which are not fixed on the relevant date and may or 
may not crystalize) be dealt with? Is it possible to value a debt at something other than 
its face value based upon the likelihood of payment? Can hindsight evidence, for 
example the subsequent forgiveness of the debt, be used to determine the “real value” 
of a debt or is this precluded by the two “snap shots in time” structure of the NFP 
calculation. These issues were recently canvassed by the Ontario Court of Appeal in 
Zavarella v. Zavarella. The split reasons in the case reveal the larger tensions between 
fairness and certainty that pervade the interpretation of Part I of the FLA. 

Zavarella v. Zavarella 

2013 ONCA 720 (CanLII) 

http://www.canlii.org/en/on/onca/doc/2013/2013onca720/2013onca720.html 
GILLESE J.A. (Strathy J.A. concurring): 

[1] A person made an assignment into bankruptcy shortly before she was married. Within months 
of the marriage, she was discharged without having made any payments on her debt. How should 
the debt that she had at the date of marriage be treated when calculating her net family property 
(“NFP”)? ... 

[4] The parties were married on August 21, 1994, and separated on July 30, 2009. They have two 
teenage children. After separation, they lived separate and apart in the matrimonial home until 
November 12, 2009, when it was sold. 

[5] The parties settled all matters before trial with the exception of a number of questions 
relating to their NFP calculations ... 

Ms. Zavarella’s Date of Marriage Debt 

[13] On August 12, 1994, about two weeks before the date of marriage, Ms. Zavarella made an 
assignment into bankruptcy. This was done with Mr. Zavarella’s knowledge and encouragement. 




448 


on the date of marriage should not change with the unfolding of subsequent events. I restate the 
closing phrase of s. 4(1) that a spouse’s debts are to be “calculated as of the date of the 
marriage”. ... 

[110] I would therefore conclude that the trial judge was correct to include the debts the wife 
owed at the date of marriage in her date of marriage debts. I would not consider whether this 
result was “unfair”, “harsh” or “unjust”. The threshold for departure from the statutory formula, 
as this court has decided, is whether the result “shocks the conscience of the court”. In my view, 
it does not. 


Note 

For a contrasting result see Jackson v. Jackson, 2013 ONSC 7884. In that case the wife 
had a debt of $110,000 at the date of separation, but entered into a consumer proposal 
two years later that provided for the reduction of the debt to $27,000. The husband 
argued that the debt should be valued at $27,000, because it would be unfair to allow 
the wife to reduce her NFP by the full value of debt when she did not have to pay it. 
Campbell J. ruled that the wife’s V-day debt was $110,000 because it was not 
reasonably foreseeable at the separation date that the wife would enter into the 
consumer proposal. Hindsight evidence was only appropriately used to confirm prior 
predictions and assumptions, not to determine the actual value of an asset or debt. 


The following two cases, Folga and Nahatchewitz deal with the special treatment of the 
matrimonial home with respect to the DOM deduction. No DOM deduction is allowed for 
a matrimonial home. But what counts as a matrimonial home? The starting point is the 
definition of matrimonial home in s. 18 of the FLA, found in part II of the Act that deals 
with special rights (possessory rights) in the matrimonial home. You should at this point 
read s. 18 and the cases in Chapter VI of the materials below that deal with identifying 
the matrimonial home. However, in the context of the DOM deduction there is the further 
issue of the time at which a property must have been used as the matrimonial home. 


Folga V. Folga 

(1986), 2 R.F.L. (3d) 358 (Ont. H.C.) 

[In calculating his net family property, the husband (respondent) sought to deduct the 
value of the matrimonial home which he owned at the time of the marriage, arguing that 
it had ceased to be a matrimonial home prior to the valuation date.] 

GRAVELY L.J.S.C.: ... The respondent claims various deductions. The respondent owned a 
house at 22 Frederick Street, St. Catharines. For a short time before the marriage and for about 
three years afterwards, the parties lived together at that property. While they were living there, 
the respondent bought the Third Street, Louth, property and the parties then moved from 
Frederick Street to Louth and the respondent sold Frederick Street. The sale price in 1974 was 
$32,000, and at the time of sale the mortgage was $15,000 There is no direct evidence as to the 
value of that property at the date of the marriage, but drawing what inferences I can from all the 
evidence, I estimate the valuation of the respondent’s equity at that time as $12,000. 

The respondent claims a deduction for the equity in Frederick Street pursuant to s. 4(1 )(b) of 
the Family Law Act. The petitioner says that there should be no deduction because Frederick 




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s. 18 of the Family Law Act. The latter speaks only in the present tense. That is, although the spouses may 
have more than one matrimonial home, collaterally, by occupying them as residences over the same period 
of time, a past family residence cannot be called or characterized as a matrimonial home once another 
domicile has supplanted it as the family home. Under s. 18 sequential matrimonial homes are abolished. 

In Folga, Gravely L.J.S.C. has quite properly pointed out that the division rules (including s. 4(1)) have 
no application until a separation or other triggering event. It is on such date that property is characterized, 
valuations made and positions “locked in”.... Only premises occupied as family residences on the valuation 
date are matrimonial homes. Thus, since the home occupied as the family residence on the valuation date 
was not the home brought into marriage, the pre-marital home was not a matrimonial home and the 
deduction was properly claimed under s. 4(1). Folga also confirms the analysis of the earlier cases under the 
Family Law Act that the deduction in respect of pre-marital property can be taken even where the property 
does not exist (or cannot be traced into other property that does exist) on the valuation date. 

The pre-marital home exclusion from deduction will likely only catch the unwary. If the home is sold 
and another (or the same) acquired the day after [marriage], the deduction remains for the cash brought in. 
If the home is kept and not occupied until years later, but is in fact the family residence on the valuation 
date, the deduction is lost. Perhaps the most startling scenario arises where a pre-marital home is sold and a 
new home acquired relying almost exclusively on financing without using the proceeds of the earlier sale. 
The cash is deductible and the net value of the home, after deducting debts (s. 4(1)) is likely to be 
negligible. If the purpose of the Act was fairness, it falls short. If it was to protect the largest asset for most 
families or somehow give the home a talismanic effect in law, its operation is erratic. 

James G. McLeod 


Note: Nahatchewitz v. Nahatchewitz 

In Nahatchewitz v. Nahatchewitz (1999), 1 R.F.L. (5‘^) 395 (Ont. C.A.) the Ontario Court 
of Appeal endorsed the approach taken in Folga to determining whether a property 
brought into the marriage is the matrimonial home. In Nahatchewitz the husband was 
permitted to deduct the value of a house that he had brought into the marriage and 
which the parties had lived in [the “Maurice Street property”], but which he had sold 
while the wife was away on a trip, using the proceeds to purchase another property that 
the parties lived in until they separated. Goudge J.A., writing for the court, reasoned as 
follows; 


[20] Section 18 requires that where spouses have separated, to qualify as a matrimonial home, the 
property must have been the family residence of the spouses at the time of separation. 

[21] In this case, at the time of separation the Maurice Street property was not ordinarily occupied 
by the parties as their family residence. The fact that it had at one time prior to separation been so 
occupied is not enough to bring it within the legislative definition of matrimonial home. 

[22] I can find no policy basis to support the opposite conclusion for the Maurice Street property. 
The policy imperative of the legislation is clear: in calculating net family property a matrimonial 
home is to be treated differently from other property owned at the date of the marriage. 

[23] To exclude from this exception a property which was a matrimonial home at the date of 
marriage but ceased to be at the time of separation is no less defensible than to include such a 
property as a matrimonial home but exclude from net family property the funds brought into the 
marriage by one spouse which were thereafter used to buy it. Either could be attacked for creating 
anomalous and unfair results inconsistent with the fundamental objective of the legislation. Or each 
could be defended as in some measure achieving the objective of treating a matrimonial home 
differently in the net family property calculation. Hence there is no policy victory achieved by 
including the Maurice Street property within the definition of matrimonial home in calculating net 
family property. 

[24] Given that there is no overriding policy consideration that would dictate otherwise, the 
ordinary meaning of the legislation must prevail. 


451 


[25] This reading of the legislation is supported by the relevant jurisprudence. With one exception, 
it uniformly employs the interpretation I have set out. The leading case remains Folga v. Folga 
(1986), 2 R.F.L. (3d) 358 (Ont. H.C.). For the most part, it has been consistently followed.... 

[26] Only Miller v. Miller (1987), 8 R.F.L. (3d) 113 (Ont. Dist. Ct.) concludes that a matrimonial 
home owned by one spouse on the date of the marriage but no longer serving as such at the time of 
separation cannot form a deduction from that spouse's net family property. For the reasons I have 
given I find this conclusion unsustainable in the face of the governing legislation. I am fortified in 
this conclusion by the fact that Miller has been ... the subject of adverse commentary ... 

[27] While there has been no appellate decision on this issue, as I have outlined, the state of the 
trial jurisprudence has been relatively well settled. I venture to say that there has been significant 
reliance on it by practitioners in the area. This adds support to the conclusion I have reached, 
namely that the Family Law Act permits the husband to deduct the value of the Maurice Street 
property in calculating his net family property. 


Note: Linov v. Williams 

Linov V . Williams, 2007 CanLII 7407, 2007 CarswellOnt 1463, [2007] O.J. No. 907 
(ONSC) illustrates the unfair results of the non-deductability of matrimonial home 
brought into the marriage. The parties were married for just under five years. They each 
owned a home on the date of marriage. The husband’s home was the matrimonial home 
at the date of marriage and the date of separation and so he was not entitled to deduct 
its DOM value in the calculation of his NFP. The wife’s home was not used as a 
matrimonial home at the time of separation and therefore she was entitled to deduct its 
value at the DOM. The husband asked the court to find that it would be unconscionable 
under s. 5(6) of the FLA for the wife to receive an equalization payment in these 
circumstances and having regard to the fact that the marriage was less than five years. 
The court refused to depart from equalization. Because the marriage was almost five 
years in length the court found that there should be no variation of the wife’s share. As 
for the differential treatment of the two pre-owned homes, Backhouse J. wrote: 

[36] One goal of the Family Law Act is to promote certainty of result, thereby decreasing 
the potential for litigation. Some may consider it unfair that the wife’s home is a 
deduction whereas the husband’s is not. A matrimonial home is treated differently. There 
is no unconscionability in this case in applying the statutory scheme. 


The following case illustrates the different ways that the deduction for date of marriage 
property and the exclusion of property defined in s. 4(2) of the Act (i.e., property 
understood to be extrinsic to the marital partnership, including gifts and inheritances 
from third parties received after the date of marriage) are dealt with. If a gift or 
inheritance was received before the marriage, the spouse is allowed a DOM deduction 
for the value at the DOM, with the result that gains in the value of the gifted or inherited 
property are included in NFP and hence shared with the other spouse. However, if the 
gift or inheritance was received after the date of marriage, it is treated as excluded 
property under s. 4(2) of the Act and if it exists on V-day its full v-day value is excluded 
from NFP. Thus if the gifted or inherited property has increased in value, the owning 
spouse is allowed to exclude not just the initial value at the time the gift or inheritance 
was received but also the increase in value. 



452 


Black V. Black 

(1988), 18 R.F.L. (3d) 303 (Ont. H.C.) 

[The facts of the case and the portions of the judgment dealing with the valuation issue 
are found in the portion of the judgment reproduced above. Having resolved the issue of 
valuation, Walsh J. went on to determine the equalization payment due the wife. One 
issue of contention between the parties was the treatment of an inheritance the husband 
received from his grandparents. Under the terms of the will of the husband's 
grandmother, who died in 1952, and of his grandfather, who died in 1959, one half of 
the residue of each of their estates was directed to be held in trust by the husband's 
father for the husband and his brother, Conrad, until Conrad reached the age of 25, at 
which time they would each receive their equal share. The husband argued that 
because of the creation of the trust, he did not "own" the shares inherited from his 
grandparents until some 5 years after the marriage, when Conrad reached the age of 
25, and was thus entitled to claim the entire value of the inheritance at the time of the 
separation as an exclusion pursuant to s.4(2) of the Act. The parties were agreed that 
the value of the inheritance at the date of the marriage was $468,000 and that on the 
date of separation the value of the inherited shares had risen to $1,695,344.] 

WALSH J.: ...The husband submits that there appears to be a eonfliet between the all-inclusive 
wording used to define “property” in s. 4(1) of the Act, which would appear to include trust 
interests, and the restrictive wording used in s. 4(2)1 to provide for exclusions of property 
“acquired by a gift or inheritance from a third person after the date of the marriage.” According 
to the husband’s submissions, the use of the word “acquired” in that section, for the purpose of 
bringing into operation the right of a spouse to claim an exclusion, can only mean the point in 
time when the recipient “gets” the property such that he or she has physical possession and 
control of and legal title to the same so that he or she can actually use it.... 

The definition of “property” contained in s. 4 of the Act is all-encompassing. It specifically, 
and therefore intentionally, includes not only a vested, but also contingent, not only a present, but 
also a future interest in real or personal property. It therefore, in my view, necessarily includes 
the W.D.I. shares the husband received under the terms of his grandparents’ wills as property 
owned as of the date of marriage. There is nothing in the wording of s. 4(2) 1 of the Act that 
convinces me otherwise. The husband therefore is entitled to a pre-marriage deduction of those 
shares from his assets for the purpose of calculating his net family property in the agreed upon 
amount of $468,050, pursuant to s. 4(1) of the Act. 


Note: Proposed Amendments to the FLA re Exclusions, Deductions and 
Special Treatment of the Matrimonial Home 

In its 1993 Report on Family Property Law, the Ontario Law Reform Commission 
(OLRC) made a number of recommendations for reform designed to ensure that the 
fundamental object of the legislation—that is, the sharing of wealth generated during a 
relationship—would be achieved. Among these were proposals to amend the law to 
ensure that the matrimonial home is treated like other assets for the purposes of 
equalization. If adopted, this change would have allowed a spouse to deduct the value 
of a home owned at the time of the marriage, or acquired independently of the marriage, 
when calculating NFP. The OLRC also recommended that increases in the value of 
excluded property after the date of receipt be shared, consistent with the treatment of 
pre-marital property under the date of marriage deduction and consistent with the initial 
recommendations of the OLRC in 1974. The summary of the Commission’s 
recommendations is reproduced below. These recommendations have not been 
implemented. 



453 


EXCLUSIONS, DEDUCTIONS AND SPECIAL TREATMENT OF THE 

MATRIMONIAL HOME 

5. (1) Section 4 of the Family Law Act should be amended to provide that all gains or losses in the 

capital value of an asset listed in section 4(2) and income earned on such an asset must be 
included in the net family property of its owner. 

(2) Gains or losses in the capital value of an excluded asset should be defined as the change in 
value accruing between the later of the date of marriage and the date of receipt, and the 
valuation date, (at 77) 

6. Clause 2 of section 4(2), which excludes from net family property income earned on property 
acquired by gift or inheritance where the donor or testator expressly stated that the income is to be 
excluded, should be repealed, (at 78) 

7. Paragraph (b) of the definition of “net family property” in section 4(1), and section 4(2) of the 
Family Law Act should be amended to delete the special treatment of the family home 
[“matrimonial home”] for the purposes of Part I of the Act. (at 85) 

8. If the Legislature does not implement the Commission’s recommendation to include all capital 
gains and losses in the value of excluded assets in the net family property of an owner (see 
recommendation 5(1)), the Commission recommends that it should implement this reform with 
respect to the family home [“matrimonial home”], alone, (at 85) 

Both P.E.I. and the N.W.T., which for the most part used Ontario’s FLA as the model for 
their property legislation, did make the changes recommended by the OLRC, removing 
the special status of the matrimonial home with respect to deductions and exclusions, 
and providing for sharing in increases in value of excluded property. Ontario has not 
implemented either recommendation. Eliminating the special treatment of the 
matrimonial home was discussed during the consultation process that led to the 2009 
amendments to the FLA, but was not pursued. Why do you think there is resistance to 
making this change? 


SOME NOTES ON TRACING EXCLUDED PROPERTY 

1. When excluded assets are mixed with non-excluded assets, it is only the portion of 
the v-day value of the asset that can be traced to the excluded asset that can be 
excluded. Thus, as a simple example, if spouse A receives a gift of $100 and then 
combines that with $100 of his savings to purchase an asset for $200, only $100 can be 
excluded from NFP. To complicate the example, assume that the asset increases in 
value to $400 on V-day. What portion of that value can be excluded? Clearly the $100 of 
the original gift. But then there is the $200 increase in value. What portion of that can be 
traced to the original gift? Here a pro rata approach has been adopted, with the result 
that in this case the answer would be half of the increase because the original gift 
constituted half of the initial value of the asset. So spouse A would be entitled to an 
exclusion of $200. For an example of a court engaging in this process of tracing and 
apportionment see Oliva v. Oliva (1988) 12 RFL (3d) 334 (ONCA). In that case the 
husband was gifted the down payment on certain properties during the marriage. He 
used the rental income from the properties to pay down the mortgage. (Recall that 
income from excluded property is not excluded unless the testator or donor expressly 
provides to the contrary). On the date of separation the properties had increased 
significantly in value. The Ontario Court of Appeal held that the husband could not 
exclude any appreciation in value due to the reinvested income. 


454 


2. Townshend v. Townshend, 2012 ONCA 868 deals with the issue of what happens if 
excluded property is transferred into joint title. On the facts of the case the husband 
received a gift of $25,000 during the marriage. The funds were deposited into a joint 
bank account in the name of the husband and wife and remained there on V-day. The 
trial judge found that the gift lost its exclusionary character when the funds were 
deposited into a joint account, with the result that each spouse would include half of the 
value ($12,500) in their NFP. The Ontario Court of Appeal disagreed. In their view the 
husband had made a gift of a one half interest in the property to his wife, which was to 
be included in her NFP, but that his interest in the joint funds remained excluded 
property, and thus he was entitled to an exclusion of $12,500: 

SIMONS J.A. (Cronk and Rouleau JJ.A. concurring): 

[20] Nonetheless, in my view, the trial judge erred in failing to grant the husband an 
exclusion for one-half of the amount of the gift.... 

[28] [This court's decision in Colletta v. Colletta, [1993] O.J. No. 2537], for the most 
part, has been interpreted as standing for the proposition that excluded property 
deposited into a joint account loses its exclusionary character to the extent of the one- 
half interest that is presumed to be gifted to the spouse: see Goodyer v. Goodyer, [1999] 
O.J. No. 29 (Gen. Div.), at para. 76; and liana I. Zylberman & Brian J. Burke, "Tracing 
Exclusions in Family Law" (2006) 25 Canadian Family Law Quarterly, 67. 

[29] In my view, this is, in fact, the correct approach. That this is so is best understood 
by recalling that, in addressing property issues under Part I of the Family Law Act, the 
court first determines issues of ownership before turning to questions involving 
calculation of the parties' net family properties ... 

[30] While s. 14 of the Family Law Act creates certain presumptions with respect to the 
ownership of property, it does not address how each party's net family property is to be 
calculated. Rather, it is s. 4(2) that stipulates the exclusions from net family property. 

[31] In relation to gifts, s. 4(2) states that, "[p]roperty, other than a matrimonial home, 
that was acquired by gift or inheritance from a third person after the date of marriage" is 
to be excluded. Similarly, "[p]roperty other than a matrimonial home, into which [a gift] 
can be traced" is excluded. 

[32] Given that the legislature made clear its intention that gifts used to purchase a 
matrimonial home lose their excluded character, but did not do the same in relation to 
monies deposited into a joint account, I discern no legislative intent that the entire 
amount of the gift should lose its excluded character when deposited into a joint bank 
account.... 

[33] In my view, therefore, the trial judge in this case erred in concluding that all of the 
gift monies lost their excluded character when deposited into a joint account. 

3. See Martin v. Sansome 2014 ONCA 14, found below in the section of the materials 
dealing with the continued relevance of constructive trust, for an example of tracing 
excluded property in a farm property only part of which was the matrimonial home. 


455 


(f) Continued Relevance of Constructive Trust 

This section of the materials will deal with the availability of the doctrine of constructive 
trust (dealt with above) to determine initial issues of ownership in the calculation of each 
spouse’s NFP. The initial determination of ownership can significantly influence the NFP 
calculation. A constructive trust may be one way a spouse can claim a share of 
excluded property to which he or she contributed. As well, constructive trust will make a 
difference in cases where property values change between valuation day (usually the 
date of separation) and the date of trial. In the case of rising property values, the FLA 
only entitles the spouse with lower NFP to a monetary payment calculated on the basis 
of separation date values, rather than an interest in the property and hence a right to 
share in any increases in value. In the case of decreasing property values, a spouse 
with the higher NFP will be required to make an equalization payment based on the 
separation date value of property, but the property may have decreased significantly in 
value and the spouse may not even have adequate resources to make the equalization 
payment. If the spouse with the lower NFP had had an ownership in the property, they 
would have been required to absorb part of that post-separation loss. 

If the courts had been more willing initially to apply s. 5(6) to deal with the inequities 
created by significant changes in the value of property between the date of separation 
and the date of trial, the issue of resort to doctrines of constructive trust may not have 
arisen. However, in the early, case of Kelly v. Kelly, (1986), 50 R.F.L. (2d) 360 (Ont. 
H.C.), the court ruled that s. 5(6) could not be used to consider post-separation events 
and this interpretation took hold. Hence the growing attractiveness of the constructive 
trust and the reverse constructive trust. In 1990 the Supreme Court of Canada ruled in 
Rawluk V. Rawluk, below, that doctrines of constructive trust remained available under 
the FLA as part of the first step of determining the ownership piles of the spouses on V- 
day. 

The 2009 decision of the Ontario Court of Appeal in Serra v. Serra, 2009 ONCA 105, 61 
R.F.L. (6*^) 1, found below, which recognizes that market-driven post-separation 
changes in the value of property may be the basis for a departure from equalization 
under s. 5(6) of the FLA, may reduce the reliance upon claims for a constructive trust or 
a reverse constructive trust in the context of property litigation between married 
spouses. 

As well, as the earlier material on trusts has shown, the law on constructive trust has 
continued to evolve since Rawluk, with emphasis being placed on its anchorage in the 
underlying doctrine of unjust enrichment. This has led to the recognition that the 
constructive trust is only one of several possible remedies to unjust enrichment. As we 
have seen, there is now a presumption in favour of monetary remedies, with the 
constructive trust, which grants an actual interest in the property, limited to cases 
involving a fairly direct causal connection between spousal contributions and the 
property. When a monetary remedy is awarded, it will have no advantages over an 
equalization of NFP as the monetary remedy will likely be calculated on the basis of 
separation date property values. 

Most recently, the Ontario Court of Appeal decision in Martin v. Sansone 2014 ONCA 14 
has further limited the use of doctrines of constructive trust and unjust enrichment in 
cases involving married couples under Part I of the FLA by ruling that these doctrines 
should only be resorted to at the end of the equalization process, i.e. only where there is 
unjust enrichment that has not been addressed through the equalization provisions of 
the FLA. 


462 


behest of the husband: McDonald v. McDonald (1988), 11 R.F.L. (3d) 321, 28 E.T.R. 81 (Ont. 
H.C.). So we arrive at the anomaly of the equitable remedy of constructive trust being applied 
against the wishes of the party found to have been unfairly treated, at the behest of the party who 
has been unjustly enriched. What does this leave of the maxim that he who seeks the aid of 
equity must come with clean hands? The fallacy at the root of such an approach is that of treating 
the remedy of constructive trust as though it were a property interest, which for the sake of 
consistency must be imposed regardless of the circumstances or of other remedies. 

I cannot leave this question without alluding to the quite different provisions found in Acts 
regulating the division of marital property in provinces other than Ontario. As Cory J. points out, 
the relationship between the constructive trust doctrine and its “statutory equivalents” has been 
variously treated in different jurisdictions. While it is interesting to consider dispositions in other 
jurisdictions, it should be noted that the legislative provisions from province to province are not 
truly equivalent. In particular, none of the provincial statutes governing the division of marital 
property, save that of Ontario, appears to have a statutorily fixed and inflexible valuation date, 
the feature of the Act which gives rise to the wife’s grievance in this case. ... 

In this case, I conclude that the remedy of constructive trust is neither necessary nor 
appropriate, given the remedies available under the Family Law Act, 1986. 

V. Conclusion 

I would set aside the judgments of the Court of Appeal and the trial judge, and refer the 
matter back to the trial judge to determine whether an adjustment should be made under s. 
5(6)(h) of the Family Law Act, 1986, to reflect the increase in value of the land held in the 
husband’s name since separation, and to adjust the amount of the equalization payment due to the 
wife, on the basis that she is not entitled to a constructive trust vesting her with a beneficial half 
interest in the property as at the date of separation. 

I would make no order as to costs in this court or below. 

Appeal dismissed. 


NOTE: REVERSE CONSTRUCTIVE TRUST 

The issue of a “reverse” constructive trust was considered in McDonald v McDonald 
(1988), 11 R.F.L. (3d) 321 (Ont. H.C.) and in Arndt v. Arndt (1993), 48 R.F.L. (3d) 353 
(Ont. C.A.). In McDonald, the husband’s tobacco farm dropped in value from $1.6 million 
to $568,000 between the date of separation and the date of trial. The decline was 
caused by the decrease in the number of smokers and not by any fault of either the 
husband or the wife. At issue was whether the husband should bear the decline in value 
alone, or whether the wife should share in it. An order of equal division of the value of 
the property would have resulted in an award of $800,000 to the wife—at least $200,000 
more than the value of total assets at the time of the trial. The court ruled that the wife 
had a 50% interest in the farm by way of constructive trust and therefore should share in 
the depreciation. She had made an extensive contribution to the acquisition of the 
properties and operation of the tobacco business during the 28 year marriage, and had 
almost complete responsibility for raising the five children. The court gave an alternative 
ruling in the event that constructive trust did not apply; it considered the size and cause 
of the depreciation, and ruled that under s. 5(6) of the FLA the wife should share equally 
in the depreciation, on the ground that it would be unconscionable for the husband to 
have to bear the entire loss alone. 

In Arndt, the Ontario Court of Appeal appeared to accept in principle the availability 
of a “reverse constructive trust,” although the Court did not impose one in the case. The 
parties were married in 1974 and separated permanently in 1989. The wife owned 


463 


significant assets before the marriage, including what would become the matrimonial 
home. One of the family properties was held in the parties’ joint names and the others 
were in the wife’s name. Much of the parties’ financial success was due to the wife’s 
investments. The parties operated as a team in most aspects of their lives, but had no 
business contact after the marriage breakdown. The wife purchased a property shortly 
before the separation without consulting the husband. At trial she refused to make full 
disclosure of the financial status of some of her assets in the post-separation years. 
Overall, the property values declined significantly after the valuation day. The trial judge 
listed all the assets on the wife’s side in the equalization accounting and refused to 
award an unequal division or impose a reverse constructive trust to share the post¬ 
separation decline in value of the parties’ real property. The wife appealed on the 
grounds that the trial judge erred in failing to determine the beneficial ownership of the 
property before calculating the equalization payment and that equalizing the net family 
properties was unconscionable within the meaning of s.5(6)(h) of the Family Law Act. 

The Ontario Court of Appeal dismissed the appeal without resolving the question of 
whether the reverse constructive trust applies under the Act. Labrosse J.A. (with whom 
Krever J.A. concurred) held that the doctrine of constructive trust was not applicable in 
this case. He found that the evidence supported the trial judge’s findings. From the 
separation date, any business partnership had ended and the wife had refused to sell 
assets and had increased debts on assets. Any reduction in the value of properties had 
not resulted solely from a downturn in the market. In addition, because the wife had 
refused to disclose the financial situation of major assets post-separation, the evidence 
did not justify a conclusion that the husband had been unjustly enriched and that the 
wife had suffered a deprivation. Weiler J.A., concurring in the result on this issue, 
suggested in obiter comments that "the reverse constructive trust sits uncomfortably 
with trust principles." However, while casting doubt on the availability of the reverse 
constructive trust, she did not rule on the issue and found that regardless of whether it is 
possible to impose the constructive trust in equalization proceedings, the wife was not 
entitled to benefit from such relief. 

The 2009 of the Ontario Court of Appeal in Serra v. Serra, 2009 ONCA 105, 61 
R.F.L. (6*^) 1, found below, has opened up the possibility of using s. 5(6) to deal with the 
situation where there has been a dramatic decline in the value of property post¬ 
separation rather than the reverse constructive trust. 


NOTE: ONTARIO LAW REFORM COMMISSION 1993 RECOMMENDATIONS 

In its Report on Family Property Law (Toronto, 1993), the Ontario Law Reform 
Commission recommended several amendments to Part I of the FLA that would rectify 
problems in its operation that were leading to reliance on constructive trust doctrines. 
The Commission recommended that Part I be amended to permit the variation of an 
equalization payment to recognize a post-valuation date change in value of an asset, if 
such is required to reach an equitable result, having regard to the cause of the 
fluctuation. (The Commission recommended the addition of a new provision granting 
courts this discretion, rather than simply adding post V-day changes in value as a factor 
justifying departure from equalization under s. 5(6).) As has been discussed above, the 
Commission also suggested that changes in the value of assets acquired independently 
of the marriage (i.e. excluded assets) should be shared when those changes took place 
during the relationship, thus eliminating the need for reliance upon the constructive trust 
in situations where a spouse had contributed to the increase in value of such assets. 

The Commission then examined the interaction of statutory and common law 
remedies for the sharing of family property between spouses. In light of the 


464 


recommendations designed to rectify the current problems with the operation of 
equalization, the Commission suggested that spouses who receive the benefit of 
statutory equalization of family property should be barred from looking also to common 
law remedies. In addition to its opinion that the proposals for change would correct the 
problems which had driven spouses to seek common law relief, the Commission 
referred to the uncertainty of application, the problems around evidence, and the costs 
of litigation when making its recommendation that the common law trust remedies 
should no longer be available. The following extract summarizes the Commission’s 
recommendations with respect to the continued availability of trust remedies: 

Chapter 6: Do Common Law Remedies Continue to Play a Useful Role? 

30. Part I of the Family Law Act should be amended to preclude a spouse from applying as 
follows: 

(a) for a declaration of a remedial constructive trust with respect to property owned by 
his or her spouse, as restitution for his or her contribution, either direct or indirect, to 
the acquisition, preservation, or enhancement of that property. 

(b) for a declaration of resulting trust with respect to property owned by his or her 
spouse, based on the common or presumed intention of the spouses regarding his or 
her contribution, either direct or indirect, to the acquisition, preservation, or 
enhancement of that property, (at 142-43) 

These recommendations were adopted in P.E.I. but not in Ontario. Do you think they 
should have been? Courts have in fact taken a relatively restrictive approach to 
constructive trust claims under the FLA, an approach now explicitly acknowledged and 
endorsed by the Ontario Court of Appeal in Martin v. Sansome, below. And in Serra the 
Ontario Court of Appeal finally recognized some ability to deal with post V-day changes 
in value under s. 5(6). It could be argued that if further reform is required, the better path 
would be to enact a specific legislative provision allowing courts to depart from 
equalization if there has been a significant change in in the value of property post V-day. 
This issue will be discussed further below. 


Martin v. Sansome 

2014 ONCA 14 (CanLII), 43 R.F.L. (7*) 306 (CanLII) 
http://www.canlii.org/en/on/onca/doc/2014/2014Qncal4/2014oncal4.html 


HOY A.C.J.O. (Laskin and Tulloch JJ.A. concurring): 

I. OVERVIEW 

[1] This appeal arises out of a dispute following marriage breakdown. The dispute centred on the 
validity of a domestic contract and the ownership of a non-operating farm that had been in the 
family of the husband, the appellant Delmer Martin, for over 180 years. ... 

[2] [Following a] difficult eleven-day trial ... the trial judge set aside the domestic contract and 
declared the appellant’s wife, the respondent Linda Sansome, owner of an undivided one-half 
interest in the farm. ... 

[3] The appellant argues that the trial judge erred in ... concluding that the respondent was 
unjustly enriched and entitled to a 50 percent interest in the farm through the proprietary remedy 
of a constructive trust, and that he provided inadequate reasons for his conclusion. The appellant 
further submits that the trial judge erred by not equalizing the parties’ respective net family 
property. ... 






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486 


property transfers made with the intent of defeating a spouse’s entitlement under Part I of the 
FLA."^ However, the court stressed that a spouse must have an existing claim against the other 
spouse at the time of the impugned conveyance. In the case itself, the Court relied on the fact 
that the wife, if she had known of the dying husband’s intention to transfer substantial assets to 
his children, could have applied under s. 5(3) of the FLA for equalization of the NFPs. 
Depending on the contextual facts in Example 9, a court might give s. 5(3) a sufficiently 
expansive interpretation so as to grant the husband standing under the Fraudulent Conveyances 
Act. The other requirements of this Act would, of course, also have to be met. 

The need to rely on the Fraudulent Conveyances Act with its 16th century language to deal with 
21st century attempts by spouses to avoid a family property regime is unfortunate. It would be 
preferable, as recommended by the OLRC in 1993, to add specific anti-avoidance provisions to 
Part I of the FLA that give courts specific authority to reverse gifts or transfers made with the 
intention of subverting the legislation. Such provisions exist in other provinces such as 
Manitoba.'^'* Until the legislature acts, Ontario lawyers will have to rely upon s. 5(6) of the FLA, 

125 

the Fraudulent Conveyances Act, and the law of trusts. 


Note: Consentino v. Consentino, 2015 ONSC 271, 55 R.F.L. (7*^) 117 

This case involved an unsuccessful attempt by a wife to invoke s. 5(6) based on the 
husband’s numerous extra-marital affairs. Perkins J. wrote: 

[47] The wife seemed to think that the nature, extent, or duration of the extramarital affairs 
engaged in by the husband, his having left evidence of the affairs where the wife could and 
did find it, or his having allowed one or more women to discover where he was living, so that 
the wife had to speak to or otherwise deal with one or more of these women, came within the 
enumerated considerations in section 5(6). 

[48] A somewhat similar argument was raised before me in Biant v Sagoo, [2001] O.J. no 
1685 (SCJ Fam Ct), where the wife sought compensation under section 5(6) for a sum of 
between $20,000 and $50,000 spent by the husband over a number of years on jewellery and 
travel for "the mistress". In rejecting the wife's claim, I said (at para 126), 

It would be a novel proposition that a philandering spouse is responsible under subsection 5(6) for 
paying to the other spouse a sum equal to the cost of an affair, either direct costs (jewellery and 
such) or indirect costs (diminished profits from business). ... There was no evidence that the 
husband's expenditures materially affected the family in any way and certainly no evidence that the 
wife has been called on to shoulder any portion of them. 

[49] However morally objectionable or emotionally harmful the husband's conduct may have 
been in this case, it is only open to the court to respond to it under section 5(6) if it falls 


Above note [110], 

Ibid, at para. 25. 

In “Setting Aside Pre-Separation Transfers Designed to Diminish Spousal Claims” (2005), 20 N.C.D. 
Rev. 20, Klatz suggests, at 24, that the courts are likely to act whenever one spouse intends to defeat the 
other's claim “in such a manner that the court considers inappropriate, unfair or fraudulent”. 

See ibid. 

173 

[OLRC, Report on Family Property Law (1993) at 68 [1993 Family Property Report]}. 

Family Property Act, C.C.S.M. c. F25, ss. 6(7)-6(ll). 

125 

Arguments based on the law of trusts could take two forms. First, the aggrieved spouse might argue that 
he or she had a beneficial interest in the transferred property. Any equitable remedies for breach of tmst 
should then be available. Second, in some circumstances, it might be possible to argue that the transferee 
holds the property in a secret trust for the transferor. If this argument succeeds, the value of the transferor's 
beneficial interest will fall into his or her NFP. 



487 


within one of the eight clauses of that provision. There was no evidence in this case that the 
husband's affairs had any significant effect on the parties' debts, liabilities, or property. There 
is accordingly no remedy under section 5(6) for the matrimonial misconduct of the husband. 
Indeed, section 5(6) was very tightly drawn specifically so as to exclude consideration of 
matrimonial misconduct such as this. 

[50] The wife did make submissions about the husband's alleged misuse of the parties'joint 
line of credit just after separation (see below), but those complaints did not relate to the 
husband's clandestine affairs. She also suggested he had split income with another real estate 
agent with whom he was romantically involved, but that was long after the parties had 
separated. 


von Czieslik v. Ayuso 

2007 ONCA 305, 36 R.F.L. (6*) 231 (Ont. C.A.) 

LANG J.A. (Goudge and Gillese JJ.A. concurring): 

Overview 

[1] This case concerns the interpretation of the legislative provision that permits a court to 
“award a spouse an amount that is more or less than half the difference between [their] net family 
properties”: Family Law Act, R.S.O. 1990, c. F.3 {FLA), s. 5(6). 

[2] The appellant sought such an award based on the trial judge’s conclusion that the 
respondent’s pre-separation conduct was unconscionable. The respondent’s unconscionable 
conduct consisted of effectively gifting property with an approximate value of $190,000 to a 
third party. As found by the trial judge, the respondent did this so that the property would not be 
included in his net family property on the date of separation. 

[3] Even though the trial judge found this conduct unconscionable, she was also of the view that 
the wording of s. 5(6), as well as decisions of this court, restricted any remedy for the appellant 
to 100 per cent of the difference between the parties’ net family properties, which was only 
$10,466. 

[4] On behalf of the Divisional Court panel, O’Driscoll J. ...dismissed the appellant’s appeal. 

[5] On the basis that there is confusion in the case law regarding the parameters of the remedy 
provided by s. 5(6), this court granted the appellant leave to appeal limited to “whether s. 5(6) of 
the Family Law Act, R.S.O. 1990, c. F.3 empowers a Court to make an order awarding more than 
100 per cent of the difference between the spouses’ net family properties.” 

[6] On this further appeal, the appellant asks this court to find that s. 5(6) allows a court to award 
more than 100 per cent of the difference between the parties’ net family properties. Specifically, 
the appellant argues that a court may award 100 per cent of the value of the offending party’s net 
family property to his or her spouse. The appellant also asks this court to find that the trial judge 
ought to have done so in this case. 

[7] For the reasons that follow, I would allow the appeal and vary the trial judgment to award the 
appellant 100 per cent of the value of the respondent’s net family property. 

Background 

[8] This was a third marriage for the appellant, Astrid von Czieslik, and a second for the 
respondent, Anthony Ayuso. They married in 1989 and separated in 2000. Both parties owned 
properties at the date of marriage and both placed mortgages of different amounts on those 
properties to assist with the purchase of their matrimonial home. The appellant’s contribution 
was approximately $140,000 from a mortgage she placed on her Maughan Crescent property and 


502 


The sole remaining issue is whether the gross disparity of contribution by the spouses results 
in the equalization of the net family property being unconscionable within the meaning of s. 5 of 
the Act. ... 

... In this case an equalization of the net family property would be shocking and 
unconscionable and would require redress through an unequal division in favour of Mrs. 
Berdette, if she had not made a gift to Mr. Berdette of an undivided one-half interest in the 
matrimonial home and cottage. 

Mrs. Berdette cannot make a gift of property to her husband and then claim it would be 
unconscionable for him to retain the value of such gift. Accordingly Mr. Berdette is entitled to 
retain his share of the two properties. If Mrs. Berdette had other net family property I would find 
it unconscionable for Mr. Berdette to share in the value of such property. 

During the period of cohabitation furniture was acquired with moneys inherited by Mrs. 
Berdette and any proprietary interest which Mr. Berdette has in the furniture is held in trust for 
Mrs. Berdette. 

As the furniture was acquired with inherited funds, it does not form part of Mrs. Berdette’s 
net family property. If I am wrong and the value of such furniture should be included in the net 
family property, I would find it unconscionable to allow Mr. Berdette to share in the value of the 
furniture. 

Counsel may speak to me in order to determine the equalization payment, if any, based on 
my findings and also to determine the matter of costs. 

[The Court of Appeal upheld the decision of the trial judge that Mrs. Berdette could not obtain 
an unequal division of net family property under s. 5(6). However, the Court of Appeal gave 
slightly different reasons for holding s. 5(6) inapplicable. First, following Rawluk v. Rawluk, the 
court held that determining the ownership of property by each spouse is the first step in the 
equalization calculation and must be kept separate from assessing whether equalization of the 
spouses’ net family property would be unconscionable. As a result, the considerations which 
would lead a court to find unconscionability under s. 5(6) are irrelevant to the question of 
property ownership on valuation day. As Mrs. Berdette had given her husband joint ownership in 
the property by way of gift, the husband had a one-half interest in the property on valuation day. 

Second, based on the wording of s. 5 of the Family Law Act, the court held that s. 5(6) may 
only be invoked where there is a difference in the spouses’ net family properties. Section 5(1) of 
the Act provides that the spouse whose net family property is the lesser of the two is entitled to 
one-half of the difference between them. The court held that if there is no difference in net 
family property, neither s. 5(1) nor s. 5(6) is applicable. Because Mr. and Mrs. Berdette each had 
a one-half interest in the properties, their net family properties were of equal value and s. 5(6) 
had no operation. Note that in 2007 the Ontario Court of Appeal expressly rejected this 
interpretation of the scope of s. 5(6): see von Czieslik v. Ayuso 2007 ONCA 305, 36 R.F.L. (6'^) 
231 (Ont. C.A.), found above. 

Leave to appeal to the Supreme Court of Canada was denied.] 


NOTES 

1. In Mclnnis v. Mclnnis, (unreported, Ont. Gen. Div., Nov. 90) the wife already owned 
the house when the couple married. The wife had a full-time job and did most of the 
household work. The husband did not work outside the home. He claimed to have 
maintained the home, but McKeown J. found that that was not so. McKeown J. said that 
the wife contributed $12,000 toward a major addition in 1987, while the husband 
chipped in only $400; and that the husband did pay $2000 toward the discharge of the 
mortgage in 1981, but did minimal cooking, cleaning and repairs. McKeown J. also 


503 


noted that the husband retained more than $17,000 of the $27,000 he brought into the 
marriage. He found that the husband made no contribution to the purchase of the 
matrimonial home and only a minimal contribution to its maintenance. He ruled that it 
would be unconscionable to divide the home equally, and found that the wife was 
entitled to the full value, $185,000, of the home. The wife, a medical secretary who 
earned about $15 an hour, said that she “lived like a pauper” to buy the house and 
would now have to remortgage it to pay for the legal bills... would have to live around 
the poverty line for the next three years. 

2. In Martin v. Martin (2007), 2007 CarswellOnt 683 (Ont. S.C.J.) the parties separated 
after an eight year marriage with two children. During the marriage the wife funded the 
husband’s computer training, did book-keeping for the husband’s business, and paid the 
husband’s debts. The husband was largely absent from the home and did little to 
maintain the home or care for the children. During the marriage he spent his money on 
alcohol and drugs. The wife’s application for an unequal division of net family property 
was granted and the husband received only half of the equalization payment due to him, 
the Court concluding that the wife bore and met an inordinate portion of the joint 
responsibilities of the spouses through her earnings, housework and child care. As well, 
the wife continued to do so after separation, because the husband had paid very little 
child support since separation despite his current employment. 

3 In DHIon v. Dillon, (2010) ONSC 5858, 96 R.F.L. (6‘^) 193 the wife successfully argued 
for a departure from equalization under s. 5(6) on the basis that her husband’s 
recklessly, and without her knowledge, depleted family assets and incurred debts over a 
lifetime of alcoholism. The court also took into account the fact that the wife had 
contributed significantly more to the acquisition of the net family property than the 
husband and that the husband had left the wife and children in a precarious economic 
situation. 


Berend Hovius, “Unequal Sharing of the Economic Gain during Marriage in 

Ontario: An Update” 

(2012) 31 Canadian Family Law Quarterly 155 at 170-171 
(Hi) Disparity in Contributions Before the Valuation Date 

Section 5(7) of the FLA indicates that NFPs are presumed to result from the joint and equal, 
albeit different, contributions of the spouses during their relationship. The courts have (fairly) 
consistently accepted that two things follow. First, the fact that one spouse earns most or even all 
of the money during the marriage does not by itself justify an unequal sharing of the NFPs. 
Second, s. 5(6) does not generally require or, indeed, permit a court to assess whether one spouse 
contributed more than the other or more than the "average spouse" to all of the familial 
responsibilities. 

Nevertheless, there are some situations where the contributions of spouses, financial or 
otherwise, are assessed and compared. This tends to occur where one of the other circumstances 
listed in s. 5(6) is relevant. For example, if one spouse argues that there should be unequal 
sharing of the NFPs in light of the short period of cohabitation, a court is likely to assess, openly 
and directly, the relative contributions of the spouses in applying s. 5(6)(e). Also, claims of 
intentional or reckless depletion of NFP often concern spouses with gambling or alcohol 
problems and the contributions of these spouses to the relationship is, indirectly at least, 
considered. 

Although this point is still unsettled, unequal sharing of the NFPs may also be appropriate where 


504 


there is a gross disparity in contributions during cohabitation or where one spouse has abdicated 
his or her responsibilities to the family. The issue of whether this can be the basis for unequal 
sharing under s. 5(6) of the FLA was fully argued in Berdette v. Berdette, but the Ontario Court 
of Appeal specifically left the issue "open until it is necessary to decide it". That Court has still 
not definitively determined the issue, although its approval of the consideration under s. 5(6)(h) 
of the abdication of family responsibilities after separation^^ suggests that such abdication 
before separation is relevant.One can also infer support for this position from the Ontario 

77 78 

Court of Appeal's reasoning in MacDonald v. MacDonald and Jukosky v. Jukosky. Although 
there are a few lower court decisions where the equalization sum has been adjusted on the basis 
of gross disparity in spousal contributions,^^ none of these cases was decided in the last four 
years. One can safely conclude that disparity in contributions prior to the valuation date should 
be the basis for unequal sharing of NFPs only in extreme circumstances, if ever. 


Note: Tort Awards for Spousal Misconduct 

In some cases where spousal misconduct amounts to a tort, courts have chosen to 
award tort damages rather than allowing the misconduct to justify an unequal division of 
property. Valenti v. Valenti (1996), 21 R.F.L. (4th) 246 (Ont. Gen. Div.), discussed 
earlier in volume I, involved a sixteen year marriage in which a violent, alcoholic 
husband worked sporadically, while the wife provided the main financial support. The 
trial judge dismissed the wife’s claim for an unequal division of property, finding that the 
circumstances were not “unconscionable.” However, she awarded the wife $15,000 
damages for the assault by the husband. 

Should a husband who kills his wife be entitled to an equalization of net family property 
under Part I of the FLA? See Maljkovich v. Maljkovich (1995), 20 R.F.L. (4th) 222 (Ont. 
Gen. Div.); appeal to the Ontario C.A. dismissed ([1997] O.J. No. 4338); leave to appeal 
to S.C.C. dismissed April 30, 1998. 


See Scherer v. Scherer, 26 R.F.L. (5th) 183, 2002 CarswellOnt 1203 (Ont. C.A.); additional reasons 2002 
CarswellOnt 1562 (Ont. C.A.). 

Indeed, the latter is arguably more relevant to a fair sharing of the financial gain during the relationship 
because it will obviously affect the size of that gain. 

33 R.F.L. (4th) 75, 1997 CarswellOnt 3911 (Ont. C.A.). The trial judge in this case awarded a greater 
share of the NFPs to the wife because she was the main financial provider. The Court of Appeal, in 
overturning the decision, noted (at para. 17) that the husband had looked after the couple's children and had 
"contributed significantly through his labour to improvements to the matrimonial home". There was no need 
to note the husband's contributions unless abdication of responsibilities would have justified the result at 
trial. 

31 R.F.L. (3d) 117, 1990 CarswellOnt 336 (Ont. Gen. Div); affirmed 1996 CarswellOnt 1121 (Ont. 
C.A.). In this case, the trial judge relied on a number of factors — including the husband's "total disregard 
of his obligations as a husband and father" — to find that equal sharing of the NFPs would be 
unconscionable. The Court of Appeal simply noted that there was no reason to interfere with this result and 
that "the findings of fact to justify unequal division are all founded on the evidence". 

See Jukosky v. Jukosky, ibid, (trial judge relied on a number of factors — including the husband's "total 
disregard of his obligations as a husband and father"); Sullivan v. Sullivan, 5 R.F.L. (3d) 28, 1986 
CarswellOnt 343 (Ont. U.F.C.) ("the contribution made to the family unit ... was staggeringly uneven ..."); 
and Giba v. Giba, 1996 CarswellOnt 2948 (Ont. Gen. Div.) (alcoholic husband who had rarely worked 
during the relationship and who had damaged the matrimonial home and assaulted his wife and son was 
denied any share of the NFP). 



507 


(v) Post-Separation Conduct and Anticipated Future Needs 

Courts have taken different approaches to the question of whether post-separation 
events or needs should be considered in an application under s. 5(6) of the Family Law 
Act. In Kelly v. Kelly, an early decision under the FLA (discussed above in the section on 
the continued relevance of constructive trust), the court was unwilling to use s. 5(6) to 
deal with post-separation events, in that case a decrease in property values. 
Subsequent judicial decisions have slowly eroded the initial judicial position that post¬ 
separation events could not be considered under s. 5(6). The first development was a 
series of cases allowing for consideration of post-separation misconduct. These cases 
will be examined here. The second development, reflected by the 2009 decision of the 
Ontario Court of Appeal in Serra v. Serra, 2009 ONCA 105, 61 R.F.L. (6th), has been to 
allow market-driven changes in the value of property post-separation to be taken into 
account under s. 5(6). That second development will be dealt with in the next section, 
below. 

In Merklinger V. Merklinger {^992), 43 R.F.L. (3d) 109 (Ont. Gen. Div.), aff’d. (1996), 26 
R.F.L. (4th) 7 (Ont. C.A.), the court considered a spouse’s improper, post-separation 
financial dealings under a s. 5(6) application. The parties were married in 1972 and 
separated in 1990. Shortly before the parties’ separation, under the threat of 
bankruptcy, the husband persuaded the wife to place a further mortgage on the 
matrimonial home, which was registered in her name, so that he could service one of his 
investments. Following the sale of the home, a net equity of $120,000 remained after 
the payment of massive encumbrances that had been used to finance the husband’s 
business ventures. A Muskoka cottage, purchased in 1988, was also registered in the 
wife’s name. At the date of the parties’ separation, it was worth $1,100,000. After the 
separation the wife wanted the cottage sold, but the husband wanted it for himself. The 
husband allowed the mortgage to go into default, stopped paying the municipal taxes, 
and would not cooperate in the selling of the property. The bank moved to realize on its 
security. The husband arranged to purchase the cottage from the bank for $650,000 
when the debt was $800,000 and the property was valued at $1,000,000. The bank 
released the husband from liability for his share of the debt and settled its claim with the 
wife for $25,000. The transaction was carried out through a company incorporated by 
the husband so that it would appear that he had no interest in the transaction. In 
addition, following separation, the husband sold assets contrary to a preservation order. 
The husband provided no support for the wife or the child of the marriage who lived with 
her. The wife applied under s. 5(6) to distribute the net family property unequally in her 
favour and to have the husband held in contempt. 

Jennings J. held for the wife, awarding her an amount that was more than half the 
difference between the net family properties by declining to order any equalization 
payment. He also found the husband’s conduct in violating the court order to preserve 
property to be in contempt of court. Jennings J. stated that the circumstances 
surrounding the encumbrancing of the wife’s interest in the matrimonial property shortly 
before separation could be construed as conduct leading to an unconscionable result if 
s. 5(6) was to be applied. Moreover, the husband’s conduct post-separation and during 
the litigation made it “simply ludicrous to suggest that he now receive an equalization 
payment from his wife:’’ 

What the husband has done here, post-separation, is to decline to make financial provision for his 
wife and one of his three children, and to scheme at defeating the wife’s right to what must have 
been some reasonably significant equity existing at valuation day in the summer property. Surely 
that conduct must break the bargain implicit in s. 5(7) and defeat his entitlement to equalization. 



508 


The Ontario Court of Appeal (Osborne, Labrosse and Weiler JJ.A.) affirmed the 
decision in very brief reasons: 

The trial judge awarded an unequal division of net family property in favour of the wife. He 
recognized that the standard of unconscionability which is required to make an award under s. 5(6) 
is a high one. In light of the economic effect of the husband’s conduct on the wife, particularly 
with reference to the cottage, we agree with the trial judge’s conclusion that to require the wife to 
pay any amount by way of equalization payment would be unconscionable within the meaning of s. 
5(6) of the Family Law Act, 1986. 

In Tamitegama v. Tamitegama, (1993) unreported, Ontario Gen. Div., a wife who 
improperly dissipated $150,000 in family funds after separation, leaving her husband 
liable for a $125,000 trust company loan, was denied a matrimonial property 
equalization award under s.5(6) of the FLA. As in Merklinger, the guilty spouse flouted 
an asset preservation order. In finding that it would be “unconscionable” to award an 
equalization payment to the wife, Eberle J. distinguished the case from previous rulings 
which had found that only pre-separation events may be considered in making an 
unequal property division under s. 5(6); 

This case is different; here the events that I have considered are the product of deliberate acts by 
one of the parties. ... I am satisfied that the appropriate focus of the FLA on the “V” day 
evaluation of property does not prevent the consideration of such events after valuation day. 


Berend Hovius, “Unequal Sharing of Net Family Properties under Ontario’s 

Family Law Act” 

(2009) 27 Canadian Family Law Quarterly 147 at 190-192 

(v) —Abdication of Responsibilities & Other Conduct after Valuation Date 

Initially, the issue of whether events after the valuation date could be considered in the 
application of s. 5(6) of the FLA sharply divided the courts. The Ontario Court of Appeal 
apparently settled the matter in Merklinger v. Merklinger, concluding that a court could take into 
account the economic consequences of a spouse’s post-separation conduct. In that case, the 
husband’s conduct caused the wife to lose her cottage after separation and he then purchased it at 
a discount from the bank. In addition, he failed to support his wife and a dependent child after 
the separation. At trial. Justice Ferrier found that it would be “outrageous” and, therefore, 
unconscionable if the wife had to pay any equalization sum. The Court of Appeal upheld the 
decision, simply noting: “In light of the economic effect of the husband’s conduct on the wife, 
particularly in reference to the cottage, we agree with the trial judge’s conclusion. ...” 

After the Merklinger decision, more judges began to hold that abdication of familial 
responsibilities after separation, particularly failure to provide financial support, can result in an 

1 ori 

adjustment of the equalization sum. This approach received approval in Scherer v. Scherer 
where the Ontario Court of Appeal upheld a refusal to extend a limitation period so as to allow a 
husband to apply for equalization of NFPs.*^' Justice Charron, in explaining why the husband 
had no prima facie grounds for a sharing of NFPs, stated; “When the respective contributions of 
the parties, financial and otherwise, are considered for the years following the separation, the 
uncontested evidence in support of the [wife’s] claim to an unequal division seems 


See, e.g., Macedo v. Macedo, [(1996), 19 R.F.L. (4th) 65, 1996 CarswellOnt 391 (Ont. Gen. Div.)] (a 
decision that just pre-dated the Merklinger case); Barrett v. Barrett (2002), 26 R.F.L. (5th) 237, 2002 
CarswellOnt 671 (Ont. S.C.J.); Sind Ahern v. Ahern, [(2007), 2007 CarswellOnt 5733 (Ont. S.C.J.)]. 

(2002), 26 R.F.L. (5th) 183, 2002 CarswellOnt 1203 (Ont. C.A.). 



1 



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526 


equalization sum in Lo v. Lo, he did decline to order the husband to pay pre-judgment interest on 
it, largely because of the decline in the value of his pension. 


Notes and Questions 

1. For comments on Serra see Berend Hovius, “Market Driven Changes in Property 
Values after the Valuation Date under Ontario’s Family Law Act; The Story 
Continues” (2009) 28 Can. Fam. L Q. 105 and Stephen Grant and Andrew 
Freeman, “Case Comment on Serra v. Serra” (2009), 61 R.F.L. (6*^) 39. 

2. Do you think that Serra will lead to fewer claims for constructive trusts and reverse 
constructive trusts in the context of equalization claims under the FLA? 

3. In its 1993 Report on Family Property Law, the Ontario Law Reform Commission 
recommended that Part I of the Family Law Act should be amended to grant courts 
the discretion to vary an equalization payment to recognize a substantial post¬ 
valuation date change in value of an asset if necessary to ensure an equitable result, 
having regard to the cause of the fluctuation. Note that the recommendation involved 
the enactment of a separate provision to deal with post-valuation date changes in 
the value of an asset and that the threshold for departure from equalization would be 
“inequity” rather “unconscionability”. When Prince Edward Island enacted family 
property legislation generally modeled on Ontario's, it adopted the OLRC's 
recommendation. See s. 6(6) of the Family Law Act, S.P.E.I. 1995, c. 12. Would 
amendment of the FLA along these lines be preferable to result achieved by Serra? 
The OLRC’s reasoning on this issue is reproduced below. 


Ontario Law Reform Commission, Report on Family Property Law 

(1993) at 68-71 

(d) Options for Reform [...] 

(Hi) Add Fluctuation in Value as a Factor to be Considered in Section 5(6) 

A modest reform would be the addition of fluctuation in value as a relevant indicator of 
unconscionability. This would alleviate the current situation in which a non-owning spouse loses 
the benefit of post-valuation date increases in value which reflect her contribution during the 
relationship. It would also alleviate the problem of extracting an equalization payment from a 
title-holding spouse regarding an asset that has collapsed in value between the valuation date and 
trial. Including fluctuation in value as a factor to which courts may have regard when 
determining unconscionability will have the advantage of removing the incentive for spouses to 
seek a remedial constructive trust in such circumstances. Rather, courts will consider the merits 
of sharing the benefit or burden of a fluctuation in value of an asset directly, without demanding 
that the applicant make out the requirements of unjust enrichment and establish the suitability of 
a proprietary remedy. 

Including fluctuation in value as a consideration under section 5(6) is a more flexible method 
of recognizing the issue than providing for the alteration of the valuation date. The subsection 
should provide expressly for courts to consider responsibility for the cause of a change in value. 
Allowing courts to consider these factors may increase the length and complexity of litigation. 
This would be restricted, however, by the requirement of meeting the threshold of 


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532 


There is uncertainty as to the limits of the court’s power to authorize the disposition of 
property pursuant to these sections. The few cases reported to date have not resolved this 
uncertainty. In Sullivan (1986), 2 R.F.L. (3d) 251 (Ont. D.C.), the court held that section 21(l)(c) 
empowered it to authorize a transaction disposing of or encumbering a matrimonial home even 
when the property is jointly owned by the spouses. However, Re Henry and Cymbalisty (1986), 
55 O.R. (2d) 51 (U.F.C.), it was held that this section was only directed at protecting the personal 
right to possession provided by section 19. Accordingly, it cannot be utilized to defeat a spouse’s 
property rights, such as those enjoyed by joint tenant. It is submitted that the latter interpretation 
seems to be more consistent with the scheme of Part II. ... 


Note: Debora v. Debora 

A matrimonial home is defined in s. 18 (1) of the FLA as a property in which a person 
has an interest and that is, or if the spouses have separated, was at the time of 
separation ordinarily occupied by the person and his or her spouse as their family 
residence. In Debora v. Debora (2006), 33 R.F.L. (6‘^) 252 (Ont. C.A.) the court 
expanded the definition of “interest” to include a corporately-owned property. On the 
facts of the case, the husband’s holding company was the registered owner of a million 
dollar cottage that was used by the family during the marriage. (The parties had been 
living together for some time, but were not married, when the property was purchased.) 
The husband provided all of the funding for the acquisition of the cottage. All of the on¬ 
going expenses and renovations were paid for personally and not by the corporation. 
The husband was the sole-shareholder and the only director of the corporation. The 
court pierced the corporate veil, holding that the corporation was merely his alter-ego. 
Because the cottage was found to be a matrimonial home, the husband was not able to 
deduct its pre-marital value in the calculation of his NFP under Part I of the FLA. 


MacFarland v. MacFarland 

70 RFL (6*) 196 (Ont. S.C.J.) 


J. MACKINNON J.: 

Introduction 

[1] The parties were married on October 1, 1983 and separated on May 10, 2006. They have two 
children; Kerri, who was 18 years old at the time the trial commenced, and Nathan, who was just 
turning 14 then. Kerri resides with her father. Nathan resides with his mother. At the time of 
trial, Ms. MacFarland was 47 years old and Mr. MacFarland was 49 years old. 

[2] These few facts had been agreed upon. In addition, neither party sought to change the 
children’s residential arrangements. A Statement of Admitted Facts filed in the Trial Record also 
includes some agreed upon values for some of the Respondent’s assets and debts on the date of 
separation. I have incorporated these into the Net Family Property Statement that is included in 
these reasons. 

[3] In addition, the parties agreed at trial that the Applicant could retain the matrimonial home 
and the Respondent could retain the cottage, subject to the proper “balance to adjust” being paid 
in light of the court’s determinations. The Respondent also agreed that the Applicant could retain 
the Ford Explorer, but its value was disputed. 

[4] The trial proceeded on these issues: 

• The Applicant’s claim that the cottage registered in the Respondent’s name was a 


543 


circumstances of the communication is critical. See Kutlesa v. Kutlesa, 52 R.F.L. (6th) 164 (Ont. 
S.C.J.) and she relies on Justice Pazaratz's decision in Kutlesa to the effect that: 

The "violence" referred to in section 24(3)(f) must, of necessity, contemplate that spouses may 
need to be protected from serious injury and harm which can arise even without physical hitting. 
Intimidation and emotional abuse can take many forms. The court has a responsibility to address 
the real dynamics between the parties, including any effort by a strong or dominant partner to 
engage in psychological warfare, or coerce without making disclosure. 

Justice McGee goes on to say: 

There can be no doubt that the vitriolic communications constitute "violence" as intended within 
Section 24(3)(f) of the Family Law Act. They are threatening, intimidating and were intended to 
be taken seriously. They occurred over the course of a full week, and were not provoked in any 
manner proportionate to the response given. Much of the father's texts were not even responded to 
by the mother. A reasonable person could not view the father's texts as either jestful or 
ambivalent. 

The texts were forwarded in the period immediately preceding the return of the mother's motion. 
The attack her counsel. They cannot be excused as a harmless excess of personality. The 
September 28 to October 5th texts resolve some of the prior conflict in evidence and provide a 
rich context for the parties' relationship dynamic. 

Justice McGee found that the text messages were sufficient to support a finding of violence, and 
that even if she was wrong on this, went on to find that it was no longer in the child's best 
interests for her parents to continue to reside together. She noted that the best interests of the 
child are paramount in determining an order for exclusive possession. 

The husband was given 24 days to vacate the home. I do not doubt that Justice McGee got this 
one right. Obviously there are many forms of violence and the text messages in this particular 
case crossed the line. It is a reminder that in this age of social media, judges are increasingly 
aided in their exploration of the facts by the production of emails, text messages, Facebook 
messages, video taken by iPhones and the like. There is no doubt that the wife would not have 
been able to bring forward this motion without being able to produce the actual text messages. 
Violence can take many ugly forms and it is not wise, when there are clear signals about 
potential violence, to wait to see if something goes wrong. Exclusive possession is a very heavy 
handed response by a court and usually enrages the person dispossessed of their property. Justice 
McGee is well aware that exclusive possession is a remedy of last resort, but also recognizes that 
the messages transmitted by the husband, in this case, cross a red line. 


Note: Exclusive Possession and Issues of Violence 

The use of applications for exclusive possession to avoid spousal and other family 
violence is not uncommon. The tragic context in which these issues may sometimes 
arise is well-illustrated by this letter to the Attorney-General of Ontario from staff 
members at a battered woman’s shelter: 

Dear Mr. Hampton, 

We are representatives of shelters for battered women and their children in the Ottawa area and are 
writing to you to express our concern over a recent tragedy. 

The case in question is that of Pamella Behrendt. On March 5"’, 1990 Pamella Behrendt, through her 
solicitor, brought a Motion against her husband, Stefan Behrendt, seeking exclusive possession of the 
matrimonial home. On March 6"', 1990, Judge Louise Charron of the Ottawa District Court denied the 
Motion. On Monday June 11"’, 1990, in the matrimonial home, Stefan Behrendt murdered his wife with a 
chainsaw then took his own life with a hunting knife. Three children survive them. 



546 


endeavour. Housing lists on all Indian reserves are heavily backlogged and women will be forced 
to live in the already crowded homes of relatives, or more likely off the reserve, until housing can 
be obtained. 

New federal legislation will hopefully address this glaring gap in legal protection for 
aboriginal women. As discussed in the previous chapter of these materials dealing with 
the application of Part I of the FLA, the Family Homes on Reserves and Matrimonial 
Interests or Rights Act received royal assent in June 2013 and came fully into force in 
December 2014. The legislation puts in place provisional federal rules regarding 
matrimonial real property on reserves and also creates a mechanism for First Nation 
communities to enact their own matrimonial real property laws. The default federal 
provisional rules provide for joint possessory rights in the matrimonial home while 
spouses (both married and common law) are living together and impose controls on 
disposition and encumbrance of interests in the home during the relationship without the 
consent of the other spouse. Orders may be granted excluding one spouse from the 
home in cases of family violence and after the relationship has broken down to meet the 
interests of children who reside in the home. 


NOTE: RESTRAINING ORDERS 

In cases involving harassment and violence, the FLA offers another remedy, in addition 
to orders for exclusive possession of the matrimonial home. Section 46 of the FLA 
provides for restraining orders—orders restraining the other spouse from molesting, 
annoying or harassing the applicant. The Act gives police the power to enforce 
restraining orders. While only married spouses may apply for orders for exclusive 
possession, unmarried spouses, and even cohabitants whose relationships do not 
satisfy the extended definition of spouse, may apply for a restraining order. 

The 2009 amendments to the FLA (as highlighted) involved some changes to 
strengthen s. 46 and enhance its ability to ensure the safety of women and children and 
the addition of s. 47.1: 

46. (1) Restraining order — On application, the court may make an interim or final restraining 
order against a person described in subsection (2) if the applicant has reasonable grounds to fear 
for his or her own safety or for the safety of any child in his or her lawful custody. 

(2) Same — A restraining order under subsection (1) may be made against, 

(a) a spouse or former spouse of the applicant; or 

(b) a person other than a spouse or former spouse of the applicant, if the person is cohabiting 
with the applicant or has cohabited with the applicant for any period of time. 

(3) Provisions of order — A restraining order made under subsection (1) shall be in the form 
prescribed by the rules of court and may contain one or more of the following provisions, as the 
court considers appropriate: 

1. Restraining the respondent, in whole or in part, from directly or indirectly contacting or 
communicating with the applicant or any child in the applicant’s lawful custody. 

2. Restraining the respondent from coming within a specified distance of one or more 
locations. 

3. Specifying one or more exceptions to the provisions described in paragraphs 1 and 2. 

4. Any other provision that the court considers appropriate. 

(4) Transition — This section, as it read immediately before the day section 35 of the Family 
Statute Law Amendment Act, 2009 came into force, continues to apply to, 

(a) any prosecution or other proceeding begun under this section before that day; and 

(b) any order made under this section that was in force immediately before that day. 

47.1 Order regarding conduct —- In making any order under this Part, other than an order under 
section 46, the court may also make an interim order prohibiting, in whole or in part, a party from 


547 


directly or indirectly contacting or communicating with another party, if the court determines that 
the order is necessary to ensure that an application under this Part is dealt with justly. 

Note that as a result of the new amendments all cohabitants are covered, not only those 
whose relationship satisfies the statutory definition of spouse. As well, courts are given 
the power to make interim orders prohibiting contact or communication when they are 
making any other orders under Part III (i.e. support orders). 


Justice Geraldine Waldman, “The What and the Why of the Proposed Integrated 

Domestic Violence Court” 

CBAO, 22 (2) Matrimonial Affairs, November 2010 

Domestic violence or partner abuse is well recognized as a serious and complex issue. The 
response of the justice system, both family and criminal, is complicated by the fact that domestic 
violence often gives rise to myriad inter-related family problems involving safety and family 
separation. Legal proceedings are further complicated by the fact that the criminal and family 
cases occur separately. The two courts operate as independent silos with virtually no sharing of 
information between them and very little ability to communicate. This is particularly true in 
Toronto where the criminal and family courts are housed in separate buildings with a separate 
judiciary and little crossover by lawyers. The courts must rely on the litigants to provide 
necessary information. The family court judge has no independent means of obtaining a copy of 
a bail or probation order to ensure that the terms of a custody or access order does not conflict 
with the bail or probation terms. Family and child protection cases are often delayed by the 
progress of the criminal justice system. Families are in some cases precluded from attending 
counseling because of no contact terms in bail and probation orders. In some cases, litigants are 
reluctant to address certain important issues in the family case because of the potential impact on 
their testimony at the criminal trial. 

In other words, the system in its current form is not providing families with a coherent and 
comprehensive response to their problems when family and domestic violence issues coincide. 

To address these concerns, we are working towards opening an Integrated Domestic Violence 
Court in Toronto in the spring of 2011. It will bring a more coherent and holistic approach to 
families involved in both the criminal and family justice systems where the underlying issue is 
domestic violence. The goal of the court is to promote justice and protect the rights of all 
litigants, and through its holistic and comprehensive approach to resolution, increase offender 
accountability and promote victim safety. 

The court is modeled on similar courts operating in several states in the United States including 
New York, Vermont and Idaho. The court is based on a one-family-one-judge concept. Simply 
put, both the criminal and family case will be dealt with in one court before a single judge. While 
one judge will case manage both the family and criminal cases, each will be dealt with 
separately. The cases are not combined but they do appear before the single judge in sequence. 
The appropriate law, standard of proof, rules of procedure and rules of evidence will apply in 
each case as they would in any court. All Crown policies will apply to the case as in any 
domestic violence court. Generally, both cases will be dealt with on the same day, sequentially. 
The judge will proceed through the process to plea and sentence in the criminal case and through 
the case management process to resolution in the family case. If a trial is required in either 
proceeding, it will be heard by a different judge. 

The court will have all of the usual resources including, family and criminal duty counsel. Victim 
Witness Assistance Program services, and the availability of family law information. In addition 
to the usual resources, the court will also have a community resource coordinator who will assist 


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