Hi, my name is Daphna Schwartz and I am a lawyer with Feldstein Family Law Group. Today I am going to talk about equalization and the unequal division of net family property.
When spouses separate in Ontario, s. 5 of the Family Law Act governs the process known as equalization of net family properties. Although Canadian law has attempted to ensure that both spouses walk away from a marriage on the same financial footing in the process known as equalization, there can be situations where equalizing property would be unfair to one of the spouses. For this reason, s. 5(6) of the Family Law Act provides the Court with the discretion to order an amount that is more or less than half of the difference between the parties’ respective net family properties. This is known as an unequal division of net family property.
In order for a Court to determine whether it should award an amount that is more or less than half of the difference between the spouses’ respective net family properties, the Court must look at all of the factors outlined in s. 5(6) of the Family Law Act. Some examples of the factors to consider include the intentional or reckless depletion of one’s net family property, for example does one spouse have a gambling habit, the fact that an equalization payment would be disproportionately high, given a period of cohabitation that is less than five years and one spouse’s failure to disclosure debts. Again, these are not the only factors which a Court will consider in making this determination.
Before a Court will award an unequal division of property, it must be satisfied that the equalization payment owing from one spouse to the other based on a standard calculation of such a payment would be “unconscionable” in the circumstances. The onus is on the spouse who is claiming an unequal division of net family property to meet this very high threshold.
That said, s. 5(6) of the Family Law Act is an important tool to ensure that the parties are walking away from the marriage in a financially equitable way.
If you would like to learn more about equalization, visit our website at www.separation.ca. To book an initial consultation to discuss your matter with one of our lawyers, please call: 905-415-1636. Thanks for watching.