Unequal Division of Property

Rosenberg v Gold, 2016 ONCA 565

This recent decision from the Ontario Court of Appeal exemplifies the difficulty parties have when seeking an unequal division of property under s. 5(6) of the Family Law Act.  The threshold to be met under s. 5(6) is “unconscionability” which requires parties to establish that an equal division of net family properties must “shock the conscience of the court”.

Background

In this case, the wife appealed on the basis that the trial judge erred by failing to award her a 50 per cent interest in the husband’s RRSP. The wife argued that she was entitled to a 50 per cent interest in the RRSP because the husband had purchased it using funds from the parties’ joint line of credit. However, the husband later used a tax refund to replenish the parties’ joint line of credit as a result of the RRSP. As such, the trial judge rejected the wife’s argument because the wife’s claim under s. 5(6) did not rise to the requisite level of unconscionability.

The wife appealed the trial judge’s decision on the basis that the trial judge erred in failing to award her a 50 per cent interest in the husband’s RRSP. However, on appeal, the wife advanced an alternative argument – the wife argued that she was entitled to a 50 per cent interest in the husband’s RRSP on the basis of resulting trust.

Analysis

The Court began by noting that the wife had not plead any interest in the husband’s RRSP on trust grounds or any other basis in her Amended Answer or at trial. Rather, the wife’s arguments reinforced her claim under s. 5(6) of the Family Law Act and did not contemplate a claim for a resulting result in the husband’s RRSP.

The Court then held that the wife’s resulting trust claim was simply a guise for a different proprietary remedy on appeal. The Court noted:

[The wife] failed in her s. 5(6) claim…and it would be unfair to permit her to seek essentially the same relief, dressed up as a different claim on appeal…The claim is impermissible because it is wrong in principle — given the overall scheme for the division of proprietary interests under the Act — to permit the [wife] to accomplish indirectly what she failed to accomplish directly under the Act. The Family Law Act contains its own scheme for the division of family property. Having failed under s. 5(6), it is not open to the [wife] to attempt to obtain the same kind of benefits and adjustments in the way she now seeks to do.

 Essentially, the Court held that the wife could not simply seek an alternate proprietary remedy on appeal because she failed to satisfy the threshold under s. 5(6) at trial. The wife is not then permitted to seek the same benefit that she did at trial, particularly when the wife did not plead an interest in the husband’s RRSP. As such, the Court refused to set aside the trial judge’s findings and dismissed the wife’s appeal.

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