During the trial in their family law matter, the parties reached a settlement on all issues except for how the Applicant would pay a $50,000 equalization payment owed to the Respondent.
The Evidence of the Applicant
The position of the Applicant was that, the Respondent would be “credited” the amount owed against future child support payments the Respondent will owe to the Applicant, rather than paying the equalization amount up front.
The evidence presented by the Applicant was that she would find it challenging to fund a one-time payment. According to her financial statement, she owns a home and has a mortgage on it. Her evidence was that when she applied to obtain a mortgage, she had trouble securing the loan. The Applicant was unsure if she could secure financing for the equalization payment.
The Applicant also owns a second property from which she operated her business. There is no mortgage on it. The Applicant testified to having no other outstanding debt and that her annual income is over $100,000.
The last piece of evidence presented by the Applicant was that she has always been the primary caregiver for their two children. Based on the financial situation of the Respondent, he only began to pay child support in January 2019 on an imputed income of $48,000.
The Evidence of the Respondent
The position of the Respondent was that the equalization payment should be paid in full, as a one-time payment, since the Applicant can qualify for financing to afford a one-time payment.
The evidence of the Respondent is as follows; after selling the matrimonial home, the proceeds were put towards relinquishing his outstanding debt. The rest was put into a savings account to contribute to the down payment of a home. His current debt is approximately $15,000.
The Respondent is self-employed due to the fact that he was terminated from his wife’s company once their divorce came into effect. The Respondent now has his own business.
The Respondent testified that the reason why he wants a one-time payment is to have enough money saved for the down payment of a new home. He testified that due to his status being self-employed, he struggled to find a mortgage. The Respondent presents evidence to suggest that the Applicant will have no undue financial hardship if she paid equalization on a lump sum basis.
The Family Law Act sets out the powers the court has regarding equalization claims made by a spouse.
Section 9 of the Family Law Act states that “[I]n an application under section 7, the court may order:
- That one spouse pay to the other spouse the amount to which the court finds that spouse to be entitled under this Part;
- That security, including a charge on property, be given for the performance of an obligation imposed by the order;
- That, if necessary to avoid hardship, an amount referred to in clause (a) be paid in installments during a period not exceeding ten years or that payment of all or part of the amount be delayed for a period not exceeding ten years; and
- That is appropriate to satisfy an obligation imposed by the other i) property must be transferred to or in a trust or vested in a spouse, whether absolutely, for life or for a term of years or, ii) any property be partitioned or sold.”
Although unstated, the Applicant’s position was that she would undergo hardship by paying the equalization payment in a lump sum.
According to Section 9 of the Family Law Act, the judge has the authority to order the payments to be made in installments. However, it does not have the jurisdiction to offset it from another outstanding payment (in this case, child support).
Given the financial burden of the Applicant in this circumstance, and since she has been the sole financial support for the children, the judge found that there would be significant hardship if she were to pay the equalization payment in one lump-sum payment. The Applicant’s evidence was that she had accessed some, but limited financing.
The End Result
The equalization payment will be paid by one lump sum payment of $20,000 by June 1, 2019. Monthly installments of $500 will pay the balance owed of $30,000. This method of payment will be secured by way of charge on the Respondent’s two properties. Once paid, the security shall be discharged.
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