BACKGROUND
The parties, Sharon Ruth Dyck (Applicant) and Malcolm Fraser Dales (Respondent), were married in 2008 and separated in 2019. In 2018, prior to their separation, the Human Rights Tribunal of Ontario found the government liable for underpaying midwives due to pay inequity. A 2020 order awarded the Applicant a lump sum of $157,498.42, representing 20% of past wages, plus a $7,500 award for injury to dignity.
The Respondent brought a motion for partial summary judgment under Rule 16(1) of the Family Law Rules, seeking to include this pay equity award in the Applicant’s net family property (NFP) for equalization purposes, exclusive of dignity damages and any amounts earned post-separation.
The Applicant opposed the motion for partial summary judgment, claiming that the matter involved a genuine issue for trial. However, the court determined that a disposition for the pay equity award on partial summary judgment would shorten the trial substantially, since spousal support will ultimately depend upon equalization of the spouses’ NFPs.
Further, the Applicant contends that the pay equity award – based on her human rights claim – was excluded under section 4(2) 3 of the Family Law Act, which exempts damages for personal injury or mental distress from the NFP calculation. As such, the core issue became whether the compensation received for pre-separation wage losses should be included in the calculation of her NFP. The court ultimately declared the Applicant’s pay equity award of $83,085 to be part of her net family property.
THE LAW
Under section 4(2) 3 of the Family Law Act, damages for personal injuries, nervous shock, mental distress, or loss of guidance, care and companionship are excluded from a spouse’s net family property. However, Ontario courts have historically distinguished between compensation for lost wages and compensation for injuries, with the former generally included in a spouse’s net family property if it relates to pre-separation periods.
In Vanderaa v Vanderaa (1995), the court held that wage-loss damages for periods before separation are shareable, as they represent income replacement rather than compensation for injury. Similarly, in Purcell v Purcell (1995), a post-separation pay equity settlement for pre-separation periods was included in a spouse’s NFP.
In Slack v Slack [2001], Polowin J. set out a test to determine whether an award is excluded from property for the purposes of calculating equalization:
- The Certainty of the Entitlement: How does the entitlement arise? Is it a right that has some degree of certainty attached, such as that defined by statute or contract? Or, is it dependent on the conduct or motive of a third party, such as wrongful dismissal or the establishment of an attrition policy by an employer?
- Whether the Entitlement Crystalized Before the Valuation Date: Is the right one of mere entitlement if certain conditions are met, or one that is already crystalized at the relevant time (e.g. the date the employment was actually terminated)?
If both conditions are met, the award may be included in a spouse’s net family property.
ANALYSIS
The central issue to be decided by the court was whether the pay equity award received by the Applicant should form part of her net family property. Justice Ramsay found that although the award was received after separation, the right to compensation crystalized before separation, either when the work was performed or when the Tribunal determined liability.
Justice Ramsay reasoned that the award was “the fruit of her work,” and therefore a form of property earned during the marriage. However, the court accepted that the $7,500 award for injury to dignity, and additional amounts attributable to post-separation work and tax liabilities, were excludable from the Applicant’s net family property.
Upon applying the Slack framework, the court determined that the award had sufficient certainty, and that despite being awarded post-separation, the award crystalized before separation. As such, Justice Ramsay concluded that $83,085 of the pay equity award met the criteria for inclusion in the Applicant’s NFP. She also noted that future amounts potentially awarded from a Tribunal-ordered study might be included in her NFP if they relate to pre-separation earnings, but deferred this issue to trial.
CONCLUSION
This case clarifies that pay for work done prior to separation – regardless of when it is received – is generally included in net family property unless it is explicitly awarded for injury or post-separation efforts. Justice Ramsay’s ruling affirms that compensation arising from human rights violations may be considered shareable property for the purposes of equalization so long as it is tied to wage loss.
Accordingly, $83,085 of the Applicant’s pay equity award was included in her net family property. The motion succeeded in resolving a significant point of dispute between the parties, thereby narrowing the issues for trial. Costs of $3,500 were awarded to the Respondent.