What’s the Role of Hindsight Evidence in Dividing Family Property?
Can a court use after-the-fact evidence in order to adjust, in hindsight, a spouse’s separation-date debts?
That was the question in a recent case called Jackson v. Jackson, where the Ontario court specifically considered the role of “hindsight evidence” in a case where, at the point of separation, the wife was in debt by over $110,000. About two years later, she made a consumer proposal to her creditors, which reduced her debt to $27,000 and obliged her to pay that amount off over a 60-month period at $450 per month with no further interest or penalties accruing.
Despite this post-separation debt re-structuring, the wife claimed that the full $110,000 that she owed on the separation date should nonetheless be included in her Net Family Property calculation. The husband, in contrast, claimed that in hindsight only the reduced amount of $27,000 should be included.
The court considered the role of hindsight evidence in these types of scenarios. It concluded that, generally speaking, a court should not take into account and assign value to property based upon events that occur after the valuation date (which in this case, was the separation date). More to the point, hindsight evidence could not be used to determine the wife’s actual valuation-date value of her debts and assets retrospectively; instead, those calculations should be performed using only the information available as of the valuation date.
(However, the court noted that there was an important exception: in narrow circumstances, hindsight evidence could be used to confirm predictions and assumptions that were previously made on the valuation date. However, there were no such predictions at play here).
Applying these principle to the facts, on the separation date the wife’s actual debts to secured and unsecured creditors was over $110,000; at that time it was not foreseeable that two years she would enter into a consumer proposal that would reduce her debt so substantially. Forcing her to use the reduced deduction at this point would therefore be improper, since it would make use of hindsight evidence in a legally-unjustified way.
The husband’s argument was rejected and the wife was accordingly allowed the full $110,000 deduction in her Net Family property calculations.
For the full text of the decision, see:
Jackson v. Jackson, 2013 ONSC 7884 (CanLII) http://canlii.ca/t/g2fst
At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders. For more information, visit us at www.RussellAlexander.com.