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Unequal Division Ordered Where Husband Pressures Wife to Use $200,000 Gift To Pay Down Debt – Then Leaves The Marriage

Unequal Division Ordered Where Husband Pressures Wife to Use $200,000 Gift To Pay Down Debt – Then Leaves The Marriage

In an interesting recent case heard by the Ontario Court of Appeal, the issue was whether the newly-separated husband was essentially entitled to the benefit of a $90,000 windfall, based on technical application of the Ontario Family Law Act, or whether the court should find the situation unconscionable, and – using its inherent discretion — take appropriate steps to redress the injustice.

The spouses had been married for 11 years, and had two children together.  Just before separating in 2007, the wife received $200,000 from her father as a gift.

The husband pressured her to use that money to pay down the line of credit on the matrimonial home that they owned jointly.  As a bid to save her troubled married, the wife acquiesced, giving the husband $180,000 of the money for that purpose.
Two months later, the husband left the marriage, announcing to the wife that he had purchased a condominium and was moving out of the matrimonial home.

The question was whether the $180,000 that the wife had given the husband pre-separation should be factored in as part of an unequal division of the parties’ net family property.   (On a straightforward application of the Family Law Act, the money would have been considered net family property, and – absent other factors – would subject to an equal division between the two spouses). If not, then once the other financial accounting and equalization factors were taken into consideration as part of the divorce, the husband would effectively enjoy a $90,000 windfall.

At trial, the judge had found that these circumstances met the legal test of “unconscionability”, and ordered an unequal division of net family property in the wife’s favour.   The Ontario Court of Appeal, hearing the husband’s subsequent appeal, agreed with the lower court’s assessment.

The Appeal Court confirmed that under the Ontario Family Law Act, a court may order an unequal division of net family property in circumstances where there has been a situation of “unconscionability”.  The test for “unconscionability” is very high; it is not the same as merely “inequitable”, but rather involves a court finding not only “unfairness”, but also a “shock to the conscience.”

Here, the lower court had considered all of the relevant facts, including:

• the timing of the wife’s father’s gift (i.e. shortly before separation);

• the fact that the gift was clearly made to her alone (and not to the couple);

• the pressure that the husband had placed on the wife;

• the wife’s acquiescence in order to save the marriage, and

• the wife’s lack of independent legal representation at the time.

The court had also noted that if the wife had not acceded to the husband’s pressure, she would have been entitled to the full $200,000, since this would have qualified as a gift which would be entirely excluded from net family property by virtue of a specific provision in the Family Law Act.

Finally, the trial court had also taken into account various other circumstances of the marriage, such as the fact that the wife had given up pursuing a career in order to raise the children, while the husband climbed the corporate ladder to become an executive earning about $300,000 in salary per year.

In the end, the Court of Appeal ruled that the lower court had made no legal error, and had correctly interpreted the facts.  The finding of unconscionability was warranted, and the order for an unequal division of net family property was confirmed.
For the full text of the decision, see:

Ward v. Ward, 2012 ONCA 462 http://canlii.ca/t/fs0j5