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Can You Spot the Math Error? Court Ordered Wife to Use Husband’s Own Money to Pay Him Equalization Amount

Net Family Property

Can You Spot the Math Error? Court Ordered Wife to Use Husband’s Own Money to Pay Him Equalization Amount

A brief ruling by the Ontario Court of Appeal recently reveals an interesting – and easy-to-miss – error made by an earlier court in connection with how an equalization payment was to be paid and funded by one former spouse to another.

Upon separation, the couple had sold their home and the proceeds of almost $278,000 were being held in trust pending the division of their net family property by a trial judge.

In the course of that trial, the judge had determined that the wife owed the husband about $184,000 as an equalization payment, and – since the matrimonial home was solely in her name – directed that she pay him that amount from the net proceeds of the sale of the home. She was allowed to keep the balance of about $94,000 for herself.

But, on later appeal the husband pointed out a conceptual problem: The $277,000 in trust was supposed to be equally shared by him and the wife in the first place. To allow the wife to use any part of the jointly-owned proceeds to pay the husband his equalization payment would mean that he was essentially getting paid his portion from his own money.

The Ontario Court of Appeal agreed with the husband’s observation, and overturned that part of the trial judge’s ruling. It confirmed that even though the wife was the sole registered owner of the home on title, the couple had proceeded on the basis that they each had an equal entitlement to the sale proceeds. This meant that the wife had no right to use the husband’s share of the sale proceeds to cover any portion of the equalization payment that he was owed. Instead, she was allowed to use up to half of those sale proceeds to pay the husband what she owed him in equalization; anything above that amount was to come from her own pocket.

For the full text of the decision, see:

Dodman v. Preston, 2016 ONCA 59

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 RussellAlexander.com