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Posts from the ‘Division of Family Property’ Category

Wednesday’s Video Clip: How to Fill out a Financial Statement


Wednesday’s Video Clip: How to Fill out a Financial Statement

In this law video, Darla review the steps required to fill out a financial statement for the family court or negotiating the terms of your divorce settlement.

When entering into a Separation Agreement or bringing an Application before the Court, parties must provide full financial disclosure.

Complete financial disclosure is a prerequisite to the settlement of any family law case. The Family Law Act and its interpretation by our Courts, leaves no uncertainty in this respect. Any agreement can be set aside if a party has failed to truthfully and accurately disclose his or her financial position.

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

Can a Judge Go “Off the Map” When Making a Ruling?

Can a Judge Go “Off the Map” When Making a Ruling?

In an interesting recent Court of Appeal case named Gomez v. McHale, a question arose as to whether a motion judge, asked to award an amount for equalization of net family property, was constrained to award only the exact dollar amount proposed by the spouse who succeeds on the motion, or whether the judge was entitled to craft a different monetary award that made sense in the circumstances.

The couple’s relationship had lasted about five years. Under s. 5(6) of the Ontario Family Law Act, a court can award un unequal amount for equalization of net family property in cases where awarding an equal amount would be “unconscionable”, in light of various factors including the length of time the couple had lived together.

They both brought summary judgment motions against each other, with the wife asking for one of two things:

• A straightforward equalization of net family property, which would result in her receiving $268,000 (which we will call “Option 1”); or

• An unequal division, to the tune of four-fifths of that amount, which was $214,000 (“Option 2”).
The husband, in contrast, wanted the either of the wife’s claims – whether under Option 1 or Option 2 – to be dismissed outright by the court.

Ultimately, a court granted the wife a third Option – but one that neither of them had asked for. For various reasons related to the specific facts, the court ordered the wife to receive an equalization payment of $60,000.

The wife appealed, claiming that the motion judge had strayed from the available choices presented at the motion hearing. In particular, the wife contended that the judge’s only available choices were to pick either Option 1 or 2, or possibly to grant her partial judgment in some amount, and direct that the rest of the issues be sent on to be resolved at a full trial.

The Court of Appeal disagreed. As that Court wrote:

Put bluntly, this is not the way motions for summary judgment, especially duelling motions, work. The motion judge was entitled to consider all the evidence and then apply the relevant statutory provision, s. 5(6) of the FLA, and determine both whether an unequal division was appropriate and, if so, the quantum of the unequal division. He was not limited to choosing one of the two amounts proposed by the appellant and, if he was inclined to reject them, referring the question of quantum on to a trial. … He was not limited to choosing only one of the appellant’s alternative positions.

The wife also claimed that the judge had made an error by not following a mathematical formula for calculating the unequal division of net family property (using the actual period of cohabitation as a percentage of the five-year period specified in s. 5(6) of the Family Law Act). The court disagreed: While a mathematical approach might help the court in some cases, it did not have to be applied in every single one.

In the end, the Appeal Court concluded that the motion judge’s final amount of equalization, set at $60,000, was fair and reasonable in view of all the circumstances, which included the fact that the wife had not made any significant contributions to the home during the period of cohabitation and marriage.

For the full text of the decision, see:

Gomez v. McHale, 2016 ONCA 318 (CanLII)

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

Appeal Court Confirms Unique “Philosophy” of the Ontario Family Law Rules

Appeal Court Confirms Unique “Philosophy” of the Ontario Family Law Rules

The Ontario Court of Appeal, in a recent case called Frick v. Frick, confirmed that the Ontario Family Law Rules are philosophically different from their civil counterpart, and reflect the unique nature of litigation involving families.

The initial facts in Frick v. Frick were unremarkable: The couple married in 1993 and had two children. They separated 20 year later, and the wife started divorce proceedings. In addition to custody and spousal/child support, she also asked for the usual equalization of Net Family Property (NFP).

But after filing her pleadings, the wife learned that the husband had spent money on extra-marital activities during the marriage, namely those incurred during what she claimed was a “10-year affair”, as well as the cost of male and female escort services and an adult fetish website membership.

In light of that spending, the wife claimed the husband had recklessly depleted his share of family funds during the marriage. Because of it, she asked for an unequal division of NFP in her favour, now that their relationship was over. She asked the court for permission to amend her claim accordingly.

But the court declined, and went one step further by expressly preventing the wife from asking for an unequal NFP division at trial. The wife appealed.

The Appeal Court ruled in her favour, finding that the motion judge had made several procedural errors. For one thing, he had innovated certain evidentiary requirements for the wife to meet, that were simply not contained anywhere in the Family Law Rules (FLR). He took issue with the wife’s failure to specify in her pleadings the precise FLR provisions on which she relied for unequal division, even though these were implicit. He took procedural liberties by essentially bringing his own motion to strike out the wife’s unequal division claim, and baring her from pursuing it at trial, even though the husband had not requested these remedies himself.

The motion judge had also applied an unjustly-high threshold for establishing the wife’s unequal division claim, and had deprived her of notice that it might be struck out permanently. As the Appeal Court put it:

Here, the wife knew that the motion was to strike portions of her document. She could not have known that her claim for an unequal division would be judged according to the summary judgment rules. Nor could she have known that her claim would be barred forever since she was denied leave to amend.

The key error, however, was the motion judge’s assessment that the FLR governed certain procedural aspects inadequately, and that he should look to the civil procedure rules for guidance instead. (Although Ontario judges are permitted to do this where warranted, the motion judge in this case showed over-reliance on the civil rules, and misunderstood when they could be invoked.).

In this context, the Court of Appeal made some important comments about the fundamental nature of the FLR:

The Family Law Rules were enacted to reflect the fact that litigation in family law matters is different from civil litigation. The family rules provide for active judicial case management, early, complete and ongoing financial disclosure, and an emphasis on resolution, mediation and ways to save time and expense in proportion to the complexity of the issues. They embody a philosophy peculiar to a lawsuit that involves a family.

The Appeal Court allowed the wife’s appeal, in part.

For the full text of the decision, see:

Frick v. Frick, 2016 ONCA 799 (CanLII)

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

What Kinds of Possessions Do Former Couples Squabble About?

beanie-couple

What Kinds of Possessions Do Former Couples Squabble About?

I had to chuckle when I came across an older photo from a U.S. divorce hearing in 1999. It shows the former couple on the floor of the courtroom dividing up their cherished Beanie Baby collection:

beanie-baby
Although evidently this collection meant a lot to this pair (and might be one of the things that actually drew them to each other), it made me wonder about some of the other things that end up becoming contentious items – whether immediately or even long after the marital split.

In a case called Kallies v. Kallies, the couple had separated a full seven years earlier, at which time the wife left the home without taking her books, records, clothing, her wedding dress, a sewing machine, her aunt’s knitting needle collection, and a painting by her sister. She had since requested numerous times that these items be returned, but the husband never complied. In its divorce order, the court expressly directed the husband to pack these specific items up and deliver them to the wife’s new address, and gave him a strict deadline to do so.

In Young v. Young, the couple split after 25 years of marriage, but then it took them another 19 years to get around to asking the court for a divorce order. During that period the wife had continued to live in the former matrimonial home, which still contained an on-display heirloom gramophone given to them during the marriage by the husband’s family. The court found that this gramophone was not a “matrimonial asset” subject to the division in the usual manner; rather it was to be returned outright to the husband in light of its family-based origins. Besides, the court added, the wife had had use and enjoyment of it for the 19 years since their separation, so it was proper that she hand it over even at this late stage.

Sometimes a single item can hold up the entire divorce process. In a case called Giannis v. Fotis, the couple’s issue was over the ownership of a particular piece of jewellery – and it kept them stymied from resolving their larger divorce-related matters. The court described the couple’s dispute this way:

Gold Neck Chain

The parties are equally adamant in their claims to the gold chain. In fact, the gold chain seems to have prevented the parties from settling all outstanding issues.

The chain was purchased by the husband before the marriage. He gave it to the wife shortly before marriage and she wore it continuously thereafter. This is borne out by the several photographs of the wife taken over the years of marriage, of which show her wearing the chain. The evidence of the husband does not indicate that any conditional or limiting words were used by him at the time of the gift. Nor is it an heirloom of the husband’s family. The wife says that it was an outright gift.

On the facts, the court ultimately awarded the gold chain to the wife, having found that it was an “item of personal jewellery” rather than a matrimonial asset that was subject to being divided. The court went on to resolve other outstanding items and then was able to finally declare the couple to be formally divorced.

(P.S. The custody of pets is often a hotly-contested issue in some divorces. Look forward to more on that in a future Blog.)

For the full text of the decisions, see:

Young v. Young, 1990 CanLII 688 (BC SC)

Kallies v. Kallies, 2010 SKQB 141 (CanLII)

Giannias v. Fotis, 1996 CanLII 5470 (NS SC)

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

Wednesday’s Video Clip: Transfer of Property in Ontario – Separation or Divorce


Wednesday’s Video Clip: Transfer of Property in Ontario – Separation or Divorce

In Ontario, whenever there’s a marriage breakdown, and spouses separate or divorce, if they jointly own property, then usually one spouse will release his or her interest in that property, either in return for an equalization payment or other predetermined benefit.

In this video, we explain how transfers of property in Ontario work, focusing on mortgage issues, equalization payments, and land transfer tax; and what documents and information you will be asked to bring to an appointment.

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.

If Spouses Reach a Separation Agreement But Later Reconcile, Is the Agreement Still Good?

separation-agreement

If Spouses Reach a Separation Agreement But Later Reconcile, Is the Agreement Still Good?

Here’s an interesting legal question arising from a not-uncommon scenario:

Two spouses decide mutually to separate. They negotiate and sign a separation agreement, and duly abide by its terms for a while. They later decide to reconcile, but the reconciliation doesn’t “stick” and they separate for a final time.

The question is this: Is their original separation agreement still good? Does the fact that they reconciled after making it affect its legal validity once they have separated a second time?

It turns out this is yet another “it depends” answer.

The basic rule is that a separation agreement is void once there has been a reconciliation. The Ontario Court of Appeal established this in an older case called Sydor v. Sydor, and it was very recently confirmed in another Ontario case called Ernikos v. Ernikos.

Of course, every rule has its exceptions. The Court in Sydor v. Sydor added that if the agreement contains a clause that overrides that general rule, or if such a clause can be reasonably implied, then the exempted part of the agreement will still be valid and the spouses’ clear intention will be given effect.

Here is an example: Let’s say a couple decides to split up. They agree in their separation agreement that the wife releases her rights in their newly-purchased car to the husband, and they use language to suggest that they consider this a final disposition. They reconcile, then split again. Although legally the whole agreement is technically void because of the reconciliation, the court may view its car-related wording to mean that they considered the husband’s rights to the vehicle are final and binding, regardless of what happens to their relationship in the future. This could form the basis of the court’s divorce order in the upcoming legal proceedings, when it comes time to formally divide the couple’s assets.

The other way to circumvent the general legal rule is to build in express and careful language saying so. Specifically, the separation agreement may define what constitutes a true reconciliation (e.g. requiring at least 60 or 90 days of uninterrupted cohabitation), or it may clarify that the agreement becomes void upon reconciliation except for any transfers, payments or other dispositions made up to that time.

For the full text of the decisions, see:

Sydor v. Sydor, 2003 CanLII 17626 (ON CA)

Ernikos v. Ernikos, 2016 ONSC 6752 (CanLII)

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

Wednesday’s Video Clip: How to Fill Out a Financial Statement


Wednesday’s Video Clip: How to Fill Out a Financial Statement

In this law video, we review the steps required to fill out a financial statement for the family court or negotiating the terms of your divorce settlement.

When entering into a Separation Agreement or bringing an Application before the Court, parties must provide full financial disclosure.

Complete financial disclosure is a prerequisite to the settlement of any family law case. The Family Law Act and its interpretation by our Courts, leaves no uncertainty in this respect. Any agreement can be set aside if a party has failed to truthfully and accurately disclose his or her financial position.

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.

Unpaid Equalization Could Come Out of Bankrupt Spouse’s Pension

Retirement Pension

Unpaid Equalization Could Come Out of Bankrupt Spouse’s Pension

We’ve talked recently in Can the Post-Bankruptcy Distinction Between Support and Equalization Payments be Circumvented? about an interesting distinction in Canadian law: a claim for unpaid equalization payment is “swept into” a paying spouse’s bankruptcy, whereas claims for unpaid child or spousal support can survive it.

In a case called Syrette v. Syrette, the wife took a position that is worth noting: in the face of her former husband’s newly-declared bankruptcy, she asked the court to allow her to pursue her unpaid equalization claim against his pension assets.

This is because pension assets can be subject to special provisions under the Ontario Pension Benefits Act, which keep them exempt from seizure by way of execution, which includes seizure by a bankruptcy trustee. So while the husband’s other assets were now in the trustee’s hands for distribution to his creditors (and were thus no longer available to satisfy the wife’s established equalization claim in the usual way), his pension assets remained untouched. This meant the wife could take steps to have those funds used in satisfaction of her equalization payment entitlement.

As a procedural aside, this required the bankruptcy court’s permission: Normally, the moment the husband declared bankruptcy, an automatic stay (i.e. suspension of legal proceedings) is triggered, which applies to all creditors – including the wife. However, in the circumstances the court was willing to grant the wife permission to proceed nonetheless:

Unfortunately for [the wife], not only are her equalization proceedings against [the husband] stayed as a result of his bankruptcy, any such equalization claim will be extinguished after the discharge … unless she obtains leave to proceed from the bankruptcy court …

The courts now routinely grant an order for leave to proceed in circumstances where a spouse wishes to proceed with an equalization remedy against the pension, presumably because the granting of such a stay does not prejudice the bankrupt estate in any way, and because it is consistent with desire of the courts to divide pension assets between spouses in circumstances where there are no other significant assets to be divided. The normal order is worded so as to permit the claimant to commence or continue proceedings in the matrimonial court for equalization against the pension, notwithstanding the bankruptcy or subsequent discharge.

The wife was therefore allowed to proceed to enforce her equalization claim against the bankrupt husband’s pension.

For the full text of the decision, see:

Syrette v. Syrette, 2011 CarswellOnt 10640, 2011 ONSC 6108

Varied on other grounds:

Syrette v. Syrette, 2012 ONCA 693

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.

Can the Post-Bankruptcy Distinction Between Support and Equalization Payments be Circumvented?

Past Due

Can the Post-Bankruptcy Distinction Between Support and Equalization Payments be Circumvented?

Recently I wrote “How Does an Unpaid Equalization Payment Intersect with Bankruptcy?” about the impact that a paying spouse’s bankruptcy has on the recipient spouse’s entitlement to nonetheless receive either child/spousal support, or an equalization payment as part of a separation or divorce. I observed that – perhaps surprisingly – Canadian law treats these two categories quite differently in terms of the post-bankruptcy collectability by the recipient spouse.

Perhaps this distinction is why some courts might be tempted to try to re-cast a spouse’s entitlement, to maximize the possibility that his or her valid family law-related claim against the bankrupt spouse – essentially in creditor/ debtor roles – will be more likely to be preserved and enforced after the bankruptcy.

But as a case called Mwanri v. Mwanri illustrates, this re-characterization is not always appropriate or permissible in law.

After a trial, the husband and wife were granted a divorce, with the husband being ordered to pay the wife about $50,000 as an equalization payment. However, he filed an assignment in bankruptcy soon after, without ever having paid a dime in satisfaction of that obligation (his spousal and child support payments were current, however). It was unlikely that his assets would be sufficient to satisfy the amount he owed the wife in equalization.

In light of this and other developments, the wife applied to a motions judge for an order that his ongoing child and spousal support obligations be converted to a lump-sum amount in the same amount as the equalization payment would have been, i.e. $50,000. The motion judge agreed, ostensibly under a broad discretion to do so under the Ontario Family Law Act and the federal Divorce Act. The husband was discharged from his bankruptcy shortly after.

From a legal standpoint, the motion judge’s ruling effectively circumvented the distinction in law between the types of award: Unpaid equalization payments got swept into the husband’s bankruptcy and evaporated once he was discharged, while spousal support obligations did not. So by asking for a $50,000 lump-sum spousal award – which was the same amount she would have received in equalization were it not for the husband’s bankruptcy – the wife could enforce the award even after the husband was discharged. In other words, the motions judge simply converted the mother’s now-unenforceable equalization claim into an enforceable entitlement to lump sum spousal support.

The husband objected, and brought an appeal to the Court of Appeal, claiming that the judge’s award was tantamount to re-distributing the husband’s assets in favour of the wife and in preference to his other creditors.

The Appeal Court agreed with the husband. It found that when it came time to make the support award, the motion judge had failed to consider: 1) the father’s status as an undischarged bankrupt; 2) the effect of a lump sum spousal support award on the father’s ongoing bankruptcy, and 3) the implications of the father’s eventual discharge from bankruptcy on the parties’ financial circumstances and assets.

The lump-sum award – not coincidentally in the same amount as the equalization payment would have been – had been made without regard to the father’s impending bankruptcy, and amounted to an end-run around the normal operation of the bankruptcy legislation. Since this was impermissible, the motion judge’s earlier ruling was overturned.

For the full text of the decision, see:

Mwanri v. Mwanri, 2015 ONCA 843 (CanLII)

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.

Is a Verbal Marriage Contract Only Worth the Paper It’s Written On?

Blank Paper

Is a Verbal Marriage Contract Only Worth the Paper It’s Written On?

In an interesting case from British Columbia, the court was asked to rule on whether a verbal marriage agreement, purporting to govern the division of a couple’s assets, was valid and enforceable.

The backstory featured a rather lavish courtship between a now 59-year-old doctor and a 49-year-old lawyer, who got married in Las Vegas in 2011. As part of their contentious divorce about three years later, the court heard that the husband had led the wife to believe that he was financially well-off; in the months prior to their wedding he had acted like a rich man, whisking her off to stay in 5-star hotels in destinations such as San Francisco, Palm Springs, Seattle, Europe, Los Angeles, Hawaii. In reality, he was overwhelmed with debt, owed money to Canada Revenue Agency, and had been repeatedly investigated and fined for improper billing in his medical practice.

Unaware of the true state of affairs, the wife proceeded with their wedding plans. At some point prior to the nuptials, she raised her concerns over a property she owned on Ross Street; she wanted it to be excluded from their family property, since it was her only asset and she wanted to have something for her children from a previous relationship.

They verbally agreed that the husband would not make a legal claim to it in the event they separated; the wife’s faith in his promise was fortified by her assumption that the husband was well-off in his own right. They had also discussed her understanding that under Canadian family law the Ross Street home would not become family property unless they lived in it together (which they did not intend to do, post-marriage, since it was rented to a tenant). They couple also agreed verbally to each pay their own credit card debts and their own car expenses, but share household expenses equally.

However, years of lavish and impulsive spending by the husband both before and during the marriage took its toll; after the inevitable financial collapse the wife was finally made privy to the true state of their precarious financial situation. The court described the next phase of their relationship this way:

She suggested to [the husband] that they move into Ross Street, but he would have to sign an agreement that recognized her sole right to that property and his sole obligation to pay his debts. [The husband] retorted that he would sign anything she wanted but she did not understand what it meant to be his wife. He suddenly asserted the marriage was over and he wanted a divorce. At the end of October 2014, [the wife] gave her Ross Street tenant notice and she moved into that home on January 1, 2015.

As part of the now-contentious divorce proceedings – and despite his verbal assurances to the contrary – the husband claimed against the wife’s Ross Street property nonetheless.

Ultimately the court issued a 132-paragraph ruling, which among other things considered in detail the provisions of the B.C. family legislation relating to division of property. The ruling culminated in a finding that the verbal agreement between the former couple to exclude the Ross Street home was valid and enforceable.

Among the evidence in favour of this conclusion was the fact that throughout their marriage they had acted in a manner that was consistent with the existence of such an agreement: the wife paid all the expenses related to the property and kept any income derived from it; the husband was never added on title, rarely attended at the property, and never made any financial or labour contributions to it (other than helping to power-wash the exterior on one occasion).

Although under Canadian law not all verbal agreements will necessarily be valid and enforceable, in this case the husband’s lack of credibility likely sealed the deal: In a preface to its ruling, the court underlined its finding that the husband “is not a trustworthy person”, that he had “little respect for the truth”, and that his evidence was “generally … unreliable and incredible”. This no doubt informed the court’s conclusion on the agreement’s existence, despite the husband’s unbelievable claims to the contrary.

For the full text of the decision, see:

Brown v. Brown, 2016 BCSC 1037 (CanLII)

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