Ontario Court of Appeal Grants Unexpected Windfall in Family Property Case – What You Need to Know

The Ontario Court of Appeal has recently issued a decision that may significantly affect how inheritance funds deposited after separation are treated in family property disputes. In Robson v. Pellerin (2025 ONCA 680), the court awarded an additional credit of $48,025.54 to the husband for post-separation inheritance funds — a decision that family law practitioners and separating spouses will want to understand in detail.

Background of the Dispute

The dispute arose from multiple contested issues flowing from the parties’ separation, including:

1. Parenting, child support, and spousal support
2. Whether a valid separation agreement existed
3. Claims about vesting title to the matrimonial home and a cottage
4. Equalization of net family property and post-separation adjustments

At trial, Justice Pamela MacEachern made a number of findings on these issues. Among them was how to treat inheritance funds that the husband deposited into a joint account after separation and whether he was entitled to a “credit” in the equalization calculation for those amounts. The trial judge gave him limited credit (for specific transactions benefiting the wife exclusively) but denied him credit for the balance, finding the funds had been used for joint expenses.

On appeal, Mr. Robson challenged several aspects of the judgment — but his key argument (and what the Court of Appeal revised) was the denial of full credit for his post-separation inheritance funds.

What the Court of Appeal Decided

1. Credit for Post-Separation Inheritance Funds

1. Mr. Robson had deposited $155,945.08 in inheritance funds into the joint account after separation.
2. The trial judge had allowed credits totaling $59,894 (for a TFSA and a vehicle purchase) but refused credit for the remainder, concluding those amounts were used for joint expenses.
3. On appeal, the Court of Appeal held that he was entitled to 50 % credit on the remaining balance, which translated into an additional credit of $48,025.54.
4. The appellate court did not endorse a blanket rule that 50 % always applies, but found in these circumstances, that allocation was fair.

2. Other Issues Remain Unchanged

Most of the trial judge’s determinations were affirmed:

1. The court upheld the conclusion that loans from Mr. Robson’s mother (advances before or during the marriage) had been forgiven and thus were valued at zero in the net family property calculation.
2. The findings regarding offsetting credits for Mr. Robson’s exclusive occupation of the home and cottage were sustained.
3. The trial judge’s approach to when spousal support should begin (June 25, 2018, when the wife moved out) was also upheld.

The Court of Appeal allowed the appeal in part (i.e. for the post-separation inheritance credit) and dismissed the remaining grounds. No costs order was made in the appeal.

Key Lessons and Implications for Practice

Tracing Matters

This case underscores the importance of tracing — being able to show a clear path from inheritance receipt to deposit to account to use. If funds deposited post-separation retain sufficient traceability, a court may allow a credit, even if some commingling or shared use occurs.

Post-Separation Funds Are Not Automatically Excluded

A common assumption is that funds received after separation are off the table in equalization. This decision cautions against that oversimplification. The appellate court’s willingness to award credit for post-separation inheritance funds signals that such funds may still attract adjustment — depending on the facts.

Courts Balancing Fairness, Not Rigid Rules

The 50 % credit awarded here should not be read as a new legal standard. Instead, the Court of Appeal treated it as equitable in the particular factual matrix. Each case will hinge on the fairness of a proposed adjustment, and how the funds were used and documented.

Deference to Trial Judgments

The court’s decision also reminds practitioners that appellate courts will not lightly disturb detailed factual findings, especially on allocations of expenses, valuations, offsets, and timing of support. Legal arguments must be grounded in error-based critiques rather than simple disagreement.