“Every Canadian province has tried to address in some way the inequities or difficulties arising out of the distribution of family assets after the breakdown of a marriage or of a common law relationship to which the same rules apply. Broadly speaking, the provincial legislatures have chosen between two different models: equalization and division of property (R. A. Klotz, Bankruptcy, Insolvency and Family Law (2nd ed. (loose-leaf)), at pp. 4-29 to 4-30).
The equalization model involves a valuation of the family assets and an accounting. The value of the assets is then divided between the spouses, usually in equal parts, although family courts have a limited discretion to order an unequal division. The valuation and the division give rise to a debtor-creditor relationship in the sense that the creditor spouse obtains a monetary claim against the debtor spouse. But the assets themselves are not divided. Each spouse retains ownership of his or her own property both before and after the breakdown of the marriage. Neither acquires a proprietary or beneficial interest in the other’s assets. Assets are transferred only at the remedial stage, as agreed by the parties or as ordered by the family court in exercising its discretion, as a form of payment or execution of the judgment (T. A. Gutkin, “Family Law and Bankruptcy” (1999), 16 Nat’l Insolv. Rev. 26, at pp. 31-32; Balyk v. Balyk (1994), 113 D.L.R. (4th) 719 (Ont. Gen. Div.), at pp. 723-25; Burson v. Burson (1990), 4 C.B.R. (3d) 1 (Ont. Gen. Div.), at paras. 24-25). The division of property schemes, on the other hand, give rise to a proprietary or beneficial interest in the assets themselves, not just in their value (Balyk, at pp. 723-24).”