“The scheme of the [Family Law Act] does not support the proposition that an application judge can simply redistribute properties among the parties. To interpret the Act in this way would be inconsistent with its overall scheme, which gives a judge only a very limited power to distribute properties in the circumstances set out in s. 9. That is, section 9 gives the court the power to transfer properties only “if appropriate to satisfy an obligation imposed by the order [for the equalization of net family properties]”. In other words, the transfer power under section 9 is specificallyconnected to the satisfaction of the order for the equalization of net family properties rather than a generaltransfer power for the settlement of disputes arising from marital breakdown.
To a similar effect is the recent decision of this court in Thibodeau v. Thibodeau, 2011 ONCA 110 (CanLII), 104 O.R. (3d) 161. In that case, Blair J.A. endorsed this interpretation of the legislative scheme of the Family Law Act, albeit in the context of a bankruptcy proceeding. As explained by Blair J.A. at para. 37, “[s]eparating spouses are not entitled to receive a division of property. … An equalization paymentis the chosen legislative default position”. He continued, at paras. 39 and 40, by observing that the enhanced remedies available under s. 9(1)can give rise to proprietary rights if the record justifies such an exception in the equalization payment regime, but only if a “real need” is shown.
Trial courts have consistently adopted this interpretation. One example is Zadegan v. Zadegan, [2002] O.J. No. 2190 (S.C.J.), in which, after referring to the fact that the parties had provided her with proposals as to how their real properties might be distributed, J. Mackinnon J. held as follows, at paras. 90-92:
90 In this way, both parties have, in effect, asked the court to redistribute their assets, in order to achieve what each of them regards as the proper outcome. In my view, this is not the type of order that the court can make under the Family Law Act. That Act does not direct the court to redistribute assets in order to make an equal distribution. See Berdette v. Berdette(1991), 1991 CanLII 7061 (ON CA), 3 O.R. (3d) 513 (C.A.). Rather, it directs the court to determine the net family property of each spouse. Then, if one spouse’s net family property is less than that of the other, s. 5(1) provides for equalization. … [T]he powers of the court to give effect to the equalization are set out in s. 9(1):
…
91 Thus, while s. 9(1)(d) permits the court to transfer property in order to satisfy an obligation imposed by the order, this is not the same thing as rearranging ownership of assets. …
92 Accordingly, the court could order the transfer of an asset between the parties in order to satisfy an equalization payment, or part of it, but cannot order the transfer of various assets between the parties in order to bring about an equitable distribution of assets.