“In giving the majority judgment of the Supreme Court of Canada in Rawluk v. Rawluk, 1990 CanLII 152 (SCC), [1990] 1 S.C.R. 70, 23 R.F.L. (3d) 337, Cory J. set out certain principles which seem to me vital in defining the approach a court must take when determining the rights of separating spouses pursuant to Part I of the FLA. He said, at pp. 93-94 S.C.R., p. 366 R.F.L.:
Under the Act a court is, as a first step, required to determine the ownership interests of the spouses. It is at that stage that the court must deal with and determine the constructive trust claims. The second step that must be taken is to perform the equalization calculations. Once this is done, a court must assess whether, given the facts of the particular case, equalization is unconscionable. The s. 5(6) analysis, even if it could be considered, would be a third step — a last avenue of judicial discretion which might be used in order to bring a measure of flexibility to the equalization process. This step in the process, if it could be used, would have to be kept distinct from the preliminary determinations of ownership.
In light of this statement and the definition of “net family property” contained in s. 4(1), the court must take the following steps in determining spouses’ rights under Part I of the FLA:
1. The court must establish the net family property of each spouse. It is only when that function has been performed that the court is in a position to apply s. 5(1) of the FLA, which is the next step. This first step must be undertaken in light of the provisions of s. 4. This means that the court must:
(a) determine what “property” each spouse owned on valuation day, and
(b) value that property after making deductions and allowing exemptions as provided in s. 4.
2. The court must determine whether one spouse’s net family property is less than that of the other. If so, s. 5(1) provides for equalization, which is effected by ordering a payment of one-half of the difference between them. However, before making that order, the court must proceed to the third step.
3. The court must decide whether, because of the considerations contained in s. 5(6), it would be unconscionable to equalize the net family properties. If so, the court may make an award that is more or less than half the difference between the net family properties. If not, the net family properties are equalized as set out in step 2.”
Berdette v. Berdette, 1991 CanLII 7061 (ON CA) per Galligan J.A.