“By operation of s. 5 of the Family Law Act, the parties to the marriage share equally in any increase in the value of family property between marriage and the date of separation. Section 5 provides as follows:
5. (1) When a divorce is granted or a marriage is declared a nullity, or when the spouses are separated and there is no reasonable prospect that they will resume cohabitation, the spouse whose net family property is the lesser of the two net family properties is entitled to one-half the difference between them.
In the jurisprudence that has developed under this section, the difficulty in valuing assets and liabilities, particularly contingent liabilities, is often noted. What is clear, however, is that contingent liabilities are to be taken into account as long as they are reasonably foreseeable. See Leslie v. Leslie (1987), 9 R.F.L. (3d) 82 (Ont. H.C.); Nicol v. Nicol (1989), 21 R.F.L. (3d) 236 (Ont. H.C.); Crutchfield v. Crutchfield(1987), 10 R.F.L. (3d) 247 (Ont. H.C.); and Drysdale v. Drysdale(1994), 1994 CanLII 7453 (ON SC), 9 R.F.L. (4th) 20 (Ont. U.F.C.J.).
In determining the present value of a contingent liability, courts have looked at what was reasonably foreseeable on the valuation date: Johnston v. Johnston, [1998] O.J. No. 5495 (Gen. Div.), at para. 59, aff’d on other grounds 2000 CanLII 14718 (ON CA), 2000 CanLII 14718 (ON C.A.), leave to appeal to S.C.C. refused [2000] S.C.C.A. No. 234. In Drysdale, at paras. 14-17, Beckett J. noted that where courts have found no or a very low risk that a guarantee would be called at the valuation date, the value of the contingent liability has been determined to be nil. However, in Drysdaleit was found that there was a real possibility that the guarantee would be called upon, though the amount could not be predicted with any certainty. Finding it unrealistic to value the liability at either zero or the full amount of $200,000, Beckett J. valued the liability at 50 percent of the amount in question: see also Salamon v. Salamon, [1997] O.J. No. 852 (S.C.J.). This approach was approved by this Court in Cade v. Rotstein(2002), 2004 CanLII 24269 (ON CA), 181 O.A.C. 226 (C.A.).”