February 10, 2021 – Section 9(1) of the Family Law Act

“Section 9(1) of the Family Law Act clothes the court with its statutory authority to grant remedies in the context of an equalization of net family property application under s. 7 of the Family Law Act. It sets out a series of options and, as Walsh J. observed, in Marsham v. Marsham (1987), 1987 CanLII 4041 (ON SC), 59 O.R. (2d) 609, [1987] O.J. No. 440 (H.C.J.), at pp. 622 and 625 O.R., equips the court with “a most extensive and comprehensive choice of powers”, and “the flexibility required to enable it to choose the most appropriate method of satisfying the equalization entitlement the court has previously determined”. This does not mean, however, that s. 9(1) contemplates an indiscriminate resort to the enhanced remedies it provides for. In my view, as I shall explain, it does not.

In summary, the choices available under s. 9(1) are (a) that the whole amount be paid; (b) that, in addition, security may be imposed, or the property transferred to or in trust for, or vested in, the receiving spouse absolutely, for life or for a term of years; and (c) if necessary, to avoid hardship, the whole amount may be paid in instalments, not to exceed a period of ten years.

Indeed, lower courts have recognized the need for a principled approach to the application of an enhanced s. 9(1) remedy. Such orders are to be made only where there is a real need for them, after all relevant considerations have been taken into account, and not as a matter of course. As Whalen J. stressed, in Colquhoun v. Colquhoun, [2007] O.J. No. 9, 2007 CarswellOnt 18 (S.C.J.), at para. 168, “[t]here must be a proven concern that payment [of an ordered equalization payment] will not be honoured” (emphasis added) before the court can order the transfer or partition and sale of property under s. 9(1).

The onus is on the party seeking such an order, and as a general rule the court’s discretion will only be exercised in favour of a s. 9(1) order where it is established — based on the targeted spouse’s previous actions and reasonably anticipated future behaviour — that the equalization payment order granted will not likely be complied with in the absence of additional, more intrusive provisions: Kennedy v. Sinclair, 2001 CanLII 28208 (ON SC), [2001] O.J. No. 1837, 18 R.F.L. (5th) 91 (S.C.J.), at para. 45; Lynch v. Segal (2006), 2006 CanLII 42240 (ON CA), 82 O.R. (3d) 641, [2006] O.J. No. 5014 (C.A.), at para. 32; [page174] Raymond v. Raymond, 2008 CanLII 68138 (ON SC), [2008] O.J. No. 5294, 64 R.F.L. (6th) 160 (S.C.J.); Alldred v. Alldred, [1998] O.J. No. 3606, 82 A.C.W.S. (3d) 512 (Gen. Div.); McDonald v. McDonald, 1994 CanLII 7435 (ON SC), [1994] O.J. No. 1644, 5 R.F.L. (4th) 215 (Gen. Div.), affd 1997 CanLII 14551 (ON CA), [1997] O.J. No. 4688, 33 R.F.L. (4th) 425 (C.A.).

Accordingly, in my view, an order providing that an equalization payment to one spouse is to be made out of the payor spouse’s share of the proceeds of the sale of the matrimonial home, without more, does not create “property rights” in the payee spouse — equitable, securitized or otherwise. Absent clear language pointing to the trier of fact’s intention to order the transfer or vesting of a payor spouse’s assets, or the creation of security, or the imposition of a trust-like obligation, in satisfaction of the equalization payment, courts should be wary of giving effect to a proprietary right form of disposition, lest (a) what the legislature has clearly decided is to be an equalization regime is inadvertently transformed into a division of property regime under the guise of protecting a payee spouse’s right to receive the equalization payment awarded, and (b) otherwise legitimate claims of third parties be subverted and bankruptcy priorities reversed.”

Thibodeau v. Thibodeau, 2011 ONCA 110 (CanLII) at 31-32, 41-43