“In Serra v Serra, 2009 ONCA 105 (CanLII), 2009 CarswellOnt 513 (Ont. C.A.), the Court of Appeal for Ontario noted that the threshold of “unconscionability” under s. 5(6) is exceptionally high and that, to cross the threshold, an equal division of net family properties in the circumstances must “shock the conscience of the court.” In Medeiros v Medeiros, [2009] O.J. No. 4309 (Ont. C.A.), the Court of Appeal noted that the factors set out in s. 5(6) must be considered in light of all the relevant circumstances.
In Kucera v Kucera, [2005] O.J. No. 1514 (Sup. Ct.), Heeney J. considered the situation where a spouse brought the matrimonial home into a short marriage. The court explained the policy rationale underlying s. 5(6)(e) at paras. 18-19:
Marriage is a form of partnership, and it is inherently fair that wealth accumulated during the life of that partnership should be shared equally.
Where the [Family Law] Act potentially becomes unfair is where the special provisions discussed above come into play. This is because the equalization process does not only share wealth accumulated during the marriage, but also shares the value of one specific asset, the matrimonial home, that was accumulated prior to the marriage. In very short marriages, this represents an unjustifiable windfall to the non-titled spouse. So long as the marriage is of a duration of less than give years, s. 5(6) is available to redress that unfairness.
The court went on to consider the following factors in terms of determining whether s. 5(6)(e) was engaged:
- Whether the home was purchased before the marriage, and the contributions of the non-titled spouse;
- Whether the home was improved during the marriage in any way;
- Whether the titled spouse covered maintenance costs, as well as other living expenses for both parties;
- Whether the bulk of the presumptive equalization payment is a result of the value of the matrimonial home;
- Whether the non-titled spouse improved their financial position even without the presumptive equalization payment, including repayment of debts brought into the marriage; and
- Whether there were children.
Applying these factors, the court found that it would be unconscionable to award the wife an equalization payment generated almost entirely from a matrimonial home that the husband had brought into the marriage where: the marriage was short, the husband had acquired the home well before the marriage, and the wife had made no substantial contributions towards the home’s maintenance. The court allowed the husband to exclude the value of the home as of the date of marriage to determine equalization, and further reduced the award by 1/6th on account of the length of the marriage.
Latchman v Sullivan, 2013 ONSC 2536, involved an uncontested trial where the main issue was division of family property. The parties cohabited for 10 years but were only married for 17 months. The wife purchased the home before the marriage but during the cohabitation period, with title solely in her name. The husband did not contribute any money towards the purchase of the home and made minimum contributions to its maintenance. The wife incurred debts for the benefit of the husband during the marriage which the husband never repaid. Based on these facts, the court allowed the wife to deduct the home’s value as of the date of marriage, and credited ½ of the mortgage payments, second mortgage, and truck loan balance made since separation such that the husband owed an equalization payment to the wife.
In Li v Zhao, 2012 ONSC 2121, the matter also proceeded by way of uncontested trial and, like the matter before this court, the husband did not provide any financial information. The court was satisfied that the husband had assets he had not disclosed that were equal to or greater than the mother’s assets. Accordingly, it assumed that their net family property was equal. However, the judge went on to note that, even if he was wrong, he would have not ordered the wife to pay equalization because she incurred a disproportionately larger amount of debt in support of the family.”