“Section 5(6) of the Family Law Act (“the Act”) permits the court to adjust a presumptive equalization of spouses’ net family properties in exceptional circumstances.
5(6) The court may award a spouse an amount that is more or less than half the difference between the net family properties if the court is of the opinion that equalizing the net family properties would be unconscionable, having regard to,
(a) a spouse’s failure to disclose to the other spouse debts or other liabilities existing at the date of the marriage;
(b) the fact that debts or other liabilities claimed in reduction of a spouse’s net family property were incurred recklessly or in bad faith;
(c) the part of a spouse’s net family property that consists of gifts made by the other spouse;
(d) a spouse’s intentional or reckless depletion of his or her net family property;
(e) the fact that the amount a spouse would otherwise receive under subsection (1), (2) or (3) is disproportionately large in relation to a period of cohabitation that is less than five years;
(f) the fact that one spouse has incurred a disproportionately larger amount of debts or other liabilities than the other spouse for the support of the family;
(g) a written agreement between the spouses that is not a domestic contract; or
(h) any other circumstance relating to the acquisition, disposition, preservation, maintenance or improvement of property. R.S.O. 1990, c. F.3, s. 5 (6).
Only sections 5(6) (e) and (h) are relevant to this matter.
Cohabitation less than five years (s. 5(6)(e))
Three findings are needed before the court may exercise its discretion under this provision:
(a) That the parties cohabited for less than five years;
(b) That the presumptive amount to be paid is disproportionately large in relation to the period of cohabitation;
(c) That equalizing the net family property would be unconscionable.
There is no factual dispute that the parties cohabited for less than five years and slightly more than three years: there was no evidence that they cohabited before marriage.
As for whether an equalization payment is disproportionately large, there is no formulaic consensus in the case law. Typically, proportionality under this provision is co-related to the nature of the property giving rise to the equalization payment as in the case of a matrimonial home brought by one party to the marriage and for which no deduction is allowed if owned on the valuation date (Gomez v. McHale): 2016 ONCA 318 CanLII and, more broadly, financial contributions to the marriage by each party. Spousal misconduct should not be relevant.
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In Serra the court held that once the “unconscionability” threshold is crossed, a court should exercise its discretion fairly and equitably according to the circumstances of the case: 2009 ONCA 105 at 71. Where s. 5(6)(e) has been found to apply, a mathematical formula, such as prorating the presumptive equalization payment to the period of cohabitation less than five years “may be helpful in some cases” but should not displace a broader consideration of the factors linking the parties’ marital contributions to the property giving rise to the equalization payment: Gomez v. McHale, at 12.”
Jayawickrema v. Jayawickrema, 2020 ONSC 4444 (CanLII) at 8-12 & 19