When Can A Court Depart From A Strict Equalization Of Net Family Property?
Section 5(6) of the Family Law Act states: 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.
The steps to be taken pursuant to s. 5(6) are clear: The Court must first ascertain the net family property of each spouse by determining and valuing the property each owned on the valuation date, subject to the deductions and exemptions set out in s. 4. Next, the court applies s. 5(1) and determines the equalization payment. Finally — and before making an order under s. 5(1) — the Court must decide whether the equalization of net family properties would be unconscionable under s. 5(6), having regard to the factors listed in paragraphs 5(6)(a) to and through (h).
The Courts have tended to limit the application of the s. 5(6) factors to circumstances arising from misconduct on the part of the spouse who owns the asset in question or against whose favour the unequal distribution is to be made.In this regard, the threshold of “unconscionability” under s. 5(6) is exceptionally high. The case law is clear that circumstances whichare “unfair”, “harsh” or “unjust” alone do not meet the test. To cross the threshold, an unequal division of net family properties in the circumstances must “shock the conscience of the court.” The threshold of “shocking the conscience of the court is much more difficult than most people may think, but it is nonetheless available in the right fact situation.