Topic: Family Law
You fell in love, you bought a home together, you raised a family… and then you separated… and now you’ve realized that since you were never married you aren’t entitled to any of your spouse’s property assets. This is a common mistake by common law partners in Ontario. However, similar laws denying property division to spouses do not exist in British Columbia. The question is why?
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Before I address the question above, it is helpful to provide some background information. For example, to fully understand the concern here, I must point out that property division has a lot to do with calculating Net Family Property (NFP). An NFP is the value of all property at the end of the relationship, after subtracting out debts or liabilities and the appropriate exclusions based on the date of marriage. In Ontario, the NFP allows lawyers to determine the appropriate equalization payment owing from one party to another (the party with the highest net worth would make this payment to the party with the lowest net worth). This is mostly governed in Part I of the Family Law Act (mostly in s. 4 of the FLA).
The most basic form of the calculation involves the following steps:
Step 1: Create a list of any property and liabilities owned by each spouse on the valuation date.
Step 2: Determine what property is excluded property.
Step 3: Determine the value of the included property and liabilities owned on the valuation date.
Step 4: For each spouse, deduct the value of the respective debts and liabilities on the valuation date.
Subtract Step 4 (debts) from Step 3 (assets) = valuation date total (X)
Step 5: Identify and value all property owned by each spouse at the date of marriage (not including the matrimonial home)
Step 6: For each spouse, deduct the value of the respective debts and liabilities on the date of marriage.
Subtract Step 6 (debts) from Step 5 (assets) = marriage date total (Y)
Step 8: Calculate the NFP by subtracting each spouse’s marriage date total (Y) from the valuation date total (X). The person with the higher NFP total would then make an equalization payment to the person with the lower NFP total.
Note: This is a very basic outline of the NFP process and this information is not to be relied upon in any way.Your case may not require the calculation of equalization (ex. if you are outside of Ontario) or there may be other special exclusions or exceptions that are applicable in your case. The calculation of NFP is complex and I would recommend retaining a lawyer to provide you with adequate legal advice.
Now that you have a basic understanding of how the NFP works, we can now tackle the issue of entitlement to property division in Ontario. Unfortunately, Part I of the FLA applies to married spouses only and thus common law spouses are not entitled to any equalization of family property. The fundamental question is why not? Are common law relationships somehow “worth less”? Are such policies simply a relic of dominant religious views underlying the laws of Ontario?
I propose that the best way to answer this question is to turn to the property division regime in BC and ask why the BC legislature has chosen to entitle common law spouses to property division. According to the BC legislature:
“The inclusion of unmarried spouses in the property division scheme recognizes that the number of common-law relationships is on the rise and that common-law remedy of constructive trusts inadequately protects the interests of this growing number of unmarried spouses. It also makes for greater consistency in the treatment of unmarried spouses in family law generally and across related laws, including wills and estates, spousal support and income tax law, which already treat common-law families the same as married families.” (see source below)
This seems like a fair and proper assessment of the issues faced by the legal system. I will not do an exhaustive review of constructive trusts and why they do not serve justice to common law spouses, but the question remains as to why Ontario has not adopted similar policies. The BC legislature states that BC “… [has] historically had a higher than average level of property division disputes in court; the broad flexibility and discretion in this area created uncertainty and promoted litigation.” Could this be a difference between Ontario and BC? Is it merely a matter of the number of property division disputes being brought to court?
“Balancing the Scales” – My Thoughts
In my substantial review of the literature on this topic, I have found no rational reason for the denial of property division to common law spouses in Ontario. Any argument or statement (that I could locate) that states to the contrary seems to be either out-dated (which may well explain the difference in policy), or an illustration of a difference in policy based on non-legal factors.
It could be argued that BC may have more property division disputes than Ontario (a common argument), but this is a weak argument. Firstly, most family law cases across Canada hardly ever make it to court and often settle outside of court. Thus, to base such an important legal policy as property division for spouses on unreliable or inaccurate statistics is fundamentally unfair.
Now the above might paint a fairly negative picture of the situation, but if you are reading this and you are in a common law relationship know that there is a way to protect yourself. As my previous blog post referred to, many of the concerns with property division for common law spouses can be addressed through contract or agreement (ex. Cohabitation Agreements or Marriage Contracts (also referred to as “prenuptial agreements”)). Perhaps this is why not much has been done to remedy the situation in Ontario, as the onus is put on parties to “Opt-in“. However, the argument I would then make is that rather than having a default model requiring couples to “Opt-in”, we avoid further issues caused by power or financial imbalances between spouses and move to a “Opt-out” model like BC. It is time to take a more progressive approach towards common law relationships… one can only hope that Ontario’s policy-makers get on board with our neighbors out west sooner rather than later.
Note: For more on property division in BC visit http://www.ag.gov.bc.ca/legislation/shareddocs/family-law/part5.pdf. You can also find similar information for Ontario at http://www.attorneygeneral.jus.gov.on.ca/english/family/divorce/division_of_property/.
Note: This is not meant to be an exhaustive explanation, and readers are assumed to have a basic knowledge of the law being discussed. This is not legal advice in any form and I would advise you to retain a lawyer for any legal issues you may be facing.
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