Von Czieslik v. Ayuso

86 O.R. (3d) 88

Court of Appeal for Ontario,

Goudge, Gillese and Lang JJ.A.

April 23, 2007

Family law -- Property -- Unconscionability -- Section 5(6) of Family Law Act permitting court to remedy unconscionable conduct by awarding 100 per cent of value of offending party's net family property to his or her spouse -- Trial judge erring in finding that s. 5(6) restricted remedy to 100 per cent of difference between parties' net family properties -- Family Law Act, R.S.O. 1990, c. F.3, s. 5(6).

The trial judge found that the husband had engaged in unconscionable pre-separation conduct by effectively gifting property with an approximate value of $190,000 to a third party so that the property would not be included in his net family property on the date of separation. However, the trial judge found that the wording of s. 5(6) of the Family Law Act ("FLA") restricted any remedy for the wife to 100 per cent of the difference between the parties' net family property, which was only $10,466. The wife appealed.

Held, the appeal should be allowed.

If equalization is found to be unconscionable, s. 5(6) of the FLA permits a court to award the other spouse "an amount that is more or less than half the difference between the net family properties". Section 5(6) empowers a court to award 100 per cent of the value of the offending party's net family property to his or her spouse. A plain reading of s. 5(6) does not support the trial judge's conclusion that s. 5(6) only allows for reapportionment of the difference between the parties' net family properties. That interpretation would not be sufficient in many cases to provide a meaningful remedy and, thus, would not achieve the [page89 ]equitable sharing envisaged by the legislature. That was so because the difference between parties' net family properties may vary radically from case to case. There is no rational connection between the unconscionable conduct and the amount of the "difference" between the parties' net family properties. Moreover, there would be little point in providing a remedy for unconscionable conduct and then restricting that remedy to the difference in the parties' net family properties. Since such a narrow interpretation would render the legislature's remedy meaningless in many cases -- for example, where there is unconscionable conduct, but the difference between the net family property values is very little -- it is an interpretation to be avoided. Permitting a court to award an amount up to the whole of an offending spouse's net family property provides a real, substantial and meaningful remedy for the unconscionable conduct. Accordingly, an interpretation that gives the court the authority to award an amount up to the value of the offending spouse's net family property accords most fully with the purpose and intent of the legislation.

APPEAL from the judgment of the Divisional Court (O'Driscoll, Jennings and Lax JJ.), 2006 6090 (ON SCDC), [2006] O.J. No. 539, 22 R.F.L. (6th) 302, awarding the wife 100 per cent of the difference between the parties' net family properties, which upheld the final order of Stewart J., 2004 12667 (ON SC), [2004] O.J. No. 2521, 4 R.F.L. (6th) 229 (S.C.J.).

Cases referred to Berdette v. Berdette (1991), 1991 7061 (ON CA), 3 O.R. (3d) 513, [1991] O.J. No. 788, 47 O.A.C. 345, 81 D.L.R. (4th) 194, 41 E.T.R. 126, 33 R.F.L. (3d) 113 (C.A.) [Application for leave to appeal dismissed [1991] S.C.C.A. No. 306]; Kuzmanovic v. Kuzmanovic, 2001 28195 (ON SC), [2001] O.J. No. 1450, 16 R.F.L. (5th) 300 (S.C.J.); Merklinger v. Merklinger (1996), 1996 642 (ON CA), 30 O.R. (3d) 575, [1996] O.J. No. 4080, 26 R.F.L. (4th) 7 (C.A.), affg (1992), 1992 7539 (ON SC), 11 O.R. (3d) 233, [1992] O.J. No. 2201, 43 R.F.L. (3d) 109 (Gen. Div.); Roseneck v. Gowling (2002), 2002 45128 (ON CA), 62 O.R. (3d) 789, [2002] O.J. No. 4939, 35 R.F.L. (5th) 177 (C.A.), supp. reasons [2003] O.J. No. 145, 223 D.L.R. (4th) 210 (C.A.), supp. reasons 2003 39758 (ON CA), [2003] O.J. No. 553, 38 R.F.L. (5th) 180 (C.A.); Stone v. Stone (2001), 2001 24110 (ON CA), 55 O.R. (3d) 491, [2001] O.J. No. 3282, 203 D.L.R. (4th) 257, 39 E.T.R. (2d) 292, 18 R.F.L. (5th) 365 (C.A.); Zadegan v. Zadegan, [2002] O.J. No. 2190 (S.C.J.), consd Other cases referred to Brett v. Brett (1999), 1999 3711 (ON CA), 44 O.R. (3d) 61, [1999] O.J. No. 1384, 173 D.L.R. (4th) 684, 46 R.F.L. (4th) 433 (C.A.); Filipponi v. Filipponi, 1992 14009 (ON SC), [1992] O.J. No. 367, 40 R.F.L. (3d) 296 (Gen. Div.); Hamilton v. Hamilton, 1996 599 (ON CA), [1996] O.J. No. 2634, 92 O.A.C. 103 (C.A.); Rawluk v. Rawluk, 1990 152 (SCC), [1990] 1 S.C.R. 70, [1990] S.C.J. No. 4, 71 O.R. (2d) 480n, 38 O.A.C. 81, 65 D.L.R. (4th) 161, 103 N.R. 321, 36 E.T.R. 1, 23 R.F.L. (3d) 337 Statutes referred to Family Law Act, R.S.O. 1990, c. F.3, ss. 4 [as am.], 5(1), (3), (6), 33(10) [as am.] Fraudulent Conveyances Act, R.S.O. 1990, c. F.29 Authorities referred to Driedger, E.A., The Construction of Statutes (Toronto: Butterworths, 1974) Sullivan, R., Sullivan and Driedger on the Construction of Statutes, 4th ed. (Markham: Butterworths Canada Ltd., 2002)

Gary S. Joseph and Geoffrey Wells, for appellant. E. Corinne Korzen, for respondent. [page90 ]

The judgment of the court was delivered by

LANG J.A.:--

Overview

[1] This case concerns the interpretation of the legislative provision that permits a court to "award a spouse an amount that is more or less than half the difference between [their] net family properties": Family Law Act, R.S.O. 1990, c. F.3 ("FLA"), s. 5(6).

[2] The appellant sought such an award based on the trial judge's conclusion that the respondent's pre-separation conduct was unconscionable. The respondent's unconscionable conduct consisted of effectively gifting property with an approximate value of $190,000 to a third party. As found by the trial judge, the respondent did this so that the property would not be included in his net family property on the date of separation.

[3] Even though the trial judge found this conduct unconscionable, she was also of the view that the wording of s. 5(6), as well as decisions of this court, restricted any remedy for the appellant to 100 per cent of the difference between the parties' net family properties, which was only $10,466.

[4] On behalf of the Divisional Court panel, O'Driscoll J., in brief oral reasons, dismissed the appellant's appeal.

[5] On the basis that there is confusion in the case law regarding the parameters of the remedy provided by s. 5(6), this court granted the appellant leave to appeal limited to "whether s. 5(6) of the Family Law Act, R.S.O. 1990, c. F.3 empowers a Court to make an order awarding more than 100 per cent of the difference between the spouses' net family properties".

[6] On this further appeal, the appellant asks this court to find that s. 5(6) allows a court to award more than 100 per cent of the difference between the parties' net family properties. Specifically, the appellant argues that a court may award 100 per cent of the value of the offending party's net family property to his or her spouse. The appellant also asks this court to find that the trial judge ought to have done so in this case.

[7] For the reasons that follow, I would allow the appeal and vary the trial judgment to award the appellant 100 per cent of the value of the respondent's net family property.

Background

[8] This was a third marriage for the appellant, Astrid von Czieslik, and a second for the respondent, Anthony Ayuso. They married in 1989 and separated in 2000. Both parties owned [page91 ]properties at the date of marriage and both placed mortgages of different amounts on those properties to assist with the purchase of their matrimonial home. The appellant's contribution was approximately $140,000 from a mortgage she placed on her Maughan Crescent property and the respondent's contribution was approximately $60,000 from a mortgage on his Quebec Avenue property ("Quebec property").

[9] Unbeknownst to the appellant, the respondent registered a further $250,000 mortgage on his Quebec property in 1994, when the parties' marriage was beginning to deteriorate. The mortgage was in favour of Three R Corporation ("Three R"). While the respondent had no interest in Three R, as noted by the trial judge, its principal was his close friend. Apparently, Three R did not advance any funds under the mortgage and the respondent made no payments of either principal or interest.

[10] In January 2000, about ten months prior to the parties' separation, the respondent sold the Quebec property to an innocent third party for $330,000. The respondent allegedly received nothing from the proceeds of sale. According to the closing documentation, $189,683.14 was disbursed to Three R to discharge the mortgage. It is this amount, which I refer to as $190,000, that is at issue in this appeal.

[11] The appellant first learned about the sale of the Quebec property and the Three R mortgage and its discharge well after the parties' separation. She did not learn about the particulars of the transactions until trial.

[12] Since the separation, the parties have divorced and the respondent has retired to Spain. The appellant, also retired, lives in the matrimonial home and is in receipt of a disability pension.

Trial Result

[13] The trial judge concluded that the respondent "intentionally incurred [the Three R mortgage] for the purpose of keeping the equity held by him in that asset or any portion of the proceeds of its sale out of von Czieslik's hands". On the basis of the figures presented at trial, the trial judge found that, but for the respondent's surreptitious dealings, the respondent would have included the $190,000 mortgage proceeds, in his statement of net family property, resulting in a $95,000 equalization credit for the appellant.

[14] Since the appellant acknowledged that the respondent had effectively gifted the asset prior to the parties' separation, the respondent would not have had any ownership interest at the date of separation. Accordingly, there was no interest regarding this asset to be included in his net family property. [page92 ]

[15] The appellant did not attempt to reinstate the Quebec property or mortgage as an asset by applying to set aside the mortgage or the sale as fraudulent under the Fraudulent Conveyances Act, R.S.O. 1990, c. F.29 ("FCA"). The appellant also claimed no interest in the property by way of constructive trust or otherwise. Further, the appellant failed to persuade the trial judge that the $190,000 should be included in the respondent's net family property as a receivable owing to him by Three R. The appellant was unsuccessful in obtaining leave to appeal this finding.

[16] The trial judge did conclude, however, that the respondent's conduct in effectively giving the asset away was unconscionable on three separate bases under s. 5(6), including as an "intentional or reckless depletion of . . . net family property". This conclusion is not appealed.

[17] In discussing the amount of redress available under s. 5(6), and her understanding that she was precluded from awarding the appellant more than 100 per cent of the difference, the trial judge stated at paras. 47-50:

Counsel for Ayuso submits that the Court lacks power under the statute to do more than give 100 per cent of the difference in net family properties to the Plaintiff. She argues that the power to direct an unequal division under s. 5(6) of the Act is limited to the difference in net family properties and does not include a general power to rearrange family assets.

That interpretation of the Court's powers under section 5(6) of the Act is supported by the preponderance of Ontario authorities: see Stone v. Stone, 2001 24110 (ON CA), 55 O.R. (3d) 491 (C.A.), in which J.A. Feldman (at para. 42) states:

. . . section 5(6) of the Family Law Act only empowers the court to order an unequal division of the difference in value of net family property. It is not a provision which can be used to set aside previous dispositions of property to third parties. Consequently, any order must be based on the net family property amounts of the spouses as determined under s. 4. The order cannot reflect the value of any property which is not part of that net family property value. As a result, although the reckless depletion of assets by one spouse can be used by the court as a factor in assessing unconscionable conduct and making an unequal distribution, the section will only be useful if the spouse who made the transfers of property has sufficient property left on the valuation date to make an order for an unequal sharing an effective remedy for the wronged spouse.

This same authority, which follows the judgment of the Ontario Court of Appeal in Berdette v. Berdette (1991), 1991 7061 (ON CA), 3 O.R. (3d) 513, has since been applied by Justice Charron in Filipponi v. Filipponi, 1992 14009 (ON SC), 40 R.F.L. (3d) 296 and Justice MacKinnon in Zadegan v. Zadegan, [2002] O.J. No. 2190. I am of the view that this interpretation of the Court's jurisdiction under section 5(6) of the Act is likewise binding in this case.

In view of the factual findings as outlined above, I am of the opinion that Ayuso's reprehensible conduct makes it necessary for the Court to order that [page93 ]the full amount of the difference between the parties' respective family property, i.e., 100 per cent of that difference, should be paid by Ayuso to von Czieslik. To do otherwise, or to equalize the net family property, would be unconscionable in these circumstances.

[18] The trial judge's equalization calculation, which was based on each party's net family property statement, resulted in a $10,466 difference between the respondent's net family property of $74,385 and the appellant's of $63,919. [^1] The trial judge awarded the appellant 100 per cent of that difference, or $10,466, as the only available remedy to redress the respondent's removal of the $190,000 from the parties' net family property equation.

Divisional Court

[19] The appellant's appeal of the trial judge's decision was dismissed by the Divisional Court on the basis that s. 5(6) does not empower the court to order an unequal division beyond the difference in value of the parties' net family properties. In his reasons on behalf of the panel, O'Driscoll J. concluded at para. 9:

In view of the decisions of the Court of Appeal for Ontario quoted by the learned trial judge, we see no error in the way that she applied s. 5(6) of the FLA. For the foregoing reasons, this appeal is, therefore, dismissed.

The Family Law Act

[20] The preamble to the Family Law Act recites that, for the purpose of encouraging and strengthening the role of the family, "it is necessary to provide in law for the orderly and equitable settlement of the affairs of the spouses upon the breakdown of the partnership".

[21] Part I of the FLA deals with family property. Section 4 defines what property is included in, and excluded from, net family property on the valuation date, which is the parties' date of separation, and provides that net family property less than zero "shall be deemed to be equal to zero".

[22] Subsection 5(1) provides for equalization of the value of the parties' net family properties by granting one-half the difference between those values to the party whose net family property has the lesser value.

[23] Subsection 5(6) provides for an award where "the court is of the opinion that equalizing the net family properties would be unconscionable, having regard to" a number of factors. If equalization is found to be unconscionable, s. 5(6) permits a court to award the other spouse "an amount that is more or less than half [page94 ]the difference between the net family properties" (emphasis added). It is the interpretation of these words that is the issue on this appeal.

Analysis

[24] This question of statutory interpretation invokes the guiding principle frequently quoted with approval by the Supreme Court of Canada:

Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context, in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament. [^2]

[25] In my view, a reading of s. 5(6) in accordance with this principle leads to the conclusion that a court may award an amount of money that is more (or less) than the difference between the parties' net family properties. Since there is no cap, restriction or limitation on "more than", on its face, the legislation does not limit such an award to 100 per cent of the difference. While the legislature could have provided that the award may be "no more than", or "cannot exceed", the difference between the parties' net family properties, it did not do so. Thus, a plain reading of the provision does not support the respondent's argument that s. 5(6) only allows for reapportionment of the difference between the parties' net family properties.

[26] I find support for this interpretation by considering both the purpose of the provision and its context. Since the preamble of the FLA provides for the "orderly and equitable settlement of the affairs of the spouses", the FLA is intended to assist parties in obtaining a fair and objectively predictable resolution of family issues. To promote predictability and consistency, the legislation does not include a consideration of "fault" by a party, with two important exceptions where a party's conduct is sufficiently egregious to be labelled unconscionable.

[27] Regarding support, s. 33(10) provides that a "court may in determining the amount of support have regard to a course of conduct that is so unconscionable as to constitute an obvious and gross repudiation of the relationship". Regarding property, s. 5(6) provides for an award to a spouse where equalization would be unconscionable having regard to the listed circumstances. [page95 ]

[28] Property is equalized under the FLA through the three- step process set out by Cory J. in Rawluk v. Rawluk, 1990 152 (SCC), [1990] 1 S.C.R. 70, [1990] S.C.J. No. 4. First, a court determines the ownership of property under s. 4. Second, it calculates the equalization payment under s. 5(1). Third, and only after a determination of the first two steps, will a court turn its mind to what Cory J. described as "a last avenue of judicial discretion" provided by s. 5(6) to award an amount having regard to a spouse's unconscionable conduct. This approach of determining ownership, equalization, and unconsionability, in that order, was confirmed in Berdette v. Berdette (1991), 1991 7061 (ON CA), 3 O.R. (3d) 513, [1991] O.J. No. 788 (C.A.).

[29] Clearly, a reapportionment of net family property under s. 5(6) is not a declaration about ownership of property, but only about distributing the value of the parties' net family properties to redress unconsionable conduct. This is reinforced by the legislative restriction of s. 5(6)'s application to certain enumerated circumstances, none of which have to do with ownership, but all of which relate to fault-based conduct on the part of the other spouse. See Hamilton v. Hamilton, 1996 599 (ON CA), [1996] O.J. No. 2634, 92 O.A.C. 103 (C.A.) and Brett v. Brett (1999), 1999 3711 (ON CA), 44 O.R. (3d) 61, [1999] O.J. No. 1384 (C.A.).

[30] Accordingly, a s. 5(6) reapportionment is only available on those rare occasions when a party is able to meet the high threshold required to establish unconscionability. Only in such an exceptional case does the legislature give a court the discretion to fashion a remedy.

[31] In keeping with the FLA objective of providing for the "orderly and equitable" resolution of the parties' disputes, the legislature furnished the courts with a remedy within the FLA, which permits redress for a wronged spouse who is able to establish egregious conduct on the part of the other spouse that amounts to unconscionable conduct. In my view, a narrow interpretation of s. 5(6) would not meet this objective.

[32] The interpretation urged by the respondent, which would restrict the court to reapportioning only the difference between the parties' net family properties, would not be sufficient in many cases to provide a meaningful remedy and, thus, would not achieve the "equitable sharing" envisaged by the legislature. This is so because the difference between parties' net family properties may vary radically from case to case. In one case the difference may be minimal, as it is for these parties, and in another it may be significant. There is simply no rational connection between the unconscionable conduct and the amount of the "difference" between the parties' net family properties. Moreover, [page96 ]there would be little point in providing a remedy for unconscionable conduct and then restricting that remedy to the difference in the parties' net family properties.

[33] Since such a narrow interpretation would render the legislature's remedy meaningless in many cases -- for example, where there is unconscionable conduct, but the difference between the net family property values is very little -- it is an interpretation to be avoided. [^3] An interpretation is to be preferred that provides a court with reasonable tools to provide redress to the wronged party. In my view, such an interpretation is available on the plain wording of s. 5(6) considered in the context of the legislation's purpose.

[34] The legislature's delineation of property to be included as net family property references property that the parties accrued during their partnership. When a party absconds with part of that property through unconscionable conduct, he or she has altered the value of the net family property that the legislature intended would be equalized. It must be that, by the enactment of s. 5(6), the legislature intended to give the courts the ability to correct the wrong by awarding the other party the value of the offending party's net family property.

[35] Permitting a court to award an amount up to the whole of an offending spouse's net family property as is appropriate to compensate for unconscionable conduct provides a real, substantial and meaningful remedy for the unconscionable conduct. Such a remedy serves, as far as is practicable, to rectify the otherwise unconscionable result and, at the same time, sends a warning to spouses tempted to hide or divert assets that it is not worthwhile to do so.

[36] Accordingly, an interpretation that gives the court the authority to award an amount up to the value of the offending spouse's net family property accords most fully with the purpose and intent of the legislation.

[37] In my view, to the extent the court below and other courts have interpreted earlier decisions of this court to arrive at a contrary result, they have been in error.

[38] The primary authority relied upon by the trial judge and the Divisional Court in this case is Stone v. Stone (2001), 2001 24110 (ON CA), 55 O.R. (3d) 491, [2001] O.J. No. 3282 (C.A.). The particular sentence in [page97 ]Stone appears at para. 42: "Fourth, s. 5(6) of the Family Law Act only empowers the court to order an unequal division of the difference in value of net family property."

[39] This sentence, however, cannot be read in isolation and, for the reasons that follow, does not limit a court's discretion under s. 5(6).

[40] First, Stone, supra, was not about the parameters of a s. 5(6) award. Rather, it was about property to be included in the first "ownership" step of the equalization process. Stone concluded that a spouse's pre-separation property that no longer belonged to a spouse on valuation day could not be included in their net family property. In addition, it held that the FLA is not a complete and exclusive code of conduct so that a party does not have to exhaust its FLA remedies before seeking a remedy under the FCA to set aside a fraudulent transaction. Thus, a spouse applying to equalize assets under the FLA could also apply to set aside a conveyance as fraudulent under the FCA.

[41] However, to apply under the FCA, the applicant spouse must have status as "a creditor or other". The question in Stone was whether the application of s. 5(3) of the FLA provided that status. [^4] Status under the FCA was the issue in Stone. No relief was sought under s. 5(6) of the FLA. Since Stone did not consider the interpretation of s. 5(6), the extracted sentence cannot be taken as purporting to address the quantum of a s. 5(6) award.

[42] Second, the fact that the sentence relied upon has been taken out of context is evident from reading it alongside the sentence that immediately follows: "It [s. 5(6)] is not a provision which can be used to set aside previous dispositions of properties to third parties." Thus, Stone stands only for the proposition that a party cannot use s. 5(6) to settle ownership issues and not as a definitive interpretation of the parameters of a s. 5(6) award.

[43] Third, the sentence in question is to be contrasted with para. 39 of Stone, which states that in the event of unconscionable conduct, a court "will order a payment of more or less than one-half of the difference". The language in para. 39 closely mirrors the actual language of s. 5(6). This sentence supports the conclusion that Stone was not intended to determine the parameters of a s. 5(6) award.

[44] Finally, in Stone, the appellant was seeking a remedy under the FCA because the respondent had virtually nothing in [page98 ]his estate from which the appellant could claim a s. 5(6) award. In this case, however, the appellant elected to rely on the unconscionability provisions of s. 5(6), rather than pursue other avenues of redress.

[45] In addition to Stone, the respondent relies on the decisions of Berdette, supra, Merklinger v. Merklinger (1992), 1992 7539 (ON SC), 11 O.R. (3d) 233, [1992] O.J. No. 2201 (Gen. Div.) and Hamilton, supra, to support his argument that a s. 5(6) award is restricted to the difference between the parties' net family properties. However, those cases do not decide the question at issue in this case.

[46] In Berdette, the wife acquired two properties with her own money and registered both in joint tenancy with her husband. The trial judge found as a fact that, by doing so, the wife gave one-half the value of each property to the husband as a gift.

[47] On appeal, the wife raised four grounds, one of which was that the trial judge erred in failing to apply s. 5(6). This court, however, found the question of gift to be the essential issue. Since it was the wife who had given the properties to the husband, she could not argue that his offending conduct made her voluntary gift unconscionable. Accordingly, Berdette stands for the proposition that s. 5(6) has no application to the s. 4 preliminary question of ownership of the net family property.

[48] This court in Berdette did go on to give a second reason for holding that s. 5(6) did not apply: since the parties' net family properties were equal, there would be no equalization payment under s. 5(1) to vary under s. 5(6). However, I do not read this secondary reason as determining that there can be no award when the parties' net family properties are equal, [^5] particularly because Berdette was not directly concerned with the quantum of the appropriate award when the other spouse's conduct was found to be unconscionable. Rather, it dealt only with equalization where there was no unconscionable conduct. Berdette neither discussed the purpose of s. 5(6) nor analyzed the wording of s. 5(6).

[49] In any event, other than when the parties' net family properties are zero, parties will virtually always have different amounts of savings or pension or cars or jewellery or debt and, hence, differing amounts of net family property. Only in the most unusual of circumstances would a situation arise where the parties' net family properties are equal. To the extent that such a situation does arise, as I read the wording of s. 5(6) applied to the unusual situation where there is no difference between the parties' net family properties, a court may award an amount to the [page99 ]wronged spouse that is greater than zero, up to a maximum of the value of the offending party's net family property.

[50] Accordingly, I am of the view that s. 5(6) permits a court to award up to 100 per cent of the value of a party's net family property to the other spouse.

[51] I am not persuaded otherwise by the decision of Osborne J.A. in Hamilton, which concluded that s. 5(6) had no application to the facts of that case. For this reason, Osborne J.A.'s obiter comment about a court's consideration of whether "to reduce or eliminate" a s. 5(6) equalization payment is of no assistance to the respondent. I note that his reasons did not include an explanation of his choice of words and did not discuss the point or the type of reapportionment that is directly at issue on this appeal.

[52] The case of Zadegan v. Zadegan, [2002] O.J. No. 2190 (S.C.J.), also relied upon by the trial judge, is similarly of no assistance because it relied on, what in my view, is an incorrect interpretation of Stone and Berdette regarding the parameters of s. 5(6). In any event, the trial judge in Zadegan made a specific finding that there was no unconscionable conduct that would invoke s. 5(6). In those circumstances, the trial judge's comments on s. 5(6) were obiter.

[53] Similarly, Merklinger does not advance the discussion because the primary issue in that case was whether a spouse's post-separation conduct was relevant to a s. 5(6) award. In Merklinger, the trial judge determined that the husband's unconscionable conduct was sufficiently addressed by eliminating the potential $175,000 equalization payment to which the husband would otherwise have been entitled from the wife. As a result, it was unnecessary for the court to consider whether the wife should have received an additional amount from the husband. For this reason, the case does not directly address whether a court has jurisdiction to award more than 100 per cent of the difference between the parties' net family properties.

[54] I am cognizant of annotations to Stone, Berdette, Filipponi v. Filipponi, 1992 14009 (ON SC), [1992] O.J. No. 367, 40 R.F.L. (3d) 296 (Gen. Div.) and Kuzmanovic v. Kuzmanovic, 2001 28195 (ON SC), [2001] O.J. No. 1450, 16 R.F.L. (5th) 300 (S.C.J.), all written by the late Professor James G. McLeod, which support an interpretation that restricts a s. 5(6) award to the difference in value between the parties' net family property.

[55] To a certain extent, Professor McLeod's support of this restrictive interpretation was based on his perception of unfairness if no award is available when there is no difference in value between the parties' net family properties. As I have indicated, that interpretation does not survive scrutiny and, in my view, a [page100] court does have the authority to make an award under s. 5(6) up to the value of the payor's net family property. In any event, Professor McLeod's conclusion also depends on an interpretation of the cases that I have concluded is not sustainable, particularly regarding Stone, which Professor McLeod saw as the definitive authority.

[56] I find support for my interpretation of these cases in Roseneck v. Gowling (2002), 2002 45128 (ON CA), 62 O.R. (3d) 789, [2002] O.J. No. 4939 (C.A.), where Weiler J.A. noted at para. 53 that in view of her conclusion that there was no unconscionable conduct "it is not necessary for me to resolve the question of whether the court may make an order under s. 5(6) which exceeds the difference between the spouses' net family property". Clearly, in her view, the parameters of the calculation of a s. 5(6) award have remained open.

[57] Finally, Kuzmanovic, supra, is one of the few decisions that directly addresses whether the amount of an award under s. 5(6) can exceed the amount of the difference of the parties' net family properties. In that case, in addition to an equalization payment of $150,767, Quinn J. awarded the wife a further $305,961 from the husband's net family property under s. 5(6). This award was to compensate the wife for the husband's unconscionable conduct in fraudulently depriving her of the value of the shares she had held in the parties' company. In reaching this result, Quinn J. said at para. 46:

Section 5(6) allows the court to award an amount that is "more . . . than half the difference between the net family properties." It does not, in my view, restrict the court to reapportioning only the difference. The section does not say, "more . . . than half, but no more than all, the difference." It reads, "more . . . than half the difference."

I agree.

[58] In summary, for the reasons I have stated, on a plain reading of the FLA, a court is not restricted in making a s. 5(6) award to the difference between the parties' net family property, even when that difference is zero. As s. 5(6) provides, a court may award "an amount that is more or less than half the difference between the net family properties". Accordingly, a court may award an amount that is greater than the difference between the parties' net family properties. If the difference between the parties' net family properties is zero, a court may still award more or less than that amount, subject to the restriction that the payment ordered cannot exceed the total value of the payor's net family property.

[59] Applying this conclusion to the facts of this case, the respondent's conduct in removing the $190,000 from his net [page101] family property was found by the trial judge to be unconscionable. To redress this conduct, to the extent permitted by s. 5(6), the appellant is entitled to the value of the respondent's net family property, which was found by the trial judge to be $74,385.

Result

[60] In the result, I would allow the appeal and vary para. 1 of the final order of Stewart J. dated June 11, 2004 to award the appellant 100 per cent of the value of the respondent's net family property in the amount of $74,385.

[61] The successful appellant is entitled to her costs of this appeal and of her leave motion, which I would fix at $17,500 inclusive of GST and disbursements.

Appeal allowed.

[^1]: This calculation included the value of each party's 50 per cent interest in their $203,000 martimonial home in which the appellant resides.

[^2]: Elmer A. Driedger, The Construction of Statutes (Toronto: Butterworths, 1974) at p. 67, as cited in Ruth Sullivan, Sullivan and Driedger on the Construction of Statutes, 4th ed. (Markham: Butterworths Canada Ltd., 2002) at p.1.

[^3]: See Sullivan, supra, at pp. 243-44: "Statutory interpretation is founded on the assumption that legislatures are rational agents. . . . An interpretation that would tend to frustrate the purpose of the legislation or the realization of the legislative scheme is likely to be labelled absurd.

[^4]: Subsection 5(3) provides that where "there is a serious danger that one spouse may improvidently deplete his or her family property", the other spouse may apply to divide the difference in their net family properties as if the parties were separated.

[^5]: Except, of course, when they are both nil.