Ward v. Ward

111 O.R. (3d) 81

2012 ONCA 462

Court of Appeal for Ontario,

Feldman, Sharpe and Simmons JJ.A.

June 29, 2012

Family law -- Property -- Equalization of net family property -- Unconscionability -- Wife staying home to raise family while husband earned high salary -- Wife's father giving her $200,000 -- Husband pressuring wife to use $180,000 of that gift to pay down line of credit on jointly owned matrimonial home at time when marriage was in trouble -- Husband leaving wife two months later -- Trial judge not erring in finding that equal division of net family property would be unconscionable.

The parties were married for 11 years and had two young children. Shortly before the separation, the wife received a gift of $200,000 from her father. The husband wanted to use the money to pay down the line of credit on the jointly owned matrimonial home. Hoping to save the troubled marriage, the wife agreed to give the husband $180,000 for that purpose. The husband left the marriage two months later. The trial judge found that the wife was entitled to an unequal division of the net family property based on unconscionability under s. 5(6) of the Family Law Act, R.S.O. 1990, c. F.3. In reaching that conclusion, he took into account (a) allowing the husband to reap a $90,000 benefit from the gift to the wife would give him a windfall benefit because of the timing of the gift; (b) the wife acceded to the husband's pressure to save a crumbling marriage, and the husband left soon afterward; (c) the wife had given up her career to raise the children while the husband had significant earning power as an executive; (d) the gift came from the wife's father's savings and would not be repeated; and (e) if the wife had not given in to the husband's insistence that the gift be used to pay down the line of credit, she would have retained the full proceeds as the gift was excluded property under s. 4(2) of the Act. He found that an equal division of the net family property would shock the conscience of the court. The husband appealed.

Held, the appeal should be dismissed.

Per Feldman J.A. (Sharpe J.A. concurring): The trial judge fully understood that the test for unconscionability is very high, and is not mere unfairness but a shock to the conscience. In the circumstances of this case, he was entitled to find that an equal division of the net family property would be unconscionable.

Per Simmons J.A. (dissenting): The trial judge did not make the factual findings needed to support the unconscionability argument. In particular, he did not find that the husband and wife openly disagreed about how the gift was to be used, that the husband pressured or persuaded the wife to use the gift to pay down the line of credit and that the husband knew the wife was advancing the money to save the marriage. Moreover, the trial judge failed to consider the central question under s. 5(6) of the Act of whether equalizing the parties' net family property would be unconscionable, but instead focused on the treatment of a single asset, the gift to the wife from her father; he failed to appreciate the unique treatment of the matrimonial home under the Act; and he relied improperly on factors relevant to spousal support, as opposed to equalization, in his unconscionability analysis and, in any event, misstated the wife's earning capacity. [page 82]

APPEAL from the order of J.C. Murray J., [2011] O.J. No. 344, 2011 ONSC 570, 5 R.F.L. (7th) 215 (S.C.J.) for an unequal division of net family property.

Cases referred to Best v. Best, 1999 700 (SCC), [1999] 2 S.C.R. 868, [1999] S.C.J. No. 40, 174 D.L.R. (4th) 235, 242 N.R. 1, J.E. 99-1405, 123 O.A.C. 1, 21 C.C.P.B. 1, 49 R.F.L. (4th) 1, 89 A.C.W.S. (3d) 540; Bobyk v. Bobyk (1993), 1993 8535 (ON SC), 13 O.R. (3d) 559, [1993] O.J. No. 1323, 50 E.T.R. 186, 47 R.F.L. (3d) 310, 41 A.C.W.S. (3d) 131 (Gen. Div.); Boisvert v. Boisvert, 2007 24073 (ON SC), [2007] O.J. No. 2555, 40 R.F.L. (6th) 158, 158 A.C.W.S. (3d) 614 (S.C.J.); Brett v. Brett (1999), 1999 3711 (ON CA), 44 O.R. (3d) 61, [1999] O.J. No. 1384, 173 D.L.R. (4th) 684, 119 O.A.C. 94, 46 R.F.L. (4th) 433, 87 A.C.W.S. (3d) 960 (C.A.); Canada (Director of Investigation and Research, Competition Act) v. Southam Inc., 1997 385 (SCC), [1997] 1 S.C.R. 748, [1996] S.C.J. No. 116, 144 D.L.R. (4th) 1, 209 N.R. 20, J.E. 97-632, 50 Admin. L.R. (2d) 199, 71 C.P.R. (3d) 417, 69 A.C.W.S. (3d) 586, REJB 1997-00386; Chalifoux v. Chalifoux, [2008] A.J. No. 174, 2008 ABCA 70, 425 A.R. 361; Clewlow v. Clewlow, 2004 7355 (ON SC), [2004] O.J. No. 3468, [2004] O.T.C. 757, 133 A.C.W.S. (3d) 110 (S.C.J.); Conway v. Conway, 2005 14136 (ON SC), [2005] O.J. No. 1698, 16 R.F.L. (6th) 23, 138 A.C.W.S. (3d) 1112 (S.C.J.); Elsom v. Elsom, 1989 100 (SCC), [1989] 1 S.C.R. 1367, [1989] S.C.J. No. 48, 59 D.L.R. (4th) 591, 96 N.R. 165, [1989] 5 W.W.R. 193, J.E. 89-816, 37 B.C.L.R. (2d) 145, 20 R.F.L. (3d) 225, 15 A.C.W.S. (3d) 210; Ezurike v. Ezurike, [2008] N.S.J. No. 415, 2008 NSCA 82, 269 N.S.R. (2d) 72, 169 A.C.W.S. (3d) 819; Hickey v. Hickey, 1999 691 (SCC), [1999] 2 S.C.R. 518, [1999] S.C.J. No. 9, 172 D.L.R. (4th) 577, 240 N.R. 312, [1999] 8 W.W.R. 485, J.E. 99-1206, 138 Man. R. (2d) 40, 46 R.F.L. (4th) 1, REJB 1999-12847; Housen v. Nikolaisen, [2002] 2 S.C.R. 235, [2002] S.C.J. No. 31, 2002 SCC 33, 211 D.L.R. (4th) 577, 286 N.R. 1, [2002] 7 W.W.R. 1, J.E. 2002-617, 219 Sask. R. 1, 10 C.C.L.T. (3d) 157, 30 M.P.L.R. (3d) 1, 112 A.C.W.S. (3d) 991; Kozuch v. Kozuch, [1992] O.J. No. 1893 (Gen. Div.); Linov v. Williams, [2007] O.J. No. 907, 155 A.C.W.S. (3d) 884 (S.C.J.); M. (M.E.) v. L. (P.), 1992 113 (SCC), [1992] 1 S.C.R. 183, [1992] S.C.J. No. 4, 88 D.L.R. (4th) 577, 132 N.R. 266, J.E. 92-209, 44 Q.A.C. 178, [1992] R.D.F. 119, EYB 1992-67845, 37 R.F.L. (3d) 349, 31 A.C.W.S. (3d) 119; McDougall v. McDougall, [1996] O.J. No. 1715, 2 O.T.C. 361, 63 A.C.W.S. (3d) 298 (Gen. Div.); Mehmeti v. Mehmeti, [1999] O.J. No. 3534 (S.C.J.); Murphy v. Murphy, [1991] O.J. No. 2905 (C.A.), affg 1987 8279 (ON SC), [1987] O.J. No. 1729, 17 R.F.L. (3d) 422, 12 A.C.W.S. (3d) 216 (Dist. Ct.); P. (S.) v. R. (M.), 1996 162 (SCC), [1996] 2 S.C.R. 842, [1996] S.C.J. No. 81, 137 D.L.R. (4th) 609, 199 N.R. 241, J.E. 96-1685, 25 R.F.L. (4th) 1, 65 A.C.W.S. (3d) 61; Serra v. Serra (2009), 93 O.R. (3d) 161, [2009] O.J. No. 432, 2009 ONCA 105, 307 D.L.R. (4th) 1, 246 O.A.C. 37, 61 R.F.L. (6th) 1; Szuflita v. Szuflita Estate, 2000 22556 (ON SC), [2000] O.J. No. 746, 4 R.F.L. (5th) 313, 95 A.C.W.S. (3d) 690 (S.C.J.); Ward v. Ward, [2011] O.J. No. 4589, 2011 ONSC 6066 (S.C.J.) Statutes referred to Family Law Act, R.S.O. 1990, c. F.3, ss. 4(1), (2) [as am.], para. 5, 5, (1), (6), (c), (h), (7), 14 [as am.], 33(8) [as am.], (9) [as am.]

Marcel R. Banasinski, for appellant. Douglas Quirt, for respondent.

[1] FELDMAN J.A. (SHARPE J.A. concurring): -- On an application following separation to decide only the remaining unresolved financial issues, the trial judge determined that the wife [page 83] was entitled to an unequal division of the net family property based on unconscionability under s. 5(6) of the Family Law Act, R.S.O. 1990, c. F.3 (the "Act"). The husband appeals from that determination. (1) Background Facts

[2] The background facts can be stated fairly briefly. The parties are spouses who were married for 11 years, then separated on March 30, 2007. They have two young boys, one born in 1999 and one in 2003. The children live with the mother in the matrimonial home, a house in Mississauga. The home is jointly owned and was subject to a line of credit secured by a mortgage. The mother was granted exclusive possession of the home by court order dated August 4, 2009, and it was agreed that she would purchase the husband's interest. The parties agreed on all values and prices. The only issue was how much money the husband owed the wife for the equalization payment.

[3] In 2001, the wife agreed to give up her career and stay at home to raise the children. The husband was the sole breadwinner, whose earnings as an executive ranged up and down between $263,000 and $331,000 between 2006 and 2009. Following the separation, the wife began her own small physical training business, from which she intends to earn income. In 2009, her income from the business was $20,000.

[4] The parties eventually consented to a final order regarding spousal and child support on September 2, 2009. [^1] When the support payments began in October 2009, the wife assumed responsibility for all the expenses of the house, which up to that time had been covered by the husband.

[5] In December 2006, shortly prior to the separation, the wife received a gift of $200,000 from her father. By that time, the marriage had been troubled for about four years, but the husband had not said that he intended to leave. They disagreed on what to do with the gift. She wanted to save the money for retirement, while he wanted to pay down the line of credit on the matrimonial home. Ultimately, she agreed to give him $180,000 of the gift to pay down the line of credit on the home, which she did on January 4, 2007. Her evidence was that she expected the husband to pay her back because the money represented her inheritance from her father. However, there was no other basis [page 84] for that belief and the husband denied any agreement to that effect. Then in March 2007, he announced that he had purchased a condominium and would be leaving the marriage and the home.

[6] In the family law proceedings that followed, the parties were eventually able to resolve all issues except two: (1) whether the wife was obliged to pay the husband occupation rent for the time she occupied the home with the children after he moved out; and (2) whether she was entitled to an unequal division of the net family property by the amount of $90,000, which was the amount by which the husband benefitted by paying off the line of credit on the matrimonial home using the gift money from the wife's father.

[7] The trial judge denied the husband's claim for occupation rent and ordered the unequal division of net family property. (2) The Trial Judge's Reasons

[8] The trial judge set out s. 5(6) of the Act, which allows the court to award 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 would be "unconscionable" having regard to the listed factors. He also acknowledged that a court's discretion to make such an award is limited because the standard for finding unconscionability is a high one, requiring that equalizing the net family properties would "shock the conscience of the court".

[9] He then discussed the factual circumstances to be considered in this case. The first was the timing. The gift from the father to the wife and her transfer of the $180,000 to the husband to pay down the line of credit on the home occurred within a couple of months of the couple's separation. The result was that by the date of separation, the husband's net family property, represented by his interest in the matrimonial home, had increased by $90,000 because of the wife's gift from her father.

[10] Second, the wife's gift from her father was excluded property under s. 4(2) of the Act (before it was used to pay down the line of credit on the home), not property accumulated during the marriage that is intended under the Act to be shared.

[11] Third, the wife testified that she expected to be paid back by the husband, although she had no specific basis for that expectation. The trial judge could not therefore give that expectation much weight, but observed that the presumption of resulting trust could lead to the same conclusion. Had the husband kept the $180,000 and not used it to pay down the line of credit on the home, then under s. 14 of the Act, the wife could [page 85] have claimed that he held the money on resulting trust for her. The trial judge concluded that it was therefore manifestly unjust to allow the husband to take advantage of the alternative presumption, also contained in s. 14 of the Act, that the parties intended to benefit equally from applying the funds to pay down the line of credit on the jointly owned home.

[12] Fourth, the trial judge noted that the gift from the wife's father was to her only and not to both spouses. In fact, she testified that her father told her not to give the money to her husband.

[13] Fifth, the trial judge looked at other circumstances in the marriage. By deciding to give up her career and stay home to look after the two children, the wife necessarily compromised her earning opportunities. She returned to work following the separation but was only earning a modest income of $20,000 by 2009, while at the time of separation, the husband was earning $300,000. The wife has primary responsibility for the children's care.

[14] Both parties testified at the trial. The trial judge made findings of fact based on the evidence he heard. He found [at para. 41] that the wife hoped that giving her husband the $180,000 "might assist in the resolution of marital difficulties". The trial judge also concluded that it was a reasonable assumption that the wife would not have advanced the money to pay down the mortgage in January had she known that her husband was going to leave the marriage a mere two months later, namely, in March. I note that in order to draw these conclusions, the trial judge must have accepted the wife's evidence that it was the husband who decided to leave the marriage and announced that he had purchased a condominium. The husband testified that it was a mutual decision.

[15] The trial judge also relied on the fact that the wife did not have independent legal advice and that there was no evidence that she fully understood the legal consequences under the Act of transferring the gift from her father to her husband to apply to the line of credit on the jointly owned home.

[16] The trial judge then gave his legal conclusions based on the statute and the case law. He found that s. 5(6)(c) and (h) were applicable. Section 5(6)(c) applies where part of a spouse's net family property consists of a gift from the other spouse. In this case, the husband's net family property increased by $90,000 as a result of the funds the wife advanced to him to pay the mortgage.

[17] Section 5(6)(h) is a section that allows the court, in exercising its discretion to order an unequal division, to consider [page 86] other circumstances relating to "the acquisition, disposition, preservation, maintenance or improvement of property". The trial judge concluded that the circumstances surrounding the husband's acquisition of an additional $90,000 in equity in the jointly owned home were such that equalization without an adjustment would be unconscionable.

[18] The trial judge then turned to the case that he felt, although not fully on all fours, was helpful factually. In Mehmeti v. Mehmeti, [1999] O.J. No. 3534 (S.C.J.), part of the factual matrix that led Low J. to order an unequal division of net family property based on unconscionability was that settlement funds the wife recovered for her injuries in a car accident were used to reduce the mortgage indebtedness on the matrimonial home, just six months prior to the end of the marriage.

[19] Based on all of the factual circumstances and the law, the trial judge then applied the test and concluded [at para. 45] that, "[f]or the respondent to reap a windfall benefit of $90,000 in the circumstances of this case would shock the conscience of the Court. Indeed, it would shock the conscience of any fully informed and reasonable observer." (3) Issue

[20] The only issue on the appeal is whether the trial judge made a reversible error in concluding that the threshold for unconscionability under s. 5(6) of the Act was met in the circumstances of this case. (4) Analysis

[21] In order to analyze and test the reasons of the trial judge, the court must apply the correct standard of review. The trial judge in this case determined the facts based on the record before him, set out the law including the high standard for finding unconscionability, then applying the law to the facts, he exercised his statutory discretion to determine whether the court was of the opinion that equalizing the net family properties would be unconscionable. In making such a decision, the trial judge must be correct on the law, while his findings of fact must not be the subject of palpable and overriding error. To the extent that the Family Law Act gives the trial judge discretion in the division of matrimonial property, intervention is warranted only if there is a misdirection or decision so clearly wrong that it amounts to an injustice: Chalifoux v. Chalifoux, [2008] A.J. No. 174, 2008 ABCA 70, 425 A.R. 361, at paras. 18 and 44; [page 87] Ezurike v. Ezurike, [2008] N.S.J. No. 415, 2008 NSCA 82, 269 N.S.R. (2d) 72, at para. 6; Elsom v. Elsom, 1989 100 (SCC), [1989] 1 S.C.R. 1367, [1989] S.C.J. No. 48, at para. 16.

[22] Section 5(1) of the Act provides the general rule requiring equalization of net family property upon marriage breakdown:

5(1) When a divorce is granted or a marriage is declared a nullity, or when the spouses are separated and there is no reasonable prospect that they will resume cohabitation, the spouse whose net family property is the lesser of the two net family properties is entitled to one-half the difference between them.

[23] However, s. 5(6) gives the court the power to award an unequal division where an equal division would, in the court's opinion, be unconscionable, based on eight listed criteria. That section provides:

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.

[24] Section 5(7) explains the purpose and intent of these provisions:

5(7) The purpose of this section is to recognize that child care, household management and financial provision are the joint responsibilities of the spouses and that inherent in the marital relationship there is equal contribution, whether financial or otherwise, by the spouses to the assumption of these responsibilities, entitling each spouse to the equalization of the net family properties, subject only to the equitable considerations set out in subsection (6). [page 88]

[25] As the trial judge said, the case law has made it clear that the intent of the section is not to alleviate every situation that may be viewed as in some ways unfair or inequitable, because equal sharing should occur in most cases. The Act creates a scheme for property sharing upon marriage breakdown that is intended to promote predictability and thereby discourage litigation. If courts were to deviate from the scheme of the Act wherever it gave rise to an unfair result, this would have the undesirable effect of encouraging parties to litigate their claims.

[26] Blair J.A. most recently repeated the test in Serra v. Serra (2009), 93 O.R. (3d) 161, [2009] O.J. No. 432, 2009 ONCA 105, at para. 47:

To cross the threshold, an equal division of net family properties in the circumstances must "shock the conscience of the court." (Citations deleted)

[27] The high threshold for finding unconscionability is based on the criteria set out in s. 5(6). In Serra, the court held that a finding of unconscionability need not rest on fault-based conduct and may flow from the financial result that the spouses are left with. Again I quote from Serra, at paras. 57 and 58:

Thus, to ensure adherence to the policy choices made by the Legislature, and reflected in s. 5(7) and the preamble of the Act, equalization of net family properties is the general rule. As with most rules, however, there are exceptions -- in this case, the high-threshold unconscionability provisions of s. 5(6). This exception is expressly contemplated by the caveat "subject only to the equitable considerations set out in subsection (6)" set out in s. 5(7). Judicial discretion with respect to equalization payments is therefore severely restricted, by statutory design, but it is not eliminated altogether since there is discretion to order an unequal payment where "the court is of the opinion that equalizing the net family properties would be unconscionable": see, for example, Skrlj v. Skrlj (1986), 1986 6314 (ON SC), 2 R.F.L. (3d) 305 at p. 309 (Ont. S.C.).

There is no principled reason that I can see, given the language of the Act and its purpose or objects, to confine the word "unconscionable" in s. 5(6) only to circumstances arising from fault-based conduct on the part of one of the spouses. Although unconscionable conduct is obviously an appropriate consideration in determining whether equalizing the net family properties would be unconscionable, in my opinion the true target of the limited exception to the general rule is a situation that leads to an unconscionable result, whether that result flows from fault-based conduct or not. [Emphasis in original]

[28] The trial judge recited and applied the correct legal test and recognized that the discretion to make an unequal division pursuant to s. 5(6) was strictly limited. He stated, at para. 34: [page 89]

The courts have limited judicial discretion in this area by setting a high standard for a finding of unconscionability. The Ontario Court of Appeal has interpreted "unconscionable" to mean "shocking the conscience of the court". See Macdonald v. Macdonald (1997), 1997 14515 (ON CA), 33 R.F.L. (4th) 75 (Ont. C.A.). Various similarly strict standards, "shockingly unfair", and "patently unfair or "inordinately inequitable" have also been applied. See Mehmeti v. Mehmeti, [1999] O.J. No. 3534 at para. 12 and the cases referred to therein.

[29] Applying this strict standard, the trial judge concluded that allowing the husband to reap a $90,000 benefit from the gift to the wife would be to countenance a result that was manifestly unjust and unconscionable. It would allow the husband to gain a windfall benefit because of the timing of the wife's father's gift to her. The marriage was crumbling, the husband persuaded the wife to put the gift money towards the house, the wife acceded in order to try to save the marriage but then the husband left the marriage. The wife had given up her career to raise the children. The husband had significant earning power while the wife's was limited. The gift from her father came from his savings and would not be repeated. Had the wife not given in to the husband's insistence that the gift be used to pay down the line of credit, she would have retained the full proceeds. Taking all these circumstances into account, the trial judge was satisfied that a s. 5(6) order for unequal distribution of net family property was required to avoid an unconscionable result that would shock the conscience of the court.

[30] As the trial judge clearly recognized, not every case where a spouse receives a gift that is comingled with matrimonial property will warrant a subsequent unequal division of property. There are numerous examples of cases where a claim is made for an unequal division, but the circumstances were only minimally unfair and the courts rightly declined to characterize them as unconscionable. For example, in Bobyk v. Bobyk (1993), 1993 8535 (ON SC), 13 O.R. (3d) 559, [1993] O.J. No. 1323 (Gen. Div.), the wife gave the husband $70,000 to invest for their mutual benefit, but he made the investments only in his name. There was, however, no unconscionability, because the money was not dissipated and the increase in value increased the husband's net family property which enured to the benefit of both. The trial judge concluded (at p. 583 O.R.): "In the final analysis, the unconscionable conduct of the husband in appropriating the wife's funds to his own use does not give rise to an unconscionable result. The claim for an unequal division of family properties is dismissed."

[31] A more recent example that also involved an inheritance is Conway v. Conway, 2005 14136 (ON SC), [2005] O.J. No. 1698, 16 R.F.L. (6th) 23 (S.C.J.). In that case, the parties each received inheritances mid-marriage (married 1972, inheritances in 1986 and 1993, [page 90] separated in 2000), and both contributed the moneys to the marriage. The wife claimed an unequal division because she used her inheritance to renovate the matrimonial home. The trial judge refused to make the requested order, stating (at paras. 71 and 75):

The threshold test under section 5(6) is whether an equalization of net family properties would be unconscionable. This is a rigorous test, it does not mean inequitable. . . . . .

Ms. Conway's inheritance cannot be considered in isolation. All factors are relevant . . . The parties did conduct their financial and family affairs as an economic partnership. Each contributed in different ways. All financial resources, income and inheritances, were used for the family. In result, the evidence cannot support a finding of unconscionability. (Citations omitted)

[32] In Clewlow v. Clewlow, 2004 7355 (ON SC), [2004] O.J. No. 3468, [2004] O.T.C. 757 (S.C.J.), the parties were married for 20 years. Three years before they separated, the wife inherited the matrimonial home, and the family lived there until the parties separated three years later. The trial judge again rejected the wife's claim for an unequal division. He observed that while it could certainly be argued that it was unfair for the husband to benefit to such a degree from the wife's inheritance, it was not unconscionable. This was a 20-year marriage, in which the husband worked when he could and contributed his paycheques. Importantly, the family lived in the home for almost three years before separation. In other words, there was neither unconscionable conduct nor an unconscionable outcome.

[33] I accept the appellant's submission that the test for unconscionability is a high one. The courts have repeatedly cautioned that the test should not be diluted to mean inequitable: see, for example, Boisvert v. Boisvert, 2007 24073 (ON SC), [2007] O.J. No. 2555, 40 R.F.L. (6th) 158 (S.C.J.), at para. 102. The trial judge was alive to the statutory threshold to be met, and articulated the test correctly.

[34] The appellant in this case is effectively arguing that although the trial judge properly articulated the test, he exceeded his discretion by concluding in all the circumstances that the financial result of allowing the husband to benefit from the gift was sufficiently shocking to warrant an unequal division of net family property.

[35] In P. (S.) v. R. (M.), 1996 162 (SCC), [1996] 2 S.C.R. 842, [1996] S.C.J. No. 81, Gonthier J. reiterated, in the context of another family law issue, that a court of appeal should not intervene in discretionary decisions of trial judges unless there is an error of law or an [page 91] "egregious error of fact". He quoted [at para. 33] from the Supreme Court's earlier decision in M. (M.E.) v. L. (P.), 1992 113 (SCC), [1992] 1 S.C.R. 183, [1992] S.C.J. No. 4, at p. 206 S.C.R.:

In the case at bar, the record contained evidence which justified the trial judge in exercising his discretion to deny the compensatory allowance to the respondent. The Court does not have to decide whether it would have exercised its discretion in the same way. Questioning a trial judge's findings of fact where there has been no error of law can only encourage appeals, a particularly unfortunate development in family matters. The Court must instead inquire whether the trial judge exercised his discretion judicially.

(5) Conclusion

[36] In my view, the trial judge made no error in law, nor in his factual findings. He fully understood that the test to be applied was not mere unfairness but a shock to the conscience. On the record before him, he was entitled to find, "in the opinion of the court", that in the context of the history of this marriage, where the wife did not earn income but stayed home to raise the family while the husband earned a high salary, and where the husband's conduct pressured the wife to use her one-time gift from her father toward the matrimonial home knowing she was doing so to try to save the marriage, then leaving her soon thereafter, an equal division of the net family property would be unconscionable. There is no basis for this court to interfere, other than to substitute another view. It is not this court's role to conduct a de novo unconscionability analysis. As the Supreme Court of Canada has made clear in the context of the trial judge's discretion in making a support order, an appeal court is not entitled to intervene "simply because it would have made a different decision or balanced the factors differently": Hickey v. Hickey, 1999 691 (SCC), [1999] 2 S.C.R. 518, [1999] S.C.J. No. 9, at para. 12.

[37] I would therefore dismiss the appeal with costs fixed at $18,000, inclusive of disbursements and HST.

SIMMONS J.A. (dissenting): -- (1) Overview

[38] The single issue on this appeal is whether the trial judge erred in holding that the threshold for ordering an unequal division of net family properties under s. 5(6) of the Family Law Act, R.S.O. 1990, c. F.3 was met in the circumstances of this case.

[39] I have had the benefit of reading the reasons of my colleague, Feldman J.A. I agree with my colleague that the trial judge articulated the correct standard for ordering an unequal [page 92] division of net family properties. I also agree that the standard of review requires that this court not intervene in the trial judge's discretionary finding of unconscionability absent an error in law, a serious misapprehension of the evidence or a decision so clearly wrong that it amounts to an injustice.

[40] However, I disagree with my colleague's conclusion that the appeal should be dismissed, for two main reasons.

[41] First, in my respectful view, the trial judge did not make the findings of "near misconduct" that my colleague attributes to him.

[42] In particular, the trial judge did not make any findings about whether (i) the husband and wife openly disagreed about how the gift money from the wife's father should be used; (ii) the husband pressured or persuaded the wife to use the gift money to pay down the line of credit; (iii) the husband knew the wife was advancing the gift money in an effort to save the marriage.

[43] Second, the fact that the trial judge may have articulated the proper test for ordering an unequal division of net family properties does not mean he applied the law correctly. In my view, the trial judge committed reversible error by failing to consider or overlooking factors relevant to the unconscionability analysis and by considering an irrelevant factor (see Housen v. Nikolaisen, [2002] 2 S.C.R. 235, [2002] S.C.J. No. 31, 2002 SCC 33, at para. 27, citing Canada (Director of Investigation and Research Competition Act) v. Southam Inc., 1997 385 (SCC), [1997] 1 S.C.R. 748, [1996] S.C.J. No. 116, at para. 39): (i) he failed to consider the central question under s. 5(6) of whether equalizing the parties' net family properties would be unconscionable and, instead, focused on the treatment of a single asset, namely, the gift the wife received from her father; (ii) he failed to appreciate the unique treatment of the matrimonial home under the Act and the deliberate legislative choice that it be shared equally; and (iii) he relied improperly on factors relevant to spousal support, as opposed to equalization, in his unconscionability analysis and, in any event, misstated the wife's income-earning capacity. [page 93]

[44] Accordingly, for the reasons that follow, I would allow the appeal. I would set aside the trial judge's order awarding the wife an unequal division of net family properties and I would reduce the payment owing by the husband to the wife by $90,000 (the amount of the unequal division ordered). (2) Background

[45] My colleague has reviewed the background in this matter. I will review it again briefly to add some facts that I consider important.

[46] The parties were married in 1996 and separated on March 30, 2007. The financial statements filed in the family law proceeding indicate that neither came into the marriage with any significant assets.

[47] In 2001, the parties agreed that the wife would give up her career to stay at home to raise the parties' children. According to her notice of application, at the time the wife stopped working, she held a senior management position in the "corporate world" and was earning about $120,000 per year.

[48] The husband continued to work after the wife left the workforce, becoming the sole breadwinner for the family. His earnings as an executive between 2006 and 2009 were $305,784 in 2006; $293,000 in 2007; $331,758 in 2008; and $263,381 in 2009.

[49] Following the separation, the wife began her own business in the physical training field. She estimated that her income from the business during 2009 was $20,000. In her financial statement dated December 1, 2010, she confirmed that her total income for 2010 was $40,700. In addition, she confirmed that, in late 2010, she obtained a job earning an annual income of $95,000.

[50] The parties purchased their matrimonial home in 2004 for $810,000. To finance the purchase, they obtained a revolving line of credit secured against the matrimonial home, which they converted into a conventional mortgage following their separation.

[51] The parties made ongoing payments to the joint line of credit. In addition, the wife received $70,000 as a gift from her uncle in 2005. Of that sum, $20,000 was used to pay down the line of credit.

[52] At trial, the parties agreed that the matrimonial home was worth approximately $917,000 and that the outstanding mortgage was approximately $284,000 -- yielding equity of approximately $633,000. [page 94] (a) The parties' evidence concerning the $180,000

[53] In December 2006, the wife received a $200,000 gift from her father. According to the wife, her father had saved "quite a bit of money" and wanted to distribute some of it to each of his children so he would no longer have to pay tax on it. While her father was, in her words, an "anti-debt person", he "knew there were troubles in the marriage" and told her not to give the money to her husband.

[54] The wife described the state of the marriage at this time as "extremely tumultuous". As well, she said she did what she thought was "in the best interests" of the marriage "by giving [her husband] the money when he insisted". The wife maintained that she did not want all the money to go to the mortgage -- rather, she wanted to consider other options such as investing in RRSPs. However, when her husband insisted, she gave him $180,000, which he used to pay down a portion of the line of credit.

[55] The wife testified that she expected that the $180,000 would be paid back because it was a gift. However, she said, "that's clearly not what happened, and shortly after the marriage [sic] -- he left. He decided to leave".

[56] The wife acknowledged that, at the time when she provided the money, she did not ask that it be paid back. She also acknowledged that there was "nothing in writing" concerning the payment. When asked by the trial judge what facts informed her expectation that the money would be paid back, she responded:

I guess I took the money at that time and did that just to save my marriage. It was a mistake. That's all I can say about that. . . . [M]y expectations were that I would see it again, I guess that was the wrong expectation to make given the circumstances.

[57] Contrary to the wife's evidence, the husband testified that there was never a debate about the use of the $180,000. He said that the parties agreed that the money should be used to pay down the line of credit secured on the matrimonial home. He testified that the wife never raised the idea of putting the money into RRSPs.

[58] The husband also testified that there had been ongoing discussions about the possibility of a gift from the wife's father for about a year before the gift was made. During this period, his wife and her brother had talked about the fact that their father did not want his children having any debt.

[59] Finally, the husband denied the suggestion that the $180,000 was given to him as a loan. He said it was his understanding that his wife gave him the money to pay down the line of credit on the family home. [page 95] (b) The parties' evidence concerning the separation

[60] When asked how the parties' separation came about, the wife said the couple had been having troubles for at least four years. She testified that, at the end of March 2007, her husband "announced one morning that he had bought a condo and he was moving out, and that was the end of the conversation". She confirmed that she allowed her husband to remain in the matrimonial home until June 2007, when he could move into his condominium.

[61] During cross-examination, the wife acknowledged that she, her husband and their children went on a family holiday to Florida in February of 2007. She explained that the vacation was planned "well before" they "were talking about separating or -- and the marriage was in trouble". In her words, "[the vacation] was planned before and we went through and executed it".

[62] Contrary to the wife's evidence, the husband testified that the parties both agreed they were not getting along and agreed to separate. (c) The issues settled by the parties and their respective financial circumstances following the settlement

[63] The parties settled the issues of custody, ongoing spousal support and ongoing child support. Their settlement was incorporated into a court order dated September 2, 2009. The order provided for ongoing spousal support of $6,000 per month commencing October 1, 2009, to be reduced on an annual basis by $120 per month (i.e., $5,880 per month in year two, $5,760 per month in year three and so on). On September 1, 2014, spousal support will terminate. Child support was fixed at $3,268 per month, based on an annual income for the husband of $260,000.

[64] The remainder of the issues between the parties (including retroactive child and spousal support, sale of the matrimonial home, division of net family properties, post- separation debits and credits, and occupation rent) came on for trial on January 10, 2011. Prior to the opening of trial, the parties settled all issues save for the husband's claim for occupation rent and the wife's claim for an unequal division of net family properties.

[65] In essence, the parties agreed that, leaving aside these two claims, the husband would owe the wife $148,965.39. [^2] This [page 96] payment accounted for equalization of net family properties (apart from the unequal division claim), and for the allocation of post-separation debits and credits (apart from the occupation rent).

[66] The wife's net assets set out in her financial statement were as follows:

(a) 50 per cent of the net equity $316,500 in the matrimonial home [^3]

(b) Car $15,000

(c) Bank account $2,847.52

(d) RRSPs (less notional tax) $111,283.96

Total $445,631.48

[67] The husband's net assets set out in his financial statement were as follows:

(a) 50 per cent of the net equity $316,500 in the matrimonial home [^4]

(b) Car $8,000

(c) Bank account $27,177.06

(d) RRSPs (less notional tax) $224,829.84

(e) RESPs $59,752.45

(f) Stocks $14,886

(g) Stock options $97,750 [^5]

Total $748,895.35

[page 97]

[68] The trial judge dismissed the husband's claim for occupation rent but granted the wife's claim for an unequal division of family assets. This resulted in a total required payment from the husband to the wife of $238,965.39 (the agreed sum of $148,965.39 plus the unequal division payment of $90,000). (3) Part I of the Family Law Act

[69] Part I of the Family Law Act sets out a comprehensive scheme for the division of the value of assets between spouses following marital breakdown.

[70] Section 4(1) of the Act requires that, following separation, each spouse must determine the value of his or her net family property. Net family property is defined as the difference between the net value of a spouse's assets upon separation (excluding certain property described in s. 4(2) of the Act) and the net value of that spouse's assets, other than a matrimonial home, at marriage.

[71] Section 5(1) of the Family Law Act stipulates that the spouse with the lesser net family property is entitled to one- half of the difference between the two spouses' net family properties.

[72] Among other things, s. 4(2) of the Family Law Act excludes from the net family property calculation any property that was acquired by gift or inheritance from a third party after the date of marriage. However, a couple's matrimonial home is specifically exempted from the list of excluded assets.

[73] Similarly, s. 4(2), para. 5 provides, in effect, that any excluded asset invested in the matrimonial home loses its classification as an excluded asset. The full text of these and other statutory provisions referred to in these reasons is set out in Appendix I.

[74] Under s. 5(6) of the Act, courts have the discretion to award a spouse an amount that is more or less than half the difference between the spouses' net family properties. The court may exercise this discretion "if the court is of the opinion that equalizing the net family properties would be unconscionable" having regard to certain specified factors. For the purposes of this case, the trial judge identified the relevant factors as:

(c) the part of a spouse's net family property that consists of gifts made by the other spouse; and . . . . .

(h) any other circumstance relating to the acquisition, disposition, preservation, maintenance or improvement of property.

[75] Section 5(7) of the Act describes the purpose of the equalization scheme set out in s. 5: [page 98]

5(7) The purpose of this section is to recognize that child care, household management and financial provision are the joint responsibilities of the spouses and that inherent in the marital relationship there is equal contribution, whether financial or otherwise, by the spouses to the assumption of these responsibilities, entitling each spouse to the equalization of the net family properties, subject only to the equitable considerations set out in subsection (6).

(4) The Trial Judge's Reasons

[76] As my colleague has said, after setting out the provisions of s. 5(6) of the Family Law Act, the trial judge correctly acknowledged that a court's discretion to make an order for an unequal division of net family properties is limited because this court has interpreted "unconscionable" as referring to circumstances which "shock the conscience of the court". See Serra v. Serra (2009), 93 O.R. (3d) 161, [2009] O.J. No. 432, 2009 ONCA 105, at para. 47.

[77] On my reading of his reasons, the following factors led the trial judge to his finding that it would "shock the conscience of the Court" to permit the husband to benefit from the wife's $180,000 gift, which was used to pay down the line of credit:

-- The timing of the relevant events. Specifically, the fact that the couple's separation occurred mere months after the wife's father gifted $200,000 to the wife and after the wife gave $180,000 to the husband to pay down the line of credit.

-- His view that the Family Law Act "focuses on the sharing of the net value of property acquired during cohabitation", whereas the gift that the wife received from her father [at para. 36] "was not property accumulated during cohabitation". Rather, prior to being used to pay down the mortgage on the matrimonial home, the gift was excluded property under s. 4(2) of the Act.

-- His view that, if the husband had retained the $180,000 instead of using it to pay down the line of credit, the wife could have claimed that the husband held the money for her by way of resulting trust under s. 14 of the Family Law Act. In these circumstances, it would be would be [at para. 37] "manifestly unjust" to allow the husband to take advantage of the alternative presumption under s. 14 that the parties intended to benefit equally as a result of applying the funds to pay down the line of credit secured on the jointly owned matrimonial home. Moreover, it was the husband, and not the wife, that applied the funds to the jointly owned matrimonial home. [page 99]

-- The fact that the $180,000 was a gift to the wife and not a gift to both spouses.

-- The fact that, by deciding to give up her career and stay at home to look after the two children, the wife necessarily "compromised her earning opportunities". In this regard, the trial judge noted the wife's return to the workforce, and her estimated earnings for 2009 of $20,000 as compared to the husband estimated earnings of approximately $300,000.

-- The fact that wife has the primary responsibility for the children's care.

-- The fact that there was no evidence that the wife received independent legal advice or that she fully understood the potential implications of transferring the $180,000 to her husband.

-- The wife's hope that transferring the $180,000 to her husband "might assist in the resolution of marital difficulties".

-- The trial judge's conclusion that it was reasonable to infer that the wife would never have advanced the $180,000 to her husband in January of 2007 had she known her husband was going to leave the marriage in March 2007.

-- Though not "factually on all fours" with this case, the trial judge considered the case of Mehmeti v. Mehmeti, [1999] O.J. No. 3534 (S.C.J.) to be "helpful". In Mehmeti, the wife used settlement funds from a motor vehicle accident in which she was injured to significantly pay down the mortgage on the jointly held matrimonial home. The parties separated just six months later. The trial judge awarded the wife an unequal division of net family properties. However, in doing so, the trial judge relied, in part, on the fact that the wife gave her husband the settlement funds in circumstances where [at para. 1] "the parties lives together w[ere] characterized by mental and physical abuse by the husband of the wife". Further, there was also some evidence that the husband had recklessly depleted his net family property by gambling. Finally, it was the husband's negligent driving that caused the accident in which the wife was injured. (5) Discussion

[78] As I have said, I do not agree with my colleague's conclusions about the trial judge's findings of fact. Further, in [page 100] my view, the trial judge made three distinct errors in his unconscionability analysis.

[79] I will begin by discussing my colleague's conclusions about the trial judge's findings of fact and then turn to the errors made by the trial judge. (a) The trial judge did not make a finding that the husband insisted or persuaded his wife to advance the gift money to pay down the line of credit; nor did he find that the husband knew the wife advanced the gift money in an effort to save the marriage

[80] At paras. 29 and 36 of her reasons, my colleague writes:

It would allow the husband to gain a windfall benefit because of the timing of the wife's father's gift to her. The marriage was crumbling, the husband persuaded the wife to put the gift money towards the house, the wife acceded in order to try to save the marriage, but then the husband left the marriage . . . Had the wife not given in to the husband's insistence that the gift be used to pay down the line of credit, she would have retained the full proceeds. Taking all these circumstances into account, the trial judge was satisfied that a s. 5(6) order for unequal distribution of net family property was required to avoid an unconscionable result that would shock the conscience of the court.

On the record before him, [the trial judge] was entitled to find "in the opinion of the court", that in the context of the history of this marriage, where the wife did not earn income but stayed home to raise the family while the husband earned a high salary, and where the husband's conduct pressured the wife to use her one-time gift from her father toward the matrimonial home knowing she was doing so to try to save the marriage, then leaving her soon thereafter, an equal division of the net family property would be unconscionable. (Emphasis added)

[81] On my reading of his reasons, the trial judge did not make the findings that my colleague alludes to, which appear to suggest some degree of "near" spousal misconduct.

[82] It is important to remember that the evidence adduced at trial was quite brief. The parties had settled most of the issues between them. The trial testimony of both the husband and wife concerning the two contested issues totals only 30 pages of transcript.

[83] Neither party gave evidence of specific conversations leading up to the transfer of $180,000 from the wife to the husband.

[84] According to the wife, she wanted to put at least some portion of the $180,000 into RRSPs or something similar but she gave the money to her husband for the good of the marriage when he "insisted". [page 101]

[85] The wife did not testify that she told her husband she wanted to put the money into RRSPs; she did not testify that she told him that she was advancing the money for the sake of the marriage; nor did she explain how, in her mind, giving the money to her husband would save the marriage.

[86] The wife did not plead undue influence, nor did she describe what she meant when [she] said her husband "insisted" that she give him the $180,000.

[87] The husband testified that the gift from his wife's father had been expected for some time and claimed that he understood that the father did not want his children having debt.

[88] The trial judge found [at para. 41] that the wife hoped that advancing $180,000 "might assist in the resolution of marital difficulties" and that "it [was] reasonable to assume that the [wife] would never have advanced the money to reduce the mortgage in January of 2007 if she knew at that time that her spouse was going to leave the marriage within months". He also noted that the wife was unable to testify as to any facts on which her stated expectation that the $180,000 would be paid back was based. Beyond this, the trial judge made no explicit findings in the analysis section [^6] of his reasons concerning the circumstances under which the wife transferred the $180,000 to her husband.

[89] However, the trial judge did not make a finding that the husband "pressured" the wife into giving him $180,000. Nor did he make a finding that the husband knew that the wife wanted the $180,000 to go into RRSPs or some other form of investment. On the record before him, it was equally possible that (i) the husband thought the money was coming from the father to pay down the line of credit; and (ii) the wife did not express her wishes -- just as she had failed to express her expectation that the money would be repaid. The trial judge did not resolve this factual issue.

[90] Based on my review of the trial judge's reasons, he concluded it would be unconscionable for the husband to reap the benefit of the $180,000 paid on the line of credit because of the factors listed above, in para. 77. Although spousal misconduct is not essential to a finding of unconscionability under s. 5(6), it can be an important factor in making such a finding where it is [page 102] found to exist: Serra, at para. 58. Had the trial judge based his conclusion in whole or in part on an unpleaded theory of "near" spousal misconduct, I am confident he would have said so. (b) The trial judge erred by failing to consider the central question under s. 5(6) of whether equalizing the parties' net family properties would be unconscionable and by, instead, focusing improperly on the treatment of a single asset

[91] In my view, the trial judge erred by failing to consider the overall result of equalizing the parties' net family properties. Nowhere in his reasons did the trial judge turn his mind to this issue. In failing to do so, he wrongly focused on the treatment of a single asset, namely, the gift the wife received from her father -- and failed to consider the central question under s. 5(6) of the Act.

[92] Serra v. Serra is instructive on this point. In Serra, this court made it clear that the focus of an assessment under s. 5(6) should be whether the overall result of equalizing the spouses' net family properties would be unconscionable: see paras. 46 and 58.

[93] So, in Serra, it was not the significant post-separation downturn in the textile industry and resulting loss of value in the husband's business alone that created unconscionability under s. 5(6): at para. 65. Rather, it was the fact that, because of the downturn, Mr. Serra would have had to pay his wife an amount that was greater than his net worth (and arguably twice the amount of his net worth) at the time of trial to equalize their net family properties, as well as the further fact that the wife was not "without means": Serra, at paras. 67 and 93.

[94] In other words, this court did not find unconscionability by focusing on a single asset -- namely, the post-separation loss of value in Mr. Serra's business. Rather, this court looked to the financial result of equalizing the net family properties and determined that the result was unconscionable.

[95] In this case, the trial judge made a finding of unconscionability without referring to what the overall financial circumstances of the parties would be if their net family properties were equalized.

[96] In my view, an examination of the parties' respective financial circumstances following their settlement (see paras. 66 and 67 above) demonstrates that equalizing their net family properties does not give rise to an unconscionable result.

[97] After coming into the marriage with little in the way of assets, both spouses are leaving the marriage with a substantial [page 103] asset base. Both contributed to the marriage by carrying out their chosen roles. Moreover, as in McDougall v. McDougall, [1996] O.J. No. 1715, 2 O.T.C. 361 (Gen. Div.), discussed below, it appears that the husband was a steady financial provider, and there is no indication that he spent money foolishly or lavishly on himself.

[98] It may appear unfair to some that the wife made a significant contribution to the acquisition of the matrimonial home and, as a result, lost the benefit of what would otherwise have been an excluded asset.

[99] However, as I will discuss below, that outcome is entirely consistent with the scheme for division of property established by the Act. Viewed in the context of the overall financial circumstances of the parties following equalization of their net family properties, the fact that the wife's gift lost its excluded status as the result of being invested in the matrimonial home does not rise to the level of unconscionability.

[100] Moreover, to use s. 5(6) to alleviate perceived unfairness arising from the application of the scheme set out in the Act would be to entirely undermine the goals of certainty and finality that the Act clearly aims to promote. Had the legislature desired a tailor-made equalization of property for each and every couple, this could have been easily achieved. The legislature clearly chose otherwise. (c) The trial judge erred by failing to appreciate the unique treatment of the matrimonial home under the Act and the deliberate legislative choice that it be shared equally

[101] In my view, two key passages in the trial judge's reasons demonstrate that he failed to appreciate the unique treatment of the matrimonial home under the Act and the deliberate legislative choice that, absent truly exceptional circumstances, the value of the matrimonial home should be shared equally.

[102] The trial judge said the following, at paras. 36 and 37 of his reasons:

The Family Law Act focuses on the sharing of the net value of property acquired during cohabitation. See Burdette v. Burdette (1991), 1991 7061 (ON CA), 3 O.R. (3d) 513 (C.A.). The gift that [the wife] received from her father was not property accumulated during cohabitation[.]

It is hard to give [the wife's] evidence of expectation [that the $180,000 was to be repaid] much weight although the presumption of resulting trust may lead to the same conclusion. In this regard, it is to be remembered that the $180,000 was not applied by [the wife] to the jointly owned property. It was applied by [the husband] to the jointly owned property. If he had kept the $180,000, then by virtue of s. 14 of the Act he would have held the entire amount in trust for [the wife]. For this reason as well, it seems manifestly [page 104] unjust to allow [the husband] to take advantage of any presumption that the parties intended to benefit equally from the application of these funds to reduce the mortgage on the matrimonial property. (Emphasis added)

[103] In saying that the Family Law Act focuses on sharing the value of assets acquired during cohabitation -- and in subsequently saying it would be manifestly unfair to allow the husband to rely on a presumption that the parties intended to benefit equally from the use of the funds -- in my view, the trial judge overlooked one of the key legislative choices that underpins the Act.

[104] Although it is true that, in relation to property other than a matrimonial home, the Act focuses on sharing the net value of property acquired by the spouses through their efforts during cohabitation, the Act treats the matrimonial home differently than all other property. Specifically, the Act requires that the net value of the matrimonial home be shared equally between the spouses -- even if one of the spouses brought the matrimonial home into the marriage -- and even if one of the spouses acquired the matrimonial home by gift or inheritance from a third party after the date of marriage.

[105] In particular, the definition of net family property makes it clear that, unlike the value of other property brought into the marriage, a spouse is not entitled to deduct the net value of a matrimonial home owned on the date of marriage when calculating his or her net family property.

[106] Further, the matrimonial home is expressly left out of the list of property contained in s. 4(2) of the Act, which excludes from a spouse's net family property the value of property acquired by gift or inheritance from a third party after the date of marriage.

[107] These provisions demonstrate the unique status of the matrimonial home under the Act and show that its distinct treatment was a deliberate legislative choice. See Szuflita v. Szuflita Estate, 2000 22556 (ON SC), [2000] O.J. No. 746, 4 R.F.L. (5th) 313 (S.C.J.), at paras. 10 and 12.

[108] For this reason, courts have generally been reluctant to use s. 5(6) of the Act to adjust an equalization payment simply because a matrimonial home was brought into the marriage by one spouse or because it was acquired by one spouse, in whole or in part, through gift or inheritance.

[109] As the Supreme Court stated in Best v. Best, 1999 700 (SCC), [1999] 2 S.C.R. 868, [1999] S.C.J. No. 40, at para. 49: "In interpreting a statute, the courts should give effect to the intent of the legislature as expressed through the statute's text." [page 105]

[110] To rely only on the fact that a matrimonial home was acquired by one spouse in whole or in part through gift or inheritance to find unconscionability is to effectively ignore the legislative choice that, following a marital breakdown, spouses should share the matrimonial home equally.

[111] So, for example, in Linov v. Williams, [2007] O.J. No. 907, 155 A.C.W.S. (3d) 884 (S.C.J.), each spouse owned a home before they married. The couple moved into the husband's home, which therefore became their matrimonial home. When the relationship ended approximately four years later, the wife was able to deduct the value of her home at the time of marriage but the husband was not. As a result, the husband owed the wife an equalization payment of $128,000.

[112] In declining to order an unequal division of net family properties in Linov, Backhouse J. said the following, at para. 36:

One goal of the Family Law Act is to promote certainty of result, thereby decreasing the potential for litigation. Some may consider it unfair that the wife's home is a deduction whereas the husband's is not. However, the Family Law Act allows deductions for all assets at the date of the marriage, including real property assets. A matrimonial home is treated differently. There is no unconscionability in this case in applying the statutory scheme. (Emphasis added)

[113] Likewise, in Clewlow v. Clewlow, 2004 7355 (ON SC), [2004] O.J. No. 3468, [2004] O.T.C. 757 (S.C.J.), the wife inherited the entire matrimonial home three years before the couples' separation. Marshman J. declined to order an unequal division of net family properties. Although she said she would not have found an equal division unconscionable in any event, she stated the following, at para. 22:

It can certainly be argued that it is unfair that Mr. Clewlow benefits to such a great degree from Mrs. Clewlow's inheritance but the unfairness arises because s. 4(2) specifically excludes the matrimonial home from inherited property which can otherwise be excluded. It cannot be said that it is unconscionable to equalize the net family properties in accordance with the principles of the Act. (Emphasis added)

[114] Similarly, in McDougall, Aston J. indicated in obiter that, even if moneys applied to the mortgage on the matrimonial home mere days before the separation had retained their character as an inheritance, in the absence of other compelling circumstances, the court should decline to order an unequal division of net family properties. He said the following, at paras. 31 and 33: [page 106]

Subsection 4(2) of the Family Law Act is clear in providing that a gift or inheritance is only excluded if it is not a matrimonial home or traceable to a matrimonial home. Even if the mortgage back from the purchaser of [her mother's home] had been to Mrs. McDougall alone and not to her and her husband on joint account, the fact is that she acquiesced in having that mortgage money paid to the mortgage on the matrimonial home and it is clearly not excluded property, even if one accepts that the presumption created by section 14 of the Family Law Act does not apply and that she had no intention of ever making a gift to her husband. . . . . .

Keeping in mind that this is a forty-year marriage, that Mr. McDougall was, throughout the marriage, a steady financial provider and that there is no suggestion that he spent money foolishly or selfishly on himself to the exclusion of Mrs. McDougall, it is, in my view, not unconscionable simply to equalize the net family property of the spouses.

[115] See, also, Murphy v. Murphy, 1987 8279 (ON SC), [1987] O.J. No. 1729, 17 R.F.L. (3d) 422 (Dist. Ct.), affd [1991] O.J. No. 2905 (C.A.); Kozuch v. Kozuch, [1992] O.J. No. 1893 (Gen. Div.).

[116] In my view, the trial judge erred in his unconscionability analysis by looking at the treatment of other assets under the Act and by failing to appreciate the special legislative treatment afforded to the matrimonial home. Instead of recognizing the special status of the matrimonial home, he treated using the gift money to pay down the joint line of credit as if the money had been used to pay down any other joint liability.

[117] Further, in my view, the timing of the gift and its use to pay down the line of credit alone cannot meet the threshold of unconscionability. Rather, as discussed above, it would still have to be shown that equalizing the net family properties would produce an unconscionable result in all the circumstances. (d) The trial judge erred in relying on factors relevant to support to find unconscionability and, in any event, misstated the wife's income-earning capacity

[118] In my opinion, the trial judge also erred by incorporating factors relevant to spousal support, rather than equalization of property, into his unconscionability analysis.

[119] The statutory scheme requiring the equalization of net family properties and that providing for spousal and child support each rely on distinct considerations. It is an error to import considerations from one scheme to another. As this court stated in Brett v. Brett (1999), 1999 3711 (ON CA), 44 O.R. (3d) 61, [1999] O.J. No. 1384 (C.A.), at para. 34:

None of the factors set out in s. 5(6)(a) to (h) require the court to examine the spouses' respective contributions to household management, child care and financial provision. If this was to be an area of specific inquiry to [page 107] determine if the equalization of net family properties would be unconscionable, the factors listed in s. 5(6) would have been expanded. In my opinion, the legislature intended to limit those circumstances in which the spouse's net family properties would not be equalized. In establishing the equalization of net family properties in the Family Law Act, the legislature did not intend for the courts to undertake a post-mortem examination of the minutiae of the sharing of responsibilities to determine if equalizing the spouses' net family properties would be "unconscionable". (Footnotes omitted)

[120] In fact, as s. 5(7) of the Act makes clear, the equalization scheme is based on the notion that spouses contribute equally to the marital relationship whether the contribution is "financial or otherwise", and should thus be entitled to an equal share of the property accumulated by the family.

[121] Accordingly, the trial judge erred in relying in his unconscionability analysis on the fact that the wife "compromised her earning opportunities" when she stopped working in order to stay home and look after the children.

[122] This factor is properly considered under the scheme for spousal support: see ss. 33(8) and 33(9) of the Family Law Act. Absent any specific relevance to the considerations listed under s. 5(6), this factor should not be imported to the analysis of the unequal division issue.

[123] Finally, I note that, in relying on this factor, the trial judge overlooked the significant fact that by the time of trial the wife had secured employment paying $95,000 per year -- far more than the $20,000 per year he relied upon. (6) Disposition

[124] For the reasons I have explained, I am not satisfied that the circumstances of this case meet the threshold for unconscionability. I would therefore allow the appeal and would set aside the trial judge's order directing that there be an unequal division of net family properties in the amount of $90,000. I would, therefore, reduce the amount payable by the husband to the wife by $90,000 to $148,965.39.

[125] I would award costs of the appeal to the husband fixed in the amount of $10,000, inclusive of disbursements and applicable taxes.

Appeal dismissed.

[page 108] Appendix I Family Law Act, R.S.O. 1990, c. F.3

4(1) In this Part, . . . . .

"matrimonial home" means a matrimonial home under section 18 and includes property that is a matrimonial home under that section at the valuation date;

"net family property" means the value of all the property, except property described in subsection (2), that a spouse owns on the valuation date, after deducting, (a) the spouse's debts and other liabilities, and (b) the value of property, other than a matrimonial home, that the spouse owned on the date of the marriage, after deducting the spouse's debts and other liabilities, other than debts or liabilities related directly to the acquisition or significant improvement of a matrimonial home, calculated as of the date of the marriage;

"property" means any interest, present or future, vested or contingent, in real or personal property and includes, (a) property over which a spouse has, alone or in conjunction with another person, a power of appointment exercisable in favour of himself or herself, (b) property disposed of by a spouse but over which the spouse has, alone or in conjunction with another person, a power to revoke the disposition or a power to consume or dispose of the property[.] . . . . .

Excluded property

(2) The value of the following property that a spouse owns on the valuation date does not form part of the spouse's net family property:

1. Property, other than a matrimonial home, that was acquired by gift or inheritance from a third person after the date of the marriage.

2. Income from property referred to in paragraph 1, if the donor or testator has expressly stated that it is to be excluded from the spouse's net family property.

3. Damages or a right to damages for personal injuries, nervous shock, mental distress or loss of guidance, care and companionship, or the part of a settlement that represents those damages.

4. Proceeds or a right to proceeds of a policy of life insurance, as defined under the Insurance Act, that are payable on the death of the life insured.

5. Property, other than a matrimonial home, into which property referred to in paragraphs 1 to 4 can be traced. [page 109]

6. Property that the spouses have agreed by a domestic contract is not to be included in the spouse's net family property.

7. Unadjusted pensionable earnings under the Canada Pension Plan. . . . . .

Equalization of net family properties

Divorce, etc.

5(1) When a divorce is granted or a marriage is declared a nullity, or when the spouses are separated and there is no reasonable prospect that they will resume cohabitation, the spouse whose net family property is the lesser of the two net family properties is entitled to one-half the difference between them. . . . . .

(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.

Purpose

(7) The purpose of this section is to recognize that child care, household management and financial provision are the joint responsibilities of the spouses and that inherent in the marital relationship there is equal contribution, whether financial or otherwise, by the spouses to the assumption of these responsibilities, entitling each spouse to the equalization of the net family properties, subject only to the equitable considerations set out in subsection (6). [page 110] . . . . .

Presumptions

14. The rule of law applying a presumption of a resulting trust shall be applied in questions of the ownership of property between spouses, as if they were not married, except that, (a) the fact that property is held in the name of spouses as joint tenants is proof, in the absence of evidence to the contrary, that the spouses are intended to own the property as joint tenants; and (b) money on deposit in the name of both spouses shall be deemed to be in the name of the spouses as joint tenants for the purposes of clause (a).

Notes

[^1]: The husband's subsequent application to reduce the amount he was required to pay for both child and spousal support was dismissed: Ward v. Ward, [2011] O.J. No. 4589, 2011 ONSC 6066 (S.C.J.).

[^2]: At trial, the husband argued that this value should be decreased by $64,784.50 for occupation rent, and the wife argued that this value should be increased by $90,000 (half the value of the $180,000 payment on the line of credit) on the basis of her claim for an unequal division of properties.

[^3]: While this was not the value assigned to the matrimonial home in the wife's financial statement, this value was agreed to by the parties at trial.

[^4]: While this was not the value assigned to the matrimonial home in the husband's financial statement, this value was agreed to by the parties at trial.

[^5]: As part of the settlement between the parties, they agreed to reduce this value assigned to the stock options to account for a post-valuation date decline in value.

[^6]: The trial judge discounted the wife's claim that she expected the $180,000 to be repaid when reciting the facts. He also accepted in the facts section of his reasons that the husband "announced" to the wife in March 2007 that he had entered into an agreement to purchase a condominium and that he was going to leave the marriage.