Over thirty years ago, the Supreme Court of Canada in Murdoch v Murdoch1 concluded that a wife who had worked alongside her husband in the fields was not entitled to any interest in the ranch that had been originally purchased with his money. Her homemaking role and hard physical labour on the farm counted for nothing. Several years later, the Supreme Court of Canada saw the error of its ways and invoked the doctrine of unjust enrichment to enable wives2and unmarried cohabitants3to share in property acquired or preserved by their partners during cohabitation. In the meantime, provincial legislatures introduced statutory reforms to ameliorate the harshness of the Murdoch v Murdoch decision so far as married couples are concerned.
Every province and territory in Canada has enacted legislation to establish property-sharing rights between spouses on marriage breakdown or divorce and, in some provinces, on death.4
Three fundamental questions require consideration in any attempt to divide property between spouses on the termination of their relationship. They are as follows:
1) What kind of property falls subject to division?
2) How is the property to be valued? and
3) How will the sharing of property be achieved?
In some provinces and territories, a wide judicial discretion exists and distinctions are drawn between "family assets" that both spouses use and "business" or "commercial" assets that are associated with only one of the spouses. In others, no such distinctions exist. In most provinces and territories, the courts are empowered to divide specific assets. In Ontario, it is the value of property, as distinct from the property itself, that is shared; all assets must be valued and each spouse is presumptively entitled to an equal share in the value of the assets acquired by either or both of them.
Provincial and territorial matrimonial property statutes usually exclude premarital assets from division and also certain postmarital assets, such as third-party gifts or inheritances and damages or monetary compensation received by a spouse from a third party as a result of personal injuries.
Statutory property-sharing regimes are not dependent on which spouse owned or acquired the assets. Prior to marriage breakdown, however, the control and management of an asset is legally vested in the owner. Provincial and territorial statutes, nevertheless, prohibit a title-holding spouse from disposing of or encumbering the matrimonial home without the consent of his or her spouse.
Because the relevant provincial and territorial statutes differ markedly in content and approach, it is impossible to provide a comprehensive analysis of the diverse provincial matrimonial property regimes in the following pages. The authors will consequently focus on the Ontario statute, which represents the most comprehensive provincial legislation on matrimonial property rights in Canada.
In 1978, the province of Ontario enacted the Family Law Reform Act5to ameliorate the hardship and injustice arising under the doctrine of separation of property, whereby each spouse retained his or her own property on the breakdown or dissolution of marriage. Section 4 of the Family Law Reform Act, 1978 empowered a court to order a division of "family assets" and, in exceptional circumstances, a division of non-family assets on marriage breakdown, regardless of which spouse was the owner of the assets. Generally speaking, a non-owning spouse would be granted an equal share of the family assets, which included the matrimonial home and other assets ordinarily used or enjoyed by the family, but no interest in business assets would be granted to the non-owning spouse.
As of 1 March 1986, Part I of the Family Law Act6eliminated the former distinction between "family assets" and "non-family assets" by providing for an equalization of the value of all assets accumulated by either spouse during the marriage in the event of marriage breakdown or death.
In general terms, the fundamental objective of Part I of the Family Law Act is to ensure that on marriage breakdown or death each spouse will receive a fair share, which will usually be an equal share, of the value of assets accumulated during the course of matrimonial cohabitation. Thus, subsection 5(7) of the Family Law Act provides as follows:
(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).
This provision does not empower a court to deviate from the norm of equal division in the absence of circumstances that justify a finding of unconscionability
within the meaning of subsection 5(6) of the Family Law Act.7As Hughes J, of the Ontario Superior Court of Justice, observed in Janjua v Khan, "[i]t is quite common for spouses to make unequal contributions of money and assets to their marriage. It is quite uncommon, however, for it to justify an unequal division of matrimonial property on the breakdown of their marriage."8
For the purpose of Part I of the Family Law Act, subsection 1(1) specifically defines "spouse" as meaning a man and woman who are married to each other or who have entered into a void or voidable marriage, provided that in either of the latter circumstances, the person asserting a right under the Act acted in good faith.9"Good faith" within the meaning of section 1(1) of the Act signifies an intention to comply with the Marriage Act.10Same-sex relationships and "common-law relationships" fall outside the ambit of Part I of the Family Law Act.
Pursuant to section 7(1) of the Ontario Family Law Act, a former spouse may seek equalization of the spousal net family properties under section 5 of the Act. After a valid foreign divorce has been granted, the Ontario Superior Court of Justice has no jurisdiction to hear and determine an application for spousal support under the Divorce Act or under the Family Law Act, but the foreign divorce does not preclude the Ontario Superior Court of Justice from adjudicating an application for the equalization of the spousal net family properties under the Family Law Act.11
Canadian courts lack jurisdiction to order the sale of...