Section 5 of the Family Law Act (the “FLA”) governs the equalization of net family property. The equalization of the net family property is only applicable to divorced couples or a nullified marriage. This process would not apply to you if you were in a common law partnership.
Each spouse is entitled to an equal distribution of the net family property (“NFP”). However, there are circumstances in which a spouse can seek an unequal distribution of the NFP. The Court has the discretion to vary the amount of the equalization payment under section 5(6) of the FLA. Section 5(6) of the FLA sets out the factors the Court must consider in making a determination for the unequal distribution of the NFP. If you are the spouse who wishes to challenge the equalization of the NFP, the onus then lies with you to demonstrate to the Court why it is appropriate to award an unequal distribution.
The party seeking an unequal distribution must demonstrate that the equalization of the NFP would be unconscionable. However, the Courts have set a high threshold for a finding of unconscionability, which has been defined as “shocking the conscience of the court”. As a result, many parties who bring a claim for the unequal division of the NFP are unsuccessful.
In the case of Ward v. Ward, the Court did find in favour of the Application for the unequal distribution of NFP. In this case, the Applicant had personally contributed a sizable sum of money to the mortgage shortly before the Respondent decided to end the marriage. As a result, the Respondent, as a joint owner, and joint debtor of the property, would have received a significant windfall benefit at the expense of the Applicant. The Court found in these circumstances that the Applicant was justified in seeking an unequal distribution, as it would shock the conscience of the Court and even that of a fully informed and reasonable observer.
Ward v. Ward is a rare case where the Court found rules in favour of the unequal distribution of NFP. The majority of the case law suggests that the Courts are very hesitant to interfere with a spouse’s prima facie right to an equal distribution of the NFP.