Timothy Gronfors. Associate, Family Law.


As a playful means for highlighting millennials’ preference for spending on luxuries rather

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than saving for essentials, a recent BBC article has developed the satirical ‘avocado toast index’.

Using statistics from across the globe, the index calculates how many years it will take to afford a down-payment on a house by merely forgoing a daily ‘smashed avocado-on-toast’ breakfast. And good news Mexico City millennials – your abstinence from avocado toasts will yield you a home in 9 short years!

Leaving aside whatever superfluous financial priorities millennials may (or may not) have, the article does highlight a chilling reality: prospective first-time home buyers are struggling to crack today’s market. For many young couples, this real estate crunch has necessitated a turn to family members for financial assistance.  

But what happens to that financial contribution if the couple separates? Was it intended as a gift or a loan? Is the parent entitled to a repayment? How these questions are answered can have a massive impact on the resulting property distribution.

But let’s take a step back and narrow the parameters. As a starting point, let’s assume that our hypothetical couple, John and Jane, are common law partners (there are very distinct rules on matrimonial homes and property division for married couples).  Let’s further assume that after losing out on a number of bidding wars that resulted in sales above listing price, John and Jane realize that they’ve been priced out of the market and that their pre-approval for a mortgage will not suffice. Thankfully, Jane’s father has come to the rescue; he’s willing to contribute $30,000 towards the down-payment, which will in turn allow the couple to qualify for a larger mortgage.

In an ideal world, Jane and John take their new financing, purchase their dream home, and live  happily ever-after but, unfortunately, Jane and John end up separating five years down the road and are forced to sell the home. Jane subsequently contends that $30,000 from the net sale proceeds should be paid back to her father. John alleges that the $30,000 was a gift to them as a young couple with no strings attached.

The Supreme Court of Canada has established two possible ‘presumptions’ when dealing with such gratuitous transfers (i.e. where a transfer is made without consideration). Unless the transfer is specifically from a parent to their child, the presumption is that the transfer was a bargain rather than a gift, meaning that it must be repaid. In our circumstance, while it was Jane’s father that made the gratuitous payment, Jane was an adult when she received it meaning that the presumption will be that the $30,000 was a loan/bargain. Because presumptions are simply starting points, John will have the onus of proving otherwise and that the $30,000 was a gift.

To add a further wrinkle to our scenario, let’s assume that when John and Jane accepted the $30,000, their bank sent out a commitment letter outlining that as a condition for receiving the funds, all three parties must sign a ‘gift letter’ clearly stating that the $30,000 is not a loan. Later, in the subsequent court battle, John produces this letter as evidence that the $30,000 was intended to be a gift. While the outcome of any one case will depend on all the surrounding facts, in decisions such as Crepeau v Crepeau the courts have found that a bank ‘gift letter’ is insufficient evidence to rebut the presumption of a bargain/loan. As in Crepeau, the finding may well be that such a ‘gift letter’ was executed solely for the purpose of obtaining the mortgage approval with no true intention to gift.

A recent Globe and Mail article by Josh O’Kane pointed out that while slightly more than 1/3 of Canadian millennials now own a home, nearly two-fifths received financial assistance from their parents to do so. Whether it’s from a parent, relative, or friend, home buyers receiving gratuitous transfers can benefit immensely from the assistance of a qualified family lawyer. There are various mechanisms, such as a cohabitation agreement, which can give the parties peace of mind in knowing that their intentions are properly delineated and help avoid a costly court battle down the road.  

By David Harris-Lowe, partner, Family Law


Which spouse owns the family home, whether you’re married or in a common law relationship, matters.  The rules around ownership are important and can make a significant difference to how property issues get resolved.  Some rules that are often surprising to people include:

a)      When you get married, ownership of assets, including the matrimonial home matters.  Family law does not change ownership.

b)      If you own the matrimonial home on the date of marriage and on the date of separation, this can result in a significant difference to how much a spouse owes (or is owed) if only one spouse owns a matrimonial home.

c)       Common law couples, even after years of living together, do not have the same rules with regard to property.

d)      Even if you are the legal owner of a home, the other spouse may still be able to claim an ownership interest in the home.

The rules regarding the treatment of family property sometimes lead to surprising results and they do change from time to time.  The idea of a joint family venture has only existed for less than 10 years and significantly changed how a non-owning spouse can claim an interest in family property.

If you are going through a separation, it’s important not to assume what the law says about the division of property, especially the family home.  It is always a good idea to meet with a family law professional to get accurate information.

By Douglas J. Manning, Partner, Certified Specialist in Family Law

Yes!  But why would you want to?

In a recent British Columbia court decision, one of the issues was whether the husband and the wife had entered into an oral marriage contract that excluded the sharing of the wife’s rental property from being shared in the parties division of property when they separated.

Both parties had come from previous marriage-like relationships. The wife owned 2 properties coming into this marriage.  The value of one of the properties increased by about $500,000 during the 3 year marriage.  The parties never occupied the property during the marriage and they never shared the rental income. The husband never paid any of the expenses associated with the property.

The wife’s evidence was that the parties had a verbal contract that the husband would not have any interest in the property, nor would the value of the property or any increase in the value be included in what the wife would have to account for in the sharing of the parties’ net worth.

The husband maintained that they had talked about putting his name on title to the property and therefore he would have been a joint owner and thus the intention was to share the asset and the increase in the value over the marriage should be included in the mix of the property to be shared.

The wife gave evidence that each party agreed to be responsible for their own expenses and pay their own debts and not look to the other for assistance.  The evidence showed that they more or less were responsible for their own individual expenses, never had a joint bank account and each was financially responsible for their own children from their prior relationships. However, the parties did share their living expenses together, including the costs of vacations, etc..

The issue was largely one of credibility. Who did the judge believe?  On balance the court preferred the wife’s evidence as it was more consistent with how the parties conducted themselves.  They had very little integration of their financial matters and this supported the wife’s contention that there was no mutual intention to share the value of her pre-marriage rental property or the increase in its value.

Of course all of this could have been avoided had the parties decided to have a written marriage contract that clearly set out their expectations, rights and obligations.  If you are going into a new relationship and have considerable assets or there is a significant difference in your incomes, it would be wise to consider the use of a cohabitation agreement or marriage contract.

Barrie Hayes, Partner, Family Law

The Family Law Act provides a statutory framework for the equalization of family property upon separation. The framework essentially exits out from the equalization the value of property the spouses owned on the date of marriage, and any property the spouses received from third parties; inheritances, life insurance policies, and certain civil judgments during the marriage.

The spouses deduct, from the value of their respective family assets at date of separation, any outstanding debt which then produces the spouses’ respective net family properties. In the event that one spouse has  net family property which is greater than the other spouse’s net family property, the spouse with the higher net family property owes a monetary payment to the other spouse equal to one half of the difference in the two net family properties.

This statutory framework provides a fairly focused, straightforward system for settling property issues between separating spouses.

Unfortunately the legislation only applies to legally married spouses. Common-law spouses have no recognition under the Family Law Act for property equalization.

Common-law spouses, in pursuing property issues arising from separation, have to resort to the common-law principle of unjust enrichment. Unjust enrichment will provide monetary relief to a common-law spouse if the common-law spouse can demonstrate that, through either financial or labour contributions made by the spouse, the other spouse was enriched by such contributions. The spouse pursuing unjust enrichment also has also to demonstrate that he/she suffered a deprivation by virtue of the contributions, and further that there was no legal reason justifying the contributions to the other spouse.

Cases dealing with unjust enrichment have increasingly recognized the claim and have broadened its application to common-law spouses.

The Supreme Court of Canada has recently advanced the unjust enrichment principle in creating the concept of a joint family venture in common law relationships. If a common-law relationship is determined to be a joint family venture, the law of unjust enrichment will compensate the contributing common-law spouse for the difference in the increase in assets between the two common-law spouses from the date of commencement of cohabitation until the date of separation.

Although the unjust enrichment principle greatly assists in providing fairness in dealing with property issues between separating common-law spouses, it lacks the precision and certainty provided by the Family Law Act to legal married spouses.

Other provinces in Canada have passed legislation which gives common-law spouses the same statutory property equalization rights as legal married spouses. Hopefully, over time, Ontario common-law spouses will be afforded the same statutory property entitlement.

Catherine Hyde, Paralegal

In recent years there has been an increase in separation of couples in the 55+ category.  It seems once the children have left and you start to notice an increase in the people you know in the obituaries, you ask yourself- is this all there is?  Thoughts of separation seep in.  Before saying you want to separate, consider some financial aspects of separation and possible lifestyle changes.

First make a list of what property you own including realty, bank accounts, investments and what debts you have.  Make a similar list for the assets and debts of your spouse.  Look at what your retirement income might be from private pensions and government pensions.   Armed with this information, make an appointment with a family law lawyer.  The lawyer should be able to provide advice on a broad basis as to what your entitlements might be on a property division and whether spousal support is a possibility, for whom, and in what quantum and duration.  All of this is subject to actual financial disclosure. 

Having all the facts you can weigh whether going it on your own is feasible.  The emotional issues and the financial reality must come together in making your decision. Counselling might be the answer for you. Attempting new things outside of your comfort zone might bring back the spark.  If not, and separation is the route, ensure you follow through with your lawyer to enter into a separation agreement that ensures you achieve an equitable settlement.  

Barrie Hayes, Partner

In many marriages the matrimonial home is the most significant family asset owned by the spouses. The Family Law Act (“FLA”), in dealing with equalization of net family property on separation, provides special treatment of the matrimonial home.

Whereas generally  a spouse may deduct from his or her net family property the (net) value of the property he or she brings into the marriage, this deduction of property does not extend to the matrimonial home. Further statutory exclusions from family asset inclusions such as inheritances or gifts from third parties do not extend to the matrimonial home.

In situations  where parents purchase a home for a child or grandchild, and wish to protect the home from being included in the equalization of net family property in the event of marriage breakdown consideration should be given to using a trust to protect the home from a potential FLA claim.

In the recent case of Spencer v Riesberry a home was purchased and was settled on a trust for the purchaser and her four children. Three additional properties where subsequently also settled on the trust. One of the terms of the trust was that any trust property distributed from it was not to form part of the recipient’s net family property for purposes of the FLA.

When one of the daughters who occupied one of the homes settled on the trust separated the court was asked to determine whether the daughter had an interest in the property sufficient to warrant a finding that the property was a matrimonial home. The Court of Appeal held that, unless the terms of the trust expressly provided otherwise, a beneficiary has no property interest in any specific asset of the trust, prior to or absent an appropriation of such assets to the beneficiary by the trustee.

The court considered the daughter’s dual role as beneficiary and as co trustee of the trust and held that occupying those positions did not provide the daughter with an interest in the home for the purposes of the FLA.

Lori L. Aylwin – Associate, Family Law.

When a separation occurs and there is a Family Business, the separation can have a significant impact on the health and ultimate future of that business.  Often a non-owner spouse may have misconceptions about the value of a business, particularly where the business does not have significant hard assets such as a law practice, a consulting business, or a private medical practice.  Finding the value can be a difficult, controversial, and expensive issue.  On separation focus often shifts from day to day management of the business to determining value of the business, forensic analysis regarding the validity of expenses that the family has historically run through the business, and determining what actual income can be derived from the business.  This shift in focus can have a negative impact on business operations, and can cause additional economic stress on separation.  In order to avoid common problems that arise on separation, and to protect a business, the following are some precautions that may be taken:

  1. Marriage Contracts:  are the single most effective tool to reduce or avoid the negative impact of a divorce on the business.  Having an agreement signed by the business owner and his or her non-owner spouse is the best protection against future problems should the couple separate.  The Marriage Contract should contain a waiver by the non-owner spouse of the owner spouse’s interest in the business, whether it is owned prior to marriage, or whether it is anticipated that one spouse will take over the family business in the future.  You want to ensure that the waiver also includes a specific waiver of any increase in value of the business in the future.  When negotiating the Marriage Contract the business owner must provide full financial disclosure to the non-owner spouse regarding the business’ present value and its future value if known and each party must also have independent legal advice.  Full financial disclosure and independent legal advice for both parties assists in protecting the agreement from attack if there is a separation. 
  2. Succession Planning:  If you are looking at transferring a family business to a child or another family member, or if you are likely to receive a share in a family business during marriage, agreements should be in place between spouses before a transfer occurs.  It is wise to consider making a transfer of the ownership interest contingent on the signing of an acknowledge by the non-owner spouse stating that that the transfer of the ownership interest is a gift or inheritance which shall be excluded from the family’s net family property in the event of a separation.  Further, you will want a waiver by the non-owner spouse of any future claim for an increase in value on that interest over the course of the marriage.  The non-owner spouse must have independent legal advice when the acknowledgement and waiver are signed. 
  3. Business Valuations:  If you do not have a Marriage Contract or a Waiver obtained on transfer of a business interest during marriage, be prepared to have your business valued on separation.  Engage someone early in the process to determine the business’ value.  If possible, agree on a jointly retained valuator to avoid conflicting expert reports on the value of business.  The expert retained should be a certified business valuator and should have experience in dealing with the valuation of businesses for the purpose of division of matrimonial property.  In order to assist in the valuation, you will be required to provide the valuator with detailed information regarding the company including financial records.  If you have a bookkeeper for the company, they would likely be the best person to assist the valuator and  provide necessary information and records. 
  4. Management and Communication: Separation can be highly stressful; focusing on your business may be difficult.  Angry spouses can come into the business and cause significant disruption.  Upon separation, give your staff as much information as possible (and that you are comfortable sharing) regarding your separation.  It is best to take proactive steps rather than reactive steps in order to keep your business running.  Advise staff if there is significant conflict between yourself and your spouse and make a plan regarding how to deal with the non-owner spouse coming onto your premises.  If possible, abdicate some of your responsibilities to other owners or a manger while you weather the storm.  

Thomas Dart, Partner, Family Law.

Lawyers who are also mediators are almost schizophrenic. As advocates, they have to pretend that they are, in effect, at war with the other side, a war which must be conducted with “civility”, but war nonetheless. As mediators, they have to find peace.  So should family law be conducted as a ‘war’ or as a ‘peace keeping project’?  Unfortunately, there is no easy answer to that question as, very often, the answer depends on the personality and goals of the client.

In the ‘war game’, the lawyer must be the adversary who is charged with the responsibility of protecting his client’s interests and obtaining the best possible result.  The rules of the game are contained in regulations called The Family Law Rules, (no you are not allowed to kill your former spouse!), which must be learned and strategically applied to attain the best possible result for your client.  It is very much an adversarial contest, a sometimes very bitter contest because the lawyer is called upon to use every tactic in the rule book to his or her client’s advantage.  Clients who totally mistrust each other, are unwilling to play by the rules, who disrespect the law, who will do anything to hurt the other side love the adversarial game because they believe that they will somehow come out a ‘winner’ of the war game. Finally, they will receive what they perceive to be justice when the judge makes a decision, after an expensive trial, favouring them. Seldom, however, does the end result in satisfaction for either party. 

In the ‘war game’, Judges have to act only on ‘evidence’ about which there is fairly strict rules.  In the war game, the vigilant lawyer can prevent harmful evidence going in unless it complies with the Rules of Evidence. For example, you may well know that your spouse has hidden income, but if you don’t have evidence to prove it, you will probably lose that part of the war.  So in the war game, you have to spend lots of time and money trying to prove facts which both sides may well know are true. Nobody has to admit facts and, very often, people have very different perceptions about facts – we all know that two people can witness the same event and come away with two opposite versions of what really happened.

In the ‘war game’ the biggest losers are the children. In an adversarial system, harmful attacks are made by each parent against the other. Justice Harvey Brownstone’s book (http://www.amazon.ca/Tug-War-Verdict-Separation-Realities/dp/1550228706)  is a must read for those who want to play the ‘war game’.

Sadly, the common approach to family law generated by an adversarial system promotes the war game and destroys families emotionally, financially and spiritually. Equally sadly, it is a necessary evil for those who get filled with hatred (or often terror) when the separation takes place.  I would like to think that we can restrict the adversarial system to the ‘criminal element’ in the family law world – that is those who want to evade their responsibilities, those who want to steal from the other spouse, those who don’t care about harming their children – can we leave that system to them? Only a judge can hold them accountable because they don’t want to (or can’t) hold themselves accountable for the breakdown of their relationship and the decisions which must be made to move forward after separation.

For those good people who get caught up in the terrible tragedy of family breakdown and who do understand and have the maturity to accept the fact that they are accountable, the peace keeping method is far superior.  A good mediator, combined with good therapists, can assist people in understanding the law and the impact of the family breakdown on all members of the family. In a peaceful, although emotionally trying, manner, a divorcing couple can learn how not to be warring enemies of one another.  By focusing on what brings peace to the family so it can move forward with hope, a good mediator will ensure that both spouses have a clear knowledge of their legal rights and obligations, all information necessary to make an informed decision, that they are properly represented by legal counsel of their own when they reach an agreement in mediation, that their financial resources are distributed fairly and in proportion to their responsibilities and can assist them in finalizing with their lawyers a final agreement dealing with all matters arising as a result of their tragic breakup.  A good mediator will also be aware of all of the other the resources in your community which can assist you in learning how to parent your children following separation, how to manage your finances properly, how to deal with each other constructively, no matter how bitter you might be toward each other at first. 

Most importantly, a good mediator will try to understand each of your respective goals regarding the separation and will use that information to assist you in attaining an agreement which comes as close as possible to attaining those goals for each of you. Often your goals will not appear to mesh at all with your spouse’s goals but a good mediator can explore those areas in a skillful manner which may show both of you that there may well be common ground where you think there is none. A good mediator has the responsibility of trying to establish a win-win for both of you.  This is not always easy and may take some time and a lot of work – a mediator’s understanding and grasp of the underlying causes of fears or anxiety which are preventing agreement is often the first step toward reaching an agreement which both parties can acknowledge as a ‘good agreement’.

A mediator can’t take sides or give legal advice. A good mediator provides  information, acts as a coach for both parties during the negotiations, keeps everyone on track and lets both sides have equal input, knows when to call a break, knows when to let you handle things on your own and provides careful governance of the negotiations. When an agreement is reached, the mediator records the basics of the agreement in a written report to the parties which they can then take to their respective lawyers for finalizing by way of a comprehensive legal document called a “separation agreement”.  A good mediator can help with wording but cannot actually draft the separation agreement for you because drafting the agreement requires legal skill and you must have independent legal advice before you sign.

A good mediator will have ‘credentials’.  Right now, in Canada, there is no regulation of mediation services. Anyone can hang out a shingle and call themselves a ‘mediator’. But a good mediator is trained and will be certified or accredited by Family Mediation Canada, (www.fmc.ca) or by the ADR Institute (http://www.adrontario.ca/) or by the Ontario Association for Family Mediation (https://oafm.on.ca/). You can look up the name of a good mediator near you on these web sites.

So if you are caught up in the tragedy of a family breakdown, which path do you want to  follow – war or peace? The choice is really up to the two of you. As for me, I want to be nothing but a mediator – I don’t like my current schizophrenic personality J !!

Many people are surprised by the high cost of legal services when they go through separation and divorce.  It is not unusual to spend tens of thousands of dollars to have issues resolved even in an “amicable divorce”.  Here are some of the reasons.

First, in most cases, people have many issues to resolve:

1)    The children:

a)    What is the parenting plan going to look like? Is he or she entitled to see the children as often as they wish? Why?

b)    What about the fact that the children don’t want to see their mother/father?

c)    What about that new partner? How can the children be seeing him or her?

d)    What if things change over time?

e)    What happens if we don’t agree on the parenting plan and what it should look like?

2)    Child support:

a)    What is the income of the paying parent? 

b)    What is the income of the recipient parent?

c)    What are Section 7 expenses?

d)    What if we share the children 50% of the time? What how do I calculate 50% of the time?

3)    Property division:

a)    What do you mean I don’t get half?

b)    Equalization, how does that work?

c)    Why do I have to get assets like my pension or my small business valued?

d)    Do I need other experts to value by property?

4)    Spousal support:

a)    The Spousal Support Advisory Guidelines – how do they work?

b)    Income determination – same problem as in child support – what’s the income?

So even in relatively “simple cases”, figuring out what you are entitled to or are obligated to pay is not a simple task. Financial issues can take a lot of time to resolve.

Figuring out what to do with children is probably the toughest issue facing most people. In some cases, parents are able to come to a quick agreement. But if the emotions are running high due to the way in which the separation occurred, judgment is often clouded and it is very difficult for spouses to focus on the needs of their children, because their own needs are coming first.  Conflicts over the children are the most time intensive and therefore costly part of a lawyer’s job. Facts are always in conflict – each parent tries to paint the other as a “poor parent” who does not have the ability to address the needs of the children.  When facts are in conflict, it is always necessary to conduct lengthy interviews of third parties who are potentially neutral third party witnesses to historic events that need to be proven in court. It is also often necessary to retain an expert in child development to assist either by mediating or by assessing the family. Courts insist on neutral evidence like this in order to make a proper decision about the best interests of the children if a trial is necessary to resolve the parenting issues. Child custody cases typically cost well over $50,000 just in legal fees if they go to trial.  While this is perhaps more than the cost of your automobile (depending on the make), it is certainly a lot of money to spend which often the family coming out of  a separation simply does not have.

Determining income in this day and age is difficult. Many people are self employed “contractors” who earn their money through their own businesses. Income determines how much child and spousal support you need to pay or receive. Many people work over time or are entitled to bonuses. Figuring all of this out is never an easy cut and dried task, primarily because people are frightened  about their financial future and need to be careful about how much income they declare or how much money they can get from their spouse.  Often the trauma of the separation and the emotion make people behave in ways they would normally not – hiding their assets or understating their income. The lawyer’s job is to figure out what the real numbers are and make recommendations on facts. Discovering the facts about income often takes a great deal of time. It also usually involves hiring another expert, like a chartered accountant who is skilled in family law issues. This necessarily adds to the cost of the case. But it is necessary in order to present the case properly and to arrive at a proper result.

Determining your property rights can also create a myriad of issues. Each side needs to establish their “net family property” (please see previous blogs for what that entails).  In general terms, married couples who separate are entitled to share all of the wealth that the couple generated themselves during the marriage.  Figuring out what that is takes time, and often involves valuation experts at additional cost.

Added to the complexity of the legal issues is the process itself. If you have ever been in Family Court, you know that there are The Family Law Rules which must be followed.  Just completing the paperwork is a time consuming and therefore expensive process. The financial statement which must be filed must be accurate and it must be supported by documents or valuation opinions. Properly completing this form so that it is satisfactory to the court and in compliance with the rules can all by itself cost several thousands of dollars, depending on the complexity of the property issues.

The rules require that procedure must be followed. For sound philosophical reasons, each case that is in court is supposed to be managed by one Judge. Nothing can happen in a case until you have had a case conference. You must also have a settlement conference and then a Trial Management Conference. The purpose of all these conferences is to encourage a settlement of the case without a trial. However, they all add to the cost of your case because the lawyer has to prepare paperwork for each and your financial statement has to be updated as well if it is more than 30 days old.  Nothing ‘substantive’ happens at these conferences unless the spouses come to an agreement. Often agreements are reached with the assistance of the presiding judge but these agreements are usually not a complete resolution of the entire case.  If the case has to go to a trial, it usually goes on a list with many other cases and you have to wait your turn as the case moves up the list.  You really can never be guaranteed a trial date in our court system.  But your lawyer has to be ready for trial just in case it does get reached when it’s on a list. Marshaling the evidence properly so it can be readily and easily presented to the trial Judge is a very time consuming and therefore expensive task. Most family law trials take at a minimum three days to try often taking much longer if there are many issues.  By the time all of the steps are taken to get through the family court system and by the time the trial is over, the cost is usually close to or exceeding $100,000 for the normal middle class family with children and the usual income and assets.  In other words, the ‘system’ adds to the cost but it is a ‘necessary system’.

If both parties can keep their emotions under control, retain a lawyer who is experienced in family law matters and then listen to their lawyer’s advice, use mediation or arbitration to resolve those difficult issues that can’t be agreed upon, or, in other words, if they can stay out of court, a much less expensive resolution can be obtained.  Both sides have to

a)    be honest with each other about their parenting roles and what’s best for their children,

b)    keep the focus on a resolution of the parenting issues, not a “win in court” at the expense of the children,

c)    fully disclose their financial information without having to be repeatedly asked,

d)    want to get their matter resolved in accordance with the law or accept financial responsibility for the breakdown of the relationship,

e)    be prepared to compromise, and

f)     be willing to do a lot of the work themselves.

There are no easy answers to the question of why legal fees are so high. There are many factors outlined above – the complexity of the law itself, the system in place to resolve the issues, the time it takes to organize and understand those issues and to prepare for a trial.

On the other hand, a lot has to do with the manner in which the parties themselves want to get their issues resolved. A lawyer has no choice but to follow their client’s proper instructions, and if the client wants to take a matter to trial that should be settled in some other manner, then the lawyer really has no choice but to take the matter to trial.  A good lawyer will make the client well aware of the potential outcome, the risks involved and the cost of taking that kind of approach to their case.  But even good lawyers have to take a case to trial when it is against their better judgment to do so.  The client has a lot to do with keeping his or her legal costs down.  A good lawyer will encourage this strategy and not encourage the client to take an adversarial approach.  A good lawyer only goes to trial when the other side presents no alternative.  Two good lawyers acting in the best interests of their clients only go to trial when there is some very honest difference of opinion on the potential outcome of the case. Most good family law lawyers settle their cases without a trial. 

Catherine Hyde, Family Law Clerk

I have recently been involved with a number of cases dealing with “Excluded Property” in order to determine whether certain items of property can be excluded from the “net family property” calculation.  To determine this one first needs to look at the Family Law Act

Section 4(2) of the Family Law Act provides that:

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.
  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. R.S.O. 1990, c.F.3, s.4 (2); 2004, c.31, Sched.38, s.2 (1); 2009, c.11, s.22 (5).”

The Act further states that onus to prove such a deduction or exclusion is on the person claiming it.

In order to exclude such property, you must first prove   that it was a gift from a third party (not your spouse), that it was received during the marriage and that it can be traced to an asset that you had on the date of separation.

If you received the asset by way of an inheritance, it will be necessary to review the Last Will and Testament  of the individual to determine whether the intention was to gift the asset to you and whether it is subject to the provisions of the Family Law Act or not.

Clearly there are many issues to be dealt with when considering whether or not you will be entitled to claim exclusion for certain property and how much you are entitled to claim. Your lawyer will best be able to explain to you the various issues and concerns relating to your specific assets that you are seeking to exclude.  Keeping complete records of any monies received and spent including bank statements, purchase receipts and investment statements, copy of correspondence from Estate lawyers, distribution statements, etc. will assist in tracing the assets to a valuation date asset.

Although you never anticipate that you are going to be divorcing and need such documentation it is simply a good financial step to take.