Unconscionable Conduct Equals Husband's Entire Net Family Property Awarded to Wife

The Court of Appeal ruling has completely reversed the traditional view of Ontario's Family Law Act regarding unconscionable conduct and awarded a woman 100% of her husband's net family property. In the past, the appeal court interpreted the Act as limiting the claim to 100% of the difference between the two parties' net family properties.

The law equalizes such property values by granting the difference between the two to the spouse whose net family property is smaller, but it also states: "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 spouse's intentional or reckless depletion of his or her net family property or any other circumstances relating to the acquisition, disposition, preservation, maintenance or improvement of property."

Justice Susan Lang emphasized that in such cases, the law allows the court to award "an amount that is more or less than half the difference." There is no stated cap or restriction. She also concluded that "there would be little point in providing a remedy for unconscionable conduct and then restricting that remedy to the difference in the parties' net family properties." She found the husband's conduct unconscionable and awarded his ex-wife his entire net family property ($74,385) plus costs.

The couple in question each mortgaged a property in order to purchase a matrimonial home. When their marriage started to break down five years later, the husband further registered the mortgage on his other property for $250,000 to provide for his friend's private company. He didn't make any mortgage payments and he didn't tell his wife about it. Then, 10 months prior to their separation, the husband sold the other property. He didn't receive anything from the sale but used about $190,000 to pay off the mortgage of his friend's corporation. Long after their separation, his wife found out and sought a greater award based on his conduct. The difference in their net family properties would have granted her just over $10,000.

Justice Lang concluded that "Permitting a court to award an amount up to the whole of an offending spouse's net family property as is appropriate to compensate for unconscionable conduct provides a real, substantial, and meaningful remedy for the unconscionable conduct. Such a remedy serves, as far as is practicable, to rectify the otherwise unconscionable result and, at the same time, sends a warning to spouses tempted to hide or divert assets that it is not worthwhile to do so. Accordingly, an interpretation that gives the court the authority to award an amount up to the value of the offending spouse's net family property accords most fully with the purpose and intent of the legislation."

The full decision of Czieslik v. Ayuso, 2007 ONCA 305 can be found by clicking here.

March 2015