When Paying the Full Equalization of Net Family Property Amount would be Unconscionable
In McGaughey v. McGaughey, 2015 ONSC 399 the Mr. Justice Michael N. Varpio considered a very simple case. The Husband and Wife were co-owners of a house worth $90 000.00 on the day they separated. The outstanding mortgage on the date of separation was for $125000.00. It was in the Wife’s name only.
The Wife’s net family property on the separation date was $45 000.00 (1/2 of $90 000.00 home) – $125 000.00 (full amount of mortgage) = $0 (Net family property cannot be less than $0.00 due to Ontario statutes.)
The Husband’s net family property is $45 000.00 (1/2 value of the home).
To equalize the net family property, the Husband should pay the wife $22 500.00. Varpio J. held that making the Husband pay this amount was unconscionable. He gave the following reasons:
- There is no good reason why the Husband should pay the majority of debt arising from the matrimonial home (a joint venture);
- The Husband has no assets to pay this debt;
- The marriage was short;
- The equalization payment was large when compared to the party’s total assets;
Varpio J. reduced the equalization payment to $7 500.00.
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