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When Paying the Full Equalization of Net Family Property Amount would be Unconscionable

by Daniel Gloade on March 9, 2015

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.

You can find the whole text here.

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