Toronto COVID-19 Unfair Family Property Division is a hot button issue in these difficult times. MacLean Law has opened their Toronto office and helps medium to high net worth Toronto family law clients resolve their net family property division disputes. MacLean Law also has one of Canada’s largest Mandarin and Cantonese fluent family law departments. In today’s blog Peter Graburn one of our senior Toronto family lawyers explains the tips and traps related to Toronto COVID-19 Unfair Family Property Division.
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Fairness? In family law disputes? Is this even an issue? You bet it is! Toronto COVID-19 Unfair Family Property Division cases require a high threshold to be met to succeed.
In several previous articles we have discussed the issue of fairness in family law (ie. cohabitation, prenuptial, and separation) agreements (see: Psychological Vulnerability in Separation Agreements. Every ex-spouse (and their lawyer) tries to get the best possible result while negotiating a family law settlement agreement or taking the matter to Court. But can too good a result for one spouse be too good a deal? Absolutely! The best Toronto family lawyers work to ensure net family property division is done fairly.
Toronto COVID-19 Unfair Family Property Division “Unconscionability” 1 877 602 9900
Fairness is such a fundamental (and sometimes concerning) aspect of family law disputes that some provinces have passed legislation (government-created law) designed to set aside agreements or division of property that are so unfair as to be “unconscionable” (ie. B.C .’s Family Law Act s. 93; Ontario’s Family Law Act s. 5(6), etc.). But what makes an agreement or resolution so unfair as to be “unconscionable”? The Courts have set a very high standard for overturning agreements on the grounds of “unconscionability”, stating in Alberta (see: Mastalerz v. Mastalerz 2007 ABQB 416 at para. 32):
In determining the question of unconscionability, the Court must take into account all the circumstances and determine whether the bargain was so bad as to constitute a fraud perpetuated upon the party who is seeking rescission of the agreement…;
and similarly in Ontario (see: Serra v. Serra, 2009 ONCA 105 at para. 47):
In this regard, the threshold of “unconscionability” under s. 5(6) is exceptionally high. The jurisprudence is clear that circumstances which are “unfair”, “harsh” or “unjust” alone do not meet the test. To cross the threshold, an equal division of net family properties in the circumstances must “shock the conscience of the court”.
Toronto COVID-19 Unfair Family Property Division
In a recent Ontario case (Jayawickrema v. Jayawickrema), Ontario’s Superior Court of Justice had the opportunity to look at whether deciding a division of matrimonial property during the uncertainty of COVID-19 may make the results of that division unconscionable, originally (in May 2020) holding (see: 2020 ONSC 2492 at para. 96) that:
Neither party affirmatively dealt with the issue of unconscionability in their evidence even though it was a trial issue. No case law was provided to the Court. The wife seems to have been oblivious to the possibility that she could be exposed to such a claim and the husband dismissed it entirely. This is especially concerning for a couple of reasons:
(a) Since the trial concluded, the COVID-19 pandemic has decimated the global economy. It was inferentially clear from the wife’s evidence that her business involved students and, quite possibly, people in close contact with each other. Public Health guidelines and restrictions have likely impacted the wife’s ability to operate her business, pay the mortgage on its premises and thus fund any equalization payment; …
The Court refused to decide on the division of property under these uncertain COVID-19 economic conditions and sent the parties away to come back with further evidence and submissions on the issue. People (mostly family law lawyers!) waited to see what the Court would decide. Finally, in July 2020, after hearing further from the parties, the Court concluded (see: 2020 ONSC 4444 at para. 18):
While I have every reason to suspect that the current pandemic is having, and may for the foreseeable future have, an impact on the wife’s business and possibly the value of her realty, I am not persuaded that she has met the exceptionally high evidentiary onus for unconscionability required by s. 5(6)(h) of the Act.
COVID-19 is not over. Ontario is now limiting operating hours for (and in some cases closing) bars and restaurants and Toronto hospitals are re-opening their COVID-19 emergency wards. Clearly, these are unprecedented social and economic times – times no-one considered in structuring their family business and property holdings. Toronto COVID-19 Unfair Family Property Division understands that settlements need to account for the unusual times.
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But the Courts (at least the Ontario Court in Jayawickrema) do not seem to be willing to waiver from the very high test for “unconscionability” even in these circumstances – ‘constituting a fraud’ or ‘shocking the conscience of the court’ are still the highest standards the Courts will impose before overturning family property agreements or in making these decisions for the parties.
It is hard to imaging a more unexpected and devastating event than COVID-19 to occur to affect family property division. It is easy to imaging that the situation faced in Jayawickrema is not the only time this matter will come before the Courts. It is likely the issue of fairness and “unconscionability” of family property division during (and after) COVID-19 will become more frequent and contested, in Ontario and across the country. This is not over.
