Child Support Table Amounts Increasing after December 31, 2011

There are new child support tables effective January 1, 2012.  The new tables can be accessed at the Department of Justice's website.

A Word on Joint Custody in Ontario

Justice Brownstone of the Ontario Court of Justice recently wrote on the state of law on joint custody in Ontario.  In the case of Hsiung v. Tsioutsioulas, Justice Brownstone wrote:

[17]                  I am acutely aware that an order for joint custody should not be made in cases where the parents have been unable or unwilling to demonstrate the capacity and willingness to communicate and to co-operate with each other and make decisions together in a civilized, child-focussed way.....  However, courts are increasingly prepared to order joint custody, even in high conflict cases, where satisfied that the parents have insulated the children from the conflict and sufficient protective factors are in place to ensure that the joint parental authority will be workable...  Moreover, in recent years, there has been more willingness to grant joint custody where such an order is necessary to preserve the balance of power between the parents, especially where one parent has been primarily responsible for the conflictual relationship... consider this to be such a case.

Gagne v. Gagne -- Appellate Guidance on the "Ranges" under the Spousal Support Advisory Guidelines

In Gagne v. Gagne, the Court of Appeal set aside the trial judge's decision and made its own child and spousal support order after finding that the trial judge had failed to determine the support payor's income.  As a result there was no basis in his decision for the amounts ordered. 

The Court of Appeal found that the husband had not made "fair disclosure" in the lower court.  Nonetheless, the trial  record showed  that the husband disclosed an average annual income of $230,000.00 over a 5 year period. The Court of Appeal upheld the trial judge's finding that the husband failed to disclose income from other sources and imputed an additional $20,000.00 to him, increasing his income to $250,000.00.

The Spousal Support Guidelines ("SSAGs") produced the following range of monthly spousal support: Low - $3349; Mid - $3968; and High - $4597 (based on the "with child formula", the length of the parties' marriage, their ages and incomes).  The Court of Appeal ordered the husband to pay the higher range figure because of his failure to make fair disclosure.


Unfortunately, there is nothing in the SSAGs to suggest that the ranges are to be used to penalize a party for financial disclosure that is not fair.  The SSAGs state in chapter 4:

The Advisory Guidelines do not generate a fixed figure for either amount or duration, but instead produce a range of outcomes that provide a starting point for negotiation or adjudication.

Ranges create scope for more individualized decision-making, allowing for argument about where a particular case should fall within the range in light of the Divorce Act’s multiple support objectives and factors. Ranges can also accommodate some of the variations in current practice, including local variations in spousal support cultures.

And at Chapter 8:

The ranges allow the parties and their counsel, or a court, to adjust amount and duration to accommodate the specifics of the individual case in light of the support factors and objectives found in the Divorce Act

It would have been nice to see an appellate case where the Court was more instructive on the use of the ranges.  Maybe some other time.

Support of Estranged Adult Children

There has been a lot of discussion lately about paying child support to adult children who are estranged from the support payor.   Should a father pay support to a child who is attending university, and who refuses to have a relationship with the support payor?  Are adult children required to communicate a minimum disclosure regarding their studies?

Smith v. Smith addresses the issue of support for adult children in circumstances where the children cut off their relationship with the support payor.  Without much analysis, the court simply terminated the children's support.

A more thorough discussion of the topic can be found in Caterini v. Zaccaria, where Justice Pazaratz quoted a paper delivered by Justice Corbett, and the following comments as authority:

(a) Contrary to certain recent literature, there has not been "growing judicial recognition" that the quality of the relationship should have a bearing on child support. 

(b) Courts have been willing to impose a few specific responsibilities on adult support recipients, and may properly do so, but not conditions that include maintaining a social relationship with a parent. 

(c) The statutory basis for taking the quality of the child-parent relationship into account is dubious. 

(d) There is appellant authority permitting the court to place some weight on the parent-child relationship, but that authority is more ambiguous than trial and motions court decisions suggest. 

(e) On the current state of the law, there seems to be a discretion to take this factor into account, though few courts do, and fewer have found it a significant factor in a support decision. 

(f) The better view is that if conduct is ever relevant, it should only be in truly egregious cases of misconduct by a child against a parent. 

As has been commented by others, a review of case law in the area suggests that the over riding concern on the part of courts is the child's need.  If the child needs the support, the weight given to the quality of his or her relationship with the payor spouse is less important.  If the support is not needed the quality of the parent child relationship is given more importance.

Bruni v. Bruni -- hatred has no legal remedy

A few years back I heard a commentary about criminal court and family court.  The saying went something like this: "criminal court is filled with bad people trying to look good, while family court is filled with good people looking bad."

The parties in Bruni v. Bruni behaved incredibly badly.   The wife alienated the children from the husband (actually seeking to have them adopted by her new boy friend 4 months after separation). The husband failed to report income and to pay adequate child support.  The husband made a frivolous claim to set aside a separation agreement.


Justice Quinn's decision was scathing of the parties.  The decision garnered national attention.

Aside from the delight of schadenfreude, can any insight to our family law system be gained from Quinn, J's critique?

Our court system is is obviously a flawed process for addressing people's emotional difficulties.  In Bruni, the parties and their children were in need of counselling but the court was unable to provide it.  Their anger towards each other came to nothing other than wasted resources and the ridicule of a jurist.

Custody Disputes and the UN Convention on the Rights of the Child -- A Child's Right to be Heard

Canada ratified the United Nations Convention on the Rights of the Child in 1991.  Recently, a lot of attention has been placed on the Convention's concept of "the voice of the child" and the right of a child to be heard in cases like custody disputes.

Article 12 of the Convention is of particular interest:

1. [countries].... shall assure to the child who is capable of forming his or her own views the right to express those views freely in all matters affecting the child, the views of the child being given due weight in accordance with the age and maturity of the child. 

2. For this purpose, the child shall in particular be provided the opportunity to be heard in any judicial and administrative proceedings affecting the child, either directly, or through a representative or an appropriate body, in a manner consistent with the procedural rules of national law. 

A lot of lawyers have taken the Convention to be consistent with the Children's Law Reform Act ("CLRA").  Section 24 of that Act requires the court, when assessing the best interests of a child in a custody dispute, to consider all the child's needs and circumstances, including "the child’s views and preferences, if they can reasonably be ascertained".

More recently, in the case of Bhajan v. Bhajan, the Court of Appeal has considered the issue of whether a court can give meaning to the right of the child to be heard by requiring the appointment of the Office of the Children's Lawyer ("OCL"), even when the OCL declines to act.  In that case, the Court of Appeal held that judge's should respect the OCL's legislative framework, which permits the OCL to decline to act.

In the recent case of G. (B.J.) v. G. (D.L.), Justice Martinson of the Yukon Territory Supreme Court considered whether judges interviewing children was an appropriate way of having a child's views heard.  Justice Martinson noted:

"More than just lip service must be paid to children's legal rights to be heard. Because of the importance of children's participation to the quality of the decision and to their short and long term best interests, the participation must be meaningful; children should:

1. be informed, at the beginning of the process, of their legal rights to be heard;

2. be given the opportunity to fully participate early and throughout the process, including being involved in judicial family case conferences, settlement conferences, and court hearings or trials;

3. have a say in the manner in which they participate so that they do so in a way that works effectively for them;

4. have their views considered in a substantive way; and

5. be informed of both the result reached and the way in which their views have been taken into account."

Will Ontario courts follow suit?

The shift towards allowing children greater participation in disputes impacting on them, such as custody disputes, has greatly evolved over the past decade.  The trend is towards making the child's right to be heard more meaningful, to the point where judges are considering the appropriateness of interviewing children -- a rarity in the past.

Certainly, if judges are to respect the OCL's power to decline involvement in a case (as directed by the Court of Appeal), conducting a judicial interview of a child may be the most appropriate method of hearing a child's views.

Expert's Opinions: the need for more than just a "bottom line"

The case of Ramlochan v. Ramlochan provides an interesting discussion about expert's opinions and the need for an expert to go beyond merely providing a conclusion.  The husband's income was at issue in the case -- the amount of his income would determine the amount of support to be paid.  The husband hired an expert, who was to provide an opinion of his income based on her investigation of his financial dealings with two privately held companies that he owned.  The expert filed a report, and without providing any explanation, gave the opinion that his income was $200,000.00 per year.
Corbett, J. refused to accept the expert's opinion.  He held:


The court will not accept an expert’s opinion solely on the basis of the expert’s “authoritative claim”.  That is, it is not sufficient for an expert to show that (a) she is an expert; (b) she has looked into a matter; (c) she has reached a conclusion; and (d) therefore the court should accept her conclusion.  Rather, the expert should explain her assumptions, describe the material evidence and observations upon which the expert relies, describe the analysis and reasoning the expert has used to reach her conclusion, set out her conclusion, including any limitations or qualifications to that conclusion.  The opinion is not just the “bottom-line” conclusion, but the entire intellectual exercise of assumptions, evidence, analysis, reasoning, conclusions and limitations and qualifications of that conclusion.  It is then possible for the court to understand and apply the expert’s opinion on the basis of the facts, as found by the court, and to weigh competing opinions on contested issues.

Corbett, J. concluded that the husband's income for the purpose of support was $557,000.00 per year.

Religious Marriages in Ontario -- Kanafani v. Abdalla

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Kanafani v. Abdalla is a decision of Justice Spies of the Superior Court.  In that case, Spies, J. found a sharia marriage performed in Ontario was not valid because it did not meet the requirements of the Marriage Act.

Ontario courts will recognize a foreign marriage if it is valid under the law of the place where it was performed.  Thus, a ceremony based on sharia law, if valid in the jurisdiction where it was performed, will be recognized by Ontario as valid.

However, an Ontario marriage must meet the requirements of the Marriage Act in order to be valid here.  A ceremony based on sharia law, if performed in Ontario, will not be recognized as valid unless it meets the requirements of the Marriage Act (such as a marriage licence and the registration of the marriage).

In Kanafani, the parties married in Toronto in an Islamic religious ceremony under sharia law.  Both knew that their marriage was purely religious.  They did not apply for a marriage licence from the Province.

Sometime after their sharia law marriage, the couple visited Abu-dhabi, where they went before a local judge and registered their sharia law marriage.  The marriage was recognized in Abu-dhabi as valid.

Justice Spies found that the parties' sharia marriage was not valid in Ontario.

Part I of the Family Law Act defines a "spouse" as:

“spouse” means either of two persons, who, (a) are married to each other, or (b) have together entered into a marriage that is voidable or void, in good faith on the part of the person relying on this clause to assert any right.

  Section 4 of the Marriage Act provides:

“[n]o marriage may be solemnized except under the authority of a licence issued in accordance with this Act or the publication of bans.”  A “licence” is a marriage licence issued under the Marriage Act

Justice Spies found that the parties registration of the Toronto religious marriage in Abu-dhabi was irrelevant.  She found that Abu-dhabi's recognition of the parties' sharia marriage was irrelevant, as well.

In reviewing the case law authority, Justice Spies found that:

....."marriage” in the definition of spouse ....means.... a marriage under the Marriage Act and ....section 1(1)(a) refers to “persons who are married, which can only refer to persons who are considered married under the laws of Ontario” . 

With respect to section 1(1)(b), .... a “marriage that is void or voidable” refers to a statutory marriage under the Marriage Act which may, in particular circumstances, be void or voidable and that these words have no relevance to a religious ceremony that is not a statutory marriage.... 

Section 1(1)(b) also provides that the parties must have entered into a marriage that is void or voidable in good faith.  ...good faith refers to “an intention to comply with Ontario law” which means an intention to comply with the requirements of the Marriage Act.  The court also confirmed that “good faith” does not refer to the state of mind of a party regarding the legality of the marriage. (at para. 7)

After finding that the parties were not validly married, Justice Spies dismissed the wife's claim for an equalization of net family property.  The wife also lost her right to occupy the "matrimonial home" -- for which only married spouses can claim a right to occupy. 

The List of Cases Used by Family Law Judges

Family law is complex practice area. There are dozens of statutes and thousands of cases.

Nonetheless, Judges who hear family law cases in Southern Ontario have a list of the leading 63 case authorities dealing with:

1. parenting;
2. child support;
3. spousal support;
4. property;
5. marriage contracts;
6. separation agreements and disclosure obligations;
7. summary judgment;
8. interim costs and disbursements;
9. partition and sale;
10. occupation rent;
11. trust doctrines;
12. preservation orders;
13. prejudgment and post judgment interest;
14. costs; and
15. motions before case conferences.

8 Days of Trial for $1,800.00 result -- Bhamra v. Bhamra

Bhamra v. Bhamra is an example of a case that you don't see very often: one that seems to be a complete waste of time and money.

The case dealt with two issues -- property equalization and spousal support -- after a relatively short (6 year) marriage. If both parties had been willing, their dispute could have been resolved during an afternoon settlement meeting. Instead, they fought about many minor valuation and property issues, and a modest spousal support claim against a payor spouse who made no more than $20,000.00 per year.

The parties dispute took up 8 days of trial -- almost two weeks -- resulting in an order that the wife pay the husband an equalization payment of about $3,200.00 and that the husband pay the wife $5,000.00 in spousal support. A net gain to the wife of $1,800.00 (until one considers the costs of paying two lawyers for four years).

It seems obvious that there were "unresolved emotions" stemming from the parties' 2006 separation. At separation, the wife charged the husband with assault, and he was removed from the home. Then, the husband's parents kicked the wife out of the home, too. Four years later they were fighting over minor issues.

There is not a lot of law in this case. Just misery.

Spousal Support Advisory Guidelines

Cassidy v. McNeil is an interesting case from Ontario's Court of Appeal and deals with the Spousal Support Advisory Guidelines ("SSAG"). The case also deals with a trial judge's duty to provide adequate written reasons for his or her decisions.

The trial judge ordered the husband to pay the wife spousal support of $1,200.00 per month for five years.

The lawyers who argued the appeal were not the same as trial counsel. Unfortunately, trial counsel failed to file and mark as exhibits the SSAG calculations used at trial.

The absence of a trial record was compounded by the brevity of the trial judge's written reasons. The trial judge failed to deal with the issue of entitlement in his reasons, and simply noted that the wife had a need for support.

The Court of Appeal therefore used its own analysis of the SSAG and varied the trial judge's decision to lower the spousal support to $950.00 per month, but made the order indefinite (given the ages of the parties and the length of the marriage).

Appellate Court Upholds Highest Spousal Support Order

Ontario's Divisional Court upheld a temporary order requiring a husband to pay a wife spousal support of $110,000.00 per month. The spousal support award was reported in the news as the highest award in Canadian history.

The case is Elgner v. Elgner.

The focus of the appeal court is different from the motions court that made the award. In the appellate case, the focus was on whether there was an automatic right to an appeal in light of the provisions of the Divorce Act. The appellate court found there was no automatic right of appeal and that leave to appeal had to be granted.

The appellate court considered the test for granting leave to appeal an 'interlocutory' order under section 19 of the Courts of Justice Act: whether there was a conflicting decision in Ontario, or where there was good reason to doubt the correctness of the decision and the matter was of public importance.

The appellate court did not agree that there was a conflicting decision.

As for doubting the correctness of the decision, the appellate court held that temporary spousal support orders should be adjusted at trial rather than re-argued on appeal.

Re-Marriage and Reducing Existing Spousal Support Obligations

Slater v. Slater is a decision of Czutrin, J. of the Ontario Superior Court and highlights some of the issues that arise when a former spouse who is receiving spousal support re-marries.

In the Slater case, the husband and wife entered into a Separation Agreement after 20 years of marriage. The husband agreed to pay the wife "non-variable" spousal support of $10,000.00 per month. The parties agreed that spousal support could only be changed in the event of a "catastrophic" change in circumstances.

The wife remarried. The former husband then applied to terminate or reduce the spousal support.

In the normal circumstance, the extent to which the new husband contributed towards the wife's expenses would impact on her need for support. The first husband named the second husband as a responding party in his application. He claimed that the second husband had a duty to contribute towards the existing support.

The former husband asked for an order that the new husband, at a minimum, share the obligation to support the wife. He asked that the new husband "indemnify" him for all or part of the spousal support because the new husband had an obligation to support the wife as an incident of marriage.

The court held that the parties' Separation Agreement governed. The Separation Agreement required a "catastrophic change". As the wife had been cohabiting when the Agreement was entered into and it was reasonably foreseeable that she might re-marry. Therefore, her re-marriage was not an event that triggered a variation.

The court did not address whether re-marriage in itself relieved the payor in whole or part of his obligation to pay spousal support. Czutrin J. expressed concern about making new spouses parties to applications to terminate spousal support. To do so would certainly dampen if not jeopardize intact relationships, and increase litigation.

We'll see if the husband appeals.

Agressive litigation and the pitfalls of financial disclosure -- Stuyt v. Stuyt

Family law cases have as their hallmark complete financial disclosure. If litigants have enough information, they can settle their disputes.

That principle usually operates in sync with some other fundamental principles, including:

• Proceedings should be brought on notice;
• Decisions should be based on evidence.
  

Simple enough? Apparently not.

In the case of Stuyt v. Stuyt, a wife obtained a court order striking the husband's Answer (his defense) because she alleged that he defaulted in providing financial disclosure. The problem was that she obtained the order without notice to the husband, without disclosing all the facts to the motions judge, and without filing any evidence (such as a sworn affidavit) to support the relief. Clearly, the motions judge should not have made the order, but it took two years of wasted resources and wasted time (including an undefended trial) before the Court of Appeal corrected the error and sent everything back to the trial judge.

To what extent excessive and aggressive lawyering contributed to the two year court odyssey is unknown. At the end of the two years, the parties' were no closer to a resolution.

Family law cases, like other disputes, are often shaped because of one party's missteps and mistakes. One wonders to what extent the wife will wish to continue with her claims, or to what extent she will discount them in order to bring the Stuyt matter to a conclusion.

David and Goliath: How a Young Lawyer Took on Wells Fargo and Saved a Family Home from Foreclosure

28 year old California lawyer Wajahat Ali, fought an epic battle for a home loan modification against Wells Fargo and won...Eventually.

His story is a well-written and terrifying look into the financial crisis, the state of America's megabanks, and how homeowners in need seemingly stand no chance against the towering indifference, incompetence and confusion of those megabanks.

It is also a piece about how the passion and tenacity of a young lawyer (or any lawyer) can make all the difference in the lives of his or her clients -- to empower the powerless and not the powerful.

For lawyers, Ali's epic struggle to save his client's home is an inspiration.

Lawyers Feed the Hungry

The legal profession has a long tradition of charity and volunteerism.

I am happy to be a supporter of the Law Society of Upper Canada's Lawyers Feed the Hungry program. I have also volunteered my time at the program; preparing and serving meals, and cleaning up.

The Law Society has operated the program for the past 11 years. Four sit-down meals and three take-away meals are served each week, for a total of 1,600 meals weekly. The program operates out of the Law Society's Cafeteria at Osgoode Hall in at 130 Queen Street West, Toronto.

It is humbling to serve people in need, and I am honoured to be a supporter of this good work. The program costs about $6,000.00 each week, and although most of the support comes from lawyers and the Law Society, donations are welcome from all (plus, you'll get a tax receipt).

The Recession's Impact on Families

I recently came across a study about the impact of the recession on family life, The State of our Unions, Marriage in America 2009: Money and Marriage. The study was released by the University of Virginia (click here for a PDF file).

The author of the stufy suggests that economic stress has made American marriages slightly more stable overall, as couples develop a “new appreciation for the economic and social support that marriage can provide in tough times". Is this a nice way of saying that people are staying together for their creditors? How much fun can that be?

Having suggested that the recession might not be so devastating to American families, the study nonetheless expresses concern that the recession’s job losses have been heavily concentrated among working class men, who may not be equipped to make a smooth adjustment to playing stay-at-home dads while their wives support the family. So perhaps things aren't so rosy for American families, after all.

Furthermore, although divorce rates in the U.S. are down slightly, the decrease can be explained by falling marriage rates. This is consistent with a trend we have seen in Canada over the past couple of decades away from marriage to cohabitation. Unfortunately, Canadian social studies suggest that families without the benefit of marriage and its commitment are at higher risk for separation.

The reality is that a financial stress like a recession places all families at risk.

Rick v. Brandsema -- righting unconscionable agreeements

The Supreme Court of Canada returned to domestic contracts and their enforceability in the case of Rick v. Brandsema, 2009 SCC 10 (Can LII). The Court once again considered the competing policy goals of:

• promoting "finality" and respecting the rights of separating spouses to enter into agreements that will be enforced by the courts; and
  

• recognizing the unique and vulnerable circumstances that separating spouses find themselves in when negotiating Separation Agreements.

The Court sought to balance these interests in its decision. There's really nothing new here in terms of law. The Court simply reaffirmed the principles set out in its decision in Miglin v. Miglin, 2003 SCCC 24 (CanLII).

The Court's message was this:

• If you want your agreement to be respected and upheld by the courts, don't use exploitative tactics such as failing to fully and honestly disclose finances and don't take advantage of the other party's vulnerabilities in the bargaining process.

• If you do so, and the agreement fails to meet the objectives of the governing legislation, the agreement may set aside and remedied by the court.

A 'hard bargain' imposed on a vulnerable spouse is not good for either party if it results in a protracted and expensive court dispute about whether the agreement is valid and enforceable.

In the Rick case, the SCC overturned the British Columbia Court of Appeal and affirmed the trial judge's decision to award the wife "equitable compensation" of $650,000.00.

At trial, the judge found that the husband had deliberately breached his duty to fully and honestly disclose his assets during the negotiation of the separation agreement. The trial judge also found that the husband had exploited his wife's "profound mental instability" in the negotiation process.

As a result of the husband's exploitative conduct, the trial judge found the wife received almost $650,000.00 less than her entitlement under B.C.'s Family Relations Act. In the circumstances of the case, the trial judge found the separation agreement to be unconscionable and ordered the husband to pay to the wife "equitable compensation" representing the difference between the "equalization payment" she received under the unconscionable agreement and her entitlement under B.C.'s Family Relations Act.

The B.C. Court of Appeal had reversed the trial judge's findings and upheld the separation agreement. The appeal court found that the wife had failed to use the professional advice (her lawyers) that was available to her, through no fault of the husband. The appeal court noted that the husband was under no obligation to act contrary to his own best interests. The appeal court relied on the SCC decision in Miglin v. Miglin, 2003 SCCC 24 (CanLII) and held that the wife's vulnerabilities were presumptively compensated for by the professional assistance available to her.

The Court of Appeal also discounted the trial judge's findings about the wife's mental health vulnerabilities, and made its own finding that although the wife was "troubled" , she was not mentally incapable, and had not entered the agreement under duress.

The SCC said the BC Court of Appeal was wrong in its reading of Miglin. The court said it was up to the trial judge to make a finding that the wife's vulnerabilities were, in fact, not compensated for by the presence of legal counsel. Her mental instability, together with the husband's breach of his obligation to make full and honest financial disclosure, as well as the agreement's substantial non-compliance with the legislative objectives, made the agreement unconscionable.

Parental Alienation Syndrome (PAS)

The trial decision of the Ontario Superior Court in A.G.L. v. K.B.D., 2009 CanLII 943 (ON.S.C.) has created a lot of discussion about Parental Alienation Syndrome (PAS). The case is a sad one, and reminds us how upsetting and complex these disputes can be.

After 17 days of trial the court found that the mother had alienated the parties' 3 daughters – aged 14, 11 and 9 – from their father. The court granted custody to the father despite an 8 year status quo in which the children were in the primary care of their mother. It did so after finding that the mother had engaged in an outrageous course of conduct which had alienated the children from their father. The trial judge found the mother's conduct to be child abuse.

A cautionary note: the mother's conduct in this case was so outrageous, and the father's behaviour was beyond reproach, so there was little discussion about "realistic estrangement" – alienation that is reasonable or warranted between a child and parent. Given the dysfunctions faced by many families undergoing separation, "realistic estrangement" may arguably be more common than PAS.

PAS is not new. The term was coined in the mid-1980s by Richard Gardner. There is much debate about its meaning, and it appears to be more of a "phenomenon" than a disorder. Nonetheless, the court accepted the expert evidence of Dr. Barbara Jo Fidler regarding the warning signs of behaviours of "pathological alienation" (at pages 13-15 of the decision). The court relied on Dr. Fidler's evidence that children are more susceptible to alienation in certain age ranges:

• Dr. Fidler gave expert evidence that children can have shifting allegiances to parents from ages 5 to 8, and that children can become confused at that time in their development when they can hold both positive and negative views about a parent.
  

• At age 10 or 11, children may choose to side with one parent over the other in order to free themselves from emotional conflict and the stress it causes.
  

• In children of 12 years old and older the alienation can become extreme, to the point where the child can find his or her own reasons to dislike or hate the alienated parent, even ones which are not real.

The court accepted Dr. Fidler's evidence that there was a broad range of effects of this type of alienation on a child:

• Low self-esteem to self-hatred, guilt, feelings of abandonment, feeling of being unloved and unworthy;
  
• Self-doubt and doubt about their ability to perceive reality;
  
• Simplistic or rigid information processing;
  
• Poor differentiation of self;
  
• Aggressive and poor impulse control;
  
• Where court orders are disobeyed, children learn that it is acceptable not to obey court orders; and
  
• Alienated children can lack compassion and remorse and can also develop an ability not to feel guilt.
  

Post Separation Decline in Equalized Assets -- Serra v. Serra

With the economy in a free fall, the Ontario Court of Appeal's (OCA) decision in Serra v. Serra could not be more timely. The OCA decision reversed the trial court's judgment and replaced it with an order requiring the husband to make a lesser payment to his wife to resolve the property claim under Ontario's Family Law Act.

The decision allows litigants to pursue an unequal division of net family property where market driven forces cause a decrease in the post separation value of assets.

Modern family law reflects a social policy of recognizing spouses equal contributions towards marriage by dividing family property equally. Ontario's family property law differs from many jurisdictions because it uses a fixed date valuation approach to achieve that underlying policy. For most purposes, that date is the separation date.

Ontario courts had been reluctant to look beyond the separation date by either valuing assets 'in hindsight' or considering a post-separation value in an application for an unequal division. They did so because of the desire for certainty in resolving cases.

In the Serra case:

• the husband's business was worth between 9 and 11 million dollars at separation.
  
• At trial 7 years later his assets had declined in value so that his net worth was perhaps 2 million.
  
• Nonetheless, the trial judge found that she had no authority under Ontario's Family Law Act to order a lesser equalization payment. The trial court ordered the husband to pay his wife an equalization based on the value of his business at separation -- twice as much as his net worth at trial.

The OCA has clarified that a non-fault, market driven decline in the value of equalized assets is sufficient for the courts to consider making an award for an unequal division of property.

In one part of the decision, the OCA suggests that a temporary market decline of shares or securities would not meet the test of unconscionability. However, does this apply to a spouse's RRSP savings, especially where it is not uncommon to see a loss of value exceeding 30 percent in this market? These are expensive issues for spouses that separated in 2007 or earlier, but who are only now effecting equalization payments.

The Court of Appeal relied on section 5(6)(h) of the Family Law Act, which says:

5(6) 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...

(h) any other circumstance relating to the acquisition, disposition, preservation, maintenance or improvement of property. R.S.O. 1990, c. F.3, s. 5 (6).

Up until the Serra decision, the titled spouse was largely the insurer of the other party's equalization claim in the face of market driven reductions. Now, market driven forces are "other circumstances" relating to the acquisition, disposition, preservation, maintenance or improvement of property.

In the face of declining markets, will the propertied spouse rush to make a transfer of assets vulnerable to reduction in value? Should he or she do so? The Family Law Act does not permit trial judges to make specific transfers of property in satisfaction of equalization payments.

Before making an order for an unequal division, a trial court must be of the opinion that an equalization will be "unconscionable". The Court of Appeal noted the standard is more than simply "unfair", "harsh", or "unjust" alone but must "shock the conscience of the court".

Of interest in the Serra decision:

1. The Court's ruling that unconscionability need not be based on fault based conduct;
2. Despite the Court's discussion of the absence in fault, it seemed to penalize the wife in her conduct of the litigation, and specifically the preservation orders and support orders obtained by her and which required the husband to hold on to his failing business to meet his obligations under the court orders;
3. The OCA held that in fashioning an unequal division, the trial court should exercise its "normal discretion", and not simply make an award that was shy of unconscionable; and
   
4. yet the OCA gave very little insight about how it exercised its discretion when it declined to saddle the wife with the entire downside of the business decline.
   

The OCA really did not touch upon an interesting element of the trial. The fact that the husband had admitted the wife's claim for a one-half interest in the business, that she subsequently withdrew on the eve of trial. Had the trial court allowed the admission, the wife would have been saddled with one-half of the decline in the business value, as she would have owned half of it.

Many practitioners feel there is enough in the Serra decision to allow litigants to pursue post-separation swings in the value of assets. Whether that will be applied to upswings in value will likely not be seen for years (given the recent market trends), and the extent to which trial judges will allow such claims is yet to be seen.