Married and wondering if you get anything from the increased value of your home since separation?
With the recent rise in property values in Ontario, many separated couples are dealing with issues arising from an increase in the value of property post-separation. If you are married and residing in Ontario, the remedy for property division is found in the equalization provisions of the Family Law Act. Under those provisions, if one spouse owns the matrimonial home, the other spouse is only entitled to one-half of the value of the home at the date of separation. Any increase in value post-separation belongs to the owning spouse.
However, all is not lost for the non-owning spouse. To access equity acquired after the date of separation, the non-owning spouse can pursue a claim for a constructive trust. In Peter v. Beblow, the Supreme Court of Canada held that a constructive trust would arise “where monetary damages are inadequate and where there is a link between the contribution that founds the action and the property in which the constructive trust is claimed.”
For a married spouse to succeed with an equalization claim, he or she must overcome the Courts general view that married couples’ property is divided using the equalization scheme. As stated by the Ontario Court of Appeal, “in the vast majority of cases, any unjust enrichment that arises as the result of a marriage will be fully addressed through the operation of the equalization provisions under the Family Law Act .” In Straub and Straub, Justice McKelvey noted that “it is significant that the provisions of the Family Law Act have provisions which allow for an unequal distribution in cases where an equal distribution would be unreasonable. This reinforces my view that the law relating to constructive trusts has little relevance in cases which are governed by the statutory framework.”
Despite the Ontario Courts' general reluctance to entertain constructive trust claims where equalization remedies are available, many married spouses have successfully claimed for unjust enrichment and equalization concurrently. If you are married and believe that your equalization of net family property claim results in unfairness, you should consult with a lawyer to determine if a claim for a constructive trust is appropriate.
If you reside in the Guelph or Kitchener-Waterloo area and have questions about matrimonial property and family law, please contact Purves-Smith Law for a consultation.