Legal Studies 1030

Section 1 - the Law and relationships

Lesson 7 - Divorce

Celebrity Divorce: In 2008, Heather Mills received a divorce settlement of 24.3 million pounds (almost $48 million Canadian) from former Beatle Paul McCartney. She asked for more, but McCartney was able to keep most of his fortune, estimated at around $450 million.

(For you to think about: Can you think of some other cases such as this one, in the world of entertainment, sports, or politics?)

Divorce is the process that legally ends a marriage. The process begins with an application for divorce. It outlines the grounds for the divorce and other essential information such as:

  • where and when the marriage occurred;
  • the ground(s) for divorce;
  • the children's names and ages (if there are any children from the marriage);
  • custody of and access to the children;
  • financial support for the children, and who is responsible for payment;
  • financial support for the applicant, if it is needed;
  • division of property and property claims.

Divorce actions are heard in provincial and territorial superior courts. About 90 percent of cases are uncontested, meaning they are resolved after discussion and negotiation without having a hearing before a judge.

Under the Divorce Act of 1985, passed by the Canadian Federal Government, there is only one ground for divorce in Canada: marriage breakdown. This is the origin of the term no-fault divorce. It states that neither party is at fault for the divorce, the marriage has simply broken down. This occurs when one of the following conditions exist:

  • the spouses have separated for at least one year and were living apart when the divorce petition was filed;
  • adultery was committed by either spouse during the marriage;
  • a spouse has been treated by the other spouse with serious physical or mental cruelty and they can no longer live together. Mental cruelty includes constant criticizing, serious alcoholism, domineering behaviour, and constant refusal to have sexual relations.

Divorce - Property and Issues:

Property is always governed by provincial and territorial laws. When a marriage breaks down, these laws control the fair and equal division of the value of a couple's property.

Under traditional English common law, daughters and married women could not own property. This injustice was finally addressed in Britain in 1882 with the passage of the Married Women's Property Act. This law granted wives the right to own and control property as though they were single. In Canada, provinces that followed the common law used this statute as the basis for similar legislation. But the separate property system often resulted in hardship for women if a marriage ended.

Until the early 1980s, husbands were generally the money earners. Wives usually looked after the home and the children and were homemakers. When marriages broke down, the most likely attitude was, "What I paid for is mine, and what you paid for is yours." Since many wives earned little, if any, money, they bought few goods. As a result, husbands owned most of the family property and walked away with it following divorce. The courts did not give the wife an interest in property that was registered in her husband's name. The laws also did not recognize her contribution in the form of household management and home-care duties.

If both spouses worked outside the home, the husband usually earned more than the wife. Often, his wages were used for the mortgage payments on their home. Her wages paid the household expenses. When the marriage broke down, the husband was considered the sole owner of the home if it was registered in his name only, which was often the case. Although the wife's wages paid for the family's expenses, which allowed her husband to pay for their home, her financial contribution was not recognized. At best, she might be allowed to keep some items she had paid for (for examples, her own car). Clearly, the old property system presented problems. The existing law did not recognize a woman's economic and material contributions to the marriage.

This injustice became the focus of public attention in the following landmark case of Murdock v. Murdock.

Murdock v. Murdock, 1973 CanLII 193 (S.C.C.)

Irene Murdock and her husband, James, worked together for hire on various ranches. In 1947, James and his father in law purchased a guest ranch. When they sold it four years later, they divided the profit equally between them. In 1952, James purchased additional property from money partly owned from his mother in law. The loan was repaid. Over the years, James bought and sold bigger and better ranch properties, always in his name. At all times, the Murdocks lives on and operated one or more of these properties. Irene did not make direct financial contributions to any of these purchases.

During these years, James got a job with a cattle stock association. While here husband was away working for the association, Irene performed or supervised any of the necessary chores on the ranches. This included driving trucks and tractors, haying, mowing, and vaccinating, branding and dehorning cattle.

In 1968, Irene left her husband after 25 years of marriage. She brought an action for a one-half interest in all lands and assets owned by her husband on the basis that they were equal partners. Irene claimed the payments from her bank account were contributions to the partnership agreement. James claimed that the money he received usually came from his in-laws and was always repaid. As well, all land, livestock and equipment were held in his name. Income tax returns were filed in his name only. No formal partnership declaration existed between them.

The trial court dismissed Irene's claim for the one-half interest. Her appeal to the Alberta Court of Appeal was also dismissed. In a 4 to 1 decision, the Supreme Court of Canada ruled that Irene was not entitled to any interest in her husband's land and assets. The court stated that there was no evidence of either a direct financial contribution on her part of a partnership agreement between them. All the work she had done was merely the work "that would be done by any farm wife."

The lone dissenting decision in this case was written by chief Justice Bora Laskin, who focused attention on the legal inequities faced by Canadian women. Over the next decade, all provinces and territories passed legislation that recognized women's rights to an equal share of family property on separation and divorce.

Provincial and territorial statutes dealing with the division of property following divorce have different names. For example, British Columbia passed the Family Relations Act, Alberta and Nova Scotia the Matrimonial Property Act and Ontario the Family Law Act. But the basic intent of the statutes is similar. Each recognizes marriage as an economic partnership. Since the Ontario legislation was the first (1986) and the most detailed, it is the focus here.

The Family Law Act provides steps for dealing with property following a marriage breakdown. The legislation does not divide specific property, only the value of the property. This is done through a process called equalization. It usually requires that couples seek advise from a family law lawyer.

The steps to determining the amount of an equalization payment (the amount that one spouse must pay to the other) are:

  1. List and calculate the value of your assets (e.g. house, car, anything of value) on the date of separation.
  2. Subtract the value of gifts and inheritances that either spouse has received from the value of assets.
  3. Subtract your total debts (e.g. anything you owe money for, such as loans, credit cards) on the date of separation. This will give you a total property value on the date of separation.
  4. Then, list and calculate the value of your assets, minus your debts, on the date of marriage.
  5. Subtract the amount in #4 from the amount in #3 to calculate each spouse's net family property.
  6. Deduct the lower net family property from the higher one, and divide the difference by two to determine the amount of the equalization payment. This payment may be made in cash, property, or investment shares.

Example: One spouse, Jeff, has a net family property of $40,000, and the other spouse, Darla, has a net family property of $90,000. The difference between the two is $50,000 ($90,000 - $40,000). The Family Law Act states that the spouse with the higher total, Darla, has to pay the spouse with the lower total, Jeff, half of the $50,000, as an equalization payment. Therefore, Darla must pay Jeff $25,000 (½ of $50,000).

Case Study: Raymond Sobeski

Raymond Sobeski married Nynna Ionson in 1998. Within a few years, he was unhappy with his marriage. In April 2003, Sobeski discovered that he won $30 million from Lotto Super 7. He decided not mention this win to anyone, including Ionson. He served his wife with divorce papers after learning of his winnings and before telling her about his big win. He claimed his prize 12 days before the ticket's expiry date in April 2004. He then cancelled his credit cards, bought a series of airline tickets, wrote large cheques for a few friends, and invested most of his winnings. After he claimed his winnings, Ionson filed a legal action against him seeking half of the $30 million. She claimed that the lottery win happened before their divorce was finalized.

(For you to think about: If you were the judge, think about what decision would you reach in this case, and why.)

The Three Principles of Law for the division of matrimonial property across Canada:

  1. The property of the marriage is to be divided equally between the spouses unless injustice or inequality would result. There are situations in which distributing marital property equally may be unfair, such as:

    • Length of the marriage
      • Quon and Meili have been married for only 18 months, and dividing the value of family assets equally may be unfair to Meili. She brought much more property into the marriage than Quon.

    • Length of the separation
      • Jafar and Birrah separated three years ago. Later, they each bought furnishings for their own accommodations. It would be unfair to divide the value of these assets equally. Both Jafar and Birrah bought them for personal use after they separated.

    • Date when an asset was acquired:
      • Jamie bought an expensive painting for himself just before separating from Laura. He wishes to keep this asset. If Laura did not have time to appreciate or enjoy the painting in their home, Jamie might not have to divide the value of the art with Laura.

    • Gifts and inheritances:
      • Rafaela inherited an antique from a wealthy uncle, while married to Luciano. This inheritance may be specifically excluded from equal division, as it is unfair to make Rafaela share the value of an antique given to her as an inheritance in a will.

  2. The contribution of the spouse who is primarily responsible for child care and home management must be legally recognized.

  3. The contribution of each spouse must be legally recognized, whether in the form of money or work, toward the acquisition of property.