In Ontario, when a married couple separates, the property accumulated during the marriage is to be equalized. The “valuation date” is the date upon which assets and liabilities will be valued as part of preparing the equalization calculation. Assets and liabilities will also be valued as at the date of marriage.
In most family law cases in Ontario, the valuation date is, as defined in the Family Law Act, the date on which the spouses separate and there is no reasonable chance they will resume cohabitation. Parties can be considered to have separated although they may continue to reside at the same physical residence for a period of time. Cohabitation is defined under the Family Law Act as living together in a conjugal relationship.
It is not uncommon for spouses to disagree as to the correct valuation date to be used. In some cases, the difference between proposed dates can be minor and will not have a significant impact on the equalization calculations. In other cases, the difference can be more dramatic and may have a large impact on the final numbers. In these cases, if the parties cannot resolve the issue by agreement, the court may be called upon to decide the appropriate valuation date.
Several cases have considered this issue and there are a number of factors to be taken into account. The two leading decisions are the cases of Greaves v. Greaves 2004 CanLII 25489 and Oswell v. Oswell, 1990 CanLII 6747 (ON SC), affirmed at the Court of Appeal 1992 CanLII 7741 (ON CA). Some of the factors the court will consider in determining whether there has been a separation without reasonable chance of resuming cohabitation will include:
- Physical separation: this may occur within the same residence but there should be an element of physical separation;
- Absence of sexual relations is a factor to be considered but not determinative;
- The manner in which the spouses continue to interact and present themselves to others socially;
- Any discussions between the spouses of family issues;
- The stated intention of one of the spouses and withdrawal from matrimonial obligations; and
- The manner in which tax returns are filed may be evidence of the intention of one or both spouses.
While the above is not necessarily an exhaustive list, in order to determine when the parties separated, the court will examine the evidence of each spouse as well as other corroborating witnesses.
The other important aspect of the valuation date is that it will also set the limitation period for bringing a claim for equalization. A claim for equalization must be brought before the earliest of:
- Two years after the day the marriage is terminated by divorce or judgement of nullity;
- Six years after the day the spouses separate and there is no reasonable proposed that they will resume cohabitation; or
- Six months after the first spouse’s death.
In the circumstances of a separation, where the spouses have not divorced or the marriage has not been annulled, either spouse will have six years within which to bring a claim for equalization. The six years begins to run as of the valuation date.
This blog post was written by Kate Wright, a member of the Family Law, Wills and Estates and Litigation teams. She can be reached at 613-369-0383 or at kate.wright@mannlawyers.com.
