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Jul 4, 2017

Does The “Date” Of Separation Really Matter?

by Steve Benmor

Steven BenmoreIt most certainly does. The date of separation is the date that will determine the value of the spouses’ assets and debts for equalization and support purposes. In other words, the date of separation is considered the valuation date. However, in most families, separation is not a day, but a process. Couples experience ups and downs, break-ups and reconciliations. But later, when they eventually seek legal advice, they discover that the division of their property is predicated on values on the date of separation. In some cases, the difference between two dates can amount to thousands or hundreds of thousands of dollars. Thus, there is incentive to debate what is the date of separation.

That is indeed what happened in the case of Joanis v. Bourque, 2016 ONSC 6505. In this case, the court describes the situation as follows:

“What began as a happy and loving relationship eventually became much less so. In 2005 or 2006, the Respondent had an extra-marital affair which the Applicant came to discover. As one might expect, she was unhappy and angered by the discovery. According to the Respondent, this happened in August of 2006 and she ordered him from their bedroom and said they would never have sex again. He says she has been good to her word and, although he continued to live in the home with her and her children until November of 2010, they were effectively separated, living separate and apart beneath the same roof.”

The judge then noted that this issue was of considerable importance because the value of certain assets increased significantly between the two dates in question.

Section 5(1) of the Family Law Act provides that when spouses are separated and there is no reasonable prospect that they will resume cohabitation, the spouse whose net family property is the lesser of the two net family properties is entitled to one-half the difference between them. Thus, central to the determination of a spouse’s net family property is the determination of the value of all the property that the spouse owned on the valuation date (aka the date of separation). Section 4 defines the valuation date as the date the spouses separated and there was no reasonable prospect that they would resume cohabitation.

The leading precedent on this subject is the 1990 case of Oswell v Oswell which provides a detailed analysis of the factors to be considered when determining whether parties who occupy the same premises are living separate and apart as follows:

  1. Has there been a physical separation of the parties notwithstanding that they remained within the same home?
  2. Has one or both spouses withdrawn from the matrimonial obligation with the intent of repudiating the matrimonial relationship?
  3. Has there been a continuing sexual relationship?
  4. Has there been ongoing discussion between the spouses of family problems, have they attended social activities together, and have they maintained the same meal pattern?
  5. Have there been changes in the performance of household tasks?
  6. Are there indicia of a spouse’s true intent as opposed to a spouse’s stated intent?
  7. Has a spouse made plans for his or her assets as a separated spouse?
  8. Any other relevant factor.

 

In the case of Joanis v. Bourque, the judge stated that the parties were not living separate and apart until October 31, 2010. To support this conclusion, the judge stated that “the evidence established that aside from the limited sexual intimacy of the parties, the family continued to function as it had in the past. They generally ate dinner together as a family. They continued to celebrate birthdays and holidays together and attended social events together...the family’s financial arrangements did not change to reflect any type of separation as might reasonably be expected if there was no reasonable prospect of their resuming cohabitation...the Applicant continued to work at the Respondent’s business...neither party consulted with counsel or took any steps to address support or the division of their assets until November of 2010. Both parties had gone through a separation from their first spouse and both knew that it could have significant financial consequences. That neither of them sought to address those issues in the four years between 2006 and 2010 leads me to believe that neither considered themselves separated...both parties continued to file their tax returns as married and not separated until 2010.”

In this case, the wife benefitted from the court’s ruling that they continued to cohabit as a family until October 31, 2010, thus granting the wife her share of the increase of the husband’s net worth until that date.

Steven Benmor is certified as a specialist in family law by the Law Society of Upper Canada and also serves as a private divorce mediator and arbitrator for high net worth families.