Valuations and Valuation Date

What Does Valuation Mean?

Merriam Webster defines valuation as figuring out the value of items including property and personal assets.

Valuations are used in different ways in Ontario family law. For example:

• a valuation can be used to determine a spouse’s income (“income assessment”);
• a valuation can determine the value of a business (“business valuation”).
• to determine the equalization payment owing from one married spouse to another, a “snap shot” is taken of each spouse’s assets less debts on two dates: the date of marriage and “valuation date”. The party who had a greater net family property, pays the other party half of the difference between their net family properties.

Valuation Date:

Section 4(1) of the Family Law Act determines that the valuation date is the earliest of the following:

1. The date of divorce
2. The day the relationship breaks down and there is no “reasonable prospect” that the couple will not get back together
3. The date the marriage is declared a nullity
4. The date a party brings a proceeding for improvident depletion that the court grants
5. The day before one spouse member passes away, leaving the other surviving

The “valuation date” is commonly the date the parties separate.

Variation of Share:

Courts have discretion to depart from the equalization of net family property. The standard to order a variation of share under section 5(6) of the Family Law Act is high. The actions of a spouse must meet the level of unconscionability for a court to depart from the equalization.

A court can look at post-separation behaviour to determine whether there was unconscionability.

In Merklinger v. Merklinger, the husband provided no spousal or child support to the wife and his child from August 1990 until the trial in June 1992. The wife and child’s quality of life decreased significantly after separation. Additionally, after separation the husband made the wife pay the mortgage for their prior home, so he could fund his personal investments. From the economic harm the wife faced, the Courts deemed that making the wife pay the husband an equalization would be unconscionable within the meaning of section 5(6) of the Family Law Act. The wife was not ordered to pay an equalization payment to the husband.

The result in Merklinger was affirmed by the Ontario Court of Appeal.

Contact our Toronto family lawyer with your questions about valuations and equalization at 905.707.3370.