Paulsen v Paulsen 2017 ONSC 2937
This case highlights the test for an extension of the limitation period for equalization, as well as the test to determine valuation date.
The parties were married in 1994 in a union that lasted for fourteen years. In that time, they had two children together. Their relationship broke down in 2008 and in January 2009, the wife moved out of the matrimonial home. At this point the two children were nine and twelve years old. The matrimonial home was sold, but due to the high level of marital debt, each party made only a small sum on the sale.
There was some debate as to the date of separation; the wife claimed it was in January 2009 when she moved out. However, the husband argued that the date of separation was Mother’s Day in May 2008, when they first discussed and decided amongst themselves to separate. Regardless of which separation date was correct, Ms. Paulsen had exceeded the amount of time permitted to make an equalization claim by a matter of months.
The valuation date is defined in the Family Law Act as being the “date the spouses separate and there is no reasonable prospect of reconciliation.” To determine this there are several indicators that the court may consider. In this case, the judge determined that the date of separation was September 1, 2008 because both parties could agree that this was approximately the time that they told their children they were separating. After Mother’s Day, the parties were still attending social functions as a couple and having sex, however it seems that this behavior ceased prior to the wife moving out. Therefore, the judge used the date that the children were informed as being indicative of a separation with finality.
- 7(3) of the Family Law Act imposes limitation periods on one’s right to bringing a claim for equalization. Subsection (b) states that an applicant may bring a claim “six years after the day the spouses separate and there is no reasonable prospect that they will resume cohabitation.”
Alternatively, if spouses obtained a divorce order, s. 7(3)(a) states that an application for equalization shall not be brought after 2 years from the date of divorce.
If the period to bring an equalization claim expires, parties may still be able to bring an application pursuant to s. 2(8) which allows for an extension from the court. In order to obtain permission from the court the legislation imposes a strict test which must be satisfied.
In this case it was found that there were apparent grounds for relief; that the wife did not let the limitation date pass by in bad faith and that the husband would not be substantially prejudiced because of the delay. Therefore, the judge granted the wife an extension to make an equalization claim.