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Larue v Larue

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FactsEdit

The parties met in 1989,lived together for a year prior to getting married, and separated in 1998. The wife worked at McDonalds and other low income jobs while the husband was in the navy. The husband was paying $600/month in spousal support. During the marriage, the couple had purchased an RRSP with borrowed money in order to earn a tax refund, the proceeds of which were used for family purposes. When they could no longer service the RRSP loan the bank sought repayment from the husband which also created a tax liability. There were other debts in question including a Visa bill and amounts borrowed to renovate the home and make it available for sale.

IssueEdit

  1. How should these debts be divided among the parties?

DecisionEdit

Petition allowed.

ReasonsEdit

Campbell found there were two main approaches courts took to the division of assets:

  1. the net matrimonial asset division approach - any matrimonial debts are subtracted from the matrimonial assets prior to division;
  2. the gross matrimonial asset approach - divides the assets among the parties, and then apportions the debts to parties without considering equal division.

He held that only the net matrimonial asset division approach produced a sound and consistent outcome.

To be matrimonial debt, the debt must be incurred for the benefit of the family, during the marriage, for ordinary household matters reasonably incurred, and can include some debt incurred after separation if incurred for basic living expenses or to preserve matrimonial assets.

In the case at bar, the net matrimonial assets were negative. The wife did not have the financial ability to assume the debt, or to pay the equalization payment that would be necessary to have an equal division of assets. As a result, Campbell found there was no choice but to leave the debt with the husband.

RatioEdit

Net matrimonial asset division approach:

  1. Determine if debts are matrimonial debts;
  2. Subtract the matrimonial debts from the matrimonial assets prior to the asset division.

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