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Stein v Stein

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FactsEdit

The husband and wife separated in 2003 after 12 years of marriage during which the wife remained home to care for the parties' two children. In the ensuing divorce action, family assets worth $1.7 million were divided equally, and the wife was awarded support based on the husband’s income of over $200,000/year. The trial judge also ordered that the husband's contingent tax liabilities associated with his tax shelters should be shared equally by the spouses on an "if and when" basis, since they both benefited from them. The Court of Appeal set aside this order on the ground that the Family Relations Act (now replaced with the Family Law Act precluded the creation of a freestanding order apportioning debt between the spouses, and ordered that the husband would be solely responsible for the contingent liability. The husband appealed to the Supreme Court of Canada.

IssueEdit

  1. Can an "if and when" order be granted regarding the apportionment of future liabilities which cannot be valued at the time of the divorce?

DecisionEdit

Appeal allowed.

ReasonsEdit

Bastarache, writing for the majority, held that the fact that a reapportionment will occur at some stage in the future, after the liability has crystallized, does not necessarily involve the creation of a “freestanding order”. Nothing in the Act precluded an order dividing a contingent liability which cannot be valued at the time of trial. There were no temporal limits on a division of assets, and once subject to an initial division, a court was permitted to make orders requiring a spouse to "pay compensation" to the other spouse "for the purpose of adjusting the division" of assets at any time. Fairness required that both assets and debts, even those that cannot be precisely valued at the time of separation, be considered upon the breakdown of a marriage, in recognition that spouses jointly contribute to not only the accumulation of assets, but also to debts incurred for family‑related costs.

Since the trial judge found that both parties obtained significant assets and were financially stable after the division of assets, and that the wife would soon be self‑sufficient, fairness requires both spouses to assume responsibility for contingent liabilities associated with tax shelters from which they have each derived benefit, notwithstanding that the husband may be better positioned to remain economically independent in the event that the taxes become payable. However, in the event that the impact of the future liability on one of the parties results in an unfairness, he allowed that that individual may apply to the court for adjustments.

RatioEdit

  • The presumption of equal division of assets is strong.
  • "If and when" orders are permissible if allowed by the provincial statute.

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