Leatherdale v. Leatherdale, [1982] 2 SCR 743

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[1982] 2 S.C.R. 743

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Supreme Court of Canada

Leatherdale v. Leatherdale, [1982] 2 S.C.R. 743

Date: 1982-12-06

Barbara Anne Leatherdale (Plaintiff) Appellant;

and

Douglas Gordon Leatherdale (Defendant) Respondent.

File No.: 16442.

1982: March 22; 1982: December 6.

Present: Laskin C.J. and Ritchie, Dickson, Beetz, Estey, McIntyre and Chouinard JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.

Matrimonial law—Division of family property and non-family property—Constructive trust—Resulting trust—The Family Law Reform Act, 1978 (Ont.), c. 2, ss. 4, 8.

The parties after nineteen years of marriage separated and reached a settlement on family assets. What remained at issue was non-family assets consisting of a registered retirement saving plan as well as a number of shares in Bell Canada which the husband had purchased by way of payroll deductions. At trial, the wife was awarded $20,000 representing not quite half of the non-family assets, the award being made under s. 8 (a) of The Family Law Reform Act. The Court of Appeal set the award aside holding that it could not be brought within s. 8. The appellant wife seeks in this Court to have the award restored under s. 8 or s. 4(6) of the Act or under applicable equitable principles (of resulting trust or constructive trust).

Held (Estey J. dissenting in part): The appeal should be allowed.

Per Laskin C.J. and Ritchie, Dickson, Beetz, Mclntyre and Chouinard JJ.: Section 4 of The Family Law Reform Act comes into play upon the dissolution or breakdown of a marriage. It provides in subs. (1) for a prima facie equal division of family assets between the spouses. Subsection (4) then empowers the court, upon a consideration of the factors set out in that subsection, to make a division of family assets which is not equal. Subsection (6) empowers the court to have recourse to non-family assets if a division limited to family assets would be inequitable, having regard to the total assets, family and non-family, held by the parties or either of them. The purpose of the division contemplated in s. 4 is set out in subs. (5).

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Section 8 has a separate purpose from that of s. 4. It deals with non-family assets or with the residuum thereof should any order be made under subs. 4(6) and provides a means for the determination of the relative proprietary interest of the spouses in assets classed as non-family assets. The relative interest must be determined on the basis of degree of contribution made in work, money, or money’s worth in respect of the acquisition, management, maintenance, operation or improvement attributable to the respective spouses. Such contribution may not be based upon the considerations mentioned in s. 4(6)(b)(ii) which are subsumed in the determination of the equitable division under s. 4. Section 8 may be invoked at any time, not only on dissolution or break-up of marriage, and can settle the ownership of, or title to, assets, not on the basis of the marriage relationship but on the simple basis of contribution of the parties without regard to the fact of marriage.

The wife’s contribution extended about half their marriage and therefore she is entitled to a share in the non-family assets in the amount of $10,000 rather than the $20,000 awarded at trial.

Further the disposition made here on the basis of specific statutory provisions of the only assets in issue leaves no room to consider the application of constructive or resulting trusts.

Per Estey J., dissenting in part: Both s. 8(a) and s. 4(6)(b)(ii) form a proper foundation for the division of the said assets determined by the trial judge. These two sections should not be read as competitive or watertight divisions of the Act, both being aimed at the overall settlement of differences in the family over property matters on a fair and equitable basis.

In order to be entitled to an award under s. 8, it is not necessary for the spouse or former spouse to identify a specific item of “property, other than family assets”, to which he or she has made a contribution of work, money or money’s worth. It is enough if he or she has made such a contribution in respect of any of the non-family assets. Such a contribution was made by the appellant. The award in her favour can also be supported under s. 4(6)(b)(ii) since her participation in the joint venture of marriage enabled the respondent to acquire the assets in question, which they intended to be for their common retirement.

[Page .v. Page (1980), 19 R.F.L. (2d) 135 considered; Weir v. Weir (1978), 23 O.R. (2d) 765; O’Reilly v. O’Reilly (1979), 23 O.R. (2d) 776, distinguished; Nuti v. Nuti (1980), 28 O.R. (2d) 102; Silverstein v. Silver-

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stein (1978), 20 O.R. (2d) 185; Bregman v. Bregman (1978), 21 O.R. (2d) 722, aff’d (1979), 25 O.R. (2d) 254; Peterson v. Peterson (1980), 20 R.F.L. (2d) 1; Re Young and Young (1981), 32 O.R. (2d) 19 referred to]

APPEAL from a judgment of the Ontario Court of Appeal (1980), 118 D.L.R. (3d) 72, 31 O.R. (2d) 141, 19 R.F.L. (2d) 148, reversing a judgment of J. Holland J. Appeal allowed, Estey J. dissenting in part.

Linda S. Dranoff, for the appellant.

Brian J. Hornsby, for the respondent.

The judgment of Laskin C.J. and Ritchie, Dickson, Beetz, McIntyre and Chouinard JJ. was delivered by

THE CHIEF JUSTICE—The Family Law Reform Act of Ontario, 1978 (Ont.), c. 2, deals separately and differently with family assets (as defined) and non-family assets. Notwithstanding the separate and different dealing, there is yet a relationship between them when the Court comes to consider what shares of each class may be properly alloted to the one spouse or to the other.

In the present case, which is here by leave of this Court on appeal from a judgment of the Ontario Court of Appeal, the spouses (who separated after nineteen years of marriage) reached a settlement on family assets, principally the matrimonial home. It was sold and the proceeds divided equally between them. What remained in issue were shares of Bell Canada held by the husband, a Bell employee, in his name, shares which were purchased by him under a payroll deduction plan. Also in issue was the value of an R.R.S.P., a registered retirement savings plan, also held by the husband. The trial judge, John Holland J., awarded the wife a $20,000 interest in these two assets which were acquired by the husband during the marriage. The $20,000 represented not quite half of the value of the Bell shares and of the R.R.S.P. The award was made under s. 8(a) of the Act. The Court of Appeal, speaking through Lacourcière J.A., set aside the award, holding that it could not be brought within s. 8. The appellant wife now seeks in this Court to have the award

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restored, either under s. 8 or under s. 4(6) or under applicable equitable (common law) principles (of resulting trust or constructive trust) which, she alleges, are not superseded or negated by the Act.

The trial judge also made an order for support against the husband in favour of the wife and of their fifteen year old son in the amount of $700 per month, each to have half of this sum. The order as limited by the trial judge was sustained on appeal in its very terms and is not in issue in this appeal.

Relevant Provisions of The Family Law Reform Act

“Family assets” are defined in s. 3(b) of the Act but it is unnecessary to set out the lengthy definition since nothing in this case turns on it. The applicable provisions here are ss. 4 and 8. It will give perspective to the Act to set out also its preamble which is as follows:

WHEREAS, it is desirable to encourage and strengthen the role of the family in society;

AND WHEREAS for that purpose it is necessary to recognize the equal position of spouses as individuals within marriage and to recognize marriage as a form of partnership;

AND WHEREAS in support of such recognition it is necessary to provide in law for the orderly and equitable settlement of the affairs of the spouses upon the breakdown of the partnership; and to provide for other mutual obligations in family relationships, including the equitable sharing by parents of responsibility for their children:

The key sections 4 and 8 are in these terms:

4.—(1) Subject to subsection (4), where a decree nisi of divorce is pronounced or a marriage is declared a nullity or where the spouses are separated and there is no reasonable prospect of the resumption of cohabitation, each spouse is entitled to have the family assets divided in equal shares notwithstanding the ownership of the assets by the spouses as determinable for other purposes and notwithstanding any order under section 7.

(2) The court may, upon the application of a person who is the spouse of another, determine any matter respecting the division of family assets between them.

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(3) The rights under subsection (1) are personal as between the spouses but any application commenced under subsection (2) before the death of a spouse may be continued by or against the estate of the deceased spouse.

(4) The court may make a division of family assets resulting in shares that are not equal where the court is of the opinion that a division of the family assets in equal shares would be inequitable, having regard to,

(a) any agreement other than a domestic contract;

(b) the duration of the period of cohabitation under the marriage;

(d) the date when the property was acquired;

(e) the extent to which property was acquired by one spouse by inheritance or by gift; or

(f) any other circumstance relating to the acquisition, disposition, preservation, maintenance, improvement or use of property rendering it inequitable for the division of family assets to be in equal shares.

(5) The purpose of this section is to recognize that child care, household management and financial provision are the joint responsibilities of the spouses and that inherent in the marital relationship there is joint contribution, whether financial or otherwise, by the spouses to the assumption of these responsibilities, entitling each spouse to an equal division of the family assets, subject to the equitable considerations set out in subsections (4) and (6).

(6) The court shall make a division of any property that is not a family asset where,

(a) a spouse has unreasonably impoverished the family assets; or

(b) the result of a division of the family assets would be inequitable in all the circumstances, having regard to,

(i) the considerations set out in clauses (4)(a) to (f), and

(ii) the effect of the assumption by one spouse of any of the responsibilities set out in subsection (5) on the ability of the other spouse to acquire, manage, maintain, operate or improve property that is not a family asset.

…

8. Where one spouse or former spouse has contributed work, money or money’s worth in respect of the acquisition, management, maintenance, operation or improve-

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ment of property, other than family assets, in which the other has or had an interest, upon application, the court may by order,

(a) direct the payment of an amount in compensation therefor; or

(b) award a share of the interest of the other spouse or former spouse in the property appropriate to the contribution,

and the court shall determine and assess the contribution without regard to the relationship of husband and wife or the fact that the acts constituting the contribution are those of a reasonable spouse of that sex in the circumstances.

Relevant Facts

The parties married in September, 1959 and separated in May, 1978. Although they reached a settlement on the distribution of family assets, namely the matrimonial home and other household items, the unresolved claim of the wife to a share of the Bell Canada shares and of the R.R.S.P. appeared to cloud the equitable disposition of the family assets. The husband, an employee of Bell Canada, had acquired the Bell Canada shares under a payroll deduction plan, and at the time of the action there were 2,001 shares of which 93 shares (all being the result of a split) were acquired before the marriage and some after the separation. It is only those acquired during the marriage, with a value of $39,519.70, that are in issue here. The R.R.S.P., with a value of some $10,000, was also acquired during the marriage and, like the Bell Canada shares, stood in the husband’s name.

The wife had worked in a bank prior to the marriage and continued to work there afterwards. She left the bank in 1965 when a child was born to the couple and did not resume her job in the bank until 1975. In the ten-year interval, she attended to the child and carried out normal household duties. Her bank earnings were used for family purposes. This was not totally so, however, with respect to an inheritance of some $14,000 which she realized during the marriage. Of this sum, she used about $4,000 for family purposes and retained the balance in her own name.

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The husband too gained an inheritance during the marriage, but it was a smaller sum, all of which he brought into the family.

The Reasons of John Holland J.

The trial judge delivered judgment after conclusion of the evidence. He found on the evidence that there was a true pooling of duties and assets for the benefit of the spouses, the wife working at a bank and doing the usual duties about the house and caring for their son and the husband working at the Bell Telephone Company and looking after various matters around the house.

The trial judge found, in his words, that the two contested assets, the Bell Canada shares and the R.R.S.P., “acquired after marriage and up to separation were so acquired by reason of the joint and pooled efforts, both financial and otherwise, of each of these two persons”. In his view, the husband’s financial ability to acquire any assets during the marriage was directly and substantially contributed to by his wife’s work, both outside and in the house; there was truly a pooling of finances and efforts. He attributed 1,800 of the Bell Canada shares to those to which the wife had made a substantial contribution and attributed the whole of the R.R.S.P. in the same way.

The approximate value of the shares and R.R.S.P. would be, according to the trial judge, in excess of $50,000. Although holding that it mattered little whether he considered the assets family assets as defined in s. 3 of the Act or non-family assets as dealt with under s. 8, he directed that the wife be awarded the sum of $20,000 under s. 8(a) respecting her interest, an approximate one-half interest in the two assets in the husband’s name. It would be, as he said, a fair and equitable disposition to give her an approximate one-half interest. In proceeding under s. 8, the trial judge excluded any reference to s. 4 of the Act, saying nothing as well about the respective inheritances of the two spouses.

Having considered all the issues before him, including those respecting support of the wife and

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child, the trial judge awarded costs to the wife, although saying that in the ordinary case he did not think it appropriate to give costs in the Court.

The Reasons of the Court of Appeal

What appeared to lie behind the Court of Appeal’s striking of the $20,000 lump sum award to the wife was the fact that the wife, after the agreed equal division of family assets, and without taking into account the disposition of non-family assets (the two items in issue here) would have more capital assets than the husband. By reason of an inheritance of which only a small part was used for family purposes, the wife’s capital assets would amount to $51,000 and those of the husband, who had received a smaller inheritance of which all was used for family purposes, would amount to $26,500. Adding the proposed $20,000 lump sum would give the wife assets of some $70,000 and leave the husband with some $56,500. Lacourcière J.A. thought this to run counter to the trial judge’s observation in his reasons that The Family Law Reform Act was intended to be remedial to correct inequities and to empower the Court to deal fairly between the parties to a marriage, regardless of the legal title in various assets.

It would appear from Lacourcière J.A.’s reasons that even if he had sustained the lump sum award when considered alone, he would have reduced the wife’s share by bringing her inheritance into account, especially when the husband had used his smaller inheritance for family purposes. It would not be the inheritance alone that would go to an equitable disposition between the parties, but an inheritance brought into calculation when considering an apportionment of family assets.

In applying s. 8(a) here, the trial judge had characterized the shares and the R.R.S.P. as non-

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family assets. Lacourcière J.A. pointed out that counsel for the wife had referred to them as family assets, leading him to say that “s. 8 would have been potentially relevant and applicable only if the property in question were not a family asset”. In view of the trial judge’s description of the property as non-family assets, an accurate description, the fact that a counsel’s characterization was inaccurate was no bar to the trial judge’s reliance on s. 8(a) if it was otherwise applicable. The real question arising under s. 8 is whether the claiming spouse “contributed work, money or money’s worth in respect of the acquisition, management, maintenance, operation or improvement of property, other than family assets”. The Court of Appeal concluded, for reasons to which I now come, that s. 8(a) could not support the lump sum award.

Lacourcière J.A. regarded s. 8(a) as requiring the non-titled spouse “[to] establish a direct contribution of work, money or money’s worth in respect of the acquisition, management, maintenance, operation or improvement of the non-family property, and not merely a contribution of money or money’s worth to the marriage”. He explained this view of s. 8 by pointing out that the trial judge had come to the same conclusion in another case, Nuti v. Nuti (1980), 28 O.R. (2d) 102, where that judge asserted that there must have been a “substantial and direct contribution” to the husband’s financial ability to acquire the non-family assets. Lacourcière J.A. noted that contribution to the marriage was not sufficient to establish an interest in the non-family assets. I do not follow this rejection of the trial judge’s view when it is plain that in his reasons he used the very principle that Lacourcière J.A. said was applicable to s. 8. To repeat, the trial judge said of the husband that “His financial ability to so acquire any assets during that period was directly and substantially contributed to by his wife’s work, both outside and in the home”.

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Lacourcière J.À. also found support in the views of Arnup J.A. in Page v. Page (1980), 19 R.F.L. (2d) 135, (delivered after the hearing of the case before him) where the learned judge was distinguishing the considerations under s. 4(6) (to which I will come) and those under s. 8 and, as to the latter (in his words at p. 140) that “A wife is not entitled to an award under s. 8 simply because she has been a zealous wife and mother, freeing the husband for the pursuit of great income and assets, which may become non-family assets”.

I have no difficulty in agreeing with Arnup J.A. on this view of s. 8. It is clear that the trial judge went too far in attributing work in the home to the acquisition of non-family assets under s. 8. That does not, however, answer the question whether the claiming spouse “contributed work, money or money’s worth in respect of the acquisition of non-family assets”. (Only the term “acquisition” is relevant here.) Nor is it clear to me what is added by the Court of Appeal’s requirement that the contribution be direct or direct and substantial. Certainly, so far as a money contribution is concerned, how can it be otherwise than direct where, as the trial judge found, there was truly a pooling of finances and efforts and that the husband’s financial ability to acquire the assets was directly and substantially contributed to by the wife’s work. The trial judge was, as stated above, wrong in bringing into account the work of the wife in the home. However, the contribution reflected in the wife’s earnings as a bank employee were certainly part of the pooling arrangement between the spouses. As the trial judge observed in a finding that was not contested, during the period of cohabitation the efforts of the parties were truly as a team. The wife had worked in the bank from the time of the marriage in September, 1959 until 1965 when she stopped because of the imminent birth of their child. She returned to the bank in 1975 and continued there to the time of the par-

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ties’ separation in mid-1978 and even beyond.

Although the wife would not be entitled to a near half interest of the non-family assets, this did not exclude her from any interest in view of her contribution of money. Although I must leave out, as I have said, any contribution of work in the home, the work in the bank was a calculable element to a limited extent.

It appears to me that Justice Lacourcière put a different gloss on the meaning of a direct and substantial contribution than that taken by John Holland J. What the learned Justice of Appeal indicated by his rejection of a s. 8 claim of the wife was that the claim must be based on a direct and substantial contribution by the wife to the acquisition of the very non-family assets. In short, Justice Lacourcière would have it that the wife is required to show a direct connection with the acquisition of the non-family assets and not simply acquisition by reason of freeing money of the husband to advance the acquisition. I do not find such strict language in s. 8; the words “direct and substantial” are not used, nor either of the words alone. I find a more benign reading of s. 8, more consonant with the philosophy of The Family Law Reform Act, in the phrase “in respect of the acquisition”, a phrase which does not tie a contributing spouse to the acquisition of the specific assets in which shares are claimed.

In the Court of Appeal and in this Court, counsel for the plaintiff wife also relied on s. 4, especially s. 4(6). The trial judge, in disposing of the case under s. 8 found it unnecessary and, indeed, did not consider s. 4, a point that I have already mentioned. It was, however, thoroughly canvassed by the Court of Appeal.

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The Court rightly rejected the contention of counsel for the plaintiff that the Bell shares and the R.R.S.P. were family assets under s. 4(1) to (4). If the wife was entitled to invoke s. 4, it was the view of the Court of Appeal that it was only s. 4(6), (providing for a division, in applicable circumstances, of any property which is not a family asset) upon which she could rely. As will be seen below, that Court held s. 4(6) to be inapplicable. I repeat for convenient reference here s. 4(6) which is as follows:

4. …

(6) The court shall make a division of any property that is not a family asset where,

(a) a spouse has unreasonably impoverished the family assets; or

(b) the result of a division of the family assets would be inequitable in all the circumstances, having regard to,

(i) the considerations set out in clauses (4)(a) to (f), and

Section 4(6)(a) of this provision has no application here, but s. 4(6)(b)(i),(ii) imports the consideration set out in s. 4(4)(a) to (f) and s. 4(5), and it will be convenient also to set these out here. They are in these terms:

4. …

(a) any agreement other than a domestic contract;

(b) the duration of the period of cohabitation under the marriage;

(d) the date when the property was acquired;

(e) the extent to which property was acquired by one spouse by inheritance or by gift; or

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I am of the opinion that Lacourcière J.A. was right in his assessment of s. 4(6) as being relevant only if there has been an improper or inequitable division of family assets under that subsection. He described the situation as follows:

The first and crucial determination under Part I is the characterization of family assets, followed by the determination of whether the division of family assets in equal shares would be inequitable under the statutory criteria. The Legislature uses the permissive word “may” in ss. (4) in contrast to the mandatory “shall” in ss. (6) in reference to the making of a division of assets. This means that the court is under no obligation to resort to an unequal division of family assets even where it is of the opinion that an equal division would be inequitable. In contrast, it is mandatory for the court to order a division of non-family assets under subsection (6) in the case of unreasonable impoverishment of the family assets by one spouse or where the result of the division of the family assets would be inequitable in all the circumstances and having regard to the statutory factors.

The logical sequence, to give effect to the apparent scheme of the Act, is to consider first whether an equal division requires a redressing to avoid inequity; the next step is to examine the possibility of awarding the deserving spouse a larger portion of family assets. Where this would not redress the inequity, or would create some other inequity, the court should then consider the making of a division of property that is not a family asset. Ultimately, in my view, the court is required to redress inequity where it exists and must select the appropriate division after consideration of the nature of the assets and the circumstances of the parties. In many cases, the ultimate result will be the same whether the award to the deserving spouse takes the form of an additional share of family assets expressed in terms of money (such as a payment of $5,000.00 to the wife in addition to her one-half interest in the matrimonial home in. [O’Reilly v. O’Reilly (1979), 23 O.R. (2d) 776]) or is expressed in a similar amount to be paid out

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of non-family assets. Where the result differs, the trial judge selects the one that avoids inequity by looking at the nature of the asset and all the other relevant circumstances.

Since Lacourcière J.A. had decided that s. 8 had no application and went on to conclude on the evidence before the trial judge that he was unable to hold, in assessing the equities and in applying the applicable statutory considerations to the factors in s. 4(4)(a) to (f) that the result of the equal division of the family assets (which was agreed to by the parties) was inequitable, unfair or unjust, he was unable to give any relief under either s. 4(4) or s. 4(6). This was especially so in the light of the husband’s proper continuing support obligations.

Sections 4(4) and 4(6) Referable to Family and Non-Family Assets

The learned Justice of Appeal dwelt on both s. 4(4) and s. 4(6), pointing out correctly that s. 4(4) is directory or permissive while s. 4(6) is imperative. What creates an obvious difficulty here is that s. 4(6) also imports the considerations already listed in s. 4(4), being the paras. (a) to (f) thereof and even goes beyond them. It is plain to me, however, that both provisions (s. 4(4) and 4(6)) are dependent upon a finding thereunder that the equal division of family assets is inequitable.

In my opinion, there is nothing in the facts of this case to warrant alteration of the equal division of the family assets arrived at by the parties and to find a basis for a larger share to the wife under s. 4(4) or to give her a share of the non-family assets under s. 4(6) while leaving the equal division of the family assets undisturbed. Unless either s. 4(4) or s. 4(6) can be invoked to improve the relative position of one spouse as against the other, I do not read s. 4(5) as saying anything more than that the spouses, through their joint responsibilities as set out therein, are entitled to an equal division of the family assets. Having regard to the inheritances of each spouse and the extent to which they were devoted to family purposes and to the maintenance and support obligation undertaken by the husband towards the wife, I see nothing in s. 4(4) that

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should disturb the equal division of the family assets or entitle the wife to a division of non‑family assets under s. 4(6).

This case does not support the kind of finding made by Southey J. in Weir v. Weir (1978), 23 O.R. (2d) 765, where he concluded that the wife had shouldered almost the entire burden of the responsibilities set out in s. 4(5) and thereby released the husband for his professional and business pursuits which he carried on in the evening as well as during the day. Equally, the wife was thereby prevented from earning money herself. In the result, Southey J. made a generous division of the family assets in favour of the wife and hence made no division of the non-family assets.

Much to the same effect as Weir v. Weir, supra, is O’Reilly v. O’Reilly (1979), 23 O.R. (2d) 776 where there were no non-family assets appropriate for division and the wife’s assumption of the burden of family responsibilities, including administrative and financial responsibilities in addition to child and home care, warranted a larger division of family assets.

In two earlier cases, Silverstein v. Silverstein (1978), 20 O.R. (2d) 185, and Bregman v. Bregman (1978), 21 O.R. (2d) 722, aff’d (1979), 25 O.R. (2d) 254, it was also found that the wife had carried the larger share of the joint responsibilities delineated under s. 4(5). In the former case, she obtained an interest in non-family assets under s. 8 by reason of her contribution of work that assisted in the acquisition of certain revenue property and also an interest under s. 4(6) by reason of her larger assumption of family responsibilities. In the Bregman case, the larger assumption by the wife of household management and child care was held to bring her into s. 4(6) as entitled to a share in the non-family assets because the husband was thereby freed to acquire them.

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In both Peterson v. Peterson (1980), 20 R.F.L. (2d) 1, and in Re Young and Young (1981), 32 O.R. (2d) 19, the Ontario Court of Appeal found that there was no such larger burden of family responsibilities assumed by the wife as to entitle her to a share of the non-family assets under s. 4(6), but in the second case she was held entitled to an interest in them under s. 8. That accords with the present case and, accordingly, without finding it necessary to canvass the views expressed in the cases above referred to, I turn to s. 8 with respect to the claim to an interest in the Bell Canada shares and the R.R.S.P.

Section 8: Section 4(6) Contrasted

It is, of course, possible for a claiming spouse to bring her or his case under both sections. Silverstein v. Silverstein showed the possibility of establishing claims under both, but it would not be under the same principles. If the same basis of relief was addressed to each, there would have to be a determination whether to proceed or to have the Court proceed under the one or the other; double entitlement for the same matter is not envisaged. There is this important difference between s. 4(6) and s. 8; the former is a dependent provision, to be invoked, according to the circumstances, only if there has initially been some division of family assets; the latter excludes reference to family assets and provides for an independent claim to an interest in non-family assets. I do not see anything in The Family Law Reform Act, 1978 which authorizes the qualification of an award under s. 8 merely because there may have been an overly generous or unduly restricted award of an interest in a family asset; it is only if non-family assets are considered under s. 4(6) that such a qualification may be applicable.

I have already shown the wife’s entitlement to a share in the non-family assets that are central to the present case. Assuming that the wife must show a direct and substantial contribution of money to the acquisition of the assets, she has

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satisfied this requirement on the finding made by the trial judge. I wish, however, to underline that nothing is added to the requirement of “direct” if there has been a money contribution to the acquisition of the assets; it follows that it has been direct. And as for the term “substantial”, I regard it as simply going beyond de minimis, a matter of the evidence in the particular case.

Before I pass on to consider the wife’s contribution and her entitlement here, I may recapitulate as follows:

Difficulty has been encountered by judges in dealing with The Family Reform Act and in particular with the relationship between s. 4 and s. 8. Each section is relatively clear in its meaning, but when the two fall for consideration against the background of one set of facts difficulties arise. To rationalize the two sections it is necessary, in my view, to consider their separate functions in the scheme of the Act in accordance with the following analysis:

Section 4 comes into play upon the dissolution or breakdown of a marriage. It provides in subs. (1) for a prima facie equal division of family assets between the spouses. Subsection (4) then empowers the Court, upon a consideration of the factors set out in that subsection, to make a division of family assets which is not equal. Subsection (6) empowers the Court to have recourse to non-family assets if a division limited to family assets would be inequitable, having regard to the total assets, family and non-family, held by the parties or either of them. The purpose of the division contemplated in s. 4 is set out in subs. (5).

Section 8 has a separate purpose from that of s. 4. It deals with non-family assets or with the residuum thereof should any order be made under subs. 6 and provides a means for the determination of the relative proprietary interests of the spouses in assets classed as non‑family assets. The relative interests must be determined on the basis of degree of contribution made in work, money, or money’s worth in respect of the acquisition, management, maintenance, operation or improvement attributable to the respective spouses. Such contribution

[Page 760]

may not be based upon the considerations mentioned in s. 4(6)(b)(ii) which are subsumed in the determination of the equitable division under s. 4. Section 8 may be invoked at any time, not only on dissolution or break-up of marriage, and can settle the ownership of, or title to, assets, not on the basis of the marriage relationship but on the simple basis of contribution of the parties without regard to the fact of marriage.

Since the wife’s contribution did not extend throughout the period of the marriage, but extended over two periods totalling some nine years separated by a ten-year gap, her claim to a share of the assets must be tailored accordingly and without enlargement by reason of work in the home or by reference to the considerations set out in s. 4(6)(b)(ii) of the Act. During about half of their marriage period, there was a pooling of joint earnings and, in my opinion, it would be a fair distribution of the two non-family assets in this case to award the wife $10,000 in place of $20,000 awarded by the trial judge.

The appeal should be allowed to this extent and, having regard to the trial judge’s disposition of costs in favour of the wife (no costs were ordered in the Court of Appeal), I would award the wife one-half of her costs throughout.

Since this is the first case under the Ontario Family Law Reform Act which has reached this Court and since the statute is not without difficulties in the interrelations of its provisions, prudence dictates that this Court should not enlarge upon the statute beyond the issues in the case which engage it.

It remains to say that the disposition made here on the basis of specific statutory provisions of the only assets that were in issue leaves no room to consider the application of constructive or resulting trusts. Whether these institutions survive The Family Law Reform Act in other circumstances need not be considered here.

[Page 761]

The following are the reasons delivered by

ESTEY J. (dissenting in part)—The essential dispute between the husband and wife in this appeal is as to the ownership, after the proper disposition in law as a result of marriage breakdown, of two assets held in the name of the husband. These assets are some shares in Bell Canada Limited and a Registered Retirement Savings Plan (hereinafter referred to as the “R.R.S.P.”) established and maintained by the husband under the Income Tax Act of Canada. It is conceded by all that these two assets are, for the purposes of these proceedings, of the same legal character and of the same origin. It is also conceded that both are in the name of the husband.

These proceedings originated in an application under The Family Law Reform Act, 1978 (Ont.), c. 2, by the wife in which she asked for certain remedies including:

(a) custody of the child and support for wife and child;

(b) exclusive possession of the matrimonial home; and

(c) of importance in these proceedings, with respect to the aforementioned assets, a division of “the family assets and property in equal shares pursuant to s. 4 of The Family Law Reform Act; or in the alternative, for an Order under s. 8”.

In these proceedings an interim order was made by the Honourable Mr. Justice Walsh for the trial of an issue “as to proper division of family assets, custody, maintenance for the child and support for the wife”.

It is clear from the record established on the trial of the issue before J. Holland J. that all issues with reference to property had been settled between the spouses through their respective legal advisers except with reference to the proper disposition of the shares and the R.R.S.P. which for convenience I will hereafter refer to as “the said assets”. Lacourcière J.A., in a judgment written on behalf of the unanimous Court of Appeal, stated in part:

…they could not agree on whether the disputed assets [the said assets] formed part of the family assets and, in

[Page 762]

any event, appeared to have agreed that the appellant’s entitlement to a share of the property in question was still in issue between them.

There are concurrent findings below that in law the said assets are non-family assets in the sense of that term under The Family Law Reform Act (hereinafter referred to as “the Act”). I will return to the specific provisions with reference to this issue in a moment.

It is clear from the opening statement of counsel for the wife that the parties had been unable to settle the character in law of the said assets. Counsel stated in opening:

The open issues are what are in fact family assets and how should they be divided.

The trial judgment summarized the position of the parties during the period when they lived together as follows:

Both parties are agreed that during the time the wife worked, all earnings of each were pooled. While there was some comment by Mr. Leatherdale that qualified this after his wife went back to work, I did not really think that it was of any significance. The earnings of both these persons were pooled, and during the period of cohabitation these efforts were truly as a team.

In addition, to working at the bank, the wife did the usual wifely duties about the house and cared for their son. The husband worked out at the Bell Telephone Company and as to the house, his duties were largely with respect to looking after the outside and the mechanical problems within the house. In my opinion, it was a true pooling of duties and assets for the benefit of each. I have no doubt that the intention of the parties was, as expressed by Mrs. Leatherdale, that the Bell Telephone shares and the R.R.S.P. acquired by reason of selling some of those shares, was for their common retirement benefit.

His Lordship then continued:

Dealing first with the shares and the R.R.S.P., I find that the Bell shares acquired after marriage and up to separation were so acquired by reason of the joint and pooled efforts, both financial and otherwise, of each of these two persons. I attach no significance to the fact that they are in Mr. Leatherdale’s name or that they

[Page 763]

were received by him pursuant to his employment status. His financial ability to so acquire any assets during that period was directly and substantially contributed to by his wife’s work, both outside and in the home. As I have said, it was truly a pooling of finances and efforts.

The R.R.S.P. I find was similarly acquired.

It was then found after trial:

…I consider that…those shares should represent shares to which Mrs. Leatherdale has made a substantial contribution in the manner which I have just set out.

The Court then applied what was considered to be the applicable portions of the Act as follows:

In my opinion, it matters little whether I consider that these shares and the R.R.S.P. are family assets as defined in Section 3 of the Family Law Reform Act or non-family assets as dealt with under Section 8. I say that it matters little because in the circumstances it would be a fair and equitable disposition of this issue, for me to hold that she has an approximate one half interest in each. I am not in a position to determine the tax liability to be incurred upon withdrawing the approximate amount of $10,000 from the R.R.S.P.

Accordingly, under Section 8(a), I direct that Mrs. Leatherdale be paid the sum of $20,000 respecting her interest in those two assets in her husband’s name.

The Court of Appeal, speaking through Lacourcière J.A., found:

(a) “There was no direct financial contribution by the respondent [wife] to the acquisition of…[the said assets]”;

(b) Section 8 relating to non-family assets was not made the subject of any application by the wife but in any event she would have had to demonstrate that her contribution was “substantial,” and direct to the acquisition of the said assets and not indirect. In any event the said assets are non-family assets and can only be distributed under s. 8 where the claimant spouse has made the contribution as therein required; and

(c) Section 4 is not applicable in these proceedings, the said assets not being “family assets” as defined in the Act, unless the division of the family assets was inequitable. Here, since the

[Page 764]

division of the family assets had been agreed upon by the parties and was not inequitable, unfair or unjust subs. (6) of s. 4 did not apply.

In the result the Court of Appeal struck out the award of a lump sum payment in the amount of $20,000 representing a one-half interest of the wife in the said assets as found by the learned trial judge.

It is apparent that the Court of Appeal determined the disposition of these proceedings on the basis that s. 8, which had been the basis for the award by the learned trial judge of $20,000 representing the interest of the wife in the said assets, was not available to the wife since no application had been made under that section. This view of the application seems to predominate throughout the judgment, for early in the reasons given by the Court of Appeal, after the reference to the fact that no application was ever made under s. 8, it was stated: “Both s. 8 and the constructive trust doctrine were relied upon by the plaintiff in the Nuti action, in contrast to the present case”. The subject was returned to when the observation was made: “An application must be made under the section [s. 8];” and “In appropriate cases, applications are brought under both s. 4 and s. 8 and different considerations apply.” In the end the Court disposed of the issue with reference to s. 4 rather than s. 8 stating:

Where, as in the present case, the division below was made under a section which we find inapplicable, it becomes necessary to give the judgment which ought to have been pronounced under the applicable section [s. 4] if we have before us all the evidence and materials necessary finally to determine the matters in controversy.

It would appear, therefore, notwithstanding the clear request under the notice of motion for an order at least in the alternative under s. 8, and notwithstanding that the parties had not agreed as between themselves by the opening of the trial as to whether or not the said assets were in fact family assets and “how they should be divided”, that the Court of Appeal has disposed of the issue

[Page 765]

on the basis that s. 8, not having been invoked, was not applicable.

As there are findings below that these assets are non-family assets, I turn first to s. 8 of the Act which is a provision applying to this class of assets.

8. Where one spouse or former spouse has contributed work, money or money’s worth in respect of the acquisition, management, maintenance, operation or improvement of property, other than family assets, in which the other has or had an interest, upon application, the court may by order,

(a) direct the payment of an amount in compensation therefor; or

(b) award a share of the interest of the other spouse or former spouse in the property appropriate to the contribution,

There is no express reference in s. 8 as to the quantum, proportionate or otherwise, of the wife’s contribution to the acquisition of the asset held by the husband. No doubt a miniscule contribution by a spouse would not attract any rights under the Act. Here there is no such suggestion. The findings of contribution by the wife (whether direct or indirect will be discussed shortly) were real and substantial and these findings below are amply supported by the evidence. I do not read Fisher v. Fisher (1979), 21 O.R. (2d) 105, where Grange J. at pp. 111-12 refers to a substantial contribution by the spouse, as being in any way inconsistent with this conclusion.

What then does the section require of a spouse in order to bring the section into operation. The spouse must contribute “money’s worth” or “work”. No argument was made that the wife here did not make such a contribution. The challenge facing the wife is the conclusion by the Court of Appeal that the contribution must be “directly” related to the acquisition of the said assets and not

[Page 766]

merely indirect in the sense that she helped create a condition wherein the husband was able to apply his earnings to the acquisition of the said assets. In the view of the learned trial judge the husband’s financial ability to acquire the shares was “directly and substantially” contributed to by the wife’s work outside and in the house. The Court of Appeal, while not differing as to these facts, concluded that the wife:

…must establish a direct contribution of work, money or money’s worth in respect of the acquisition, management, maintenance, operation or improvement of the non-family property, and not merely a contribution of money or money’s worth to the marriage. The words underlined indicate that the Legislature intended that there should be a clear and direct connection between the contribution and the disputed property.

Later in the judgment of Lacourcière J.:

However, s. 8 does not contain the statutory recognition given by s. 4(6)(b)(ii) to the indirect contribution of a spouse by his or her assumption of any of the joint responsibilities of child care, household management and financial contribution, thereby affecting the other spouse’s ability to acquire, manage, maintain, operate or improve the property that is not a family asset.

His Lordship went on to state:

The recognition in s. 4(6)(b)(ii) of this kind of indirect contribution forms no part of s. 8, and one must presume that the Legislature intended to confine its operation to a s. 4 division of assets between spouses.

Whether the words “in respect of logically lead to a requirement of direct contribution to the acquisition of the said assets depends upon the meaning of that phrase in the setting in which it is found in the sentence which forms s. 8. Of controlling importance, in my view, in this process of interpretation, is the meaning properly to be accorded to the word “property” which follows this phrase. The applicable wording reads:

Where…[the] spouse…has contributed…money’s worth in respect of the acquisition…of property…

Is the word “property” singular or plural, specific or general, as employed in this section? In s. 1(3)(c) of The Family Law Reform Act, 1975

[Page 767]

(Ont.), c. 41, the predecessor of s. 8 of the 1978 Act, the spouse’s contribution had to be “in respect of the acquisition…of a property”. The wording of the present provision, however, clearly suggests a wider scope. The word “property” is used to refer to property which is not included in the defined term “family assets”. It may be proper to substitute for the words “property, other than family assets,” the expression “non-family assets”. In that sense the word property is generic and not specific.

The wording employed in the section lacks precision and is ambiguous in that the language can be read as referring to “all” or “any” property, or it may mean “each” property. The reference in subpara, (b) to “the property” does not relieve the doubt because it merely refers back to “property, other than family assets”, which revives the uncertainty. In my interpretation of these words, the reference is to two groups of property, “family assets” and “non-family assets”, and does not require a spouse to identify the item of property to which he or she has made contribution in acquisition. To read any other meaning into these words as employed in this section is to place an unnatural strain on the general language employed by the Legislature in establishing a legislative plan which is introduced by the following recital of purpose or object of the Act:

AND WHEREAS for that purpose it is necessary to recognize the equal position of spouses as individuals within marriage and to recognize marriage as a form of partnership;

Furthermore, with respect, I adopt the observation of the learned trial judge that this statute is clearly one of remedial nature and therefore should attract in its interpretation s. 10 of The Interpretation Act which states in part that the terms of the statute “shall accordingly receive such fair, large and liberal construction and interpretation as will best insure the attainment of the object of the Act according to its true intent, meaning and spirit”. It may be that a comparison of the terminology in s. 4 will throw some light on the proper interpretation of s. 8. Section 4 provides:

[Page 768]

(2) The court may, upon the application of a person who is the spouse of another, determine any matter respecting the division of family assets between them.

(a) any agreement other than a domestic contract;

(b) the duration of the period of cohabitation under the marriage;

(d) the date when the property was acquired;

(e) the extent to which property was acquired by one spouse by inheritance or by gift; or

(6) The court shall make a division of any property that is not a family asset where,

(a) a spouse has unreasonably impoverished the family assets; or

[Page 769]

(b) the result of a division of the family assets would be inequitable in all the circumstances, having regard to,

(i) the considerations set out in clauses (4)(a) to (f), and

(ii) the effect of the assumption by one spouse of any of the responsibilities set out in subsection, (5) on the ability of the other spouse to acquire, manage, maintain, operate or improve property that is not a family asset.

Section 4 comes into operation only on marriage breakdown. Section 8 has no such limitation. It is available generally, and makes no reference to s. 4 or any other provision in the Act. Section 4 is less precise about the rights of a former spouse than s. 8 where a person is expressly brought within the section. Section 4(2), (3) appears to limit the range of s. 4 to the present spouse. Subject to the “equitable considerations” set out in subss. (4) and (6), the section recognizes “joint contribution, whether financial or otherwise”, and each spouse is entitled to have the family assets divided equally.

It is s. 4(6) that extends the section to assets other than those defined as “family assets”. This subsection is a directive to the court expressed in mandatory terms to divide non-family assets on a basis not specified in the subsection, where the conditions enumerated in the subsection exist. Unless the statute elsewhere provides (and it does not), it must be taken that the mode of division or disposition in subs. (6) is such as to remedy the condition which triggered the application of subs. (6).

The circumstances described in subs. (6)(b) alone could trigger the extention of s. 4 in these proceedings to include non-family assets. Here the learned trial judge found that the parties had not reached agreement as to whether the said assets were “family assets”. Hence the division of those family assets which were settled by agreement could not be taken as being a final agreement and binding without regard to the settlement of the division of all assets in whatever statutory category

[Page 770]

they may be. It could hardly be otherwise when having regard to the above-quoted statement by the trial judge repeated here for convenience:

I have no doubt that the intention of the parties was, as expressed by Mrs. Leatherdale, that the Bell Telephone shares and the R.R.S.P. acquired by reason of selling some of those shares was for their common retirement benefit.

The Court of Appeal, through Lacourcière J.A., commented:

The documents filed in lieu of pleadings and the opening statement of applicant’s counsel at trial alleged that the disputed personal property was a family asset.

It can hardly be concluded in these circumstances that the parties had agreed that the settlement of the distribution of the admitted family assets was “equitable” in vaccuo. Subsection (6)(b) directs the Court to divide non-family assets where “the result of a division of the family assets [where so found] would be inequitable in all the circumstances”. One of the relevant circumstances listed in that subsection is the inability of the Court to achieve a division of all the assets which reflects “the effect of the assumption by one spouse of any of the responsibilities set out in subs. (5) on the ability of the other spouse to acquire…property that is not a family asset”. Here the trial judge has found, and that finding is not challenged by the Court of Appeal, that the wife’s participation in the joint venture of the marriage enabled the husband to acquire the said assets. It was also found by the trial judge and concurrently by the Court of Appeal that the said assets were to be “for their common retirement”. If the parties could not agree on the performance of this accord, and the Court could not bring about its performance under the Act, then this must surely be “a circumstance” rendering the initial division of the family assets “inequitable”, and thereby authorizing, indeed directing, an order pursuant to subs. (6) for the division of the non-family assets. The wording of subs. 6 is somewhat cumbersome and perhaps not as express as it might be. Nonetheless the terminology employed by the Legislature can be set out, by eliminating the unnecessary wording

[Page 771]

in the context of the issues arising in this appeal, as follows:

The court shall [divide the non-family assets] where…the result of a division of the family assets would be inequitable in all the circumstances…[including] the effect…on the ability of the…[husband] to acquire [non-family assets of the wife’s assumption of the joint responsibilities set out in subsection 5].

Whether or not the expression in subs. (6)(b) “having regard to” can be equated to the expression “including”, the provisions of subpara. (b)(ii) must be taken into the consideration of “all the circumstances” surrounding the division of the family assets. Such a division would be rendered inequitable if it flew in the face of, or produced a result diametrically opposed to, that contemplated by the spouses in their agreement with respect to the retirement fund established by the said assets.

In short, therefore, I conclude that:

(a) Section 8(a) forms a proper foundation for the division of the said assets by the learned trial judge; and,

(b) Section 4(6)(b)(ii) likewise authorizes this disposition.

Two technical points can be put against these conclusions. Firstly, in the reference for the trial of an issue, the referral order does not expressly restate the notice of motion wherein the wife asks for a division of the said assets under s. 8. In family law particularly, and nowadays in most litigation, the fate of the parties should not be settled by pleadings, especially where the consideration in question is really procedural. The issue was, in the view of all the parties at all times, to settle the disposition of the said assets, and the opening statement of counsel at trial makes this conclusively clear. Secondly, the trial judge did not make the requisite determination in explicit terms that the equal division of the “family assets” in isolation was not equitable by reason of the necessarily consequential breach of the spousal accord to dedicate the said assets to their “common retirement”; and hence that s. 4(6)(b)(ii) came into play. Again in the field of family law the answer is

[Page 772]

short and clear. Litigation of family issues must be, within the limits authorized by law, expeditious and final as well as just. Here the findings at trial, undisturbed in some instances and concurrent in others in the Court of Appeal, incontrovertibly found the equitable solution (if in law available) to be an equal division of the family assets and the said assets. It follows inexorably that one without the other would be inequitable; hence, the order of the trial judge under either the family asset or the non-family asset provisions of the Act was the same.

I am confirmed in my view of these two sections of the Act by this result, recognizing as it does that there is no distinction in the law as established by the statute between the claim of a current spouse and a former spouse with reference to the division of all the assets of the family.

Concerning the status of the law of constructive and other trusts in the regime of The Family Law Reform Act, I wish only to say that I am in respectful agreement with the Chief Justice that the statute law now prevails.

I wish to add only that this comprehensive legislation, dealing with matters arising in domestic relations, should, in my view, be read by the courts in a broad and generous manner so as to promote the announced and evident objectives of the Act. Family law, more than any other branch of the law, must provide, where it is possible, simple and clear rules which readily lend themselves to expeditious application in the trial courts. Litigation over family matters is never economic, always a heavy expense and a painful experience. The simpler the rules, the easier their application by the courts; and even more importantly, the more

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readily applied by the legal advisers to the members of the family who must always strive to settle family differences without recourse to the delays, expense and pain of court proceedings. In more specific terms, I do not believe, with all respect to those holding different views, that s. 4 and s. 8 should be read as competitive or water-tight divisions of the Act. Both provisions are aimed at the same problem; the overall settlement of differences in the family over property matters on a fair and equitable basis, once and for all. I would therefore allow the appeal, set aside the order of the Court of Appeal and restore the order of the trial court. The Court of Appeal did not believe this to be a case for costs. I am in full agreement and would make no order as to costs in this Court.

Appeal allowed, ESTEY J. dissenting in part.

Solicitors for the appellant: Linda Silver Dranoff & Associates, Toronto.

Solicitor for the respondent: Brian J. Hornsby, Toronto.

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Leatherdale v. Leatherdale, [1982] 2 SCR 743

Citations[1982] 2 S.C.R. 743

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[1982] 2 S.C.R. 743