Equalization: Determining the Valuation Date

How do you decide the date of separation?

When a marriage ends, the spouses’ property is divided in a process known as equalization. The property to be divided is known as the “net family property”. The value of the property is determined as of the date known as the “valuation date”. In this post, Jordan Levy, Fresh Legal intern and University of Ottawa law student, summarizes a case where the valuation date was determined at court.

What is the “valuation date”?

The Family Law Act defines “valuation date” as the earliest of the following dates:

  1. The date the spouses separate and there is no reasonable prospect that they will resume cohabitation.

  2. The date a divorce is granted.

  3. The date the marriage is declared a nullity.

  4. The date one of the spouses commences an application based on subsection 5 (3) (improvident depletion) that is subsequently granted.

  5. The date before the date on which one of the spouses dies leaving the other spouse surviving. 

Learn more about equalization: Can I exclude my inheritance from sharing?

What happens if the parties can’t agree on a valuation date?

In the case of Farahpour v Aghamirkarimi, 2018 ONSC 3588, the spouses did not agree on the valuation date.

The husband stated that the date of February 9, 2014 should be the valuation date. On this date, the husband arrived at the apartment previously shared by the couple and his wife was not in the apartment. The husband had been in Iran, and the wife had left the apartment before her husband returned to Canada. By this date their relationship was strained; the husband had disconnected his wife’s cellular phone with their provider and the wife had cut his access to their shared storage unit.

The wife stated that the date of April 4, 2014 should be the valuation date. On this date, the wife received papers to begin family law proceedings from her husband.

The valuation date is when both parties should be reasonably aware that their relationship is over. As in the case of Oswell v. Oswell (H.C.J.), 1990 CanLII 6747 (ON SC), spouses can be legally separated, even if they continue to live under the same roof. Thus, separation is an emotional and psychological concept, not merely a physical concept.

Both parties must be aware of the moment of separation to create a valid valuation date.

One party to the relationship can directly state their intention to separate to the second party of the relationship. The second party does not need to agree to the separation in order for the valuation date to be set.

The judge stated at para. 17:

… it is worth reiterating a passage from Strobele v. Strobele, supra; Justice Corbett states, “The global question is, when was it that the parties knew or, acting reasonably, ought to have known, that their relationship was over and would not resume?”

In determining the separation date in this case, the judge considered the permanency of the split at para. 22:

…the permanency of the split between the parties was demonstrated by the fact that she admitted that the Applicant had disconnected her cellular phone with the provider as soon as he reached the airport in Canada; she had cut off his access to their storage unit while he was in Iran; she did, indeed, complain to the police as stated by the Applicant; the Applicant never asked to speak to her when he telephoned her brother; and he never tried to contact her to resolve their conflict.

Ultimately, the court ruled that the valuation date was February 9, 2014, because both parties in the relationship should have reasonably known that their marriage was irretrievably broken for the foreseeable future on this day.