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Case Review: Divorce and the Matrimonial Home

Did your former spouse purchase your matrimonial home prior to your marriage?

A recent Court of Appeal decision reinforces the family law Rule regarding debts incurred to secure or improve a matrimonial home.

The case, Fielding v. Fielding, involved two accomplished surgeons. Over the years they had gone to litigation over a number of issues pertaining to custody, spousal support, and property division.

Mr. Fielding had purchased the matrimonial home prior to the marriage. On the date of marriage, there was a mortgage on the home with a value of $415,000.

Net-Family Property Calculations

When parties separate, they are required to determine their respective “net-family property” (or NFP). Essentially, this is their individual net worth at the date of marriage, less their individual net worth at the date of separation. The party with the higher NFP is required to pay half the difference of the parties’ separate NFPs to their spouse.

For example, if John Doe’s NFP was $100,000, and his wife Jane Doe’s NFP was $80,000, John would owe Jane $10,000 (half the difference of $20,000).

The equalization payment is almost always required in a family law property division between two married parties.

The law stipulates that if a debt or liability is related “directly to the acquisition or significant improvement of a matrimonial home”, it is not included in the calculation of the NFP. Thus, a mortgage used to finance/secure a home (in this case, before that residence became a home of the marriage) is not considered part of the NFP calculation.

This rule seriously impacted the amount of funds Mrs. Fielding was entitled to from her ex-husband at equalization. She included the $415,000 in the NFP calculation.

Typically a premarital debt will increase a former spouse’s NFP; which means if the debt is included, the former spouse will likely owe you more in an equalization payment. The trial judge and the Court of Appeal rejected Mrs. Fielding’s inclusion of the $415,000, and it was not included in Mr. Fielding’s NFP.

This resulted in Mrs. Fielding losing out on half the difference, which amounted to $207,500.

How does this influence me?

This decision should be of interest to anyone who is going through a separation with a former spouse who mortgaged their matrimonial home before the residence became a home of the marriage.

As reinforced in this case, you will not be entitled to include your ex-spouse’s mortgage debt on the home purchased prior to marriage, in an equalization accounting to determine how much you are owed.

This case illustrates the complexities associated with accounting in a family law proceeding. Always consult with an experienced lawyer to determine the extent of your just dues, or obligations, upon separation.