Post-separation decreases in an asset's value

In Ontario, when a married couple separates, the net accummulation of wealth of each spouse during the marriage is equalized. This is done by calculating the value of assets and liablities on the date of marriage and the date of separation. Under certain circumstances, however, post-separation decreases in the value of an asset may be taken into account.

In Serra v. Serra, the husband owned a textile company that had a value on the date of marriage of around $10 million. Four years later, when the trial was held, the company had a value of around $2 million. The decline in value had to do, in part, with China's entry into the World Trade Organization in 2001. The trial judge stated that market-driven declines in the value of assets after separation are irrelevant when calculating an equalization payment, and so the husband's textile company was valued at its higher separation date amount. The Ontario Court of Appeal disagreed, stating that such a result was unconscionable because it meant that the husband would have to make an equalization payment that was more than, and possibly twice as much as, his total net worth. It valued the company at the lower post-separation amount.

In the recent trial decision of Kean v. Clausi, the wife owned a TD Waterhouse investment that was worth around $229,000 when the husband and wife separated. When the trial was held, the investment's value was $157,000, a reduction that was entirely market driven. In calculating the wife's equalization payment to the husband, the trial judge valued the investment at $157,000, stating that it would be unconscionable for the wife to bear the entire burden of its decrease in value.

Serra v. Serra: http://www.canlii.org/en/on/onca/doc/2009/2009onca105/2009onca105.html

Kean v. Clausi: http://www.canlii.org/en/on/onsc/doc/2010/2010onsc2583/2010onsc2583.html