In the case of Panchalingam v. Pathmalingam from 2013, the Ontario Court tackled the question of whether a separated husband should be forced to share the burden of the wife’s post-separation financial irresponsibility.
They had been married for around 20 years before they separated. The wife kept possession of the home where she lived with the three children of the marriage and the husband was given specified access to the children and was paying support pursuant to a court order.
Without the husband’s knowledge, the wife ran up a line of credit that had been secured against the home, defaulted on the mortgage payments and also owed money to Legal Aid Ontario, which placed a lien on the home for almost $20,000. The husband only learned about the wife’s financial irresponsibility when he arrived at the home and found a letter on the door from the bank, indicating that he would be evicted, and the home sold unless the debt was cleared up.
The husband then took emergency steps to prevent the family home from being lost, arranged for refinancing and settled with Legal Aid Ontario for most of the outstanding debt. When the couple returned to court to address their equalization of Net Family Property, the husband asked for an unequal division to account for the fact that, in light of the wife’s post-separation mis-management, it would be unfair to burden him with half the costs of her self-imposed debt.
On one hand, the wife had been in desperate circumstances since separation, working at Tim Hortons and relying on the generosity of her friends and church to meet her basic needs. She had been borrowing money to pay for necessities and enlisting the help of Legal Aid Ontario to settle the custody issues stemming from the breakdown of the parties’ marriage.
On the other hand, the wife had incurred these debts on her own and had failed to take any steps to resolve them. She had become apathetic and let matters get so out of control that the security of the home, in which the children lived, was in real jeopardy. What was more troubling is that she failed to take any responsibility for the situation, even when circumstances were clearly very dire, it was only the husband’s eleventh-hour steps to refinance that saved the family home from being lost.
The Court concluded that an equal division of family property would be unconscionable in the circumstances and reduced the wife’s entitlement accordingly.