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  • Writer's pictureJared Davies, Lawyer

Emptying the bank account before separation

If a spouse knows that separation is imminent, they may try to create an unfair advantage for themselves by removing or withdrawing money from a joint bank account or depleting property ahead of time, attempting to avoid the “equalization” of that money or property. Since equalization, or the division of the net family property, looks at date of marriage and date of separation assets and debts, the unilateral removal of money or property prior to separation may distort equalization. The Family Law Act provides a mechanism to combat the negative effects of this vis-à-vis an unequal division of property.

The primary consideration for an unequal division is whether one of the prongs in section 5(6) of the Family Law Act is present, and whether the normal property division would otherwise be unconscionable, which is a very high threshold using a discretionary fact-based analysis. A recent post examined how a litigant can potentially get an unequal division of property based on a short-term marriage and unequal contributions to property during that marriage (section 5(6)(e) of the Family Law Act) – in it, unconscionability was discussed.

However, Sultana v Salehin, a 2023 case, explored next, also makes clear that if one party begins withdrawing money from a bank account in anticipation of separation, the victim-party can potentially utilize section 5(6)(d) of the Family Law Act to try and have this accounted for through an unequal division of net family property. In other words, property may no longer exist on the date of separation, but the remedy would be to add it back in the equalization calculation. Section 5 of the Family Law Act states:

5 (1) When a divorce is granted or a marriage is declared a nullity, or when the spouses are separated and there is no reasonable prospect that they will resume cohabitation, the spouse whose net family property is the lesser of the two net family properties is entitled to one-half the difference between them. R.S.O. 1990, c. F.3, s. 5 (1).

(6) The court may award a spouse an amount that is more or less than half the difference between the net family properties if the court is of the opinion that equalizing the net family properties would be unconscionable, having regard to,


(d) a spouse’s intentional or reckless depletion of his or her net family property;


In the recent case of Sultana v Salehin, 2023 ONSC 118, a couple with two children sought a divorce and division of property. The court found that the husband strategically removed over a hundred thousand dollars from his own accounts ahead of the separation, arguing that he used the money to pay back a private loan. However, the court found that this evidence was not credible for numerous reasons, including the fact that the individual who allegedly provided the loan did not testify. The court found that the husband had removed the money to avoid giving up half of it upon separation. The court also found that the wife had begun removing monies in response as well, over ten thousand dollars. The court ruled that section 5(6)(d) of the Family Law Act was engaged for an unequal division. So, the withdrawn monies in question were to be accounted for in the equalization. In Sultana v Salehin, the court outlined:

35 The applicant submits that the respondent intentionally depleted his assets leading up to separation, and that the amounts removed should be added back and the NFP adjusted accordingly. I agree with this submission.

36 The evidence discloses, and I find, that leading up to the date of separation, the respondent removed $20,000 from his Tax-Free Savings Account on March 28, 2017, $22,000 on April 6, 2017, and then $754.35 to close the account on July 11, 2017.

37 The respondent says that this money was used to pay back a family debt owing to his brother. The applicant disputes this and asks that $42,754.35 be equalized.

38 I do not believe the respondent's claim that he owed a debt to his brother. The respondent's testimony regarding debit vouchers and deposit vouchers and how they were signed is illogical and not credible. The respondent could not explain how he came to calculate what he purportedly owed his brother at the time he allegedly paid his brother. The respondent did not call his brother to testify to corroborate his assertion that a debt was owed and paid off. The evidence does not support the contention that the family was in need of loans to fund the various trips asserted by the respondent. I find that the alleged loan was a contrivance by the respondent to attempt to avoid his equalization obligations to the applicant, and that he is not entitled to a deduction in this regard.

39 From January 19, 2017 to June 13, 2017, the respondent removed $56,109.96 by cash withdrawals. The applicants asks that this amount be equalized.

40 The respondent withdrew $5,074.51 on June 20, 2017, and closed the account.

41 From January 2017 to September 27, 2017, the respondent withdrew $11,819.54 from his Registered Group RSP account.

42 I find that that respondent removed these sums, adding up to $115,683.85, to liquidate his bank accounts leading up to separation in order to try to avoid equalizing his assets. Pursuant to s.5(6)(d) of the Family Law Act, there should be an adjustment.

43 The applicant concedes that she too withdrew monies and closed an account prior to September 27, 2017, in the amount of $10,192.29.

44 Performing the relevant calculation, $115,683.85 minus $10,129.29 equals $105,491.56. This amount divided in half equals $52,745.78. This amount should be added in equalization adjustments.

Obvious takeaways? As the previous section 5(6) Family Law Act post suggests, an unequal division of property is a high threshold. However, recent courts have found that withdrawing large sums of money prior to a separation can reach this threshold and call for an unequal division of property.

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