The Debt Entered Between Husband and Father Prior to Marriage
Evidence
[35] In his testimony, Mr. Belgiorgio hesitantly admitted that he incurred a debt of $60,000.00 to his father in the summer of 1988, prior to his marriage to Mrs. Belgiorgio. Mr. Belgiorgio made it clear that he felt the debt was his responsibility alone, and that it was repaid to his father’s estate with proceeds from his inheritance.
Analysis
[36] Counsel for Mrs. Belgiorgio suggests that Section 4(1) of the Family Law Act would include debts incurred prior to marriage in a spouse’s net family property. The section reads:
“Net Family Property” means the value of all the property, except property described in subsection (2), that a spouse owns on the valuation date, after deducting,
(a) the spouse’s debts and other liabilities; and
(b) the value of property, other than the matrimonial home, that the spouse owned on the date of marriage, after deducting the spouse’s debts and other liabilities, calculated as of the date of marriage;
[37] The question of whether debts brought into a marriage should be considered in calculating a spouse’s net family property under the Family Law Act has been considered in a number of cases in this jurisdiction; and recently in McDonald v. McDonald reflex, (1995), 17 R.F.L. (4th) 258 (Ont. Gen. Div.). In McDonald, Rutherford J. found at p. 260:
In Jackson v. Jackson reflex, (1986), 5 R.F.L. (3d) 8, Kent L.J.S.C. proceeded, without any elaboration, to treat and include the respondent husbands’ net pre-marital debt position in the net family property calculation with the mathematical effect I have already mentioned, namely, that those debts became additions to his net family property. In an annotation to the judgment of Fleury U.F.C.J. in Menage v. Hedges (1987). 8 R.F.L. (3d) 225, (at 229) James G. McLeod suggests that the case supports the Jackson v. Jackson proposition that a negative pre-marital property value deduction translates mathematically into an addition to net family property. I don’t think the case supports the proposition at all. In Menage, Justice Fleury was dealing with a husband whose pre‑marital assets were substantially greater in value than were his debts. At page 256, Justice Fleury concluded that the husband’s net property at marriage had a value of $52,208. Menage v. Hedges is not a net pre-marital debt case at all.
Interestingly however, when Justice Fleury then turned to the specific exclusions to be deducted under section 4(2) of the Family Law Act from net family property, he declined to include certain debts in the calculation of “property… that was acquired by gift or inheritance from a third party after the date of the marriage.” He concluded that a debt owed to a third party cannot be property that a spouse owns on valuation day, stating that “a debt is not a property within the meaning of the Family Law Act.”
Because of the contest in which Justice Fleury makes that statement, I do not take it as meaning that a party cannot be found to have a negative value of property at the date of marriage, at the step in the net family property calculation described in subsection 4(1)(b) of the Family Law Act. As I have already suggested, I think it is fair for the net debts a party brings into a marriage to be accounted for at the time net family property is equalized upon a break-up of the marriage.
[38] I agree with the analysis of Rutherford J. Mrs. Belgiorgio’s contribution toward eliminating Mr. Belgiorgio’s debt should be properly reflected in the equalization payment. I find that this debt should be included in the calculation of Mr. Belgiorgio’s net family property.
