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Family - Net Family Property (2). Lang-Newlands v. Newlands [trust interest as NFP]
In Lang-Newlands v. Newlands (Ont CA, 2026) the Ontario Court of Appeal considers a family law appeal, here brought against a final order which determined a support order and the NFP treatment of trust interest.
Here the court considers the trust interest NFP issue:[1] This is a high net-worth family law dispute. The primary issue is whether to treat the respondent wife, Barbara Lang-Newlands’s (“Barbara’s”) interest in a family trust, formed following an estate freeze, as a gift before or after marriage. If it is a gift before marriage, the appellant husband, Ian Newlands (“Ian”), shares in the growth in value of this interest during the marriage; if it is a gift after marriage, he does not.
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[4] The husband, Ian, appeals the final order of the trial judge who concluded that (i) he was bound by this court’s decision in Shinder v. Shinder, 2018 ONCA 717, 142 O.R. (3d) 321, to exclude Barbara’s interest in the Newlands Family Trust from her net family property for the purpose of equalization; ....
[5] Section 4 of the Family Law Act, R.S.O. 1990, c. F.3, distinguishes gifts received before marriage from those received after marriage. The former are “deductions” for the purpose of calculating net family property, such that their value at marriage is deducted from net family property, but any growth is included. In contrast, gifts received after marriage, and any income derived from them, are “excluded property” under the Act and do not form part of net family property subject to equalization.[1] It is considerably more financially advantageous for Barbara if her interest in the NFT is treated as a gift after marriage.
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a. THE LEGISLATIVE SCHEME
[11] As set out in its preamble, the goal of Ontario’s Family Law Act is to “recognize the equal position of spouses as individuals within marriage and to recognize marriage as a form of partnership”. Unlike its predecessor – the Family Law Reform Act, R.S.O. 1980, c. 152, which featured a division of property scheme – Ontario’s Family Law Act adopted an equalization payment regime. Separating spouses are, generally speaking, entitled to receive one-half of the value of all property accumulated during the marriage: Thibodeau v. Thibodeau, 2011 ONCA 110, 104 O.R. (3d) 161, at para. 37.
[12] The value of each party’s property accumulated during the marriage, or “net family property” is defined in s. 4(1) of the Family Law Act as,[T]he 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 a matrimonial home, that the spouse owned on the date of the marriage ... [13] Section 4(2) of the Family Law Act provides that:The value of the following property that a spouse owns on the valuation date does not form part of the spouse’s net family property:
1. Property, other than a matrimonial home, that was acquired by gift or inheritance from a third person after the date of the marriage.
2. Income from property referred to in paragraph 1, if the donor or testator has expressly stated that it is to be excluded from the spouse’s net family property. [14] As such, a gift or inheritance acquired before marriage is treated as a deduction such that the appreciation is shared. However, a gift or inheritance received during a marriage from a third party and its appreciation are excluded from net family property and therefore not subject to equalization.
[15] The recipient of an appreciating gift or inheritance therefore benefits far more if the gift is received after marriage than if it is received before.
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a. The standard of review
[56] The issue of how to characterize Barbara’s interest in the NFT under the Family Law Act is a question of law. Determining the value of that interest, and whether an equal division would be unconscionable, are questions of fact or mixed fact and law that are entitled to deference. An award of spousal support should not be overturned absent material error, such as a serious misapprehension of the evidence or an error in law: R.L. v. M.F., 2025 ONCA 595, at paras. 20-21. A costs award should be set aside only when the trial judge made an error in principle, or if the costs award is clearly wrong: Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, [2005] 1 S.C.R. 303, at para. 27.
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c. What is “net family property” within the meaning of s. 4(2) of the Family Law Act?
[60] The central issue is whether a trust created following an estate freeze after marriage with $100 from a spouse’s parent, but containing only shares given to the spouse before the date of marriage, should be characterized as a “gift after marriage” from a third party. If so, it would be excluded from the calculation of net family property under the Family Law Act.
[61] Barbara has the onus of establishing an exclusion to her net family property: s. 4(3) of the Family Law Act.
[62] Property is defined in the Family Law Act to include:any interest, present or future, vested or contingent, in real or personal property and includes,
(a) property over which a spouse has, alone or in conjunction with another person, a power of appointment exercisable in favour of himself or herself [Emphasis added.] [63] As such, Barbara’s beneficial interest in the NFT is “property” within the meaning of the Act.
[64] A gift is a gratuitous transfer of property to a third party: McNamee v. McNamee, 2011 ONCA 533, 106 O.R. (3d) 401, at paras. 23-24. Once the transfer is made, the gift is complete: Townshend v. Townshend, 2012 ONCA 868, 113 O.R. (3d) 321.
[65] There is no dispute that Barbara acquired property by gift from her father. The issue in this case is whether Barbara’s interest in the NFT is properly characterized as acquired by gift before or after the date of marriage.
1. This court’s decision in Shinder was not binding on the trial judge
[66] The trial judge held that this court’s decision in Shinder was binding on him such that Barbara’s share in the NFT must be considered a gift after marriage and therefore excluded from the calculation of her net family property.
[67] Shinder involved an appeal from the dismissal of a summary judgment motion. The motion judge in that case held that summary judgment should not be granted as there was significant non-disclosure prior to signing a separation agreement. This court granted the appeal largely on the basis that there was no significant non-disclosure prior to signing the separation agreement.
[68] In Shinder, a husband (Neil) and his wife were separating. Before the marriage, Neil had owned shares in his father Sol’s company (Coofer). During the marriage, Neil’s father set up a family trust, of which Neil was one beneficiary. That trust included both Neil’s pre-marriage Coofer shares, and additional property from Sol. On separation, Neil’s wife argued that Neil had not properly disclosed his beneficial interest in that family trust. The issue of what constituted net family property was not central in that case.
[69] The trial judge relied on paragraph 58 of Shinder where this court held that, “any additional benefits [the husband] Neil might receive under the trust would constitute a gift or inheritance acquired after the date of marriage and hence would have to constitute excluded property”.
[70] In my view, the underlying facts in Shinder are distinguishable. At paragraph 58, this court in Shinder held that,The trust comprised Sol's property and Neil's common shares in Coofer that had originally been given to him by Sol and then exchanged for preference shares that were disclosed to [Neil’s wife] and included in both of Neil's financial statements. In the face of the disclosure of these Coofer shares, any additional benefits Neil might receive under the trust would constitute a gift or inheritance acquired after the date of the marriage and hence would have to constitute excluded property as defined under the Family Law Act. [Emphasis added.] [71] The Shinder trust, unlike the NFT in this case, was made up of both Neil’s shares that he held before marriage, and property from his father Sol that was placed in the trust during the marriage. This court held that Neil’s ownership of the Coofer shares had been disclosed. The “additional benefits” Neil received under the trust after marriage were from his father’s property. This court therefore held in Shinder that, given that the “additional benefits” Neil received after his marriage from the trust came from his father, they would constitute a gift or inheritance to be excluded from net family property.
[72] By contrast, in the present case, the trial judge found at paras. 288 and 289 of his decision, that Barbara’s father did not transfer any value to the NFT after Barbara’s marriage except for the $100 to set up the NFT.
[73] Shinder is not determinative of the issues in this case. It does not address the situation where, as here, all the assets in the NFT (save for the $100 to set up the trust) were a gift before marriage.
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3. Conclusion: Barbara’s interest in the NFT is not a gift after marriage and should therefore not be excluded from her net family property
[87] For the above reasons, I conclude that Barbara’s share of the NFT on the date of separation was not a “gift” from a third party after marriage. This court’s decision in Shinder is distinguishable and not binding on the facts of this case. Barbara is entitled to a deduction for the value of her shares at the date of marriage, but her interest in the NFT is not excluded property under s. 4(2)1 of the Family Law Act.
[88] I would adopt the alternative analysis offered by the trial judge and include in Barbara’s net family property a one-fifth share of the NFT, minus the marriage-date deduction of $16 million. This is consistent with the case law.[5] Moreover, for the reasons of the trial judge and consistent with the evidence of Barbara’s expert valuator, the reasons in LeVan, and Andrew Freedman & Timothy Martin, Financial Principles of Family Law, (Toronto: Thomson Reuters Canada, 2021), I would apply a 50 percent discount to Barbara’s 20 percent interest.
[89] Section 5(6) of the Family Law Act provides for discretion to award an unequal division if equalizing the net family property would be “unconscionable”. Appellate intervention on such an issue is limited: Ward v. Ward, 2012 ONCA 462, 111 O.R. (3d) 81, at paras. 35-36.
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