Equalisation of family property limited by "nemo dat"

Brennan v. Brennan, 2010 ONCA 222 deals with whether a trust agreement can trump an equalisation entitlement under the Family Law Act.

The short answer is yes and this is based on "nemo dat quod non habet", literally meaning "no one [can] give what one does not have".

In this case a trust was created before the couple married and so the property disputed was not subject to equalisation rules. Put otherwise the only things (including a matrimonial home) that can be equalised are assets of the couple.

So, if a couple owns a house subject to bank mortgage financing the property equalised is the equity of the house only.

The Court writes:

[2] First, she argues that even if the Trust Agreement were otherwise valid, her interests under the Family Law Act, R.S.O. 1990, c. F. 3 (the "Act") in respect of the real property that became the parties' matrimonial home could not be defeated by the Trust Agreement.

[3] Although this argument was ably put by the appellant's counsel, we would not give effect to it. When the Trust Agreement was executed, the real property was not a matrimonial home within the meaning of the Act. Neither the appellant nor the respondent had any interest in the home, which was not acquired until after the date of the Trust Agreement. More importantly, by her own admission, the appellant had no proprietary or other interest – whether legal or equitable – in the funds that formed the subject-matter of the trust.