The starting point for division of debt under the Family Law Act (FLA) is s. 81, which provides that spouses are both responsible for family debt, regardless of their respective use or contribution, and that on separation, each spouse is equally responsible for family debt.

However, the court may order an unequal division of family debt if it would be significantly unfair to equally divide family debt.

The court can reapportion debt to one spouse if that spouse reduced the value of the assets available for distribution in circumstances that rendered an equal division unfair. Section 95(2)(f) of the FLA allows the court to consider whether a spouse, after separation, has caused a significant increase in family debt and s. 95(2)(g) applies where “a spouse, other than a spouse acting in good faith”, substantially reduces the value of family property.

The court is generally not willing to dissect the financial dealings between the parties during the marriage.

In Walsh v. Chambers , where a house was found to be excluded property with no increased value during the relationship, the court found that the mortgage pre-dated the relationship and therefore was not a family debt. The mortgage had increased during the relationship. Part of that increase was found to have been due to renovation expenses on the house, while the rest of the increase was due a number of family debts that had been consolidated. Only the consolidated loan aspect of the mortgage was found to be a family debt.