Out in the Cold: Schreyer v Schreyer's Call for Law Reform

In Schreyer v Schreyer, the Supreme Court of Canada dealt with "a perceived clash between family law and bankruptcy law." This case illustrates a problem that many spouses have encountered when attempting to obtain marital property settlements in the face of their spouse's bankruptcy, particularly in provinces with equalization regimes. In its decision, the Supreme Court outlined the problem, suggested that its hands were tied, and issued a clarion call for law reform in the face of its apparent inability to redress unfairness in outcomes. Schreyer also highlights the fact that some marital property regimes in Canadian provinces fail to actually give a proprietary remedy to a spouse at the time of separation or divorce, instead creating a debt relationship between spouses. Serious consequences can arise for the creditor spouse, usually a woman, when a debtor spouse declares bankruptcy.

This comment outlines the facts in Schreyer, looks briefly at the sometimes competing objectives of the bankruptcy law and marital property regimes, explains the operation of each system, and then examines the apparent collision of the two systems in the Schreyer case. The authors then consider alternative paths that could have been taken in this case, and review some law reform options, including those mentioned by the Supreme Court of Canada.