A family lawyer Vancouver divides the property and debt of separating spouses under Part 5 of the Family Law Act. The two most significant changes to property division are that the rules apply the same to married and common-law spouses, and the creation of excluded property that is usually not taken into account on an equal division. The key to a basic understanding of Part 5 is to begin with the definition of spouses, family property and excluded property before looking at the basic property division rules.
Spouses are defined in Section 3 of the Family Law Act to include married and living with another person in a marriage like relationship for a continuous period of 2 years.
Family property is defined in Section 84 of the Family Law Act to include all real and personal property, except excluded property, that is owned by at least one spouse. Family property can include assets such as the family home, recreational property, timeshares, cars, companies, proprietorships, bank accounts, investments, RSPs, pensions and CPP credits.
Excluded property is defined in Section 85 of the Family Law Act to include property acquired by a spouse before the relationship began, inheritances, third party gifts, certain personal injury settlements/damages, certain insurance payouts and certain trust funds, including property derived from this type of property or the disposition of this type of property.
Property division rules are set out in Section 81 of the Family Law Act that subject to an agreement or court order, spouses are both entitled to family property and responsible for family debt regardless of their use or contribution.
Vancouver divorce lawyers in British Columbia today have little case authority interpreting the application of excluded property to property division. Mr. Justice Butler’s August 15, 2014 judgment in Remmem v. Remmem is one of the first decisions to consider the new division of property rules. Judge Butler in Remmem answered three property related questions.
1. Value of excluded property that has gone down in value. The court asked the question whether the value of excluded property brought into a relationship that has gone down in value can be made up from other assets? The asset in question was a Sechelt boat that was worth $100,000 at the beginning of the relationship and $52,500 at the end of the relationship. The court answered the question that it cannot. As set out above, excluded property is defined in terms of property, not value. The property or asset itself is excluded property, the value of the excluded property is not. So, in the situation where an asset was in existence at the beginning of the relationship and has gone down in value by the end of the relationship, the asset is excluded, not the value of the asset at the beginning of the relationship. It is important to understand that this only applies when the value of the property has gone down. As examples of the two possibilities for property owned at the beginning and end of the relationship,
2. Tracing the value of excluded property to property in joint names. The court asked the question of whether the value of excluded property brought into a relationship transferred into the purchase of a joint property reduces the value of the exclusion? The wife alleged that one half of the proceeds were a gift to her and so only one half of the original value was excluded property. The presumption of advancement was also raised as part of this argument. The asset in question was a Sechelt property worth $65,000 at the beginning of the relationship and that was transferred into the purchase of a home in joint tenancy. The court answered the question that the full value was excluded property as traced into the new home in joint tenancy. The court preferred the straightforward simplicity of the Section 85(1)(g) FLA tracing provisions based on the definitions of family and excluded property to an investigation of intention and presumptions of advancement. The original owner of the real property received the full $65,000 credit for excluded property.
3. Significantly unfair. The court also began the lengthy process of coming to terms with the Section 95 FLA â€œsignificantly unfairâ€ provisions allowing the court to order an unequal division of family property or family debt if it would be significantly unfair to equally divide family property or family debt including pensions. The court distinguished between “unfair” as used under the old Family Relations Act and “significantly unfair” under the new Family Law Act, before saying, “There must be a finding that the division of property pursuant to the statutory scheme is ‘significantly’ unfair. The Concise Oxford English Dictionary defines “significant” as “extensive or important enough to merit attention”. Significantly is understood to mean more than a regular impact something weighty, meaningful, or compelling. In other words, the legislature has raised the bar for a finding of unfairness to justify an unequal distribution. It is necessary to find that the unfairness is compelling or meaningful having regard to the factors set out in section 95(2). It seems clear that the FRA case law for “unfair” will be of limited assistance under the FLA’s “significantly unfair”.
For a free consultation about dividing family property as part of a divorce or separation, please telephone our office or fill out our online Family Law Form.