By Jenna Lalani, BC Family Lawyer and Legal Coach, Estate Planning Lawyer
What is family property and what isn’t family property?
Under Section 81 of the BC Family Law Act, all property that is "family property" is divided equally, as is "family debt", regardless of respective contribution or use.
Section 84 - Family Property
Subject to section 85 [excluded property], family property is all real property and personal property as follows:
a) on the date the spouses separate,
i. property that is owned by at least one spouse, or
ii. a beneficial interest of at least one spouse in property;
b) after separation,
i. property acquired by at least one spouse if the property is derived from property referred to in paragraph (a) (i) or from a beneficial interest referred to in paragraph (a)(ii), orfrom the disposition of either, or
ii. a beneficial interest acquired by at least one spouse in property if the beneficial interest is derived from property referred to in paragraph (a) (i) or from a beneficial interest referred to in paragraph (a) (ii), or from the disposition of either.
Gifts, inheritances, and pre-marital assets are commonly known to be excluded under Section 85 of the BC Family Law Act, but there are instances when it cannot be traced back to its original form or has been ‘comingled’ or mixed into family property that the exclusion is lost.
Could a spouse be entitled to an unequal division?
In the absence of a family law agreement, whether that be a cohabitation agreement, pre -nuptial agreement or a marriage agreement, a spousal relationship invokes some sort of a division of family property. The presumption of an equal division of property is the widespread general understanding. However, there are instances where a court has granted an unequal division in accordance with Section 95 of the BC Family Law Act.
Section 95 - Unequal division by order
(1) The Supreme Court may order an unequal division of family property or family debt, or both, if it would be significantly unfair to
a) equally divide family property or family debt, or both, or
b) divide family property as required under Part 6 [Pension Division].
(2) For the purposes of subsection (1), the Supreme Court may consider one or more of the following:
a) the duration of the relationship between the spouses;
b) the terms of any agreement between the spouses, other than an agreement described in section 93 (1) [setting aside agreements respecting property division];
c) a spouse's contribution to the career or career potential of the other spouse;
d) whether family debt was incurred in the normal course of the relationship between the spouses;
e) if the amount of family debt exceeds the value of family property, the ability of each spouse to pay a share of the family debt;
f) whether a spouse, after the date of separation, caused a significant decrease or increase in the value of family property or family debt beyond market trends;
g) the fact that a spouse, other than a spouse acting in good faith,
h) substantially reduced the value of family property, or
i) disposed of, transferred or converted property that is or would have been family property, or exchanged property that is or would have been family property into another form, causing the other spouse's interest in the property or family property to be defeated or adversely affected;
j) a tax liability that may be incurred by a spouse as a result of a transfer or sale of property or as a result of an order;
k) any other factor, other than the consideration referred to in subsection (3), that may lead to significant unfairness.
(3) The Supreme Court may also consider the extent to which the financial means and earning capacity of a spouse have been affected by the responsibilities and other circumstances of the relationship between the spouses if, on making a determination respecting spousal support, the objectives of spousal support under section 161 [objectives of spousal support] have not been met.
In order to make a claim for an unequal division, it must be considered whether it is significantly unfair to equally divide property. In the Court of Appeal case, Jaszczewska v. Kostanski, 2016 BCCA 286, it was stated at paragraph 41:
“Clearly, the statutory intent is to constrain the exercise of judicial discretion. The test of “significant unfairness” imposes a more stringent threshold than the mere “unfairness” test … to allow unequal division by a court. As Mr. Justice Butler observed in Remmem v. Remmem, 2014 BCSC 1552, “significant” is defined as “extensive or important enough to merit attention” and the term refers to something that is “weighty, meaningful or compelling.” He concluded that to justify an unequal distribution “[i]t is necessary to find that the unfairness is compelling or meaningful having regard to the factors set out in s. 95(2)”: Remmem at para. 44. As the judge here noted at para. 162 of her reasons, the Legislature intended the general rule of equal division to prevail unless persuasive reasons can be shown for a different result. I agree.”
Despite the legislation setting out that family property is to be divided equally regardless of contribution, there have been instances under Section 95 of the Family Law Act, where the courts have considered the duration of the relationship along with a parties’ contribution:
- In a two-year relationship, in Yeh v. Wadud, 2017 BCSC 694, the court awarded unequal division to the sole contributor where the division was split at 80% and 20% for the increase in value of a pre-marital asset.
- In a three-and-a-half-year relationship, in Williams v. Killey, 2014 BCSC 1846, the increase in value of excluded property amounted to $107,000, and as a result of the short duration of the marriage along with the lack of direct or indirect contribution, the division was split at 85% and 15%.
- In a two-and-a-half-year relationship, in Chapman v. Cuthbert, 2021 BCSC 1, the court reapportioned the increase in value on an 85% and 15% division largely due to one party’s sole contribution.
On the other hand, in Wakefield v. Owen, 2018 BCSC 1160, the parties were in a common law relationship for three and a half years and during the relationship they purchased a home together. While the relationship was short, this was not a situation where the man brought the house into the relationship but rather, it was purchased together. Both parties put time, money, and work into property. One’s contribution was greater than the other, however, one party made contributions that reflected traditional gendered division of labour, and therefore, this situation allowed for the presumption of equal division. While there were no other financial contributions to other assets during the relationship, that was not sufficient to displace presumption of equal division of increase in value of assets during the relationship. It was deemed that financial and non-monetary contributions to the welfare of the family and dividing increase in value of assets over the period of the relationship was not significantly unfair.
There is no hard-set rule on how property gets divided. The legal coaches at Coach My Case have experience dealing with equal division as well as claims for unequal division and can guide you through your situation. As each matter is different, every circumstance could result in a different outcome which is why you should consult with a legal professional. Contact us today for your complimentary 20-minute consultation.