WHICH ACT GOVERNS PROPERTY DIVISION IN BRITISH COLUMBIA?
The British Columbia legislation dealing with the division of matrimonial property is the Family Law Act, which replaced the Family Relations Act on March 18, 2013. (Note the FRA still applies to property division matters prior to March 18, 2013).
WHO DOES THIS PROPERTY DIVISION SCHEME APPLY TO?
The property division scheme applies to all married spouses, plus unmarried spouses who have lived in a marriage-like relationship for at least two years, and a former spouse.
When Does a Relationship Begin for the Purposes of Property Division?
A relationship between spouses begins on the date they begin to live together in a marriage-like relationship or the date of their marriage, whichever is earlier.
What About Transition Cases (Those Under the Old Act)?
The provision of the Family Law Act that deals with the transition of property claims from the FRA to the FLA does not apply to common law spouses.
What About Common Law Spouses Under the Family Law Act?
The Family Law Act can apply to claims that were commenced by common law spouses prior to the coming into force of the Family Law Act.
WHO IS ENTITLED TO WHAT AMOUNT?
The Family Law Act, set out that spouses are both entitled to family property and responsible for family debt, regardless of their respective use or contribution.
How Much Does Each Spouse Get Upon Separation?
On separation, each spouse has a right to an undivided half interest in all family property as a tenant in common, and is equally responsible for family debt.
What is the Triggering Event that Allows for Entitlement?
Under the Act, the date of separation is the triggering event that entitles a spouse to a half interest in family property.
What Type of Property is Considered Family Property?
Family property can include the following:
a) a share or interest in a corporation;
b) an interest in a partnership, an association, an organization, a business or a venture;
c) property owing to a spouse as a refund, including an income tax refund;
d) a return for the provision of a good or service;
e) a spouse's money in an account with a financial institution;
f) a spouse's entitlement under an annuity, a pension plan, a retirement savings plan or an income plan;
g) property, other than trust property, that a spouse disposes of after the relationship between the spouses began, but over which the spouse retains authority, to be exercised alone or with another person, to require its return or to direct its use or further disposition in any way;
h) the amount by which the value of excluded property has increased since the later of the date:
(i) the relationship between the spouses began, or
(ii) the excluded property was acquired;
i) some types of trust property;
What if the Property is Excluded Property Under the Family Law Act?
Then the spouse is not preemptively entitled to an undivided half interest in that property. The spouse claiming the property is excluded property has the burden of proof to demonstrate the property is excluded.
What Type of Property is Excluded From Family Property?
a) Non-property related insurance proceeds, except that part meant to compensate both spouses or to replace wages; and
b) a settlement or an award of damages to a spouse as compensation for injury or loss, unless the settlement or award represents compensation for a loss to both spouses, or lost income of a spouse;
c) property acquired by a spouse before the relationship between the spouses began;
d) property acquired pre-relationship;
e) inheritances to a spouse and gifts to a spouse from a third party ;
f) most money payable under an insurance policy (there are exceptions);
g) excluded trust property; and
h) any property derived from excluded proeprty or disposition of excluded property.
What if Equal Division is Unfair?
If equal division of family property is significantly unfair, the Supreme Court may order the division adjusted.
WHEN MAY I START A PROCEEDING TO DIVIDE PROPERTY, DEBT, OR PENSION?
A spouse may start a proceeding for an order to divide property or family debt or to divide a pension, or no later than two years after: (a) in the case of spouses who were married, the date
(i) a judgment granting a divorce of the spouses is made, or
(ii) an order is made declaring the marriage of the spouses to be a nullity; or
(b) in the case of spouses who were living in a marriage-like relationship, the date the spouses separated.
What is the Maximum Amount of Time a Spouse Has to Vary an Order for Property Division?
No later than two years after the spouse first discovered, or reasonably ought to have discovered, the grounds for making the application.
WHAT IS THE VALUE OF THE FAMILY PROPERTY BASED ON?
Most of the time, the value of the family property must be based on its fair market value.
What are Some Exceptions?
If there is an agreement or order that provides otherwise or in relation to pension plan benefits.
What Date is the Value Determined?
The value of family property and family debt must be determined either as
a) of the date that an agreement dividing the family property and family debt is made, or
b) as of the date of the court hearing respecting the division of property and family debt.
Note, courts may depart from the trial date as the valuation date only where a test of significant unfairness is met.
Am I Entitled to Any Post-Separation Increase in Value?
Yes, parties presumptively share in any post-separation increase in the value of family property, independent of their contribution to that increase.
WHEN DOES AN UNEQUAL DIVISION OCCUR?
The Supreme Court has the power to make an order respecting division of property and family debt on application by a spous, where it may order an unequal division of family property or family debt, or both, if it would be significantly unfair to equally divide the property or debt.
What if There is Already a Separation Agreement?
If the property division is subject to a written agreement, the Court may not make an order unless all or part of the agreement is set aside.
WHAT IF THE PROPERTY LIES IN ANOTHER PROVINCE OR COUNTRY?
The Family Law Act adapts the Uniform Law Conference of Canada's Uniform Jurisdiction and Choice of Law Rules in Domestic Property Proceedings Act to be used when deciding whether a British Columbia court has jurisdiction to hear a property division case, when it should decline to exercise that jurisdiction and which province, state or country's law should govern a dispute.
When Can A British Columbia Supreme Court Make an Order?
If there is property in more than one province, the Supreme Court has authority to make an order under the Act if one of the following conditions are met:
(a) a spouse has started another proceeding in the Supreme Court, to which a proceeding under the Act's provisions is a counterclaim;
(b) both spouses submit, either in an agreement or during the proceeding, to the Supreme Court's jurisdiction;
(c) either spouse is habitually resident in British Columbia at the time a proceeding is started; or
(d) there is a real and substantial connection between British Columbia and the facts on which the proceeding is based.
Can a Supreme Court Decline to Make an Order?
Yes if certain factors are met.
What if the Property is Outside of BC?
If the Supreme Court has authority under the Family Law Act, it may make an order respecting the ownership and division of extra-provincial property.
WHAT POWER DO AGREEMENTS HAVE IN TERMS OF PROPERTY AND DEBT?
Spouses may make agreements respecting the division of property and debt, including agreements for:
(a) divide family property or family debt, or both, and do so equally or unequally;
(b) include as family property or family debt items of property or debt that would not otherwise be included;
(c) exclude as family property or family debt items of property or debt that would otherwise be included; and
(d) value family property or family debt differently than it would be valued under the Act.
When Can a Court Set Aside an Agreement Relating to Property Division?
First a spouse must make an application in Supreme Court. Then the court may set aside or replace an order if:
(a) a spouse failed to disclose significant property or debts, or other information relevant to the negotiation of the agreement;
(b) a spouse took improper advantage of the other spouse's vulnerability, including the other spouse's ignorance, need or distress;
(c) a spouse did not understand the nature or consequences of the agreement; or
(d) other circumstances that would, under the common law, cause all or part of a contract to be voidable.
Can the Court Decline to Act?
Yes, if the court would not replace the agreement with an order that is substantially different, it may do so.
What if the Agreement was Significantly Unfair?
In situations where even if the agreement was procedurally fair, the court may set aide the agreement if the substance of the agreement is "significantly unfair" when considering the following:
(a) the length of time that has passed since the agreement was made;
(b) the intention of the spouses, in making the agreement, to achieve certainty; or
(c) the degree to which the spouses relied on the terms of the agreement.
What Effect Does the Duration of the Relationship Have on Unequal Division?
In cases where the relationship has been short, the court may give the other spouse less than one half of the property. On the contrary, a long-term relationship may support an equal division of family assets.
Can the Court Order a Division of Excluded Property?
No, not unless:
a) family property or family debt located outside British Columbia cannot practically be divided, or
(b) it would be significantly unfair not to divide excluded property on consideration of
(i) the duration of the relationship between the spouses, and
(ii) a spouse's direct contribution to the preservation, maintenance, improvement, operation or management of excluded property.