Dividing family property after a divorce or separation can be contentious. Emotions may be running high, and financial stability is important when embarking on a new life. Under British Columbia law, spouses are entitled to an equal division of family property and debt, although the property may be split unequally in certain circumstances, such as where it would be significantly unfair to divide equally.
After reviewing some basic principles, this article reviews two recent decisions of the Court of Appeal for British Columbia in which spouses asked the Court for unequal divisions of family property. They demonstrate that it can be difficult to prove significant unfairness to obtain an unequal division.
Family property and debt are normally divided equally, although there are exceptions
What are family property and debt?
Under the Family Law Act (“FLA”) of British Columbia, spouses are both generally entitled to family property and responsible for family debt, regardless of their respective use or contribution. On separation, each spouse has a right to an undivided half interest in all family property and is equally responsible for family debt.
“Family property” is expansively defined in section 84 of the FLA. It includes any asset owned by either spouse on the date of separation. Section 85 excludes various types of property, such as property acquired by a spouse before the relationship between spouses began.
Finally, “family debt” is defined in section 86 to include all financial obligations incurred by a spouse during the relationship between the spouses, and after separation, if incurred to maintain family property.
What are the exceptions to equal division?
We previously wrote a detailed article about property division, however, there are several exceptions to the normal rule of equal division set out in the FLA. For example, spouses are permitted to make agreements respecting property and debt division.
Relevantly for this article, the Supreme Court may also order an unequal division of family property or family debt if it would be significantly unfair to divide the property or debt equally. Section 95 contains a long list of factors that the court may consider, including the duration of the relationship, a spouse’s contribution to the other’s career and whether the debt was incurred in the normal course of the relationship.
Parties could not agree on the division of debts in respect of the husband’s toys
In the case of Fawbert v Fawbert, the parties married in 2008 after a decade of cohabitation before separating in 2017 and then divorcing. Before the trial, the parties agreed on the division of most of their assets and the amount of child support.
However, they could not agree on spousal support and how to apportion some outstanding debts. The debts related to the purchase of a travel trailer, a dirt bike, an all-terrain vehicle, a snowmobile and a sea-doo.
The wife conceded that these assets were used for “family purposes”. However, apart from the trailer which was used for family holidays, the rest of the vehicles were used only by the husband and their son. While she agreed that the husband could keep the vehicles, she wanted him to be responsible for the associated debt.
Equal division of the assets and associated debt was not significantly unfair
The Court of Appeal noted that the vehicles were family property acquired during the marriage. As such, normally the debt associated with them would have to be paid equally.
The Court decided that an equal division of the vehicles and associated debt would not be significantly unfair, despite the fact they were only used by the husband and son. Given that the vehicles had been traded in or sold, the Court ordered that the wife pay the husband half of the post-separation payments made by the husband.
Spouse sought unequal division of investment financial assets
In Katz v Zentner, the parties were in a common law relationship for 37 years, which came to an end in 2017. Their assets were worth at least $17.5 million. One of the spouses sought to exclude certain property from the division and to obtain an unequal division of certain investment financial assets in his name.
In support of his argument that an equal division would be significantly unfair, he argued that the parties had an oral agreement to separate property and debt, and that the date of separation (rather than the date of trial) should be used for valuation. He also claimed that he contributed to family property that might otherwise have been excluded property. Finally, he noted that his ex-spouse had a terminal illness and argued that this should be a relevant factor since she would not need the funds and her share would go to her estate.
Courts ordered equal division of family property; terminal illness not a relevant factor
The trial judge rejected his arguments and ordered an equal division of family property. In relation to the terminal illness argument, the judge placed no weight on this factor, stating:
“At separation, the [ill spouse] was presumptively entitled to an equal share of the family property. She should not be disentitled after the fact due to her tragic illness, subject to the [other spouse] meeting the high threshold for establishing significant unfairness.”
He appealed on procedural grounds, making several arguments including that the trial judge inappropriately cut short his evidence. The Court of Appeal decided that he received a fair trial and dismissed the appeal.
Contact Meridian Law Group in Vancouver for Advice on Family Law, Including the Division of Property
The experienced family lawyers at Meridian Law Group can help you get through your separation or divorce by taking care of all of the family law aspects, including divorce and property division. This includes issues relating to the division of family property. We understand the complexities involved and take action to preserve your property rights.
Located across from the courthouse in downtown Vancouver, the firm represents clients throughout British Columbia. To schedule a confidential consultation, please call us at (604) 687-2277 or reach out to us online.