Dividing family property after separation is often described as a straightforward exercise: add everything up and split it down the middle. In British Columbia, however, the Family Law Act recognizes that equal division does not always produce a fair outcome. When one spouse’s conduct, financial decisions, or lack of disclosure significantly prejudices the other, the Court has the power to intervene.
The Supreme Court of British Columbia’s decision in Sahota v. Sahota provides a detailed and cautionary illustration of when and why unequal division of family property and debt may be ordered. The case also highlights how courts approach informal separation agreements, addiction-related financial mismanagement, and claims for spousal support in long marriages.
A Long Marriage, Repeated Separations, and a Family Business
The parties married in 1999 and separated for the final time in 2022, after more than two decades together. They had two children, both adults by the time the matter reached trial. Over the course of the marriage, the couple acquired significant assets, including a family home and a commercial property in Surrey used for the husband’s disposal and trucking business.
Like many long relationships, the marriage was marked by periods of stability and disruption. The evidence showed repeated separations, reconciliations, and ongoing challenges related to substance addiction, mental health, and financial instability. These issues ultimately shaped the Court’s assessment of credibility and fairness.
At the heart of the dispute was how to divide the remaining family assets and substantial debts, and whether an equal division would be “significantly unfair” under the Family Law Act.
The Presumption of Equal Division of Property and Debt
Part five of the Family Law Act starts from a strong presumption: family property and family debt are divided equally on separation. This presumption applies regardless of which spouse earned more income, managed the finances, or held title to particular assets.
However, the legislation also recognizes that rigid equality can sometimes produce unjust outcomes. Section 95 of the Family Law Act allows the Court to order unequal division if equal division would be significantly unfair, having regard to specific statutory factors.
Importantly, “significant unfairness” is a high threshold. Courts have consistently cautioned that unequal division is not meant to reward or punish spouses, nor to invite a dollar-for-dollar comparison of contributions. Instead, the inquiry focuses on whether equal division would be objectively unjust in a meaningful way.
Credibility Matters, Especially With Finances
Before turning to the division of assets, the Court undertook a detailed credibility analysis. This proved decisive.
The trial judge found the wife’s evidence logical, consistent, and corroborated by documents and the children’s testimony. By contrast, the husband’s evidence was found to be vague, evasive, and internally inconsistent — particularly on issues relating to finances, disclosure, and the operation of the family business.
Of particular concern was the husband’s failure to provide complete financial disclosure, including:
- Personal and corporate tax returns
- Business bank statements
- Clear records of business debts
- An accounting of loan proceeds
In family law, incomplete disclosure is more than a technical failure. It undermines the Court’s ability to value assets accurately and often weighs heavily against the non-disclosing spouse.
2022 Reconciliation Agreement Still Relevant
During a brief reconciliation attempt in early 2022, the parties signed a written agreement setting out how assets and liabilities would be treated if they separated again. Both spouses received independent legal advice before signing.
At trial, the husband argued the agreement should be disregarded, claiming he signed it under pressure. The Court rejected that argument. There was no evidence of duress, misunderstanding, or unfairness in the negotiation process.
While the agreement did not fully resolve property division, the Court treated it as an important contextual factor, particularly where the husband later failed to comply with its terms.
When Debt Becomes the Turning Point
The most striking feature of the case was the treatment of family debt. After separation, the wife assumed responsibility for maintaining mortgage payments and servicing a high-interest private loan that had been secured against the family home. She did so to prevent foreclosure and preserve housing stability for herself and her children.
Meanwhile, the husband resisted the sale of a commercial property that could have been used to relieve financial pressure. The Court found that this decision directly contributed to the eventual foreclosure and loss of the family home.
This post-separation conduct proved critical. The Court held that had the commercial property been sold earlier, the family home could likely have been saved. The emotional and financial consequences of the foreclosure fell disproportionately on the wife and children.
Unequal Division: 65% to One Spouse, 35% to the Other
Taking all factors into account, the Court concluded that equal division would be significantly unfair. The judge ordered that 65% of the net proceeds from the family home and commercial property would be allocated to the wife, with the remaining 35% going to the husband.
This was a substantial departure from the presumptive 50/50 split and reflected the Court’s serious view of post-separation financial conduct that increases risk or loss for the family.
The Court emphasized that the unequal division was not based on moral blame, but on concrete economic consequences arising from the husband’s decisions and lack of disclosure.
Allocation of Business and Tax Debts
The Court also addressed responsibility for several significant debts, including business loans, CRA arrears, and a government COVID loan.
While some debts were divided equally, the Court found that others should be borne solely by the husband. In particular, a private loan that had not been used for its stated purpose (and for which no accounting was provided) was allocated entirely to him, with an obligation to reimburse the wife.
This portion of the decision reinforces that debts incurred outside the normal course of the relationship, or in breach of an agreement, may justify unequal allocation.
Spousal Support: Not Automatic, Even After a Long Marriage
Despite the length of the marriage, the wife’s claim for spousal support was dismissed.
The Court found that she had not established entitlement on either a compensatory or non-compensatory basis. Although she had taken on significant caregiving responsibilities, she had worked throughout the marriage and maintained stable employment. There was no evidence that her earning capacity had been compromised by the relationship.
Contact Meridian Law Group in Vancouver for Top-Tier Family Law Support After Separation
Property division disputes are rarely just about numbers. They reflect years of shared decisions, sacrifices, and missteps. Sahota v. Sahota illustrates how the BC Supreme Court balances legal principles with lived reality to reach fair outcomes, even when they are not equal.
If you are navigating separation, managing family property, or dealing with complex debt issues, early legal advice can make a decisive difference. The knowledgeable family lawyers at Meridian Law Group can assess whether equal division is appropriate in your circumstances, identify risks early, and guide you toward a resolution that reflects both the law and your lived reality. Contact the firm online or call (604) 687-2277 to schedule a confidential consultation and take the first step toward clarity and financial stability.
