The division of family property after a separation or divorce is complex. Under British Columbia’s Family Law Act, spouses are entitled to an equal division of all family property. However, the nature, history and value of a couple’s assets may lead to complications and disputes.
This article looks at when an equal division of family property may not be appropriate.
We also look at a recent decision of the Court of Appeal for British Columbia in which the parties disagreed as to whether the increase in value of properties should be split equally.
What is the division of family property?
Under Part 5 of the Family Law Act, the general rule is that spouses are both entitled to family property and responsible for family debt, regardless of their respective contributions. 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” includes any asset owned by either spouse on the date of separation. This is exclusive of any assets that are expressly excluded by the Family Law Act. For example, property acquired by a spouse before the relationship between spouses began is not included. However, the growth in value of excluded property from the date the relationship began to the date of an agreement dividing family property or the date of a hearing respecting the division of family property is to be shared equally.
Are there any exceptions to equal entitlement?
There are various exceptions set out in the Family Law Act. For example, spouses may make agreements respecting the division of property and debt. These could, for example, divide family property unequally or exclude as family property items that would otherwise be included.
The Supreme Court may also order an unequal division of family property or debt if it would be significantly unfair to have an equal division.
When will the court order an unequal property division?
According to section 95 of the Family Law Act, the court can consider a range of factors in deciding whether to order an unequal division. These include:
- the duration of the relationship;
- the terms of any agreement between the spouses;
- a spouse’s contribution to the career of the other;
- whether a spouse, after separation, caused a significant change in the value of family property beyond market trends; and
- any other factor that may lead to significant unfairness.
Courts are cautions in departing from the default rule of equal division. “Significant unfairness” is a high threshold, with the person arguing for unequal division needing to show something objectively unjust, unreasonable or unfair in an important sense.
Properties grew in value after the date of separation
In Banh v Chrysler, the parties married in August 2014 and began cohabiting shortly after in October. They separated in August 2016 and were granted an order for divorce during their trial in November 2019.
Both parties brought property into the marriage. The husband owned three rental properties on Vancouver Island, which he managed and maintained, and the wife owned a property in Surrey, in which the couple lived. The properties grew considerably in value between the date of separation and the date of trial.
The wife argued at trial that the default rule should apply, under which the parties split the growth in equity of the properties until the date of trial. The husband argued that this was unfair and that only growth until the date of separation should be split.
Husband’s contributions did not make it significantly unfair to equally divide property
Justice of Appeal Marchand noted the relatively short duration of the marriage. However, his Honour explained that there was no evidence that the husband’s efforts in managing the rental properties contributed to the wife’s career or increased the value of the rental properties beyond market trends.
His Honour noted that the rent from the properties was collected and used by the husband. As a result, the husband’s contributions did not lead to significant unfairness to warrant deviating from an equal division of family property at the date of trial.
Growth in excluded property divided equally
Justice of Appeal Marchand held that the range of other reasons advanced by the husband did not fall within the factors listed in section 95 of the Family Law Act or lead to significant unfairness.
- it was immaterial that the wife did not own any of the rental properties;
- the growth in the rental properties after separation was also irrelevant and entirely due to market forces;
- there was no connection between the husband paying some of the wife’s debts and the division of family property; and
- the setting of the trial date, years after separation, did not relate to the economic characteristics of the spousal relationship, and therefore should not be considered.
His Honour decided that the short two-year marriage could not justify disentitling the wife to the post-separation growth of the rental properties. The Court of Appeal ordered that the increase in equity on all of the parties’ excluded properties from the date of the parties’ marriage to the date of trial be divided equally.
Contact Meridian Law Group in Vancouver for Legal Advice on Family Property Division
Meridian Law Group understands the complexities of property division following a separation or divorce. The firm’s skilled family lawyers develop creative, practical legal solutions to resolve property disputes and ease clients’ concerns. The Meridian Law Group team exceeds expectations and assertively advocates for clients’ rights and property interests in any legal forum, including mediation, arbitration, and trial.
The lawyers of Meridian Law Group have been an integral part of the British Columbia family law community for over 30 years. Located in Nelson Square in downtown Vancouver, the firm proudly serves clients in Vancouver and throughout British Columbia, including West Vancouver, North Vancouver, Coquitlam, Penticton, Kelowna, Richmond, New Westminster, Burnaby, Surrey, Langley, and White Rock. To arrange a confidential consultation for your family law matter, please call 604-687-2277 or reach out online.