Family Law – Unequal Division of Family Property

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The Family Law Act, s. 95(1), gives the Supreme Court the power to 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].

The Family Law Act, s. 95(2) lists several factors the Supreme Court may consider when deciding whether or not to order unequal division of family property, family debt, or both:

  • the duration of the relationship between the spouses;
  • the terms of any agreement between the spouses, other than an agreement described in section 93 (1) [setting aside agreements respecting property division];
  • a spouse’s contribution to the career or career potential of the other spouse;
  • whether family debt was incurred in the normal course of the relationship between the spouses;
  • 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;
  • 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,

(i) substantially reduced the value of family property, or

(ii) 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;

  • 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;

(i) any other factor, other than the consideration referred to in subsection (3), that may lead to significant unfairness.

The recent case of MCV v. FV, 2018 BCSC 96 (“MCV”) elaborates on the test the Court will apply when deciding whether or not to make an order under s. 95. In MCV, the Honourable Madam Justice Darbi wrote that

[122]     In Jaszczewska v. Kostanski, 2016 BCCA 286, the Court of Appeal interpreted the legislative intent of section 95 as constraining the exercise of judicial discretion:

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 of the FRA 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.

In MCV, a wife sought unequal distribution of family property on the ground that the husband failed to produce a trust indenture and financial statements for the trust, and that the wife was deprived of the opportunity to determine if the husband’s interest in the trust qualified as family property under the Family Law Act.

Madam Justice Darbi wrote that failure to disclose financial assets may be considered as a factor under 95(2)(i) when deciding whether or not to order unequal division of family property. Ultimately, the Court refused to order unequal division of the family property, writing that the threshold for unequal division is “high”, and elaborating that the test had not been met because:

[130]     Balancing the evidence as a whole, I cannot conclude that Mr. V. is concealing assets. Mr. V. has disclosed the existence of the European Trust. He disclosed that he receives monthly distributions from the European Trust. Mr. V. has also disclosed that the European Trust has paid for his medical expenses in the past and has made charitable donations on his behalf. Mr. V. was forthright in disclosing that he believes that his siblings are also beneficiaries of the European Trust. I accept that Mr. V. sought a copy of the trust deed, and related information for his own edification on many occasions and that he has repeatedly been denied that information. It can be reasonably inferred that Mr. Suhner has not responded to Mr. V.’s requests for information made during the course of this proceeding.

[131]     Moreover, the evidence does not establish the nature of Mr. V.’s interest in the European Trust beyond the trustees having discretion to make distributions to Mr. V. from the trust. There is no evidence before this Court with respect to the duration of the trust, the value of its assets, and who the other beneficiaries might be. I conclude that there is an insufficient evidentiary basis before the Court to make any reliable conclusions regarding the attributes of the European Trust.

[132]     Similarly, there is an insufficient evidentiary basis for this Court to reasonably draw any inferences that Mr. V. has other undisclosed assets in Europe that generate income or the value of which may have increased since 2002. While I found Mr. V.’s evidence on the various financial transactions involving his siblings difficult to follow and somewhat inconsistent, I am not persuaded that I can make any reliable conclusions regarding undisclosed assets in Europe.

[133]     In the end, I do not consider it appropriate to draw any adverse inferences regarding the existence of undisclosed family property.

If you would like to book an appointment with any of our family law lawyers, namely Kathleen Sugiyama, Christopher Murphy or Nathan Seaward, please contact Heath Law LLP at 250-753-2202.

 

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