Difference between revisions of "Dividing Property and Debt in Family Law Matters"

Interestingly, there isn't a section that explicitly says "the court should make orders dividing family property and family debt equally"; you have to figure this out from s. 81, which says that each spouse should have half of the family property and family debt, and from s. 94, which says that the court can make orders dividing family property and family debt.

<blockquote>To divide property and debt under the ''Family Law Act'', you first have to figure out whether you're a "spouse" as defined by s. 3(1)(a) or 3(1)(b)(i). You must either be married or have lived with your partner in a marriage-like relationship for at least two years.</blockquote>

<blockquote>Next you have to check that you're making your claim within the ''time limits'' set out in s. 198(2). Married spouses must bring their claims for the division of property and debt within two years of the date of their divorce or a declaration that their marriage is a nullity; unmarried spouses must bring their claims within two years of the date of their separation.</blockquote>

<blockquote>there may be a problem. If another court can make an order, you then have to figure out under s. 106 whether the courts of British Columbia should be dealing with your proceeding at all.</blockquote>

<blockquote>Now that you've got the numbers worked out, you may want to think about whether an ''equal division'' of family property and family debt would be "significantly unfair," bearing in mind the factors listed in s. 95(2), which includes, but is not limited to, the duration of the relationship and whether a spouse, after the date of separation, caused a significant decrease or increase in the value of the family property or family debt beyond market forces. If it wouldn't be significantly unfair, then split the family property and family debt equally and go on with your life. If it would be significantly unfair, then you've got to figure out what a fair split looks like and I wish you the best of luck sorting this out in a speedy manner.</blockquote>

<blockquote>Finally, you may also want to think about whether there's a reason to share in some or all of the ''excluded property''. Excluded property can be divided if there's property outside of British Columbia that ought to be family property but can't easily be divided, or if it would be "significantly unfair" not to share excluded property, bearing in mind the factors listed in s. 96(b). If there's no reason to share excluded property, carry on. If there is a reason to share that property, then you've got to figure out what a fair division looks like.</blockquote>

Under the ''[[Family Law Act]]'', a person who is a "spouse" under s. 3 may apply, within the two-year time limit in s. 198, for a division of property under s. 94(1). Where another court may also make an order for the division of property, the court here must first determine whether it should go ahead under s. 106 and, if so, it must next determine what law it should apply under s. 108. However, where no other court may make an order respecting property, the court here may make orders dividing property and debt under Part 5 of the act without any more complications.

A person who qualifies as a spouse under s. 3 of the ''[[Family Law Act]]'' can start a court proceeding in British Columbia and ask for orders about the division of property and debt. There's no rule that says that a person who starts a court proceeding in British Columbia must live in British Columbia, but there must be some sort of connection with this province and the court proceeding. Maybe the other spouse lives here. Maybe the property or debt is here. Maybe British Columbia is where the spouses lived for most of their relationship. Either way, there must be some connection between the court proceeding and British Columbia.

When another court might be able to make orders about the same people and the same property, s. 106(2) provides the rules to help the court here determine when it may  make orders dividing that property between those people under Part 5:

As if this wasn't complicated enough, even if the court can make an order because one of the s. 106(2) conditions are met, under s. 106(4) the court can refuse to make orders for the division of property and debt. Section 106(5) says what the court must take into <span class="noglossary">account</span> in deciding to refuse to make orders:

Assuming, then, that the court here has decided that it has the authority to make orders for the division of property and debt because one of the s. 106(2) factors is met, and that it hasn't decided to refuse to make orders anyway under s. 106(4), the next thing to figure out is the law that the court should use in deciding how the property and debt should be divided under ss. 107 and 108. That law could be the law of British Columbia, namely Part 5 of the ''[[Family Law Act]]'', or it could be the law of another place.

Section 108 is just as complicated as s. 106, but what it all comes down to is this:

#under s. 108(3), if the spouses have an agreement that says the law of a particular place must be used, the law the court must use is the law of that particular place,

#under s. 108(4), if the spouses first together lived in a place that divides property like the ''[[Family Law Act]]'' divides property, the law the court must use is the law of the place where the spouses first lived together,

#under s. 108(5), if neither of the first two circumstances apply, the law the court must use is the "applicable internal law."

Under s. 97, the court can make whatever orders are needed to equally divide family property and family debt between spouses, whatever extra orders are needed to divide family property and family debt unequally under s. 95, and whatever extra orders are needed to divide excluded property under s. 96.

An ''interim order'' is a temporary order made after a court proceeding has started and before it has wrapped up with a trial or a settlement. Under s. 88, a spouse can apply to court for an interim order about property at any time until a final order or a final agreement has been made about the division of property and debt.

Under s. 89, the court can make an order for the interim distribution of some of the family property to a party to pay for:

*the cost of expert's reports, like needs of the child assessments under s. 211, property appraisals, or business valuation.

Under s. 90, the court can make an interim order that one spouse have the exclusive right to live in the family home and use the property (i.e. household contents and furnishings) kept at the family home. The court will make these orders if it's no longer possible for the spouses to share the home and if the convenience to the spouse who's staying in the home outweighs the inconvenience to the spouse who's being made to leave.  Usually, if there are children (especially young children), the spouse who has primary care of the children will be the spouse who remains in the family home because the children require the stability and security of remaining in the family home.

Under s. 91(2)(a), the court can make other interim orders "for the possession, delivery, safekeeping and preservation of property." This might include orders that a spouse must return personal property to the other spouse or that a spouse will have the sole use of personal property, like a car that's necessary to go to work or take the kids to school.

Under s. 91(1) and (2), the court can make some really important interim orders that are intended to freeze any property that is at issue in the court proceeding, including family property and property that might be excluded property, until the property is finally divided by an order or an agreement.

Rule 12-4 of the Supreme Court Family Rules gives the court the authority to make a general restraining order, called an ''injunction'', to require someone to do something or not do something. The same authority is given to the court by s. 39 of the provincial ''[http://canlii.ca/t/8459 Law and Equity Act]''. See this chapter's section on [[Protecting Property & Debt in Family Law Matters|Protecting Propery & Debt]] for more information.

Under s. 81(a) of the ''[[Family Law Act]]'', "spouses are both entitled to family property and responsible for family debt, regardless of their respective use or contribution." Under s. 81(b), each spouse's share of the family property is presumed to be an "undivided half interest" and each spouse is "equally responsible for family debt." Section 97 gives the court the ability to make whatever orders are necessary to divide family property and family debt between spouses.

Under s. 95(1) of the ''[[Family Law Act]]'', the court may divide family property or family debt unequally, but only if equal division would be "significantly unfair" in the context of the factors mentioned in s. 95(2). Recent court decisions explain that the unfairness must be "weighty, meaningful or compelling." A  judge can only order an unequal division of family property where the result of equal division would be so unfair as to be unjust or unreasonable. It is highly unlikely that a court would find the circumstances to be "significantly unfair" merely because one spouse worked during the marriage and the other spouse did not. <!-- Note that significant unfairness in this context requires much more than differing financial contributions in a relationship. -->

Under s. 95(3), the court can also take into <span class="noglossary">account</span> issues relating to spousal support in deciding whether to divide family property and family debt unequally:

Under s. 96 of the ''[[Family Law Act]]'', the court may not make an order dividing excluded property between spouses except in two situations: if there's property outside the province that can't be divided under s. 109, discussed below; or, if it would be "significantly unfair" not to divide the excluded property in light of the length of the spouses' relationship or one spouse's contributions to the excluded property owned by the other spouse. Section 96 says this:

As we saw in the discussion about s. 95, it's hard to say what "significantly unfair" means. I expect that something that is "significantly unfair" is more unfair than something which is just "unfair," yet is less unfair than something that is "grossly unfair."

#under s. 109(2)(a), the court can divide family property here unequally to compensate for property outside the province, just like how the court can divide excluded property for the same reason under s. 96(a),

#under s. 109(2)(b)(i), the court can make a kind of restraining order to stop the property outside the province from being sold, just like how the court can make restraining orders about property inside the province under s. 91(1), and

#under s. 109(2)(b)(ii) and (iii) and s. 109(3), the court can make orders about which spouse should be able to possess or own property outside the province and orders transferring property outside the province between spouses.

The ways that a separation agreement can deal with the division of family property and family debt are virtually unlimited. Under the ''[[Family Law Act]]'', each spouse is presumed to keep the property they brought into the relationship and share in the property bought during the relationship as well as the increase in the value of any property brought in. Although spouses are presumed to be each half responsible for any debt incurred during the relationship, you can make whatever other arrangements you want, as long as both spouses agree to those arrangements and they're reasonably fair. In fact, s. 92 says this:

When spouses have written, signed, and witnessed an agreement about the division of property and debt, s. 94(2) of the ''[[Family Law Act]]'' says that the court cannot make an order about the division of family property, excluded property, or family debt, unless the parts of the agreement that deal with property and debt are set aside by a court order. This gives agreements on the division of property and debt a lot more protection against later court challenges than was provided to agreements under the old ''[[Family Relations Act]]''.

The ''[[Family Law Act]]'' provides two tests to help the court decide when an agreement on property and debt should be set aside. Under the first test, at s. 93(3), the court must look at the situation of the parties when they were negotiating and executing the agreement. The court is required to consider whether the following circumstances existed when the parties were making their agreement:

Now, even if there are problems with an agreement under s. 93(3), the court can still decide not to set aside the agreement if "it would not replace the agreement with an order that is substantially different from the terms set out in the agreement" under s. 93(4). In other words, if the court wouldn't make a different order than the arrangements the parties agreed to, it might just leave the agreement alone.

If there are no problems under s. 93(3), the second test, at s. 93(5), allows the court to set aside agreements that are "significantly unfair", taking into <span class="noglossary">account</span>:

If the court sets aside an agreement under s. 93(3) or (5), the court will then make an order dividing property and debt between the spouses in place of the agreement.