Getting More than Half: An Update on Excluded Property and Unequal Division under the Family Law Act by Cristen Gleeson and Kathryn Panton

Under section 95 of the Family Law Act (the “Act”) a court may order that a couple’s family property and debt be divided unequally if the court finds that an equal division would be “significantly unfair”. This unequal division applies to both married and common law partners. This permits a party to argue that they ought to receive a greater portion of family property. The courts have recently further defined the circumstances under which a party may successfully argue for more than half the family property.

So, when is equal division “significantly unfair”?

Under section 95 of the Act the courts are given a list of considerations to analyze in order to determine whether it would be significantly unfair to divide the property (or debt) equally. Some of these considerations include:

1. The duration of the relationship;
2. One spouse’s contribution to the career or career potential of the other spouse;
3. Whether one spouse, after the date of separation, caused a significant decrease or increase in the value of family property or family debt beyond market trends;
4. Whether the amount of family debt exceeds the value of family property and the ability of each spouse to pay a share of that family debt; and,
5. Whether one spouse substantially reduced the value or disposed of family property causing the other spouse’s interest in the family property to be defeated or adversely affected.

When the Act first came into force, there was uncertainty as to how the courts would handle unequal division of family property. The first significant case commenting on this was the 2014 case of Remmen v Remmen, 2014 BCSC 1552, where Mr. Justice Butler held that the Act intended a 50/50 division of family property except for the most unusual circumstances. The intention of the court was that a stricter test would limit the number of cases involving claims of unequal division.

More recently the Province’s highest court, the Court of Appeal, decided the case of Venables v. Venables 2019 BCCA 281 (“Venables”), which provides greater guidance with regard to what is required to have an unequal division of family property.

In Venables, Mr. Venables argued that he ought to keep his excluded property. Mr. Venables had bought the family home prior to his marriage. During the course of the marriage, Mr. Venables added his wife, Ms. Venables, to the title of the home as joint tenants. During their marriage, Mr. Venables also received an inheritance, which he placed in joint names with his wife.

In the separation proceedings Ms. Venables argued that, by registering these excluded assets in the joint names of the parties, the husband had gifted 50% of such assets to her.

Ms. Venables won at trial on this part of the argument and the court determined that 50% of the home and inherited funds were gifted to her, and therefore could not be characterized as excluded property. However, Mr. Venables ended up saving his excluded property from division by arguing that it was significantly unfair. The court at trial utilized section 95 of the Act and declared an equal division of the property to be “significantly unfair” to Mr. Venables under the circumstances. It assisted Mr. Venables that the relationship was only 8 years in duration.

The trial judge commented as follows:

[126] If the family property were divided equally, as a result of their eight years together, Mr. Venables would largely be in the same financial position as when the parties began living together while Ms. Venables would be in a substantially better position.

Ms. Venables unsuccessfully appealed the court’s decision. The Court of Appeal held that the Act does not prohibit the court from taking into account the origins of property that was previously excluded when determining whether an equal division of family property would be significantly unfair.

The Court of Appeal found that the language of “significantly unfair” requires a higher threshold of unfairness before the court will consider unequal distribution. Generally, the requirement is “something objectively unjust, unreasonable or unfair in some important or substantial sense”: Jaszczewska v. Kostanski, 2016 BCCA 286. Mr. Venables met this requirement by the fact that should the family property be divided equally, after an eight-year relationship, Mr. Venables would have only $33,000 more in assets, while Ms. Venables would have $236,354.50 more than what she had prior to the relationship.

What Venables has demonstrated is that excluded property is not necessarily lost when it is registered jointly 50/50. However, there must be something significantly unfair about the property being divided equally.

However success at trial on issues pertaining to excluded property and unequal division is still uncertain and unpredictable. In the recent case of Lupien v LeBlanc, 2019 BCSC 43, the judge found that the equal division of the family home was fair. This case involved a 15-year common law relationship between Ms. Lupien and Mr. LeBlanc. Mr. LeBlanc claimed unequal division of the family home based on the work he put into the home before, during and after their relationship.

The family home was originally purchased by Mr. LeBlanc and his friend Mr. Peterson. Mr. LeBlanc and Mr. Peterson were joint owners of the home. Mr. LeBlanc and Ms. Lupien moved in together in September 2000. Mr. LeBlanc bought Mr. Peterson’s interest in the home in 2004. On separation Ms. Lupien sought half of the home’s equity, while Mr. LeBlanc sought the full amount of the equity based on an alleged previous oral agreement. In the alternative, Mr. LeBlanc argued that he was entitled to $250,000, the value of the property at the time he purchased Mr. Peterson’s interest in the home.

In reaching the decision, the judge made the following comment:

[47] I do not find that the facts of the case at bar involve such a marked, prolonged, and intentional or unexplained disparity and contribution that would lead to a finding of unequal division. The parties lived in a marriage-like relationship in the Family Home from 2000 to the end of 2015. They each contributed to the day-to-day maintenance of the home and enjoyed the renovations carried out by Mr. LeBlanc. Given my prior finding that no oral agreement existed between the parties, there is no basis to find that Ms. Lupien was increasingly “indebted” to Mr. LeBlanc with each enhancement to the Family Home, which they shared as a couple. Similarly, Mr. LeBlanc is not “indebted” to Ms. Lupien for each bill payment that she made.

The judge further commented that cases in which unequal contribution to family expenses was found to be significantly unfair to divide family property equally have involved marked, prolonged, and intentional or unexplained disparities in contribution to family burdens: Nanara v. Nanara, 2017 BCSC 1447. In Nanara, the trial judge awarded 60% of the family property to the claimant wife based on the respondent husband’s unequal contribution. Throughout the 33-year marriage with three children, the wife worked multiple full-time, low-paying jobs, often working 16-hour days. After separation, she maintained both family residences and continued to support one son. In contrast, the husband was continually underemployed throughout the relationship without explanation, made no contributions to the residences after separation, and did not support the children.

As you can see from the above cases, the courts’ approach to excluded property and arguments for an unequal division is very inconsistent. Therefore, while it may be worthwhile to argue for significant unfairness at trial, it cannot be known with certainty what the outcome will be in any given case. Case law on the issues of excluded property and unequal division continues to evolve as each new decision is released by the courts in British Columbia.