Unfair Division of Property – Change in Standards

 

On March 18, 2013, BC’s new Family Law Act (the “Act”) came into force replacing the Family Relations Act (the “FRA”). In the three months since enactment there have been few cases that have been decided solely under the new Act but in the recent decision of G.(L.) v. G.(R.), Brown J. had the opportunity to consider the change in standards in determining the division of property from the FRA to the new Act.

The wife, L.H. formerly known as L.G., made an application for an order entitling her to a portion of her ex-husband, R.G.’s pension upon his retirement. L.H. was seeking an equal share calculated proportionately based on the length of time that her and her R.G. were together, determined to be 16.9 years. R.G. opposed this order stating that he was virtually destitute. In R.G.’s affidavit, he stated that due to L.H.’s attempts at alienating their two children, B. and S., and her conduct following the separation, he had suffered asset loss and mental illness which, in turn, caused him to lose parenting time with the children.

Generally, the Court is not to consider the conduct of the parties when determining the division of family assets. But as decided in previous cases, namely Van Duzen v. Van Duzen, if that conduct has probative value linked to a factor listed in Section 65 of the FRA, and is not outweighed by its prejudicial effect, the Court may consider it. Section 65 states, in part, that if division of property or division of pension entitlement would be unfair having regard to the factors enumerated in (1) the Court may order the pension entitlement be divided according to shares fixed by the court. The relevant factors in this case were:
(e) the needs of each spouse to become or remain economically independent and self sufficient, or
(f) any other circumstances relating to the acquisition, preservation, maintenance, improvement, or use of property, or the capacity or liabilities of a spouse.

Brown J. held that Section 65 continued to govern the division of property in cases where the action was commenced before the new Act came into force, but the new Act would govern the division of pension entitlement, as the parties would be eligible to receive this benefit on a future date. The new Act increases the standard required by the Court in considering unequal division from “unfairness” to “significant unfairness”.

Section 95 of the Act states that unequal division may be ordered if it would be significantly unfair to divide benefits equally under Part 6, pension division having regard to the factors listed in (2). The relevant factors being:
(f) 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; […]
(i) any other factor, other than the consideration referred to in subsection (3), that may lead to significant unfairness.

The term “significant unfairness” has yet to be defined under the new Act. The Court looked to the case of Reid v. Strata Plan LMS 2503 where the term was defined as meaning “burdensome, harsh, wrongful, [and] lacking in probity or fair dealing”. Brown J. held that the term used in Section 95 of the Act “is a caution against a departure from the default of equal division in an attempt to achieve perfect fairness” and that:
only when an equal division brings consequences sufficiently weighty to render an equal division unjust or unreasonable should a judge order depart from the default equal division.

Brown J. found that L.H. had engaged in conduct that alienated the children from R.G in order to gain favourable financial terms. He concluded that L.H. failed to encourage a relationship between the children and their father and actually discouraged that relationship altogether. This conduct contributed to increased financial losses and to R.G.’s depression and anxiety disorders.

Brown J. held that it would be significantly unfair to divide R.G.’s pension equally, taking into account the diminished value of the pension and the loss of capital assets occurring as a result of R.G.’s mental illness. L.H. was entitled to be registered as a limited member of R.G.’s pension plan and received a 20% portion based on the pension amount earned in the 16.9 years that the couple were together.

G. (L.) v. G. (R.), 2013 BCSC 983, can be found at www.canlii.org.