BC SHORT MARRIAGE FAMILY ASSET REAPPORTIONMENT OF HOME AND RRSP’S LAWYERS

A recent Vancouver BC family asset division  and matrimonial property reapportionment case called McIntyre points out how the court divides property in a short marriage under the Family Relations Act. Our new Family Law Act coming in 2013 will focus on sharing the gain only in assets brought into marriage or a common law relationship.  As top rated lawyers with offices across BC in Vancouver, Kelowna, Surrey and Fort St John and Dawson Creek are very familiar with effective strategies to be employed upon marriage breakdown. Call us toll free at 1 877 602 9900 or contact us now 24/7.

In this 5.5 year marriage case where the husband was the primary breadwinner and where he had used inherited monies to purchase assets the court felt the normal rule of equal division of family assets based on the concept that homemaking and breadwinning are of equal value was found not to have applied. As such the husband received far more than half of the assets at the end of this short term relationship. The concept often applied to short marriages is that there should not be a significant monetary windfall to either spouse arising from a short marriage.

[1]             This is a family law proceeding in which the contested issues are financial.  The parties were married for approximately five and a half years, and lived together for about a year prior to marriage.  Both parties were around age 40 when they got together.  Although they are divorced, I will refer to the parties as the husband and the wife.

[2]             The appellant wife came into the union with financial difficulties and the respondent husband took steps to ameliorate those difficulties.  It is fair to say that the husband was in a much more financially productive situation than the wife for most of the duration of the union.  Fortunately, the wife was able to secure a position with the husband’s employer during the latter portion of their years together and, although she was not earning at the level of the husband, she could anticipate steady employment at a reasonable level of remuneration.  Around the time the parties separated in the spring of 2009, the husband had an earnings level in the $90,000 range and the wife had an earnings level in the $40,000 range.

[3]             During the marriage, the wife performed most household duties and helped renovate the family home.  She also assisted with some work on the premises of her mother-in-law.  She was not earning significant sums during most years of the marriage.  However, the income that she did earn was deposited into a joint account, which was topped up by the husband as needed to finance household expenses.  Near the end of the union, both parties began to deposit 80% of their earnings into the joint account, and mortgage payments began to be made using these funds.  Not long before the parties separated, the husband received an inheritance that allowed him to pay off the debts secured against the condominium property in which the parties resided.

[4]             The husband was very much the financial engine of the union until the last year or two before the separation occurred.  Counsel for the appellant submits that this circumstance was given undue weight by the trial judge in his orders relating to the division of family property.  Counsel for the respondent submits that the judge was simply taking a realistic view of the financial history of the relationship, and says the discretionary orders of the judge ought to be given due deference by this Court.  Counsel for the respondent refers to the following passage from the recent case of Karisik v. Chow, 2010 BCCA 548, 12 B.C.L.R. (5th) 107:

[51]      The exercise of a trial judge’s discretion in making an order for reapportionment under s. 65(1) of the [Family Relations Act, R.S.B.C. 1996, c. 128] is entitled to considerable deference, absent a demonstrated material error, a serious misapprehension of the evidence, or an error of law: Hickey v. Hickey, [1999] 2 S.C.R. 518 at para. 12. As was stated in [Elsom v. Elsom, [1989] 1 S.C.R. 1367] at 1374-75:

Courts of Appeal should be highly reluctant to interfere with the exercise of a trial judge’s discretion. It is he who has the advantage of hearing the parties and is in the best position to weigh the equities of a case. The principle of non-interference has been emphasized by this court in a number of cases concerning the division of family property.

… an appellant court will be justified in intervening in a trial judge’s exercise of his discretion only if the trial judge misdirects himself or if his decision is so clearly wrong as to amount to an injustice.

5]             The largest asset to be assessed and divided was the family home.  When the parties got together, the respondent’s condominium had a value of around $140,000, although it seems the net value of the asset after accounting for debt was about $75,000.  At the trial date the property was valued at $325,000, debt free.  The judge made the following disposition concerning this asset:

[55]      The defendant is entitled to reapportionment under s. 65(1)(a)(c)(d) and (f) of the Family Relations Act. He may not have acquired the home itself through inheritance but he did acquire full equity in the home through use of his inheritance monies to pay off the encumbrances.

[56]      The plaintiff does have some need to become and remain economically independent and self-sufficient as set out in s. 65(1)(f) because she really has little by way of assets and only her employment income to fall back on.

[57]      In my view an appropriate reapportionment of the matrimonial home would be 80% of its increase in value during marriage to the defendant and 20% to the plaintiff. That would oblige the defendant to buy out the plaintiff’s 20% interest in the increase for an amount of $36,800, being 20% of the difference between its present value of $325,000 and its assessed value as of July 1, 2003 of $141,000.

[6]             Counsel for the appellant submits the judge erred in his disposition of this asset in two respects.  First, it is asserted that the judge erred in considering only the increase in value of the family home during the marriage.  Even if this approach was not in error, it is submitted that the judge got the numbers wrong by failing to consider the net value of the condominium at the outset of the union, which would result in a larger appreciation figure.  Counsel also contends that an equal division of the property should have been ordered.

[7]             The parties’ union was comparatively short, and the property was debt free at the time of separation as a result of the husband’s use of his inheritance money to pay off the debts secured against the property.  Having regard to all the circumstances related to this property, I consider we should give proper deference to the decision of the trial judge to order an unequal division.  That said, however, I consider the judge did err by not considering the entire value of the property as the baseline for division, and not just the increase in value.  I consider he ought to have awarded a larger sum to the wife, namely 20% of $325,000.  Counsel can work out the numbers, but the sum due to the wife ought to be fixed at something in the range of $65,000 as opposed to the $36,800 ordered by the judge.

[8]             When the parties got together, the husband had two RRSP plans, one which was referred to as a locked-in plan from previous employment, as well as a self-administered plan.  Some gains occurred in both plans over the course of the union.  For some reason, the judge did not treat the locked-in plan as a family asset, a result counsel for the respondent rightly concedes is not sustainable on the authorities.  As to the self-directed RRSP, counsel for the appellant submits that the judge selected the wrong date for valuation of the plan, which should have been valued as of the date of trial: see Blackett v. Blackett (1989), 40 B.C.L.R. (2d) 99, 63 D.L.R. (4th) 18 (B.C.C.A.).

[12]         In an ideal world, this issue should perhaps be remitted for the consideration of the trial court.  However, I consider this course of action would impose undue cost burdens on the parties.  In my view, the state of the record permits us to assess what should now be done with respect to this asset.  The respondent, referring to Kordysz v. Kordysz, [1999] B.C.J. No. 360, affirmed by this Court in 2001 BCCA 355, submits that, considering the comparatively short duration of the parties’ relationship and the fact that the RRSP was accumulated entirely before the marriage, this asset should be wholly reapportioned to the respondent.  Having regard to the history of accumulation of the locked-in RRSP, I consider it would be appropriate to order that the wife should receive one quarter of the amount of the appreciation of this asset during the marriage to the date of trial.

In the end result the husband received the lion’s share of the assets he had either brought into the marriage or contributed to through an inheritance. This approach is consistent with the concept that if the parties work together to acquire assets in either a short or long marriage they will be likely shared equally subject to the factors for reapportionment but that when it can be shown the concept of equal contribution of effort has not occurred whether by one party bringing a significant amount of assets into the marriage or receiving a gift or inheritance to them alone during the marriage reapportionment may well occur. The new laws coming into  effect shortly will seek to exclude the value of assets brought into a relationship or received by one party to gift or inheritance and share only the gain.   Given this change in the law coming in the next year is expected that the test to depart from an equal division of the gain  will be harder given the new test of “significantly unfair”.  different strategies will apply for spouses in considering whether the current legislation or new legislation favours them more. You owe it to yourself to contact us to find out what your rights are. Call  Us toll-free across British Columbia 1 877 602 9900.