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Court Awards Starting Value of BC Excluded Property To Husband
The first BC Family Law Act unequal family property division case was just decided by BC Supreme Court Justice Truscott in Williams v. Killey. With recent huge gains on Vancouver and BC land prices this case packs a legal punch.
At issue in the case was whether both parties ever lived in a short term marriage like relationship that would permit a family property division claim and if so should the division be one sided or equal. Secondly, what if any spousal support should be payable after a relationship of under 4 years where the husband earned roughly $100,000 more than the wife. In the end result the husband prevailed in having both the starting value of his home RRSP and car found to be his alone as BC excluded property and their gain in value then further divided unequally in his favour.
Surprising Unequal Family Property Division Of Gain In Value Of Excluded Property
Mort interestingly for our family law clients, was the judge’s decision to divide the gain in value on these excluded assets substantially unequally in the husband’s favour! The new act was thought to make the standard for departing from the equal division of family property including the gain on excluded property much more difficult so cases would be more predictable and easier to settle. This new case may throw a monkey wrench into that concept.
Was There An Error In Using Old BC Unequal Family Property Division Case Law?
The cases relied upon to justify unequal division of property of between 10-15 % likely came from our old Family Relations Act which did not exclude the starting vale of property brought into short term relationships. This case may be viewed with some skepticism as there seems to be a double deduction if the new act’s excluded property scheme is then further modified by reductions for short relationships by way of unequal division based. At the same time, if all the gain on real property comes passively from market conditions isn’t there still a windfall for sharing the gain for the spouse who didn’t contribute to this asset?
Here are the key parts of the BC unequal family property division decision:
 Alternatively, he submits that if the two year period has been met then the growth in value of his assets should be apportioned entirely in his favour, or the claimant should only be entitled to $10,800, being 10% of the growth in the value of his townhome, and her other claims should be dismissed including her spousal support claim because it should be subsumed in her share of his assets.
85 (1) The following is excluded from family property:
(a) property acquired by a spouse before the relationship between the spouses began;
95 (1) The Supreme Court may 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,…
(2) For the purposes of subsection (1), the Supreme Court may consider one or more of the following:
(a) the duration of the relationship between the spouses;
(i) any other factor, other than the consideration referred to in subsection (3), that may lead to significant unfairness.
(3) The Supreme Court may consider also the extent to which the financial means and earning capacity of a spouse have been affected by the responsibilities and other circumstances of the relationship between the spouses if, on making a determination respecting spousal support, the objectives of spousal support under section 161 [objectives of spousal support] have not been met.
96 The Supreme Court must not order a division of excluded property unless
(b) it would be significantly unfair not to divide excluded property on consideration of
(i) the duration of the relationship between the spouses, and
(ii) a spouse’s direct contribution to the preservation, maintenance, improvement, operation or management of excluded property.
 The assets to consider for division under s. 95 of the FLA, either by way of equal division or unequal division, are the net values of the respondent’s townhome, his RRSPs, and his vehicle.
 Section 85 of the FLA excludes from consideration property acquired by a spouse prior to the relationship between the spouses beginning, while s. 84(2)(g) modifies that somewhat by including within family property the amount by which the value of excluded property has increased since the later of the date the relationship between the spouses began or the excluded property was acquired.
 On the evidence the respondent’s townhome, his RRSPs, and presumably his vehicle as well, were all acquired prior to the common law relationship beginning with the claimant. Therefore all are excluded property.
 Applying s. 84(2)(g) to these assets, the parties agree the townhome increased in net equity by $107,173 during their relationship, and the RRSPs increased in value by $96,661.
 There is no evidence of any increase in the value of the respondent’s vehicle during their relationship so I will not consider that item as part of excluded property for consideration.
 His vehicle had a fair market value as at November 1, 2012 of $17,000 with no evidence of its original purchase price. It is a safe assumption by the make of the vehicle that it was worth a lot more when it was first purchased and actually lost value during the relationship.
 Section 95 is the re-apportion section of the FLA. Here under s. (a), the duration of the common law relationship between the parties is to be considered, which was approximately three and one-half years. Under s. (i), the only other factor applicable would appear to be one that results in significant unfairness.
 The respondent’s cases I consider to be a lot more helpful than the claimant’s cases and they put the contribution of a spouse in a short term relationship as being valued at 10-15% of property.
 The claimant here did contribute significantly to the household expenses and to the preservation and maintenance of the townhome. I consider it would be significantly unfair to her for her efforts to be denied any part of the increase in the townhome which was due only to market forces while she resided there.
 I award the claimant 15% of the $107,173 increase in net value of the townhome during their relationship time. The amount awarded for the increase is $16,075.95.
 RRSPs are family property by virtue of s. 84(2)(e). The respondent’s RRSPs were acquired prior to the relationship so s. 85(1) is also applicable to the RRSPs as excluded property.
 However, again, s. 84(2)(g) takes into account any increase in excluded property during the relationship for the purpose of division and brings into play as well s. 95 for re-apportion purposes.
 While the respondent’s RRSPs increased in value by $96,661 during the relationship, during that same period of time the evidence is that he contributed over $85,000 to his RRSPs.
 In these circumstances, I apportion the RRSPs 100% to the respondent.
 The claimant continued to work at her chosen employment during the length of the relationship. She did not suffer any adverse economic consequences to that employment from the relationship.
 She was offered two other positions outside of her normal employment, that were slightly more remunerative. However she did not take up either of these positions in order to remain near the respondent.
 While this might be considered an economic disadvantage arising from the relationship, it is at most a very minor disadvantage.
 In all the circumstances I award a lump sum amount of $10,000.
Our BC family property division lawyers will help you make sense of what is a fair family and excluded property division and explain strategies to plan ahead for marriage or relationship breakdown.