Our new BC Family Law Act treats separated unmarried couples in marriage like relationships lasting longer than two years the same as if they were married for property division purposes. Vancouver excluded property division disputes require expert knowledge from a lawyer intimately familiar with this complex area. The most hotly contested family property issue our Vancouver excluded property division lawyers face is how to divide property brought into or solely received by gift or inheritance by one spouse in a short or medium length relationship. Lorne MacLean, QC regularly handles high value family property and excluded property valuation and division cases as the founder of top rated MacLean Law. “Significantly unfair” arguments that lead to unequal division of excluded and family property are on the rise in BC and you need to speak with us to find out how this affects your case. Contact our wealth preservation and asset protection team early on if you are entering or leaving a marriage or marriage like relationship to get advice on how to protect yourself in a Vancouver excluded property division case.
Equal Division of The Gain May Be Significantly Unfair For Excluded Property
Many common law couples whom our Vancouver excluded property division lawyers represent, decided not to marry because they didn’t want to be subject to the presumption of equal division of family property. The wealthier unmarried “spouse” may be excused for feeling blindsided by the new Act, as the share their spouse receives is now far higher under the Family law Act than it would have been under constructive trust principles.
In BC the value of property brought into the relationship or inherited or gifted solely to one spouse is normally exempt from division but the gain on this “excluded property” is presumptively shared equally regardless of effort or contribution by the other spouse.
Our Vancouver excluded property division lawyers have noticed an increasing line of case authority that unequally divides gains or excludes the gains entirely for family property brought into a short or medium common law relationship or married relationship.
The recent case BC Supreme Court decision of Walburger v Lindsay dealt with an 8 year common law relationship and granted a blanket exemption for one of two real properties the “husband” brought into the unmarried relationship. Significantly the court focused on the fact the parties were not married and the common law marriage rules they expected to apply to their family property division on relationship breakdown were more stringent and far less generous than a presumption of equal division that came into play just as their common law relationship ended. The court assessed the concept of significantly unfair against what the constructive trust regime would have granted the “wife”.
The “husband” sought a 80/20 split in his favour on one real property and a 100/0 split in his favour on the other. In the end result he was successful in completely excluding one property form any division while the gain on the other was divided equally.
Here are the key portions of the Vancouver excluded property division judgment bolded for crucial principles that are instructive for future cases:
[90] With regard to s. 95(2)(a), he refers to Williams v. Killey, 2014 BCSC 1846 where the court was addressing a three and-a-half year relationship where the parties had separated prior to the coming into force of the FLA. Mr. Justice Truscott reapportioned the family property and awarded the claimant only 15% of the increased value in the townhome. The court found that the claimant had contributed “significantly” to the household expenses and to the preservation and maintenance of the townhome: para. 69.
[91] Mr. Lindsay takes the position that the result in Williams should be doubled in respect of this eight-year relationship to apportion 20-30% of the increase in value to Ms. Walburger. I understand the mathematics of this analysis, but that hardly does justice to the various factors set out in s. 95 of the FLA. Further, Mr. Lindsay cites G.H.H. v. R.N.H. (sub nom Hofer v. Hofer), 2005 BCSC 423, Murphy v. Murphy, 2007 BCSC 870 and Ferreira v. Peloquin, 2012 BCSC 1952. I note that all of these cases are of limited assistance here since they were decided under the test found in the FRA, s. 65(1), which allowed the court to reapportion assets where it would be “unfair”, as opposed to “significantly unfair”.
[92] Mr. Lindsay also relies on the FLA, s. 95(2)(i) in arguing that a factor to be considered is that the parties here lived their entire relationship under the auspices of the FRA, where property division issues between common-law spouses were to be determined under unjust enrichment and constructive trust principles. In Williams, just as here, the parties separated prior to the FLA coming into force, yet the court in Williams applied the “significantly unfair” test under s. 95 of the FLA.
[93] In Bressette v. Henderson, 2013 BCSC 1661, Madam Justice Griffin was addressing the same unique circumstances that arise here. The claim was initially advanced under common-law principles, but the claimant later also advanced a claim under the FLA. Ultimately, the court did not find it necessary to decide the issue as to whether the FLA applied; rather, the court concluded that the division of property result was the same whether decided under the common law or under the FLA. The court cited the leading case of Kerr v. Baranow, 2011 SCC 10 and applied the factors arising from that case, being the duration of the relationship, the parties’ intentions and expectations during the relationship, and the parties’ respective direct and indirect contributions to the acquisition of property during the relationship, as applicable: para. 138.
[94] The court in Bressette considered such factors equally applicable in any application of the reapportionment provisions under the FLA, s. 95:
[134] The unjust enrichment legal cause of action is based on fairness, or equity, and as such is intended to be flexible and to take into account the many varieties of relationships that may exist. An important factor running throughout the authorities in determining whether or not there has been unjust enrichment is the legitimate expectations of the parties. Here, if the FLA was applicable to these parties, it would be “significantly unfair” to reach a different result than that based on the unjust enrichment remedy, given that the common-law remedy is based on fairness and the legitimate expectations of the parties. Here the parties never considered or expected that there would be a new statutory regime applicable to the relationship during the course of the relationship.
[95] Similarly, in this case, the parties lived their entire relationship before the FLA came into force and would have anticipated that any determination of the property issues arising upon their separation would have to be determined in light of those same factors. Indeed, Ms. Walburger’s initial pleadings sought relief on the basis of unjust enrichment and constructive trust principles. It is well-taken that the application of those principles is a complex matter and requires a rigorous consideration of the facts.
[96] The parties here did not combine their assets and debts and both organized their lives under separate property and financial regimes. There were no jointly-held assets or debt.
[97] The legislature, in enacting the FLA, clearly intended that common-law spouses would now qualify to see these issues resolved under the new legislation. By doing so, many of the difficult factual issues and the application of the law to common-law relationships have been eliminated. The new regime applies equally to both married and common-law couples. More certainty is now in place for both with the additional benefit for common-law couples in eliminating the added cost and delay in deciding issues under unjust enrichment and constructive trust principles.
[98] The fact of the matter is that the parties have now qualified to resolve their property claims under the FLA and both agree that this regime applies. However, in these unique circumstances, it remains a relevant consideration within the “significant unfairness” analysis that this relationship began and ended with this “pre-FLA” mindset, which again would have been indicative of the legitimate expectations of the parties.
[99] Turning back to the FLA analysis, at the outset, I would note that the governing concept of entitlement under the FLA, s. 81(a) is to apply “regardless of [the spouses] respective use or contribution” to family property.
[100] In one of the first decisions of this Court to consider the meaning of “significant unfairness”, Mr. Justice N. Brown stated in L.G. v. R.G., 2013 BCSC 983 at paras. 69-70. Brown J. further stated:
[71] In my view, the term ‘significantly unfair’ in s. 95(1) of the FLA essentially is a caution against a departure from the default of equal division in an attempt to achieve ‘perfect fairness’. 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.
[101] To similar effect, Mr. Justice Butler discussed the meaning of this new term in Remmem v. Remmem, 2014 BCSC 1552:
[44] The FLA provisions granting the court a discretion to order other than an equal division are very different from the provisions in the previous legislative scheme. Pursuant to s. 65(1) of the Family Relations Act, R.S.B.C. 1996, c. 128 (the “FRA”), courts had a discretion to divide family property in unequal shares if the court found that the division of property (pursuant to agreement or the provisions of the FRA) would be unfair having regard to the factors set out in that section. The first and obvious difference between the discretion given under the FRA and the discretion given in Part 5 of the FLA is that in order to exercise the discretion, it is no longer sufficient to find that a division of property is merely “unfair”. There must be a finding that the division of property pursuant to the statutory scheme is “significantly” unfair. The Concise Oxford English Dictionary defines “significant” as “extensive or important enough to merit attention.” Significantly is understood to mean more than a regular impact – something weighty, meaningful, or compelling. In other words, the legislature has raised the bar for a finding of unfairness to justify an unequal distribution. It is necessary to find that the unfairness is compelling or meaningful having regard to the factors set out in s. 95(2).
[102] I conclude that this relationship of eight years was of medium duration. As Ms. Walburger argues, I agree that the significance of the length of the relationship will depend to some extent on the age of the spouses at its beginning: see Wilson v. Fotsch, 2010 BCCA 226 at para. 64. In this case, Ms. Walburger was 55 years of age when she began her relationship with Mr. Lindsay. She is now 65 years of age and has few options in terms of her ability to support herself.
[103] I would reiterate, however, that even without this relationship, it was extremely unlikely that Ms. Walburger would have seen herself in any materially different circumstances. She has shown no appreciable inclination or ability over the years since her first divorce to seek out more remunerative employment. Nor did there ever seem to be any ability or desire to accumulate savings or assets. Her low income no doubt foreclosed much ability to do so, however, the dissipation of her inheritance evidences a general disregard for planning for her financial future.
[104] The evidence does establish that Mr. Lindsay paid for the vast majority of the expenses relating to the Lanyon Drive Property, including the mortgage payments, taxes and most utilities. He also did extensive work around the property in terms of the renovations that were completed when he and Ms. Walburger moved into the property. He also worked in the yard and garden.
[105] That being said, it is also apparent that Ms. Walburger made contributions to the Lanyon Drive Property. She maintained the home when Mr. Lindsay was working out of town, she assisted in the renovations (in respect of the less physical tasks and clean up), she paid for various household expenses and she did considerable work in the garden, including paying for plants from time to time. I find that all of this work and expense did contribute to the upkeep of the home by which its value was maintained and perhaps enhanced over time.
[106] Turning to the Price Road Property, Ms. Walburger acknowledged that she had not made any financial contribution to that property during her relationship with Mr. Lindsay. In addition, she made absolutely no other contribution to that property, such as maintaining it. Her sole involvement with the Price Road Property was in visiting Mr. Lindsay’s mother from time to time until her death in 2006.
[107] Similarly, Mr. Lindsay’s only contribution to the Price Road Property has been to pay the taxes on that property, with Lorne paying all other expenses and generally maintaining the property. I accept Mr. Lindsay’s evidence that it was always his intention to transfer the property to his son, Lorne, when his personal issues had progressed to the point when that was appropriate. It is also my conclusion that the transfer of the Price Road Property to Mr. Lindsay by his mother in April 2004 was essentially an advance against his inheritance.
[108] Ms. Walburger takes the position that Mr. Lindsay will be left with the lion’s share of the excluded assets (including what he owned before the relationship began) and half of the increased value over the relationship. He will also be left with the majority of the Ironworkers Pension, after the division of that asset. Ms. Walburger says that she will be left “virtually destitute”. In these circumstances, she says that it is hardly “significantly unfair” that she receive half of the increased value of the family assets.
[109] I conclude that Mr. Lindsay has not proven that it would be significantly unfair that Ms. Walburger share in half of the increased value with respect to the Lanyon Drive Property. However, with respect to the Price Road Property, I have come to a different conclusion. In my view, it would be significantly unfair to allocate any amount of that property to Ms. Walburger, particularly given her lack of any contribution to the property, its origins arising from the transfer from Mr. Lindsay’s mother, Lorne’s maintenance of the property over the entire time and, finally, Mr. Lindsay’s intentions with respect to transferring it to Lorne. I would reapportion the entirety of the increase in value of the Price Road Property to Mr. Lindsay.
