Our top BC Family Property Division Lawyers ensure that BC cases involving substantial family property and family debt are properly sorted out. Contact our award winning family property division lawyers toll free across BC at 1-877-602-9900. MacLean Law has been named best family law firm in Vancouver on multiple occasions by Top Choice.
Lorne MacLean, QC, the founder of MacLean Law, heads our top rated BC Vancouver Family Property Division Lawyers and he handles all kinds of novel family property disputes. In a recent decision of the BC Supreme Court the court dealt with the interesting issue of banked action time, banked sick time and shareholders loans amongst other family property.
Our skilled BC Family Property Division Lawyers are savvy and skills in ensuring the separating spouses’ assets are fairly divided and with a minimum of disruption.
BC Family Property Division Lawyers
In today’s blog our Vancouver Family Property Division Lawyers deal with some of the more unusual types of property. First we deal with banked holiday time.
Banked Holiday Time? Is It BC Family Property?
Our BC Family Property Division Lawyers know that some types of assets function as sources of or replacement for income and are not property such as banked sick pay. Our Family Property Division Lawyers ask the question -Does holiday pay change from income to property if he is cashed out instead of saved for the future? In Cole v Cole the court held:
[87] Though the issue of banked holiday time has not yet been addressed under the FLA, that issue has been considered under the FRA. Some of the FRA cases are, however, inconsistent with one another.
[88] The leading case in this area is Cameron v. Cameron (1994), 100 B.C.L.R. (2d) 104 (S.C.). In that decision, the Court held that past annual leave that had been accumulated during the marriage and paid out to the husband constituted a family asset.
[89] This case was thereafter widely followed with respect to banked holiday time: Derksen v. Derksen, 2007 BCSC 542 at paras. 44-45; L.M.K. v. W.D.J.K., 2004 BCSC 871 at paras. 42-45; Clark v. Clark, [1999] B.C.J. No. 156 at para. 4 (S.C.), though Clancy J. noted that there are circumstances in which vacation or holiday pay may not be a family asset; Zander v. Zander, [1995] B.C.J. No. 444 at para. 33 (S.C.). This pattern was also followed in Hill v. Magee, 2002 BCSC 353 at para. 13, where the Court found that banked overtime which the husband had accumulated during the marriage, and converted to cash after the date of separation, was a family asset.
[90] One case departed from these conclusions. In Davies v. Davies (1999), 50 R.F.L. (4th) 353 at para. 25 (S.C.), Smith J. concluded that the husband’s retroactive “holiday pay was income and is not a family asset”, despite the fact that it had been paid out as part of his severance package before the “triggering event”. The decision was not appealed.
[91] These cases all address banked holiday time that had been paid out by the employer to the accumulating spouse prior to trial. Christensen v. Reid (1997), 28 R.F.L. (4th) 230 (B.C.S.C.) addressed the issue of banked holiday time in circumstances where the accumulating spouse had not yet left their employer or retired. At paras. 45-48, Drost J. chose not to apply Cameron, and he determined that unused, but not yet paid out vacation time, was not a family asset.
[92] The most recent case to have considered banked holiday time under the FRA is Dignard v. Dignard, 2014 BCSC 1902. At paras. 85-86, Bernard J. upheld the principle expressed in Cameron, finding that the husband’s holiday pay earned during the marriage and before separation was a family asset. However, Bernard J. expanded upon this principle, stating that there was no legal difference between paid out vacation pay and banked vacation time. It does not appear that either Christensen or Davies was brought to his attention. Accordingly, he divided the husband’s accrued, but not yet paid out, holiday time.
[93] Dignard has not yet been cited by any other court. Respectfully, I do not agree with the conclusions expressed in that decision. Rather, I consider that the approach in Christensen should be followed, for similar reasons to those that I outlined with respect to banked sick time.
[94] Banked or accrued holiday time, like sick time, is a form of potential future replacement income. It is generally intended to be used during the term of employment and it is expected to function as replacement income when a former spouse cannot work or chooses to take vacation. It is unlike the investment vehicles outlined in s. 84(2)(e) because it is not designed to be accumulated for the purpose of retirement, even if it is sometimes paid out upon retirement.
Does It Matter If You Withdraw The Banked Time? Yes!
Our BC Family Property Division Lawyers thought the judge’s analysis to be well reasoned when he considered whether the holiday time is income or property and the risk if it was first divided as a family property and then if taken by a spouse after included again as income to be used for support.
[95] I do, however, accept the proposition established in Cameron that banked holiday pay, which is paid out prior to the date of separation, should be regarded as family property. Once paid out, these funds no longer need function as potential replacement income since the party is free to obtain other employment or retire. Banked holiday pay then becomes more akin to a severance payment, which is family property; see Nitnawre v. Jagtap, 2015 BCSC 1562 at para. 146; Madruga v. Madruga, 2015 BCSC 1605 at para. 19.
[96] The Dignard approach also potentially allows a party receiving spousal support to “double dip”. A payee spouse would receive half of the payor spouse’s accumulated holiday time at the time of trial, and would receive spousal support payments from those same funds when the banked time was used.
[97] Accordingly, this aspect of Mr. Cole’s claim is also dismissed.
Don’t Make A Huge Mistake And Forget To Divide The Shareholder’s Loan
Our top . rated team of BC Family Property Division Lawyers also liked the court’s analysis on a shareholders a lion. This is an area inexperienced lawyers can fail to properly address. Our skilled Vancouver Family Property Division Lawyers know that while these loans are deducted from the value of a family business THEY MUST BE ADDED as personal family property.
[54] I do not, however, consider that the Shareholder Loan to Mr. Cole gives rise to any indebtedness or responsibility on the part of Ms. Cole. I arrive at this conclusion in two ways.
[55] First, I consider it obvious that if Bloomfield’s had continued to be successful as a business, Ms. Cole would argue that the business was family property and subject to equal division. Similarly, if Bloomfield’s had taken out a bank loan to finance its indebtedness, which was guaranteed by Mr. Cole, that loan would be a family debt that was payable by both parties.
[56] What underlies this issue, however, is the fact that Mr. Cole effectively used approximately $123,500 of his personal funds, instead of a bank loan, to pay for Bloomfield’s debts. Had he chosen to obtain third-party financing, he would still have the $123,500. That $123,500 would be subject to equal division and Ms. Cole would receive almost $62,000, which would then be available to her to pay for her half of the third-party loan.
[57] There is a second lens through which this issue can be addressed. The Shareholder’s Loan owed by Bloomfield’s to Mr. Cole is in the nature of an account receivable owed to Mr. Cole;Descantes v. Descantes, 1992 Carswell BC 1264 at para. 20 (S.C.). That account receivable, though it is unlikely to ever be repaid, is family property; Walburger v. Lindsay, 2015 BCSC 341 at para. 85. It is an amount that is owed to both Mr. and Ms. Cole under s. 84(2)(c) of the FLA. Accordingly, there is no basis for Ms. Cole to make any contribution to Mr. Cole on account of the Shareholder’s Loan.
The case also dealt with banked sick pay and found it also was not family property that could be divided.
When you have a novel BC family property dispute involving high stakes valuations of a business a venture, a partnership, inventions patents, stock options and the like hire Lorne N MacLean, QC or anyone of his firm’s BC Family Property Division Lawyers.
