Vancouver Joint Ownership Excluded Property lawyers at MacLean Law handle the calculation of excluded property, gains on excluded property and what happens to cases of Vancouver Joint Ownership Excluded Property in terms of protecting or losing the normal exemption from equal sharing. In today’s blog Lorne MacLean, QC of our downtown medium to high net worth family and excluded property division team explains recent BC excluded property cases that interpret the seminal BC family property appeal case of VJF. You can read more about Lorne MacLean, QC here, or contact Lorne at 604-602-9000.
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The groundbreaking case of VJF v. SKW, 2016 BCCA 186 left more unclear regarding gifts of excluded property than it elucidated. One question that has been on the minds of family law litigants and their lawyers is the issue of excluded property that is gifted into joint names or joint tenancy with the other spouse. For example, what happens when a spouse purchases a car in both parties’ names or real estate in joint tenancy with money gifted to them by a third party or earned exclusively before the relationship began? Although we do not yet have firm answers, there is recent case law where the courts have found that excluded property can be traced into the jointly held property, maintaining the exclusion.
Tracing Of Vancouver Joint Ownership Excluded Property
In Lahdekorpi v. Lahdekorpi, 2016 BCSC 2143, the wife received a $30,000 inheritance, which was used to purchase a previous matrimonial home in joint names. That home was then sold to purchase the current matrimonial home in joint names. The Court permitted the wife to retain the exclusion for the inheritance. The Court stated at paras 93 and 94:
93 At trial the claimant expressly conceded that $30,000 of the parties’ property was excluded property under s. 85(1)(b) of the FLA as the respondent derived this amount from an inheritance from her mother. Subsequently, after the trial concluded and as a result of the decision of the Court of Appeal in V.J.F. v. S.K.W., 2016 BCCA 186 (CanLII), the claimant sought to retract this concession on the basis that the inheritance was used to purchase a previous matrimonial home (on Shirley Road in Thunder Bay) and, therefore, lost its character as excluded property. He contends that the $30,000 inheritance is subject to equal division between the parties, along with other family property.
94 The case before the court in V.J.F. involved an inheritance. More significantly, in that case the Court found that there was a gift of property to the wife where the husband intentionally transferred title to her. The property was registered solely in the wife’s name. In the instant case, the Shirley Road property was purchased, in part, with the respondent’s $30,000 inheritance and the property was registered jointly in both their names. In my view, the joint tenancy effectively preserved her contribution to the property, which was purchased for approximately $130,000. In these circumstances, I am not persuaded that the respondent could reasonably be said to have intended to gift her inheritance to the claimant. I note that, although the parties purchased subsequent properties using, in part, income derived from the Shirley Road property, the properties were either held jointly or in the sole name of the respondent. In my view, the $30,000 used in the purchase of the Shirley Road property can be traced back to the inheritance, such that it does not lose its character as an inheritance.
In Kalmiakov v. Shylova, 2016 BCSC 2095, a mother gifted money to her adult daughter. The daughter put the money toward the purchase of the family home, registered jointly to her and her husband. When the marriage ended, and property division came before the court, the husband argued that his mother-in-law had intended to make the gift to her daughter and him jointly. The husband offered no evidence for this assertion, and the mother was not competent to testify regarding her intent. The judge found that the mother had intended the gift to be to her daughter only, and excluded this gift from the family property on the basis that it was readily traceable and capable of mathematical certainty. At paras 90 to 94 the court stated as follows:
90 Ms. Shylova says that, in May 2005, her mother gifted her $65,000 to purchase Hedgestone. She says that the bank required her mother to sign a letter saying that the $65,000 was a gift to both parties as Hedgestone was to be registered in joint names. She has produced a copy of the letter provided to the bank. Ms. Shylova says that, despite the letter, the gift was only intended for her.
91 Mr. Kalmiakov says that the $65,000 was a joint gift to the parties. However, he does not specifically respond to Ms. Shylova’s evidence about the bank’s requirements for the letter reflecting a joint gift and it remains uncontroverted. Mr. Kalmiakov does not provide any evidence about his relationship with Ms. Shylova’s mother prior to the gift. He does not say whether he had ever met her and, if so, how often. Apart from his bald assertion that the $65,000 was intended as a joint gift, he provides no evidence as to why Ms. Shylova’s mother would make such a gift jointly.
92 Due to her current mental health, Ms. Shylova’s mother is not competent to provide any evidence as to her intent.
93 I conclude that Ms. Shylova’s evidence, which is forthright and clear, should be accepted in this regard. It is supported by the fact that after Ms. Shylova’s mother was sponsored by the parties to Canada, she gifted $62,000 US to her daughter alone. It was used to purchase an investment property. Despite Mr. Kalmiakov supporting the cost of her immigration, as he says he did in the affidavit he filed in the Provincial Court proceedings, his mother-in-law did not then jointly gift him money. It is unlikely that she would have jointly gifted him money earlier. As I have said, Mr. Kalmiakov’s evidence must be treated with caution.
 Ms. Shylova’s gift from her mother was used as a down payment on Hedgestone. It is readily traceable and capable of mathematical certainty. For these reasons, I conclude that Ms. Shylova is entitled to an additional $65,000 in excluded property from the proceeds of sale of the family home.
Vancouver Joint Ownership Excluded Property Lawyers Lessons To Be Taken Away
The lesson from these cases is to proceed with caution when placing excluded property into joint names. Although the above cases suggest excluded property may be traceable into jointly held property, there is no certain answer at this stage. The outcome may be highly dependent on the intention of the gift or of the excluded property, whether that is the spouse or a third party gift or.
Vancouver Joint Ownership Excluded Property Best Practice
Keeping an excluded property in your sole name is the obvious best practice.
The Vancouver Joint Ownership Excluded Property lawyers at MacLean Law can help you navigate this complex area of family law.
Since these new family property laws only started in 2013, we completely understand that no one told you to do this if your relationship started under the old property division regime.
Don’t despair, call us to get help protecting your excluded property or if you are on the other side of a jointly owned family property dispute contact us about getting your fair share of family or excluded property.