MacLean law holds the record for largest Interim Family Property Distribution at $400,000 for a single advance followed by another $400,000. What is Interim Family Property Distribution and why should you care? These advances are designed to level the playing field in a family law dispute. The advances provide critically needed funds to let the financially weaker spouse properly pursue their family property claims.
Vancouver Interim Family Property Division 604 602 9000
Here is an extract from our record win for our client in British Columbia:
[156] In I.R., Ballance J. stated:
[192] The blunt purpose of s. 89 is to assist economically disadvantaged spouses to access justice in matrimonial disputes; it is meant to help level the litigation playing field that is so often skewed when one spouse controls all or the majority of the wealth and assets. Application of s. 89 calls for a purposive interpretation, where the need of the applicant spouse to receive an interim distribution and the potential entailing harm to the other spouse are evaluated contextually with an eye on the larger objectives endorsed by the FLA.
See also M.A.L. v. N.A.L., 2014 BCSC 203 at para. 15.
[157] I am satisfied that a $400,000 interim distribution from family property can be made without negatively impacting the Respondent. Indeed, the proposal is that this amount be paid, along with the support payments, both retroactive and in the future, from a BC bank account in the Respondent’s name that has been frozen. It will be open to the trial judge to consider this payment in the overall resolution of the property division exercise that will be done at the trial. I see no prejudice to either party in proceeding in that fashion.
Alberta Interim Family Property Distribution 403 444 5503
As we have said in numerous previous articles, division of family property in Alberta is easy, right? Well, not so much. In its simplest terms, division of family property includes dividing all family property (assets and debts) owned by the separating couple, after taking out all non-family (ie. exempt) property. The Supreme Court of Canada in Moge ([1992] 3 SCR 813) stated that the equitable distribution of family property was an essential aspect of providing for an equitable distribution of the economic consequences of marriage breakdown. Clearer now? Not really.
Calgary Division of Family Property
The Alberta Family Property Act codifies the division of family property upon breakdown of a (married or “common-law”) couple’s relationship, under two sections: Section 7 creates a presumption of an equal distribution of non-exempt family property, unless it would not be just or equitable to do so, and; Section 8 provides a number of considerations that could lead to an unequal distribution of family property. Furthermore, the Alberta Court of Appeal (in Hodgson v. Hodgson, 2005 ABCA 13) has set out a 4-step process for achieving an equitable division of family property on separation, being:
- Determine all property owned and its value at date of trial;
- Determine and exclude from distribution property that is exempt;
- Distribute the increase in value of exempt property in a manner that is “just and equitable” taking into considerations the section 8 factors;
- Divide the balance of the remaining property equally, unless it would be “unjust and inequitable” considering the section 8 factors.
So, in Alberta, division of family is to be done as at trial. But what if separating couples want (or need) to divide some of their family property (ie. an interim distribution) before dividing all their family property (final division) at trial? For some family property (ie. RRSPs, pensions, vehicles, etc.), this generally does not create a problem. But for some property, and particularly regarding the family home, an interim distribution can create problems. In fact, dealing with the family home separately and in isolation from the other family property is ‘unusual’ in a family law matter. There are two (2) particular situations where the interim sale of the family home (whether voluntarily or not) can create a problem:
Partition and Sale
What if one ex-spouse wants to sell the (former) family home, and the other does not? Section 15 of the Alberta Law of Property Act provides that the Court can direct the partition of ownership and sale of jointly owned land. The case-law is divided on this issue. On one hand, the Court may order the partition and sale of the matrimonial home in cases of urgency or need if it would simplify, not complicate, the resolution of outstanding financial matters between the parties – a “disentanglement of their property now” (Gole v. Meier, 2021 ABQB 965, at para. 30). On the other hand, another case states (see: Wolf v. Wolf, 2019 ABQB 200, at para. 45-49):
“An interim distribution is effectively an advance on a party’s ultimate entitlement to matrimonial property… The granting of an interim distribution of matrimonial property… must take into account the prejudice that such an order could create, as well as the benefits that it could produce. In considering possible prejudice, such as that which could arise if it was later determined that a party was entitled to an unequal distribution of the marital property, the Court can take into account the availability of other matrimonial assets to compensate for granting the order… An interim distribution must not be made unless doing so “will not affect the final property rights of the parties”…
With respect to the matrimonial home it must be noted that the ordinary rule in favour of partition and sale does not apply to matrimonial property. In the context of matrimonial property litigation, “the Court should not order the sale of the former matrimonial home if there are significant other financial matters still to be resolved”. The Court in Buskas did note that each case must “be weighed on its own merits” and declined to order sale of the matrimonial home where there was no pressing need to do so, and the party occupying the home might ultimately have sufficient assets to buy out the other party’s interest in the home. “
A further case says there is no general rule that determines whether a family home should be sold – each case of partition and sale of the family home must be looked at “on its own merits” (see: Garnett v. Garnett, 2019 ABCA 282, at para. 24)
Certificate of Lis Pendens (CLP)
But problems can arise even if the ex-spouses agree to deal with the family home prior to dividing the rest of their family property. As we have previously indicated Calgary Alberta Family Dower Rights , an ex-spouse who is not the joint registered owner of the family property can register their claim to an interest in family property by filing a Certificate of Lis Pendens (CLP, like a lien) on title. The CLP gives notice to potential (or actual) purchasers of the property of the litigation over family property. But what happens if the parties agree that the registered owner needs to sell the family home – what happens to the unregistered owner’s lien on the property? In order to keep the unregistered owners’ security for the division of other property on the sale of the family home, the parties can agree to keep the sale proceeds from the sale of the family home in trust pending further agreement of the parties or Order of the Court.
But for how long can these funds be held in trust? In a recent case (WHG Investments Ltd. v. Unterschultz, 2022 ABCA 156), the Alberta Court of Appeal overturned a lower Court decision to pay out to a corporate creditor of the husband (also an owner of the company) from the proceeds of sale of the family home. The wife had agreed to release her registered CLP on the property in favour of an agreement to hold the sale proceeds in trust in order to permit the sale of the family home. As to how long the proceeds should be held in trust, the Court of Appeal stated (at para. 44-47):
“In this case, the parties agreed that the certificate of lis pendens would encumber and prevent distribution of the sale proceeds held in trust pending resolution of Ms. Unterschultz’ claim to the sale proceeds as matrimonial property. The certificate of lis pendens applies to the entirety of the $7,300,000 and, Ms. Unterschultz is contractually entitled to have this amount held in trust until her matrimonial property claim to the lands is resolved… (ie.) until the matrimonial property litigation is concluded.”
As indicated above, an interim division of family property (and especially the family home) is unusual in (contested) family law matters. Sometimes it may seem like a good idea, particularly where funds are tight. But an interim division of some family property before a final division of all family property (whether voluntary or not) can sometimes lead to problems. Particularly when trying to provide for an equitable distribution of the economic consequence of relationship breakdown.
If you have questions about interim family property division contact us across BC and in Calgary.
