The reader is invited to first consult Canadian Matrimonial Property Law - A Primer before reading this topic, for an understanding of some basic concepts of Canadian matrimonial property law. Also, readers should defer to professional legal sources in British Columbia to ascertain their specific rights in actual situations. There is too much at stake to try to actually resolve your situation through this general legal information material.
The primary law in British Columbia which resolves matrimonial property disputes is Part 3 of the B.C. Family Relations Act (FRA), which came into force in 1979. The rights of B.C. spouses to matrimonial property in B.C. under the FRA are in addition to any other rights that they may have under other common law or statutes (see, for example, discussion in Matrimonial Property in Canada - A Primer).
In B.C., each spouse is entitled to half of all "family assets" as a tenant-in-common.
A "family asset" is defined as anything "owned by one or both spouses and ordinarily used by a spouse or a child of either spouse, for a family purpose".
A legal presumption exists which captures all ordinary family use property as family assets, an onus which has to be defeated by contrary evidence.
Some cases have helped to understand Part 3 of the FRA.
Jewellery given to the wife as a gift has been held not to be a family asset.
A speedboat bought with just the husband's money and never used by anyone else in the family may not be a family asset.
But in another case, where a fur coat was bought for the purposes of wearing to the husband's office party, the coat was held to be a family asset, or where the speedboat is used on many family outings.
The asset must be for the whole family and not just one member. Case law, although not unanimous, tends to view hobby equipment as family assets. One court said that hobby equipment is by its very nature a family asset.
Stamp, coin and vehicle collections, photography equipment and pianos have all been held to be family assets. And yet in another case, a firearm collection was held to not be a family asset. Works of art have been held to be family assets especially if displayed in the family home.
University degrees have been held not to be family assets whereas professional practices (such as a law firm) have been held to be family assets.
The entitlement to a one-half interest in family assets exists (i.e. a court will only order it) as of the moment that (1) there is a separation agreement, (2) a B.C. Court has declared "that the spouses have no reasonable prospect of reconciliation", (3) if the parties are divorced or (4) if the marriage has been declared null and void (for a discussion on null or void marriages, please see About Marriage in Canada).
Judges and lawyers have taken to calling these four possibilities "triggering events".
For those wondering whether British Columbia is a community property or separate property regime for the purposes of comparative law analysis, authors Maclise and Stark in Matrimonial Property Law in Canada explains that:
"It is not a common property regime as is often thought. It is a separate property regime with entitlement by a spouse to a one-half interest in assets defined to be family assets. Prior to (a triggering event), each spouse is able to deal with his or her property as he or she wishes without the necessity of obtaining his or her spouses consent.
It is the date of the triggering event that constitutes the date for the purposes of determining what is and what is not a family asset, although this date can be changed by the court for reasons of fairness.
Assets acquired after the triggering event are not family assets unless they were purchased with family assets or from the proceeds of a family asset. Assets owned prior to the marriage become family assets if they meet the criteria for a "family asset" above. Notably, the mere fact of separating is not a triggering event.
The FRA excludes business assets from division between the spouses.These assets are property used primarily for business purposes, owned by one spouse only, and for which there has been no contribution, direct or indirect, by the other spouse, to either the acquisition of the business property or to the operation of the business itself. The FRA adds that an indirect contribution would include savings by effective management of household responsibilities. The key here, to use the words of a 1980 decision, is for the spouse to somehow show "some connection, albeit in only a general way, with the property in which she seeks an interest".
The FRA allows a court to overlook the legal ownership of a corporation in what otherwise appears to be a family asset if certain conditions are met (eg. a company car). The court will give the family-used asset a value and compensate by dividing up the shares owned by the spouse in the corporation accordingly.
The drafters of the FRA confused the system when they added that a family asset included a share in a "venture to which money or money's worth, was directly or indirectly, contributed by or on behalf of the other spouse." There have been several opinions but it appears that B.C. courts still have not figured out how a venture asset is different from a business asset.
Even if there is a marriage contract or a separation agreement which covers property division, and in spite of the definition of "family assets" or "business assets", the B.C. Supreme Court has the overriding broad power to re-divide the property if to do otherwise would create a situation of unfairness having regard to six different criteria:
- The needs of each spouse to become economically independent. This needs test is based on the socio-economic status the spouse has obtained during the marriage and not that at which the marriage was entered into.
- The duration of the marriage.
- The duration of a separation
- The date the property was acquired. For example, a spouse could bring substantial property into a marriage which is ultimately of short duration. It would not be fair, in this circumstance, to allow the other spouse to claim a half-interest in the property.
- The fact that property was a gift or inheritance. The effect of this diminishes with time between the inheritance and the triggering event.
- A catch-all clause including any other related circumstance relating to the property.
In one case the wife was unable to assert her one-half interest in family land because it was on Indian territory. The court acknowledged his inability to affect the ownership of Indian land for constitutional reasons but he was able to order financial compensation under the FRA.
A BC court has all the necessary powers to give effect to the division of matrimonial property under the FRA.
The court may declare a spouse owner of a piece of property.
The court can grant possession of property to one spouse while acknowledging ownership of another.
The court can order partition or sale of property or compensation to one of the spouses, or that property be held in trust for a spouse or child.
The court can even order that one spouse give security for the performance of one of these orders or sever a joint tenancy which might exists or reverse a gift or sale made to a third-party where such gift or sale was made with the intent to frustrate the proper division of matrimonial property.
The court can also place a restraining order on a spouse suspected of an inclination to unilaterally sell a family asset.
It should be noted that a British Columbia court will not interfere if there is no dispute between the parties with regards to the division of property; separating spouses most often divide their common assets agreeably between themselves.
In addition, the conduct of the parties is not a factor in dividing family assets unless it can somehow be shown that such conduct affected the contribution or use of the property.
A word on pensions: since July 1, 1995, the FRA has been amended to facilitate the sharing of pensions built during marriage.
Before this date, a court order was required to get a share of a spouse's pension and the court order usually ordered the spouse to divide his pension revenue upon receipt and to redirect a portion to his ex-spouse.
The new Part 3.1 of the FRA allows for the division of pension funds at the source, directly by the pension plan company. Regulations have been approved which set a complicated formula to be used in determining a spouse's share of another spouse's pension, based on length of marriage and period of contribution (although this division formula may be amended by consent of both spouses).