Canada: Why You Should Plan For A Breakup Before Your Marriage Breaks Down

Last Updated: August 29 2019
Article by Adam Black

Planning for the breakdown of a marriage while the relationship is intact can be difficult and emotionally charged. However, the failure to plan for the end of a relationship can have unintended and potentially disastrous consequences.

That is precisely what happened to a couple in Grand Forks, British Columbia. Unfortunately, their failure to properly plan landed them in a three-day trial before the Supreme Court of British Columbia and, eventually, a one-day appeal hearing before the Court of Appeal for British Columbia.

The couple was married on August 1, 2009. Approximately one year prior to their marriage, they began residing together in the husband’s home, which he owned solely. In May 2013, the husband transferred ownership of the home into the parties’ joint names. The husband and wife separated three years later.

In October 2012, prior to the parties’ separation, the husband’s mother died leaving him a substantial inheritance. By the time the husband’s mother’s estate was fully administered, the husband had received an inheritance in excess of $160,000. From this inheritance, the husband deposited over $40,000 to term deposits held jointly by the husband and wife.

Under British Columbia’s Family Law Act, in the event of marriage breakdown, family property is to be divided equally between the separated spouses. Excluded from this sharing regime are property acquired by a spouse prior to the relationship, inheritances, gifts from a third party, and any property derived from such property. Any increase in the value of excluded property over the course of the relationship is, however, to be shared.

The controversial issue in this case was the extent to which the wife ought to share in the husband’s inheritance (held in the joint term deposit) and the value of the home, which he owned solely on the date of marriage and subsequently transferred to the parties’ joint names. If the inheritance and the home had remained in the husband’s sole name, the wife would have been entitled to share in the growth only of these assets. Instead, the husband was met with the wife’s claim that, as a consequence of her joint ownership, she is entitled to one-half of those assets.

At trial, the judge found that the husband intended to gift one-half of these assets to the wife when he placed them in the parties’ joint names. However, the judge’s analysis did not stop there. The judge found the husband entered the marriage with approximately $300,000 in investments and received an inheritance of $160,000 during the marriage. In the event of an equal division of family property, the husband’s asset base would have increased by only $33,000 over the course of the marriage. Conversely, the wife’s asset base would have increased by more than $200,000.

After a careful review of the circumstances in the case, the judge concluded that “an equal division of family property would be manifestly unjust.” In order to “find a path to fairness” the judge turned to section 95(2) of the BC’s Family Law Act. That section permits a court to make an order for unequal division of family assets in circumstances where it would be significantly unfair to divide family property equally. According to the trial judge, the division of family property should be adjusted “as far as necessary so as not to create a significant unfairness, but no further.” For the judge, this was the best way “to respect the intention of the legislation to divide family property equally without creating significant unfairness.”

In the result, the judge made an order that the wife receive $134,989 of the family property and the husband receive the remaining $337,702.

The wife appealed on the basis that the judge was wrong to exercise his discretion to divide family property unequally. Writing for the BC Court of Appeal, Justice Saunders squarely addressed the issue that arises “when ownership of excluded property is transferred from one spouse’s name to the other spouse’s name, solely or jointly, and remains in that form of ownership at the time of separation.” Against the backdrop of the trial judge’s finding that the husband intended to gift one-half of the home and the term deposit to the wife,

Justice Saunders agreed with the trial judge that these assets must be included in family property. The real question is whether “the origins of the property that previously made it excluded property be considered as a factor that might make it significantly unfair to divide the family property equally.” Following a thorough and thoughtful review of the legislative framework, Justice Saunders concludes that “by providing for reapportionment if equal division of family property would be significantly unfair, the Family Law Act left it open to the court to consider, as a factor justifying reapportionment, the origins of family property as formerly excluded property contributed by one spouse. The degree of attention paid to this factor will, as in all property division matters, depend on all the circumstances.”

In the result, the BC Court of Appeal upheld the trial judge’s decision which, more or less, made the husband whole in respect of what could have been excluded property. This decision may serve as a warning to couples considering significant changes in ownership of their assets. With proper planning, a three-day trial and an appeal may be avoided.

This article originally appeared in the National Post.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions