When spouses separate, the starting point is an equal division of family property, even if one spouse contributed more than the other spouse. The same is true of family debt. The presumption is that both spouses are equally responsible for the debt regardless of who incurred the debt or in whose name the debt is registered.
What if a 50/50 division is not fair? What if one spouse claims they are entitled to more or argues that they should not be responsible for half of the debt? BC courts have the power to order unequal division but only in limited circumstances.
When does the court order equal property division?
In the majority of cases, BC courts will order the equal property division. BC’s Family Law Act (“FLA”) applies to both married spouses and common-law spouses. Section 81 of the Family Law Act states that on separation, each spouse is equally entitled to family property and equally responsible for family debt regardless of their respective use or contribution to the property, unless the spouses have made an agreement that indicates otherwise.
The agreement can be:
a pre-nuptial agreement, cohabitation agreement or marriage agreement made before or during the relationship (e.g., an agreement to keep property and assets separate or an agreement that sets out how the spouses want to divide family property and family debt if they separate); or
a separation agreement that is negotiated after the relationship has ended.
If a family law claim has been commenced in British Columbia Supreme Court, there is another option. Spouses can agree to divide family property and family debt unequally and incorporate the terms of their agreement into a Consent Court Order.
BC courts have limited discretion to order unequal division
When a spouse does not think equal division is fair, but the other spouse will not agree to unequal division, a family law claim must be brought to resolve property issues. Section 95 of the FLA gives the court the discretion to order unequal division but only if it would be “significantly unfair” to equally divide family property or family debt. The “significant unfairness” threshold is high and it is not easy to prove to the court that re-apportionment should be ordered. The purpose of the 50/50 default in the Family Law Act is to increase certainty, fairness and predictability in property division matters by reducing the discretion of the courts to depart from equal division.
When does the court order unequal division?
Reapportionment requires something objectively unjust, unreasonable or unfair in some important or substantial sense. “Unfair” is not enough—it must be significantly unfair. BC courts have interpreted the test as requiring a real sense of injustice that would permeate the result if the court does not deviate from the presumptive rule of equal division. When deciding whether to order unequal division, the court can consider any factor that may lead to significant unfairness, including the following considerations:
the length of the relationship;
the terms of any agreement between the spouses;
one spouse’s contribution to the career of the other spouse;
whether debt was incurred in the normal course of the spouses’ relationship (as opposed to a gambling debt or reckless spending by one spouse, for example);
actions taken by a spouse after the date of separation that have caused a significant increase or decrease in the value of the family property or debt, beyond market trends;
the fact that a spouse, other than a spouse acting in good faith, did something to substantially reduce the value of family property;
the fact that one spouse disposed of, transferred, or converted property that would otherwise have been family property, causing the other spouse's interest in that property to be defeated or adversely affected;
a tax liability that may arise as a result of the transfer or sale of property or as a result of a court order (for example, if one spouse will have to pay taxes because of a property transfer);
the ability of each spouse to pay a share of the family debt if the amount of debt exceeds the value of family property.
If you are unsure about what is family property and what is excluded property, you may wish to contact Valerie Little, an experienced family lawyer, to discuss the specifics of your situation.
Get trusted advice on how to divide family property and debt
It can be stressful dealing with property division upon separation or divorce. The team at Valerie M. Little Law Corporation can make the process easier by providing valuable information, advice and support to assist you. Valerie has helped countless clients with division of property and related legal issues that arise at the end of their relationship.
Valerie M. Little Law Corporation is centrally located in New Westminster and serves all areas of Metro Vancouver. To schedule your confidential appointment to discuss your family law concerns and get individual advice tailored to your unique situation, please call 604-526-3333 or email us today. You will be glad you did.