10 October 2016

October 2016 Update on Excluded Property in British Columbia

In 2016 our Court of Appeal handed down two decisions which have changed the way family lawyers advise their clients about excluded property.  The Family Law Act defines Excluded Property in section 85, as property that is excluded from Family Property and includes:

 (a) property acquired by a spouse before the relationship between the spouses began;

(b) inheritances to a spouse;

(b.1) gifts to a spouse from a third party;

(c) a settlement or an award of damages to a spouse as compensation for injury or loss, unless the settlement or award represents compensation for

(i) loss to both spouses, or

(ii) lost income of a spouse;

(d) money paid or payable under an insurance policy, other than a policy respecting property, except any portion that represents compensation for

(i) loss to both spouses, or

(ii) lost income of a spouse;

(e) property referred to in any of paragraphs (a) to (d) that is held in trust for the benefit of a spouse;

(f) a spouse's beneficial interest in property held in a discretionary trust

(i) to which the spouse did not contribute, and

(ii) that is settled by a person other than the spouse;

(g) property derived from property or the disposition of property referred to in any of paragraphs (a) to (f).

(2) A spouse claiming that property is excluded property is responsible for demonstrating that the property is excluded property.



On plain reading of the Family Law Act, it would appear that a person, who received an inheritance and could prove it, was entitled to claim it as Excluded Property.  Not so, the Court of Appeal tells us.  These cases tell us that the provisions of the Family Law Act cannot be considered in isolation, that FLA is not in itself a complete code, and that we must look at the intentions of the parties at the time the inheritance was received or the property was transferred. 


In Cabezas v. Maxim, 2016 BCCA 82, the parties met in 2005 and began living together in 2006.  In 2007 they purchased property together and Mr. Maxim paid a $56,000 down payment.  The balance of the purchase was funded through a mortgage of $256,000.  The parties struggled financially so Mr. Maxim’s parents paid a total of $187,349 to discharge the mortgage, without any written agreement or loan document.  After separation in 2013 and following the sale of the family residence, Mr. Maxim argued that the net sale proceeds of $196,070 were his excluded property.  Mr. Maxim’s mother testified at trial that she intended the money to be given only to her son as an advance on his inheritance, and not to the couple together.  In the absence of any contemporaneous evidence suggesting the payments were loans, as well as the manner in which she gave  money to her other  children, the trial judge concluded that the funds were given as a gift intended to benefit both parties (at para. 67).  The judge found that the mother’s intention to provide the funds as an advance on her son’s inheritance were found to have been made after the gifts had been made, therefore they were not excluded property. 


Mr. Maxim appealed the trial decision and on February 23, 2016 the B.C. Court of Appeal handed down this first decision which confirms that the Family Law Act is not a complete code, meaning that the common law principles can still be considered in each case.  Madam Justice Garson, at paragraph 38 clearly states that the common law provides interpretative context to the Family Law Act. 



On April 28, 2016 the Court of Appeal handed down the decision in V.J.F. v. S.K.W., 2016 BCCA 186.  At paragraph 72 Madam Justice Newberry, citing the Cabezas and Maxim case, says that case “provides additional support for the conclusion that common law precepts continue to apply at the earlier categorization stage.”  The Court found that the 2 million dollar inheritance received by the husband, and used to purchase a property solely in the name of the wife was properly characterized by the trial judge as family property, subject to equal division. 

This clarifies that the common law and equitable principles as they relate to property have not been eliminated by the Family Law Act. 


So, what do we know now? 

These cases tell us that the Excluded Property provisions of the Family Law Act are not a complete code and in advising our clients we need to look at the intention of the parties and or their parents or relatives at the time the gifts or inheritances were given or property was received or transferred.  It isn’t enough at separation for a person to say,

hey I know I put all of my inheritance down on the mortgage on our joint property for twenty years of our marriage but I really meant to keep it all to myself if we separated…”


there needs to be evidence of intention at the time these decisions were made. 

In 2015, and certainly before these Court of Appeal decisions, lawyers may have been telling their clients that the Excluded Property Provisions of The Family Law Act would protect their gifts and inheritances in any circumstance, but those assurances can no longer be given. 


So, what can you do?

  1. Draft a marriage agreement or a cohabitation agreement and clarify your intentions.
  2. Make sure you have documentation at the time your property/gift/inheritance is received or transferred.
  3. Sign a Declaration of Trust if you intend that your spouse will hold property in trust for you.
  4. Be aware of the inference of joint right of survivorship that arises with joint bank accounts and property held in joint tenancy.
  5. Talk to a family law lawyer about your options. 

written by

2016 Cases that have applied the V.J.F and Cabezas decisions:

19 September 2016

BC Govt seeking input on Family Law Act

The BC government’s Civil Policy and Legislation Office has released two Discussion Papers on issues pertaining to BC’s Family Law Act. Their website explains that:

The Family Law Act came fully into force on March 18, 2013, replacing the Family Relations Act. The new act significantly changed the way guardianship and parenting arrangements are conceptualized within family law in British Columbia, introducing new terminology as well as a new framework for determining parents’ responsibilities towards their children.  The Family Law Act also reformed the division of property, listing the types of property that are excluded from family property and generally will not be divided up after the parties separate. 

Whenever new legislation is enacted, it is anticipated the courts will provide guidance on how the new legislative provisions are to be interpreted as cases are decided using the new law.  There are now three years of case law interpreting the Family Law Act.  Feedback received by government suggests that this is an opportune time to consider particular issues that have been raised related to guardianship and division of property under the Family Law Act.

The deadline for providing feedback is Friday, September 30, 2016.  Responses can be sent by email to CPLO@gov.bc.ca or by mail to the Civil Policy and Legislation Office; Justice Services Branch; Ministry of Justice; PO Box 9222, Stn Prov Govt; Victoria, BC V8W 9J1.

The first Discussion Paper covers issues pertaining to the guardianship provisions, including “the intention underlying those provisions; how the default guardianship provisions have been interpreted in recent case law; and potential guardianship models suggested in response to concerned feedback.”

  1. Should the FLA be clarified with respect to guardianship in situations where the parents never lived together, or lived together but separated before the child was born?
  2.  Is regular care a useful basis for establishing the guardianship status of a parent that has never lived with their child?
  3. If it is a useful basis, does regular care need to be more clearly defined within the FLA?
  4. The diagram on page eight is a visual depiction of the options and some of the questions that flow from them. Does one of these options represent a clearer, more effective way to understand and apply guardianship in the absence of an agreement or order?

The second Discussion Paper covers the presumption of advancement.  It highlights many of the issues raised in the BC Court of Appeal decision V.J.F. v.S.K.W., 2016 BCCA 186, summarized on page six of the Discussion Paper as “whether excluded property always remains excluded property; the impact of applying the presumption of advancement to Part 5 of the FLA; the interpretation of ‘derived from’ in section 85 (1) (g) of the FLA; and the impact of section 104 (2) of the FLA on the operation of Part 5 of the FLA.”

  1.  Is it more consistent with fairness between spouses for the FLA to provide that gifts of excluded property between spouses transfer beneficial ownership or to allow excluded property to always retain its excluded status? Consider the example of RRSP’s or other investments purchased with the excluded property of one spouse and registered in the name of the other spouse? Should the value of the excluded property be returned to the transferor spouse or treated as family property under Part 5 of the FLA?
  2. The BCCA decision in VJF suggests that a spouse who wants to rebut the presumption of advancement can enter into an agreement that sets out that property exchanged between them is not a gift. Is this a practical way for spouses to address the issue?
  3. Should consideration be given to amending the legislation to explicitly abolish the presumption of advancement for the purposes of Part 5 of the FLA entirely? Or, should consideration be given to adopting the approach used in other provinces?
  4. If the presumption is not abolished for purposes of Part 5 of the FLA, should the FLA be clarified to ensure that the presumption also applies to those non-married spouses to whom Part 5 of the FLA applies?
  5. The Court of Appeal decision suggests that section 85(1)(g) can be used to retain the status of excluded property only if: the test of the presumption of advancement is met; and there is property or some other benefit returning to the transferor spouse. Because section 85(1) (g) applies only between spouses, are there scenarios in which a transferor spouse will receive a benefit from the transferee spouse such that section 85(1)(g) can apply? For example, assuming a finding that the test of the presumption of advancement was met, if the facts of VJF were that the purchased property was registered in the joint names of the spouses rather than the sole name of the wife, would that difference have constituted a returning ‘benefit’ to the husband?
  6. The BCCA decision in VJF alludes to the usefulness of the presumption of advancement to ensure fairness between spouses. If the presumption of advancement continues to apply to matters under Part 5 of the FLA, does section 95 of the FLA provide sufficient flexibility to allow a Court to address any alleged unfairness caused by excluded property being converted to family property?
  7. If the presumption of advancement is specifically abolished regarding matters under Part 5 of the FLA, does section 96 of the FLA provide sufficient flexibility to allow a Court to address any alleged unfairness that results from the tracing of excluded property?
  8. Are there other “rights under equity or any other law” that may interact with Part 5 of the FLA which require examination?

The CBABC Family Law Working Group has prepared two surveys on these issues to assist them in drafting their submissions to the government.  They are seeking input from lawyers and non-lawyers.  The deadline for responding to their first survey on the presumption of advancement is this Wednesday, September 21st. The deadline for responding to their second survey on guardianship is Friday, September 30th. 

Posted by Jennifer Woodruff

18 August 2016

Family Maintenance Enforcement Program

I am often asked about how helpful the Family Maintenance Enforcement Program is in assisting parties with enforcement of their court orders or separation agreements.  The answer is, FMEP can be extremely helpful, but only if your agreement or court order is specific enough. 

Some basic facts about FMEP can be found here :

  1. FMEP is a free service of the BC Ministry of Justice helping families and children entitled to support under a maintenance order or agreement.
  2. Anyone with a maintenance order or agreement can enroll in FMEP.
  3. There are various ways to send or receive maintenance payments and also actions can be taken if payments are not made. 

One of the biggest problems that keep people coming back unnecessarily to lawyers, and spending more money than they often are trying to collect, is poorly worded court orders or agreements for sharing of children’s expenses or “section 7 expenses”.  Section 7 expenses are discretionary by nature, meaning that, a court “may on either spouse’s request, provide for an amount to cover all or any portion of the following expenses……”   The online version of the Guidelines found here  can help you understand whether the expenses you want to share are extraordinary or whether they are covered by the child support you currently receive or pay. 

The key is to have your court order or separation agreement worded in such a way that avoids challenges and arguments down the road when you are trying to get payment for little’s Susie’s ballet class or little Jonny’s summer camp fees that weren’t mentioned in the Separation Agreement.  These expenses change over time as your children grow, so you may need to amend your agreement, but if you start out with clarity, it is much easier to make changes.  The FMEP website gives clear instructions about how your agreement should be worded, so FMEP can collect payments on your behalf and take enforcement action if required.  The agreement needs to clearly state the type of expense, the name of the child to whom the expense relates, the exact amount one parent is to pay the other for the expense, the date payments are to start and the frequency of payments.  If your agreement contains a vague statement that “parent one will pay to parent two his or her proportionate share of the agreed upon extraordinary expenses” FMEP cannot collect payment on your behalf if you send them receipts for little Susie’s ballet class because your agreement is not specific enough. 

Yes, it does take time to be precise in agreements, and when you are on the home stretch in that last lawyer meeting, these are often the details that get missed and I hear people say, “oh we can work that out ourselves”.  That is all fine and good when you are getting along, but when it comes to sharing of larger expenses like university tuition, which you may not have anticipated at separation because your children are young, you do not want to be in a position of having difficulties because of a poorly worded agreement.

What should you do?  Read through the child support guidelines to determine if the expenses you are trying to share are indeed “extraordinary” and then draft a clearly worded agreement about how these costs will be shared between you and the other parent.  Have a look at the FMEP website where you will find the answers to many of your questions about enrolment and enforcement. 

And finally, talk to a lawyer before you sign anything. 

25 July 2016

Excluded Property 2016: Where are we now?

It has been an interesting year for family law lawyers giving advice to clients about division of property and how to ensure they can keep the assets they are bringing into the relationship in the event of separation.  Since blended families are more and more common, parties are entering into relationships and asking the question together, "How can we plan our relationship so we each keep our property separate so we can leave it to our own children?"  This is a good question and one I am asked almost on a daily basis.  My answer to that question has consistently been that parties should enter into Cohabitation Agreements or Marriage Agreements (also called Pre-Nuptial Agreements)  in order to clarify their intentions early on in the relationship; when things are going well it's much easier to talk about these types of things.  A Marriage Agreement can be a simple document in which each person sets out what they own and owe, what they earn, and what their intentions are regarding division of property and payment of support to each other in the unlikely event that their relationship should end.  This just makes good sense, and it avoids a lot of ugly arguments and payment of legal fees if you end up separating in the future.

Some basic facts about property division in British Columbia.
  1. The Family Law Act ("FLA") came into effect March 18, 2013 providing a new regime for property division in BC, defining family property and excluded property, in the hopes that parties would  more easily be able to resolve disputes without having to use lawyers and go to court. Section 84 defines family property as all real and personal property owned by either spouse on the date of separation and Section 85 defines Excluded Property  to include property acquired by a spouse before the relationship began, inheritances, gifts to  a spouse and so on.  Any growth in value of Excluded Property is captured back in Section 84(2)(g) as Family Property and presumptively divided between the parties on separation.  Put simply, if you owned a house worth $500,000 when you got together with your spouse, and when you separated your house was worth $600,000, if you didn't have a marriage agreement stating otherwise, according to the FLA you get to keep your initial $500,000 but you share the growth of $100,000 with your spouse.  Any inheritances are yours to keep, but again, the growth in value between the date you received the inheritance and the date you separate, are divided with your spouse.  The intention of the FLA was to keep things simpler and allow parties to keep what was theirs going into the relationship and to divide what they grow together.    All sounds good so far.  Right?
  2. The Family Law Act also made it more difficult to divide Excluded Property by raising the bar to one of Significant Unfairness so that under the FLA, equal division occurs unless it would be significantly unfair to do so.  This section of the FLA has been interpreted by the courts as a "caution against departure from the default of equal division in an attempt to achieve perfect fairness."  In L.G. v. R.G. 2013 BCSC 983 the court said that "only when equal division brings consequences sufficiently weighty to render an equal division unjust or unreasonable should a judge depart from the default equal division."  An analysis of the cases that consider this issue leaves us to advise our clients that the issue of significant unfairness needs to be dealt with on a case by case basis, which for me, always brings me back to my initial advice to clients:  do a Cohabitation Agreement or Marriage Agreement if you want to avoid problems in the future.
  3. Under the new FLA, parties who are not married are able to rely on the property division regime once they have been living together in a marriage-like relationship for two years, and are therefore considered "spouses" for the purpose of the Act.  What does this mean for the average person?  If you are living together and you intend to keep living together, you need to think about having an agreement prepared so you and your 'spouse' can write down what you each own and owe, and what your intentions are if you separate.  If you are together for five years, you are considered spouses from the date you started living together, not starting at the two year mark, and it doesn't matter if you have been living together for over two years, you can still do an agreement now.  Talk to your spouse, gather all of your financial documents together and go and see a Family Law Lawyer  to talk about your options.  These are not comfortable conversations to have with your beloved, but they can save a lot of heartache if your relationship doesn't go the way you planned.
Family Law Lawyers have been watching the Court roll out some interesting and sometimes conflicting decisions about property division since the new FLA.  Some of the prominent cases are described here, but this is by no means an exhaustive list.  First, we had Asselin v. Roy 2013 BCSC 1681, a decision of Mr. Justice Harvey, that told us if you could trace your excluded property (with documents and other evidence), then you could keep it as your separate property.  Then we had Remmem v. Remmem 2014 BCSC 1552, a decision of Mr. Justice Butler, in which the husband was allowed to keep the value of his excluded property, even though it had been sold and the funds used towards the purchase of the parties new house.  From this case we were reassured that our clients could comfortably use their excluded property, or funds derived from their excluded property to purchase property jointly with their spouse, and they would not automatically lose their exclusion.   A line of cases followed Remmem, including P.G. v. D.G. 2015 BCSC 1454, which basically said, "once property is excluded it is always excluded".

Then came Wells v. Campbell 2015 BCSC 3, a decision of Mr. Justice Masuhara which contradicted the Remmem  and P.G. decisions and found that the husband had lost the ability to claim his exclusion by putting property into joint names with his wife.  In the fall of 2015, Mr. Justice Walker's decision, following the trial in V.J.F. v. S.K.W. aka S.K.F. 2015 BCSC 593, followed the line of reasoning in the Wells v. Campbell case and the husband lost his exclusion of $2,000,000 by purchasing a property with his inheritance and putting it into the sole name of his wife.

In April of 2016, The Court of Appeal handed down the decision in V.J.F. v. S.K.W. 2016 BCCA 186, and provided clarification regarding the state of the law when it comes to excluded property.  The Court found that the husband, in putting the $2,000,000 inheritance into a house and putting it into the sole name of his wife, had gifted that property to his wife and could not then later claim that property as his excluded property.  The husband's evidence at trial was that the purpose of his 'gift' was to protect the property from creditors, but the Court said he could not have it both ways, meaning he couldn't give it to her for one reason and then get it back for another.  The 'gift' of the $2,000,000 property to the wife was found to be Family Property, not Excluded Property as claimed by the husband, and it was subject to equal division between the parties.

What does this mean for you?  It means you should have an Agreement with your spouse about how you want to hold and manage your property during your relationship and in the unlikely event that you separate.  It means that if you had excluded property, and you sold it and used it to buy property jointly with your spouse, you risk losing your claim to that excluded property.  The safest way to keep excluded property excluded, is to keep it separate.  Plain and simple.  But, that isn't always possible, particularly when we live here in Vancouver and people want to have nice homes so they sell their previously owned home and in a state of bliss they go with their new spouse and buy a new bigger house for the family, putting all of their 'eggs' into one literal and legal basket.  The facts of the V.J.F case were a little unique in that the husband placed the entire $2,000,000 home into the wife's sole name and not into joint names, so we are still waiting for the Court of Appeal to give us a decision where the facts are more along the lines of the P.G. case where funds and property were co-mingled.

So, stay tuned, and talk to a lawyer if you have any doubt about whether your property is being held and managed in a way that is consistent with your intentions.

Karen Redmond
Redmond Law

01 June 2016

Adoption Update

It looks like I've found someone - a group really - who is interested in and well-suited to taking this blog over. I hope to make the transition by the beginning of September at the latest. More news to follow.

Update: 8 July 2016

In the very near future, Collaborative Divorce Vancouver will assume control of this blog. CDV is wonderful group of family law lawyers, family therapists and financial specialists who bring are trained in both collaborative settlement processes and mediation and focus on resolving their clients' legal disputes without going to court. I took my collaborative training in BC and was a member of CDV before I left for Alberta, and I am very pleased to have CDV take over my blog.

CDV has kindly agreed to keep all of my old posts, going back to 2008, live and online, and that all new content they post will be available for all to copy, save, reuse and repurpose on the same Creative Commons non-commercial, share-alike licence I've used for the past several years.

Although I'm giving up this blog, for the reasons I described in my post of 27 March 2016, I'm satisfied that it's in good hands and will continue to provide the same sort of insights and analysis readers are used to. I'll be following this blog after it changes hands, and I'm looking forward to the fantastic new content.

My sincere thanks to CDV and to all of my readers over these last eight years. Without your interest, I would never have kept the blog going as long as I did. Thank you.

 - John-Paul Boyd

02 May 2016

Unbundled Family Law Services Project: Help MediateBC with an Important Initiative

MediateBC is in the middle of its Family Unbundled Legal Services Project, an initiative aimed at encouraging more family law lawyers to offer short legal services to support families involved in mediation. Among other things, the project is looking to find out more about how lawyers provide short legal services and how those services are used.

MediateBC is looking for more information from British Columbia family law lawyers as well as from people who have been involved in a family law dispute anywhere in Canada, and invites you to complete a survey that you can find on their website. One survey is provided for family law lawyers, another for families. 

Please help MediateBC gather the data they need for this important initiative and take the time to complete their survey.

31 March 2016

Save the Date! New Course on Difficult Family Law Issues Coming to Vancouver

A new one-day course on difficult family law issues, "A Rock & A Hard Place: Complex Issues in Family Law Practice" is coming to the Pan Pacific in Vancouver, British Columbia in April. The course is being put on by the Trial Lawyers Association of BC and is being chaired by lawyers Magal Huberman and Zara Suleman.

Here's how the promo material from TLABC describes the course:
Family law practice can be challenging. Sometimes (or often) we can have files that have no easy answers. TLABC's 2016 Family Law Seminar A Rock & A Hard Place: Complex Issues in Family Law Practice is designed to address some of the more advanced issues in family law. With problems to solve that are as diverse as our clients, we benefit from the enriching perspectives of the judiciary, family counsel, criminal lawyers, Crown counsel, community advocates, police and the Ministry of Justice.
Faculty include:
  • Megan Ellis, QC and Bill Story, noted Vancouver family law lawyers;
  • The Honourable Judge Patricia Bond, from the Surrey Registry of the BC Provincial Court;
  • Professor Margaret Jackson from Simon Fraser;
  • Vicky Law from Battered Women's Support Services;
  • Dr. Susan Gamache, a marriage and family therapist based in Vancouver;
  • Jack Hittrich, a noted Surrey family law lawyer; and,
  • Penelope Lipsack from the BC Ministry of Justice.
Topics include:
  • family violence and projections orders;
  • using counselling and collaborative tools in litigation; 
  • interjurisdictional issues in custody matters; and,
  • allegations of child alienation.
Here are the details...
22 April 2016
Pan Pacific Hotel, Vancouver
$111.60 to $471.60, varying depending on membership status with TLABC and year of call; additional discounts available to articled students and law students