Family Law Re Property and Debt

Family Law Re Property and Debt

Family Property and Debt was discussed in Williams v Williams 2022 BCSC 517.

Although Family law and estate law have historically been very different, there has been a gradual trend in recent years to incorporate more family law principles into certain aspects of estate litigation such as wills variation.

Section 85 of the Family Law Act, S.B.C. 2011, c. 25 [FLA] provides a broad definition of family property which includes real property, business interests, investments, money, pensions, and increases in value of any excluded property during the course of a relationship.

Per s. 87 of the FLA, valuation of family property must be based on market value and determined as of the date of an agreement dividing family property and debt, or at the court hearing to determine those matters. In the family property scheme, the FLA allows for property to be identified as excluded and not subject to equal division. Property may be excluded from equal division under s. 85 if it is acquired by a spouse before the relationship between the spouses began, is an inheritance, or a gift to a spouse from a third party. The spouse claiming that property is excluded is responsible for demonstrating how that exclusion occurs.

The Court of Appeal in Shih v. Shih, 2017 BCCA 37 [Shih] set out the legal test for excluded property under s. 85 of the FLA. The party seeking property to be excluded must establish, on a balance of probabilities, that the property should be excluded. The Court rejected a legal standard demanding mathematical certainty or precision, finding this improperly tips the standard closer to a criminal standard of proof beyond a reasonable doubt. The Court stated “…in many relationships of any significant length, documents will have been destroyed and memories dimmed. A legal standard that demands mathematical certainty or precisions risks defeating legitimate claims”: at paras. 41-42.

In Venables v. Venables, 2018 BCSC 1736, Mr. Justice Marchand considered situations where funds of a family were comingled, for example where a spouse got an inheritance or gift and then brought that amount into what seemed to be pooled family property. At para. 64, Justice Marchand commented on the case of S.E.V. v. T.M.V., 2018 BCSC 30, concluded that the proper approach was to consider the transferor’s intention and to look at the transferor’s intention in the overall context of their actions:

In S.E.V. v. T.M.V., 2018 BCSC 30 at para. 96 concluded that, rather than apply a presumption, the proper approach was to consider the transferor’s intention. At paras. 100-101, conducted a fact-specific inquiry and determined that each party intended to give 50% of their property to the other. Even though certain funds could be traced to the sale of excluded property, considered all of the parties’ property to be family property and divided it equally. In the alternative, at para. 104 Abrioux J. found that it would be significantly unfair not to divide the funds at issue equally.

Similarly, in Pisarski v. Piesik, 2019 BCCA 129 [Pisarki], the Court of Appeal emphasized the principle that the onus rests on the person seeking the exemption to prove that property should be considered exempt. The Court in Pisarki adopted the Shih test for balance of probabilities, and noted that the party seeking to exclude property must do so with clear and cogent evidence. Further, the trial judge considering the exemption has to balance the evidence as a whole and can draw reasonable inferences from the evidence presented about what is the intention of the parties in the circumstances

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