When married couples separate in British Columbia, the default rule is that marital property and debts are split evenly down the middle. Assets brought into the relationship are excluded from such division and considered separate from the family property—though their increase in value during the marriage may be divided.
In reality, however, property and debt division can be much more complex. Unequal property division is quite common in B.C. So, when does this happen? Under what circumstances will a court decide to split the property or debts unequally? What’s considered fair or unfair?
Decision-making by judges is not always consistent across the province, and understanding what can happen in court may help prevent unnecessary disputes. It can encourage separating couples to work out their property division matters through negotiation and collaboration between lawyers—rather than litigation.
What does the Family Law Act say about unequal division?
The starting point under the Family Law Act for dividing property and debt acquired during a spousal relationship in British Columbia is the presumption of equal entitlement. However, this is not set in stone.
The legislation recognizes that sometimes, a strict 50/50 split would be unfair. In several recent cases, the court ruled an equal split of property/debt but the decision was overruled by the appeals court or the Supreme Court.
In reality, fairness is sought rather than equality when a couple separates or divorces. Generally, there are two relevant sections of the Family Law Act to refer to in such cases. Section 95 states this:
The Supreme Court may order an unequal division of family property or family debt, or both, if it would be significantly unfair to equally divide them.
Factors that might contribute to such a decision include the duration of the relationship, contribution by one spouse to the other spouse’s career, post-separation conduct affecting the value of family property (such as bad-faith distribution), tax liabilities, and any other factor causing significant unfairness. Furthermore, the law states:
The Supreme Court may consider also the extent to which the financial means and earning capacity of a spouse have been affected by the responsibilities and other circumstances of the relationship between the spouses if, on making a determination respecting spousal support, the objectives of spousal support under section 161 [objectives of spousal support] have not been met.
Section 96 states that the court must not divide excluded property unless it would be significantly unfair not to do so, and the non-owning spouse made a direct contribution to the preservation, improvement, operation, or management of the property. A legally valid agreement between the couple may also be upheld in court.
When equal division becomes “significantly unfair” in BC
Fairness is prioritized by the B.C. courts and if an equal division is considered “significantly unfair”, discretion can be exercised to divide family property unequally, essentially compensating the party who would be penalized by a purely equal split.
The threshold is high and the plaintiff must show that an equal division is “objectively unjust, unreasonable, or unfair in some important or substantial sense” and that a “real sense of injustice” would result from the presumptive equal division.
For instance, if property usually considered “excluded” from division is central to a couple’s economic life during the course of a lengthy marriage, an equal division of the remaining marital property may be deemed unfair by the courts.
There are other instances in which significant unfairness may result from an equal division. Let’s take a quick look at each.
Financial conduct after separation
If one of the partners takes on considerable financial responsibilities for the family home, such as making mortgage payments and arranging necessary maintenance after the separation, a judge may consider this grounds to award a greater share of the proceeds of the home to that spouse—especially if the other partner made no such contributions.
Major wealth gap
If one partner inherited a large amount of property (which is generally excluded under BC law) and this causes a major wealth gap, a B.C. court may take that into account—but financial disparity by itself usually isn’t enough. To divide that inherited property or achieve an unequal split, the court needs to find “significant unfairness” based on more than just the inheritance.
Non-payment of child support
In British Columbia, failing to pay court-ordered or agreed child support is taken seriously, but it is usually addressed through enforcement measures rather than property division. However, in exceptional cases, a long-term failure to support the children may contribute to an unequal division of property if it creates significant unfairness.
What does case law teach BC families seeking fair division?
If you and your partner are seeking a fair division of property, a 50/50 split may or may not be best. Several lessons can be taken from the Family Law Act and from case law. Most notably, consider the following:
- Equal division is a good starting point but you can depart from this if significant unfairness would result—and the courts won’t hesitate to “reapportion” property to redress economic unfairness.
- Debt must be divided as well as property, so, for instance, if one partner runs a failed business or takes out a sizable loan, this must be part of the overall division calculations.
- What each spouse does financially after separation can impact property and debt division—for instance, preserving assets and making contributions to the upkeep of the family home (such as paying the mortgage, taxes, and maintenance costs).
- Excluded assets should not be ignored if they supported the family lifestyle, significant contributions were made to them by both partners, and their exclusion will result in major lifestyle discrepancies and significant unfairness.
- The length of the marriage can be relevant in assessing financial fairness after separation. In some cases, if one spouse would face significant hardship that spousal support cannot adequately address, a judge may consider an unequal division of family property.
- Child support contributions can impact property and debt division, even if a formal claim for retroactive child support is not made.
- The overall economic impact of an equal property and debt division on the lives of each partner is important for the court, as fairness is the priority.
Property and debt division can be challenging when you separate, but it’s often made considerably easier with the help of a B.C. family lawyer, who can protect your rights, explain your responsibilities, and represent your interests.
For a free 30-minute consultation about your legal options during a divorce or separation, contact the team at Legalbird today.
