FLA Revisions

A change is gonna come…

After a decade in force, Legislature has proposed a series of changes to the Family Law Act (FLA). These changes are a smorgasbord of solutions to vexing issues facing family lawyers (not to mention families). The three big changes have to do with transfers of property between spouses, division of excluded property, and pets. There are a series of other changes to the treatment of pension-like instruments, but these will need to be addressed by someone with more than a vague understanding…

Excluded Property and Transfers between Spouses

Under the current case law, where a spouse owns excluded property and transfers that property into the name of the other spouse, or into joint names with the other spouse, courts have generally held that the exclusion is lost, and the entirety of the property becomes family property. The court will look at the intention of the transferring spouse at the time of transfer, and if the transferor shows no demonstrable attempt to preserve the exclusion, the exclusion will usually be lost.

This logic is based in part on the doctrine of “presumption of advancement”. That doctrine states that when a husband transfers property gratuitously to a wife, the court should assume that the transfer is a gift and not a loan/resulting trust. The presumption of advancement has not consistently been applied to transfers from wives to husbands, or to common law spouses, or to same-sex spouses, and this is among the many difficulties associated with it.

Regrettably, this line of cases has significantly diminished the certainty produced by the excluded property regime, and it does so based on conduct that may have taken place many years ago, and in some cases before the FLA itself came into force.

Legislature has apparently agreed and proposes the following revisions:

1. First, new section 81.1 will abolish both the presumption of resulting trust and the presumption of advancement as between spouses.
2. Second, new subsection 85(3) provides that excluded property will continue to be excluded despite any transfer of legal or beneficial ownership from one spouse to the other.

So after amendment, property that is excluded will remain excluded, regardless of transfers between spouses.

Division of Excluded Property.

Section 96 is a little-used provision of the FLA that permits the division of excluded property, but only under rare circumstances. At present, it is only available in two circumstances. First, where there is family property or family debt outside of BC that cannot be practically divided, in which case the B.C. court may divide the excluded property within BC to take into account the extra provincial property. Second, where “in consideration of the duration of the relationship” (i.e. in a long relationship), division would be significantly unfair given the non-owning spouse’s direct contribution to the preservation, maintenance, improvement, operation or management of the excluded property.

This creates a difficult burden: not only does the claimant spouse have to show “significant unfairness” (always a hard burden), but also that the unfairness is tied into the length of the marriage and the non-owning spouse’s direct contributions to the excluded property. Indirect contributions do not count, so child rearing, payment of other expenses, and other factors of unfairness simply don’t matter.

As a result, s. 96 has not been frequently used, and is treated by the court very much as a last resort.

Legislature is proposing to expand s. 96 significantly, adding on two new factors to be considered:

1. The terms of any agreement between the spouses respecting excluded property, other than an agreement described in section 93 (a formal written agreement), which could be an oral agreement; and
2. To the extent that the court is not able to address significant unfairness under s. 95 by dividing family property and family debt, then it can rely on s. 96 to divide excluded property.

Both of these additions significantly expand the applicability of s. 96. On the first point, it is not at all uncommon for parties to discuss and agree to division of a future inheritance or gift. This gives the court some ability to enforce those agreements, even if they are informal. On the second point, the effect appears to be that in any case where there is significant unfairness that cannot be addressed via s. 95, excluded property will be generally available to satisfy that unfairness.

Pets

Also, there’s pets in there now as “companion animals” (“an animal that is kept primarily for the purpose of companionship”, and that is not a guide or service dog; an animal kept as part of a business; or an animal kept for an agricultural purpose.)

Section 92 permits spouses to make formal agreements concerning family property and debt and will be expanded to permit spouses to agree to jointly own a companion animal, share possession of a companion animal, or give exclusive ownership or possession of a companion animal to one of the spouses.

Section 97 gives the court broad powers to give effect to division of family property and family debt. The amendments require the Court to consider specific factors when it comes to dividing companion animals, which are as follows:

(a) the circumstances in which the companion animal was acquired;

(b) the extent to which each spouse cared for the companion animal;

(c) any history of family violence;

(d) the risk of family violence;

(e) a spouse’s cruelty, or threat of cruelty, toward an animal;

(f) the relationship that a child has with the companion animal;

(g) the willingness and ability of each spouse to care for the basic needs of the companion animal; and

 (h) any other circumstances the court considers relevant.

Critically, the court may not order joint ownership of the companion animal or require spouses to share possession of the companion animal. Thus (to my great relief) we will not have to litigate shared parenting schedules for animals.

Bottom line:

1. Spouses can now make agreements concerning possession and ownership of companion animals, and can agree to share ownership;
2. The court now must consider specific factors, most of which are oriented to the best interests of the animal, when determining who should keep a companion animal;
3. The court may not order shared ownership of a companion animal; and
4. Sections 95 and 96 will not apply to companion animals.

Transition Clauses

The changes to excluded property and presumption of advance will come into force via Royal Assent at some point in the future (assuming the bill passes legislature). When it does, we will have two “flavours” of family law cases: those that were started pre-Royal Assent, in which case the old version of the Act (“FLA Classic”) will apply, and those started after pre-Royal Asset, in which case the new version of the Act (“New FLA”) will apply.

Accordingly, practitioners should consider which of the two regimes will be more advantageous on their sets of facts. Those seeking to protect exclusions will favour New FLA, while those hoping to take a piece of formerly excluded property will favour FLA Classic.