Borrowing on Family Property to Acquire New Property Will be Traced by the Court

With the introduction of “excluded property” into British Columbia’s family property law, cases continue to be released providing guidance to lawyers and separating couples alike.

The Appeal Court in KPB v. KE 2019 BCCA 152 considered whether the husband’s use of a line of credit secured by the parties’ family home, and used by him to purchase real property in his name after the date of separation, brought the after-acquired property into the category of family property or whether it was excluded property.

The parties were married for 12 years and had two children. They jointly purchased the family home for $255,000 with a $70,000 loan from the appellant wife’s father. The parties agreed that the trial judge incorrectly held that the loan was excluded property and consented to an order that the loan was a family debt pursuant to the Family Law Act.

The parties had a joint line of credit, that had a $0 balance. It was secured by a collateral mortgage against the family home. The home had a trial date value of $480,000. Just prior to the separation, the husband withdrew $25,000 from the credit line, and later an additional $95,000 to purchase a home in his name. Still later, he unilaterally withdrew a further $73,000, making total withdrawals of approximately $194,000.

When the husband brought his action for divorce and corollary relief, he failed to disclose this new home and the line of credit debt.

During the marriage the husband received an inheritance which he used to purchase RRSP’s and mutual funds which were agreed to be excluded property.
The trial judge equally divided the family property with the exception of the home the husband purchased at the time of separation. His rationale was that since the line of credit debt was the husband’s sole responsibility, the home was excluded property.

The appeal panel acceded to the wife’s argument that the trial judge erred in concluding that the husband’s after-acquired real property was excluded property. The Court held that if the trial judge had first determined what assets were family property and thereafter, what debt was family debt, he may not have fallen into error.

The Court said:

“After determining that the $193,792 was not family debt, the judge then reasoned that whatever was acquired by the husband with those monies was not family property. Had the correct approach been followed, in my opinion the result would have been different.”

The Court observed that the husband’s new home and the family home were interconnected assets because the husband, in effect, borrowed $120,000 from the equity of the family home to make his purchase.

The Court held that the wife’s interest in the husband’s home equated to that portion of the home that was purchased using the family home equity, which based on the home’s value of $490,000, less encumbrances, amounted to a compensation payment to the wife of $88,000.

Lawdiva aka Georgialee Lang

Trial Judge Misunderstands Evidence: Appeal Court Intervenes

In Baryla v. Baryla 2019 BCCA 22, the Court considered whether the trial judge had erred by failing to find that a half-interest in a home owned by the husband was excluded property, as the respondent husband had received the half-interest from his mother upon her death as a joint survivor of the joint tenancy property.

The parties ended their 40-year marriage in 2014 by signing a Letter of Intent Agreement dividing their assets equally between them. The Agreement provided that Mr. Baryla would transfer the subject home to his wife, and he did so. However, not all of the terms of the Agreement were implemented, as the wife brought a family law action seeking spousal support and an equal division of property.

The trial judge determined that the respondent wife had made a financial contribution to the home, which caused the appellate court to examine whether the gift of the right of survivorship was made to the husband and his wife, or just the husband, noting that this analysis was not done by the trial judge.

The appeal panel also pondered whether the husband’s transfer of the property to his wife pursuant to the Agreement extinguished his excluded property claim.

The appellant husband alleged that the trial judge had misapprehended the evidence by erroneously finding that the parties had contributed approximately $170,000 to the purchase of the home, while the true facts were that the sum of $170,000 came from the sale of his mother’s former home.

The trial judge relied on VJF v. SKW 2016 BCCA 186 to find that the husband’s voluntary transfer of the property to his wife eliminated his excluded property claim.

The Court of Appeal disagreed saying that the presumption of advancement had no application because the parties were separated at the time of the transfer and the transfer was not a gift but a fulfillment of a contract.

The husband also challenged the trial judge’s alternative holding that it would be significantly unfair not to divide the property equally because the purchase price of the home came primarily from the parties, relying again on the misunderstanding of the relevant evidence.

The appeal panel acknowledged that they could not consider this argument until the parties’ actual contributions to the purchase price was ascertained.

The Appeal Court allowed the appeal and ordered a new trial.

Lawdiva aka Georgialee Lang

GUEST POST: 5 TIPS FOR PARENTING TEENS AFTER SEPARATION

Separating isn’t easy, and many divorced parents worry about how they might alter their parenting to minimize damage on their teenager. It is common for teenagers to have a variety of negative emotions and increased risk after divorce, but having the right attitude and methods can prevent the poor outcomes from becoming long term problems. Here are five tips to keep in mind when parenting your teen after separation.

1. Don’t Make You Teen Your Confidant
It’s important to find someone to confide it, but it shouldn’t be your teenager. Your teen has to struggle with the effects of the divorce on their own, and shouldn’t be burdened with additional stress that you can put on them by treating them like a therapist. We suggest that you confide in someone else, like a close friend, someone who went through similar experiences or a professional therapist.

2. Encourage Closer Bonding with Your Teen
One of the unexpected positive outcomes of divorce is that teens get closer to their parents than if they had stayed married. If you maintain a positive attitude, use inspirational language, and find more ways to bond with your teen in a unique way, your relationship will be better than it ever has been. Use this opportunity to show a different side of yourself to your teen, and get to know your teen more personally too.

3. Don’t Talk Badly About Your Ex
One of the most troubling things you can do to your teen after divorce is criticize your ex. Your teen needs to have a positive relationship with both parents, that part doesn’t change after separation. Criticism can ruin those relationships. Plus, you don’t want your teen to start picking sides or make the family more divisive during a time when everyone needs to heal. We recommend that you only speak positively about your ex, regardless of the gripes you may have.

4. Pay Attention to Emotional Changes
Another tip we have is to pay close attention to emotional or behavioral changes in yourself and your teen. If you or your teen start acting out, or stop socializing, or form other negative habits, you should take note and come up with strategies to cope with the divorce in a healthier way. One way to cope is to have regular communication, get exercise, and find new hobbies to get involved in. These are beneficial for you and your teen, and should help you stay on track if your mood persistently changes.

5. Find Counseling for Your Teen
We think it’s important for your teen to have someone to talk to about the divorce that isn’t a parent. Having a third party is crucial because they can approach their issues with the divorce without fear of offending someone. Also, your teen is likely to experience anger, frustration, sadness, or other negative emotions that can interfere with their lifestyle. Being unable to express emotions in a healthy way can lead to risky behavior in the future. Having a counselor might help your teen learn how to handle their feelings and continue to live a happy life.

We Hope This Helps
These situations are never easy, and there can be a lot of unpredictable consequences on your teenager. We hope that following these tips can help you reduce the negative impact of divorce on your teen.

Author Bio:
ANDY EARLE is a researcher who studies parent-teen communication and adolescent risk behaviors. He is the co-founder of talkingtoteens.com and host of the Talking to Teens podcast, a free weekly talk show for parents of teenagers.

Appeal Court Adjusts Division of Property to Account for Gifts Between Spouses

In Venables v. Venables 2019 BCCA 281 the appeal court considered a case where a husband transferred a home he acquired before the commencement of his marriage into joint tenancy with his wife, and also placed inherited funds in joint names. At trial the court determined that the home and inherited funds were gifted to the wife and therefore, could not be characterized as excluded property. However, the court utilized section 95 of the Family Law Act and declared an equal division of the property to be “significantly unfair” resulting in a division of property that closely mirrored a division that shared the growth of the assets during the marriage, akin to a division recognizing excluded property.

The facts disclosed an eight-year relationship where the husband had a home valued at $203,000 and cash of $93,000 when the parties began to cohabit. He had no debts. His wife had personal chattels and a car with a loan attached. During the marriage he received an inheritance of $164,000 and placed $90,000 in joint names. At the time of trial, the husband was 56 years old and the wife, age 60. The family home had increased in value by $27,000 during the marriage.

In the final tally, the trial held that the husband’s interest in RRSP’s, savings, and investments, totaling $93,000, was excluded property and that the total value of family property was $473,000.

The judge’s section 95 analysis included the following finding:

“If the family property were divided equally, as a result of their eight years together, Mr. Venables would largely be in the same financial position as when the parties began living together while Ms. Venables would be in a substantially better position.”

The Court noted that if an equal division was ordered Mr. Venables would have increased his property over the eight-year marriage by only $33,000, despite his contributions and inheritance.

The trial judge awarded Ms. Venables $134,989 of the family property while Mr. Venables was awarded the remaining value of $337,702, plus his excluded property. Ms. Venables also received lump sum spousal support of $25,000 and the parties shared pension credits earned by each of them during the marriage equally.

Ms. Venables appealed the judge’s order regarding the unequal division of property citing procedural unfairness as section 95 was not plead nor argued at trial. The appeal panel did not accede to this argument noting that pleadings in family law cases consists of a template with check boxes and schedules. The Court also observed that while the pleadings were “confusing” it should have been apparent to the parties at trial that while they both checked the same boxes; their submissions did not parallel each other. The Court also found that each party plead “such further and other relief as the Court may deem meet and just” and “such further and other relief as may be available pursuant to the Family Law Act”, which was sufficient to raise a section 95 analysis.

The wife also argued that her theory that “once a gift, always a gift” prevented the trial judge from reapportioning the family property in favour of the husband. After reviewing the legislative history of the concepts of excluded property and section 95, the appeal panel considered whether the fact that the Family Law Act did not expressly state what would happen if excluded property became family property because one spouse gifted the property to the other, barred a reapportionment based on significant unfairness.

The appeal court rejected this argument finding that the silence of the Family Law Acton this issue did not mean that the legislators intended that a gift of excluded property to a spouse precluded the application of section 95, holding that no language in the Family Law Act compelled that result.

The trial judge’s order was upheld, and the appeal dismissed.

Family Jewellery Now All Part of the Family Pot

Prior to the the enactment of British Columbia’s Family Law Act in 2013, jewellery belonging to each of the parties, particularly a wife’s wedding and engagement rings, were rarely divided between the parties. The treatment of jewellery was rather more civilized under the predecessor legislation.

Today it is very clear that everything is thrown into the family pot and divided, even the most personal items of male and female jewellery.

Relying on section 85 (1)(B.1), Mr. Justice Basran in MN v. CGF 2019 BCSC 1406 noted that while gifts from third parties are excluded from division, a piece of jewellery given by one spouse to the other “falls back into the communal pot when the marriage ends”, citing PG v. Dg 2015 BCSC 1454.

Basran J. specifically considered a Rolex watch the husband said his wife encouraged him to buy for himself during the marriage and the wife’s engagement ring. The court held that the husband had not discharged his onus to establish that the Rolex was excluded property and thus, the proceeds of its recent sale, some $14,000, would be shared by the former spouses.

With respect to the engagement ring, the court remarked on the paucity of evidence, but cited PS v. HR 2016 BCSC 2071, where Mr. Justice Blok held that where there was evidence of a clear intention that the ring was an “absolute gift” the ring would remain with the spouse. However, no such evidence was presented to Basran J. and he found that the engagement ring was divisible family property.

The Court’s solution was to order that all jewellery owned by a spouse before the marriage was excluded property. All jewellery purchased during the marriage would be divided equally, as follows:

“Within 30 days of this judgment, each party shall provide the other with a complete list of the family jewelry items they have in their possession.

Unless the parties agree otherwise, the family jewelry will be divided as follows:

a) After exchanging the lists of family jewelry, the parties will have all of this jewelry valued within 60 days of the date of this judgment, with the cost of the valuation to be shared equally; and

b) After receiving the valuation, each party will have 30 days to select specific jewelry items they wish to retain and will exchange lists of these items. If the parties agree with each other’s lists, each will pay the other half of the assessed value of the items they wish to retain. If the parties are unable to agree on the division of items and/or if there are items that neither of them want, the remaining items will be sold and the parties will equally share the proceeds.”

Lawdiva aka Georgialee Lang

Rare Use of Parens Patriae Power to Provide Remedy for Minor Child

A young teen from British Columbia was removed from her family home and placed in the interim and later the permanent custody of the Director of Child Protection in 2015. The Ministry located a foster home for the girl who thrived and developed a positive relationship with her foster mother. (The Director, Child, Family and Community Services Act v. Registrar General of Vital Statistics 2019 BCSC 1859)

The girl’s removal arose when criminal charges were brought against her father for sexual interference, sexual assault, and incest…a terrible, tragic situation, but one that resulted in the father’s conviction, after she testified against him. The aftermath of her trauma led to suicidal ideation and complex PTSD.

In an application to change her surname from her father’s name to the surname of her foster mother, the Director cited the Name Act, but the Vital Statistics authority refused to accede to the application since the legislation stipulated that only a parent could bring a name change application. The authority suggested that the teen contact her biological mother and request that she bring the application on her behalf.

That advice was acted on but ended badly, as the teen’s mother blamed her for damaging the family unit.

The Director launched an appeal to the British Columbia Supreme Court from the decision of the Regional Manager for Vital Statistics, filing supporting material from the teen’s counsellor, her social worker, her foster mother, and the teen herself. The evidence established that she experienced high anxiety and extreme emotional distress when signing, reading, or being called by her family surname.

After considering the evidence, the Court remarked that the Regional Director’s decision was sound given the language of the Name Act, as there was no presently qualified person to bring an application on the girl’s behalf.

Based on the “gap” in the legislation, the Court relied on its parens patriae power to provide the remedy sought, relying on E. v. Eve (1986) 2 SCR 377 where the high court said:

“An appeal to the parens patriae jurisdiction of the Court is the equivalent of an appeal to its inherent jurisdiction; namely, a jurisdiction which can be exercised when no rule or statute explicitly confers jurisdiction”

The Court noted that without the use of the parens patriae power, the minor child, would “but for its exercise, be left in a hopeless situation.”

Lawdiva aka Georgialee Lang

Judge’s Order at Settlement Conference Upheld by Appeal Court

Can a judge make an order for spousal support at a settlement conference in the absence of a filed application or supporting affidavit? The case of Creighton v. Creighton 2019 ONSC 5706 answers that question in the affirmative.

The parties attended a settlement conference in October 2018 where a judge made a without prejudice interim spousal support order against the husband as a term of the adjournment of the settlement conference sought by the husband.

The husband appealed the order arguing that the settlement conference judge lacked authority to make a substantive order without an application for support and sworn evidence regarding the husband’s income.

The wife had filed a settlement conference brief which contained a copy of the husband’s 2017 T4 and several support calculations. The husband filed no material, but sought an adjournment. He had already obtained one previous adjournment. Ms. Creighton’s counsel made submissions on spousal support requesting that a support order be made as a term of an adjournment, if the court was disposed to granting the order sought by the husband.

The appeal panel observed that it was apparent that the settlement conference judge was of the view that the husband’s adjournment application, together with his lack of financial disclosure, was part of his strategy to delay the proceedings.

The appellate judges determined from the record below that the settlement conference never commenced. The only issue before the conference judge was the husband’s adjournment application and the order for support was a term of the husband’s successful adjournment application.

They noted that the judge could have made a costs order; made the return date peremptory on the husband; or ordered other terms, given his broad discretion where a party is delinquent with respect to financial disclosure.

They also remarked that the husband’s counsel took no exception to the income evidence supplied by the wife proffering her husband’s 2017 T4 and underscored the without prejudice nature of the order.

The husband sought costs of $21,000 while the wife’s costs were $14,000 based on substantial indemnity. The Court awarded the wife her costs, commenting that the husband’s appeal was a continuation of his delay tactics and was not to be encouraged.

Finally, the Court expressed concern over the economics of the appeal, with the parties having expended more than $40,000 thus far, and given that the appeal was argued in September 2019 and a trial date was scheduled for November 2019, where spousal support would be determined.

A more sensible approach would be been for the husband to pay the interim support, and if his 2018 income was less than his 2017 income, he could have negotiated a lesser amount. If negotiation was not fruitful, he could have scheduled a further settlement conference or a mediation. His last resort would be a trial where the “without prejudice” nature of the order would provide him with relief if he had overpaid.

Lawdiva aka Georgialee Lang