Can A Couple Orally Agree Not to Divide Their Property? Will a Court Respect that Agreement?

GeorgiaLeeLang059Today’s decision of Mr. Justice Kelleher of the British Columbia Supreme Court  provides an answer to the two questions posed above.

If a couple decide to live together, have no children, and confirm with one another that everything each of them owns or will own will always remain separate if the couple separate, will a court interfere?  In the case of Doell v. Prentice 2018 BCSC 1115 the Court said “yes” it will.

This common law couple lived together for 23 years on property purchased with Mr. Prentice’s savings. He was a highly skilled bricklayer and stone mason, while Ms. Doell, who had a university degree, worked in menial positions taking care of dogs and horses. Her annual income was less than a full-time minimum wage job.

Many witnesses testified they were aware of the couple’s financial arrangements which were apparently openly discussed with their friends and relatives. Ms. Doell reputedly said that if their relationship ended she would leave with her belongings but nothing of her husband’s. However, after she left the home she shared with Mr. Prentice she changed her mind and brought a court action seeking an equal division of property and spousal support. Mr. Prentice argued that she should receive no property and no spousal support despite her status as a common law spouse under the law.

The judge reviewed the evidence finding they never shared property, had no joint accounts or joint credit cards; she paid for her expenses and he paid for his. When they ate at a restaurant they each paid their way. Mr. Prentice bought several other properties and fixed them up. When he sold a property he did not share the sale proceeds with  his wife.  Ms. Doell was of the view that she would not work on the properties as they were not hers and she would get nothing back for her services.

Later, during the relationship, Ms. Doell purchased a property in joint tenancy with her mother and made it clear that it was not intended to be shared with Mr. Prentice. At that point she moved her dog care business to her new property. Unfortunately, Ms Doell fell off her horse and had a concussion which caused migraine headaches. Still later several of her animals unexpectedly died which caused her upset and depression. She changed her will deleting any gift to Mr. Prentice.  By this time the relationship was clearly coming to an end.

The Court was satisfied that the parties entered into an oral contract to keep their property separate. As for spousal support, there was no definitive evidence that Ms. Doell had agreed to give up that claim.

The Court reviewed s. 95(2)  of the Family Law Act to determine if it would be “significantly unfair” not to deviate from the oral agreement:

(2)        For the purposes of subsection (1), the Supreme Court may consider one or more of the following:

(a)        the duration of the relationship between the spouses;

(b)        the terms of any agreement between the spouses, other than an agreement described in section 93 (1) [setting aside agreements respecting property division];

(c)        a spouse’s contribution to the career or career potential of the other spouse;

(d)        whether family debt was incurred in the normal course of the relationship between the spouses;

(e)        if the amount of family debt exceeds the value of family property, the ability of each spouse to pay a share of the family debt;

(f)         whether a spouse, after the date of separation, caused a significant decrease or increase in the value of family property or family debt beyond market trends;

(g)        the fact that a spouse, other than a spouse acting in good faith,

(i)  substantially reduced the value of family property, or

(ii) disposed of, transferred or converted property that is or would have been family property, or exchanged property that is or would have been family property into another form, causing the other spouse’s interest in the property or family property to be defeated or adversely affected;

(h)        a tax liability that may be incurred by a spouse as a result of a transfer or sale of property or as a result of an order;

(i)         any other factor, other than the consideration referred to in subsection (3), that may lead to significant unfairness.

After reviewing similar cases, the Court ordered that the property of the parties would be divided 80/20 in favour of Mr. Prentice, however, he would pay indefinite spousal support of $850 per month.

Would it have made a difference if this couple had written down their agreement? Probably not. After 23 years together it is unlikely that an agreement not to share assets, where one party has an abundance and the other, very little, would be upheld by a court in British Columbia.

Lawdiva aka Georgialee Lang

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BC’ s Groundbreaking “Family Law Act” Coming Soon

Last July British Columbia’s Attorney-General Mike DeJong held a press conference to announce his Liberal government’s intention to update British Columbia’s “Family Relations Act”, an announcement that was welcomed in most quarters.

After months of meetings with stakeholders and detailed input from a blue-ribbon committee made up of government representatives and some of British Columbia’s senior family law lawyers, the recommendations for change were challenged, debated and then fine-tuned. To the government’s credit, they listened well.

Lieutenant-Governor Steven Point, in his recent Throne Speech, advised British Columbians that a new “Family Law Act” will be introduced this Fall to replace the 1979 Family Relations Act, news that many of us have been long waiting to hear.

How important is the new law to families in crisis? While tinkering with language may not seem innovative, in the area of custody and access it is significant. Many progressive lawyers already avoid words like “custody” and “access” because of their clients’ negative reaction to language that suggests one parent has ownership of the child, a “custodial” parent, and the other has “access”, a term that has become pejorative over time. The new legislation removes this language, replacing “custody” with “guardianship” and “access” with “parenting time”.

The drafters of the new law hope that the abandonment of these traditional expressions will eliminate conflict between parents based merely on semantics.

Some of the other substantive changes include:

1. New rights granted to common law spouses that will treat them the same as legally married spouses. Currently common law spouses are not entitled to apply for a division of family property upon the breakdown of their relationship. A complicated and ponderous legal concept may be invoked, but it is more expensive and provides nominal compensation. (the doctrine of unjust enrichment)

The new law will open the door for common law spouses to enjoy the same property law benefits as legally married spouses. The law will ensure that common law spouses who live in a marriage-like relationship for two years or less than two years, but have a child, will be treated like married spouses in respect of their family assets. This change will, of course, also apply to same-sex couples. British Columbia will lead the way as the first province in Canada to grant equal property rights to separating common law spouses.

2. Issues arising from reproductive technology will be covered in the new law. For example, where a child has three parents i.e. a birth mother, the birth mother’s partner and a sperm donor, each of them may have parental rights if they enter into an agreement. As well, a surrogate mother will not be forced to give up her child, just because she has signed an agreement to do so. None of these important social issues have previously been addressed in British Columbia’s family law.

3. Spousal support will not terminate upon the death of a payor spouse, but may continue and be paid from the estate of the deceased spouse. Today in British Columbia it is very difficult to convince a judge that a long-term spouse should be protected from the sudden termination of spousal support because of the payor’s death. A 60-year-old divorced woman who has no employment skills and has spent years as a stay-at-home mom can be left with no financial resources if her husband dies. This change in the law may positively impact the feminization of poverty.

4. Overall, the focus will move from a court-centered approach to out-of court resolutions. Mediation and collaborative law will continue to be highlighted. Family law arbitration will be introduced, a process where “private judges”, usually senior lawyers or retired judges, will have authority to make decisions for warring couples who wish to avoid the expense, delay, and lack of privacy intrinsic to court proceedings.

Bringing family law into the 21st century is long overdue, however, the success of the new Family Law Act will depend on lawyers and judges recognizing the policy shift that underscores this legislation. It is time to admit that a court-centred, adversarial approach simply is not working for most Canadians caught in the throes of divorce.

Lawdiva aka Georgialee Lang