05 January 2015

Supreme Court Releases Important Decision on Jurisdiction in Property Cases Under the FLA

Over the winter break, Madam Justice Donegan of the British Columbia Supreme Court handed down her judgment in Cockerham v Hanc, an  important decision discussing some of the more difficult parts of the new Family Law Act on when the court should take jurisdiction in disputes about property division and spousal support. "Jurisdiction" has a number of meanings. For the purposes of this post, I mean jurisdiction in the sense of the court's authority to hear a particular case when the same case could potentially also be heard by a different court. Courts don't like to be stepping on each other's toes — with good reason! — and whether to take jurisdiction when jurisdiction is challenged is among the more important and more difficult decisions the court has to make.

Cockerham involved an unmarried couple who began to live together in Ontario in 2007 and separated in early 2014, following which Cockerham, who was unemployed, moved to British Columbia while Hanc stayed in Ontario where his job was. Cockerham started court proceedings in British Columbia a few months later, following a contact from Hanc's lawyer in Ontario. In her claim, Cockerham asked for:
  • an equal division of the family property, including a house and a condominium in Ontario;
  • an interest in Hanc's other property;
  • an equal apportionment of responsibility for her student loans, amounting to some $200,000; and,
  • spousal support.
Hanc replied to Cockerham's claim with a Jurisdictional Response, a court form under the Supreme Court Family Rules which is filed when a party to a lawsuit, usually a respondent, believes that the court should not or cannot take jurisdiction in the case. Hanc subsequently applied for an order under SCFR 18-2 that Cockerham's case be dismissed or suspended, "on the grounds that this court does not have jurisdiction or that the court ought to decline to exercise its jurisdiction," and it is this application which gave Madam Justice Donegan reason to consider some of the more complicated parts of the Family Law Act.

The reasons for Hanc's application are probably obvious from the short facts I've given. Here, however, is the court's concise synopsis:
"[26] Mr. Hanc submits that the appropriate forum for these issues to be decided is Ontario. The parties resided in Ontario until their separation, when Ms. Cockerham moved to Kamloops. Mr. Hanc has no ties to British Columbia and owns no property here. He is not, and has never been, a resident of British Columbia. He has no connection to this province. With respect to Ms. Cockerham’s claim for spousal support, Mr. Hanc submits that it must be claimed pursuant to the provisions of the [Interjurisdictional Support Orders Act]. The [Family Law Act], he submits, does not empower a British Columbia court to make an original order for support against a non-resident.

"[27] With respect to the claim for division of family property and debt, Mr. Hanc asserts that there is no real and substantial connection between British Columbia and the facts on which the proceeding against him is based. As such, he submits that this court lacks territorial jurisdiction under either the provisions of the Court Jurisdiction and Proceedings Transfer Act ... or the FLA. In the alternative, if the court determines that it does have jurisdiction in respect of this claim, Mr. Hanc submits that this court ought to decline jurisdiction in favour of Ontario."
Fair enough. Now the Court Jurisdiction and Proceedings Transfer Act, which deals with the court's authority to hear a case, has been around since 2003. We've had enough court decisions on the act to understand it fairly well. The Family Law Act, on the other hand is fairly new and the parts of the act that deal with property located outside the province, and the ability of British Columbia courts to make orders about that property, are ridiculously complex, which is what makes this decision so important. If you want to read them in their entirety for yourself — which you should — look for Division 6 of Part 5. It's harder to read than the federal Income Tax Act, and just as likely to keep you awake at night.

Determining Whether to Take Jurisdiction under Part 5 of the Family Law Act

Here is the step-by-step analysis taken by Justice Donegan with respect to the property portion of Cockerham's claim.
1. The burden of proving that the court has the jurisdiction to hear a case is on the person who claims that the court has jurisdiction. (Para. 31) 
2. The first place to look is normally the Court Jurisdiction and Proceedings Transfer Act, unless there is legislation that applies to the case which specifically addresses the jurisdiction issue. (Para. 32) 
3. The Family Law Act specifically addresses the jurisdiction issue at Division 6 of Part 5. (Para. 33)  
4. The test for the court to decide whether it should make orders under Part 5, the part of the act dealing with property and debt, is set out in s. 106. (Para. 42) Here's what s. 106 says:
(1) This section applies if an order respecting property division, respecting the same spouses, may be made in more than one jurisdiction. 
(2) Despite any other provision of this Part, the Supreme Court has authority to make an order under this Part only if one of the following conditions is met: 
(a) a spouse has started another proceeding in the Supreme Court, to which a proceeding under this Part is a counterclaim; 
(b) both spouses submit, either in an agreement or during the proceeding, to the Supreme Court's jurisdiction under this Part; 
(c) either spouse is habitually resident in British Columbia at the time a proceeding under this Part is started; 
(d) there is a real and substantial connection between British Columbia and the facts on which the proceeding under this Part is based.
   (3) For the purposes of subsection (2) (d), a real and substantial connection is presumed to exist if one or more of the following apply:
(a) property that is the subject of the proceeding is located in British Columbia; 
(b) the most recent common habitual residence of the spouses was in British Columbia; 
(c) a notice of family claim with respect to the spouses has been issued under the Divorce Act (Canada) in British Columbia.
   (4) Despite subsection (2), a court may decline to make an order under this Part if the court, having regard to the interests of the spouses and the ends of justice, considers that it is more appropriate for jurisdiction to be exercised outside British Columbia. 
(5) In determining whether to decline jurisdiction under subsection (4), the court must consider all of the following: 
(a) [Repealed. 2014-9-15(b)]. 
(b) the relative convenience and expense for the spouses and their witnesses; 
(c) if section 108 [choice of law rules] applies, the law to be applied to issues in the proceeding; 
(d) the desirability of avoiding multiple proceedings or conflicting decisions in different courts or tribunals; 
(e) the extent to which an order respecting property or debt
(i) made in another jurisdiction would be enforceable in British Columbia, and 
(ii) made in British Columbia would be enforceable in another jurisdiction;
    (f) the fair and efficient working of the Canadian legal system as a whole; 
(g) any other circumstances the court considers relevant.
   (6) A determination of authority under subsection (2) or of whether to decline jurisdiction under subsection (4) is to be made solely by reference to this section.
Bit of a mouthful, isn't it? 
5. However, under s-s. (1), s. 106 only applies if an order about property division between the same people can be made in more than one jurisdiction. (Para. 46) 
6. If s. 106 applies, the court must then decide whether one or more of the conditions in s-s. (2) are met, giving it the authority to make orders under Part 5. (Para. 49) 
7. Even if the court has jurisdiction under s. 106(2), under s-s. (4) it must then decide whether it should exercise that jurisdiction or "it is more appropriate for jurisdiction to be exercised outside British Columbia," considering the factors set out in s-s. (5). (Paras. 57 and 59)
Application to the Case

Following this reasoning, the judge held that Cockerham had the burden of establishing that the British Columbia court could take jurisdiction over property mostly located in Ontario. She held that the Family Law Act has specific provisions addressing jurisdiction over that property and that the Family Law Act applied rather than the Court Jurisdiction and Proceedings Transfer Act.

She then turned to s. 106 and concluded that the section applied to the case before her as orders between Cockerham and Hanc about the family property could be made in both Ontario, where the parties had lived during the whole of their relationship and where the bulk of their property was located, and in British Columbia, where Cockerham lived now and where the proceeds of an RRSP account and some jewelry were located.

The judge then decided that Cockerham was "habitually resident within British Columbia," under s. 106(2)(c), which would allow the court to take jurisdiction and make orders about the Ontario property under Part 5.
Habitual Residence
I'm going to pause here to dwell on "habitual residence" and "ordinary residence" for a moment. These terms are used in the Court Jurisdiction and Proceedings Transfer Act, pop up in the case law about jurisdiction all the time, and can be confusing. Here's Justice Donegal's handy summary of the case law, cites omitted as usual:
"[51] What is meant by habitual residence? 'Habitual' and 'ordinary' residence are two expressions that have been used interchangeably ... 
"[52] In [S.R.L. v. K.J.T.] Madam Justice Fenlon summarized the principles governing the determination of ordinary residence at para. 30 as follows:
I now turn to the principles governing the determination of ordinary residence.
a) Preponderance of time spent at a residence is not determinative; 
b) A person may be ordinarily resident without being actually resident; 
c) It is where a person regularly, normally or customarily lives his or her customary mode of life as opposed to a special, occasional, or casual residence; 
d) It is where a person intends to make a home for an indefinite period; an intention to reside there permanently is not required."
Accordingly, Her Ladyship concluded that:
"[53] On the basis of these authorities, I am satisfied that at the time of filing her claim, Ms. Cockerham was habitually resident in British Columbia. 
"[54] In March of 2014, Ms. Cockerham left the home she had previously shared with Mr. Hanc in Ontario. With nowhere to go, she moved to [city], British Columbia and into the home of her mother and step-father, residents of [city] for several years. Having spent time here in the past with family and friends, it was a place familiar to her, a place where she now receives financial and emotional support. 
"[55] Ms. Cockerham's evidence is clear that she is not a visitor or tourist here — this is her home. Her activities following her arrival here all support the conclusion that British Columbia is where she now normally and customarily resides. She obtained a British Columbia driver's licence. She secured a family doctor, who is currently treating her for a medical condition. She has applied for a multitude of jobs in [city] in fields related to her degree. She has significant and meaningful family ties here. That Ms. Cockerham may be accepted to a residency program next year that may see her away from [city] temporarily does not affect a finding that she was, and remains, habitually resident in British Columbia pursuant to s. 106(2)(c) of the FLA."
However, although the judge held that she could take jurisdiction under s. 106(2)(c), she declined to exercise that jurisdiction in favour of the courts of Ontario under s. 106(4):
"[61] Other than the engagement ring that Ms. Cockerham kept and a small RRSP that she has now cashed and spent, the property and debts at issue are all located and based in Ontario. Mr. Hanc's real and other property is all located in Ontario. Ms. Cockerham's claims, as they have been pled, relate substantially to that real property, but also include claims to Mr. Hanc's RRSPs, pensions, chattels, insurance, savings, business interests, options, shares, and club memberships. Neither party owns any real property in British Columbia. 
"[62] If this matter were to proceed in British Columbia, the inconvenience and expense to the parties would be very high, particularly to Mr. Hanc. The parties lived their lives together in Ontario. Civilian witnesses that may be required would largely be from Ontario. Mr. Hanc's financial information is all in Ontario. Expert witnesses from Ontario would be required in relation to appraisals of the real property and possibly his other assets. The significant family debt that is claimed is based upon a contract signed by the parties in Ontario. Bank representatives involved in the contract and/or in keeping of the records may be required to testify. To hear this matter, with nearly all Ontario witnesses, would be very inconvenient and expensive to many people, significantly Mr. Hanc. 
"[63] Further, s. 108 of the FLA applies to this case and leads to the inevitable conclusion that the applicable internal law that would apply to Ms. Cockerham's claims under Part 5 of the FLA is the law of Ontario."
Of course this means that we need to talk about s. 108 as well.
Applicable Law
Section 108 is another difficult part of Division 6. In a nutshell, when the court takes jurisdiction under s. 106, s. 108 is used to figure out the law that should be used to divide the property, which might be the rules about the division of family property set out in the rest of Part 5 or might be the laws of the jurisdiction in which the parties had their "last common habitual residence" — the last place they lived together. Here's s. 108, which is just as difficult to read as s. 106:
(1) In this section, "regime of community of property" means a system of law, including a regime of partnership of acquests, in which property owned or acquired and debt owing or acquired during the relationship between the spouses 
(a) are deemed to be owned or owing by both spouses, and 
(b) are divided, on separation of the spouses, as if both spouses equally owned the property or owed the debt,
but does not include a regime of separate property or a system of law under which a spouse's interest is deferred until or after the occurrence of an event that signifies the end of the relationship between the spouses. 
(2) If the Supreme Court takes jurisdiction under this Division, the Supreme Court must act in accordance with the rules set out in this section. 
(3) Subject to subsection (4), if spouses make an agreement respecting the division of property or debt, the substantive rights of the spouses in a proceeding under this Part are determined by the agreement. 
(4) The enforcement of an agreement under subsection (3) is subject to any restriction that the proper law of the relationship places on the ability of spouses to determine the division of property or debt by agreement. 
(5) Subject to subsection (3), if the spouses' first common habitual residence during the relationship between the spouses was in a jurisdiction in which a regime of community of property applies, property owned or acquired and debt owing or acquired during the relationship between the spouses that is property or debt to which the regime of community of property applies must be divided at the end of the relationship between the spouses according to that regime of community of property. 
(6) If neither subsection (3) nor (5) applies, the substantive rights of spouses in a proceeding under this Part must be determined according to the proper law of the relationship.
In other words, if the parties have an agreement about property, their property should be divided according to their agreement. If the parties used to live in a place that had rules like the old Family Relations Act, where all property used for a family purpose was divided, whether bought before or during the relationship, those are the rules that should be used. If neither of these situations apply, you then have to figure out the "proper law of the relationship," according to the test set out in s. 107:
The proper law of the relationship between the spouses for the purposes of section 108 is 
(a) the internal law of the jurisdiction in which the spouses had their most recent common habitual residence, 
(b) if the jurisdiction under paragraph (a) is outside Canada and is not the jurisdiction most closely associated with the relationship between the spouses, the internal law of the jurisdiction that is most closely associated with the relationship between the spouses, or 
(c) if the spouses did not have a common habitual residence, the internal law of the jurisdiction in which the spouse making an application for an order under this Part was most recently habitually resident.
The judge's conclusions under s. 108 merely confirm her decision to decline to act made under s. 106(4):
"[64] Section 108(2) mandates that if the court takes jurisdiction under Division 6 of Part 5, it must act in accordance with s. 108. As there is no agreement between the parties regarding the applicable internal law, only subsections (5) and (6) are relevant. ... 
"[65] The parties' first common habitual residence was in Ontario. It was their only residence together where they lived and participated in everyday family life. If Ontario has a 'regime of community property', the applicable internal law is that of Ontario. If Ontario does not have a 'regime of community property', the applicable internal law is determined by s. 107 of the FLA. Also known as the 'proper law' of the spousal relationship, this too would be Ontario law because Ontario is the jurisdiction where the parties had their most recent common habitual residence. 
"[66] As I have concluded the law of Ontario would apply to Ms. Cockerham's claims under Part 5, additional inconvenience and expense would be required if this matter proceeded in British Columbia. As Mr. Hanc points out, an expert in Ontario family law would be required to offer opinion evidence on the law of property and debt division."
I should mention that at this point in her reasons, the judge analyses Cockerham's claim under the Court Jurisdiction and Proceedings Transfer Act, reaching an identical conclusion. Her analysis of this act will be helpful for anyone looking into whether there is a "real and substantial connection" — another cryptic phrase bedevilling the case law on jurisdiction! — between British Columbia and the facts of a particular case. 

Determining Whether to Take Jurisdiction under Part 7 of the Family Law Act

As for Cockerham's claim for spousal support — spousal support and child support are covered in Part 7 of the act — the court rejected this as well, on the basis that the Interjurisdictional Support Orders Act, a law which has been passed by each province and territory, provided the appropriate mechanism for a resident of British Columbia to obtain a support order against someone living in another province.

Following the Court of Appeal's decision on the Interjurisdictional Support Orders Act and the Family Relations Act in a 2006 case called Nurani v Virani, Justice Donegan held that:
"[92] Neither the [Supreme Court Family Rules] nor the FLA alters the [Interjurisdictional Support Orders Act] scheme or renders it now inapplicable. Express statutory language would be required for such a result. No such language exists. Although Ms. Cockerham argues that the ISOA mechanisms are inconsistent with the object of the Family Rules, describing them as slow and cumbersome, one can also see how its scheme is consistent with the object as well. A process whereby no court appearance in British Columbia or another jurisdiction is required in order to obtain a support order could be seen as promoting a just and inexpensive determination of the issue. 
"[93] In any event, in the absence of express statutory language rendering the ISOA inapplicable in light of the FLA, [the Court of Appeal's decisions in Nurani] remain binding authority on this court. Mr. Hanc is not a resident of British Columbia, nor has he ever been. He has no connections to British Columbia whatsoever. In these circumstances, this court has no jurisdiction to make an original order for support against him pursuant to the FLA. ... Ms. Cockerham has the mechanisms of the ISOA available to her should she so chose."
Summary

I am grateful to Justice Donegan for her clear analysis of Division 6. It is a very difficult part of the act and her decision in Cockerham is, I believe, the first treatment of the division by the court. Here is a short summary of the steps required to analyze a claim involving property located outside British Columbia.
1. The burden of proving that the court has the jurisdiction to hear a case lies on the person who claims that the court has jurisdiction.
2. Claims about the interests of spouses in property located outside of British Columbia brought under the Family Law Act should be analyzed under that act rather than the Court Jurisdiction and Proceedings Transfer Act.
3. Determine if s. 106 of the Family Law Act applies by examining whether an order about property division between the same people can be made in more than one jurisdiction. 
4. If s. 106 applies, determine whether one or more of the conditions in s-s. (2) are met to give the court authority to make orders under Part 5 of the Family Law Act
5. If the court has jurisdiction under s. 106(2), determine whether the court should exercise that jurisdiction or leave the matter to a court in another jurisdiction under s. 106(4), considering the factors set out in s. 106(5). 
6. If the court decides to act, determine the law to apply under ss. 107 and 108. Note that the applicable law may be a factor in determining whether to decline to act under s. 106(4).
My thanks to my colleague Mary Fus, a lawyer with a thriving family law practice in Kamloops, for bringing this important case to my attention.

1 comment:

  1. We see the good judge quotes you, Mr. Boyd, at para. 34: http://www.canlii.org/en/bc/bcsc/doc/2014/2014bcsc2432/2014bcsc2432.html#par34

    Fine work as always!

    ReplyDelete