01 March 2015

Court of Appeal Releases Important Judgment on the Complexity of Family Law, Limitation Dates and Commencement of Proceedings

In Halliday v Halliday, the Court of Appeal for British Columbia addresses the critical issue of limitation dates under s. 198 of the Family Law Act and how court proceedings are started under the Supreme Court Family Rules; although its conclusions on s. 198 aren't particularly surprising or detailed, the court's observations about the Rules make a point I expect few practitioners are alive to.

Halliday is one of those cases that are a procedural nightmare, with one misstep that goes unnoticed followed by another and another, until the file gets to the Court of Appeal which is then tasked with untangling the knots. This happens when lawyers are in charge of a case, but more often occurs when one or both parties are without counsel. I do not mean this as a criticism of or jab at litigants without counsel. The fact of the matter is that the rules of the Supreme Court are extraordinarily complex, can be difficult to interpret and can be difficult to apply. As it happens, in Halliday the husband was represented while the wife was not. Here are some pretty powerful comments from the court about the complexity of family law cases, cites omitted and important bits in bold as usual:
"[1] Family law cases contain many traps for the unwary. The Supreme Court Family Rules and the different legislative regimes are complex. Litigants must select with care the appropriate procedures under Family Rules. They must be mindful in seeking relief of the distinctions within and differences between federal and provincial legislation. While the Divorce Act, the Family Law Act, and the Family Relations Act, to the extent that it still applies, contain many similar provisions, they are not identical.

"[2] Particular care must be taken with regard to the procedures and time limits to bring proceedings to set aside provisions of a separation agreement. The fact that many family law litigants are unrepresented compounds the problem. The fine distinctions in procedure and in the legislation are often understandingly lost to the legally untrained and, I might add, to those that are legally trained. Recognizing the distinctions can be the difference between success and failure. This proceeding, to date, is a cautionary tale as to what can go wrong."
Speaking as someone who practiced family law in British Columbia for thirteen years, I couldn't agree more. This is a clarion call for both better access to digestible legal information and the reform of family justice. "Family law cases contain many traps for the unwary." They do indeed.

Background

In a nutshell, the parties had been married for almost a quarter of a century before they separated in 2008. Within a year, the parties signed a separation agreement, without legal advice, dealing with the division of property and spousal support. (Bear with me, the explanation is a bit lengthy. This is a large nut.)

The agreement called for the husband to pay spousal support in the amount of $500 per month for twelve months, however the husband lost his job before the year was out and he made eight of the twelve payment required. The wife, however, wasn't particularly bothered by it and was prepared to call it a day.

The parties started a joint divorce claim a few months after signing their separation agreement. The only order sought was a divorce; no orders about property or spousal support were asked for. The husband returns to work about two years later

Fast forward to early 2014. The wife files the separation agreement in court, but not under the old divorce file, she files it in a brand new court file. Mistake number one. The wife also files a Notice of Application in the new court file. In her application, she asked for an order for spousal support and the division of assets and for the cancellation of the relevant portions of the agreement, doing so under the Family Law Act. Mistake number two.

The husband, represented by a lawyer, files a Response to the application, saying that the application is out of time because of the two-year limit in s. 198 of the Family Law Act is long past, and otherwise objecting to the order sought. The husband then files a Notice of Application asking for an order dismissing the wife's application.

The parties wind up before a judge, who decides that the wife's application to cancel the agreement couldn't be brought in a court file started by filing a separation agreement, the claim had to be made in an action started with a Notice of Family Claim. Mistake number three.

The wife then, following the judge's directions, files a Notice of Family Claim in the new court file. 

The husband files his Response to Family Claim as he normally would, and then files a Notice of Application asking for an order that the wife's claim be struck as it was out of time under the two-year limit in s. 198.

The application then gets before another judge, with each side relying on affidavits in support of their positions... even through affidavits aren't allowed on such applications. (If a claim is so flawed as to be struck, the problem ought to be obvious. Hence, no affidavits are allowed.) Mistake number four. The judge applies s. 198 of the Family Law Act and decides that the wife's claim is not out of time. Mistake number five.

The husband appealed the dismissal of his application to have the wife's claim struck.

Starting a Family Law Proceeding

Under the new Supreme Court Family Rules and the old Supreme Court Rules, there are two ways to start a family law case, either by filing a Petition or by filing a Notice of Family Claim (new rules) or Writ of Summons and Statement of Claim (old rules). Petitions are used when the entire claim can be resolved at a single hearing before a judge in chambers. Adoptions are a good example of this sort of action. Most of the time, we use Notices of Family Claim because we expect that the claim will end in a trial, that there will be a few applications heard before we get to trial and that we'll need to use the rules about disclosure and discovery. A Petition is a sandwich to go. A Notice of Claim is an eight-course sit-down dinner.

Under Rule 3-1(4.1) of the new rules, however, a "family law case" can also be started by filing a separation agreement in court. I expect that most family lawyers haven't noticed this; I hadn't. This small point is actually rather important, because lots of procedural options apply to family law cases. Among other things, you've started a case in which interim applications can be brought and which might potentially be resolved by trial. You've also triggered the obligation Under Rule 7-1(2) to have a Judicial Case Conference before you can apply for any orders, or even send your Notice of Application to the other side.

You can also apply for whatever interim orders you wish Under Rule 10-5, including orders to have the agreement cancelled and orders made in its place. In other words, having started a family law case by filing the agreement, it was open to the wife to make her first application for spousal support and a division of property without needing to start all over and a file a Notice of Family Claim. This is where the second judge erred.
"[58] This proceeding has regrettably been marred by a series of procedural errors and missteps. The proceeding was commenced when the Wife filed by requisition the parties’ Separation Agreement. Pursuant to R. 3-1(4.1), the filing of the requisition commenced the family law case. 
"[59] A party seeking an order to set aside or vary a separation agreement must do so by way of application: see Rules 10-5(1) and 10-5(2). Accordingly, the Wife was correct to bring an application to set aside the whole or part of the Separation Agreement.

"[60] The original application was brought before [the judge]. Unfortunately, the relevant Family Rules do not appear to have been brought to her attention. She erred when she advised the Wife that she could not obtain the relief she sought unless she issued a notice of family claim seeking spousal support. I note that the Husband’s counsel did not suggest otherwise."
Choosing the Right Law

There was an even more fundamental problem in this case: the Family Law Act was the wrong law. The new act has certain rules about how the old act, and cases started under that act, apply under the new act. In particular, s. 252 says this about issues relating to property:
(1) This section applies despite the repeal of the former Act and the enactment of Part 5 of this Act. 
(2) Unless the spouses agree otherwise, 
(a) a proceeding to enforce, set aside or replace an agreement respecting property division made before the coming into force of this section, or 
(b) a proceeding respecting property division started under the former Act
must be started or continued, as applicable, under the former Act as if the former Act had not been repealed.
This doesn't apply to claims about spousal support, but it does mean that it's the Family Relations Act, the "former Act," that governs the terms of the parties' separation agreement about property and applications to cancel those terms. Here's what the court said:
"[42] The effect of s. 252(1) of the FLA is to allow parties that would otherwise have been subject to the FLA property regime at the time they filed their claim to proceed under the old FRA regime despite it having been repealed. In essence, s. 252(1) preserves the FRA regime as it concerns property division for any separation agreements that were finalized before the FRA was repealed, unless the parties elect to proceed under the FLA.

"[43] There is no evidence that the parties agreed that the dispute be governed by the FLA rather than the FRA. Accordingly, an application such as that brought by the Wife to set aside or replace a separation agreement made before the FLA came into force and dealing with property division must be resolved under the FRA. Procedurally, this means that s. 198 of the FLA, the section upon which the Husband relies, could not be used as a means of dismissing the Wife’s proceeding to set aside the property provisions of the Separation Agreement.

"[44] The FLA does not contain a similar transition provision for separation agreements concerning spousal support. In the absence of a similar transition provision for spousal support, a party to a separation agreement finalized before the FLA came into force and seeking to vary the spousal support provisions of that agreement would have to proceed under the FLA. The question of whether a spousal support claim under the FLA would be statute-barred would then turn on the proper construction of s. 198(3)."
Curiously, the Family Law Act didn't need to apply to her claim for spousal support either. Because the parties were married, the wife could have applied for spousal support under the Divorce Act... and the singular advantage she would have had under the Divorce Act is that the act has no limitation periods. Once you have married, you can apply for spousal support, regardless of your separation agreement, how long ago you signed it or how long ago you were divorced.

The Limitation Period

Although the issue of s. 198 did not absolutely have to be discussed, the court did have some interesting things to say about it in relation to s. 164, the section of the Family Law Act on when an agreement on spousal support can be cancelled. Here's what the relevant parts of s. 198 say:
(2) A spouse may start a proceeding for an order under Part 5 to divide property or family debt, Part 6 to divide a pension, or Part 7 for spousal support, no later than 2 years after,
(a) in the case of spouses who were married, the date
(i) a judgment granting a divorce of the spouses is made, or 
(ii) an order is made declaring the marriage of the spouses to be a nullity, or
(b) in the case of spouses who were living in a marriage-like relationship, the date the spouses separated.
(3) Despite subsection (2), a spouse may make an application for an order to set aside or replace with an order made under Part 5, 6 or 7, as applicable, all or part of an agreement respecting property or spousal support no later than 2 years after the spouse first discovered, or reasonably ought to have discovered, the grounds for making the application.
Fairly straightforward, except for that last bit about when the "grounds for making the application" were "discovered." 
"[39] While 'grounds' is not defined in s. 198 of the FLA, s. 164 of the FLA sets out a myriad of factors that must be considered when a spouse seeks to set aside or replace a spousal support agreement. The factors are similar to those set out in Miglin. ... "
(The court then recites s. 164(1), (3), (4) and (5).)
"[40] Section 164(3) says that the court may only set aside or replace with an order all or part of an agreement when satisfied that one or more of the circumstances set out in that subsection existed. That provision is then contradicted by s-s. 164(5) which indicates the circumstances set out in s-s. 164(3) need not exist if the agreement is significantly unfair on consideration of a completely different set of circumstances. Given the language of s. 164 determining when a party first discovered, or reasonably ought to have discovered, the grounds for making the application is, I suggest, a matter of some complexity."
Of course, this doesn't shine any additional light on the cases interpreting ss. 198 and 164, but it does suggest that the "grounds" for making the application might be limited to those articulated in the legislation rather than extrinsic factors such as ignorance of the law or a disability preventing action.

My thanks to Mary Fus for bringing this interesting case to my attention.

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