24 January 2018

Unequal Division of Family Property - what exactly is "Significant Unfairness" anyway?

Karen F. Redmond

Family Law Lawyer and Mediator

In the recent case of  Polard v. Polard, 2017 BCSC 1963, Justice MacKenzie granted the wife's request for unequal division of family property (70/30 in her favour) based largely on the fact that the husband had significant claims to excluded property. What is interesting to me about this case is that the excluded property consisted entirely of a Family Trust which the husband would be entitled to receive on the death of both his parents who were alive and well at the time of the trial. 

The case provides an excellent overview of the provisions of the Family Law Act required for consideration in claims involving "significant unfairness", including the definition of family property and excluded property; the presumption of equal division under section 81  and the considerations under section 95(1) if a party seeks to divide family property unequally on the basis of significant unfairness.   

Under the section 95 analysis, subjection (2) sets out the considerations for the court including the duration of the relationship between the spouses, a spouse's contribution to the career or career potential of the other spouse, and any other factor other than those listed in section 95(3) which states

"The Supreme Court may consider also the extent to which the financial means and earning capacity of a spouse have been affected by the responsibilities and other circumstances of the relationship between the spouses if, on making a determination respecting spousal support, the objectives of spousal support under section 162 (objectives of spousal support) have not been met."

Although significant unfairness is not defined in the Family Law Act, in L.G. v. R.G. , 2013 BCSC 983 at paragraph 71 the court cautioned against "a departure from the default of equal division in an attempt to achieve a "perfect fairness."  And only when an equal division would be "unjust or unreasonable" should the court depart from an equal division.  The BC Court of Appeal further clarified the meaning in Jaszczewska v. Kostanski, 2016 BCCA 286  saying at paragraph 42 that significant unfairness must be something objectively unjust, unreasonable or unfair in some important or substantial sense. 

The first step of the analysis in determining whether equal division would be significantly unfair is determination of family property (and debt) pursuant to sections 84, 85 and 86 of the Family Law Act, and once an equal division has been calculated, the court then determines whether or not equal division would be significantly unfair having regard to the provisions of section 95 (see Remmen v. Remmen, 2014 BCSC 1552 and Blair v. Johnson, 2015 BCSC 761.

In the Polard case what struck me was that the excluded property consisted of benefits which might at some point be conferred on the husband from the Family Trust controlled by his father.  The matter was somewhat complicated by the fact that distributions might in future be made to him from rebates which may or may not be forthcoming from CRA.  The husband argued that he never actually received any money from the tax maneuvers utilized by his father and the accountants which were done in order to reduce the tax bill from the sale of his father's business and not to benefit him or his siblings.  Despite the evidence of Mr. Polard Sr. that Mr. Polard Jr. would not actually receive any financial benefit until the death of both parents, the Court reapportioned family property 70/30 in favour of the wife. 

An interesting case to read.  As always, speak to a family law lawyer to discuss the specifics of your case.