Supreme Court Releases Another Helpful Decision on the Paramountcy Problem

On 27 March 2014, I wrote about the case of B.D.M. v A.E.M. on issue of the whether the Divorce Act, as federal legislation, automatically prevents the application of the provincial Family Law Act in cases involving married spouses seeking a divorce. The Supreme Court of British Columbia has just released its decision in J.M.P. v D.R.B. which addresses the same issue, with an admirable economy of language, and reaches the same result. For an overlong discussion of this issue, see my post "Supreme Court Releases Important Decision on Paramountcy Problem between Divorce Act and Family Law Act."

In J.M.P., the mother asked for an order for sole custody under the Divorce Act, as well as "an allocation of parenting responsibilities and parenting time" under the Family Law Act. The court summarized this peculiar position thusly:

"[33] Counsel for J.M.P. submits that any form of joint parenting is not possible ... because, in her submission, the parties lack the ability to discuss matters in a reasonable, amicable way. In her submission, the evidence shows that D.R.B. simply seeks to impose his will on J.M.P. in the event she disagrees with him about any aspect of parenting. 

"[34] The claimant seeks an order of sole custody pursuant to the Divorce Act. Counsel for the claimant concedes that D.R.B. should remain a guardian of the children under the FLA, but submits that, in terms of parenting responsibilities, J.M.P. should have the right to make the decisions. She says that it would be reasonable to require J.M.P. to inform D.R.B. with regard to major decisions affecting the children in order that he might have the opportunity to bring an application to court to challenge the decision in the event he considered she was acting contrary to the best interests of the children. She submits, however, that there is no effective, affordable mechanism that could be put in place to resolve disputes in some other way, such as a parenting coordinator or arbitration."

The father took the position that no custody order was necessary and that all orders necessary to see to the parenting of the children could be made under the Family Law Act:

"[39] D.R.B. seeks an order that would provide for parallel parenting, whereby; each parent would be responsible for making daily decisions during their parenting time; the parents would have to attempt to reach agreement on major decisions; and, failing agreement, the parties attend a mediator, with a court application being a last resort."

In attempting to square this circle, the court observed that:

"[88] Whether it is made under the Divorce Act or the FLA, a parenting order must be made only in accordance with the best interests of the children. ..."

After reciting the key provisions of the two acts on the best interests test, without further elaboration on the law, the court reached this conclusion (important bits in bold):

"[100] I agree with the submission of D.R.B. ... that the parenting arrangement can be defined quite adequately by making orders under the FLA and that there is no need to resort to the Divorce Act. There is no dispute that D.R.B. is to remain a joint guardian of the children under the FLA. The parenting time and the parenting responsibilities can be allocated under the FLA without the need to resort to the awarding of 'custody' per se under the Divorce Act. What is important, in my view, is that the order be precise, unambiguous and as complete as possible in the allocation of parenting rights and responsibilities, including parenting time."

Although I have some doubt about this approach to the resolution of parenting claims in a final order — a similar approach was appropriately taken to the Divorce Act in an interim application in D.Q.L. v W.D.H. — I certainly agree with the result. Guardianship is, after all, a larger, more comprehensive legal concept than custody.

My thanks to my colleague Anna Laing for pointing out this interesting decision.

Supreme Court Releases Important Decision on Paramountcy Problem between Divorce Act and Family Law Act

The excellent decision of Mr. Justice Sewell, of the British Columbia Supreme Court, in the case of B.D.M. v A.E.M. also known as A.M. was released a few days ago. The case is both another example of how high conflict family law disputes are so spectacularly ill-served by the justice system in its present form — the case featured a whopping 17 court applications and the trial required 68 days of court time, in fits and spurts, between 27 February 2012 and 13 September 2013! — but more importantly makes a point about the intersection of the Divorce Act and the new Family Law Act on parenting issues that I've been pressing since the act was first tabled on 14 November 2011.

Background

The basic nuts and bolts of the issue are these. 

1. We have a federal law, the Divorce Act, which talks about the care of children in terms of custody and access. We have a new provincial law, the Family Law Act, which talks about the care of children in terms of guardians who have parental responsibilities and parenting time, and people who are not guardians and have contact with a child. 

2. Under the Constitution Act, 1867, the different aspects of running a country are divvied up between the federal government and the provincial governments. This lets the federal government take charge of the army and the mail service, for example, while the provincial governments get to make rules about hospitals, bars and woodlots. From a family law point of view, the important things are the federal government's power to make laws about "marriage and divorce" and the provincial governments' powers to make laws about "property and civil rights" and matters of a "private nature."

3. Sometimes the powers of the federal government conflict with the powers of the provincial government. For example, the federal government has the power to make rules about "Indians, and the Lands reserved for the Indians" — I'm quoting here — which conflicts with the provinces' power to make rules about property. Conflicts like these are usually resolved through something called the doctrine of paramountcy, which means that if both levels of government can make rules about the same thing, the federal government wins. This is a huge generalization, but that's the gist of it.

4. Under the old Family Relations Act, the provincial rules about the care of children talked about custody, guardianship and access. This was very useful because these ideas mostly overlapped with the language used by the Divorce Act, and we wound up shoving all of the aspects involved in parenting into guardianship, leaving custody as a sort of Good Housekeeping seal of parental competence. Issues about paramountcy never really came up.

5. However, we now have a system in which, at least at first glance, the parenting provisions of the two laws are no longer compatible. If this is true, we have a real problem: we might find ourselves in a situation where there is one law for married couples wishing to divorce — there's a line of cases that says that a couple are asking for a divorce, orders about children and support must also be made under the Divorce Act — and another law for everyone else. 

6. This would well and truly suck because the present Divorce Act is a musty retread of older legislation and doesn't deal with important issues such as relocation, the enforcement of orders about children or the mechanics of decision-making concerning children. The Family Law Act, on the other hand, has lots of progressive and useful features, such as: the presumption that cohabiting parents are both guardians of their children; the distribution of parentage and guardianship to third-parties involved in the conception of children through assisted reproduction; the enforcement of withheld or unexercised parenting time and contact; the temporary delegation of parental responsibilities to third parties; relocation where the parents do and do not have an order or agreement on parenting arrangements; a best interests of the child test that specifically requires family violence and children's views to be considered; and, the status of informal parenting arrangements established without an order or agreement. Lots of good stuff, you see, that might be lost to married parents.

I'm going to explain the underlying legal issues next, but if you want to cut to the chase, skip all of this and scroll down to the next heading. In fact, the last paragraph in this post actually summarizes the importance of the decision quite succinctly.

My Position on the Problem

Not that anyone ought to give a fig what I think, but my take on the matter is that guardianship is a much older, much larger and much more comprehensive concept than custody, and that the federal government intentionally chose to use the much newer, much smaller and much more confined concept when it drafted the first Divorce Act in 1968 and the doctrine of paramountcy should be considered with a great deal of caution before rejecting the application of the Family Law Act.

Guardianship and its sister concept, tutelage, have been a feature of our law since the time of the Roman Empire, and continue in the traditions of the English common law and the French civil law. The first English law on guardianship popped up in the Guardians in Socage Act of 1267. The next important English law on the subject was the Tenures Abolition Act of 1660, which required guardians to use the property of the children in their care for the benefit of those children rather than themselves. The next important law — note the date — was the 1886 Guardianship of Infants Act, which gave mothers a right of guardianship and duplicated some of the relevant bits of the Guardians in Socage Act and the Tenures Abolition Act. 

These principles were all incorporated into the law of the colonies of Vancouver Island and British Columbia thanks to the proclamation of Governor Sir James Douglas in 1858, and survived until the repeal of the Family Relations Act on 18 March 2013. The powers of guardians were described at s. 25(2) of that act thusly:

Subject to this Act, a guardian of the estate of a child has all powers over the estate of a child as a guardian appointed by will or otherwise had on May 19, 1917 in England under Acts 12, Charles the Second, chapter 24,41 and 49 and 50 Victoria, chapter 12, section 4.

As you will have guessed, the act under Charles II is the Tenures Abolition Act and the act under Victoria is the Guardianship of Infants Act.

Here's what Sir William Blackstone had to say about the meaning of guardianship in the late 1760s:

"He may lawfully correct his child, being under age, in a reasonable manner; for this is for the benefit of his education. The consent or concurrence of the parent to the marriage of his child under age ... is absolutely necessary, for without it the contract is void. … A father has no other power over his son’s estate than as his trustee or guardian; for though he may receive the profits during the child’s minority, yet he must account for them when he comes of age. He may indeed have the benefit of his children’s labor while they live with him, and are maintained by him; but this is no more than he is entitled to from his apprentices or servants. The legal power of a father, – for a mother, as such, is entitled to no power, but only to reverence and respect; the power of a father, I say, over the person of his children ceases at the age of twentyone: for they are then enfranchised by arriving at years of discretion, or that point which the law has established, as some must necessarily be established, when the empire of the father, or other guardian, gives place to the empire of reason. Yet, till that age arrives, this empire of the father continues even after his death; for he may by his will appoint a guardian to his children."

If you got through all of that, the upshot of being a guardian is to have complete power of all of the affairs, interests and assets of the minor in your care. Here's how Madam Justice Huddart explained the modern understanding of guardianship in her excellent 1987 decision, Anson v Anson:

"... subject only to specific statutory restrictions or to limits imposed by a court, the guardian of the estate of a child has the full bundle of parental rights and duties regarding the child’s property and the guardians of the person has the full bundle of parental personal rights, including necessarily the entitlement to physical possession of the child."

Now as to custody, the first law on that subject was England's 1839 Custody of Infants Act, which allowed the civil court to make custody orders when the religious court had made an order for a judicial separation, a kind of half-divorce that left the parents legally married. With the 1857 Divorce and Matrimonial Causes Act, civil courts took control over the divorce process. Under s. 35 of that act, that the court could also make orders as "to the Custody, Maintenance, and Education of the Children of the Marriage" if it felt inclined to do so. 

Remember that, at this point, laws about guardianship had been on the books in England since 1267, and that the Guardians in Socage Act and the 1660 Tenures Abolition Act continued to be of such importance that they were incorporated in the 1886 Guardianship of Infants Act. Guardianship was hardly unknown to government when it introduced the Divorce and Matrimonial Causes Act. In other words, the English Parliament, in passing the act, must be presumed to have chosen to allow the court to make orders about custody rather than guardianship.

The Divorce and Matrimonial Causes Act, by the way, also became part of the law of British Columbia in 1858. It remained the law in this province until the federal government finally legislated on divorce in 1968.

Here's how Justice Huddart explained the meaning of custody in Anson:

"The case law indicates two different meanings. In its wide meaning it is akin to guardianship of the person, That is, it includes the bundle of rights and responsibilities of a parent. In its narrow meaning it is regarded as mere physical custody or day‐to‐day control of the child. 

"In both England and Canada in recent times the wide meaning has taken hold."

But that's not all of it. Under even the wider meaning of custody, custody is not guardianship; it is almost the equivalent of guardianship but still not guardianship. Justice Huddart continues:

"… custody under the Family Relations Act must be considered as being almost the equivalent of guardianship of the person. It includes the right to determine the child’s education, health care and religion, as well as physical control over the child … Essentially, the custodian has the full bundle of rights over the person of the child that are not reserved to the guardian of the person or some other person or institution by statute or by court order. ... 

"There seems to be no limit other than that of the imagination of the bar and bench to the variety of orders that can be devised to ensure the best interests of children are served by the distribution of custodial rights and duties between interested adults. … Key, however, is where the residual authority lies. … The wide meaning is entrenched in federal legislation and in the case law here and elsewhere. That wide meaning of custody detracts from the significance one can attach to an order for guardianship of the person, for it leaves few sticks in the bundle."

Now remember what I said about when the laws on guardianship were developed. When both the English Parliament and Canadian Parliament decided to make a law about divorce, they decided to include rules about the smaller concept of custody rather than the more encompassing concept of guardianship. My point here is essentially this: the doctrine of paramountcy should not be applied by rote to bump the provincial Family Law Act and its discussion of the rights and duties involved in guardianship merely because the federal government has chosen to legislate on a related subject. The federal government chose the smaller concept, and when the courts must make orders about the care of children in separated families there remains room for the larger discussion available under the Family Law Act.

Thankfully, there's another way to look at the dilemma, the route taken by Mr. Justice Sewell.

The Decision in B.D.M. v A.E.M.

In the case before Justice Sewell, the parties met abroad in 2004 and were married in 2005. The husband sponsored the wife's entry into Canada but the wheels fell off the bus in 2006 and the husband tried to revoke his sponsorship. The parties somehow reconciled and their daughter was born in 2007. They separated conclusively in 2008, which appears to be the same year that their litigation commenced.

At trial, the husband sought an order for sole custody under the Divorce Act, with limited, supervised access to the wife. The wife sought orders under the Family Relations Act that would preserve their status as the guardians of their daughter, but that the daughter mostly live with her and that she have right to determine certain parental responsibilities. (Other matters were of course on the table, but it's the judge's comments on this legal issue that I am most interested in.) Since the parties were making competing claims under the federal legislation and the provincial, the judge needed to make an initial decision about what law to apply (cites are omitted and will be throughout):

"[90] These proceedings are brought pursuant to the Divorce Act. Therefore, I must consider whether any order with respect to parenting arrangements must be made pursuant to the Divorce Act or whether it is open to the court to make such an order pursuant to the Family Law Act. In addition, I must address the question of the impact of an order for custody under the Divorce Act on the status of both parties as guardians under the FLA."

And here's the nub of the issue, from the judge's point of view:

"[94] The practical issue that arises from the different provisions of the Divorce Act and the FLA is that while parenting responsibilities can clearly be allocated among guardians under the FLA so that the powers exercised by a guardian may be limited, the authorities suggest that a parent to whom custody is granted cannot have his or her powers similarly limited."

Given the conflicting nature of the parties' claims, this issue cuts to the quick. After reviewing Justice Huddart's decision in Anson and the dissenting judgment in Young v Young, a 1993 case from the Supreme Court of Canada, Justice Sewell concluded that:

"[99] ... Thus it would appear that a non-custodial parent under the Divorce Act has very limited, if any, rights to participate in decision making with respect to the children of the marriage. The corollary of this is that a parent who has joint custody cannot be denied the right to participate in decision making with respect to the children. This is reflected in the literature and authorities that suggest joint custody should be granted only when the court is satisfied there will be a high degree of cooperation between the parents."

In light of this rather black and white conclusion, the Family Law Act would clearly provide the court, and the parties, with a much more flexible range of options to address the conflict between the parties and the optimal arrangements for the care of their daughter. Which act then applies? The Divorce Act, because it is paramount federal legislation and the foundation of the husband's claim, or the Family Law Act?

The court then quoted from Madam Justice Humphries' decision in Hansen v Mantei-Hansen, one of the more important early decisions looking at the relationship of the Divorce Act and the Family Law Act, and her discussion of "how the guardianship, parenting and contact model in the FLA might render the guardianship provisions incompatible with the custody and access provisions of the Divorce Act" (important bits in bold):

"[117] The new Act is not easily and conveniently compatible with the Divorce Act because the concept of guardianship in the new Act subsumes the concept of custody. It may become apparent that orders respecting children should no longer be sought or made under both Acts, and as the Divorce Act must be pleaded if a marriage is to be dissolved, and as the federal legislation is paramount, orders under that Act alone may become more prevalent. 

"[118] The situation in the present case, where both parents wish to have orders for joint custody and joint guardianship, means that this court does not have to deal with the question of what rights and responsibilities remain in the non-custodial parent in the face of an order for sole custody under the Divorce Act, when the non-custodial parent continues to be, by statute, a guardian under the expanded concept of guardianship in the new Act."

As a result, a number of decisions have taken the view that orders dealing with custody should be made under the Divorce Act exclusively. I don't think that Justice Humphries was suggesting quite so stark a result, and indeed Justice Sewell cites a number of cases which the provisions of the Family Law Act were applied despite the presence of claims under the Divorce Act and the paramountcy principle:

"[106] In A.K. v. M.K., Holmes J. explained:

To the extent that there is inconsistency between the Divorce Act and the FLA, the principle of paramountcy might suggest that the Divorce Act should govern. However, in my assessment, it would respond more closely to the evidence and submissions the parties presented in the trial to apply the FLA, in this particular case.

"[107] In D.Q.L. v. W.D.H., Truscott J. also applied the FLA:

In view of the fact that custody under the Divorce Act is to be given a broad meaning akin to the concept of guardianship, the concept of guardianship is now set out in the FLA, only interim orders are sought, and these are applications on competing affidavits, I decline to make any order for custody at this time as I consider that all the necessary requirements for the children on an interim basis can be covered within the principles of guardianship set out in the FLA.

"[108] In S.F.S. v A.F.S., Melnick J. at trial made a divorce order and an order for joint custody ... under the Divorce Act. He then said the doctrine of paramountcy ... required him to determine the primary residence of the children according to the factors set out in ... the Divorce Act. However, he also said those factors are not 'in any meaningful way inconsistent with the factors … under the FLA'. 

"[109] In D.J.F. v. V.J.F., Abrioux J. said both the Divorce Act and the FLA apply to the issue of custody provided there is no conflict, and the FLA applies to guardianship. He found no conflict on the facts of that case. 

"[110] In M.M. v. C.J., Jenkins J. began with the following summary:

Where no operational inconsistency or incompatibility exists between the provincial and federal acts, there is discretion to use either Act. However, it is preferable to use the Divorce Act. Where an operational inconsistency exists, the doctrine of paramountcy applies and the order must be made under the Divorce Act.

He then distinguished the cases applying the Divorce Act because in all of them at least one party had relied on that Act. ... As a result Jenkins J. found it unnecessary to determine the issue of paramountcy. He applied the FLA."

Back to the case at hand. Having established that (1) the Divorce Act is an all-or-nothing proposition when it comes to sole custody and parenting decisions, and that (2) the doctrine of paramountcy is not an insuperable leviathan, Justice Sewell then turned to the husband's claim:

[112] There is reason to be cautious about granting sole custody in this case. The [husband] in particular has attached considerable significance to the concept of custody. I have concluded that defining parental responsibility within the rubric of custody will cause further discord and strife, and will not promote the best interests of [the child]. I prefer to make an order that continues to recognize both parents as guardians with the right to be consulted on important parenting matters. While I have concluded that one parent must have final decision-making power, I think it is important that that parent attempt to consult with the other parent before making important decisions on behalf of [the child]. ... The [wife] is willing to attempt to consult with the claimant. Section 40(2) of the FLA would permit me to make such an order."

And here's the kicker and the reason, from my point of view, to celebrate this decision:

"[113] After reviewing the authorities, I am of the view that the doctrine of paramountcy does not preclude consideration and application of the FLA in family law proceedings in which a divorce is granted. 

"[114] An overlap in legislation does not, without more, trigger paramountcy. Paramountcy only arises if a provincial law would frustrate the purpose of a federal law. In Canadian Western Bank v. Alberta, the [Supreme Court of Canada] reiterated the principles of the doctrine of federal paramountcy as follows:

69 According to the doctrine of federal paramountcy, when the operational effects of provincial legislation are incompatible with federal legislation, the federal legislation must prevail and the provincial legislation is rendered inoperative to the extent of the incompatibility. The doctrine applies not only to cases in which the provincial legislature has legislated pursuant to its ancillary power to trench on an area of federal jurisdiction, but also to situations in which the provincial legislature acts within its primary powers, and Parliament pursuant to its ancillary powers... 

70 Of course, the main difficulty consists in determining the degree of incompatibility needed to trigger the application of the doctrine of federal paramountcy. ... 

71 ... In Multiple Access Ltd. v. McCutcheon, the Court defined the fundamental test for determining whether there is sufficient incompatibility to trigger the application of the doctrine of federal paramountcy. ...

In principle, there would seem to be no good reasons to speak of paramountcy and preclusion except where there is actual conflict in operation as where one enactment says 'yes' and the other says 'no'. ... ; compliance with one is defiance of the other.

72 Thus, according to this test, the mere existence of a duplication of norms at the federal and provincial levels does not in itself constitute a degree of incompatibility capable of triggering the application of the doctrine. Moreover, a provincial law may in principle add requirements that supplement the requirements of federal legislation. In both cases, the laws can apply concurrently, and citizens can comply with either of them without violating the other. ... 

74 ... The fact that Parliament has legislated in respect of a matter does not lead to the presumption that in so doing it intended to rule out any possible provincial action in respect of that subject. ... 

75 ... the courts must never lose sight of the fundamental rule of constitutional interpretation that, '[w]hen a federal statute can be properly interpreted so as not to interfere with a provincial statute, such an interpretation is to be applied in preference to another applicable construction which would bring about a conflict between the two statutes'. To sum up, the onus is on the party relying on the doctrine of federal paramountcy to demonstrate that the federal and provincial laws are in fact incompatible by establishing either that it is impossible to comply with both laws or that to apply the provincial law would frustrate the purpose of the federal law.

"[115] I can see nothing in the FLA that would frustrate the purpose of s. 16 of the Divorce Act. The underlying purpose of the relevant provisions of the Divorce Act and FLA are identical. Both statutes require the Court to consider the best interests of the child in determining parenting responsibility."

And there you have it. The provincial Family Law Act can complement the federal Divorce Act and add additional rules to its requirements. The Divorce Act must be interpreted, where possible, in a manner that does not interfere with the Family Law Act. To oust the application of the Family Law Act, a party must establish that it is impossible to comply with both the Divorce Act and the Family Law Act.

My thanks to Anna Laing, Agnes Huang and James Cudmore for bringing this important case to my attention.

Update to 1998 "Myths and Realities of Custody and Access" Report Published

The FREDA Centre for Research on Violence Against Women and Children has just published a new report called "Myths and Stereotypes in Family Law: Exploring the Realities and Impacts of Custody and Access / Shared Parenting" (PDF).  The report offers a helpful reality check for the canards offered up in support of legislating a presumption of shared parenting between separated parents by, typically, fathers' rights groups, including:

• Including the presumption of “shared parenting,” “joint custody,” or “enhanced access” in divorce law will result in good and responsible parenting.
• More and more men are being denied access to their children by women and the family law process.
• There is an epidemic of false allegations of child abuse against fathers by malicious and vindictive mothers.
• Feminists and mothers are fighting against equality for fathers.

The report updates a 1998 report called "Myths and Realities of Custody and Access" prepared by Margaret Denike and Agnes Huang with the FREDA Centre that I expect was prepared for the federal Special Joint Committee established in 1997 as the quid pro quo for the Senate's cooperation in passing the Child Support Guidelines.

I assume that the update was prepared in light of Bill C-560, a private member's bill proposed by MP Maurice Vellacott, presently before Parliament that would amend the the Divorce Act to include a presumption of shared custody, rebuttable upon proof that "the best interests of the child would be substantially enhanced by allocating parenting time ... other than equally." My previous comment on the bill is available in my post "Equal Parenting Amendment Bill Tabled;" a more complete critique of presumptions of shared custody is available in my post "Why There is No Place for Presumptions of Shared Parenting in Family Law."

Update: 18 March 2014

As I've already received my first comment on the above post, I'll announce that I am imposing some ground rules. You see, when I first wrote about Mr. Vellacott's bill in December, I had the pleasure of dealing with a number of comments from fathers' and men's rights people, which escalated after one anonymous posted a call to arms on a men's rights subreddit titled "Canadian lawyer lies in blog about Shared Parenting Laws in Australia, then censors my comments when I call him on it. Help needed!" Of course, I did not censor his remarks, much of which were submitted over the holidays and were accordingly delayed, and I did not "lie" about shared parenting laws in Australia, I merely provided a view that differed from his, which I later supported with a number of articles at his demand for "citations."

In any event, over the weeks that followed the ALL CAPS and multiple-exclamation-marks crowd went to town with various poorly couched arguments relying on emotional persuasion, rather than fact or logic, and attacked my colleagues and I with a variety of slanderous remarks dwelling on lawyers' supposed avarice and willingness to distort the truth to win. As a result, I will publish and reply to the comment I've just received. Future comments, however, may or may not be published and most certainly will not be published if they contain ad hominem attacks against me. I also don't intend to get into a running debate with anyone. Don't feel bad, I'm just not interested.

For those of the view that lawyers (1) foment discord and promote litigation to line their wallets, (2) are liars or "present baseless assertions," or (3) are "scum" who make the world "a worse off place," please review similar comments on my posts "Equal Parenting Amendment Bill Tabled" and "Why There is No Place for Presumptions of Shared Parenting in Family Law" before making comments in a similar vein. If you have something actually original to say on the topic, fill your boots.

For those who wish help in composing a rational argument in support of their views, you may find some helpful tips in my post "A Brief Guide to Making a Better Argument," which is so well-written it was described as "unbelievable!" by one commentator, although I suspect that he may not have been expressing enthusiasm.

"Significant unfairness" is addressed at last! Sort of. Well, no, not really.

Yesterday, the British Columbia Supreme Court released its judgment in Karreman v Karreman, the first decision to address the meaning of "significant unfairness" under the new Family Law Act.

This is important, you see, because the Family Law Act uses "significant unfairness" as the threshold that must be met to:

• set aside an agreement on the distribution of property and debt between spouses (s. 93(5))
• divide family property or family debt other than equally (s. 95(1), (2)(i))
• divided property normally excluded from division (s. 96(b))
• set aside an agreement on spousal support (s. 164(3))

Under the old Family Relations Act, we knew what "unfair" meant, as that was the test that had to be met to divide family assets unequally (s. 65(1)). We also knew what "grossly unfair" meant, as that was the test to be met to reduce or cancel arrears of child support or spousal support and interest accruing on those arrears (s. 96(2), (3.1), (3.2)).

Although we had loads of Family Relations Act cases explaining the meaning of unfair and grossly unfair, we have nothing explaining the meaning of significantly unfair... although a quick glance at at a dictionary suggests that significantly unfair falls somewhere between mere unfairness and gross unfairness. Accordingly, family law lawyers have been waiting with bated breath to learn what this new phrase means; how else can we give advice about whether an agreement is likely to be set aside, whether family property is likely to be divided unequally or whether excluded property will be divided?

It would be nice to say that with Karreman the wait is over. It isn't.

In this case, the parties had been married for about twelve years, during which time they managed to have four children. Shortly after separation, the parties agreed, without legal advice, that the wife would have the home in lieu of child support and the husband would keep business equipment worth some $100,000. However, the transfer of the family home never happened and further misfortunes befell the husband's business and the parties' indebtedness. By court order, the family home was put up for sale. At the time of trial, the home had been sold with $70,000 remaining after the mortgage was paid off and the husband was in arrears of child support to the tune of $26,000.

Ignoring some of the complexities, this means that the husband had kept property worth $100,000, for which he would normally have given the wife $50,000, while the wife was left with $70,000 from the family home, of which the husband would normally have been entitled to $35,000, and the husband still owed the wife $26,000 in child support. An unsatisfactory situation to be sure.

Here is the court's take on things:

"[15] I find there are elements to this case that clearly militate against dividing up the proceeds of sale equally between the parties. The affidavit material filed by the claimant establishes the respondent intended the claimant to have the equity from the matrimonial home in lieu of child support. While that might have made sense to the parties at the time, it reflects a view that all of the matrimonial property, including the equipment and vehicles worth approximately $100,000, belonged to the respondent to dispose of as he saw fit without regard to the claimant’s interests in the couple’s assets. 

"[16] If the proceeds from the sale of the matrimonial home were divided equally between the claimant and respondent, the respondent would be receiving a double benefit — giving the claimant the home in lieu of child support and then effectively clawing half of it back, while still retaining the benefit of the equipment and vehicles. 

"[17] Based on the rationale behind the [child support order], which imputed income of $30,000 per year to the respondent and fixed his child support obligation at $754 per month, the respondent notionally owes child support from the date he moved out of the matrimonial home in October 2009 to December 31, 2012, the month before the [child support order] took effect. This is a total of 26 months (November 1, 2009 to December 31, 2012) and amounts to $19,604. The respondent paid $4,300 in child support prior to January 1, 2013. I deduct that amount from $19,604 and find that he owes the claimant $15,304 for support prior to the [child support order]. 

"[18] From January 1, 2013 up to and including March 1, 2014 the respondent owes child support in the amount of $754 per month for a total of $11,310. A total of $26,614 is therefore due to the claimant for child support from November 1, 2009 to March 1, 2014. 

"[19] When the amount of child support owing to the claimant is deducted from the net sale proceeds of the matrimonial home, the amount of $43,768.55 remains. As I noted above, the respondent had the benefit of about $100,000 worth of vehicles and business equipment as a result of the first agreement he made with the claimant. The claimant was entitled to a share in the vehicles and business equipment as well as a share of the matrimonial home. Apart from any interest in matrimonial assets, the respondent had an obligation to pay child support. 

"[20] After considering all the circumstances I find it would be significantly unfair within the meaning of s. 95(2)(i) of the Act to award the respondent any of the proceeds of sale from the matrimonial home, even after deductions for child support currently owing. I order that the proceeds of sale be paid to the claimant. With that order, the respondent’s liability for child support up to March 1, 2014 is satisfied."

It is clear that in this case, the parties' management of their property and support obligations were less than ideal, but neither this nor the absence of legal advice automatically relieves them from the presumption that they were bound by the agreement they had struck. Nor does the husband's failure to pay child support relieve them of their agreement.

Unfortunately, it is not clear that the court was able to make an order about property without first setting aside the parties' agreement. Under s. 94(2), the court may not make an order about the division of property in the face of an agreement on the division of property, unless that agreement is set aside.

The test to decide whether to set aside such agreements is set out in s. 93, and although an absence of legal advice can be read into that test, the absence of legal advice on its own is not sufficient. There must be proof of non-disclosure, that a party was taken advantage of, that a party did not understand the agreement, or other circumstances under the law of contracts that would void the contract. Failing that, the court can set the agreement aside if it is "significantly unfair" in light of the time passing since the agreement was made, the parties' intention to achieve certainty and the extent to which the parties relied on the agreement. The court, however, addressed none of these issues.

Nevertheless, assuming that the agreement had been properly set aside, leaving the court with a free rein to divide the family property, what then was the "significant unfairness" justifying the unequal division of that property? As near as I can figure, it stemmed from (1) the parties' mutual misunderstanding of the law, which resulted in the husband keeping more than half of the family assets, and (2) the arrears of child support owed by the husband. This, I think, may be reasonable.

If one assumes that all of the property at the time of separation was shareable family property, which would ignore contributions made prior to the beginning of the parties' twelve year relationship, each party should have received $50,000 for the business equipment and about $35,000 for the sale of the family home. $85,000 each, in other words. Instead, the parties agreed that the husband would have all of the equipment, $100,000, and the wife would have all of the house, $70,000. This yields a shortfall of $15,000 owed by the husband to the wife, about 9% of their total assets.

This may not on its own be significantly unfair, however the court took the husband's arrears of child support into account, and when you deduct the arrears of $26,000 from the money due to the wife from the sale of the family home, things look grim indeed. The husband received $100,000 while the wife received, net of the arrears, $43,000. Although I'm not convinced that a debt for child support is a factor to be taken into account in the division of family property — it isn't under s. 95(2) — the shortfall of $42,000 from an equal division of $85,000 each now amounts to 21% of the total assets. Perhaps this is the degree of unfairness that must be reached to be "significant."

In any event, the result was that the $70,000 remaining from the sale of the family house was "reapportioned" to the wife and the husband's arrears of $26,000 were extinguished. All in all, not a bad deal at all the husband, assuming that the equipment he kept was really worth $100,000.

My thanks, again, to Agnes Huang for bringing this case to my attention.

Bill Amending Family Law Act Tabled

On 3 March 2014, Minister of Justice Suzanne Anton tabled Bill 14, which, if passed, will become the Justice Statutes Amendment Act, 2014. The bill contains a number of amendments to the legislation on family law matters in British Columbia: the Adult Guardianship Act, the new Family Law Act, the Family Maintenance Enforcement Act, the Interjurisdictional Support Orders Act, the Public Guardian and Trustee Act and the new Wills, Estates and Succession Act when it comes into force. In this post, I will briefly outline the amendments to the Family Law Act.

Trust Property

Sections 11, 12 and 13 of the bill are designed to clear up certain problems relating to the status of trust property. The amendments make it clear that a spouse's beneficial interest in property, as well as property bought using the spouse's beneficial interest, is presumed to be family property to be divided between the spouses. However, if the beneficial interest concerns property held in a discretionary trust (a trust in which the distribution of property and to whom it will distributed is decided by the trustee, not the beneficiaries or the person who created the trust) and the spouse did not contribute to or create the trust, the beneficial interest is excluded from the pool of family assets to be divided.

Gifts

Section 13 of the bill would amend the act to make it clear that the only gifts that are excluded from the pool of family property to be divided are gifts from third parties. This is really important, because the way the Family Law Act currently reads, gifts between spouses are excluded from the pool of family property, and spouses often make decisions about how property is owned for tax reasons, to protect the property from creditors and to plan the distribution of their estates

Foreign Property

Sections 14, 15, 16 and 17 of the bill go some way toward cleaning up the extraordinarily incomprehensible provisions of the Family Law Act on property located outside of British Columbia that is, or might be, family property. These provisions are found in Division 6 of Part 5 and are horrifically complicated, and as a result I won't say more about it. I have written a paper on the foreign property provisions of the act which may be available from the Continuing Legal Education Society of BC.

Protection Orders

Sections 18 and 29 of the bill, would add the Criminal Code definitions of "firearm" and "weapon" to the definitions for Part 8 of the Family Law Act, the part that deals with protections orders, and clarify that a protection order can not only prohibit someone from possessing firearms and weapons, but also the licences, certificates, authorizations and whatnot relating to the firearms and weapons. A protection order can also prohibit someone from possessing "a specified object."

Consolidation of Multiple Proceedings

Section 20 of the bill makes it clear that the court can join two or more proceedings together. This will be most useful when there is a proceeding between two parents about parenting time, for example, and a relative starts a separate proceeding seeking contact with the same child. Since any order made in the second proceeding would impact on the order made in the first proceeding, a party could apply for an order that both proceedings be joined and dealt with together.

Needs of the Child Assessments

Sections 21 and 23 of the bill, would amend the Family Law Act provisions on needs of the child assessments, formerly called custody and access reports, so that only particular people with particular training and experience — to be established by regulation — are able to conduct needs of the child assessments.