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. 

08 January 2018

Is a verbal agreement made between lawyers binding on their clients?

As counsel we have a tremendous responsibility to act not only in the best interests of our clients, but on their instructions.  When lawyers are retained, we are engaged by our clients to do certain things and act for them in a way that accords with the terms of our retainer agreement.  One of the things we are often tasked with is conducting negotiations.  It is crucial for our clients to know that we are negotiating on their behalf, but the decisions, particularly decisions to reach a settlement, that are made must be theirs. 

As counsel, it is as critical to ensure clear communication with our clients to make sure they are properly informed about any proposals and that they provide us clear instructions for responding and settling a case.  In this day and age of high speed internet, deals are often negotiated by email, by phone or on the Courthouse steps, as was the case in Sekhon v. Khangura, 2009 BCSC 670 (CanLII) where two lawyers negotiated and confirmed a settlement on behalf of their clients in person at the Courthouse.  The defendants in the Sekhon later claimed that a deal had not been reached so the matter was set for trial, with both former lawyers as witnesses.  

The Sekhon case provides an interesting overview of the issues that the Court considers when deciding if an agreement has been reached between lawyers, on behalf of their clients.  Were the lawyers properly retained?  Were the clients informed of the proposal and did they authorize their lawyer to accept the proposal on their behalf?  How was the information conveyed to the lawyer and how was it conveyed by the lawyer to the opposing party?  Did the proposal and the agreement need to be in writing? 
One of the defendants, Mrs. Khangura, claimed that a deal had not been reached because she had not instructed the lawyer to accept the proposal on her behalf.  In the alternative, she said at trial, that she told the lawyer she would consider the proposal if it was sent to her in writing, thereby alleging that the acceptance was conditional upon it being reduced to writing and signed.  Mrs. Khangura’s former lawyer testified that he was at all times acting on the basis of instructions from his client to settle the matter has she had been anxious to settle. 

The Court found that the defendants had properly instructed their lawyer to settle the case, and that the terms of settlement had been properly communicated verbally between the lawyers at the courthouse.  The following propositions were clarified at paragraph 110:

  1. A solicitor acting for a party in settlement negotiations is acting as the agent of the client;
  2. The solicitor is presumed to have the authority to bind the client to the terms of settlement;
  3. There is no obligation on other parties to make enquiries regarding a solicitor’s authority to settle a matter on a client’s behalf;
  4. It is in the best interests of the administration of justice that solicitors be free to contemplate settlements with solicitors without having to enquire about or be concerned with the actual authority of the solicitor;

Scherer v. Patella, [1966] O.J. No. 1017 (C.A.)
Harvey v. British Columbia Corps of Commissionaires, 2002 BCPC 69

  1. And from paragraph 117:  “A settlement made between counsel for the parties with their client’s knowledge and consent is enforceable as a binding contract.  The court will give effect to a binding contract, unless there are grounds for setting aside the contract under ordinary principles of contract law, such as fraud, duress, lack of capacity or mutual mistake.”  Robertson v. Walwyn Stodgell Cochrane Murray Ltd., [1988] B.C.J. No. 485 (C.A.).)
  2. An agreement does not need to be reduced to writing in order for it to be enforceable. 

“To my mind the form of the settlement is immaterial. The actual settlement was agreed to between solicitors. There was a settlement from the moment the solicitors reached an accord. The solicitors could have finalized the settlement by an exchange of correspondence or in any other manner they chose. However, the decision of Mr. Ouellette was to have his clients sign the offer to settle and have it accepted. That goes to form only.”   Rottacker Farms Ltd. v. C & M Farms Ltd.1976 ALTASCAD 158 (CanLII), [1976] A.J. No. 453 (S.C. (A.D.)) at ¶25:
And finally, “A complaint about a lawyer’s conduct in circumstances like this, however, is not relevant to the determination of whether there was a binding settlement agreement entered into between the two lawyers on September 22, 2006.  If a lawyer has exceeded his authority, that is matter between the lawyer and his clients: Adamoski at ¶4; Rottacker at ¶28; Baldissera v Baldassi2000 BCSC 1788 (CanLII) at ¶39.” 

So, the answer to the question posed: "Is a verbal agreement made between lawyers binding on their clients?" is yes, if the circumstances of the case are as those in the Sekhon case. 

As always speak to a lawyer if you have questions about your case.