One of the common questions that arise in family law matters is what date should be used for dividing assets. This can have a significant impact on the outcome of the property division, especially if the value of the assets has changed over time – such as a significant increase in house values that have occurred in BC in recent years. In this post, we will discuss how the date of trial or agreement is generally used as a date for division of assets in BC, and look at the recent case of Banh v. Chrysler, 2022 BCCA 74. We will also explain how the Family Law Act (FLA) governs the valuation and division of family property, and how parties can choose a different date if they reach an out-of-court settlement.
The FLA provides for an equal division of the net family property, which is the value of the family property minus the value of the family debt and any excluded property. However, the FLA also allows for an unequal division of the net family property if an equal division would be significantly unfair, considering a number of factors such as the duration of the relationship, the terms of any agreement between the spouses, a spouse’s contribution to the career or career potential of the other spouse, a spouse’s significant depletion or dissipation of family property or debt after separation, and any other relevant circumstance.
The FLA also specifies how to determine the value of family property and family debt. Section 87 of the FLA requires that (a) family property must be valued based on its fair market value, and (b) the value of family property and family debt must be determined as of the date of (i) an agreement dividing the net family property, or (ii) the date of a hearing with respect to the division of family property and family debt. This is the presumptive date for valuation of family property under the FLA.
The recent case of Banh v. Chrysler, 2022 BCCA 74 illustrates how the date of trial or agreement is generally used as a date for division of assets in BC, unless there are exceptional circumstances that warrant a different date. The case involved a married couple who separated in 2014 after a relationship of only a couple of years and had a trial in 2019. The husband argued that the value of the family property should be determined as of the date of separation, not the date of trial, because the wife had increased her net worth by $1.6 million during that period.
The Court of Appeal reiterated that section 87 of the FLA requires that the value of family property and family debt must be determined as of the date of (i) an agreement dividing the net family property, or (ii) the date of a hearing with respect to the division of family property and family debt. This is the presumptive date for valuation of family property under the FLA.
The Court of Appeal also noted that a departure from the presumptive date is effectively a reapportionment or unequal division of the family property, which can only be done under section 95 of the FLA. Section 95 expressly provides for the reapportionment of net family property if an equal division would be “significantly unfair”. The Court of Appeal found that there was no significant unfairness in this case, as both parties had contributed to the acquisition, preservation, maintenance or improvement of the family property during their 25-year marriage.
In other words, the date of trial is generally used as a date for division of assets in BC, unless there are exceptional circumstances that warrant a different date. This may be the case even if it may have taken several years to reach the trial date and relationship was short, and property values have increased since separation. However, this does not mean that parties cannot agree to use a different date if they reach an out-of-court settlement. In fact, section 6(1) of the FLA allows parties to make an agreement respecting property division that is different from what the FLA provides. When parties do mediations with us, we have a discussion about the appropriate date to use for valuing their family property, such as the date of mediation or the date of separation (which some parties prefer). We have some flexibility when resolving matters out of court.
If you have any questions or need legal advice, please contact us at 250-824-1255.