Since the Family Law Act, S.B.C. 2011, c. 25 (“FLA”) came into force in 2013, the courts have grappled with the meaning of “significantly unfair” in the context of reapportionment claims. In BC, separating spouses may be entitled to a greater portion of family property, if they can prove that it would be “significantly unfair” to divide the family’s property equally.
The important takeaway from a recent BC Court of Appeal case, Singh v. Singh, 2020 BCCA 21, is that the “catch all” provision in s. 95(2)(i) of the FLA, does not really mean “any other factor” that leads to a finding of significant unfairness. Section 95(2)(i) is limited to factors that relate to the economic characteristics of a spousal relationship. This includes, for example, bankruptcy, undisclosed assets, and other economic or financial factors arising from a separation. However, the question remains: how broadly can the court now interpret the meaning of “economic” factors?
Under s. 95 of the FLA, the court will consider the following factors in a claim for reapportionment:
- the duration of the relationship between the spouses;
- the terms of any agreement between the spouses, other than an agreement described in section 93 (1) [setting aside agreements respecting property division];
- a spouse’s contribution to the career or career potential of the other spouse;
- whether family debt was incurred in the normal course of the relationship between the spouses;
- if the amount of family debt exceeds the value of family property, the ability of each spouse to pay a share of the family debt;
- whether a spouse, after the date of separation, caused a significant decrease or increase in the value of family property or family debt beyond market trends;
- the fact that a spouse, other than a spouse acting in good faith,
- substantially reduced the value of family property, or
- disposed of, transferred or converted property that is or would have been family property, or exchanged property that is or would have been family property into another form, causing the other spouse’s interest in the property or family property to be defeated or adversely affected;
- a tax liability that may be incurred by a spouse as a result of a transfer or sale of property or as a result of an order;
- any other factor, other than the consideration referred to in subsection (3), that may lead to significant unfairness.
- (3) 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 161 [objectives of spousal support] have not been met.
The catch-all “any other factor” in section 95(2)(i), has recently been discussed by the Court of Appeal in Singh v. Singh, 2020 BCCA 21. The outcome of which was to limit the broadness of section 95(2)(i) to only consider economic factors arising from a separation.
In Singh v. Singh, 2020 BCCA 21, the parties were married for 37 years. At separation, the trial judge found that the parties owned property in British Columbia, Arizona and Palm Springs. The parties also owned property abroad in India (the “India Properties”). The trial mainly concerned conflicting claims to these assets, their values, and legal ownership. On appeal, Mr. Singh argued that the trial judge overvalued certain assets, wrongly divided assets, and wrongly awarded Ms. Singh $250,000 under s. 95 of the FLA to compensate her for “significant unfairness”.
At trial, which lasted 27 days, the court found Mr. Singh’s disclosure of assets inadequate and misleading. He was also found to be an untruthful witness. He had breached court orders, lied in affidavits, gave inconsistent and conflicting testimony, falsely swore his Form F8 Financial Statement, testified that amounts up to $10,000 were not material in terms of his disclosure, gave false testimony in court, disregarded the judge’s instructions not to discuss his testimony while under cross-examination, admitted that he did not read affidavits he swore, admitted he “doctored a document” in order to mislead the court, forged Ms. Singh’s signature, breached a restraining order, and commenced a bankruptcy proceeding in Arizona for an improper purpose. He demonstrated a clear disregard for the administration of justice.
Needless to say, the trial judge preferred the evidence of Ms. Singh.
The only successful aspect of Mr. Singh’s appeal was his argument that one of the Indian Properties, “Sector 35A”, was wrongly attributed to him. Sector 35A was subject to litigation, and the contract to purchase was never completed, meaning Mr. Singh did not own this property. The Court of Appeal found that it was clear (partially based on fresh evidence), that Mr. Singh did not have legal title to Sector 35A and as such it could not be divided.
This case is important as it relates to a new interpretation of “significant unfairness” and s. 95 of the FLA:
With respect to unequal division of property, the trial judge adjusted the otherwise equal division of family assets by allocating an additional $250,000 to Ms. Singh, pursuant to s. 95 of the FLA, explaining that:
“Mr. Singh’s actions and motivation to file for Chapter 11 protection [i.e. bankruptcy] and the significant related expenses to RPC 2011 [a financial account]… engage the significantly unfair consideration under s. 95 of FLA; unspecified properties and funds in India in which I find Mr. Singh to have an interest; and equalization of division for Mr. Singh in family property; an overall adjustment for these entitles Ms. Singh to a further $250,000.”
On appeal, Mr. Singh argued that the evidence did not rise to the high threshold of “significant unfairness”. Ms. Singh countered that the trial judge’s $250,000 reapportionment was “modest” in the context of a body of assets worth an estimated $6.1 million.
With respect to the $250,000 award, the issues were:
- whether the costs associated with a bad faith petition in bankruptcy, and the judge’s finding that there were undisclosed assets outside the jurisdiction, come within the factors to consider in reapportioning family assets pursuant to s. 95(2)(i), and
- whether the judge improperly exercised his discretion in ordering an unequal division of assets.
The Court of Appeal reviewed the law on the interpretation of “significant unfairness”, noting:
- the Legislature sought to increase certainty, fairness, and predictability in property division matters with the FLA by reducing the discretion of the courts to depart from equal division. It is clear that the Legislature intended the general rule of equal division to prevail unless persuasive reasons can be shown for a different result (Jaszczewska v. Kostanski, 2016 BCCA 286);
- “Significant” means “extensive or important enough to merit attention” and something that is “weighty, meaningful or compelling,” concluding that to justify an unequal distribution, there must be something objectively unjust, unreasonable or unfair in some important or substantial sense;
- In enacting s. 95(2)(i) (“any other factor”) the Legislature recognized that there may be factors other than those listed that could ground significant unfairness. Hence, some discretion is available.
In reviewing section 95(2)(i) of the FLA, (“any other factor … that may lead to significant unfairness”), the Court of Appeal found that it was appropriate to limit this general term to the class of terms that precede it, finding that:
“other factors enumerated in s. 95(2) suggest consideration of aspects of the relationship between the spouses, including its duration, the terms of any agreement, as well as the characteristics of family assets and debt and how the spouses have influenced their value. One of the considerations in s. 95(2)(g) includes an analysis of a spouse’s good faith or motive. These factors are broad. Nevertheless, in my view, they all relate to a limited class, namely, the economic characteristics of a spousal relationship.”
On the whole of the evidence, the Court found that the reapportionment of $250,000 to Ms. Singh was justified, and in keeping with the (new) proper reading of s. 95(2)(i).