Excluded Property: The onus is on you – recent BCSC Decision

Excluded Property: The onus is on you – recent BCSC Decision

While each spouse is generally entitled to equal division of family property under the Family Law Act property that spouses brought into the relationship is “excluded property”. Section 85 of the Act sets out what is “excluded property”. Inheritance, gifts from third parties, settlement proceeds, money payable under an insurance proceeds and anything derived from that money falls under the definition of excluded property. More importantly, the legislation makes it clear the onus is on the spouse claiming an exclusion to demonstrate where the exclusion came from.

A recent BC Supreme Court Family Law decisions reaffirmed a spouse’s obligation to demonstrate the exclusion. In Ebrahimi v. Mineyee, 2019 BCSC 379 a spouse claimed a condo in her sole name as excluded property on the basis that she purchased it with money in her account she had before her relationship began. Although her bank statements showed money from her account was used to fund a portion of the purchase the court was not satisfied she had met her burden of demonstrating the property was excluded. Mr. Justice G.C. Weatherill commented:

[57]         I am not satisfied that the respondent has discharged this onus.  Although the evidence shows that $8,500 from her bank account was used to fund a portion of the down payment for the purchase of the Condo, those monies were from the sale of UG Pizza which occurred after the parties were married.  There is no evidence regarding how much, if any, of that amount was derived from an investment in UG Pizza prior to the parties’ marriage on April 9, 2010 or what the value of that entity was at the time of the marriage.

[58]The balance of the purchase monies for the Condo came from monies gifted to the respondent by her family during the parties’ marriage as well as from the U.S. dollar account she opened on October 22, 2011.  With respect to the former, the respondent led no evidence that the money she received from her parents was a gift to her alone rather than to the parties together to enable them to purchase the Condo.  She could easily have done so.  With respect to the latter, I find that it is more probable than not that those funds were provided to the respondent by the claimant upon his arrival in Canada.

[59] The respondent has failed to demonstrate that any of the monies used to fund the purchase of the Condo were derived from the disposition of property acquired before the relationship began.

The condo owning spouse requested the equity divided unequally on the basis equal division would be unfair given she alone had contributed to the condo. Discussing this point, the court reiterated the law requires more than just “unfairness”. The unfairness must rise to the point of being meaningful and compellable:

[75] The test of “significant unfairness” imposes a more stringent threshold than the mere “unfairness” test under the former Family Relations Act, R.S.B.C. 1996, c. 128.  “Significant” means “extensive or important enough to merit attentions” and refers to something that is “weighty, meaningful or compelling”.  To depart from the general rule of equal division, there must be persuasive reasons shown having regard to the factors set out in s. 95(2): Jaszczewska at para. 41.

While the court ordered the condo sold and the equity divided, the court found it would be unfair not to consider the spouse’s unilateral contribution. He ordered the spouse who paid the upkeep and expenses on the property to be reimbursed 50% of those costs out of the equity of the condo before dividing it equally.

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