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The issues relate to the question of whether the presumption that when a married spouse transfers property to the other spouse the spouse making the transfer intends to make a gift should apply to make property that would otherwise have been excluded from the property that is divided on a marriage breakdown included property. I wrote about the decision in V.J.F. v S.K.W., 2016 BCCA 186 in my post “What Happens to Funds Inherited by a Spouse on the Breakdown of the Marriage.” In the V.J.F. case, the husband had inherited $2 million which he used to purchase real estate in his wife’s name. The trial judge had found that the husband had failed to rebut the presumption of advancement and that the real property was a gift to the wife. The court divided the land equally between the spouses. Had the husband bought the land using the inherited funds in his own name, the land would have been excluded from the division of property because it was an inheritance.
The Ministry of Justice poses the following questions in the Discussion Paper:
1. Is it more consistent with fairness between spouses for the FLA to provide that gifts of excluded property between spouses transfer beneficial ownership or to allow excluded property to always retain its excluded status? Consider the example of RRSP’s or other investments purchased with the excluded property of one spouse and registered in the name of the other spouse? Should the value of the excluded property be returned to the transferor spouse or treated as family property under Part 5 of the FLA?
2. The BCCA decision in VJF suggests that a spouse who wants to rebut the presumption of advancement can enter into an agreement that sets out that property exchanged between them is not a gift. Is this a practical way for spouses to address the issue?
3. Should consideration be given to amending the legislation to explicitly abolish the presumption of advancement for the purposes of Part 5 of the FLA entirely? Or, should consideration be given to adopting the approach used in other provinces?
4. If the presumption is not abolished for purposes of Part 5 of the FLA, should the FLA be clarified to ensure that the presumption also applies to those non-married spouses to whom Part 5 of the FLA applies?
5. The BCCA decision in VJF alludes to the usefulness of the presumption of advancement to ensure fairness between spouses. If the presumption of advancement continues to apply to matters under Part 5 of the FLA, does section 95 of the FLA provide sufficient flexibility to allow a Court to address any alleged unfairness caused by excluded property being converted to family property?
6. The BCCA decision in VJF alludes to the usefulness of the presumption of advancement to ensure fairness between spouses. If the presumption of advancement continues to apply to matters under Part 5 of the FLA, does section 95 of the FLA provide sufficient flexibility to allow a Court to address any alleged unfairness caused by excluded property being converted to family property?
7. If the presumption of advancement is specifically abolished regarding matters under Part 5 of the FLA, does section 96 of the FLA provide sufficient flexibility to allow a Court to address any alleged unfairness that results from the tracing of excluded property?
8. Are there other “rights under equity or any other law” that may interact with Part 5 of the FLA which require examination?
You may respond by mail or email as follows:
By regular mail: Civil Policy and Legislation Office
Justice Services Branch
Ministry of Justice
PO Box 9222, Stn Prov Govt
Victoria, BC V8W 9J1
By email: CPLO@gov.bc.ca
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