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Posts Tagged ‘asset division’

New BC Family Relations Act Reform 2010 BC Family Law White Paper-Lorne N. MacLean interviewed on CKNW AM 980 on the Proposed BC Family Law Act

Monday, July 19th, 2010

New BC Family Law changes- BC Family Relations Act Reform 2010 and the BC Family Law Act White Paper provides dramatic BC Family Law reforms to BC spousal support, BC family property division, BC common law property division, BC child custody-Lorne N. MacLean will be interviewed on the BC Family Relations Act Reform Law , tonight at 5:30PM on CKNW AM 980. Mr. MacLean will be talking about important new changes to the Family Relations Act. The new act will be called the Family Law Act and the deadline for written input/comment on the white paper will be October 8, 2010. Some of the proposed changes to Family Relations Act reflect issues that Mr. MacLean has addressed before the Supreme Court of Canada in Young v. Young [1993] 4 S.C.R. 3 and in the Leskun v. Leskun [2006] 1 S.C.R. 920 decision. Some of the proposed changes will address the property rights of married and common-law couples; guardianship of children and decision-making about children; the enforcement of access orders; mobility and relocation issues; spousal support; and, parenting coordination, arbitration and mediation. Below is the executive summary, for the report click here.

New Family Relations Act Reform 2010 Changes Coming


White Paper on Family Relations Act Reform 2010 EXECUTIVE SUMMARY

British Columbia’s Family Relations Act has not been comprehensively reviewed since its introduction in the late 1970s. Since 2006, the British Columbia Ministry of Attorney General has been researching and consulting on how best to modernize this important area of the law. The draft legislation discussed in this white paper reflects the results of its policy review.

The main features of the proposed new family statute are:

TOPIC RECOMMENDED POLICY
Overall Approach Promote co-operation to the extent possible. For example:
• Structure the law so that court is not the only implied starting point.
• Promote a broader range of non-court dispute resolution options.
• Adopt a conflict prevention approach to family law disputes.
• Increase the law’s ability to deal with family violence and safety issues.
• Use less adversarial terminology.
• Meet the overall goals of the Family Relations Act review.

Non-Court Dispute Resolution and Agreements

Promote non-court dispute resolution. For example:
• Require family justice professionals to provide early information to clients on dispute resolution options.
Enable parenting coordination by agreement or court order.
• Amend the Commercial Arbitration Act to address family arbitrations.
• Provide for regulation-making authority to define practice standards/qualifications for family dispute resolution practitioners, as and if required.

Encourage agreements by providing greater clarity regarding when and how an agreement may be set aside:
• Parenting agreements may be set aside if they are not in the best interests of the child.
• Child support agreements may be set aside if they fail to comply with the Federal Child Support Guidelines.
• All agreements may be set aside for lack of procedural fairness, such as significant failure to disclose or where one party has taken unfair advantage of the other.
• Property and support agreements can be set aside for non-procedural reasons in limited circumstances where it would be clearly unfair.

Legal Parentage
Include a comprehensive scheme to determine a child’s legal parents, including in situations where reproductive technology has been used.

Children’s Best Interests

Make children’s best interests the only consideration in parenting disputes and identify children’s safety as an overarching objective of the best interests of the child test.
Add further best interests’ factors, including the history of the child’s care, family violence, and consideration of civil or criminal proceedings relevant to the safety or well-being of the child.
Provide for consideration of a child’s views “unless it would be inappropriate” to encourage greater inclusion of children’s views.
Guardianship Enact reforms to the Act’s treatment of guardianship, including the following:
• Replace the terms “custody” and “access” with “guardianship” and “parenting time”.
• Define “guardianship” through a list of “parental responsibilities” that can be allocated to allow for more customized parenting arrangements.

Provide that parents retain responsibility for their children upon separation if they have lived together with the child after the child’s birth. (Note: this does not mean that the law presumes an automatic 50-50 split of parental responsibilities or parenting time.) If they have not, the parent with whom the child lives is the guardian.
• Consolidate guardianship of children into the new law by including testamentary and standby guardianship.

When Orders or Agreements for Time with a Child are not Respected

Include a new range of tools and remedies to address non-compliance with orders and agreements for time with a child:
• Remedies range from moderate to extraordinary remedies depending on the facts of the situation and history of non-compliance.
• Provide different remedies for failure to allow parenting time/contact and failure to exercise parenting time/contact.

Relocation

Introduce a relocation regime that aims to increase certainty and predictability of the law of relocation, the highlights of which are:
• Include a mandatory 60-day notice-of-move provision, to provide an opportunity for parties to try to resolve any disputes about the proposed move.
• List factors that must be considered (e.g. the reasons for the proposed move and whether the proposed move is likely to enhance the general quality of life of the child and the guardian planning the move) and factors that must not be considered (e.g. whether the guardian would be willing to move without the child in any event).
• Include presumptions to be applied where the proposed move is contested.

Children’s Property
Add provisions relating to children’s property that would:
• Enable a child’s guardian(s) to manage property below a certain monetary threshold without a court order.
• Provide court oversight of larger children’s trusts, including the appointment of private trustees.

Property Division

Enact major reforms to the law’s property division regime, that would:
• Extend it to common-law spouses who have lived together for two years in a marriage-like relationship or who are in marriage-like relationship of some permanence and have children together.
• Exclude certain types of property (e.g. pre-relationship property, gifts, and inheritances) from the pool of family property to be divided 50-50.
• Limit judicial discretion to reapportion family property or to divide excluded property to circumstances where it would be clearly unfair not to do so.
• Provide that debts are subject to equal division.
• Set as defaults: the date of separation as the triggering event and the date of the court order or agreement as the valuation date.
• Limit the ability of judges to set aside or change property division agreements.
• Enable interim orders, including for the distribution of property for the purposes of funding litigation or dispute resolution.
• Enact conflict of laws provisions to address property outside of British Columbia.

Pension Division

Enact most of the major and housekeeping recommendations made by the British Columbia Law Institute in its 2006 report on the division of pensions.
Extend the pension division scheme to unmarried spouses who meet the definition of spouse.
Support Minor changes to the child support provisions to ensure consistency with new Act’s language and
structure.

Minor changes to spousal support provisions:
• Align provincial spousal support factors and objectives more closely with the Divorce Act.
• Explicitly permit periodic reviews.
• Permit variation applications in light of the spousal support objectives and factors where there has been a change in circumstances, new evidence or a failure to make full and frank disclosure.
• Limit consideration of a spouse’s alleged misconduct to that which “arbitrarily or unreasonably” affects the need for support or the ability to provide it.
• Provide that spousal support obligations continue after the death of the paying spouse unless otherwise agreed or ordered.
• Clarify that spousal support should be awarded only where spousal support objectives have not already been met through property division.
• Spousal Support Advisory Guidelines will not be referred to in the Act and will remain advisory.

Eliminate parental support obligations.

Case Management and Enforcement Tools

Include a broader range of case management and enforcement tools for judges. In particular:
• Provide for a new type of order called “conduct orders” and corresponding remedies for non-compliance to manage behaviour and facilitate resolution, for example, through referrals to a service, program, counselling or non-court dispute resolution process, providing for a party to pay the other’s reasonable expenses incurred as a result of the non-compliance, and limiting frivolous or vexatious litigation.
• Establish a general duty to disclose information, and provide for a greater range of remedies for failure to comply with an order to disclose.

Protection Orders

Replace existing family law restraining orders with “protection orders” enforceable under the Criminal Code.
Court Jurisdiction and Procedural Matters The new family statute will carry forward many of the jurisdictional provisions from the Family Relations Act. Proposed procedural changes include the following:
• Lawyers must certify that information about non-court dispute resolution options has been provided prior to filing court documents.
• Family cases are to be conducted, to the extent possible, in a way that minimizes delay, cost and formality, reduces conflict and promotes co-operation, protects those involved, and is proportionate to the dispute.
• Children who are 16 or older or who are parents, spouses or former spouses will be able to conduct court cases without a litigation guardian.

Transition

Where a court action has been started but not yet resolved before the effective date, the Family Relations Act applies unless the parties enter into a written agreement stating that the new Act governs. Cases that have already been time-barred under the Family Relations Act are not revived by the new Act.
Where a court action has been started on or after the effective date, the new Act applies.
Orders and declarations made under the previous law continue in force according to their terms, but subsequent applications made on or after the effective date (e.g., to vary or enforce) are governed by the new Act.

BC FAMILY ASSET and BC PROPERTY DIVISION- NEW BC FAMILY LAW RULES ALLOW INTERIM ADVANCES FOR BC LEGAL FEES AND EXPERT REPORTS

Sunday, July 11th, 2010

BC Family Law and Interim Distribution of BC Family Assets and Advances to Pay BC Legal Fees: Who Pays the Piper in Divorce?

We are all familiar with the notion that “he who pays the piper calls the tune,” but what happens when you don’t have the money to pay the piper? In contested divorce cases it is not uncommon for legal fees and expenses to reach the point where you face difficulty paying your lawyer to represent your interests for lack of funds. In cases of mid to high net worth divorcing couples there are usually substantial assets that require dividing – bank accounts, trust/income funds, houses, property (local and foreign) and insurance policies to name but a few. Assets by their very nature have an intrinsic monetary value. The question is whether or not a divorcing spouse short on capital before a trial needed to pay their legal fees can access these assets or borrow against them to pay past, present and future legal expenses before the trial that will likely divide these family assets- most often equally? Is there any reason that all assets should remain untouchable until the trial is over and judgment rendered?

A new rule may allow people access to income and assets before a trial where in the past this was more difficult if not impossible to achieve. Lorne MacLean of the MacLean Family Law Group points out new BC Supreme Court Family rule 12-1 may allow a much needed interim advance of funds for a spouse needing funds to live on or to pay legal and expert fees as it states:

Photo Lorne MacLean BC Family Law Attorney

BC Supreme Court Family Law Rule 12-1

Allowance of income from property
(3) If property is the subject matter of a family law case and the court is satisfied that the property will be more than sufficient to answer all claims on it, the court at any time

(a) may allow the whole or part of the income of the property to be paid, during such period as the court may direct, to a party who has an interest in it, or

(b) in the case of personal property, may order that part of the personal property be delivered or transferred to a party.

Recovery of specific property
(4) If a party claims the recovery of specific property other than land, the court may order that the property claimed be given up to the party, pending the outcome of the family law case, either unconditionally or on terms and conditions, if any, relating to giving security, time, mode of trial or otherwise.

In the past a party claiming an advance against their ultimate share in property met with stiff judicial precedent against them.
In British Columbia the leading authority – Ansari v. Ansari [2000] BCJ No. 763 – holds that advances (interim distributions) or borrowing funds against family assets subject to division in a divorce proceeding to pay past, present and future legal fees are not allowed except to fund unusual disbursements relating specifically to the valuation of assets. In Ansari v. Ansari [2000] B.C.J. No. 763 (BCSC) – Macaulay J.noted:

(a) Jurisdiction for interim payment from family assets founded in s.66 of the Family Relations Act (as decided in Erskine v. Erskine (1991) 31 R.F.L. (3d) 273)

(b) Two step test established by Kirkpatrick J. in Jiwa v. Jiwa [1992] B.C.J. No. 3024 (S.C.):

(1) Is the advance required to mount a challenge to the other spouse’s position at trial?

(2) Will the advance or the payment on an interim distribution basis jeopardize the other spouse’s position at trial?

Macaulay J. held at paragraph 28 in Ansari:

As the interim distribution of assets sought relates primarily to past and projected legal expenses in the matrimonial litigation, entitlement falls to be determined, in my view, within s.66 and with regard to the limitations expressed in earlier decisions. The weight of authority is against ordering an interim distribution of assets to meet past and, in particular, future legal expenses except to fund unusual disbursements relating specifically to the valuation of assets. I decline to order an interim distribution in favour of either party.

The more recent case of Herr v. Herr [2006] B.C.J. No. 1624 – held as in Ansari that no interim disposition of funds should be allowed allowed and at paragraphs 19 and 20 Ralph J. stated:

“The purpose for which the true interim distribution was required was not specific but appeared to be for past and future legal expenses. As recognized in Ansari the weight of authority is against ordering an interim distribution of assets to meet past and future legal expenses except to fund unusual disbursements relating to the valuation of assets.”

“In my respectful view, having already authorized a substantial draw upon these funds to pay the arrears of support, the Master erred in further authorizing the payment of $40,000 for the unspecified past and future legal expense. I conclude that Mr. Herr’s appeal with respect to the Master’s order relating to the interim distribution of $40,000 should be allowed and that the order must be set aside.”

Similarly, in Hiemstra v. Hiemstra [2001] B.C.J. No. 522 – No interim distribution of funds was allowed to pay legal fees and in McLeod v. McLeod [2001] B.C.J. No. 1201 (S.C.) – Kirkpatrick J. followed Ansari and refused to make an interim order for distribution of funds for legal fees. Kirkpatrick J. also followed the Pierce decision, in that she did not find that “such an advance is, in equity, required”. The distinguishing features in this case are that the wife was already receiving a substantial sum (close to $5000 per month) for child support and the husband was paying a good portion of the household expenses, and spousal support of almost $4000. Therefore, the circumstances were not so dire as to require the disbursement of funds to the wife out of the property.

An older line of cases did allow some advances for legal fees:

(a) Pierce v. Pierce [1994] B.C.J. No. 3079 (S.C.) as per Melnick J. – the focus in ordering an advance is not whether it is required for one spouse to fund his or her lawsuit against the other, but rather whether, in order to make a determination regarding assets, as contemplated by s.52 of
Family Relations Act, such an advance is, in equity, required.

(b) Ford v. Ford (6 February 1992), Vancouver Registry A913765 – allowed for release of funds for legal fees.

(c) Newbury J. in Lane v. Lane [1991] B.C.J. No. 3246 (S.C.) – lump sum payment ordered to reimburse a wife for past accounting and legal expenses but would not order payment for estimated future legal expenses.

The big change regarding experts in family matters is the emphasis on 1 neutral expert being appointed by consent or if disputed by court order as follows:

Single Court Appointed Expert
13-4
Application to court
(3) If the parties do not agree that a joint expert is required or do not agree on any matter relating to the appointment of a joint expert, any party may apply to the court in accordance with Rule 10-5 for an order
(a) appointing a joint expert, and
(b) settling any matter relating to the appointment of the joint expert.

Note also full cooperation is required and full disclosure mandated under this rule.

Appointment of Court’s own Expert
13-5
(10) The remuneration of an expert appointed under this rule
(a) must be fixed by the court and consented to by the expert, and
(b) may include
(i) a fee for the report, and any supplementary reports, required under Rule 13-6, and
(ii) an appropriate sum for each day that the expert’s attendance in court is required.
Security for remuneration

(11) The court may make one or both of the following orders, without prejudice to any party’s right to costs:
(a) an order directing that the expert’s remuneration be paid by the persons and at the time ordered by the court;
(b) an order for security for the expert’s remuneration

If you have an issue with needing to access monies you are properly owed before trial call us toll free at 1-877-602-9900 to help you ensure your case is handled properly and that funds you need to protect your rights and properly instruct your lawyer and valuation experts can be obtained.

BC FAMILY ASSETS AND BC PROPERTY DIVISION AND BC FAMILY ASSET VALUATION ISSUES IN SPECIE DIVISION OF FAMILY ASSETS

Tuesday, January 5th, 2010

img_5968
Many BC Family Law and British Columbia divorce clients who have BC family assets and who are dividing BC family assets may be missing the boat on getting their fair share of BC family assets or other or BC business assets when an asset at the time of trial or division in a separation agreement has no current value but which BC family asset has the potential to increase in value in the future. Where a BC commercial property or BC business asset or BC patent asset currently has no value a good BC Family Law lawyer should ensure that you do not simply transfer your one half share in this BC family asset to the other spouse for no value. We recently settle the case by ensuring that our client obtained an in specie division meeting a division of the asset itself for example on a property rather than simply transferring your one half share to your other spouse for no money consider trying to stay in as a half owner so that you can participate in the gain in the future. Of course you have to consider seriously the upside and downside of staying in on a asset which currently has no value. You should also consider what contribution you may have to make in the future as a partner in this asset and you should also consider if it’s appropriate for ex-spouses to continue to work together after they are divorced or separate.

A recent example of an in specie division of an asset with potential upside was made in Smith v Smith 2008 BCCA 245. We provide the extract from the reasons below.
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BRITISH COLUMBIA SEPARATION AND MARRIAGE AGREEMENT ENFORCEMENT AND BC VARIATION UPDATE-JUST BE FAIR WITH ME

Friday, October 30th, 2009

img_5817
A critical new British Columbia Separation Agreement enforcement and BC separation agreement case was released recently in Rick v. Brandsema [2009] S.C.J. No. 10
If you are about to enter into a BC separation agreement or consider a British Columbia separation or separation agreement or marriage agreement you have signed to be unfair or unconscionable call us at 604-602-9000. The summary below was prepared by one of our very capable articled stdents, namely Jaqua Page who works out of our Vancouver and North Peace office.

This was an appeal to the Supreme Court of Canada from a decision of the British Columbia Court of Appeal, to set aside an award made to the wife by the trial judge, ordering the husband to pay damages in the amount of $649,680.00 on the grounds that the separation agreement signed by the parties was unconscionable and therefore unenforceable.

The parties married in 1973 and separated in February 2000 after a long and difficult marriage. There were five children to the marriage. During the course of the marriage the parties acquired assets and real property, including a dairy farm the value of which was the subject of the appeal.

The parties continued to live together for a number of months after the separation. They signed a separation agreement in December 2001, which was drafted with the intermittent assistance of two different lawyers, the services of two mediators, advice from tax accountants and other professionals. They were divorced in January 2002 and the wife brought an action a year later to set aside the separation agreement on the grounds the agreement was unconscionable or in the alternative that there should be a reapportionment under Section 65 of the B.C. Family Relations Act. The husband was found to have severely undervalued the property and concealed funds.

The SCC emphasized the importance of recognizing that the area of family law creates a uniquely difficult and vulnerable environment. To ensure fairness, the court found that there is a duty to make full and honest disclosure of all relevant financial information in order to protect the integrity of the resulting agreement when separating parties are in the process of settling an agreement. The case also represents the creation of the new term psychological exploitation, which is established when one party takes advantage of the other partys mental state during negotiations of familial matters. In this case, there was evidence the husband was well aware of the wifes mental fragility and that he had falsely exaggerated the dairy farms debts as well as claiming inappropriate tax deferment, decreasing the wifes value of the company, when there was no evidence of a future sale.

The appeal court, applying Miglin, rejected the findings of fact of the trial judge that there was a power imbalance between the parties due to the wifes mental vulnerability and regardless found that any disparities were cured by the wifes access to professional assistance. The SCC respectively disagreed with the Court of Appeals interpretation of the test in Miglin in relation to the weight that should be given to professional assistance. The court held that the mere presence of professional advice does not extinguish the potential negotiating abuses that can occur in reaching an agreement, stating that a genuine bargain can only be reached when both parties are fully informed of the relevant information.

The SCC said that the duty flows from the judgment in Miglin with the acknowledgment that legal issues surrounding the breakdown of a marriage take place in highly emotive situations. As a result special care must be taken to ensure that negotiations between spouses are free from informational and psychological exploitation. The court stated that the degree of dishonesty will determine whether a separation agreement is open to judicial intervention.

The court was entirely supportive of the trial judge, affirming the principle that an Appellate Court should not reverse the findings of fact made by a trial judge unless there was a palpable and overriding error. In addition, a trial judge has discretion when considering tax deferment in relation to the division of assets, concluding that either damages or s66(2)(c) of the Family Relations Act that may include ordering a spouse to pay compensation to the other spouse for the purpose of adjusting the division. were suitable remedies when the terms of the separation agreement substantially deviated from the intent of the legislation.

Do Federal and British Columbia Spousal Support Advisory Guidelines apply to high net worth family law cases? Isnt 6 million enough to live on?

Tuesday, October 6th, 2009

img_5942An interesting BC Court of Appeal decision of Bell awarded $5000 per month support to a woman in a long marriage who had already received $6,000,000 of property from the divorce settlement. The court found that although the wife had suffered no disadvantage from the marriage, she had suffered a disadvantage as a result of the marriage ending. It had been thought in many legal circles that receipt of substantial assets from a marriage breakdown would likely moderate or negate the need for spousal support. Here the husbands income was found to be almost $650,000 per year while the wifes was $210,000. The court did not strictly apply the new federal Spousal Support Advisory Guidelines given the $350,000 income exception and awarded $5000 per month although the Moge argument of equalizing incomes after a long term marriage was argued by the wife`s counsel. Clearly the large property award resulted in a lower support payment but some people might question why a spouse with $6 million of assets would get any support at all.
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BC Spousal Support Advisory Guidelines Spousal Support Exceptions for High-Net Worth Client

Thursday, February 19th, 2009

The finalized version of the Spousal Support Advisory
Guidelines was released in the fall of 2008 and I note the following revisions
or clarifications that relate to BC high-net worth families in British Columbia
Spousal Support cases:

 

  1. a new
    exception that recognizes a payors inability to deduct spousal support
    for income tax purposes if his or her income is mostly or entirely from
    legitimately non-taxable sources;

 

This is a critical exception for spouses who are working
abroad in a regime where no taxes are paid or where taxes are paid but no deduction is allowed by the foreign state. 
Where the take-home pay of the payor is substantially higher as a result
of no tax being taken off, Courts will routinely gross up the non-tax paying
spouses income to reflect what a gross income in Canada would have to be to
net the same amount of take-home pay in the non-tax paying jurisdiction.  However, it is critical that the Court be
made aware that the Spousal Support Advisory Guidelines take into account the
substantial tax deduction that is available to the paying spouse and that tax is paid by the receiving spouse. 

 

In cases where there is no tax deduction available to the
payor, it is questionable whether the recipient will pay tax in Canada on such an amount.  There are options for
lawyers to be creative with respect to lump-sum payment maintenance to ensure
that neither the recipient nor the payor are affected by the tax deduction tax
inclusion regime.

 

  1. a
    clarification that indefinite spousal support means support with a
    duration that is not specified not permanent or infinite support;

 

It is important to note that maintenance Orders are never
final and are always subject to being changed if there is a substantial change
in circumstances in the income or asset position of the paying or receiving
spouse.  Given the current economy with
job losses at an all time high, it is not improbable that an indefinite Order
for maintenance might last only a few months.

 

 

  1. a new
    exception that recognizes the possibility in B.C. of reapportionment of
    property on spousal support grounds by allowing the amount of spousal
    support to be reduced below the ranges where a large reapportionment order
    has been made;

 

British Columbia is the only province in Canada that allows for a Court to divide property other than equally between the
spouses when taking into account the financial needs of a spouse.  As this unequal division relates
substantially to the same issue as economic disadvantage suffered by a spouse
that would qualify them to receive spousal support a special exception for
British Columbia to prevent double recovery had to be instituted.  In my opinion, some judges erroneously nearly
add a notional interest component to the property value above half that a
spouse receives when they receive more than half when in fact they should be
dividing the capital as well as the interest that capital can produce over a
certain number of years to reduce dollar for dollar the Spousal Support
Advisory Guidelines calculated amount after factoring in the property is tax free money. 

 

  1. a
    recognition that it is open to counsel to argue for an exception in
    high-property, high-income cases;

 

My firm handles a substantial number of high-net worth
cases.  At a certain point when the asset
pot that is divided becomes so high it becomes clear that the spouse with a
lower income should not be provided with spousal support as there was no
disadvantage suffered during the marriage and there is no real need.  For example, if a spouse obtains 4 million
dollars in assets in a property division, most cases would suggest that no
spousal support be payable.  The issue
becomes if no spousal support is payable on 4 million dollars of assets, what
spousal support should be payable if the spouse receives 2 million.  Surely, there should be some reduction of support to reflect the advantage of the assets attained from the marriage.  This topic requires a separate article which
I will produce at a later date.

 

  1. an
    exception allowing for an increase in the duration or amount of spousal
    support under the with child support
    formula after child support that limited the amount left over for spousal
    support pursuant to s. 15.3 (priority of child support) ends.

 

Finally, the issue of what happens to spousal support under
the with child formula when the
children become adults is a topic of considerable complexity.  There must be a transition of child support
from the with child formula to the without child formula when the last
child no longer receives child support. 
It is critical that this be taken into account on any settlement or any
Court argument as spousal support under the with
child
formula provides the spouse with an amount that is leftover after
child support is paid.  As the child
support declines, unless the spousal support increases, there will be an uneven
standard of living in the paying and receiving spouses household. 

 

If you have a situation like this, please do not hesitate to
call me.