The default law in BC regarding property division seems simple but how it is applied is not. By default marital assets are divided 50/50 and excluded assets brought into the relationship goes back to the person who brought them.
But the reality of BC family law could not be more complicated, with inconsistent decision making by judges, and an evident struggle between our Supreme Court and Court of Appeal in arriving at that sweet spot where spouses are treated fairy and the law is applied correctly -sort of.
In the latest case of Healey, the husband walked away with $16 million dollars in excluded assets and the wife with just over $2 million when the law was applied by default. Given the evident unfairness of the situation, the Appeals court departed from default law, reasoning that marital assets should be divided unequally in the wife’s favour given the husband’s situation and the insufficiency of spousal support when addressing the wife’s needs.
The Latest Update on Excluded Assets and Property Division: Healey v. Healey | Unequal Division of Assets
Healey v. Healey, 2024 BCCA 68, is a prime example of why dividing assets in a BC divorce is more than just a numbers game. It reminds us that excluded assets don’t give the wealthier spouse a free pass. It also shows how spousal support and property division are deeply connected, especially when the economic fallout from marriage is lopsided.
The British Columbia Court of Appeal delivered a judgment correcting a trial decision that failed to grasp the economic consequences of a long-term marriage where one spouse walks away with millions in excluded property—and the other with financial insecurity.
Curious how your property might be divided? Try our free Divorce Calculator to get an estimate based on BC family law.
The Core Facts
- 21-year marriage, three children.
- Wife (appellant): primary caregiver, limited career development.
- Husband (respondent): successful financial adviser with $12 million+ in excluded property, mainly from family trusts and private corporations.
- The couple lived a high-end lifestyle during marriage, funded in part by excluded assets.
- Upon separation, the wife received about $2.2 million in assets. The husband retained over $16 million.
Excluded Assets Still Matter
Although the husband’s assets in Alco and KFD were technically excluded, they were used throughout the marriage to:
- Fund family expenses,
- Buy the family home,
- Maintain a high standard of living.
The Court was careful to note that mere disparity alone is insufficient to require reapportionment. In this case, the wealth had been used for family purposes, was intended to fund the parties’ mutual retirements, and the wife had relied on the husband to “plan and save for their retirement.” Because of this reliance, the wife pursued only “limited career opportunities” during the marriage. She “did not concern herself with having a pension or RRSP.”
The trial judge failed to connect the dots. The Court of Appeal did not.
Section 95 and 96 of the Family Law Act: A Refresher
In analyzing the case, the court relied on sections 95 and 96 of the Family Law Act which deal with division of assets and excluded property:
Section 95 – Unequal Division of Family Property
95(1) The Supreme Court may order an unequal division of family property or family debt, or both, if it would be significantly unfair to equally divide them.
95(2) Factors include:
- (a) Duration of relationship
- (c) Contribution to the other spouse’s career
- (f) Post-separation conduct affecting value
- (g) Bad-faith disposition of property
- (h) Tax liabilities
- (i) Any other factor that may lead to significant unfairness
95(3) Courts may consider the parties’ financial means and earning capacity if spousal support hasn’t met its objectives under s. 161.
Section 96 – Division of Excluded Property
The court must not divide excluded property unless:
- (a) It would be significantly unfair not to do so; and
- (b) The non-owning spouse made a direct contribution to its preservation, improvement, operation, or management.
In Healey, the wife failed to meet the direct contribution test under s. 96. However, the Court still ordered a reapportionment of family property under s. 95 because the excluded wealth was central to the couple’s economic life.
Key Takeaways for Lawyers & Litigants
- Reapportionment is alive and well. Courts will use s. 95 of the FLA to address economic unfairness—even where excluded property is off the table.
- Support and property division are interconnected. If support doesn’t meet its objectives, courts can (and should) revisit the property division.
- Excluded assets can’t be ignored if they supported the family lifestyle or retirement planning.
- Recurring, tax-free payments that are not actually a return of capital can be income, even if labeled as “loan repayments.”
Final Orders by the Court of Appeal
- Unequal division of family property: Wife receives $1M more (65/35 split).
- KFD payments imputed as income: $96,000/year added to the husband’s income.
- No division of excluded assets, but they were relevant to the fairness analysis.
Need Help With Dividing Your Assets in a BC Divorce? YLaw Can Help
Navigating property division in a BC divorce can be complex—especially when excluded assets are involved. If you’re facing a high-stakes divorce and need expert legal guidance, YLaw is here to help. Our team specializes in ensuring fair outcomes in property division cases. Contact us today to protect your financial future.
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