Equal in the Eyes of the Law – Healey v Healey, 2024 BCCA 68 Overview

This case was an appeal made to the Court of Appeal by the mother, based on her position that the trial judge considered the two issues at hand, determining support and the division of assets, in the incorrect order. She further claimed that the trial judge failed to create a fair division of family property between the parties, and calculated the father’s income incorrectly.

• The parties were in a 21-year marriage that resulted in three children.
• During the marriage, the mother was primarily responsible for child care and managing the family home.
• The mother had primary responsibility for all three children, and the father worked as a successful financial advisor.
• The father had been made the beneficiary of a trust before the marriage, the value of which exceeded the value of the family property at the time of trial.
• During the marriage, he received dividend income and an investment holding company as a testamentary trust.
• He also received monthly tax-free distributions from a family-owned holding company.
• When the parties separated, the father bought out the mother’s interest in the family home at the value of $2.25 million.
• He also assisted her in the purchase of a townhouse.
• The trial judge concluded that the mother was entitled to spousal support and to child support, but did not include the monthly tax-free distribution payment as part of the father’s income.
• The judge declined to order an unequal division of family property, despite the parties’ disparate financial situations.
• He ordered that the father make a compensation payment of $60,000 to the mother, to give effect to an equal division of family property.

Why This Decision is Important

The Court of Appeal found that the trial judge’s order of addressing the issues, though unorthodox, was not incorrect. He did, however, commit an error when addressing the mother’s claim for unequal division of family property.

The trial judge failed to consider what the parties’ financial situation would be if the family property had been divided equally, as well as the relevant factors from the Family Law Act.

Under the Family Law Act section 95, the trial judge should have considered a number of factors to determine whether or not the family property should have been divided equally.

The court also had discretion under the Federal Child Support Guidelines to include the father’s monthly distribution payments in his income determination, and should have done so.

The mother’s claim to compensatory spousal support was strong, given “the length of the marriage, her role as primary caregiver to the children, and the loss of income-earning potential she [would] experience going forward.” This, along with her anticipated financial need, justified spousal support being ordered at the high end of the range.

Under the Family Law Act, spouses have a presumptive entitlement to an equal interest in all family property, and are equally responsible for family debt.¹ A court may order an unequal division of family property if an equal division would be “significantly unfair.” To meet the test of significant unfairness, the party seeking unequal division must show “something objectively unjust, unreasonable or unfair in some important or substantial sense.”²

In terms of the excluded property, that can include property acquired by one spouse before the relationship began, inheritances to one spouse, and a spouse’s beneficial interest in property held in a discretionary trust, among other things.

Courts generally determine property division before making a final order for spousal support. This is because the issues are often interlinked, and making a spousal support order requires considering the “condition, means, needs and other circumstances” of each spouse, which are undeniably influenced by the outcome of a property division determination.

The analysis to determine if there is significant unfairness in terms of an equal division of property should start with the judge considering the financial position the parties would be in if family property is divided equally, and then determining if that division would be significantly unfair. The trial judge did not reference the fact that, upon an equal division of family property, the father would be left with over $16 million in assets, and the mother with $2.25 million.

It seems true that, given that this separation followed a 21-year marriage in which the mother made sacrifices so that the father could improve his career, and the parties engaged in the joint enterprise of raising children, this would be significantly unfair.

The judge also failed to consider relevant factors under section 95 of the Family Law Act, namely the duration of the relationship, and one spouse’s contribution to the career or career potential of the other spouse.³

Further, the trial judge failed to consider the significant value of the father’s excluded property. The father routinely used income and assets deriving from his excluded property to cover family expenses, as well as to purchase the family home. Therefore, those excluded assets helped maintain the standard of living the parties both enjoyed.

Section 19(1) of the Federal Child Support Guidelines create wide discretion for the court to impute income where it is appropriate. This is to ensure that income that is reasonably available for child support is not excluded on the basis of how a payment has been structured.

The monthly distribution payments received by the father should have been viewed as a form of revenue, or as analogous to a benefit received from a trust. It is consistent with the Guidelines to include these payments in the father’s income.

Case Details

Family law — Children — Maintenance — Entitlement

Outcome

The Court of Appeal found that an equal division of family property would be significantly unfair, and ordered an unequal division of family property, requiring the father to pay $1 million in gross compensation to the mother.

Further, the court found that the father’s $4,000 monthly distribution payments should have been included in his income. As a result, $96,000 was added to his income, with a corresponding revision to the monthly child and spousal support amounts.

Key Takeaways

• When making a spousal support order, the court can consider whether the division of property has had an impact on meeting the call of that eventual order.
• A court can order an unequal division of family property in circumstances where ordering an equal division would be “significantly unfair.”
• The court has broad discretion, in certain situations, to impute income to one party if that money falls into certain categories, or has a relationship to the economic circumstances of the marriage.

References

Healey v Healey, 2024 BCCA 68 (CanLII)
https://canlii.ca/t/k34nd

1. Family Law Act, SBC 2011, c 25
   https://canlii.ca/t/566g8 ↩︎
2. Singh v Singh, 2020 BCCA 21 (CanLII)
   https://canlii.ca/t/j4tb4 ↩︎
3. Supra, s 95(2) ↩︎

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