Protecting Property & Debt in Family Law Matters

From Clicklaw Wikibooks

It's sometimes necessary to take steps to protect family propertyA term under the ''Family Law Act'' referring to property acquired by either or both spouses during their relationship and after separation, if bought with family property. Both spouses are presumed to be equally entitled to share in family property. See "excluded property.", family debtA term under the ''Family Law Act'' referring to debt owed by either or both spouses that accumulated during the spouses' relationship and after separation, if used to maintain family property. Both spouses are presumed to be equally liable for family debt., and excluded propertyA term under the ''Family Law Act'' referring to property acquired by a spouse prior to the commencement of the spouses' relationship and certain property acquired by a spouse during the relationship, including gifts, inheritances, court awards and insurance proceedings. A spouse is presumed to be entitled to keep his or her excluded property without having to share it with the other spouse. See "family property," "gift," and "inheritance." until a final agreement or orderA mandatory direction of the court, binding and enforceable upon the parties to a court proceeding. An "interim order" is a temporary order made following the hearing of an interim application. A "final order" is a permanent order, made following the trial of the court proceeding or the parties' settlement, following which the only recourse open to a dissatisfied party is to appeal. See "appeal," "consent order," "decision" and "declaration." dividing assets is made. Failing to take these steps can sometimes result in propertySomething which can be owned. See "chattels" and "real property." being sold, diminished in value, used as collateral for a loan, moved out of province, or being seized by a trusteeA person who holds property in trust for the benefit of another person. See "trust." in bankruptcy or by a creditor. Most of the time it only becomes important to protect property after a couple has separated.

This section reviews some important initial steps that you can take to secure family property and family debt. It also looks at the restraining orders that can stop family property from being disposed of, the problems posed by third-partyIn law, a person named as an applicant, claimant, respondent or third party in a court proceeding; someone asserting a claim in a court proceeding or against whom a claim has been brought. See "action" and "litigant." claims such as debts and bankruptcy, and how assets located outside British Columbia can be protected.

Initial steps

It may seem a bit neurotic to be worrying about assets when your relationship is falling apart, but this is precisely the time to be concerned. It certainly isn't the case that every spouseUnder the ''Divorce Act'', either of two people who are married to one another, whether of the same or opposite genders. Under the ''Family Law Act'', married spouses, unmarried parties who have lived together in a marriage-like relationship for at least two years, and, for all purposes of the act other than the division of property or debt, unmarried parties who have lived together for less than two years but have had a child together. See "marriage" and "marriage-like relationship." is busy squirrelling money away in Switzerland or Antigua, or hatching plans to transferIn law, the act of an owner of a thing giving ownership of that thing to another person, in exchange for money or other property in the case of a sale or in exchange for other rights in the case of a family law agreement. See "family law agreements," "ownership" and "sale." the titleIn law, a document demonstrating ownership of a thing. See "ownership." of the family homeIn family law, the dwelling occupied by a family as their primary residence. See "family property" and "real property." to a loan shark from Las Vegas, but there are certain steps you should take regardless of how well you think you know your spouse.

There is, as they say, no sense in bolting the barn door after the horses have gone. It's fairly reasonable to take steps to protect your own interests, and in most cases you probably should.

Take stock of property and debtA sum of money or an obligation owed by one person to another. A "debtor" is a person responsible for paying a debt; a "creditor" is the person to whom the debt is owed.

Firstly, you might want to take a careful, but not too obvious, tally of what each of you owns and owes. This might be difficult if you and your spouse keep separate bank accounts and maintain your own investments, but make your best efforts. A list of the bank accounts, RRSP and investment accounts, cars, properties, loans, lines of credit and credit cards you have may prove to be extremely useful. Even if you can't get all the account details, a record of the names of the financial institutions that are sending your spouse mail can be extremely useful.

Make it clear that you've separated

Once you've decided that your relationship can't continue, and you're sure that it can't continue, you need to separate. This doesn't mean that you and your spouse need to move into separate homes, but you need to announce your decision and you should probably do it in writing so that you have a record of the date of separationIn family law, the decision of one or both parties to terminate a married or unmarried relationship; the act of one person leaving the family home to live somewhere else with the intention of terminating the relationship. There is no such thing as a "legal separation." In general, one separates by simply moving out, however it is possible to be separated but still live under the same roof. See "divorce, grounds of.".

Under s. 81(b) of the provincial Family Law Act, when separation happens each spouse takes a one-half interest in all family property as tenants in common, regardless of how the property was owned before separation, and becomes responsible for one-half of all family debt. It can be critical to protect your share of the family property from creditors, your spouse's bankruptcy, or court orders made in other court proceedings.

While it's always a good idea to consult with a lawyerA person licensed to practice law in a particular jurisdiction. See "barrister and solicitor." if you have a family law problem, be especially sure to do so if you're not certain whether separating would be helpful or harmful.

There are only a few times when a separation is a bad idea, usually when the effect of separation will limit a claimThe assertion of a legal right to an order or to a thing; the remedy or relief sought by a party to a court proceeding. to one-half of the family property when there's a good chance that it might be more. Say, for example, that a spouse is in poor health and dying when the parties separate. The effect of separation may mean that a surviving spouse will get no more than half of the deceased spouse's estateThe personal property and real property that a person owns or in which he or she has an interest, usually in connection with the prospect or event of the person's death. when the spouse might have received more than half as a surviving spouse or a surviving joint tenant.

Register your interest in property

Registering an interest in real propertyA parcel of land and the buildings on that land. See "chattel," "ownership" and "possession." will stop the property from being sold and may prevent the property from being borrowed against. The two most common ways to do this are by filing an entry under the Land (Spouse Protection) Act with the Land Title and Survey AuthorityThe provincial government agency responsible for maintaining written records of the ownership of real property in the province, together with a record of the encumbrances which may be registered against a property. See "Land Title Act" and "real property.", or by filing a Certificate of Pending LitigationA document filed in the office of the Land Title and Survey Authority against the title of real property, stating that the property is the subject of a court proceeding and that ownership of the property may change as a result; formerly called a ''lis pendens''. In family law, a CPL is used to protect the interest of a party in a piece of property by notifying potential purchasers or mortgagees about the court proceeding. See "clear title," "encumbrance," and "real property." under the Land Title Act with the Land Title and Survey Authority.

Entries under the Land (Spouse Protection) Act

Married spouses and unmarried spouses may file an entry on the title of the family home under the provincial Land (Spouse Protection) Act. The entry will prevent a spouse from transferring, selling, leasing, or making a giftA voluntary transfer of property from one person to another, without expectation of payment or reward. Gifts to one spouse do not usually qualify as family property, and are excluded from the pool of property to be divided. See "donee," "donor," "excluded property," and "family property." of the family home without the knowledge and approval of the spouse filing the entry. A spouse is not given notice of an entry filed against the family home under the Land (Spouse Protection) Act.

The great thing about these entries is that you can get one whether court proceedings have started or not. This is an ideal way to protect yourself if you only have a slight concern about your relationship or the trustworthiness of your spouse, but don't have the need to begin a proceedingIn law, the whole of the conduct of a court proceeding, from beginning to end, and the steps in between; may also be used to refer to a specific hearing or trial. See "action." just yet. The downside, of course, is that entries under this actIntentionally doing a thing; a law passed by a government, also called "legislation" or a "statute." See "regulations." only protect the single property that is or was used as the family home.

Certificates of pending litigation under the Land Title Act

Where a court proceedingA legal proceeding in which one party sues another for a specific remedy or relief, also called an "action," a "lawsuit" or a "case." A court proceeding for divorce, for example, is a proceeding in which the claimant sues the respondent for the relief of a divorce order. has started in the Supreme CourtNormally referred to as the "Supreme Court of British Columbia," this court hears most court proceedings in this province. The Supreme Court is a court of inherent jurisdiction and is subject to no limits on the sorts of claims it can hear or on the sorts of orders it can make. Decisions of the Provincial Court are appealed to the Supreme Court; decisions of the Supreme Court are appealed to the Court of Appeal. See "Court of Appeal," "jurisdiction," "Provincial Court" and "Supreme Court of Canada.", a Certificate of Pending Litigation (CPLThe short form for "Certificate of Pending Legislation." A CPL is a document filed in the office of the Land Title and Survey Authority against the title of real property stating that the property is the subject of a court proceeding and that ownership of the property may change as a result, formerly called a ''lis pendens''. In family law, a CPL is used to protect the interest of a party in a piece of property by notifying potential purchasers or mortgagees about the court proceeding. See "clear title," "encumbrance," and "real property."), formerly called a lis pendens, can be registered against the title of any property owned by you and your spouse at the Land Title and Survey Authority. As long as you have asked for a CPL in your Notice of Family ClaimA legal document required by the Supreme Court Family Rules to begin a court proceeding, setting out the relief claimed by the claimant and the grounds on which that relief is claimed. See "action," "claim," "claimant," "pleadings" and "relief." or CounterclaimA legal document required by the Supreme Court Family Rules in which a respondent sets out a claim for a specific remedy or relief against a claimant. See "Notice of Family Claim" and "Response to Family Claim." and made a claim for the division of family property, you will be entitled to register a CPL.

The effect of a CPL is to announce to anyone interested in the property, such as a mortgagee or a creditor or a potential buyer, that ownershipA legal right to have a thing that is enforceable in court. See "possession." of the property may change as a result of the litigation. This discourages and usually prevents the saleAn agreement to transfer the ownership of property from one person to another in exchange for the reciprocal transfer of something else, usually money. See "agreement." of the property or its use as collateral.

You can file your CPL at the same time as you file your Notice of Family Claim or Counterclaim. The registryA central office, located in each judicial district, at which the court files for each court proceeding in that district are maintained, and at which legal documents can be filed, searched and reviewed; a courthouse. will stamp your CPL, and you must take the stamped CPL and file it in the Land Title and Survey Authority together with a copy of your Notice of Family Claim or Counterclaim. The owner or owners of the property on which a CPL has been registered against title are given notice of the CPL by mail.

Notices and financing statements under the Family Law Act

Spouses who have made a cohabitation agreementAn agreement signed by people who are or have begun to live together in a marriage-like relationship that is intended to govern their rights and obligations in the event of the breakdown of their relationship and, sometimes, their rights and obligations during their relationship. See "family law agreement.", a marriage agreementAn agreement signed by people who are planning on marrying or have married that is intended to govern their rights and obligations in the event of the breakdown of their marriage and, sometimes, their rights and obligations during their marriage. See "family law agreement.", or a separation agreementA contract intended to resolve all or some of the issues outstanding following the breakdown of a relationship and intended to guide the parties in their dealings with one another thereafter. A typical separation agreement is signed following a settlement reached through negotiations and deals with issues including guardianship, parenting arrangements, contact, support, the division of property and the division of debt. See "family law agreements." dealing with real property can file a notice of the agreement against the title of the property with the Land Title and Survey Authority under s. 99 of the Family Law Act. A notice can be filed whether court proceedings have started or not, and will prevent the other spouse from transferring, selling, leasing, or otherwise dealing with the property without the voluntary cancellation of the notice or a court order.

A financing statement can be filed in the Personal Property Registry against a manufactured home under s. 100. This will stop the manufactured home from being transferred, and any new debts registered against the manufactured home will come in second to the spouse's interest under the financing statement.

Make sure the rent gets paid and the lights stay on

Section 226 of the Family Law Act allows the Provincial CourtA court established and staffed by the provincial government, which includes Small Claims Court, Youth Court and Family Court. The Provincial Court is the lowest level of court in British Columbia and is restricted in the sorts of matters it can deal with. Small Claims Court, for example, cannot deal with claims larger than $25,000, and Family Court cannot deal with the division of family property or matters under the ''Divorce Act''. See "judge" and "jurisdiction." and the Supreme Court to make a conduct order that can require a party to keep paying the household bills and prevent a party from terminating services to the family home:

A court may make an order to do one or more of the following:
(a) require a party to make payments respecting rent, mortgageThe conditional transfer of the title to real property by an owner to another person in return for money given as a loan, while retaining possession of the property. The party to whom title is given, the "mortgagee," usually a bank, is allowed to register the title of the property in his or her name if the person taking the loan, the "mortgagor," fails to make the required payments. See "encumbrance" and "real property.", specified utilities, taxes, insurance and other expenses related to a residenceThe geographic place where a person permanently lives. This is different from a person's "domicile" in that a person's residence is more fixed and less changeable in nature. A person's residence can also have an impact on a court's authority to hear and decide a legal action. See "domicile" and "jurisdiction.";
(b) prohibit a party from terminating specified utilities for a residence;

Most of the time, people don't stop paying the mortgage or cut off the electricity to the former family home when they move out. However, it can be very tempting to do this when emotions are running high, when there's not enough money to pay rent at the new place plus rent for the old place, or when the BC Hydro account at the former family home is in the name of the person who needs to arrange for the electricity to be hooked up at his or her new place. The court is not likely to make orders under s. 226 when there's not enough money to pay for everything, but it will step in where someone is acting out of spite or malice.

Financial restraining orders

A restraining orderAn order which forbids a party from doing or not doing a thing. In family law, common restraining orders include stopping someone from travelling out of an area with the children, stopping someone from disposing of property, and stopping someone from harassing someone else. See "ex parte," "order" and "protection order." is an order of the Supreme Court requiring someone to do something or to not do something. A typical restraining order relating to family assets reads something like this:

The Respondent shall be and is hereby restrained from disposing or encumbering, or attempting to dispose of or encumber, the family property and other property at issue without the express written agreement of the Claimant or the further order of this Honourable Court.

In other words, unless the respondentThe person against whom a claim has been brought by Notice of Family Claim. See “application” and “Notice of Family Claim." comes to an agreement with the claimantThe person who starts a court proceeding seeking an order for specific remedy or relief against another person, the respondent. See "action" and "respondent." or the court makes another order, under a restraining order like this the respondent is not allowed to sell any real property or personal propertyChattels, goods, money; property other than real property. See "chattel" and "real property.", or use that property as collateral for a loan or a mortgage. An order on terms like these is usually all that will be necessary for most couples in most circumstances and will cover real and personal property in British Columbia and personal property outside of British Columbia.

Remember that the Provincial Court does not have the power to make orders affecting property, including restraining orders about property.

The Family Law Act

The easiest way for married and unmarried spouses to obtain a financial restraining order is to apply for an order under s. 91(1) of the Family Law Act. This section says that:

(1) On application by a spouse, the Supreme Court must make an order restraining the other spouse from disposing of any property at issue under this Part or Part 6 until or unless the other spouse establishes that a claim made under this Part or Part 6 will not be defeated or adversely affected by the disposal of the property.

A couple of important points about this section deserve mention:

  • The order must be granted on a party's applicationA request to the court that it make an order for a specific remedy or relief usually on an interim or temporary basis, also called a "chambers application" or a "motion." See also "interim application" and "relief.", unless the other party can show that there are enough assets that the applicantA party who brings an application to the court for a specific remedy or relief. Usually refers to the party making an interim application, but in the Provincial Court can mean the person who starts a court proceeding. See also "court proceeding," "application respondent" and "interim application."'s claim to the property won't be frustrated if he or she happens to sell some of the assets.
  • The order can be made without the other party being given notice of the application.
  • The order includes not just family property but all "property at issue," which might include excluded property.

This is an important order and should probably be applied for whenever a claim is being made for the division of property. Again, this is a matter of simply being prudent. You may have no cause to believe that your spouse would do something that would jeopardize your interests, but better safe than sorry.

The Rules of Court

Rule 12-4 of the Supreme Court Family Rules gives the court the authority to make a general restraining order, also called an injunctionA court order that someone not do or cease doing a thing; a restraining order. In family law, injunctions are often sought, for example, to stop someone from removing the children from a place, from disposing of assets or from harassing someone. See "application" and "ex parte.", to make someone to do something or not do something. The potential scope of these restraining orders is very broad, and can include, for example, a restraining order identical to that provided for in s. 91 of the Family Law Act as well as an order stopping someone from racking up debt by drawing on credit cards and lines of credit.

Rule 12-4 says little more that "the court can issue an injunction." A 1986 case of the British Columbia Court of AppealThe highest level of court in this province, having the jurisdiction to review decisions of the Supreme Court, all provincial lower courts and certain tribunals. See "appeal.", British Columbia v. Wale, 1986 CanLII 171 (BCCA) offers some guidance. In that caseIn law, a court proceeding; a lawsuit; an action; a cause of action; a claim. Also the historic decisions of the court. See "action," "case law, " "court proceeding," and "precedent.", the court held that someone applying for an injunction had to prove three things. In a family law context involving unmarried parties, these are that:

  1. you have a reasonable claim against assets owned by your spouse,
  2. your spouse has disposed of or encumbered his or her assets or is likely do so, and
  3. the inconvenience that will be suffered by your spouse as a result of the injunction is less severe than the inconvenience you will suffer if the injunction isn't granted.

The Law and Equity Act

Section 39 of the provincial Law and Equity Act does pretty much the same thing as Rule 12-4 of the Supreme Court Family Rules. Section 39 says this:

(1) An injunction ... may be granted ... in all cases in which it appears to the court to be just or convenient that the order should be made.
(2) An order made under subsection (1) may be made either unconditionally or on terms and conditions the court thinks just.
(3) If an injunction is requested either before, at or after the hearingIn law, any proceeding before a judicial official to determine questions of law and questions of fact, including the hearing of an application and the hearing of a trial. See "decision" and "evidence." of a cause or matter, to prevent any threatened or apprehended wasteIn law, intentionally or unintentionally allowing the value of a piece of property to diminish through carelessness, neglect or purposeful harm. or trespass, the injunction may be granted if the court thinks fit, whether the person against whom the injunction is sought is or is not in possessionIn law, the right to have the control and use of a thing. One can have a right to the possession of a thing without owning it, as in the case of a car lease, or ownership without possession, as in the case of a landlord who rents an apartment suite. See "ownership." under any claim of title or otherwise or, if out of possession, does or does not claim a right to do the act sought to be restrained under any colour of title, and whether the estates claimed by both or by either of the parties are legal or equitable.

This section gives the court a fairly broad authority to make an injunction where the injunction is justified. Much like injunctions under Rule 12-4, you will have to show that:

  1. you have a reasonable claim against assets owned by your spouse,
  2. your spouse has disposed of or encumbered his or her assets or is likely do so, and
  3. the inconvenience that will be suffered by your spouse as a result of the injunction is less severe than the inconvenience you will suffer if the injunction isn't granted.

Applying for restraining orders without notice

The court can only make orders, including restraining orders, when a court proceeding has been started. When there is an urgent problem, as might be the case if a spouse is threatening to sell or move an asset, applications for injunctions and restraining orders can be made with little or no notice to the spouse and sometimes before the spouse has even been notified of the court proceeding.

It's important to know that if you are applying for an injunction or restraining order without notice to the other spouse, the court will require that you make full and complete disclosureA step in a court proceeding in which each party advises the other of the documents in his or her possession which relate to the issues in the court proceeding and produces copies of any requested documents before trial. This process is regulated by the rules of court, which put each party under an ongoing obligation to continue to advise the other of new documents coming into their possession or control. The purpose of this step is to encourage the settlement of court proceedings and to prevent a party from springing new evidence on the other party at trial. of all of the relevant facts, even of those facts that aren't in your favour. If it is discovered that you haven't made full disclosure, the court can set aside the injunction, make an award of costsA calculation of the allowable legal expenses of a party to a court proceeding, as determined by the Supreme Court Family Rules. The party who is most successful in a court proceeding is usually awarded their "costs" of the proceeding. See "account, "bill of costs," "certificate of costs," and "lawyer's fees." against you, or make an award of damagesAn award of money payable by one party to a court proceeding to another, usually as compensation for loss or harm suffered as a result of the other party’s actions or omissions. In family law, damages are usually awarded to one party in compensation for breach of contract or spousal abuse. See "breach of contract" and "tort." to compensate the other party for any inconvenience caused by the injunction. In a 1986 Supreme Court case called Morin v. Morin, 1986 CanLII 896 (BCSC), this resulted in a spouse having the injunction cancelled and getting awarded special court costs of the application.

Debts, bankruptcies and third-party claims

Apart from the possibility that your spouse will be less than forthright in dealing with the family property and family debt, you may also need to protect your interest in those assets from claims made by creditors and third parties, and against the possibility of your spouse's bankruptcy or your spouse racking up further debt. These issues can be dealt with, for the most part, by ensuring that you:

  1. separate from your spouse, to convert the ownership of all property to a shared ownership between you and your spouse as tenants in common,
  2. register a CPL against all real property in which your spouse has an interest, and
  3. obtain a financial restraining order under one or more of s. 91 of the Family Law Act, s. 39 of the Law and Equity Act or Rule 12-4 of the Supreme Court Family Rules.

The problem here is that property that is owned only by your spouse, or by both of you as joint tenants, may be vulnerable to your spouse's creditors and in the event of his or her bankruptcy. Say, for example, your spouse has put up his or her car as collateral for a loan. You would normally be entitled to one-half the car's value as a family property, assuming the car was bought during your relationship. If your spouse defaults on the loan, the car can be seized and you could find, especially where there are few other assets, that you get no compensation for your interest in the car's value once the lender's default fees and legal fees are added on.

Your spouse's creditors or trustee in bankruptcy will not usually be able to seize assets held only in your name, or your interest in property as a tenant in common, unless you are responsible for your spouse's debts for some reason, like having co-signed or guaranteed a loan, or having used a secondary credit card on your spouse's account. Although, under the Family Law Act both spouses are responsible for the debts incurred during their relationship, this obligationA duty, whether contractual, moral or legal in origin, to do or not do something. See "duty." is only between spouses and doesn't give any extra rights to creditors.

Creditors

Creditors have a wide range of remedies available to them when a debtor fails to live up to the conditions of a loan, a line of credit or a credit card. Among other things, a creditor can:

  • seize any asset put up as collateral on the loan,
  • sue the debtor for the amount owing,
  • put a lien on property owned by the debtor,
  • garnish the debtor's wages,
  • force the sale of the debtor's property to meet the debt, or
  • register a judgmentA judge's conclusions after hearing argument and considering the evidence presented at a trial or an application; a decision, the judge's reasons. A judge's written or oral decision will include the judge's conclusions about the relief or remedies claimed as well as his or her findings of fact and conclusions of law. A written decision is called the judge’s "reasons for judgment." See "common law," "conclusions of law," "findings of fact," and "final judgment." against the debtor's property.

Any one of these remedies can harm the interest the other spouse has in what would otherwise be family property, even if the other spouse had nothing to do with how or why the debt was incurred. The effect of separation can help to shield the other spouse's presumptive one-half interest in the family property from creditors and limit their ability to recover to the half of the property owed by the debtor spouse.

Third-party claims

Your spouse might be liable for damages or debt to someone in a court proceeding unrelated to your relationship. Your spouse may also have made a deal with someone outside the family that concerns the family property. These people may have a legitimate claim against the family property. The problem is that even though their claim or entitlement may be restricted to property owned by your spouse in his or her name alone, your interest in that property may be lost if a third partyA person named in a court proceeding or joined to a proceeding who is neither the claimant nor the respondent. A third party may be joined to a proceeding where the respondent believes that the person has or shares some responsibility for the cause of action. See "action," "cause of action" and "party." gets there first.

As we've discussed, both spouses have a presumptive interest in the family property, including property owned only by the other spouse, as long as it qualifies as family property. A third-party claim or entitlement can result in the loss of an asset or in the loss of the value of the property. By the time the family property is divided, without separation or a restraining order, the assets might very well be in the hands of someone else and no longer be available for division.

Bankruptcy

When someone declares bankruptcy, the ownership of his or her property is transferred to a trustee in bankruptcy. The trustee's job is to tally up the list of the bankrupt's debts and then sell as much of the bankrupt's property as is necessary to satisfy his or her creditors. This may include almost all property registered in the bankrupt's name, but will exclude a few specific assets like pensions, clothing, and work tools.

If an asset is family property, the transfer of the asset to the trustee may deprive the other spouse of any interest he or she might have in that asset and, since the owning spouse is bankrupt, he or she may not have any other financial resources from which to compensate the non-bankrupt spouse for the lost interest.

A trustee in bankruptcy cannot take property that doesn't belong to the bankrupt. If the spouses separate before the bankruptcy, only the bankrupt's one-half interest in the family as a tenant in common will go to the trustee.

Protecting property outside British Columbia

This is a little complicated, so please be patient. The law that deals with the division of property between spouses in this province is the Family Law Act. Because the jurisdictionWith respect to judges, the authority of the court to hear an action and make orders; the limits of the authority of a particular judicial official; the geographic location of a court; the territorial limits of a court's authority. With respect to governments, the authority of a government to make legislation as determined by the constitution; the limits of authority of a particular government agents. See “constitution." of the government of British Columbia is generally limited to the province of British Columbia, the government cannot usually make laws that affect people and things located outside of British Columbia. For the same reason, the courts of British Columbia usually only have the jurisdiction to deal with things located inside the province of British Columbia.

There are some exceptions to these general rules.

  • The Supreme Court of British Columbia can make an order requiring a person to do or not do something when that person accepts the authority of the court, even where that person lives outside the province.
  • A person is considered to have accepted the authority of the court by responding to a court proceeding. Once an out-of-province respondent files a Response to Family ClaimA legal document required by the Supreme Court Family Rules in which the respondent to a court proceeding sets out his or her reply to the claimant's claim and the grounds for his or her reply. See "action," claim," "Notice of Family Claim" and "pleadings." in replyIn law, an answer or rebuttal to a claim made or a defence raised by the other party to court proceeding or legal dispute. See "action," "claim," "defence" and "rebut." to the claimant's Notice of Family Claim, he or she has accepted the jurisdiction of the court to deal with the litigation. This is called attorning to the jurisdiction.
  • When someone attorns to the jurisdiction of the courts of British Columbia, they submit to the court's authority. The court still may not have the authority to make orders about things located outside the province, but it does have the authority to make orders about the person located outside the province. This is called "in personam jurisdiction."
  • A court with in personam jurisdiction over a person can make orders requiring the person to do or not do things involving certain kinds of things located outside the province, such as assets like bank accounts, stocks, investment accounts, and similar assets that aren't real estate. These assets are called movable assets.
  • Whether a court has in personam jurisdiction or not, it usually won't have jurisdiction over real property located outside the province. This kind of jurisdiction is called "in rem jurisdiction." Real property and things attached to real property like buildings are called immovable assets.

The upshot of all of this is the following general rules:

  • the courts of British Columbia generally cannot deal with real property located in other provinces or outside of Canada,
  • the Supreme Court of British Columbia can deal with out-of-province assets that are movable, like RRSPs, stocks, bank accounts, chattels and what not, as long as the owner has attorned to the court's jurisdiction, and
  • the Provincial Court cannot deal with out-of-province issues at all.

However, the Family Law Act contains some provisions that are meant to give the court in rem jurisdiction out of province under certain circumstances and, if those circumstances are met, to allow the court to make an order restraining a person from disposing of property located outside the province. Although it remains to be seen how effective this legislationAn act; a statute; a written law made by a government. See "regulations." will be in imposing on the authority of another jurisdiction, the Act's out-of-province restraining orders are discussed below.

This area of the law is extremely complex, and you really should consider hiring a lawyer to help you whenever you have an interest in assets located outside the province.

Immovable assets

Real property and things attached to real property, like buildings, are called immovable assets. The courts of British Columbia generally do not have jurisdiction over immovable assets located outside of the province.

The general rule

Generally speaking, subject to the exception in the Family Law Act discussed below, there is nothing that can be done to stop someone from selling or otherwise dealing with real property located outside of British Columbia, even property that would normally qualify as family property. Usually, the only way to effectively protect such assets from sale or being used as collateral is to start a court proceeding in the jurisdiction in which the property is located.

The courts of this province will, however, usually compensate a spouse for an interest in out-of-province property by reapportioning the property that the court can deal with, property located inside British Columbia, to compensate for the property that it can't deal with. Here's an example:

Zygmunt has a farm in Flin Flon, Manitoba worth $50,000. Zygmunt and Ivan both own the family home in Vernon, British Columbia worth $100,000. Assuming both properties were bought after the relationship began and that both are family property, under an equal division each of the spouses would be entitled to $25,000 for the farm in Manitoba and $50,000 for the family home in British Columbia.
Since the court can't normally make an order requiring the sale or transfer of the property in Flin Flon, an equal division of the assets in this jurisdiction would give each spouse $50,000, half the value of the family home, but this would short Ivan of his interest in the farm. To avoid this unfairness, the court could simply divide the family home in Vernon in favour of Ivan, and give him a $75,000 share rather than an equal share.
This would reapportionIn family law, the unequal division of family property or family debt between spouses. See "apportion," "family debt," and "family property." the value of the property the court can deal with (the family home) to compensate Ivan for the interest he ought to have in the property the court can't deal with (the farm). Zygmunt is still left with half of the family property, as he remains the sole owner of the farm, $50,000, and gets a $25,000 share of the family home, for a total property interest of $75,000.

In truly exceptional circumstances, it is possible to get an order stopping someone from disposing of real property located outside the province with something called a "Mareva injunction." A Mareva injunction will stop someone from selling or encumbering assets outside of British Columbia, providing that certain conditions are met. (The name of this order comes from an old English case in which the reliefIn law, an order sought by a party to a court proceeding or application, usually as described in his or her pleadings. Where more than one order or type of order is sought, each order sought is called a "head of relief." See "action," "application" and "pleadings." was first granted, Mareva Compania Naviera S.A. v. International Bulkcarriers S.A., [1980] 1 All E.R. 213) To qualify for this order, you must:

  1. show a strong case for your entitlement to a share of those assets,
  2. show that there is a real risk that the other party will dispose of those assets before a final order is made, and
  3. guarantee that you will make good any harm the other party might suffer if the order is made.

The Family Law Act

Under Division 6 of Part 5 of the Family Law Act, the Supreme Court of British Columbia may, in certain circumstances, make orders about the ownership and division of property located outside British Columbia. If the court has the ability to make orders dividing property located outside the province, it may also make an order to preserve the property from being disposed of. Section 109(2)(b) says this:

(b) if the court is satisfied that it would be enforceable against a spouse in the jurisdiction in which the extraprovincial property is located,
(i) preserve the extraprovincial property ...
(iv) provide for any other matter in connection with the extraprovincial property;

The first stumbling block is to figure out whether the court can divide the out-of-province property, and that requires a difficult analysis under ss. 106, 107 and 108 of the act. Assuming the court can make such orders, the next step is to find out whether the order would "enforceable against a spouse" in the place where the property is located. If the answer to both questions is yes, then the court may make an order for the preservation of the foreign property.

This part of the act is extremely complicated and you should get advice from a lawyer whenever you may need to deal with movable and immovable property located outside of British Columbia.

Movable assets

Bank accounts, stocks, investment accounts, and similar assets that aren't real estate are called movable assets. The BC Supreme Court usually has jurisdiction over immovable assets located outside of the province where the owner has attorned to the jurisdiction and accepted the court's authority.

Where a spouse has attorned, the court can make a restraining order stopping the spouse from disposing of movable property located outside of British Columbia under s. 91 of the Family Law Act. Inside British Columbia, a s. 91 order will stop a spouse from dealing with everything that is family property or other "property at issue," including real property. Outside British Columbia, a s. 91 restraining order will only stop a spouse from dealing with movable assets.

The court can be reluctant to issue a s. 91 order that is intended to deal with assets located outside the province, since in most cases the courts of British Columbia cannot make orders about things located outside the province. In a 2002 case called Boyd v. Boyd, 2001 BCCA 535, the Court of Appeal confirmed that the court can make in personam restraining orders that are effective against movable assets located outside the province.

If a s. 91 order is not available for some reason, a Mareva injunction will have the same effect. However, Mareva injunctions are not granted automatically and you must satisfy the test described just above.

Resources and links

Legislation

Links


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