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Family Law, Family Property Division

Divorce Law BC: Dividing Assets Acquired by Joint Family Venture

Where spouses contribute in various ways, and in different measures, to the acquisition of family wealth and assets, how does BC divorce law apply to divide that property on breakdown of the marriage? In many cases, title to the property is in only one spouse’s name, despite the other spouse’s contributions. It might also be the case that title to property is in the name of other family members, such as one spouse’s parents. That was precisely the situation in Judge v. Judge, 2015 BCSC 1764, where a number of properties were acquired by the efforts of four people: a husband, wife, and the husband’s parents.

Let’s examine Judge v. Judge to find out how BC divorce law applies to divide property acquired by joint family venture.

Facts in BC divorce law case

A husband and wife separated after a 20-year marriage. One of the major issues in this BC divorce law case was ownership and division of residential properties located in Kamloops, BC. The husband’s parents were included as parties to the divorce proceedings as they held title to three of those properties. The evidence established that the husband, the wife, and the husband’s parents had embarked on a venture wherein real estate was acquired, or built, and rented. The rental income and equity in each property was then used to fund acquisition or building of the next. In other words, both the income earned from a property and its value as an asset became the platform upon which the next step in the venture rested. The venture expanded to include the opening of what became a very successful convenience store. Earnings from the store formed a common fund of resources controlled by the husband. Revenues from the store (along with other sources of funds) were applied to the acquisition of additional properties.

Wife’s claim in BC divorce law

In her claim for divorce, the wife sought a judicial reapportionment of family assets in her favour. The husband’s parents claimed that the disputed properties were purchased with their own funds and that they should keep legal and beneficial title. The court examined the evidence and concluded that the husband controlled the pooled resources of the extended family household and determined how the funds would be applied, including the allocation of income and the acquisition of real property. The husband determined who would hold title to real property, and his decisions about who would hold title were unrelated to the contributions the parties made to the acquisition of the properties. The wife was subservient to the husband and unaware of how he was structuring the financial affairs of the extended family unit.

Joint family venture under BC divorce law

The court found that the husband’s parents made direct financial contributions to the acquisition of the properties and also provided indirect contributions by way of child care assistance to the husband and wife that permitted them to work long hours, particularly after the convenience store opened. However, those contributions were secondary to the joint contributions by the husband and wife. The wife made substantial and direct contributions to the acquisition of each asset encompassed by the joint venture through her employment earnings, her share of rental income derived from the properties, and the revenues generated by the convenience store. She also contributed indirectly through management of the household and child-rearing, and in addition, she permitted her interest in the properties to be pledged as security by her husband to obtain financing to further the joint family venture. In light of all of the facts, the court was satisfied that the properties in question were family assets acquired by joint family venture and should be reapportioned in the wife’s favour.

How much is each party entitled to?

The court next had to determine the proportionate interest of the four parties to the properties held in the name of the husband’s parents. There was an absence of clear financial records.  As noted, the court concluded that the husband and wife made the most significant contributions to the venture, and that the husband’s parents played secondary roles. In all the circumstances, the court concluded that 80% of the value of the disputed properties was properly apportioned to the husband and wife, and that each was entitled to a 40% interest in those assets.

Applying BC divorce law to divide assets acquired by joint family venture

Upon the breakdown of a marriage where title to property or assets is disputed, BC divorce law may apply such that the property is found to be a family property acquired by joint venture. Contribution to the acquisition of property can be direct or indirect. Where the facts support such a finding, the court will then consider each parties’ contribution to determine their proportionate interest in the disputed property.