When a Matrimonial Home Isn’t Subject to Equalization

In Canada, it is a commonly held belief that when a married couple divorces, each spouse is entitled to a fifty-fifty split down the middle with respect to the property they share, including all bank accounts, cars, homes, and other assets. Where it is not possible to split the asset itself, such as the family home, the item will usually be sold, and the proceeds of the sale shared by both spouses. Alternatively, one spouse may retain possession of the asset but be required to pay 50% of the value accrued during the marriage to the other person. However, while it is true that married spouses have a legal right to share in the value of what is referred to as “family property”, the dividing line may not always be drawn straight down the middle. In some cases, such as the one discussed below, the spouses may not even be entitled to an interest in their shared family home.

While in many cases a court will look to evenly distribute the value of shared family property between the spouses, a court ultimately has discretion to make the order it deems appropriate under the circumstances. More specifically, under s. 7(3) of the Family Property Act, a Court is required to distribute family property in “a manner that it considers just and equitable”. This grants the court the power to adjust the division to reflect other circumstances including how the assets were obtained, the income level of each spouse, the parenting arrangements for the couple’s children if applicable, and more. In a recent Alberta case, the judge in a divorce hearing ordered that the husband was not entitled to share in the value of the matrimonial home. The husband then unsuccessfully appealed the decision to the Court of Appeal. 

Court Orders Husband Has No Interest in Family Home Purchased with Daughter’s Personal Injury Settlement Funds

In the case at hand, called Big Throat v. Fox, the couple had been married since 2008, and prior to that had lived together in an adult interdependent relationship since 1988. The wife, BT, had children from a previous relationship. In 2002, one of BT’s children, her daughter SBT, was involved in a serious car accident which caused severe, long-lasting injuries, at which point she became dependent on BT for 24-hour care. The husband, RF, worked full-time and provided the sole income for the family for several years. In 2014, BT was awarded a settlement “in trust” as part of a personal injury claim she had filed on her daughter’s behalf. BT was provided with $335,000 in recognition of the care she had provided to SBT since the accident. Part of the funds from the settlement were used to pay off the mortgage on the family home, which had been purchased because it better suited SBT’s caregiving needs after her accident. According to testimony in the original hearing, litigation loans related to SBT’s claim had also been used to make mortgage payments on the home before the mortgage was paid in full.

When BT received the in-trust funds, RF chose to quit his job and he remained unemployed for over two years until the couple separated in 2016. In the immediate aftermath of the separation, BT and her daughter left the family home and stayed with various friends until February of 2017, when BT was granted an order of exclusive possession of the family home.  

At the time of the divorce, the couple appeared in family court to resolve a number of outstanding issues, one of which involved the division of shared family property. The judge ultimately determined that the family home had been paid for using litigation loans and settlement funds related to SBT’s personal injury claim, and as such, it was excluded from the division of family property under s. 7(2)(d) of the Family Property Act. 

In the decision, the judge held that there had been no real evidence of financial contribution from either spouse towards the home, and that in essence, it belonged to SBT, since it had been almost entirely paid for through funds relating to her injury claim. The judge ordered that the ownership of the home be transferred into a trust in SBT’s name, for her benefit. RF appealed this decision to the Alberta Court of Appeal. 

Appealing the Division of Family Property & The Limited Power of the Court

When appealing an award with respect to property division in family court, a high level of deference is given to the original decision, as a result of the discretion a court has to distribute the property in whichever manner it deems “just and equitable”. In the case at hand, the judges refereed to the following passage from a 2021 decision called Graham v. Graham, which stated:

Whether the trial judge erred in dividing the matrimonial property is a question of mixed fact and law, and is reviewed on the basis of a palpable and overriding error… Additionally, as it involves the discretion of a trial judge to distribute matrimonial property, appellate intervention is only warranted where the trial judge misdirected himself on the facts or if the decision is so clearly wrong it amounts to an injustice…

In this case, the Court of Appeal found there was no basis to interfere with the judge’s decision to order the home be placed in a trust for SBT. Further, the Court went on to state that “the division of matrimonial property is the product of the application of law to facts and may only be set aside if it is clearly wrong – palpable and overriding error”.

In this case, there was no such error, and so RF’s appeal was dismissed. 

Contact Mincher Koeman for Skilled Representation in Family Property Division

At Mincher Koeman, our Calgary family lawyers have the experience and skill necessary to handle any matter involving the division of family property, no matter how complex. We provide knowledgeable and candid advice to our clients, working to efficiently traverse the process of valuing and dividing shared property. We will always seek to provide a client with the most cost-effective method appropriate for their given situation. If you are facing the end of a relationship and require the services of an effective family law lawyer for the fair division of your family property, contact our office to make an appointment to discuss your matter by calling us at 403-910-3000 or by contacting us online.