Lexpert magazine features articles and columns on developments in legal practice management, deals and lawsuits of interest in Canada, the law and business issues of interest to legal professionals and businesses that purchase legal services.
Issue link: https://digital.carswellmedia.com/i/1547047
42 www.canadianlawyermag.com LEGAL REPORT In practice, however, the current rules can pose challenges. Because individuals need to prove they were in a "marriage- like" relationship for at least two years to qualify for property-division rights, many end up getting into disputes about whether their relationship was sufficiently "marriage-like" and whether the two-year requirement was met, MacLean says. "Not all serious relationships look the same," he says. "Some couples maintain separate finances, some have separate bedrooms, some spend time apart for work, some intentionally avoid labels, so the 'marriage-like' analysis can become heavily evidentiary." A high-profile decision issued by the BC Supreme Court last year, however, suggests the courts are likely to interpret "marriage-like" broadly. In the dispute, MacL ean represented a woman who dated and lived with an older philanthro- pist, estimated to be worth $150 million, from 2018 to 2021. The court noted that sexual behaviour, social ac tivity, and financial arrangements are among the factors that must be considered when determining whether a couple is in a "marriage-like" relationship. The philanthropist, Thomas Alan Budd, argued his former partner was not entitled to property-division rights because she did not love him and there- fore lacked the "subjective intention" to be in a "marriage-like" arrangement. But the court disagreed, stating that love has never been a legal requirement for marriage. The court awarded his ex-partner more than $5 million in divided property. MacLean says another challenge with BC's current regime is that many people don't understand how it works. A lot of clients come to him "blindsided" by BC's rules, he says. More public education about property-division rights "would go a long way in how people arrange things in their relationship," he argues. hypothetical scenario, the house is worth $1 million, and there's a $500,000 mort- gage on it. The couple would have to divide that equity in the house by including it with the other assets accounted for in the equal- ization formula. However, "in the scenario where you have non-married spouses and only one of them owns the house, the [common-law] spouse who doesn't own the house doesn't get to share in the value of the house by way of equalization," Battaglia says. "The Family Law Act says you're not a legally married spouse, so we treat you differently." British Columbia is one of several prov- inces that take a different approach from Ontario, granting common-law partners the same property-division rights as married spouses. This has been the case since 2013, when the province's Family Law Act replaced its decades-old Family Relations Act, obliging unmarried couples who have lived together for at least two years in a "marriage-like relationship" to split any property they acquired during the relation- ship when they separate. For Fraser MacLean, a partner at Vancouver-based firm MacLean Family Law, BC's Family Law Act is an improve- ment over the province's previous family law regime. "If two people have orga- nized their lives as a family unit for more than two years, the fact that they did not have a wedding should not necessarily mean one partner walks away with no statutory-property protection," he says. For married couples in Ontario, the province's Family Law Act governs how they must divide their property when they separate. Under the act, separating spouses generally divide their wealth by determining the value of the assets they each own as of the date of separation, subtracting any debts and liabilities, and subtracting the value of the assets they initially brought into the marriage. The spouse calculated to have more assets then pays the difference – which is known as an equalization payment – to the spouse calculated to have the lower amount of assets. There is an exception for matrimonial homes, meaning the home that the couple lived in together. If one spouse owned the home before the couple married, the value of the home at the date of separation cannot be subtracted from that spouse's total assets. Instead, its value must be counted as an asset to be split with the spouse who doesn't own the home. This property-division framework does not apply to separating common-law part- ners in Ontario. "For common-law couples, there's not an equalization payment," Fine says. "Common-law partners don't have an auto- matic right to equalize property like married couples do." Battaglia offers an example of how this difference could play out. "If there were two people who were married and only one of the spouses owned the house [they lived in], they have to equalize the value of that house with their … spouse," she explains. In her "I do think there is a disadvantage, certainly still in this day and age, for people who don't marry in Ontario but live in and contribute to a home together" Melanie Battaglia, Battaglia Law FAMILY LAW