May 16, 2014

Family Law Act Applies to Unmarried Spouses Separating before Act came into Force: Critical New Supreme Court Decision

Meservy v. Field, 2013 BCSC 2378 (CanLII)
The new year has gotten off to a very good start. On 30 December 2013, Madam Justice Hyslop released her judgment in Meservy v. Field, a concise and learned decision that unflinchingly addresses one of the most significant questions remaining on the application of the new Family Law Act: do the property provisions of the act apply to unmarried couples who separated before the act came into force on 18 March 2013? The answer to this question is very important because a "yes" would give unmarried spouses a presumptive entitlement to half the family property, while a "no" would leave all unmarried spouses separating before 18 March 2013 stuck making difficult claims under the common law.
Here's the background to the question.
Under the old Family Relations Act, only married spouses could make claims for the division of family assets. Although unmarried couples who had lived together for at least two years were "spouses" for the parts of the act about spousal support, they weren't spouses for the parts of the act about property. This is the definition from s. 1:
"spouse" means a person who
(b) except under Parts 5 and 6, lived with another person in a marriage-like relationship for a period of at least 2 years if the application under this Act is made within one year after they ceased to live together and, for the purposes of this Act, the marriage-like relationship may be between persons of the same gender,

Parts 5 and 6 were the parts dealing with property and pensions, and, under s. 56 in Part 5, a married spouse was entitled to 50% of all of the family assets:
(1) Subject to this Part and Part 6, each spouse is entitled to an interest in each family asset ...
(2) The interest under subsection (1) is an undivided half interest in the family asset as a tenant in common.
To be clear, unmarried couples had no property rights under the old act, with a minor exception for to couples with cohabitation agreements. As a result, to make a claim to property owned only by one person, the other would have to make a complicated claim for "unjust enrichment" under the law of equity and, if proven, for restitution by a "constructive trust." This was all very complicated and rarely yielded a result anywhere near the result the couple would have had if they had been married.
The new Family Law Act made a number of huge changes to the law in British Columbia, and giving property rights to unmarried spouses was probably one of the most significant. This is how the new act defines "spouse," at s. 3:
(1) A person is a spouse for the purposes of this Act if the person
(a) is married to another person, or

(b) has lived with another person in a marriage-like relationship, and
(i) has done so for a continuous period of at least 2 years, or


(ii) except in Parts 5 and 6, has a child with the other person.
(2) A spouse includes a former spouse.
This is hugely important because it means that you are a "spouse" for the parts of the act about property and spousal support if you are married or unmarried but have lived together for at least two years. The only couples not shut out are unmarried couples who have lived together for less than two years.
"Spouse" also includes people who used to be spouses. In other words, married spouses who have divorced and unmarried spouses who have separated can also make a claim for the division of property under the new act. This right isn't perpetual, s. 198 imposes a two year time limit:
(2) A spouse may start a proceeding for an order under Part 5 to divide property or family debt [or under] Part 6 to divide a pension ... no later than 2 years after,
(a) in the case of spouses who were married, the date
(i) a judgment granting a divorce of the spouses is made, or



(ii) an order is made declaring the marriage of the spouses to be a nullity, or
(b) in the case of spouses who were living in a marriage-like relationship, the date the spouses separated.
Under s. 81, anyone who falls within the definition of "spouse" and makes a claim within the two year time limit is entitled to 50% of all of the family property:
(b) on separation, each spouse has a right to an undivided half interest in all family property as a tenant in common, and is equally responsible for family debt.
Okay, so all of that is probably pretty clear. Here's where things get sticky.
The new act was passed by the legislature on 23 November 2011, and received royal assent on 24 November 2011. However, the lion's share of the act — all of the really important stuff — would not come into force until an unspecified date in the future. Although the bill had now become a law, it was not yet operative.
In the middle of June 2012, we learned that that the act would come into force on 18 March 2013.
Let's do some math. Remember how unmarried spouses who have separated can make a claim for a share of property under the Family Law Act? Remember that two year time limit? Well, it looks like an unmarried couple would have had to have separated before 18 March 2011 if they were going to be disqualified by the time limits. And of course, 18 March 2011 was more than nine months before the bill was even tabled in the legislature, and a whopping fifteen months before the effective date was announced.
As a result, it seems to me that anyone who was in an intact unmarried spousal relationship on or after 18 March 2011 would be unable to escape a potential claim under the Family Law Act. Ouch. This is what I wrote on 10 March 2012, before the effective date was announced:
"When the Family Law Act comes into force, for the purposes of the parts of the law that divide property and debt "spouse" will at that moment be defined as including:
1. anyone who is or has ever been in a married relationship, and
2. anyone who is living with another person in a marriage-like relationship and has done so for at least two years, and anyone who has ever lived with someone in a marriage-like relationship for at least two years.
"The limit to these spouses' ability to make claims for the division of property and debt is that the claim must be made within two years of the date of separation, for unmarried spouses, or the date of divorce, for married spouses.
"There is no twelve- to eighteen-month period to think about things. The principle that legislation is not to be interpreted as having a retroactive effect has nothing to do with it; the definition of spouse that will be in force when the new law comes into force is expressly worded so as to catch former spouses as well as people in existing spousal relationships.
"To summarize, as long as the act comes into force on or before 24 November 2013, if you were in a spousal relationship when the Family Law Act became law, you will be subject to the property and debt provisions of the new law. Breaking up now will not save you from the effects of the new law. It's too late and was too late from the moment the bill was tabled. To take advantage of the new legislation, all a spouse needs to do is wait until the Family Law Act comes into force and then file an action in the Supreme Court."
This is what I told lawyers, in a post on the website of Courthouse Libraries BC, who were acting for unmarried couples separating after 18 March 2011 after the effective date was announced:
"Your client will be a 'spouse' as defined by the FLA when it comes into effect on 18 March 2013. Start a Supreme Court action now if there are limitations under the FRA to preserve or some other reason to commence proceedings, state your client’s claim as a claim for a property interest under the principles of unjust enrichment and amend your pleadings to claim under the FLA when it comes into effect."
If I was right in my interpretation, the consequences would be huge. Thousands of people across the province in unmarried spousal relationships after 18 March 2011 would be stuck with a law that gave them property rights, a law that didn't exist when they were together (and didn't exist on 18 March 2011), regardless of what their intentions might have been going into their relationship. As you'd likely guess, lots of people in long-term, unmarried relationships chose that kind of relationship precisely to avoid property issues.
Despite the significance of this issue, we have not yet, at least not until Justice Hyslop's excellent decision, had a case that square on addressed the problem:

  • in Trudeau v Panter, the court decided that the parties' relationship was not "marriage-like," and thus the property provisions of the new act did not apply;

  • in Reynolds v Huard, the court refused an application to amend the claim to include a claim under the Family Law Act on the basis that the parties had separated in 2003 and the claim was filed in 2008, long before the new act was a twinkle in the Attorney General's eye and well before the two year time limit (a subsequent appeal of the decisions was refused on the basis of the date of separation);

  • in Bressette v Henderson, the claim had been amended to include a claim under the new act, however because of the nature and length of the parties' relationship the court made an order under the common law rules saying that the result would have been the same under the new act, and refused to decide whether the new act should apply or not;

  • in Lee v Starinovich, the lawyers agreed the new act would not apply, and the property at issue was acquired before the parties' relationship began and thus wouldn't qualify to be shared under the new act even if the new act was applied;

  • in Asselin v Roy, the lawyers agreed that the new act would apply, saving the court from making a decision on the issue; and,

  • in P.N.K. v C.L., the court refused an application to amend the claim brought on the morning of trial on the basis that the parties separated more than two years before the new act came into effect.

Okay, that's enough context. Let's get to Meservy v Field.
In the case the parties — who I will call "husband" and "wife" for ease of reference, even though they weren't married — had lived together from January 2009 to September 2011, a relationship what was long enough to qualify as "spouses" under the Family Law Act and ended late enough to fall within the two-year time limit.
The wife started her claim on 14 March 2013, just a few days before the new act came into effect, asking for an interest in property owned by the husband under the old common law rules. The husband wished to make a property claim under the Family Law Act, which the wife said should not apply. The parties went to a judicial case conference on 11 June 2013, where the issue of the new act was obviously raised. The Master hearing the JCC ordered that the parties make an application to determine whether the act applied by a certain date in advance of trial. This was the application heard by Justice Hyslop.
There is, of course, more to to this issue than the two-year limit, although that has proven a useful reason to turf claims resulting from unmarried relationships ending prior to 18 March 2011. The core of the problem is whether the act has a retroactive effect or not, because of the basic legal principle that legislation only has a go-forward effect. This is what I said about the issue in that March 2012 post:
"The principle that legislation is not to be interpreted as having a retroactive effect has nothing to do with it; the definition of spouse that will be in force when the new law comes into force is expressly worded so as to catch former spouses as well as people in existing spousal relationships."
Justice Hyslop started her analysis by quoting Elmer Driedger, a well known authority on the interpretation of statutes, to define her terms (important bits in bold):
"A retroactive statute is one that operates as of a time prior to its enactment. A retrospective statute is one that operates for the future only. It is prospective, but it imposes new results in respect of a past event. A retroactive statute operates backwards. A retrospective statute operates forwards, but it looks backwards in that it attaches new consequences for the future to an event that took place before the statute was enacted. A retroactive statute changes the law from what it was; a retrospective statute changes the law from what it otherwise would be with respect to a prior event."
She then notes the presumption against retroactivity I referred to above, quoting Ruth Sullivan, another authority on the issue:
"It is not disputed that there is a presumption against legislation being retroactive. For legislation to be retroactive, the legislation must be specific that it is to operate retroactively or 'by express words or by necessary implication'."
A similar rule can be found in s. 3 of the provincial Interpretation Act:
(3.1) If an Act contains a provision to the effect that the Act, or a portion of it, comes into force on a date that is earlier than the date of assent, that Act or portion referred to in the provision
(a) comes into force in accordance with the terms of the provision, and

(b) on coming into force, is deemed to have come into force on the earlier date referred to in the provision and is retroactive to the extent necessary to give it force and effect on and after that earlier date.
The key, then, lay in whether the Family Law Act is "retroactive" or "retrospective." Justice Hyslop then refers to two passages from Pierre-André Coté, yet another authority on statutory interpretation, for a clarification of the principle and an example of its application in family law matters:
"Normal retroactive effect modifies all the legal consequences of the facts at issue, regardless of the moment when they were accomplished. However, the legislature can decide to modify only the future effects of past facts, while leaving unchanged the consequences which occurred prior to commencement. This second case is termed 'retrospective effect'."
"For example, a new statute may convey a benefit on all married persons. Here, the date of marriage is of no significance: it is the ongoing fact of being married and not the momentary fact of marriage which results in application of the law. As long as a person’s marital status is 'married' subsequent to the commencement of the statute, they may claim the benefits created by the statute. The date of marriage is irrelevant from the standpoint of transitional law."
Here is Her Ladyship's conclusion (cites omitted):
"[45] [The wife] and [the husband] are spouses (former spouses) by operation of the definition of spouses in the FLA. This status occurred prior to the FLA coming into force. To make a claim for property rights under Part 5 of the FLA, [the husband] had to bring his claim to court within two years of the date when he and [the wife] separated. Without making his claim within the two years, he did not have the status of a spouse to make claims under Part 5 of the FLA.
"[46] In Re Sanderson and Russell, the Ontario Court of Appeal dealt with a situation similar to that of [the parties]. The issue was the application of the Family Law Reform Act to a “common law relationship” that ended before the FLRA came into force. In Re Sanderson, the parties lived together for six years in a manner sufficient to meet the definition of spouses in the FLRA. ... In the Ontario legislation, the definition of a spouse was that they had to have cohabited together in a conjugal relationship for five years and they had to have resided together the previous year prior to making the application.
"[47] The FLRA stated that each spouse had a duty to provide support to the other and, upon an application by a spouse, a court may order support to that spouse. ...
"[49] Mr. Russell resisted the claim for spousal support on the basis:
…it would be unwarranted retrospective application of the Act to hold that such period can be the basis of a claim by Mrs. Sanderson.
"[50] Mr. Russell further argued that the relationship was over when the legislation came into force and that he and Mrs. Sanderson were no longer spouses. The court rejected this argument and stated:
...According to the scheme of the Act this depends upon whether she was a “spouse” at the time of her application. The appellant submits that she was not because: (1) the five years was complete before March 31, 1978, and (2) that part of [the definition] requiring continuous cohabitation within the preceding year (there is no dispute that this means preceding the application) is a limitation period and not really part of the definition of “spouse”. I do not accept this submission. While the one-year period undoubtedly serves the necessary purpose of a limitation provision it is expressly made part of the definition of spouse. Therefore, a person satisfying the requirements of [the definition] is a spouse for the purpose of [spousal support]. … Support then will serve a useful function. With this consideration in mind it seems to me that it is reasonable to regard the final clause of [the definition] as part of the substantive definition of “spouse” and not just a limitation provision. In short, the definition means what it says.
"[51] The court made reference to the policy of the FLRA which:
…is to enable certain persons who are in need to claim support. …regardless of the kind of “spouse” seeking it.
The court stated that with this policy in mind, that:
…it is reasonable to regard the final clause of [the definition of spouse] as part of the substantive definition of “spouse” and not just a limitation provision. In short, the definition means what it says.
"[52] The court concluded that the language in the FLRA had:
…all of the factual ingredients giving a person status to assert a claim for support are contained in the definition provision. This provision, of course, is not an operative one. It defines an existing status, albeit by reference to past events. When the defined term is used in the operative provisions ... it is reasonable to assume that the Legislature intended that a person having the defined status on the date the Act came into force would be entitled to the benefit of the operative provisions.
"[53] The court found that the FLRA was not retroactive because the applicant spouse became a spouse before the FLRA became law. The importance was that she was a spouse at the time she made her application. ...
"[55] The Ontario legislation gave married and unmarried spouses obligations and rights to spousal support dependent upon their status prior to the legislation coming into force.
"[56] On March 18, 2013, unmarried and married spouses in British Columbia were entitled to seek a division of 'property and debt' within two years from the date of their separation in the case of person’s in marriage-like relationships and the case of married people two years from the date of divorce. The two year period relates to their status of a spouse.
"[57] As in Re Sanderson, the date of separation is not just a limitation period, but is part of the substantive definition of a spouse in British Columbia.
"[58] I declare that the provisions of Part 5 of the FLA are applicable to this proceeding."
And there you have it. The definition of "spouse" in the Family Law Act is not subject to the presumption against retroactivity, the definition has a retrospective effect which changes the future consequences of past relationships. As a result, and pending an appeal decision to the contrary, unmarried persons who met the definition of spouse during their relationship and separated at anytime within the last two years may make claims for the division of family property, and family debt!, under the Family Law Act.
This case is a nice bookend to Smith v Anderson, a November 2013 decision of Master Bouck, which came to somewhat the same result in another application to amend a claim to include a claim under the Family Law Act. In that case, which I've written about previously, the amendment was allowed on the basis that the parties had separated within the two-year time limit; there was no reason not to allow the amendment; and, any prejudice to the other party could be rectified by a costs award. However, as to the critical question of the effect of the amendment, the Master left that to the trial judge:
"[31] ... I am unable to conclude that the claims made in the proposed amendments are bound to fail. It will be up to the trial judge to decide the whether the FLA remedies can be applied."
My thanks to my colleagues Morag MacLeod and Agnes Huang for bringing this important case to my attention.