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For married spouses, this chapter will review some important initial steps that should be taken to secure family assets, the restraining orders that can stop assets from being disposed of, the problems posed by third party claims such as debts and bankruptcy, and how assets located outside British Columbia can be protected. For unmarried couples, this chaper will review some of steps that can be taken to protect property. Initial Steps It may seem at 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 spouse is busy squirrelling money away in Switzerland or Antigua, or hatching plans to transfer the title of the family home 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 are gone. It is quite acceptable to take steps to protect your own interests and it is only prudent that you should do so. What are the Family Assets? Firstly, you might want to take a careful, but not too obvious, tally of what each of you own. 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 RRSPs, stocks, investments, bonds, GICs, cars, properties, and bank accounts you have may prove to be extemely useful. One less obvious tip is to keep a record of the names of the financial institutions which are sending your spouse mail; you don't even need to open the envelope, just record the name. See the How do I ? section for more tips on preparing for separation. Get a Triggering Event Once you have separated and an action has started, make sure a triggering event happens as soon as possible. Most of the time it is a very good idea to get a triggering event. Triggering events are described in more detail in the first chapter of this section, Family Assets. The four triggering events are:
A triggering event crystallizes each spouse's presumptive one-half interest in the family assets as tenants in common and can be critical to protect your one-half of the property from creditors, bankruptcy, or court Orders made in unrelated actions. There are only a few times when a triggering event is a bad idea. Essentially, the question you have to ask is whether it's a good idea to limit your claim to a one-half interest in the family assets or not. Two of the more common reasons why a triggering event might be a bad idea are when:
While it's always a good idea to consult with a lawyer if you have a family law problem, be especially sure to do so if you're not certain whether a triggering event would be helpful or harmful. Register an Interest in Real Property Registering an interest in real estate may stop the property from being sold or being borrowed against. The two most common ways to do this are: filing a Certificate of Pending Litigation with the Land Title and Survey Authority under the Land Title Act; and, filing an entry under the Land (Spouse Protection) Act. Certificates of Pending Litigation Where real property is involved and an action has started, you should register a Certificate of Pending Litigation, formerly called a lis pendens, against the property at the Land Title and Survey Authority. As long as you have asked for a CPL in your Statement of Claim or Counterclaim and made a claim for the division of assets, 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 ownership of the property may change as a result of the litigation and prevent the sale or the use of the property as collateral. In terms of procedure, you must claim a CPL and apply for the division of property in your Statement of Claim or Counterclaim. You can file for your CPL at the same time as you file your Statement of Claim or Counterclaim. The registry 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 Statement of Claim or Counterclaim. Entries under the Land (Spouse Protection) Act If, for some reason, you cannot obtain a CPL, you may be able to file an "entry" with the Land Title and Survey Authority against the title of the matrimonial home under the provincial Land (Spouse Protection) Act. The entry will prevent the your spouse from transferring, selling, leasing or making a gift of the family home without your consent. The interesting thing about entries under the Land (Spouse Protection) Act is that you can get one as long as you are married, and you can get the entry whether litigation has 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 intend to sue him or her just yet. The protection an entry gives is only available to married spouses. The protection will end when an order for divorce is pronounced and the parties are no longer "spouses." Note also that an entry under the Land (Spouse Protection) Act protects only the family home, not other real property that a couple might own. Notices under the Family Relations Act Married spouses who have made a separation agreement dealing with real property can, under s. 63 of the Family Relations Act, file a notice of the agreement against the title of the property with the Land Title and Survey Authority. The notice 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 removing the notice. Sample Documents The links below will open sample documents in a new window. You will require Adobe Acrobat Reader to view these files, a free program available for download from Adobe Software. In this sample, our fictitious Plaintiff, Jane Doe, is putting a CPL against the title to a piece of property and filing an entry against the title of the family home under the Land (Spouse Protection) Act. Normally you would do one or the other, but not both.
These sample documents are just that: samples. While they represent a more or less accurate picture of how Jane Doe might fill out her forms, they may not be applicable to your situation. Use them as a reference only together with the official court form. Areas where the court form offers a choice or where you must supply information are indicated in burgundy text. Back to the top of this chapter. Restraining Orders A restraining order is a court order requiring someone to do something or to not do something. A typical restraining order relating to family assets reads something like this: "THIS COURT ORDERS THAT the Defendant shall be restrained from disposing or encumbering, or attempting to dispose of or encumber, the family assets and other assets at issue without the express written agreement of the Plaintiff or the further Order of This Honourable Court." This choice bit of legalese boils down to this: unless the Defendant comes to an agreement with the Plaintiff or the court makes another order, the Defendant is not allowed to sell any property or use that property as collateral for a loan or a mortgage. Section 67 Restraining Orders The easiest way to obtain a financial restraining order is to apply for an order pursuant to s. 67 of the Family Relations Act. This section states that: (1) On application by a party to a proceeding under this Part or Part 6, the court must make an order restraining another party to the proceeding from disposing of a family asset or any other property at issue under this Part or Part 6 until or unless the other party establishes that a claim made by the applicant under this Part or Part 6 will not be defeated or substantially impaired by the disposal of that family asset or other property. (2) On application by a party to a proceeding under this Part or Part 6, the court may make an order for the possession, delivery, safekeeping and preservation of a family asset or other property at issue under this Part or Part 6. (3) The court may make an order under this section before notice of the application is served on the other party or may order that notice of the application be served on the other party. (4) On application by a party to a proceeding under this Part or Part 6, the court may vary or rescind an order made under this section on terms it considers appropriate. A couple of important points from this section deserve some mention:
This is a powerful order and should probably be obtained whenever a claim is being made for the division of assets. 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 claim or your interests, but it almost always pays to be cautious. This restraining order is only available to married couples. Unmarried couples can get a similar sort of order under Rule 45 of the Rules of Court, discussed below. Other Sources of Restraining Orders Rule 45 of the Rules of Court gives the court the authority to make a general restraining order, also known as an "injunction," to force someone to do something or not do something. The same authority is given to the court by s. 39 of the provincial Law and Equity Act. This can include, for example, a restraining order identical to that provided for in s. 67 of the Family Relations Act; you're just not asking for the order under that particular act, you're asking for it under the Law and Equity Act or the Rules of Court. These types of restraining order are discussed more fully below, in the segments dealing with assets located outside British Columbia and with unmarried couples and the protection of assets. Back to the top of this chapter. Debts, Bankruptcies and Third Party Claims Apart from the possibility that your spouse will be less than forthright in dealing with the assets, you may also need to protect your interest in those assets from claims made by creditors, third parties, and against the prospect of your spouse's bankruptcy. These issues can be dealt with, for the most part, by ensuring that you:
These remedies are discussed above. This segment will discuss the nature of the threat posed by debts, bankruptcies and third party claims. For so long as you and your spouse own the family assets separately or together as joint tenants, your assets may be vulnerable to outside problems. Say, for example, your spouse has put up his or her car as collateral for a loan. You would normally be entitled, on divorce, to one-half the car's value. 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 can get no compensation for your interest in the car's value, even if you helped your spouse with the loan payments or the downpayment. 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:
Any one of these remedies can harm the interest the other spouse has in what would otherwise be a family asset, even if the other spouse had nothing to do with the circumstances under which the debt was incurred. A triggering event can help to shield the innocent spouse's presumptive one-half interest in the family assets from creditors, and limit their ability to recover the debt to the other spouse's one-half of the family assets. Third Party Claims Your spouse might be liable for damages or debt to someone in an action unrelated to your divorce. Your spouse may also have made a deal with someone outside the family that concerns the family assets. Those people, people who are not parties to your action against your spouse, may have a legitimate claim against the family assets. 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 party gets there first. Both spouses have a prima facie interest in all family assets, including those owned only by the other spouse. A third party claim or entitlement can result in the loss of an asset or in the loss of value of an asset. By the time the family assets are divided, without a triggering event or restraining order, those assets might very well be in the hands of someone else and no longer form a part of the pool of assets subject to division. A triggering event can help to shield the innocent spouse's presumptive one-half interest in the family assets from third parties, and limit their ability to recover to the other spouse's one-half of the family assets. A restraining order, in this case a restraining order against the third party, can temporarily suspend the third party's ability to realize their claim against the family assets. Bankruptcy When someone declares bankruptcy, the ownership of his or her assets is transferred to a trustee in banktruptcy. 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 the creditors. This may include almost all property registered in the bankrupt's name, excluding few specific assets like pensions. If an asset is a family asset, the transfer of the asset to the trustee may deprive the non-bankrupt spouse of any interest he or she might have in that asset. A trustee cannot, however, take property that doesn't belong to the bankrupt. A triggering event obtained before bankruptcy will prevent the trustee from dealing with the other spouse's one-half interest in the family assets, including those registered in only the name of the bankrupt spouse. Back to the top of this chapter. Dealing with Assets outside British Columbia This issue is a bit difficult. The only piece of legislation which deals with the division of assets between married spouses in this province is the Family Relations Act. Because the jurisdiction of the government of British Columbia is limited to the province of British Columbia, the government cannot make legislation that effects people and things located outside of British Columbia. For the same reason, the courts of British Columbia only have the jurisdiction to deal with things located inside the province of British Columbia. There is an exception to this general rule. Bear with me, this is a bit complex.
The upshot of all of this is the following general rules:
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. Real Property Generally speaking, subject to the exception 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 a family asset. Usually, the only way to protect that asset from sale or being used as collateral is to start a law suit in the jurisdiction that the property is located in. 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: Spouse A has a farm in Manitoba worth $50,000. Spouse A and Spouse B both own the family home in Vernon, worth $100,000. Assuming both properties are family assets and the court was to divide the family assets equally, 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 make an order requiring the sale or transfer of the property in Manitoba, an equal division of the assets would give each spouse $50,000, half the value of the family home, but this would short Spouse B of his interest in the farm. To avoid this unfairness, the could simply reapportion the family home in Vernon in favour of Spouse B, and give him a $75,000 share rather than an equal share. This would reapportion the value of the property the court can deal with (the family home) to compensate Spouse B for the interest Spouse B ought to have in the property the court can't deal with (the farm). Spouse A is still left with half of the family assets, as she 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 your spouse from selling or burdening assets outside of British Columbia, providing certain conditions are met. (The name of this order comes from an old United Kingdom case in which the relief was first granted, Mareva Compania Naviera S.A. v. International Bulkcarriers S.A.) To qualify for this order, you must:
Financial Assets Where a spouse has accepted the court's authority, the court can make a restraining order stopping the spouse from disposing of liquid assets located outside of British Columbia under s. 67 of the Family Relations Act. Section 67 orders are discussed above. Inside British Columbia, a s. 67 restraining order will stop a spouse from dealing with everying that qualifies as a family asset, including real property. Outside British Columbia, a s. 67 restraining order will only stop a spouse from dealing with liquid assets, such as RRSPs, stocks, bank accounts, chattels and so forth. The court can be reluctant to issue a s. 67 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 anything located outside the province. The Court of Appeal however, in a 2002 case called Boyd v. Boyd, confirmed that the court does have the jurisdiction to make these sorts of orders. Back to the top of this chapter. Unmarried Couples and the Protection of Assets Unmarried couples are expressly excluded from the two parts of the Family Relations Act that deal with the division of property. Unfortunately, the most common and simplest way of protecting assets, a financial restraining order under s. 67 of the act, is in one of these parts. On the bright side, two restraining orders are available to both married spouses and unmarried couples, which can have an effect much like s. 67 restraining orders. Rule 45 of the Supreme Court Rules of Court gives the court the authority to make a general restraining order, also known as an "injunction," to force someone to do something or not do something. The same authority is given to the court by s. 39 of the provincial Law and Equity Act. (Section 67 restraining orders are discussed in much detail above.) Unmarried couples can also register a Certificate of Pending Litigation against the title of real property, in just the same way that married spouses can, but using a slightly different court form. Injunctions Rule 45 says little more that "the court can issue an injunction." A 1986 case of the British Columbia Court of Appeal, British Columbia v. Wale, offers a litle more guidance. In that case, the court held that someone applying for an injunction had to prove three things. In a family law context involving unmarried parties, these are:
Note that if you are applying for an injunction, the court will required that you make full and complete disclosure of all of the relevant facts, even those facts that aren't in your favour. The Law and Equity Act Section 39 of the provincial Law and Equity Act offers much the same relief as Rule 45 of the Supreme Court Rules of Court. Section 39 reads, in part, as follows: (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 hearing of a cause or matter, to prevent any threatened or apprehended waste 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 possession 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 of make injunctions where such injunctions are justified. Much like injunctions under Rule 45, you will have to show that:
Note that if you are applying for an injunction, the court will required that you make full and complete disclosure of all of the relevant facts, even those facts that aren't in your favour. Certificates of Pending Litigation Where real property is involved and an action has started, an unmarried partner can register a Certificate of Pending Litigation, formerly called a lis pendens, against the property at issue with the Land Title and Survey Authority. As long as you have asked for a CPL in your Statement of Claim or Counterclaim, you will be entitled to register this document in the Land Title and Survey Authority. 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 the title to the property may change as a result of the litigation you are involved in. In terms of procedure, you must claim a CPL and a property interest in your Statement of Claim or Counterclaim. You can file for your CPL at the same time as you file your Statement of Claim or Counterclaim. The registry 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 Statement of Claim or Counterclaim. Sample Documents The link below will open a sample document in a new window. You will require Adobe Acrobat Reader to view this file, a free program available for download from Adobe Software. In this sample, our fictitious Plaintiff, Jane Doe, is putting a CPL against the title to a piece of property owned by her partner, John Smith.
This sample document is just that: a sample. While it represents a more or less accurate picture of how Jane Doe might fill out her form, it may not be applicable to your situation. Use it as a reference only together with the official court form. Areas where the court form offers a choice or where you must supply information are indicated in burgundy text. Back to the top of this chapter. Site Navigation
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