Matrimonial Home & Family Law Act

Special Treatment of Matrimonial Home

• Inheritance or gifts used to purchase a matrimonial home are included in net family property (NFP).
• The matrimonial home includes properties in which a person has an interest and which were "ordinarily occupied" by the person and a spouse as their "family residence" at the time of separation.
• Matrimonial homes cannot be deducted as pre-marital property or excluded from equalization.

Trust Property and the Matrimonial Home

• A spouse's beneficial interest in a trust holding the family home may not qualify it as a matrimonial home under the Family Law Act (FLA), and can be excluded from NFP.
• In Spencer v Riesberry, the family home was held in a trust set up by the wife’s mother, with the trust agreement stipulating that the home was not part of the wife’s NFP.

Matrimonial Home and Trust Arrangements

• If neither spouse has an interest in a property due to a trust arrangement, it does not qualify as a matrimonial home under the FLA, as ruled in Kent v Kent.
• Concerns exist that family trusts might be used to circumvent matrimonial home treatment, potentially disadvantaging a spouse.

Excluded Property and the Matrimonial Home

• Spouses can exclude gifts or inheritances from NFP, unless those funds are used to buy the matrimonial home per FLA, s 4(2)
• In Lefevre v Lefevre, an inheritance used to purchase a home was not excluded from NFP because the home was the matrimonial home at separation.
• Using an inheritance to pay off a matrimonial home mortgage does not allow exclusion, unlike investing it elsewhere.

Determining Matrimonial Home Status

• In DaCosta v DaCosta, a farm property acquired through inheritance did not qualify as a matrimonial home because the spouses never lived there as their primary residence.
• A property must be "ordinarily occupied" by the spouses at separation to qualify as a matrimonial home.

Debts and Liabilities: Disposition Costs

• Courts have struggled with whether to deduct tax and disposition costs of selling property from NFP.
• Sengmueller v Sengmueller established guidelines for disposition costs:
  • Disposition costs should be shared equally.
  • The probability of sale must be considered.
  • Deductions should be applied unless the sale is uncertain.
• Disposition costs should be shared if asset disposal is likely.

Deductions and Net Family Property (NFP)

• NFP includes all property owned by a spouse except "excluded property," after deducting debts/liabilities on valuation day and property owned at marriage (less debts at that time).

Deductions, Debts, and Fairness

• Zavarella v Zavarella addressed whether a spouse’s debt at the date of marriage should be included in their NFP.
• The Court of Appeal ruled that a debt discharged post-marriage should not be included in NFP.

Re-Purchasing a Matrimonial Home

• In Folga v Folga, a husband owned a house at the date of marriage, sold it three years later, and purchased another house which became the family home.
• Because the original home was sold and a new one purchased during the marriage, the husband can deduct the value of the first home at the date of marriage.

Balancing Fairness and Certainty in the FLA

• The 2009 FLA amendments allowed contingent tax liabilities to be included as liabilities in NFP.
• Cases like Knight v Knight and Reiss v Garten show judicial discretion in deciding whether to deduct hypothetical costs.
• Zavarella v Zavarella exemplifies the tension between fairness and a formula-based approach in equalization.

Key Points on Matrimonial Homes, Trusts, and Inheritances:

• Trust-held family homes might not qualify as matrimonial homes, shielding them from equalization.
• Inheritance used for a matrimonial home cannot be excluded from NFP, which may create an unfair outcome.
• Property must be “ordinarily occupied” at separation to be considered a matrimonial home (DaCosta v DaCosta).

Key Points on Debts and Liabilities:

• Marriage debts might not count toward NFP if discharged soon after marriage (Zavarella v Zavarella).
• Disposition costs and contingent tax liabilities remain contentious in equalization calculations.
• Courts struggle with balancing fairness and certainty in family property law.
• A family home held in trust may still form part of family patrimony under Quebec law, broadening what forms part of family property
• A spouse can exclude from the value of property they own at V-day, but if a gift or inheritance is used to purchase a MH, it loses the "excluded" status
• If a spouse sells their pre-marriage home and buys a new one, the new home’s value can be deducted (if it is not a matrimonial home at V day).

Calculating the Equalization Claim

• The equalization formula states that the spouse with a greater NFP pays half the difference to the other spouse.
• If a spouse’s NFP is negative at the valuation date, it is deemed to be zero per FLA, s 4(5)
• Judicial discretion is limited to egregious situations warranting unequal shares per FLA, s 5(6):
  • Failure to disclose assets.
  • Reckless debt accumulation.
  • Depletion of NFP.
• Unequal division under s. 5(6) of the FLA requires extreme circumstances.

Section 5(6), Unequal Shares

• A court may award more or less than half the difference between NFPs if equalizing would be unconscionable.
• Relevant factors include:
  • Failure to disclose debts.
  • Reckless or bad faith debts.
  • Gifts from one spouse to the other.
  • Intentional or reckless depletion of NFP.
  • Disproportionately large amount relative to cohabitation of less than five years.
  • One spouse incurring disproportionately larger debts for family support.
  • Written agreement that is not a domestic contract.
  • Any circumstance related to the acquisition, disposition, preservation, maintenance, or improvement of property.

Limitation Period

• Claims must be made:
  • Within 2 years after divorce.
  • Within 6 years after separation with no reasonable prospect of resuming cohabitation.
  • Within 6 months after a spouse's death.
• Extensions are possible

Matrimonial Property and Indigenous Reserves

• Provincial family law legislation does not apply to lands on Indigenous reserves due to federal jurisdiction under section 91(24) of the Constitution Act, 1867 (Derrickson v Derrickson, Paul v Paul).
• In Wynn v Wynn, the court granted an in personam order restraining a husband from interfering with his wife’s possession of the matrimonial home but could not grant exclusive possession because it was on a reserve.

Legislative Developments in Indigenous Matrimonial Property Rights

• The First Nations Land Management Act (1999) allowed First Nations to create their own land codes.
• In 2008, Bills C-47 and C-8 (Family Homes on Reserves and Matrimonial Interests or Rights Act) did not pass.
• Bill S-2 (2011) introduced a 12-month transition period.

The Family Homes on Reserves and Matrimonial Interests or Rights Act (FHRMIRA)

• *Enacted as SC 2013, c 20, the FHRMIRA created a default regime for matrimonial property rights.
• The federal government did not provide resources to assist First Nations in developing their own matrimonial property laws.

Criticism of FHRMIRA and Indigenous Sovereignty Issues

• The Act may not fully recognize Indigenous laws and establishes a delegated law-making model.
• Pam Palmater critiques the Act's ambiguity concerning:
  • Indigenous sovereignty over land.
  • The ability of non-Indigenous individuals to hold life interests in on-reserve property.
  • Lack of explicit protection for the special status of reserve lands.

The Issue of Housing and Gendered Inequality

• The Act fails to mandate increased housing on reserves.
• The Native Women’s Association of Canada (NWAC) advocated for:
  • Increased housing stock.
  • Violence prevention measures.
  • Additional supports for Indigenous women.

The Question of Privatization

• Matrimonial property regimes contribute to the privatization of Indigenous lands.
• Critics warn that changes could reinforce colonial land structures rather than support Indigenous self-determination.

Legal Uncertainty and Practical Challenges

• Many legal questions remain unresolved:
  • How the FHRMIRA interacts with the First Nations Land Management Act (FNLMP).
  • How Canadian courts will handle matrimonial property disputes on reserves.
  • The lack of specialized legal aid and expertise in this area.

Conclusion

• The Act has faced criticism for:
  • Failing to fully recognize Indigenous self-governance.
  • Not providing sufficient resources for First Nations to develop their own laws.
  • Potentially contributing to the privatization of reserve lands.
  • Exacerbating housing shortages and gender inequalities.
• Provincial laws regarding family property on reserves are prohibited, which could leave Indigenous women and children without shelter.
• Family Homes on Reserves and Matrimonial Interests or Rights Act, 2013 includes:
  • Mechanism for First Nations to enact community specific matrimonial real property laws.
  • Provisional federal rules came into force Dec 16, 2014 to be applied in absence of First Nations own law.
• The Act is criticized for insufficient time/resources to create/implement own laws and for a privatizing effect.
• Family law is part of the colonial system.
• Indigenous legal systems in family law Promote healing within Indigenous communities, make family respectful of Indigenous laws, strengthens self-governance in Indigenous community, and Canada's treaty constitutional and international obligations