The new Family Law Act in B.C. intended to establish a regime whereby property that was owned by one spouse prior to the relationship or that was inherited or gifted to a spouse during the relationship would remain the property of that spouse on separation. Only the increase in the value of the property would be shared.
The courts in B.C. have been struggling with the issue of what happens when a spouse gifts their excluded property to the other spouse by placing the property in joint names. The most common example is a house that was owned by one spouse before the relationship is put in joint names with the new spouse.
The B.C. Court of Appeal has decided in a case called V.J.F. that where property is placed in joint names the right to claim excluded property is lost because there is a presumption that a gift was intended. This presumption can be rebutted if a contrary intention can be proved but that will usually be difficult to do. This case is currently being appealed to the Supreme Court of Canada.
In Alberta there is similar legislation to the Family Law Act in B.C. In a decision McKee v. McKee 2006 ABQB 196 the court held that when one spouse places property in joint names they are presumed to have given only one half of their property to the other spouse. The result of this is that the first spouse retained the exemption for one of half of the excluded property and the other half was divided equally.
We do not yet know if this will be adopted by the courts in British Columbia.
