The BC Court of Appeal decision in Dignard v Dignard, 2025 BCCA 43, gave clarity as to what considerations are needed when deciding whether an equal division of property would result in significant unfairness.
The Court also explained the significance, or lack thereof, that should be given to tax consequences during a property division when the amount and actuality of them being incurred are unknown.
Case Background
The parties began a marriage-like relationship in July 2017, married in July 2018, and separated in September 2021.
Prior to the relationship, each party had acquired property. The appellant owned a house in Langley (the Langley House), sold it in July 2017, and began living with the respondent in his property.
A condo in Langley (Langley Condo), which was registered in both of the parties’ names, was purchased with some of the funds from the sale of the Langley House. At the time of trial, the appellant’s children were paying her $1,400 per month in rent to live in the property.
Trial Decision
The trial judge found that no part of the proceeds from the Langley House sale was excluded property. It was also found that capital gains taxes should not be deducted from the respondent’s share of the family property.
Positions of the Parties
The appeal focused on the following errors:
1. The trial judge had made a mistaken assumption to the appellant, or in the alternative;
2. S. 95 of the Family Law Act was improperly applied when it was found that equal division of property would not be significantly unfair;
3. The Langley Condo should have accounted for inherent tax liabilities in the valuation.
The Determination
1. The Court of Appeal agreed that the trial judge had attributed a mistaken assumption to the appellant and did not consider what she said in full context.
2. It was also found that the trial judge erred in not considering what the financial impact would be on both parties if there were an equal division of property. Although the appellant would not be financially ruined, the Court must consider if the respondent would be left at a much greater disadvantage by the split. If there were an equal division in this case, the appellant would gain approximately $30,000, while the respondent would gain over $600,000. The Court of Appeal found this to be “unjust, unreasonable, and unfair.”
3. In terms of the Langley Condo’s tax liabilities, no error was found. The appellant’s tax liability was too speculative and didn’t have to be accounted for. The Court emphasized that there is no absolute rule in terms of when to account for taxes in the division of family assets. Further, there was evidence against the likelihood of the appellant selling the Langley Condo, since the appellant’s children were living in the residence and there was no evidence of any plan to have them move out.
Conclusion
This case confirmed that courts must look at both parties’ finances when considering significant unfairness. Although one party may not be financially destroyed by an equal division, an unfair result can arise if one party is significantly advantaged.
The Court also confirmed that if too uncertain or unlikely in nature, tax consequences do not have to be considered in a division of property.
