Matrimonial Property Division
In Alberta, the division of matrimonial property is governed by the Matrimonial Property Act (the “MPA”). This Act is divided into three main parts. The first part is called Matrimonial Property and talks about the division and distribution of property between spouses. The second part, called Matrimonial Home Possession, deals with possession of the matrimonial home and sole use of the household goods. The third part of the Act contains general law and procedure. The MPA only applies to legally married couples, and does not apply to couples who are just living together (see Common Law).
An application for division of property under Part I can be made on its own or with an action for divorce, judicial separation, or annulment. Therefore, you can make an application if you have separated but not yet divorced or started to get a divorce. You can also bring an application under the MPA for property division once divorce proceedings have started. If the application is made while the two spouses are separated, but not divorced, or if the spouses have not started to get a divorce, it must be made within two years after the date the spouses separated.
An application under Part II for Matrimonial home possession, can be made at the same time as an application under Part I, on its own, along with divorce proceedings, or along with an action under the Family Law Act. An order under Part II can be made without telling the other spouse (“ex parte”) if the court decides that there is danger of injury to the spouse asking for the application or danger to a child living in the home.
PART I OF THE MPA - DIVISION OF PROPERTY
The basic idea behind the MPA is all matrimonial property should be divided equally between the spouses when the marriage ends. Matrimonial property is all property acquired by the spouses while they are married. The increase in value of property owned by the spouses is also included as matrimonial property. As a general rule, the MPA tells the Judge to divide all property owned by both or either spouse. Generally speaking, a Judge will divide all of this property equally between the spouses. The Judge will not do this if it would be unfair. When deciding what is fair the judge must consider Section 8 of the MPA. All property will be divided, unless it is classified as exempt property (property that does not fall within the MPA rules).
1. Property which may be distributed under Section 7 of the Act includes, but is not limited to:
a. the matrimonial home (owned, leased or rented);
b. household goods (this includes almost all personal property used by all family members);
d. other property that has been purchased during the marriage or brought into the matrimonial relationship -whatever has been used for the mutual benefit of thespouses.
Other property which may be distributed would include such things as: R.R.S.P.’s, business interests, investments, and stocks and bonds. One other type of property which falls under this category that is very important is pensions.
2. Property which is exempt from distribution under Section 7(2) of the Act includes:
a. property of one of the spouses that they got before the marriage;
b. property one spouse receives as a gift;
c. property one spouse gets by inheritance;
d. an award or settlement for damages in tort law in favour of a spouse (i.e. damages paid for injury in an automobile accident) unless the money is for a loss to both spouses.
Exempt property (property that does not fall under the MPA) belongs to the spouse who received the exempt property. No claim by the other spouse can be made on this exempt property, except as explained in the section dealing with divisible property. If there is an increase in value of the exempt property, this increased value may be divided between the spouses.
3. Division of Pensions
Pensions are property under the MPA. There are basically two types of pensions: private pensions by employment and the Canada Pension Plan. There are three ways the court can divide the value of private pension plans. You should contact a lawyer to determine what approach you should take.
a. Contributions Approach
This is often used for shorter length marriages. The court will use this approach when the contributing spouse’s (the one paying into the pension) annuity (pension payments) start a long way into the future. The court takes the amount the contributing spouse has given to the pension plan and divides it by two, minus any reduction in the amount because of taxes. The court then orders that the contributing spouse pay the non-contributing spouse a lump sum equal to one half of the amount of contributions. Alternatively, because the court will not make the contributing spouse cash in the pension, the non-contributing spouse might receive a larger share of the other property involved in place of the pension amount. The court may deduct tax liabilities from the actual pension in determining the value of the pension.
b. McCallister Formula
This formula, developed by the courts, is used in longer term marriages where the spouse is close to retirement or has retired. Here, the non-contributing spouse will receive a share in the monthly pension if and when the contributing spouse receives his or her pension. The formula is:
(Number of years married \ Number of years employed) X Amount of Pension payable X the percentage (%) to which the court thinks the non-contributing spouse should be given (usually 50%)
c. Legislative Requirement
Some pensions are subject to legislature that dictates how the pension is divided. You should contact the pension administrator for the pension in question to determine if the pension is subject to legislative division with respect to marriage breakdown.
4. Canada Pension Plan
You may also apply for a division of Canada Pension Plan credits. The rationale behind this program is to provide some financial protection to the spouse who did not work outside of the home and could not contribute to the plan or had lower earnings during the marriage. There is an exception if the Minister of National Health and Welfare is satisfied that it would not be in the best interests of both spouses to divide them.If you want to have Canada Pension Plan credits divided, you should submit an application to your nearest Income Security Programs Client Service Centre.
5. Eligibility Requirements for the division of CPP credits
In general CPP credits will be divided if the couple has lived together for at least 12 months in a row. No application is required. The division of property will be made as soon as the Minister of National Health and Welfare has the necessary information. There is no time limit to give the information. In the case of common law spouses, the spouses must be of opposite sex and have lived together for at least twelve months in a row. The separation must have lasted for at least two months, or less if one of the spouses dies, and the application must be made within four years from the date of separation.
MATTERS TO BE CONSIDERED IN THE DISTRIBUTION OF PROPERTY (SECTION 8)
Section 8 of the MPA allows the Court to be fair in determining what each spouse’s share of property will be when an equal division of the property would be unfair. Usually equal division of the property occurs unless there are very good reasons presented to the Court that it should not be. There are specific guidelines which the judge considers when the spouses cannot agree on a split of the property. (see section 8 of MPA).
Section 9 of the MPA allows the Court to think about the effect of property held outside the province. The Court can distribute the property in Alberta to make it like an equal distribution as if all the property were located in Alberta.
PART II OF THE MPA - MATRIMONIAL HOME POSSESSION
“Matrimonial home” is defined in the Act as a house, part of a house, part of a business being used as a house, a mobile home, a condominium, or a suite. The home also includes as much property around the home as is needed. The house must be owned or leased by one or both spouses and must be occupied as the family home (i.e. does not include a summer cottage). Though the Act does not expressly state it, the home must be located in Alberta. The court’s power to order exclusive possession of the matrimonial home allows the court to deal with problems arising when the spouses cannot live together peacefully but neither is willing to leave the matrimonial home. An exclusive possession order allows one spouse to keep the other out of the house.
As stated earlier, a matrimonial home possession order (possession of the matrimonial home that is enforced by the court) can be applied for by itself or along with some other matrimonial action (i.e. divorce). In deciding whether a possession order will be granted, the court will consider the following:
a. whether each spouse can find and maintain another place to live;
b. the needs of any children living at home (e.g. will they have to go to another school if the parent with custody is not given possession?);
c. the financial position of each spouse;
d. any existing court orders as to maintenance and property of either spouse.
The remedy of exclusive possession (sole possession of the home by one spouse, excluding the other) is not one the Courts will grant easily. The person applying for an order of exclusive possession must prove that the MPA guidelines have been met.
The person applying for the order must show something more than a balance of convenience, that is, it is not good enough to show that one spouse does not like the other person being there.
If there is a history of violence in the home, this may also affect the granting of the order.
In granting the order the Court may do one or more of the following:
1. direct that a spouse be given exclusive possession of the home (regardless of whose name the property is in);
2. direct that a spouse be evicted from the matrimonial home;
3. stop a spouse from entering or going to the matrimonial home.
Under the MPA, the Court can only grant an order preventing a person from entering or visiting the home. The Court cannot stop one spouse from harassing the people in the home on the telephone or harassing them outside the home. If this happens, you may wish to apply for a restraining order along with a divorce action. However, to get the restraining order, you will have to show a real or suspected danger to your safety.
An order for possession may even be made with conditions. For example, the wife could be given exclusive possession of the house with the condition that the husband must make the mortgage payments.
A spouse can apply to the court without telling the other spouse (“ex parte”) but this will only be done if it can be shown that there is an urgent need, such as danger to the health and safety of the spouse or the children, from the continued presence of the spouse to be excluded. A spouse can also apply for an order giving him/her exclusive use of the household goods. “Household goods” are defined in the Act as personal property owned by at least one of the spouses and used or enjoyed by either spouse, or the children, for transportation, household, educational, recreational, social, or aesthetic purposes. Household goods include motor vehicles, furniture, and appliances. The Court can make this order for any time that the Court thinks necessary.
All orders granted under this part should be registered with the appropriate registry: Motor Vehicles for cars, Land Titles for houses, Central Registry for household goods. Once the order is registered, the home or goods cannot be sold unless the spouse who was granted the order agrees.
PART III OF THE MPA - GENERAL PROVISIONS
1. Marriage and separation agreements
If you agree with your spouse, either before or after the marriage, as to how the property will be divided between you if you separate or divorce, you should know that there are conditions that must be met before such an agreement will be enforced by the Courts.
To be valid the agreement must:
a. be in writing;
b. have been entered into freely and not have been forced by the spouse or some other person;
c. show that each spouse had INDEPENDENT LEGAL ADVICE about the effects of signing the agreement. That means that each spouse must execute the agreement with a different lawyer.
Creating a separation agreement will allow the parties to contract out of the MPA. That means that the MPA will not apply to their property. But each spouse must know of the possible future claims to property that they may have under this Act and must want to give up these claims and replace them with the new agreement.
The Court will also not enforce an agreement that it considers “unconscionable”. An agreement would be unconscionable if one spouse was unable to properly protect their own interests (i.e. because s/he cannot afford legal advice or, because of a mental or physical problem and the spouse does not understand the effects the agreement had on their rights, or where a spouse does not tell about all his/her assets/property, or where the other spouse took advantage of the ‘weaker’ spouse). If any of these factors are shown to the Court, then the Court will have the power to ignore the agreement altogether. However, if the agreement is valid, then it will be considered a binding contract. For a fuller explanation , please see Separation Agreements.
This area of law seems difficult because it is difficult. The most important thing to keep in mind is that if you are involved in a matrimonial property dispute, protect yourself by getting proper legal counsel.