Family Law

Property Distribution During Divorce in Alberta

March 20, 2024

Photo of person taping up a packing box representing family property division following a divorce

Going through a divorce is a challenging and emotionally taxing process, made more difficult when considering what to do with matrimonial property. In Alberta, like all provinces in Canada, the law provides the framework for how property should be divided between spouses. Understanding that framework can help individuals navigate divorce with more clarity and confidence.

This blog will explore the fundamental principles and considerations related to property distribution and discuss a recent case before the Court of Appeal that reveals the considerations the Court would make when upholding interim matrimonial distribution orders.

What is Matrimonial Property?

In Alberta, matrimonial property refers to assets and debts acquired by either spouse during the course of their marriage. According to Alberta’s Family Property Act (formerly known as the Matrimonial Property Act), matrimonial property can include property owned or leased by the spouses or occupied by the spouses. All owned real estate properties are matrimonial property, explicitly including a fully detached home, a semi-detached home, a self-contained dwelling unit, part of business premises with living arrangements, mobile homes, condominiums, or suites. Matrimonial property also includes “household goods,” which is personal property owned by either spouse, or ordinarily used or enjoyed by either spouse, or other family members, for transportation, household, educational, recreational, social or esthetic purposes.

Matrimonial property includes real estate, vehicles, bank accounts, investments, pensions, and any other valuable possessions. In divorce proceedings, matrimonial property is divided pursuant to the Family Property Act.

What Property is Excluded From Division?

Even in the absence of a cohabitation or marital agreement that separates specific assets from marital property, some assets may be protected from division under Alberta law. Some examples of property that may be exempt from equalization include:

  • An inheritance;
  • A gift from a third party to one spouse exclusively; and
  • Settlement funds from a lawsuit.

However, how the asset was treated during the marriage might impact its exemption. For example, if a sum of money was inherited by one party alone but was deposited into a joint bank account that was used by both parties, it may no longer be exempt from division.

Division of Matrimonial Property in Alberta

In the event of a divorce, matrimonial property is subject to division between the spouses. The Family Property Act states that matrimonial property must be distributed equitably between the spouses. Presumptively, this means that property is divided 50/50. However, courts are not required to divide property equally, as they are only concerned with ensuring that the assets are divided fairly.

An unequal property division can often result in challenges to property division awards, such as in the case discussed below. This case reveals how the Court of Appeal will dissect interim matrimonial property awards to determine whether they are equitable.

Lower Court Awards Respondent Money to Buy Her Own Property

In Mucha v Mucha, 2024 ABCA 46, a lower court ruled that the appellant must pay the respondent $700,000, essentially so that she could obtain property of her own. The ruling resulted from the spouses’ separation after approximately 40 years together, during which time they lived on an expansive farmland complex worth $3.2 million. Since separation, the appellant resided at the matrimonial home so that he could continue to tend to the farming operation. The respondent lived with their daughter, who has largely provided for the respondent.

In the original application, the respondent sought an equal distribution of matrimonial property for compensation arising from unjust enrichment of the appellant, occupation rent payable by the appellant, along with costs and interest. The appellant disputed the unjust enrichment claim on the grounds that their daughter has been covering the respondent’s costs, and the respondent’s relocation has effectively cost her no money.

After the lower court’s award, the appellant appealed the decision, arguing that those parcels of land should not have been included in the land valuation since there were informal agreements that they would not be “part of the family farm and business prior to the marriage.” He also asserted that there would be ‘double counting’ if these parcels were included and if he was also required to pay spousal support.

Court of Appeal Refuses to Allow Interim Matrimonial Property Award

The Court of Appeal disagreed with the appellant’s reasoning and refused to allow the appeal of the interim award. The Court recognized that at least $700,000 would be ordered on the ultimate property division and that the lower court has the discretion to order such interim awards. It also noted that it was the appellant’s burden to rebut the presumption that the property should be distributed so that the parcels would not be considered matrimonial. However, the appellant was unable to do so.

This case demonstrates that the Court of Appeal will allow the lower courts deference in awarding interim matrimonial property awards. Further, the standard for varying or setting aside such awards is that “the judge misdirected himself on the facts or if the decision is so clearly wrong as to amount to an injustice.”

Contact the Family Lawyers at DBB Law for Advice on Complex Property Division Matters

Property division is often a contentious and detail-oriented issue arising from separation and divorce. At DBB Law in Calgary, our experienced team of family lawyers regularly advise clients on their rights and entitlements during a divorce, including property division and exemptions. We offer our clients comprehensive and tailored legal solutions to resolve even the most complex family law disputes. To schedule a confidential consultation with a member of our family law team, contact us at 403-265-7777 or reach out to us online.

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