Husband’s lawsuit settlement was gift; property should be equally divided: BC Court of Appeal

The British Columbia Court of Appeal has upheld an equal division of family property, despite finding that most of the funds used in the purchase of the property came from the husband’s settlement of a malpractice suit.

In Hannon v. Hopson, 2022 BCCA 314, Curtis Hannon and Katherine Hopson were in a 14-year relationship starting in 2001 in the UK. They moved to British Columbia in 2012 and purchased two properties – an apartment in Yaletown and a house in Gibson, BC.

The Gibson house was largely purchased with money from a settlement Hannon received from a malpractice lawsuit in 2010. The amount was placed in a joint account and accrued interest prior to the purchase.

Hopson commenced family proceedings several months after their separation in 2015 and sought equal division of family property. Hannon opposed, alleging significant unfairness. He claimed that they never intended to have BC law govern their community property regime, the properties were purchased in his name, and Hopson made no financial contributions to either of the properties.

The trial judge ruled against Hannon,concluding that when the parties moved to BC in 2012, they intended to live there in a marriage-like relationship and did so until they separated. She also concluded that the transfer of the settlement funds into a joint account was considered a gift to Hopson. Thus, the judge concluded that both properties were family property and divided them equally.

On appeal, Hannon argued that the judge erred in ruling that the settlement funds conferred a financial advantage in his favour despite being excluded property and were not relevant to the economic characteristics of the spousal relationship.

The appellate court disagreed.

Significant unfairness considered

An order for unequal division of family property requires the consideration of significant unfairness, the court found. Ruling upon the fairness of how the settlement funds were treated would ignore the judge’s finding that the settlement funds were gifted to Hopson, said the court.

Further, the appellate court rejected Hannon’s argument that formerly excluded property should be treated as a separate category than other spousal contributions, as it was not supported by jurisprudence. The judge must consider the extent of each spouse’s contribution in light of the relevant circumstances to decide whether equal division will result in significant unfairness, said the court.

The appellate court ruled that the trial judge did not err in her treatment of the settlement funds and dismissed the appeal.