In our last blog article on the subject of valuation dates, we discussed the general requirement under Section 87 of the Family Law Act (FLA) that, unless an agreement or order provides otherwise, the value of family property should be based on fair market value at the date of trial. In part two of this series, we describe the circumstances in which a variation from this general rule might be appropriate.
The concept of “Significant Unfairness”
The court has discretion to order an alternative date for valuation in order to avoid significant unfairness relating to a spouse’s post-separation contribution.
This issue was addressed in the case of Namdarpour v Vahman, 2017 BCSC 1189. The issue involved how the increase in the value of the business (purportedly caused by the husband’s efforts to increase revenues after the date of separation) should be considered in the division of family property.
 Section 87 of the FLA, S.B.C. 2011, c. 25, provides that unless otherwise determined by the court or agreement between the parties, the value of family assets and debt is to be determined as at the date of the court hearing.
 Section 95, which allows for an unequal division of assets, is also relevant here. The threshold that must be met is that it must be “significantly unfair” to divide the assets equally. The section sets out a number of criteria to consider. The relevant one for this case is subsection 95(2)(f):
(f) whether a spouse, after the date of separation, caused a significant decrease or increase in the value of family property or family debt beyond market trends;
 These sections were recently considered by the Court of Appeal in Jaszczewska v. Kostanski, 2016 BCCA 286. At para. 41, the Court emphasized that the use of “significantly unfair” in s. 95 was meant to constrain the exercise of judicial discretion in departing from an equal division of assets. A higher threshold is imposed than that under the former Family Relations Act, which only required that “unfairness” be found.
 Implicit in the decision is that for the court to exercise its discretion to value an asset at a time before trial under s. 87, significant unfairness must also be found. This point was recognized by Fleming J. in an earlier decision, Blair v. Johnson, 2015 BCSC 761, in which she said:
 Section 95 of the FLA requires significant unfairness on specified grounds before the court may order an unequal division of family property. To the extent that s. 95 and s. 87 may provide alternate routes to address the substantial unfairness that would arise from awarding parties equal shares in family property valued at trial, it seems to me the significant unfairness threshold should also be met before the court departs from the date of trial as the valuation date pursuant to s. 87. To conclude otherwise would allow for an earlier valuation date resulting in a radical departure from an equal division as of the date of trial in circumstances where the significant unfairness threshold under s. 95 is not met. I say this leaving aside circumstances where it is necessary to set an earlier date because family property has been sold etc. or debt eliminated prior to the hearing. It is important to bear in mind the basic principle of equal entitlement (and responsibility) found in s. 81 that is integral to the division of family property regime in the FLA.
[The Court’s Conclusion in Namdarpour v Vahman]
 The Company did not own assets that fluctuated in value, such as real estate. …. [the valuator] valued the business on a capitalized cash flow basis. Therefore, any increase in value from the time of separation would have been primarily the result of increased sales. … [the Husband] operated the kiosks himself post-separation. The increase in value must be at least partly the result of his efforts. It could also be the result of increasing passenger flow through the terminal: we have no evidence on that.
 Under the circumstances, using the value at the time of trial (i.e., the valuation as at June 30, 2016 which was the closest in time) would be significantly unfair.
As noted by JP Boyd on Family Law “A review of the cases makes it clear that it does take a set of very unique facts for the Court to order valuation at the date of separation”.
In the case of Bamford v. Mulyati, 2017 BCSC 945 the 83 year old Claimant applied to divorce his 51 year old wife after she fled the country with his first (deceased) wife’s jewelry in 2013. The family property consisted of the increase in value of the Claimant’s pre-marital investments and his claim to the Court was for reapportionment in his favor based on significant unfairness due to post separation contributions to those assets. Madam Justice Morellato in the Bamford case agreed that the date of separation should be the date of valuation, as she found that a significant unfairness had arisen because Ms. Mulyati had not made any contributions towards the family property since her ‘sudden departure’ in 2013”.
The Bamford case referenced the case of Slavenova v. Ranguelov, 2015 BCSC 79 to support the claim for valuation at the date of separation. From paragraph 53: “the FLA provides two alternate routes to address potential unfairness that may arise from a party’s post-separation contributions, namely s. 87 and s. 95. Under s. 95 a court can order reapportionment to address any “significant unfairness” that may arise from an equal division of property and debt in light of the spouse’s post-separation contribution. Alternatively, under s. 87 the Court may depart from the date of hearing or agreement as the valuation date.”
It is obviously for the court to decide whether “significant unfairness” would exist using a valuation as at the trial date.
To support their argument for an earlier valuation date, lawyers may consider using a valuator (independent of the jointly appointed valuator) to buttress their case (or refute opposing counsel’s case) by looking at the principal valuation drivers that may have caused the business to increase in value after the date of separation.
It may not be enough to simply state that revenues increased solely due to the business owner’s post separation date efforts. For example, it might be demonstrated that revenues increased as a result of rising market prices for the goods sold, and that sales volumes were actually flat. There could be numerous other factors at play that could support, or refute, a claim that the business owner’s efforts caused a significant increase in post separation date value under subsection 95(2)(f).
If you would like more advice on this topic, please contact one of our trusted Chartered Business Valuators.
 The Court of Appeal also stated:
 …. because family property is generally valued on the date of the hearing, the parties will presumptively share in any post-separation increases in the value of family property. Once again, because of s. 81, this entitlement exists independent of the parties’ respective contribution to the post-separation increase in value.
 Also, because family property is generally valued on the date of the hearing, the parties will presumptively share in any post-separation increases in the value of family property. Once again, because of s. 81, this entitlement exists independent of the parties’ respective contribution to the post-separation increase in value.
 Nonetheless, the scheme contemplates judicial discretion to depart from an equal division. That discretion is recognized in s. 81 and further articulated in s. 95. Section 95 defines both the test and the factors for a court to consider in exercising its discretion.
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