The British Columbia Court of Appeal’s decision in Mills v. O’Connor, 2025 BCCA 34 (February 4, 2025), delivers a meticulous analysis of property division under B.C.’s Family Law Act (FLA), S.B.C. 2011, c. 25, with implications that ripple beyond its borders—including into Ontario’s family law landscape. While rooted in B.C.’s statutory framework, this case not only clarifies tracing under the FLA but also prompts Ontario lawyers to rethink how we approach commingled inheritances under Ontario’s Family Law Act, R.S.O. 1990, c. F.3 (FLA Ontario). Its examination of tracing excluded property, reapportionment of family assets (under the BC regime), and retroactive child support offers strategic lessons—tempered by key jurisdictional distinctions.
Case Overview
Mills v. O’Connor stemmed from a 23-year marriage that ended in 2015. The appeal and cross-appeal challenged the trial judge’s orders on spousal support, child support, and property division, focusing on the husband’s inherited assets. The parties agreed the trial judge erred by overlooking over $1 million in family property available for division, prompting the Court of Appeal—led by Justice Abrioux, with Justices Newbury and Grauer concurring—to reassess the asset split and related issues.
Central to the case was Mills’ inheritance of a property (valued at $1,850,000 in 1994), which he renovated and sold for $3,650,000 in 2006. The proceeds funded another, later destroyed by fire in 2018, yielding millions in insurance proceeds and $255,000 from the bare land’s sale. The total family property available for division was agreed at $3,084,542.63. Disputes focused on tracing Mills’ excluded property, apportioning family property, and addressing a $7,000 payment the husband made to their daughter.
Tracing Excluded Property: A Pro Rata Approach
The Court of Appeal’s standout contribution in Mills v. O’Connor is its guidance on tracing excluded property under B.C.’s FLA. The trial judge had deemed the entire $1,878,580.26 in trust funds from the first property, once sold could be traced to the funds in trust from the sale of second property. The Court rejected this, emphasizing that s. 84(2)(g) of the FLA (BC) classifies increases in excluded property value as family property, presumptively divisible equally.
Justice Abrioux discarded the trial judge’s “first-in, first-out” tracing method, opting for a pro rata ex post facto approach. This calculates the excluded portion as a proportion of total contributions (excluded and family property) to the final asset pool, assessed at trial. The husband’s exclusion was recalculated by the BC Court of Appeal at $1,155,409.26, far below the trial judge’s finding of $1,850,000.
Implications for Ontario Lawyers
Ontario’s FLA, under s. 4(2), excludes inherited property from net family property (NFP) but does not automatically treat increases in value dealt with separately. Ontario courts distinguish passive increases (excluded) from active increases (potentially included in NFP). Tracing relies on common law and equitable doctrines—for instance, in Rawluk v. Rawluk ([1990] 1 S.C.R. 70), the Supreme Court emphasized tracing the source of funds—applied case-by-case rather than through a statutory formula. While B.C.’s pro rata method offers a structured alternative, Ontario practitioners can leverage Mills v. O’Connor to advocate proportionate calculations for commingled inheritances, though success hinges on judicial discretion.
Reapportionment: Addressing Significant Unfairness
With the husband’s exclusion set at $1,155,409.26, the remaining family property ($1,929,133.37) was available for division. An equal split would have given the wife $964,566.69 and the husband $2,119,975.95 (including his exclusion). The Court deemed this “significantly unfair” under s. 95 of B.C.’s FLA, citing the 23-year marriage, the wife’s role as primary caregiver, and the family’s reliance on excluded property. It reapportioned assets 65/35 in O’Connor’s favor.
Ontario Distinctions
Ontario lacks a parallel to s. 95. under s. 5(6) of the FLA Ontario. In Ontario an unequal division requires “unconscionability”—a much steeper hurdle than B.C.’s “significant unfairness test.” Ontario’s threshold typically demands egregious conduct or extreme financial imbalance, limiting its use compared to B.C.’s broader equitable fairness lens. Still, cases like LeVan v. LeVan (2008 ONCA 388) show Ontario courts adjusting equalization when one spouse significantly contributes to an inherited asset. Mills v. O’Connor bolsters arguments for equitable tweaks in Ontario when strict equalization results in unconscionable circumstances.
Retroactive Child Support: A Deferential Approach
The BC Court of Appeal upheld the trial judge’s $10,000 retroactive child support award , despite a factual misstep. The judge mischaracterized a $7,000 payment from the husband to the child as compensation for lost belongings rather than rent. Evidence showed it was mostly for rent post-graduation), after the husband’s support obligation ended. The ambiguity arose from insufficient evidence tying the payment to the child’s pre-graduation period, but the Court found this error non-overriding, affirming the trial judge’s discretionary balancing as reasonable.
Ontario Parallels
Ontario courts align with D.B.S. v. S.R.G. (2006 SCC 37), prioritizing judicial discretion in retroactive support. Mills v. O’Connor reinforces that appellate courts hesitate to disrupt a trial judge’s holistic assessment, even with minor factual errors. Ontario lawyers should emphasize broader fairness over payment-specific disputes in retroactive claims.
Takeaways for Ontario Practice
✅ Tracing Complexity: Mills v. O’Connor’s pro rata method offers a structured alternative to Ontario’s fluid approach, opening the door to push for proportionate calculations in tracing commingled inheritances, backed by meticulous financial records.
✅ Equitable Adjustments: Though Ontario’s “unconscionability” bar is significantly higher, Mills v. O’Connor supports arguments for adjusting equalization where excluded property leaves one spouse with disproportionate wealth—especially in long marriages with interdependent contributions.
✅ Support Discretion: The Court’s deference to a discretionary child support award underscores framing retroactive claims holistically, not fixating on specific payments.
While B.C.’s FLA presumes equal division versus Ontario’s equalization, Mills v. O’Connor equips Ontario lawyers with persuasive tools for fair, nuanced outcomes in property division and support disputes.
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