Article Volume 21:4

A Note on Deferred Community of Gains: The Theory and the Practice

Table of Contents

A Note on Deferred Community of Gains:

The Theory and the Practice

H. R. Hahlo*

almost twenty years ago –

While the deferred community of gains regime is initially at-
tractive, the provinces currently considering its adoption ought not
to rush into it without first studying the experience of those countries
which have already lived with the system.’ One such country is West
Germany which, it will be remembered, adopted a deferred com-
munity of gains, under the name of Zugewinngemeinschaft, in 1957
and has had more practical experience

with it than any other country. What German lawyers think of it
may thus be of interest to Canada, where Ontario, British Columbia,
Saskatchewan, Alberta and some other common law provinces are at
present contemplating the introduction of such a system. Quebec, of
course, has a deferred community of gains, under the name of
“partnership of acquests” (socigtg d’acquats),2 as its statutory
matrimonial regime, but only since 1970. Attendance at the first
conference of the International Society on Family Law in West
Berlin in April, 1975, provided me with an opportunity of discussing
the merits of such a system with leading German lawyers.

In theory, a deferred community of gains is the ideal matrimonial
property regime. A good marriage is, or should be, a partnership in
the economic sphere; without encroaching in any way upon the wife’s
legal independence. During the marriage the spouses are, subject
to obviously necessary safeguards against fraudulent dispositions,
in the same position as under a system of separation of property. On
the dissolution of the marriage by death or divorce, they pool and
share the gains made by both of them during marriage.

One should think therefore that such a regime would meet with
the universal approval of lawyers and public alike, and it comes as
somewhat of a surprise to find that a great many German lawyers
doubt its merits and consider that separation of property, combined

*Faculty of Law, McGill University.
I The author has previously urged against hasty adoption of the deerred
A Note of Warning

community regime in Deferred Community of Gains –
(1974) 52 Can.Bar Rev. 482.
” Arts.1266c et seq. C.C.

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with a legitimate portion for the surviving spouse on the dissolution
of the marriage by death, is to be preferred.:

In what follows I am going to enumerate briefly some of the main
difficulties which, to judge by the German experience, are likely to
arise if a deferred community of gains were made the statutory
matrimonial property regime in Canada.

1. While it would seem that no investigations have been made
in Germany to find out what the German-in-the-street thinks of
Zugewinngemeinschaft, it is generally agreed that professional and
business people are not enamoured of it. Apart from other con-
siderations, they do not like the idea that if the marriage should
terminate by divorce after it has lasted a short time, they are
obliged to share their gains with their ex-spouses.

It will be remembered that Professor Max Rheinstein, in referring

to such a regime, had this to say:

Is a fifty-fifty split proper under all circumstances including the case of
a short-lived marrriage of, let us say, a highly paid movie star to a lazy
bum?4
Almost every German lawyer with whom I talked is agreed that
if Zugewinngemeinschaft remains, it should only take effect after
the marriage has lasted a certain length of time –
terms of three and
five years were mentioned to me. I was told that in the Nordic
countries, too, where a deferred universal community is the pre-
vailing legal regime, there is a movement afoot to prescribe a
“quarantine period” of three or five years before community comes
into operation.

2. Where a marriage has lasted a long time, and the husband
has progressed “from rags to riches”, a deferred community of
gains regime works well. Practically the whole of the husband’s
estate constitutes “gains” in which his wife shares on dissolution
of the marriage. The position is different where he was a wealthy
man from beginning to end of the marriage, without having added
substantially to his fortune during its subsistence. Lacking “gains”
to be divided, his wife of twenty or thirty years’ standing is not
entitled to any share in his estate, yet this is the very case where
she should be. It may be objected that in these circumstances a

3A recent review by Erik Jayme in (1975) 23 Am.J. of Comp.L. 378 of a
German book on the new matrimonial property regime of France significantly
opens with this sentence: “Ever since German law in 1957 adopted ‘community
of surplus’ (Zugewinngemeinschaft) as its marital property system, German
scholars have been looking to foreign law for better solutions.”

4The Transformation of Marriage and the Law (1973)

68 Northwestern

Univ.L.Rev. 463, 476.

1975]

COMMUNITY OF GAINS: THE THEORY AND THE PRACTICE

591

Canadian court would probably award her maintenance under s.ll
of the Divorce Act,4′, where the marriage is dissolved by divorce, or
under the respective provincial Dependants’ Relief legislation, where
it is dissolved by death, be it by means of periodical payments, or by
means of a lump sum, and that in such a case she will in effect
receive part of his estate. There is a considerable difference, how-
ever, between awarding the wife maintenance, which is, after all,
by definition no more than provision for needed support, and giving
her as of right a share in her husband’s estate.

3. That under a deferred community of gains regime the wife,
no matter how long the marriage may have lasted or how poor she
may be, is not entitled to any share in her husband’s estate if he has
made no gains during the marriage, is especially hard on her if she
has worked for years without proper remuneration in his business
or on his farm; in other words, where the facts are as in Murdoch”
except that there are no gains. The German courts have sometimes
been able to help by finding that a partnership existed between the
spouses but, on lines similar to those of the majority judgment in
Murdoch, they consider that a partnership can only be implied if:
1)
the wife has rendered services over and above those ordinarily
expected of a wife; and 2)
there is something to indicate that the
spouses have, expressly or by implication, entered into a partnership
agreement.

Conversely, where one of the spouses has made substantial gains,
the other spouse, on dissolution of the marriage, is entitled to share
in them irrespective of the circumstances –
even where the spouses
have been living apart for years or where the spouse who has made
the lesser gains has committed adultery or has treated the other
spouse with cruelty. The German courts, however, have discretionary
powers to refuse participation where it would be grossly inequitable
to permit it.

4. When Zugewinngemeinschaft was introduced in Germany,
it was widely believed that one of the major difficulties would be
the calculation of the gains made by the spouses. It was for this
reason that a rule was introduced, that on the dissolution of the
marriage by death, the surviving spouse was to have the right to
take, in addition to his or her legal inheritance portion, one-quarter
of the estate of the first-dying in lieu of a half share in the gains of
the marriage.

4a R.S.C. 1970, c.D-8.
[1975] 1 S.C.R. 423, (1973) 41 D.L.R. (3d) 367 (S.C.C.).

6 BGB 1371.

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The anticipated difficulties of determining the gains of the
marriage have not materialized, with one notable exception: how
to deal with inflationary increases in the value of assets. The trend
of legal opinion is that, unlike increases in value due to other factors
(e.g., in the value of land owing to urban development), inflationary
increases are not genuine (echte) gains and therefore do not fall
into the community of gains. While this may or may not be
theoretically sound, in practice it has been found to be virtually
impossible to ascertain after a long marriage what gains were
“genuine” and what gains were not.

5.

If a deferred community of gains regime is introduced,
provision must be made to deal with the benefits of a private
pension or annuity scheme. Where a marriage which has lasted a
long time is dissolved by divorce, and the husband remarries, it is
only fair and equitable that his first wife who has, after all, directly
or indirectly made a major contribution to the building-up of the
pension or annuity fund, should participate in its benefits, and more
particularly, that if her husband (now ex-husband) dies before her,
a major part of the widow’s pension should go to her. In Canada
as in England, the courts have used their power to refuse a divorce
under the general hardship clause7 to compel divorce-hungry hus-
bands to make sufficient provision for their wives,8 but this can
hardly be regarded as more than a make-shift solution.

6.

I understand that the Ontario Law Reform Commission
proposes to include damages in tort for personal injuries recovered
by one of the spouses from a third party among the gains to be
divided. I also understand that in Louisiana, where a similar rule
prevails, enterprising wives (and presumably husbands) have dis-
covered its full beauty. By divorcing her husband, a wife can get rid
of a permanent invalid and obtain, as a reward for her action, half of
the compensation awarded to him.

Compensation for personal injuries is what it says: compensation
for loss, and not a windfall gain. The Quebec Civil Code rightly
provides that:

[C]ompensation received by a consort … as damages for injury, personal
wrongs or bodily injuries as well as the right to such compensation …
shall … be private property.9

7 Divorce Act, R.S.C. 1970, c.D-8, s.9(1)(f).
8 See, e.g., for Canada, Johnstone v. Johnstone (1969) 7 D.L.R. (3d) 14
(Ont. H.C.); Ferguson v. Ferguson (1970) 1 R.F.L. 387 (Man. Q.B.); Ceicko v.
Ceicko (1969) 5 D.L.R.(3d) 360 (Man. Q.B.); and Bigelow v. Bigelow (1972)
22 D.L.R.(3d) 729 (Man. Q.B.); and for England, Mathias v. Mathias [1972]
3 All E.R. 1 (C.A.).

9 Art.1266i C.C.

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COMMUNITY OF GAINS: THE THEORY AND THE PRACTICE

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7.

I understand that suggestions have been made that where the
spouse who made the lesser gain (as previously stated, usually the
wife) happens to die first, the surviving spouse should not be
obliged to share his or her gains equally with the other’s heirs. This
proposal is based on a misconception of the nature of community. The
idea underlying a community regime, universal or partial, instant or
deferred, is that husband and wife are partners. It follows that the
wife’s share in the community or balancing claim (again assuming
that she was the spouse who made the lesser gains) is something
which she has earned by her labours. To deprive her heirs of all or
part of it is equivalent to depriving a partner in a business of his
share in its assets and profits because he has happened to die
before the other partners. It is on this ground that every lawyer in
Germany with whom I discussed Zugewinngemeinschaft considered
that the rule that the surviving spouse may opt to take a quarter
of the estate of the first-dying in lieu of his or her share in the com-
munity of gains, ought to be scrapped. It enables surviving spouses to
escape the duty of sharing their gains with the heirs of their partners.
I wish to state in conclusion that all the problems outlined above,
and others which consideration of space prevented me from mention-
ing, are not necessarily fatal to a deferred community of gains. They
can be dealt with by appropriate devices. My submission is not that
a deferred community of gains regime is unworkable, but that, as
shown by practical experience elsewhere, there are certain situations
for which remedial provision must be made if it
is to work
satisfactorily.