Vancouver unequal division of family property is this week’s blog topic.
Vancouver unequal division of family property sometimes called reapportionment of family property cases have a higher threshold under our new Family Law Act. Unequal division of family property can be ordered where someone got rid of valuable family property before the trial occurs or to alleviate economic hardship amongst other factors.
Unequal Division Of family Property is A Specialized Area Of BC Family Law
Lorne MacLean, QC heads our family business, professional practice, real estate and stock venture valuation and division department. Over the years he has protected both the operators of the family business and their spouses who both make key financial contributions during their relationship. Vancouver unequal division of family property cases are complex and when the value of the family property is high there is no room for mistake.
It’s also likely no surprise to the reader that separated parties may try to defeat their spouse’s claims or sometimes endanger a family business’ continued success. It’s critical steps are taken early to make sure profits and family property don’t go missing before they can be fairly divided.
Will The Court Let A Spouse Do And End Run With The Family Business?
The recent case of K.D.M. v. T.M.L.C., 2015 BCSC 1509 dealt with disposal of a family business where the husband retained the personal goodwill and skills from the industry his business competed in. Can a spouse sell the old family business then start a competing business that thrives and as a result do a financial end run around his old spouse? Mr. Justice Harvey said no to this maneuver. The court ordered unequal division of family property in this recent case because the court was unimpressed with the husband’s attemot to cut his ex spouse out of her fair share of the family business.
Mr. Justice Harvey held the personal goodwill taken by the husband and used after separation to start a new and thriving business justified the wife receiving a substantial reapportionment of all of the sale proceeds from the bricks and mortar of the former family business that was sold. In this way the judge attempted to fairly divide the husband and wife’s family business they grew together.
The court was skeptical that the ex-husband sold the old business, refused to sign a non-compete clause with the buyer and then started a new business with his new spouse.He then took a much lower salary than he earned with his first wife. His new business venture with his new partner thrived although she played only a very minimal role in the new business’ success.
Here are the key parts of the judgement:
[131] I disagree with that submission. There is no basis on which to conclude the value of Engage’s interest in RWM was sold at below market value, other than D.M.’s subjective conclusion that it was worth $1 million, provided the respondent did not compete with RWM for a period of two years.
[132] The respondent says he never agreed to a noncompetition clause, although implicit in his counsel’s letter to the claimant’s solicitor in March 2013 is the acknowledgment that the respondent will be without an income for a period of time. Reading between the lines of this letter, it seems clear that some proffer of an unequal apportionment of the sale proceeds was being suggested.
[133] Nonetheless, what in fact was sold to D.M. or his holding company was Engage’s interest in RWM’s assets; not any goodwill personally attributable to the respondent.
[134] The respondent consciously chose to retain that goodwill which was no doubt built up over the course of the marriage. That it had a market value is undeniable. In my view, despite D.M.’s offer it would be inappropriate to conclude that its value was $535,000, which is the difference between the final price agreed upon and D.M.’s original offer. Clearly, D.M.’s perception that the respondent was already competing with RWM had an impact upon his willingness to buy goodwill from the respondent.
[135] Just as clearly, I conclude that the respondent was unwilling to agree to a noncompetition clause because he was actively considering the establishment of a competing business with the assistance of T.P.
[136] I reject any notion that T.P., absent the essential involvement of the respondent, would have been able to get Altium up and running, let alone thriving as it is apparently doing.
[137] The resultant situation leaves the respondent in possession of a significant, albeit non-transferable, asset. As noted, that asset developed over the course of the marriage with the support, both direct and indirect, of the claimant.
[138] The respondent is left with significant earning capacity, premised upon the retention of his goodwill, whereas the claimant, without retraining, is likely destined to remain in entry-level jobs for the remainder of her working career. Further, the claimant will not fully realize her entitlement to spousal support given the relationship between the respondent and his employer. Support, alone, will not provide adequate redress in these circumstances.
[139] I find that the claimant is unlikely to participate in the future stream of income generated by the respondent’s expertise acquired during the marriage. His relationship with T.P., both business and personal, makes it unlikely he will ever receive income commensurate with his value to Altium.
[140] In my view, such will be to the long term detriment of the claimant’s financial future unless redressed by an unequal division of the assets.
[141] As was noted by our Court of Appeal in Lodge v. Lodge (1993), 79 B.C.L.R. (2d) 360 (C.A.), in circumstances not unlike this, an equal division of assets is unfair in circumstances where one spouse, here, the claimant, has remained at home while the other, by virtue of work experience, has expanded his or her knowledge and experience in work related areas such as to have a higher earning potential than the other spouse.
[142] In Lodge, Prowse J.A. recognized that spouses, usually women, suffer economic disadvantage as a result of roles assumed by them during the marriage, which is not always capable of being cured by support orders.
[143] I note, parenthetically, that even had the respondent accepted the original offer tendered by D.M., along with the noncompetition clause which would have impacted his earning capacity, he likely would have earned as much or more pursuing other employment options than what he claims his income to be from Altium.
[144] Instead, the respondent has retained a significant asset from the marriage, specifically goodwill that is used now and likely in the foreseeable future in a fashion such that the claimant will be unable to share its benefit. Such, in my view, warrants a reapportionment based upon the needs of the claimant to become and remain economically independent.
[145] The appropriate reapportionment is that the claimant will be entitled to the whole of the cash proceeds which remain from the sale of Engage’s interest in RWM.
Vancouver unequal division of family property cases involve a number of complex and confusing factors. A top lawyer is an indispensable ally to ensure you maximize your chances of success. Hire Lorne MacLean, QC and his team early on so your rights are protected. Our 4 offices are located throughout BC.
