Double Dipping Family Business Spousal Support lawyers know that no one likes the dinner guest who “double dips” their tortilla chip into the salsa. In today’s blog, Lorne N. MacLean, QC explains why spouses’ can get into arguments over an even more aggravating issue – Double Dipping Family Business Spousal Support. Top rated* MacLean Family Law handles medium to high net worth spousal support and financial disputes across BC and Calgary, Alberta.
Double Dipping Family Business Spousal Support Lawyers
Boston v Boston from our Supreme Court of Canada decided that double dipping with respect to a pension that was valued and divided with one spouse buying the other out up front on separation, should ideally not be divided again as a source of income used for spousal support when the retiring spouse begins to collect their monthly pension income. However, there are exceptions says Boston where double recovery may be permitted:
- where the payor spouse has the ability to pay,
- where the payee spouse has made a reasonable effort to use the equalized assets in an income-producing way and,
- despite this, an economic hardship from the marriage or its breakdown persists.
For a great blog on double dipping involving a BC Pension case involving a retired BC Supreme Court Judge click here.
Double Dipping Family Business Spousal Support 1-877-602-9900
M.C.D. v. D.A.D. 2017 BCSC 1832, reviewed double dipping in the context of dividing a BC family business. Firstly, a husband’s business was valued using a multiple of business earnings approach and then his wife asked the Court to also use the full business income he earned to pay her spousal support. Is there a difference in the approach on double dipping for family businesses, professional practices and ventures?
Double Dipping Family Business Spousal Support For Business Allowed
The husband cried “hey-no double dipping!” but the Judge disagreed. Unlike a pension which diminishes in value as it is being paid out, the same does not happen to a family business. Key Takeaway-So while pensions have a chance of not suffering a double dip businesses do not.
Double Dipping
104 D.D. submits that M.D. should not be permitted to claim spousal support based on the whole of the income generated from DFS. He asserts that through the division of family assets, M.D. received adequate compensation for her interest in DFS and further access to income through his business revenue would constitute double dipping.
105 M.D. counters with the submission that it is not “double dipping” to include the revenue that D.D. will generate from this business in the assessment of his capacity to pay spousal support as D.D. is in possession of assets that will continue to generate income and are not likely to depreciate.
106 The animating principles with respect to double dipping formulated by the Supreme Court of Canada in Boston v. Boston, 2001 SCC 43 (S.C.C.) were addressed by the Court in Bozak v. Bozak, 2008 BCSC 1458 (B.C. S.C.) where the Court stated at para. 52:
The concept of “double dipping” or “double recovery” was addressed by the Supreme Court of Canada in Boston v. Boston, [2001] 2 S.C.R. 413. That case examined whether a pension plan, which was treated as property and equalized in the division of assets, could also be treated as income in assessing spousal support obligations. The majority held that a pension plan that had no value apart from the income stream it represented could not be used for determining spousal support obligations, as to permit otherwise would allow the spouse to recover twice from the pension. The majority distinguished cases involving pensions from those involving business income or income from investment. This distinction was addressed at para. 57:
When a pension produces income the asset is being liquidated. The same capital that was equalized is being converted into an income stream. By contrast, when a business or investment is producing income, that income can be spent without affecting the asset itself. In fact, the business or asset may continue to increase in value. The value of the business or investment can be equalized, but neither are depleted solely by producing income.
[Emphasis added.]
107 The British Columbia Court of Appeal in Holmes v. Matkovich, 2008 YKCA 10 (Y.T. C.A.) at para.27 and Jens v. Jens, 2008 BCCA 392 (B.C. C.A.) at para.50 held that a spouse who retains marketable assets with an income yield as part of the equalization of family assets cannot eliminate such income from the determination of his or her capacity to pay spousal support by claiming it would be double dipping: Bozak at para. 53.
108 In this case, D.D.’s business produces income that can be spent without depleting the value of his business. There is no coherent support in the authorities for the notion that D.D. may reduce or eliminate the amount of income he earns from DFS from the determination of his capacity to pay spousal support by claiming that it would be double dipping.
109 In the result, I determine D.D.’s capacity to pay spousal support based on his Guideline income referred to above.
