When a Family Business Becomes a Weapon: Economic Abuse in Family Law

What happens when a Family Business Becomes a Weapon?: Economic Abuse in Family Law

In family law disputes, a family business, intended to be a source of shared prosperity, can unfortunately become a powerful tool for one spouse to control, punish, surveil, and damage the other spouse and their children. The family business may have been a joint venture that two parties started together to accomplish a wealth strategy or life strategy for the family. The family business may also be a “family business” in a traditional sense, where the business was historically controlled by one member of the family, often being the spouse who controlled finances during the relationship. Today, Jesse Emmond one of our top associates explains the problem and proposes solutions to protect yourself if you have questions concerning What happens when a Family Business Becomes a Weapon?: Economic Abuse in Family Law .

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Whatever the circumstances, at separation one spouse is often left with a significant controlling influence over the other spouses’ access to funds. The other spouse may not fully understand how the business works, or what subtle efforts to sabotage business growth efficiency and household income the controlling spouse may engage in to reduce the divisible value of the business at settlement. A former spouse may take deliberate steps to weaponize their influence or control over the family business and diminish the financial welfare and asset entitlement of their formal partner. This form of abuse, often termed economic abuse, can manifest in various ways, particularly during and after separation.

If you are separating from your partner and a family business is at risk – don’t hesitate and call our high net worth lawyers at 604-602-9000 to intervene now and protect your assets.

What happens when a Family Business Becomes a Weapon?: Economic Abuse in Family Law Tel: 604 602 9000

Family Violence includes Economic Abuse

Under the British Columbia Family Law Act (FLA), “family violence” is broadly defined to encompass various forms of abuse, including physical abuse, sexual abuse, and psychological or emotional abuse. Economic abuse, sometimes called “financial abuse”, is expressly recognized as a form of psychological or emotional abuse. The definition for family violence in section 1 of the FLA is as follows:

“family violence” includes, with or without an intent to harm a family member,

a)physical abuse of a family member, including forced confinement or deprivation of the necessities of life, but not including the use of reasonable force to protect oneself or others from harm,

(b)  sexual abuse of a family member,

(c)  attempts to physically or sexually abuse a family member,

(d)  psychological or emotional abuse of a family member, including

(i)  intimidation, harassment, coercion or threats, including threats respecting other persons, pets or property,

(ii)  unreasonable restrictions on, or prevention of, a family member’s financial or personal autonomy,

(iii)  stalking or following of the family member, and

(iv)  intentional damage to property, and

(e)  in the case of a child, direct or indirect exposure to family violence;

Economic abuse is intended to be captured under (d)(ii) through the inclusion of “unreasonable restrictions on, or prevention of, a family member’s financial or personal autonomy” within the definition of psychological or emotional abuse.

The British Columbia Law Institute released a powerful study paper on how a family business can be used to cause family violence and coercive control, including economic abuse, against the former spouse and their children.

This paper discusses how economic abuse is considered an effective control tactic, because it limits a person’s economic resources, thereby restricting their autonomy and ability to address the abuse (page 14):

A person without resources is in a much weaker position to resist violence. Resources take many forms, for example relationships, a profession, self-confidence, or material resources. For this reason, a person can “wear down resistance by limiting and depleting these resources.” Economic abuse is a key piece in breaking a victim/survivor’s resistance. “[E]conomic abuse is an effective control tactic because it limits [someone’s] economic resources, thereby restricting their autonomy/space for action and ability to combat the abuse.”

When there is a family business, the business can become a tool of coercive control. How this looks will change as the relationship changes. During the relationship, the victim/survivor may be forced to work for the company without pay. During separation, a victim/survivor may be fired from the company or removed as a shareholder or director without their knowledge or consent. After separation, a person may move money and assets out of the business to personal accounts or trusted third parties to defeat the victim/survivor’s access or claims. All of these behaviors represent economic abuse. The conduit for these behaviors is the family business. The purpose of these behaviors is to control and dominate the victim/survivor.

Courts have recognized that financial coercion or control, including threats regarding property or limiting a party’s financial autonomy, constitutes a real and serious form of family violence. Such actions, even if minor individually, can collectively demonstrate a pattern of coercion and control that amounts to family violence. In Loss v. Walters, 2024 BCSC 1012 (paras 98-99) the court held:

[98]      The court must be aware of the presence and nature of family violence in all decisions under the FLA. The impacts of family violence expressed through coercion or threats regarding property, or limitation of a party’s financial autonomy, may be real and significant, but not readily apparent.

[99]      The inclusion of these financial abuse, as a form of psychological abuse and control, mandates consideration of financial control or property related coercion as a real and serious form of family violence. These types of family violence may be more difficult to see, or assess the impacts of.

Some examples of conduct found to be economic abuse include:

• Drawing down a line of credit without the other spouse’s approval, refusing to pay child or spousal support until compelled by court order, changing locks on a matrimonial home to deny access

See A.K.P. v. I.S.P., 2024 BCSC 1271, at para 48

• Preventing a spouse from operating a business by removing equipment or interfering with clients, threatening to damage or destroy property relied upon by the other spouse Loss v. Walters, 2024 BCSC 1012 (para 106) 

When a Family Business Becomes a Weapon: Economic Abuse in Family Law

Business as a Tool of Coercive Control

Economic abuse through a family business is a form of coercive control, where one partner uses the business to maintain power over the other. This can involve damaging the business as an asset to reduce property division or manipulating income to decrease support payments.

Often, the abuser is the “skilled spouse” who possesses critical knowledge and controls key relationships, leaving the other spouse excluded from operations and financial information upon separation.

Where a party wishes to decrease the profitability of a business, the myriad of private operational decisions made over time by a spouse in control of that business can reduce value and available funds. Numerous tactics addressed in the Study Paper can be used to exert control and inflict harm:

1. Manipulating Business Decisions: Discretionary decisions regarding inventory, accounts, debt, and employees can be made with the intent to reduce profitability. Examples include writing off large bad debts, purchasing excessive inventory, submitting intentionally low bids, or failing to collect accounts receivable (pages 23-25).
2. Asset Manipulation: A spouse may refuse to sell the business or its assets to prevent the other spouse from accessing funds, often leading to court applications. Conversely, assets might be sold without consent, with the money kept by the abuser, or even sold at a loss or given away, sometimes by transferring the business to a friend or associate while retaining beneficial ownership (pages 26-27)
3. Corporate Record and Ownership Manipulation: Abusers may forge signatures or falsify documents, particularly banking and financial records, or create false agreements to limit a spouse’s entitlement. A spouse might be removed as a shareholder or director without their knowledge or consent, as seen in KRW v PMM, 2023 BCSC 981, where a director was removed to deny bank account access, then reinstated to preserve her liability for company debts (page 27).
4. Financial Misconduct: Instances of financial misconduct, which include transferring money out of the company to personal accounts or third parties, declaring corporate or personal bankruptcy to defeat claims, or using the company as a “piggy-bank” through unrecorded withdrawals, cash deals, or failing to file tax returns (pages 27-28). The case Valastiak v Valastiak, 2010 BCCA 71 illustrated a spouse using a business bank account as a “piggy-bank” and transferring money to his own account, leading to mismanagement and an inability to determine the business’s value (pages 11, 23, 28).
5. Non-Disclosure and Breach of Court Orders: Controlling business information and refusing to produce necessary disclosure is also a common tactic.

   • In Y.L. v G.L, 2020 BCSC 808, the court found a spouse failed to disclose significant corporate interests and did not comply with disclosure obligations, leading to an adverse inference and unequal division of property (paras 241, 322).

   • Similarly, S.L.C. v J.R.C, 2020 BCSC 463 involved persistent non-disclosure and dissipation of a corporate asset, justifying an unequal division of family property (paras 68, 197).

   • Harming the Other Spouse’s Business: If the victim/survivor operates their own business, the abuser may damage key relationships, such as by telling customers negative things about them (page 29).In Dobson v Green, 2012 ONSC 4432, the violent person continued to harass and negatively impact the victim/survivor’s business by interfering with a supplier (para 17).

   • Threats and Harassment: Threats and harassment against a spouse can encompass threats respecting property, unreasonable restrictions on financial autonomy, and intentional damage to property.

   • In Loss v Walters, 2024 BCSC 1012 , a spouse removed and threatened to destroy equipment needed for the victim/survivor’s campsite business (para 106):

[106]   On the evidence before me, I find that there is evidence of family violence in the form of coercion, intimidation and threats regarding property and prevention of financial autonomy directed against Ms. Loss. Mr. Walters prevented Ms. Loss from running the campground business by removing equipment. He threatened to damage or burn facilities that she relied upon. She was threatened with not having access to an area needed to maintain running water in the winter to the Cabin. Clients of Ms. Loss’s were approached directly by Mr. Walters and she lost retreat business as a result. Ms. Loss was also subject to coercion and threats regarding her ability to live in the Cabin.

         6. Litigation Abuse: Post-separation, violence often shifts from physical to  economic and litigation-based, using legal processes to maintain control and harass former partners. It is defined in the Study Paper as the use of litigation as means “to maintain contact, domination and control over former partners. Perpetrators repeatedly engage legal systems (family courts, appeal courts, child protection agencies, police, civil protection systems, access to information processes) in the crusade to maintain contact and to coerce, control, harass, undermine and dominate their intimate and former intimate partners”. (Page 70)

When a Family Business Becomes a Weapon: Economic Abuse in Family Law Legal Remedies in British Columbia

The Family Law Act (FLA) in British Columbia provides several mechanisms that we can assist you with to address such abuse:

1. Court declarations against the offending party for Family Violence.
2. Best Interests of the Child, when considering Parenting Arrangements and Responsibilities.
3. Protection orders, where family violence is likely to occur and you or a family member is at risk.
4. Property preservation orders, where a court restrains a spouse from disposing of property if a claim would be defeated or adversely affected.
5. Interim Management of a Family Business, should the mischief of the other spouse operating be of such a real and substantial character that they may cause irreversible damage to the business, including a loss of value for the business.
6. An unequal division of family property, where an equal division would be “significantly unfair” – this can be awarded as a result of one spouse’s bad faith reduction or disposition of property and party of an effort to deprive the other party of their interest.
7. Obtaining orders for financial and other document disclosure.
8. New Tort of Intimate Partner Violence: The Supreme Court of Canada, in Ahluwalia v. Ahluwalia, 2026 SCC 16, recognized a new tort of intimate partner violence, which explicitly includes “financial control” as a component of coercive and controlling behavior. (See para 120). This case further solidifies the legal recognition of financial control as a distinct form of abuse.

CONCLUSION Tel: 604 602 9000

These legal provisions and judicial interpretations demonstrate that courts are increasingly recognizing and addressing the complex ways in which family businesses can be weaponized in family disputes, aiming to protect vulnerable spouses and children from economic abuse and coercive control. When a Family Business Becomes a Weapon: Economic Abuse in Family Law cases are a serious issue and MacLean Law’s top UHNW family lawyers  are here to help.