The wife gained $1.5 million on Appeal.
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Every case is unique. This recent BCCA case contains many valuable lessons (1).
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Summary
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A recent appeal case overturned an order for equal division of the family assets, determining that equal division would be significantly unfair. The court ruled that the objectives of spousal support were not met. It overturned apportioning 1/2 the husband’s tax liability to the wife, instead it added $96,000 to the husband’s Guidelines income, significantly increasing monthly spousal and child support payments. The spousal support was indefinite since it was a 21 year "long marriage".
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In effect the orders added a present value of about $500,000 in increased indefinite support payments to the new $1,000,000 compensation order.
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The trial judge ordered a $60,024 compensation payment to the wife based on an equal split.
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The Appeal court set that aside and ordered a $1,000,000 compensation payment based on a roughly 65/35 split.
$96,000 per year was added to the husband’s Guidelines income with spousal and child support re-calculated accordingly.
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The court found that equal division of family assets was significantly unfair considering the needs and means of the wife, and the parties disparate financial positions going forward, stating:
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i. " The gross financial disparity between the parties made it objectively, unjust, unreasonable, and unfair to divide the family property equally.”
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ii. “ the husband’s standard of living would remain the same as during the marriage, but the wife’s standard of living would suffer a significant decline”.
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iii. “ the order for periodic monthly support payments was insufficient to cover the wife’s monthly expenses, let alone address her lack of financial stability and impaired ability to achieve economic self-sufficiency, which is an objective of spousal support”.
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iv. "it was significantly unfair to divide family assets equally when the husband was left with $16 million in assets and wife with $2.25 million in assets." She would not be able to maintain her standard of living nor achieve self sufficiency within a reasonable time,
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v. the wife was not obligated to pay roughly 1/2 the tax liabilities the husband incurred in the circumstances, since he acted unilaterally and the tax was not covered in the written agreement between the parties on dividing the family home,
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vi. a $4,000 per month recurring tax free payments to the husband from excluded assets had been used during the marriage to pay family expenses and maintain their standard of living. The court added a grossed up pre-tax amount of $96,000 per year to the husband’s Guidelines income, with child and spousal support re-calculated accordingly under SSAG.
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In summary, the Appeal court found that the trial judge’s orders failed to meet objectives of spousal support under s.15.2(6) and s.162 the Divorce Act and the FLA, and so it intervened.​​​​​​​​​​
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Child and Spousal Support
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* The trial judge found the husband’s Guidelines income was $255,430 and the wife's was $30,650. He ordered child support $2,934 per month and indefinite Spousal support of $7,731 per month, subject to review.
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* Spousal and Child Support was significantly increased (estimated to add +-$3,000 per month) on Appeal.
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* Special expenses of the children were ordered to be split 60/40.
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Husband purchased wife's 1/2 of Family Home
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After separating the parties entered into a written agreement on the buyout of the family home. Tax liability was not mentioned in the agreement. This proved to be fatal to the husband. The parties evidence was that they had planned to deal with any other issues in a later agreement, but never did so.
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Expert witnesses
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5 expert witnesses were called to testify.
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A jointly retained corporate valuations expert, to determine the value of the excluded corporate assets.
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The wife called an expert witness to calculate the husband’s Guidelines income.
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The husband called an expert witness to calculate the husband’s Guidelines income.
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The husband called the late father’s family accountant to give evidence on the family trust that he inherited and on the creation, structure and functioning of excluded companies.
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The husband called his personal and corporate accountant.
The husband’s Guidelines income
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1. As calculated by the wife's expert: $ 743,000 per year.
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(Note that under the Guidelines there is an income "ceiling" of $350,000, but in Hathaway BCCA 2014 spousal support was based on income of $1,000,000 per year, spousal support payments were set at $24,124 and child support payments were set at $12,814 per month, the husband appealed based on the $350,000 ceiling in SSAG but the Appeal was dismissed).
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2. As calculated by the husband’s expert: +$351,450 per year (inferred, not explicitly stated).
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3. As calculated by the trial judge: $ 255,430 per year.
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4. As calculated by the Court of Appeal: $255, 430 + $96,000 = $351,430 per year.
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5. The wife's expert found the husband’s imputed corporate income was $450,000 per year but the trial judge found the husband’s imputed corporate income was only $61,609 per year.
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The wife's Guidelines income
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1. The wife's expert found her tax return income was $14,700 per year with an imputed income of $20,000 to $30,000 per year.
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2. The husband argued the wife was intentionally under-employed and imputed her income at $90,000 per year.
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3. The trial judge found the wife was intentionally under-employed and imputed her income at $30,650 per year.
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Costs of the litigation
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It appears there was an enormous cost of litigation, made worse by an inability to settle before trial. The parties apparently paid hundreds of thousands in combined total litigation costs.
For example, the wife reported legal expenses of $22,000 per month on her Form 8 Financial Statement. Details of her monthly expenses factored into the Appeal court decision on spousal support factors to consider.
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The wife received a $275,000 advance from family assets for litigation purposes and also took out a $350,000 mortgage/line of credit against her town home to help fund litigation.
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The husband borrowed $125,000 from his mother and further liquidated assets to help fund the litigation. The husband’s bill of costs on the first trial was $64,720 with disbursements of $78,659.
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The trial was 14 days in court plus the day of judgement. The Costs trial and the Appeal costs was extra.
Offers to Settle and Cost awards
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The husband made 2 offers to settle before trial under 11-1(5) of the Supreme Court Family Rules. The wife did not accept the offers.
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The husband claimed double costs of $200,000 against the wife for not accepting his offers before trial. That application failed.
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The court ruled it was not unreasonable for the wife to not accept the offers, as financial disclosures were outstanding at time of first offer and key unresolved legal issues still needed to be tried at time of 2nd offer.
The husband was awarded costs for the first trial. The wife was awarded costs for the husband’s double costs application. The wife was likely entitled to costs on the Appeal.
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(1) Healey v Healey, 2024 BCCA 68
Understanding the factual and legal issues in this case helps focus on:
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1. the basics of spousal support,
2. complexities with excluded property,
3. settlement offers considerations before trial, and
4. planning to manage litigation costs against the potential for settlement to effect substantial savings.
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Island Forensics
November 22, 2024
reposted December 18, 2024
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