Dividing the Grape Juice

You like wine. Who doesn’t? You’ve got a nice collection going, cellared under pristine conditions, perfectly cooled and humidified. And now you and your spouse are splitting up. Wither the wine? How do the courts deal with something that is equal parts collection and food?

While meant to be drunk (clearly), bottles of sought-after wine can command remarkable prices. The values of those bottles can and do constantly shift based upon the providence of the wine (ie. how it has been stored) its age and popularity. How then can a court value a collection and divide it up?

The British Columbia courts have taken more than one position on this issue. In Forzley v. Forzley, 1998 CanLII 5511 (BC S.C.), the court roughly estimated the value of the wine collection and reapportioned other assets to compensate for the parties’ relative interests.

In Hodgkinson v. Hodgkinson, 2003 CarswellBC 2461, the court came to the conclusion that the parties’ collection, “… has no market value. It cannot be resold (Liquor Control and Licensing Act, R.S.B.C. 1996, c.267, s.38).” (at para.38) In her reasons for judgement, Mme. Justice Dillon found at para. 45 that, “Because there was no market value for the wine cellar and because it apparently cannot be sold, I conclude that the wine cellar will be distributed in specie.” “The plaintiff has had the benefit of the cellar for two years without accountability. The defendant, therefore, will have first choice of 24 bottles, followed by the plaintiff’s choice of 24 bottles, and so on. Equality of these choices is based only upon fluid ounces and not value. Each party will have to do their own homework to decide what to choose. ”

In both cases, the court was cognizant of the benefit derived by the party living above the cellar and compensated the other party for assets which may have been guzzled.

For many people, wine is not just a drink and few collect solely for financial reasons. The decision in Hodgkinson appears to take this into account. Given that appraisals will never capture the personal essence of this kind of collection, an in specie division may be the best solution.

Posted: May 14th, 2010 under Case Analysis, Property Division.
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Financial Statement Assumptions

Some thoughts about Financial Statements:  The Form 89 financial statement is divided into major sections – income, expenses and property.  Generally, income and property pose few conceptual problems.  Parties might disagree with values of assets or with characterization of income, but there little room for assumptions (ie, you would not include a Ferrari in section 2 of Part 3 (Vehicles) premised on “IF I had a Ferrari, THEN I would have a Ferrari”).

The same cannot be said for the expense section of the Form 89, which is rife with assumptions.  It is not clear on the face of the document what, exactly, is called for.  Is one being asked to say what one’s expenses have been for the past year?  What one expects them to be in the coming year?  What they will be if one gets what one is proposing that the court order, or what one will be paying if the other party is successful?  Does one calculate expenses on the most one believes one should be spending or the least?   The answer to all of these questions is, unfortunately, yes.

Because there is so much grey in the Financial Statement, it is important that one clarifies for the court any assumptions and decisions that you make.  If one is filling out the document based upon what one expects to pay if one receives what one is seeking, that assumption should be set out in affidavit material and brought to the attention of any judge hearing a related matter.  Clarifying affidavits are very helpful for the court and helps them to see exactly what logic lies behind the income and expense calculations you or your counsel may be promoting.

Posted: February 24th, 2010 under Child Support, Procedure, Property Division, Spousal Support.
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What to do about non-disclosure

What can you do when the other side won’t give you the documents you need to determine his or her income?  Rule 60D of the British Columbia Supreme Court Rules dictates the disclosure that a party must make in a family law proceeding.  In the case of Cunha v. Cunha (1994), 99 B.C.L.R. (2d) 93 (S.C.)) Mr. Justice Fraser quite appropriately stated that,

“Non-disclosure of assets is the cancer of matrimonial property litigation. It discourages settlement or promotes settlements which are inadequate. It increases the time and expense of litigation. The prolonged stress of unnecessary battle may lead weary and drained women simply to give up and walk away with only a share of the assets they know about, taking with them the bitter aftertaste of a reasonably-based suspicion that justice was not done. Non-disclosure also has a tendency to deprive children of proper support.

It is not enough to respond to non-disclosure by an award of costs. Nor is it enough, in a case like this one, to deal only with what is known. Either of these approaches, or both together, may still reward the non-disclosing litigant for his conduct, depending whether his concealment has been successful.”

What then is to be done?  Luckily, the courts provide some resources to the party seeking information.  They include:

Presumptions Against the Non Disclosing Party: If someone does not disclose assets in accordance with the Rules, the court may presume that there is continuing non-disclosure and the onus will be on the non-disclosing party to satisfy the court that he or she has complied.

Penalties Against the Non-Disclosing Party: If a proper demand has been made for disclosure and it has not been complied with, the court is able to assess up to $5000.00 against the non-disclosing party, to be paid for the benefit of the spouse, child or parent on whose behalf the request for financial information was made.

Dismissal of the Non-Disclosing Party’s Action: If a party does not provide a financial statement, the court under Rule 60D of the rules of court, under Rule 2(5) is able dismiss the offending party’s proceedings or order that the proceeding go ahead as if no appearance had been entered or no defense had been filed.

Contempt: The court can, in certain circumstances, make findings of contempt of court against someone hiding income or assets.  This could result in fines against the offending party or even jail time.

Mr. Justice Fraser’s words still ring very true, and it is vital that each party provide full disclosure so that each has full knowledge of the other’s finances.

Posted: November 25th, 2009 under Child Support, Procedure, Property Division, Spousal Support.
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