Family Business Challenges from Divorce or Separation Many businesses in Canada are family businesses or have evolved from family businesses. Family businesses present many unique challenges as they grow should the personal relationships of the key members of the family business change or deteriorate. Divorce and separation can have serious impact upon family-owned and family-run businesses, whether incorporated companies or partnerships. Changes in a family business and the challenges presented by change can often result in legal disputes between interested parties. Family business disputes are often be protracted, expensive, and disruptive, and may even result in the sale, division or winding up of the family business. Impact of Separation and Divorce on Family Businesses Complex questions arise in the division of property and assets when dealing with a family business during a separation or divorce. The value of the family business is included in the equalization of net family property … Read More
How to Set Aside (Cancel) a Separation Agreement: Part 2
As Part 1 of this series explained, courts generally respect the arrangements negotiated by parties in separation agreements, but can “set aside” (cancel) a separation agreement for several different reasons. Part 1 discussed two common grounds, (i) misunderstanding of the nature or consequences of the agreement, and (ii) duress, undue influence, fraud, misrepresentation, or public policy reasons. This Part 2 covers another common ground, failure to meet the financial disclosure requirements of the Family Law Act. Financial disclosure is the key obligation in family law. One of the most common reasons separation agreements are set aside (canceled) is for lack of financial disclosure or inadequate financial disclosure. Under the Family Law Act, parties cannot waive financial disclosure before entering into a separation agreement. Under the Family Law Act, the court can set aside a separation agreement if a party failed to disclose to the other significant assets, or significant debts … Read More
The Top Four Family Dispute Resolution Options
Most separating spouses do not resolve their parenting, support, and property issues in court. In fact, Canada’s Divorce Act requires separating spouses and their lawyers to try to resolve these issues through an out-of-court process unless it is inappropriate to do so. This can be a cheaper, faster, and less acrimonious way to settle family law disputes than traditional court litigation. These out-of-court options are referred to by the general term ‘family dispute resolution process’ (FDR). The most common forms of (FDR) processes, are negotiation, collaborative family law, mediation, and arbitration. This can be formal negotiation between lawyers or more informal negotiation between the parties themselves, with or without lawyers. Negotiation can occur when only one party has a lawyer, and the other party does not. Most separating couples try negotiation first before proceeding to other forms of FDR. Collaborative family law is a form of negotiation, that attempts … Read More
Three Things To Know About Separation Agreements
Separation agreements are legal contracts created by two spouses, after separation. Separation agreements set out each spouse’s rights and obligations on issues such as parenting, finances, property, and support. Both married spouses and common-law spouses can enter into a separation agreement. Separation Agreements are Faster and More Economical Than Going to Court Traditional court litigation can be time-consuming and expensive. It can take years to reach a resolution in court. With litigation, the courts decide when and how a matter moves forward. Even at the best of times, many courts have a large backlog. Since the beginning of the COVID-19 pandemic, the courts have an even larger backlog. The court process is also expensive, and the costs are unpredictable. When negotiating a separation agreement outside of court, parties get to decide the pace and are in more control of the costs. Issues to Address in a Separation Agreement Separating spouses … Read More
Limitation Periods in Family Law
A limitation period is the amount of time within which the law permits one to bring a legal claim or action. Claims started after a limitation period has ended can be barred. Under the Limitations Act, there is a general two-year limitation period. In family law there are several different limitation periods that prospective and current family law clients should be aware of. Under the Family Law Act, married spouses may make a claim for equalization of net family property within the earliest of (a) two years after the marriage is terminated by divorce or judgement of nullity; (b) six years after the spouses separate and there is no reasonable prospect that they resume cohabitation; or (c) six months after the first spouse’s death. The court may extend the limitation period for bringing an equalization claim, if it is satisfied that (a) there are apparent grounds of relief; (b) relief … Read More
Corona Divorce: Worldwide Increase in Divorce Rates and Inquiries After Coronavirus Quarantine
Divorce rates and inquiries have dramatically increased across the world because of lockdowns brought by governments intended to stop the spread of COVID-19. The stress of the pandemic, coupled with being confined in close quarters for weeks, added financial worries and increased childcare responsibilities are thought to be behind this increase. Back in March, Baroness Shackleton of Belgravia, one of the UK’s most eminent family law lawyers told her peers at Westminister: “The prediction amongst divorce lawyers is that following self-imposed confinement it is very likely that the divorce rate will rise.” She further noted: “”One only has to imagine what it’s going to be like when families are sealed in a property for a long period of time.” As China emerged from lockdown in March, numerous cities across China reported large increases in divorce filings. Specific numbers are not available as China only releases statistics on divorces annually. Saudi … Read More
Five Common Myths about Divorce
Both Spouses Need to Consent to Divorce In Canada, if one spouse wants to divorce, they do not need to seek their spouse’s consent to divorce. Canadian courts will grant a divorce under three grounds: if spouses have been separated from each other for a year without reconciling; if a spouse has proven adultery occurred during the marriage and they have not absolved their spouse; and if one spouse proved they received mentally or physically cruel treatment from their spouse. The Spouse Who Earns Less Income Always Receives Spousal Support Unlike child support, separated and divorced spouses do not have an automatic right to receive spousal support when their marriage ends. Separated spouses may be entitled to receive spousal support. There are several factors which give rise to an entitlement to spousal support. These factors include the length of the marriage or relationship, the roles each spouse played in the … Read More
Five Reasons Why You Should Choose Collaborative Divorce
One: It’s Faster Traditional litigation can be a lengthy, time-consuming process, and it can take years to reach a resolution. With litigation, the courts decide when and how a matter moves forward. Even at the best of times, many courts have a large backlog. Since mid-March 2020, the courts in Ontario have suspended regular operations due to the COVID-19 pandemic. While the courts have continued to hear emergency matters and have recently expanded their scope of operations, they will not resume normal operations until July 6, 2020 at the earliest. There inevitably will be a large backlog when the courts reopen. Most collaborative professionals, along with mediators and arbitrators, continue to work during the pandemic by offering their services virtually. Two: It’s More Economical Collaborative divorce often costs less than going to court. The court process is expensive, and its costs are unpredictable. Traditional litigation requires a lot of preparation, … Read More
Divorce and Separation: Spouses jointly owned business’
When parties separate, tensions are high with both parties making lifestyle adjustments, attempting to divide assets and often negotiating parenting arrangements. In the case where parties share business interests or are partners in business, this can lead to increased stress, where the business and therefore the spouses current and future financial security remains entwined with a soon to be ex-spouse’s. In the case of Danecker v. Danecker, 2013 ONSC 1605, the husband and wife were both physiotherapists. Their marriage ultimately broke down in late 2009 and at the date of separation, they were equal partners in an unincorporated physiotherapy clinic. The husband attempted, without success, to set up his own separate clinic but eventually was employed by a local hospital. Upon the separation, the wife bought out the husband’s share of the building and continued to operate for three years without any profits being shared with the husband. As part … Read More
Divorce: How are business assets split?
When parties separate, there are often disputes over one party’s entitlement to the other party’s shares or interest in a private or family business. If a marriage contract was executed validly, this contract may govern the splitting of business assets. Where there is no marriage contract, there is no specific method of valuating a business under the Family Law Act and parties should always be aware that different methods can result in different values with different tax consequences. Parties often hire two separate valuators and if both parties cannot agree, the issue will end up in the Family Courts. Entitlement to a share of the business Whilst a family business which has been inherited or gifted to one party may result in the business interest being exempted from matrimonial property, the value of a private business interest not inherited or gifted will fall presumptively into the category of matrimonial property … Read More
COVID-19 / Coronavirus: What Constitutes an Urgent Family Law Matter?
On March 15, 2020, the Chief Justice of the Ontario Superior Court of Justice released a Notice to the Profession advising that all scheduled family law hearings were adjourned until further notice. Similarly, as of March 20, 2020 the Ontario Court of Justice adjourned all scheduled family law hearings until May 29, 2020. Both courts continue to hear urgent and emergency family law matters. According to the March 15, 2020 Notice to the Profession, the Ontario Superior Court of Justice will only hear urgent family law matters such as: requests for urgent relief relating to the safety of a child or parent (e.g., a restraining order, other restrictions on contact between the parties or a party and a child, or exclusive possession of the home); urgent issues that must be determined relating to the well-being of a child including essential medical decisions or issues relating to the wrongful removal or retention of … Read More
Divorce and Separation: Who gets the family pet?
Upon separation or divorce, a contentious issue is often which party gets to keep the family pet. Despite furry friends often being just as important to the family as children, Ontario’s courts have refused to make custody orders in respect of family pets. Justice Timms in Warnica v Gering stated “Whether in the Family Court or otherwise, I do not believe that any court should be in the business of making custody orders for pets, disguised or otherwise… Obviously, I acknowledge that pets are of great importance to human beings. Strong bonds develop between them and the human beings that look after them. To some people, the relationship with their pets takes on a significance exceeding that of any other. They go to extraordinary lengths to preserve that relationship; even at a cost that some would say is disproportionate. Some may consider them to be children; however, they are not children.” … Read More
COVID-19 / Coronavirus: Alternatives to Family Court
As of March 17, 2020, the Ontario Superior Court of Justice suspended all regular operations for an indefinite period. Similarly, as of March 20, 2020 the Ontario Court of Justice suspended all regular operations until May 29, 2020. Both courts continue to hear urgent and emergency family law matters. Without access to the courts, family law litigants can still avail of a number of different options to resolve their family law disputes. Indeed, there are numerous forms of alternative dispute resolution (ADR). With consent, parties at any stage of litigation can agree to settle their issues outside of court with ADR. These processes can be a cheaper, faster, and less acrimonious way to settle family law disputes than traditional court litigation. Collaborative family law is an out-of-court resolution process which puts families first. With collaborative practice, parties work together, with their lawyers and other neutral professionals, such as family professionals … Read More
Cyberbullying in Family Law
Cyber-bullying is a growing concern in family law litigation. Some provinces already have legislation to deal with such issues. While Ontario currently does not, in recent years Ontario courts have recognized new common law remedies to address these issues. In Yenovkian v. Gulian, 2019 ONSC 7279, Justice Kristjanson of the Ontario Superior Court of Justice recognized the act of publicly placing a person in a false light as a new cause of action under the tort of invasion of privacy. Yenovkian involved an extremely acrimonious separation and custody dispute involving two children, one of whom has special needs. Shortly after separating in 2016, the Respondent, Ms. Gulian, took the parties children to England and refused to return to Ontario. The Applicant, Mr. Yenovkian, engaged in a cyberbullying campaign spanning several years against his estranged wife. This campaign included videotaping court-ordered access visits with the children, without the children’s knowledge and … Read More
Six Ways to Get an Annulment in Ontario
Civil annulments are uncommon in Ontario as most separating spouses in Ontario choose to get a divorce. Annulments deem a marriage invalid, rendering the marriage null and void, as if it never happened. Essentially, an annulment means your marriage never occurred in the eyes of the law. Annulments are granted under a few specific grounds: 1. One of the spouses does not have the capacity to marry or could not consent to the marriage. Section 7 of Ontario’s Marriage Act states no one shall issue a licence to or solemnize the marriage of any person who lacks the mental capacity to marry by reason of being under the influence of intoxicating liquor or drugs or for any other reason. Predatory marriages, where a financially motivated person marries an elderly person to gain access to and control over their property, assets and estate, can fall under this category if the victim … Read More
The Matrimonial Home: What Happens Post Separation?
The matrimonial home is often viewed as sacred ground for divorcing couples and disputes commonly arise over the ownership and possession of the property. In Ontario, special status is given to the matrimonial home due to it often being the most valuable and sentimental asset that a couple or family possesses. What is a ‘matrimonial home’? Section 18 of the Ontario Family Law Act defines the matrimonial home: “every property in which a person has an interest and that is, or, if the spouses have separated, was at the time of separation ordinarily occupied by the person and their spouse as their family residence”. Can there be more than one ‘matrimonial home’? There can be more than one ‘matrimonial home’ as long as at the date of separation, all of the properties are “ordinarily occupied” by the spouses as the “family residence”. The residence(s) being claimed as the ‘matrimonial home’ must … Read More
Common Law Couple Entitlements
Common Law Couples A common law relationship is not defined universally in law. Federal and provincial legislation use differing criteria to define common law relationships. For example, Ontario’s Family Law Act, defines common law relationships as one where parties reside together for at least three years or where parties are in a relationship of some permanence and have a child. Whereas, under the Income Tax Act, a common law relationship is defined as one where parties are in a conjugal relationship and living together for at least twelve continuous months. When you reside as common law spouses you are ‘spouses’ for the purpose of Government programs or benefits, except for those specifically applicable to ‘married spouses’. There is no formal separation process which must be followed. Married Couples A married couple is a couple who have chosen to commit their lives together and have undertaken to legally bind their relationship. … Read More
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