Appeal Court Varies Agreement to Alleviate Unfairness Between the Parties

The Court of Appeal continues to deal with appeals involving challenges to agreements that were intended to settle all matters between the parties. In Dhaliwal v. Dhaliwal 2021 BCCA 72 the court considered whether after an eight-year marriage the parties’ marriage agreement satisfied the objectives of the Divorce Act and the Family Law Act.

Mr. Dhaliwal was a former federal politician who was widowed with adult children. His second wife, Ms. Dhaliwal, who had also been previously married and had a young son, had moved to British Columbia after meeting her future husband in India.  She had a PhD in Women’s Studies, she expected to earn $30,000 as an academic in Canada and had assets valued at $200,000.  Mr. Dhaliwal’s income was approximately $100,00 and he had property valued at over one million dollars. Notably however, several of Mr. Dhaliwal’s successful businesses were disclosed in the agreement, but not valued. 

The agreement provided Ms. Dhaliwal with $450,000 if the marriage survived between eight and ten years, which it did. This sum was intended to provide her with funds to purchase a home if the marriage ended in divorce.  The agreement also provided her with spousal support of $3,000 a month for seven years. As a result of the agreement Ms. Dhaliwal left the marriage with a net worth of $698,000, while her husband retained assets valued at $3.7 million. However, the trial court included the spousal support in its calculation of Ms. Dhaliwal’s net worth, although support was paid monthly. 

The trial judge determined that the agreement was fair, as all assets were acquired by the husband decades before the marriage; that she had made no contribution to her husband’s property; and that she was highly educated and able to be employed for a further thirteen years, while Mr. Dhaliwal was near retirement age at the time of trial. As well, her son was now an adult and self-supporting.

 The trial judge failed to mention that the family home had increased in value by 100% from $875,000 at the time of the agreement to $1.9 million at the date of trial. He also failed to note that the lump sum payment contemplated by the agreement was intended to pay for a home for Ms. Dhaliwal. The appeal court allowed the appeal and determined that a “fair approach” was to provide that the parties share equally in the growth in value of the family home, which would increase the payment to the wife from $450,00 to $525,00, an increase of $75,000. The spousal support agreement remained intact. Presumably the “win” in the Court of Appeal came at a very high cost, likely netting Ms. Dhaliwal very little if any benefit at the end of it all. 

Lawdiva aka Georgialee Lang

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