High-Stakes Litigation Results in Costs Award of $1.4 Million to Wife

BarristerIt wasn’t that long ago that family law was considered the “poor sister” of commercial and corporate litigation, labelled “pink collar” law and considered a less worthy pursuit than other areas of the law. Happily that characterization has been abandoned for some time and rightly so.

Cases like Blatherwick v. Blatherwick 2017 ONSC 3968 (Canlii) and many others like it, point to the reality that family law embraces complex legal concepts including corporate valuations, off-shore assets with jurisdictional issues, and complicated income analysis, to name just a few.

When you have family litigation where the wealthy spouse refuses to provide information and documents, lies and evades the truth, and enlists business partners to assist in the obfuscation, it is not unusual to see large costs awards levied against the fraudulent litigant. Blatherwick is a perfect example of such a case.

Where there has been “reprehensible, scandalous, or outrageous conduct on the part of one of the parties”, the successful party will be awarded “special costs”, which represent the actual legal fees he or she has paid to his or her lawyer. In Blatherwick the successful wife was awarded $1,461,000 in circumstances where the husband made a mockery of fair play after a marriage lasting 39 years.

Mr. Blatherwick’s litigation “sins” were numerous including:

1. His admission that his business partners formed a “brotherhood of trust” and would circle the wagons in the case of any matrimonial dispute;

2. His admission that he was a liar and a cheat and that his business was conducted with those values;

3. His admission that his business was conducted in China and the British Virgin Islands and that the few documents produced were utterly unreliable.

4. His ever-changing evidence, despite previous admissions being made under oath;

5. His flagrant and deliberate disregard of court orders, in particular an order that restrained him from depleting his assets. However, the court found that in breach of the order he paid his lawyers over $800,000;

6. He failed to pay interim support to his wife and was in arrears of over $500,000;

7. He gave over $900,000 to several girlfriends in the Philipines and also made fraudulent Canadian immigration applications on their behalf, telling the authorities that his wife was deceased, and on another occasion that he was not married.

8. He made a voluntary assignment into bankruptcy such that his trustee seized and sold all his Canadian assets. He valued his off-shore companies at one dollar, despite evidence of $42 million dollars in annual sales;

In lengthy Reasons the Court held that Mrs. Blatherwick, in her early 60’s, was entitled to lump sum support in the amount of $5,985,216 based on an imputed income to her husband of $1.4 million dollars. Notably, his Canadian tax returns recorded income of about $48,000 per annum. She was also awarded compensation for her interest in the family assets in the amount of $3,573,807.

The Court annulled Mr. Blatherwick’s bankruptcy and scheduled a hearing to determine if his lawyers should be held in contempt of court for receiving funds from their client while he was under a restraining order.

The question remains, however, in the face of Mr. Blatherwick’s litigation behaviour, whether his wife will actually receive the funds she is owed. With her husband living in the Phillipines, and all his valuable assets located off shore, it seems highly unlikely that collecting her award will be a simple task. Although his Canadian passport was seized by Family Maintenance Enforcement authorities, it is very likely he has acquired a Phillipines passport.

These are extremely difficult cases and often the Court’s findings and orders are hollow, in the absence of compliance from a spouse who has already proved to be a rogue.

Lawdiva aka Georgialee Lang

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Legal Nightmare Documented in B.C. Judge’s Reasons

BarristerWhat would your life look like if you were engaged in protracted family law litigation requiring more than fifty court appearances before 28 different Judges and Masters of the Court, over a period of 15 years?

“Hell on earth” would be an apt description for Laura Koch and Graham Underhill, the divorced parents of two children who have used the British Columbia Supreme Court as their public battleground since 1997.

In reviewing Mr. Justice Grove’s Reasons (2013 BCSC 1889), several aspects of Koch v. Underhill are noteworthy. Firstly, their legal rollercoaster began with an ex parte or without notice application to the court, wherein Ms. Koch received interim custody of the children who were ages three and one. A variety of restraining orders were also put in place barring Mr. Underhill from any activity that involved his wife and children.

In numerous posts I have decried the damage done when parents go to court behind their partner’s back to obtain life-changing orders, a practice that in my opinion usually leads to ugly, soul-destroying litigation, just like it did here.

As is typical in cases such as these, a succession of court hearings quickly followed the initial ex parte hearing, resulting in a more balanced order that saw the ex parte order set aside, the interim custody order deleted, and joint guardianship ordered.

Ten months later the parties agreed to share joint custody and equal parenting of their children, but by this time they had been back to court seven more times.

Another trigger that often leads to high-conflict in family law cases are allegations of mental illness and substance abuse. In 2002 the Koch v. Underhill litigation machine wound up again resulting in orders for production of psychiatric files, medical intervention, and a change in the equal parenting arrangement, with the children ordered to live primarily with their father.

The third significant factor in this case was Mr. Underhill’s longstanding refusal to provide proper financial disclosure, a situation that is often referred to as the “cancer of matrimonial litigation”.

Mr. Justice Groves remarked that despite Mr. Underhill’s “limited” disclosure it was apparent he was a very wealthy individual, which brings up the fourth element often found in marathon family law litigation, a litigant with “deep pockets”.

Through much of the litigation Mr. Underhill was represented by counsel, while Ms. Koch acted for herself, after her resources ran dry.

The Koch/Underhill saga is a textbook treatise that shows how warring spouses/parents can ruin their lives…and for what? To win? What about their children and the psychological damage they have inflicted on them? It is shameful…

Lawdiva aka Georgialee Lang