“Extreme” Family Law Litigation Decried by the Court

GeorgiaLeeLang025Despite family law Rules of Court that call for the “just, speedy, and inexpensive determination of a family law case on its merits”, there always seem to be those cases that take on the qualities of “scorched earth” litigation. Oliverio v. Oliverio 2017 BCSC 1704 appears to be one of those cases.

The application heard by Master Muir sought orders imputing income, determining the quantum of child and spousal support, and the sale of the family home. Other orders sought in the Notice of Application had been resolved or adjourned by the parties. Nonetheless, the application took more than a day-and-a-half of court time over three separate dates.

What was equally remarkable was the two boxes of materials presented to the court containing 160 affidavits, with 26 affidavits filed by the respondent wife and 15 filed by the claimant husband in respect of the orders sought. Master Muir described this mountain of material as evidence of “an unhealthy and abusive litigation climate”.

The preparation of 160 affidavits is almost too much to contemplate and the cost enormous.

She said:

“This approach to family issues is counter to the fundamental basis of our present family system which encourages negotiation, not litigation. This is not supposed to be a war. It is supposed to be a civilized allocation of rights, responsibilities, and assets following a family break-up.”

Master Muir declared that this style of litigation was unnecessary, damaging to the parties and their children, and a waste of family assets on litigation costs. She noted that the parties had accessed capital in the amount of almost $700,000, much of which was used to fund their legal expenses, albeit their trial was still eight months away.

As both husband and wife were not employed, although capable of employment, the court imputed $95,000 of income to the husband and $25,000 to the wife, and ordered child support with a set-off to account for their equal parenting arrangement. The wife also received spousal support at the mid-range. The application for the sale of the home was dismissed.

Finally, Master Muir implored counsel to speak to their clients. She said:

“I ask that counsel convey those sentiments to their clients in the hope that this can be reined in and the parties can refocus on resolving this in some other way.”

As a mediator and arbitrator, I know this case could be resolved within 60 days, if not less, using a mediation/arbitration model, where a legal professional mediates the disputed issues, with those unresolved being decided by that legal professional. And probably at a cost of less than $20,000…just sayin’

Lawdiva aka Georgialee Lang

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To Sign or Not to Sign: The Prenup Dilemma

DSC01152_2 (2)_2Pre-nuptial agreements are so commonplace today that no one gives them a second thought.  They are considered de rigueur in second marriages, particularly where there are children from a first marriage, who panic at the first sign that good ol’ dad has a girlfriend. They are also regularly used when a 50-year old wealthy bachelor moves his 25-year old girlfriend into his home. Ah…young love…

Their purpose is to protect a spouse’s assets from attack by their new partner if the relationship breaks down, and often they provide that upon separation, the wealthy spouse will not pay spousal support to the other.

But do they offer the protection the monied spouse is seeking, and what happens if your partner refuses to sign one?

Prenups are, of course, simply contracts, but unlike commercial contracts, courts look at prenups differently. When a couple begin living together or get married, there should be no expectation that each of them automatically has an interest in the other’s property or can expect to be supported by their new partner.

However, there comes a time when a couples’ lives are so intertwined that the law recognizes and provides for the sharing of property and in many cases, spousal support. Some of the factors include the birth of children, the sharing of childcare, the pooling of financial resources, the length of the relationship, and the many  non-financial contributions  each makes based on their abilities and skills.

In the usual prenup scenarios, if dad’s second marriage lasts as long or longer than his first, the prenup signed at the outset may be difficult to enforce. Our bachelor with the young girlfriend may find that after she has two children and is no longer participating in the job force, the contract they signed is simply unfair to her.

Often clients will make an appointment to discuss their desire for a prenup, but frequently it is a subject they have not yet raised with their partner. While prenups are not terribly expensive, to instruct a lawyer to draft one is rather foolish unless one has broached the issue with one’s sweetheart.

Case in point: New York executive,  Yiri Sun, is a Princeton graduate and vice-president of a large insurance company. She was very excited about her wedding day. She had booked a beautiful venue, the catering was top-notch, her bridal gown was exquisite, and the invitations sent.

At the last minute she was forced to call off the wedding as she refused to sign the prenup that was presented to her. Instead of losing her $8,000  reception deposit, she decided to turn her wedding into a party for 60 needy children and their families, referred to her by  the Salvation Army. She hosted the event wearing her wedding gown.

Ms. Sun’s professional status clearly gave her the confidence to call off the wedding when she saw the terms of the contract. Most women presented with prenups simply sign them. The good news for them is that if their relationship is not short, and they have made life choices that prejudice their financial well-being, they may be able to convince a judge to overrule the prenup.

As I tell my clients, prenups are a short-term solution, that in the long-run may not meet their expectations.

Lawdiva aka Georgialee Lang

All is Not What it Seems: Wealth and Divorce

You may be surprised to learn that many of your seemingly wealthy neighbours are not wealthy at all. They are simply part of a burgeoning group of North American families who live beyond their means. They may have all the outward signs of success: expensive cars, designer wardrobes, extravagant vacations, and upscale homes, but the reality is they owe money to everyone and live in a state of perpetual angst.

When they face an unexpected event, such as the loss of employment, the collapse of a business, a devastating illness, or a divorce their house of cards collapses. What I have seen in almost three decades of working with families in crisis is how often spouses are unaware of mounting debt and overspending, until it is too late. Most frequently the debt is consumer credit loans and unpaid personal and corporate income taxes, together with punishing interest payments and in respect of taxes, penalties and fines owed.

It can be a terrible shock to live in a splashy area of town in a million dollar home only to realize that your husband or wife has remortgaged the property multiple times to support a heavily leveraged lifestyle, and the boat, ATV’s and snowmobiles are owned by the bank!

A recent case in Britain is emblematic of court hearings across the country where apparently prosperous husbands and wives split up, agree to sell assets, pay debt, and share the proceeds, but the sinking economy negates all the good intentions.

A businessman in London made a fortune in the mining industry and was obliged to pay his wife $2 million dollars. He immediately paid her $1.375 million in 1999 and the balance was to be paid over time. But he never did pay her the remaining amount. After several futile court appearances, she asked the judge to order her ex-husband to pay what he owed together with interest for the past 17 years or be sent to prison. The man lived in an expensive rented apartment but insisted he was penniless, deeply in debt, and was relying on housing benefits for the poor, and the charity of his friends and his synagogue.

His ex-wife, of course, argued that her ex-spouse’s alleged circumstances were an elaborate façade meant to deprive her of her rightful entitlement and that he should pay or be sent to jail. The judge sympathized with her, particularly acknowledging that without the funds she may lose her home, but pointed out that there was no evidence that he had any hidden assets or secret funds. The Court declined to order a jail sentence finding that he had no current ability to pay her.

How can a spouse protect herself from a scenario like the one above? Clearly, it would have been best if this lady had received all she was entitled to upfront, but often that is not possible. If the remaining monies had been secured by an asset retained by the former husband that would also have assisted, but again circumstances do not always permit that and judges in British Columbia have been reluctant to encumber a spouse’s share of the property to protect the other spouse. A life insurance policy on the husband only helps if he dies, while still owing monies.

Most frequently this problem of collecting monies after the divorce arises in cases where a spouse has a long-term obligation to pay spousal support. Many spouses fail to realize that if they agree or are ordered to pay support, it will be most difficult to escape the obligation and unfortunately, there are spouses who create situations where they appear to be impecunious. Lump-sum support is one solution but again, judges are loath to order a spouse to give up their capital to pay spousal support.

The lesson to be learned is that spouses must insist on being aware of how family finances are handled during the marriage and that upon divorce a “bird in the hand may be worth two in the bush.”

Lawdiva aka Georgialee Lang

The Pettiness of Divorce

It is amazing how long former spouses can hold a grudge and exhibit pettiness, particularly when one spouse is obliged by court order to make spousal support payments to the other. The resentment that builds up when one spouse believes the other does not deserve to be supported can lead to piddly antics, such as the behaviour exhibited by New Jersey divorcee Diane Wagner, age 57.

Ms. Wagner claimed that she did not have sufficient funds to contest her husband’s claim for spousal support so she consented to pay him $744 a month for six years. However, it was apparent that her payments were made begrudgingly as evidenced by the notations she wrote on the cheques, such as “bum”,  “loser”, “adult child support” and she even used the acronym “FOAD”. (If you don’t know what that means better ask one of your teenagers).

Her ex-husband’s lawyers found it amusing enough to post a comment and a copy of one cheque on Facebook, whiting out her last name and street address. Several months later Ms. Wagner received a letter from her husband’s lawyers advising  that their client, Francis Wagner Jr., age 61,  had suffered “sustained heart attacks in recent weeks” due to the emotionally disturbing comments on her alimony cheques and that if she continued they would file a lawsuit against her for “intentionally inflicting emotional distress”.

Ms. Wagner gave a media interview suggesting she could write anything she liked on the cheque saying “I was the victim in that marriage. What more blood does he want from me? I pay him religiously”. She also claimed that when she discovered the Facebook posting, she too suffered emotional distress.

Yeah, I know all of this is hard to believe coming from mature adults. Nonetheless, last week Mr. Wagner’s lawyers filed the lawsuit they  had threatened.

I can’t figure out why a self-respecting lawyer would agree to file such a stupid lawsuit. The Wagners both need to be told to “grow up and get a life!”

 

Lawdiva aka Georgialee Lang

 

 

 

Second Attempt to Reform Spousal Support Crashes and Burns

GEO CASUALIt almost happened in 2013 as proponents of alimony reform in Florida heralded what they believed was the forthcoming passage of new laws eliminating lifetime spousal support and introducing other significant changes in alimony laws. However, women’s groups and divorce attorneys convinced Governor Rick Scott to veto the new law and the hopes of overburdened spouses were dashed.

Fast forward to 2015 where two separate alimony reform bills were introduced to legislators. Florida’s Senate embraced a bill that would end life time spousal support and provide a calculation for the amount and length of support based on the length of the spouses’ marriage and their respective incomes. Not content to focus on alimony reform, it also contained a provision mandating 50/50 shared parenting.

Meanwhile, a similar but separate bill was the subject of debate in Florida’s House where it handily passed.

While the Senate bill raised the heated controversy surrounding equal parenting, the House bill merely added a policy statement that
a child’s interests are usually best served by having both parents involved in his or her life. The bill did not seek to introduce a presumption in favor of either parent for time-sharing, relying as it did on a policy of maximum contact with each parent.

Florida media outlets reported that Senator Tom Lee stood in the way of the Senate’s acceptance of the House bill because of an alleged grudge he held related to his own divorce 15 years earlier, an allegation denied by Senator Lee. Lee was a vocal proponent of 50/50 parenting and would not vote in favour of the House bill’s “watered-down” version.

Nonetheless, the House and Senate’s decision to mix shared parenting with spousal support reform was a significant factor in the demise of alimony reform.

It appears the philosophy of reformers is to try to fix all the perceived ills of family laws in one fell swoop, a strategy that has backfired in other jurisdictions. Pundits say that had the bill dealt strictly with alimony it would likely have passed.

As it is now, lifetime alimony remains and it may be another two years before a further attempt is made. My suggestion? Deal with alimony and get that law passed. Phase 2 can then focus on shared parenting, however, laws that are “extreme”, such as a strict 50/50 formula or retroactivity are less attractive to major interest groups, including family law lawyers and women’s rights groups, who hold significant sway over public opinion.

Lawdiva aka Georgialee Lang

Wife Seeks Support 30 Years After Separation

GAL & PAL #2jpgImagine that you married when you were 20-years-old, had a child with your spouse and separated three years later. During the marriage you lived a peripatetic “new age hippy” lifestyle surviving on welfare benefits, with not a penny to your name.

Would you be surprised when your ex-wife, thirty years later brought a claim against you for financial compensation?

In a rags to riches tale, British entrepreneur and founder of wind farm company Ecotricity, Dale Vince, has battled his former spouse for several years to defeat her claim against him. She is asking for almost 2 million pounds.

Mr. Vince created a wind turbine from recycled materials, a venture that brought him millions of pounds and an Order of the British Empire.

Living in the lap of luxury with his second wife and their child, life was good. But not so good for his ex Kathleen Wyatt. When the marriage ended she took responsibility for their son, her daughter from a previous marriage, and went on to have two more children with her second husband, a marriage that also ended in divorce. Husband #2 also failed to provide financial support.

Ms. Wyatt approached Mr. Vince privately to see if he might be persuaded to assist her financially. He would not, and so she left the matter alone, claiming she was intimidated by his anger in response to her requests.

Her first foray into court in 2011 was successful, the lower court ruling that since the matter of support had never been settled or litigated, and given there was no statutory time limit to seek support, her claim could proceed.

Happily for Dale Vince, the English Court of Appeal disagreed with the lower court. Lord Justice Jackson said the court “should not allow people to be harassed by claims for financial relief which were issued many years after the divorce and had no real prospect of success.” The Court also noted that Mr. Vince was “the most improbable candidate for affluence.”

Alas for Mr. Vince, this week five members of Britain’s highest court, the House of Lords, overturned the appeal court’s ruling. Lord Wilson, for a unanimous court, ruled that the court must consider “the contribution of each party to the welfare of the family, including by looking after the home or caring for the family”.

Mr. Vince characterized his ex’s win as her “cashing in an old lottery ticket” however, the decision made by the Law Lords only allows her to pursue her claim. It does not guarantee her any amount of money and it is notable that the Court cautioned that it was unlikely she would receive anything close to millions of pounds.

The decision has received much media attention with Ms. Wyatt’s supporters suggesting that Mr. Vince went on his merry way unencumbered to achieve fame and fortune, while Ms. Wyatt cared for his son with no financial assistance from him.

Those who support wind-farm tycoon Mr. Vince decry the ruling saying that because Ms. Wyatt remarried and had two additional children, she should look to their father for support. They also criticize a media report that Mr. Vince has so far paid half a million pounds in legal fees, including his payment of Ms. Wyatt’s legal expenses. They protest that if she wishes to bring a claim against him, she should pay for it!

The next chapter of this litigation will be carefully watched and no doubt, appealed at every level.

As for former spouses in British Columbia, it is always dangerous to leave family matters “undone” and yes, there have been several cases where spouses have brought claims long after separation and been successful.

Lawdiva aka Georgialee Lang

Ex-Wife Refuses to Cash Cheque for $975 Million Dollars

GEO CASUALYou may have read the headlines last fall concerning the divorce of billionaire Harold Hamm in Oklahoma. Mr. Hamm is the CEO and majority shareholder of Continental Resources Inc., a company branded as “America’s Oil Champion”.

Hamm and his ex-wife Sue Ann Arnall spent nine-weeks in a trial that was shrouded in secrecy in order to protect the business relations and corporate secrets of Hamm’s company.

The main issue at trial was whether Mr. Hamm’s business acumen contributed to the substantial increase in the value of the company during their 25-year marriage, or whether market forces were the pivotal factor in its increase in value. Mr. Hamm argued that it was not his business expertise, a position that would substantially reduce his wife’s share of Continental’s value.

Imagine a CEO suggesting that a company grew in leaps and bounds, but it had nothing to do with his talent or business skills. Unhappily for Mr. Hamm, the court rejected his theory and awarded Ms. Arnall almost $1 billion dollars. But don’t feel sorry for Harold Hamm, he retained the company and a large chunk of his enormous wealth, totalling about $2 billion dollars.

Hamm’s lawyer declared it a victory, however, as the price of oil fell, and Continental shares lost value, he returned to court to persuade the judge to order a downward adjustment of his wife’s portion of the assets. The Court refused.

Meanwhile, Ms. Arnall was never happy with a third of the assets and filed an appeal.

Earlier this week, Mr. Hamm sent a cheque to his ex-wife for the sum of $975 million, but following her lawyer’s advice she refused to cash it, concerned that her acceptance of the money would prejudice her appeal.

Her refusal to take the money reminds me of a case I handled a decade ago. In my case the parties had a marriage agreement which provided that if the marriage ended, the husband would pay the wife the sum of $2 million dollars.

Sadly, the marriage ended, and as counsel for the husband I advised him to send a cheque for $2 million to his spouse. By then his wife had made it very clear through her lawyer that she believed the agreement was unfair and that $2 million was not nearly enough.

My client reluctantly provided me with a cheque that I delivered to his wife’s lawyer. A few days later she sent the cheque back to me. Another few days passed and I sent the cheque back to her. This time she kept it and cashed it. At the time, the interest rates were very high and my calculation of lost interest on the funds was substantial. A trivial matter for the very wealthy…

It’s “wait and see” as to how Ms. Arnell fares with her appeal, but she must be bolstered by the trial judge’s comments that she may be eligible for spousal support. Hard to believe that $945 million is not enough money to support yourself!

Lawdiva aka Georgialee Lang