Division of Property
Divorcing Couple Running Illegal Marijuana Business Ordered to Divide Assets
A British Columbia court recently dealt with the issues of property division and spousal support where a separated couple had run an illegal cross-border marijuana grow op for more than two decades and therefore had very little documentary evidence of their income for that period of time.
Lack of Documentary Evidence
Due to the nature of their business, their income was cash only and they kept no business records. At trial, all evidence about their income was “oral, inferential, thin and often contradictory”. The court noted that the credibility of both parties was an issue.
Despite the lack of documentary evidence, the court was able to make a number of conclusions with respect to both division of property and spousal support.
The court noted that in 1998, the ex-husband began started his own company (LR Welding), where he worked as a stainless steel welder and fabricator and provided services for various contractors. The ex-wife played a “small role” in the company doing general office management for which she was provided with “a small salary”.
The court further noted that other than the brief time that the ex-husband worked at LR Welding, the majority of the family’s income since the early 1990’s was derived through their marijuana grow operations.
Despite the “limited evidence” about how much money was brought into the family, the court found that:
…it was clear that the family enjoyed a comfortable lifestyle on this income. They travelled in the United States and abroad. They financed 50% of their daughters’ university educations. They took winters off and generally lived well.
The court concluded that, based on the ex-husband’s testimony, he earned approximately $120,000 a year through the family’s grow op in California, the family’s annual income between 2007 and 2012 was at least $120,000 USD.
Division of Property
Based on s. 81(b) of British Columbia’s Family Law Act, each spouse in a separation or divorce is presumed to have a 50% interest in all family assets. This presumption can be rebutted in situation where equal division is significantly unfair.
Both parties agreed that their liquid assets had been divided at the time of separation (or shortly after), and that there were no family debts at the time of separation.
Due to the nature of their business, the family had moved often during the marriage, owning homes in Coquitlam, Langley, Mendocino (California), Red Deer, La Paz (Mexico), Leggett (California), Calgary, and Grand Forks (Michigan). At trial, the only assets left to be divided included the Grand Forks home, the property in Mexico, miscellaneous items including artwork, and profits from the sale of their Calgary home.
The ex-wife argued that all family property should be transferred to her in recognition of the ex-husband’s alleged failure to fully disclose his financial situation.
The court noted that, while it did find fault with the ex-husband’s “failure to be forthright in disclosing information on [his] financial statements and affidavits” these deficiencies were not sufficient to vary the presumption of equality in sharing the family assets acquired during the marriage and the court was not prepared to transfer all family property to the ex-wife.
The court therefore ordered that:
- The parties were each entitled to a 50% interest in the Grand Forks home (based on an appraisal of the property, the value of each party’s interest was $167,500);
- The parties list the Mexican property for sale, and divide the proceeds of that sale equally between themselves;
- The ex-husband was to retain all of the goods and furnishings in the Calgary property, and ex-wife was to retain all of the goods and furnishings in the Grand Forks property, with no claim on what was held by the other party;
- The ex-husband was entitled to retain $62,837.43 from the sale of the Calgary home, and the remaining proceeds of sale were to be shared equally between the parties. This gave the ex-wife $46,771.57 and the ex-husband $109,609 (these amounts were based on the finding that the parties had contributed equally to the mortgage payments, but the ex-husband paid the property tax and insurance)
No orders where made on cash held by the parties, as the court was unable to draw any conclusions on those amounts.
The court found that while both parties had been involved in the grow op, the ex-wife’s role was “minor and secondary to the [ex-husband’s] role”. She assisted the ex-husband with certain aspects of the business, including counting the cash received from marijuana sales and bundling it into $1,000, $5,000, and $10,000 bundles, which was then given back to the ex-husband “for him to deal with.” She was also involved in trimming and bagging the crops. The court found that her primary responsibilities during the marriage were to maintain the household and raise the children.
The court additionally found that, based on its assessment of witness statements and “the obvious inability of [the ex-wife] to run a successful operation on her own post separation”, the ex-husband was primarily responsible for selling marijuana and running the grow op.
The court concluded that the ex-wife was reliant on the ex-husband throughout their marriage, that she reported negligible income in the years after separation, and had a limited ability to work due to various chronic health conditions.
The court found that the ex-wife was entitled to both compensatory and non-compensatory support from the ex-husband in accordance with the objectives set out in the Divorce Act, noting:
[The ex-husband] focused on building a successful, albeit illegal, business during the marriage. He was assisted to some extent by [the ex-wife], but I find that he was the main driver of the family business. Through the efforts of [the ex-husband] the family enjoyed a reasonably high standard of living throughout the marriage. In addition, [the ex-husband] was able to maintain his skills in the metalwork trades, and has proven adept at re-entering that trade at various points in his life, including in his mid-50s when he began working in the oil fields. [The ex-wife], on the other hand, was primarily responsible for raising the children and maintaining the household. While she assisted in the family business, she did not develop skills which have proven to be sufficient to allow her to become economically independent. Given the length of the marriage, [the ex-wife] is entitled to a level of support from [the ex-husband] consistent with their different but equal contributions to the family.
The court noted that, based on a previous interim order which had imputed an income of $80,000 to the ex-husband, he was obligated to pay the ex-wife $2,000 per month (of which he still owed $98,262 in retroactive support). The ex-husband was ordered to pay this sum.
The ex-wife further sought a lump sum representing the ex-husband’s obligation to provide ongoing spousal support. The court found that the circumstances in this case(including the ex-husband’s failure to truthfully disclose his income) favoured a lump-sum order.
As such, in addition to paying the retroactive support still owing to the ex-wife, the ex-husband was also ordered to pay future spousal support of $36,432, for a total of $134,694.
The court granted the parties a divorce, effective on the 31st day following the order, and further ordered that neither party was to have contact or communication with the other, except through lawyers.
At Jason P. Howie, our highly experienced Windsor family lawyers regularly handle complex property division and spousal support matters for clients in Windsor, Essex County and throughout the region. We approach property division and spousal support as we do all family law matters, with a focus on providing individualized attention and legal advice tailored to the unique needs of each client. To speak with us about your situation, call 519.973.1500 or contact us online. Many of our clients are referred to us by former and current clients, as well as by lawyers, accountants and other professionals.