Division of Property
Former Spouses Can’t Agree On Value Of Business And Home
Dealing with the division of property can be one of the more complicated elements of going through a divorce or separation. If you and your spouse have substantial assets or debts, determining who is both entitled and responsible for each is important, and comes with risks. We recommend dealing with a third party to ensure a spouse is truthful in their financial disclosures. In a recent high-new-worth divorce, the Ontario Superior Court of Justice was faced with two independent asset valuators (one representing each party) who offered vastly different figures about the value of the family business and matrimonial home.
The couple were married for 24 years. At the time of the hearing they had three children, all of whom were adults. The wife had worked as an optometrist, but stopped working when the husband became extremely successful in the computer software business. One business he started was sold to AT&T for about $31 million. This changed the family’s lifestyle considerably. They bought a large house in a wealthy Toronto neighborhood. After selling his first business, he started another business. The divorce proceedings dealt with a number of issues. Amongst those were the value of the family business as well as their former home.
A large gap in assessed value
The wife’s expert valuator came to a determination that the business was worth $52.5 million. Meanwhile, the husband hire his own expert valuator who stated the business was worth just over $24 million.
The court commented the determination of the value of the family’s property was ultimately the real cause of conflict between them. The court wrote of the importance of arriving at an accurate value, though. In its decision, the court wrote, “When it comes to debts and other liabilities, issues remain as to the appropriate amount of disposition costs (notional or otherwise) to be attached to the various assets. I must decide all of these issues in order to determine each party’s net family property (NFP) and the equalization payment owed from one of them to the other.”
While the couple agreed on the value of most of their assets, the valuators’ hugely different findings for the value of the business presented a challenge. The court addressed this challenge, writing,
“The valuators disagreed on both the values of both (the home) and (the business). In each case, each valuator, supposedly acting entirely independently, suggested values that benefitted the position of the party who had hired him. Similarly, when it came to expert opinion on (the husband’s) income, (the husband’s) expert, in particular, seemed particularly aligned with (the husband’s) position. Sadly, this is often the case.
“I have always been tempted to ask valuators whether their opinions would have been the same had the other party retained them. I have never given in to that temptation, but merely make the observation. It seems to me that in order to provide the court with truly independent, unbiased and reliable opinions, it would be preferable to require the parties to jointly retain a single expert, or, perhaps, to require the parties to fund an expert who would be retained by the court, at the parties’ expense.”
Regarding the value of the home, the court decided to not accept wither valuator’s figures. The wife’s valuator assigned it a value of $14 million, while the husband’s determined it was worth $17.5 million. The differences were the result of each valuator using their own set of measurements for the property as well as using different understandings of the value of neighbouring homes. The court ultimately arrived at its own conclusion, valuing the home at $15,5 million. The court took a similar approach to determining the value of the business, with its ultimate conclusion being that the business was worth $32 million.
If you have complex property division matters, you should speak to the experienced Windsor lawyers at Jason P. Howie Professional Corporation. We regularly handle complex property division matters for clients in Windosr, Essex Country, and throughout the region. We provide our clients with individualized attention and legal advice tailored to their unique needs. We can be reached online or by phone at 519.973.1500