Judge Awards $1.3 Million to Wife After Finding Husband’s Hidden Assets and Forged Documents
A British Columbia woman who had been earning around $900 a month working in the laundry room of a hotel owned by her now ex-husband, has been awarded more than $1 million in spousal support after a court found that the ex-husband had hidden substantial assets from her in an attempt to reduce his financial obligations towards her. The amount awarded was more than 35 times the approximately $35,000 she had originally requested in support.
The husband was born in India, and emigrated to Canada, in the 1970’s, where he and his brothers started a construction company and a numbered corporation which owned commercial and residential real estate including a hotel, a restaurant, and a mixed-use high rise.
The parties were married in India in 1995 through an arranged marriage. They met one another for the first time on their wedding day. The wife was 32 years old when she married, had a Grade 10 education, and had never worked outside of the home.
Shortly after the wedding, the husband returned to Canada, leaving his new wife in India. He eventually sponsored her immigration package. The wife arrived in Canada in March 1996, with only some gold jewelry and the clothing she was wearing. She spoke little English.
The parties had a son in April 1997. The wife occasionally worked in the laundry room of the hotel owned by the husband’s numbered corporation, earning approximately $900 per month but sometimes working for free.
In January 1999 the wife and son left on a trip to India. The husband had to remain in Canada due to an illness in the family. The wife was supposed to return within six months, but did not so, and gradually stopped contacting the husband. The marriage effectively ended.
The Fight Over the Couple’s Child
In July 1999, the husband filed for custody of the son. He obtained an ex parte order granting him interim sole custody and guardianship of the boy, allowing him to travel to India to bring him back to Canada. He did so, and managed to bring the child home without the wife’s knowledge by obtaining a temporary passport from the Canadian consulate.
Once she became aware of what happened, the wife returned to Canada to fight for custody. She also brought a counterclaim seeking spousal support and division of family assets.
A Complex Financial Web
Since the breakdown of the marriage, the wife had worked only intermittently, usually as a cleaner on a contract basis. She had been unable to secure full-time employment and her earnings were sporadic. When she first returned to Canada, she lived in a shelter. When the husband began to pay spousal support, she moved into an apartment. When he stopped paying, she relied on social assistance.
In the summer of 2001, while legal action in this matter was ongoing, the husband prepared and fraudulently backdated several trust agreements in an attempt to prove that his shares in the numbered company that he owned with his brothers were always held in trust for one of his brothers. This allowed him to negotiate a consent order in 2006 that required him to pay the wife a total of $12,000 in spousal support before ending any legal obligation he had towards her.
In the interim, a legal battle heated up between the husband, his father, and his brothers over the ownership and running of the family business. After a trial that lasted 86 days, the husband revealed that he had created the trust documents “…for an improper purpose, namely to protect my shares in the two companies from possible claims by my wife.” The husband was forced to admit that the current fair market value of his actual interest in the companies was $1.5 million and $8.4 million respectively.
The Division of Assets
The wife claimed an interest in the husband’s companies as well as any other unknown assets that he may not have disclosed, including a pension and real estate in India.
The court found that the wife made both direct and indirect contributions to the husband’s businesses, contributing directly through her labour in the laundry room at the hotel, and indirectly by providing child care for the son and general household management. Such work made it easier for the husband and his brothers to build the businesses. As such, the husband’s shares in both companies could be classified as family assets and were divisible.
The wife argued that an appropriate division of assets would be 60/40 in favour of the husband, pointing to the potential of further undisclosed assets. The husband argued that the wife should receive a minimal allocation on the basis that any contributions that she made to the operations of both businesses were minimal. He also argued that after more than 10 years of litigation with his family members “no stone ha[d] been left unturned and it would be unreasonable to conclude that any significant assets remain undisclosed at [that] stage.”
Factors Considered by the Court
The court drew an adverse inference against the husband, finding that because he had not been forthcoming about his assets in the past, there was a strong chance that he was continuing to conceal assets, and added 2% to the interest apportioned to the wife to account for this.
The court also noted the following:
- The marriage was short (4 years total, with the wife only being in Canada and able to make direct and indirect contributions to the family assets for 3 of those 4 years);
- The wife had been wrongly deprived of a remedy for at least a decade;
- Shares and other significant assets were acquired during the marriage with pre-marriage funds;
- The wife had come to Canada for the sake of her marriage. While here, she encountered a foreign language and culture and faced challenges becoming financially independent following the breakdown in the marriage.
The court ordered that the wife should be apportioned a 12% and 17% interest in the shares of each respective company (totaling $1,263,000), with a 2% interest added to account for potential missing assets. In addition, the court ordered the husband to pay the wife $150,000 in compensation, and $500,000 within six months in lieu of a declaration of title to the shares. In addition to these amount, the husband may also have to pay special costs for affecting the litigation through his misconduct, with the court noting:
An award of special costs is not just compensatory. It also serves an important denunciatory purpose. The court must distance itself from reprehensible conduct such as occurred here. The misconduct in this case involved more than just an attempt to conceal assets, which is bad enough. It was a conspiracy to commit fraud, including uttering several forged documents, supplemented by repeated lies under oath calculated to sustain the deceit. That misconduct was serious enough, once it occurred, to taint the entire litigation from then on.
If you have questions about spousal support, or child support or any other obligations following a separation or divorce, speak with experienced Windsor family law lawyer, Jason P. Howie, at 519.973.1500 or contact us online. We serve clients in Windsor, Essex County and throughout the region.