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Goldwater, Dubé applauds $2M “De Facto Business Partners” decision by Quebec Superior Court

Goldwater, Dubé, a Canadian leader in family law since 1981, is pleased to announce an important Superior Court judgment it helped mount granting a compensatory allowance and lump sum of approximately $2 million to a divorced woman who, the judge ruled, co-managed and expanded her ex-husband’s business without fair compensation.

In her July 9 ruling, Honourable Justice Nathalie Pelletier of the Superior Court awarded the woman the allowance totalling $1,985,086, to be paid by her ex-husband within 90 days, in addition to monthly spousal and child support payments. The Court deemed that the husband’s successful business endeavours were due in large part to the wife’s hard work, both at the office and home.

“This decision validates a spouse’s extraordinary contribution to the marriage and confirms that, independent of the parties’ matrimonial regime, marriage remains a joint venture,” explained Goldwater, Dubé’s Me Eric Kirshner, a senior litigator with nearly 30 years experience who was lead counsel on the file. “In view of the fact that the parties were married under the regime of separation as to property, one partner had to rely on the doctrine of compensatory allowance, which is an equitable remedy providing compensation when one spouse is enriched and the other spouse is impoverished without justification.”

De Facto Business Partners

“This is an important ruling for women’s rights in Quebec, and we thank Judge Pelletier for her wisdom and clarity,” said Me Goldwater. “What the Court has said is simple: a marriage contract signed before a notary at the outset of a marriage will not shield a husband from having to share the value of assets acquired during the marriage, where the wife has actively contributed to these assets by dint of her work inside and outside the home. These ‘old school’ arrangements where a wife ‘signs off’ to sharing the fruits of a marriage will be disregarded when incompatible with Quebec law which is founded upon fairness and justice.”

The case centres on a 20+ year relationship between “Sylvie” and “Theodore” — pseudonyms to protect the privacy of the parties — where Sylvie worked with Theodore without fair compensation, the judge ruled, helping with project management, bookkeeping and other managerial duties, on top of daily domestic tasks and raising children. Theodore argued that his wife had little education and a modest income when they married, and she enjoyed the lifestyle “he” provided to her. The judge noted wryly that when Sylvie left his company, Theodore had to hire three new employees to replace her.

For nearly a decade of their marriage, Theodore would regularly take profits and keep them in his holding company, the judge wrote, telling Sylvie it was all going in the same “pot” for the “common good” of the couple’s retirement fund. Throughout the relationship, Sylvie was never paid a salary or benefits commensurate with her efforts, the judge concluded.

When they separated in 2017, despite Sylvie’s efforts, she had about $ 200,000 to her name while Theodore’s assets totaled over $ 4.5 million.

Sylvie argued successfully that she was always considered a “boss” in both the workplace and the broader community, along with Theodore, and that their contributions to their numerous ventures were comparable. Theodore argued that he alone had the expertise to run the business, and the Judge riposted that without his wife’s support and efforts, he would not have been able to build the business alone.

Parallels with Nathalie vs Pierre

Earlier this year, Goldwater, Dubé served notice to the Quebec Government that it is again challenging alimony and family patrimony laws in the “Nathalie vs Pierre” case, a sequel of sorts to the so-called “Eric vs Lola” affair, as unwed Quebec spouses still do not share the same rights as their officially married counterparts, even after decades of cohabitation and, in that case, business collaboration.

Similarly, the “Sylvie vs Theodore” case — though the couple wed in 2000 — raises important questions about the roles of many spouses as “de facto business partners,” as Me Goldwater described it, facilitating their partners’ professional growth.

“This is a benchmark case for Me Kirshner that we hope serves as a warning signal to medium and high net worth Canadians about the historically exploitative nature of prenuptial agreements (marriage contracts) and other such financially abusive practices between spouses,” Me Goldwater added. “If you think your marriage comes with a free servant built-in, you are in for a surprise down the road. Marriage is a partnership.”

Goldwater, Dubé would also like to acknowledge the contributions of co-counsel Me David Chun of Montreal’s Lavery firm.

Photo: Bill Oxford // Unsplash