Link to the original Supreme Court decision (June 12, 2008).
Case summary: A couple separated "after 12 years of marriage during which the wife remained home to care for the parties' two children." The divorce court split $1.7 million of assets equally between them and awarded the wife support payments "based on the husband's income of over $200,000 per annum." However, the husband also had contingent tax liabilities associated with tax shelters, the details of which could not be predicted precisely at the time. The divorce court ordered that those liabilities also should be split equally when and if they came due. The Court of Appeal set aside that order saying that it was "a freestanding order apportioning debt between the spouses," forbidden by the British Columbia Family Relations Act, and assigned the contingent liabilities to the husband alone. The question now is whether that decision should stand.
Opinions:
(Bastarache, McLachlin, LeBel, Deschamps, Fish, and Rothstein): Although we are not allowed to assign one spouse's debt to the other, we are required to make a fair division of assets and that can and often does include changing the asset split to equalize the overall division including "family debts" incurred to benefit them both. That is the situation here: the tax shelters were to benefit the family, even if created in the husband's name. The order for them to split the liabilities equally when and if those came due should be treated as that kind of equalization payment rather than a division of debt, and should be allowed. Majority decision.
(Abella): Even with the equal division of assets and the support payments, these two parties are not economically equal. The husband has a large income and a lot of business experience; the wife has been out of the workforce for 12 years, her job prospects are iffy, and she is much less financially experienced. They are not equally well equipped to deal with the contingent liabilities and it is not fair to split those equally. Assigning them to the husband, who can better handle them, is appropriate.
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Matt from 216.75.190.36 at Thu, 31 Jul 2008 22:45:14 +0000:
With respect, I think Madame Justice Abella is colouring way outside the lines on this one. The Supreme Court shouldn't be just deciding the case based on what's fair as if it were a completely fresh case (de novo); that is the bottom-level court's job (the "trier of fact") and it's not fair to put the parties through three or four repetitions of the original case with only the last one counting, nor is that fair to the lower level courts. Why bother having the lower level courts if it's just going to be a matter of redoing the basic fact questions at every level? Instead, what the Supreme Court is *supposed* to be doing is asking whether the lower level courts screwed up in some really major way, and if so, putting that right. Abella's decision doesn't really seem to even consider that kind of question - she's only talking about what would be "fair," de novo, and I think the original divorce court should make that decision. (See all the other cases and opinions that talk about "deference" to lower-level courts.)
But with that said, I think the majority's reasoning sounds pretty hokey too. If the statute says you're not allowed to divide up debts, but you say you're allowed to modify the division of assets in order to have the same effect as if you'd divided up the debts, then what is the point of having that statute at all? It looks a lot like Eldred v. Ashcroft, where the US Supreme Court said "Okay, you can't make copyright eternal, but you can make it any finite length and extend it as many times as you want, even retroactively, so as to have the same effect." That was a lousy decision and "You can't divide debts, but you can charge them against assets when you divide those so as to have the same effect" looks like it's going in the same direction.
However, it seems like the point can legitimately be raised that these "contingent liabilities" may not really be "debts" of the kind the legislation is meant to cover anyway... and the "no dividing debts" legislation itself sounds questionable and unfair and (if and only if the parties raised this - the Court shouldn't be the people to introduce it!) maybe there could be a Charter challenge on whether that legislation should be allowed.
I'm kind of tempted to vote with Abella even though I don't like her reasons, because I also don't like the majority's reasons. It's a tough case to call.