For families who own a business together, getting a separation or divorce can lead to more difficulty in getting through property division. Business owners, including those who own professional corporations, such as lawyers and dentists, must take steps to protect their assets. In a recent decision from the Ontario Superior Court of Justice, we look at a situation where, at best, the husband failed to protect the business assets he shared with his wife when he claims he hid $160,000 from their business in the trunk of the wife’s car.
The husband and wife involved in the matter were separated on November 23, 2019. They own to gyms together. The husband was the sole shareholder of one gym, while they owned the other together. They used the income from these companies to support their family.
Right around the time of their separation, the husband told the wife he was going to move $272,921.61 from a joint account in order to protect against creditors. Of that, he states he deposited $70,000 into the account of the gym they owned together. Another $10,000 was placed into new accounts for two businesses he had started, and that the remaining $160,000 was hidden in the trunk of a car, which the wife had possession of at the time of the trial.
Of course, the wrinkle at the heart of the matter arises in the wife’s statement that she did not see any cash in the trunk of their car.
Back in March 2020 the court issued an order requiring the husband to deposit $160,000 into the parties’ joint bank account. In that decision, the court wrote the husband’s “explanation is hard to accept, and, if true, was completely irresponsible. He withdrew the parties’ life savings from a secure location, the bank, without the consent of the (wife).”
The court also made mention of a sworn affidavit by a woman who said she was in a relationship with the husband from April 2020-July 2020, and that when he was getting ready to leave the country he asked her to look after a large bag of money for safekeeping.
The wife wanted the court to find the husband in contempt for ignoring this order as well as others. The court answered that while the husband failed to abide by the instructions to deposit the $160,000 in a joint account, that alone isn’t enough to find him in contempt. However, the court used the opportunity before it to remind the husband that court orders are not suggestions, and that if he continues to ignore them, he could lose his ability to participate in litigation with the wife.
As a remedy, the court provided the husband with 30 days in which to deposit the money.
At NULaw our family law team has years of experience guiding business owners and entrepreneurs through changes in their personal lives. Our goal is to fully understand the nuances of your venture, protect your assets, and safeguard your financial future as your circumstances evolve. Contact us online or at 416-481-5604 to book a consultation.