© 2008  Karen Selick

An edited version of this article first appeared in the November 18, 2008 issue of the National Post.
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Judges Make Justice Unaffordable...Again!

The Supreme Court of Canada recently refused to hear an appeal in the matrimonial case LeVan v. LeVan, thereby passing up a splendid opportunity to undo some major mischief done by Ontario’s lower courts over the past few years.

The facts of the case include more wrinkles than can possibly be described here.  However, in a nutshell, the lower courts nullified a marriage contract under which the wife had apparently agreed, in case of a separation, to forego the property equalization and spousal support rights that Ontario law would normally bestow upon her.    

Seven years after marriage, the couple split up.  Mrs. LeVan then applied to the court for all the things the contract said she wouldn’t get, and the court gave them to her: $5.3 million in property equalization and $79,680 yearly in spousal support. 

The court found the contract “unfair” for several reasons, but the one I want to focus on here is the fact that the husband had not disclosed in advance the dollar value of his assets.  His family owned a controlling interest in a large Canadian manufacturing company.  In other words, Mr. LeVan was rich—worth almost $15 million—but he neglected to tell his fiancée.  What he did tell her was that if she didn’t sign the marriage contract, there would be no wedding.  

Putting it bluntly, the bride had two options:  either sign the marriage contract and get virtually none of the husband’s money, or not get married at all—in which case she would obviously get none of the husband’s money.  Note that both options included the part about not getting any significant amount of the husband’s money. Therefore, how could it possibly have mattered whether she knew the dollar value of his assets, since she wasn’t going to get any of them either way?  Zero percent of any number is still zero.

Now, it’s possible that Mrs. LeVan didn’t actually understand that she wouldn’t be getting any of her husband’s money.  The contract was such a hasty, botched-up mess that it’s not even clear whether the dyslexic husband or the three lawyers involved in negotiating it understood the final product. But that’s a different issue. 

My beef, and the concern of lawyers across Ontario, is that the courts have now made it virtually mandatory for betrothed individuals to disclose a dollar value for their assets, supported by independent appraisals, even if their marriage contract denies them any rights to each other’s wealth and even if both parties understand that.  Our paternalistic courts have held that without knowing “what asset base might potentially grow”, couples can’t understand what they are giving up.  So even if they’re determined to marry for love rather than money, they’ve got to produce those numbers.

During the negotiations, Mr. LeVan’s lawyer had responded to a request for financial disclosure with the objection that a “full-blown valuation” would cost “at least $10,000.”   Ha! 

By the time the trial was over, the wife’s appraiser had billed $244,753 for valuing the husband’s pre-marriage and post-separation assets, and for appearing as a witness. The husband’s appraiser estimated, even more outlandishly, that the valuations would cost over $500,000.

Faced with costs like this, what individuals in their right minds would ever get marriage contracts prepared?  Even my middle-class clients will look askance at paying $1,000 extra to have their houses and pensions appraised when the outcome won’t make one iota of difference. How many people have just been effectively deprived by the courts of their statutory right to opt out of property equalization? 

The ultimate irony is that the Supreme Court’s decision not to tackle this case was made by a panel of three judges including Justice Ian Binnie.  In a 1999 speech, Justice Binnie denounced “astronomical” legal expenses, saying “I am staggered at the amount of money law firms can burn up in addressing issues. You can burn up thousands and thousands and thousands of dollars unnecessarily.”  Then, in a letter published here in the National Post, he wrote: “…the fault lies with the structure of civil litigation, which pushes conscientious lawyers to engage in lengthy pre-trial procedures that are out of proportion to the matter in issue and are in that sense ‘unnecessary’ to produce a just result.”  I responded in these pages with this column arguing that, frequently, it is judges who make justice unaffordable. 

Justice Binnie, it appears that this is another case where you judges were not part of the solution.  Which means…



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       December 7, 2008