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Case Study of John and Sally – Property Issues

The Collaborative Process provides many benefits. Not only can it help keep things productive and respectful, it opens the lines of communication and maximizes the prospect of a positive outcome and friendly future relations. Divorce lawyers are here to help and John and Sally are a great example of how the Collaborative Process can work.

John and Sally were married for 18 years and have two teenaged children. Both John and Sally have well-paying jobs and earn about the same salary. Over the course of their relationship, they have accumulated a number of assets and debts. Actually, John and Sally are not real people but their story is a composite of real stories.

John came to me for representation. He and Sally had agreed to work out a resolution through Collaborative Process instead of going to Court. Custody of the teenagers was not an issue. The children had a close relationship with both parents and were already going back and forth between their parents’ homes.

Although communication was difficult regarding other issues, including the cause of their separation, John and Sally could communicate regarding the children. Their difficulties revolved primarily around the division of their personal and shared property. Sally retained a Collaboratively trained lawyer, and we had a series of four-way meetings. Initially, we signed the Participation Agreement and dealt with urgent issues. We then began to accumulate documentation regarding their assets and debts on the date of separation and marriage.

It was John’s decision to separate. Sally was very upset about the separation, which was unexpected to her. John felt very guilty about it. In recognizing that the negotiations would take longer than ususal, the other lawyer and I arranged for John and Sally to retain the services of a Family Specialist to ensure both parties were on a level playing field. With the help of the Family Specialist, John and Sally were able to explore their emotions and learn techniques to negotiate effectively with each other and the children.

The Family Specialist also helped them to remember that the negotiations were not the place to even the score for the hurts inflicted during the marriage and separation. Both parties saved a lot of money by getting assistance from the Family Specialist early in the process, instead of venting their emotions with their lawyers during the four-way meetings.

John had received an inheritance during his marriage, but it had been spent on household bills and so was irrelevant according to the law. Had he kept the inheritance in a separate bank account or used it to purchase a particular item, the money or item would have been excluded from the calculations. In other words, he would not have had to share it with Sally. But in this case, the inheritance was used to pay household bills and was gone. John was very upset when heard how the law would treat his inheritance. We ended the meeting at an impasse. John was too upset to continue. The lawyers were worried the process would not proceed further.

John met with the Family Specialist. She helped him gain some perspective. At the next meeting, John said he accepted the law and that he would not get credit for his inheritance. Surprisingly, Sally said that she felt John should be given something to compensate him for this loss. She wanted to recognize John’s inheritance. A judge in Family Court could not have done this, but because John and Sally were in the Collaborative Process, they could be more creative.

We spent one meeting discussing the household items. The lawyers kept the whole conversation light by joking about the various items in dispute. If we had been in Court, it would have been a real battle. Our humour helped John and Sally to maintain a healthy perspective. They remembered that the household items were just minor “things”, not that important in the grand scheme of life.

It wasn’t always smooth sailing. A couple of items triggered a strong argument, but with the help of the lawyers, they were able to get through it.

We even shared some laughs. Sally had the master bedroom suite. When trying to determine a value for the master bedroom suite that Sally wanted, we considered the purchase price and the prices listed in the local classified ads. John jokingly said that the bed was in good shape, since “It had only one person sleeping on it for about two years (he’d been sleeping on the couch) and it had only been used for “sleeping” prior to that!” We all had a chuckle, including Sally.

Some of the more sentimental items were difficult to divide, but after some discussion, they each compromised a bit and a resolution was reached. Sally was perhaps more generous than she had to be, as she was considerate of John having spent his inheritance on family expenses during the marriage. She also knew that in the next couple of years she would be receiving an inheritance, which she would not have to share with John.

One meeting was spent reviewing the entire financial picture. A Financial Specialist had already met with John and Sally and gathered proof of the couple’s debts and assets (bank statements, credit card statements, RRSP statements, etc.). She had also explored the consequences of various settlement options with them, which made the lawyers’ jobs easier, since John and Sally were well prepared when we began negotiating an agreement. The parties had a lot of debt. Sally had a pension from her employer, so we agreed to have a valuation done by the pension administrator. The home had been sold and the proceeds divided, so it was not an issue.

John had a small business with ten employees. The parties did not know what the business was worth, so John and Sally decided to jointly retain a local Certified Business Valuator to determine its value. The lawyers advised the valuator to be completely neutral in his valuation. We also asked him to not generate a written report, but rather to meet with the parties to discuss his conclusions, thus minimizing the cost. Had we been in Court, we probably would have had to retain separate business valuators, who would have completed expensive reports and disputed each other’s results. It would have been another battle.

When the business valuator completed his investigations, we had a meeting to discuss the value of the business. Sally was not involved in the day-to-day operations of the business, so it was helpful for her to hear directly from the valuator how he determined the business’ value. Both Sally and John were comfortable with the valuator’s conclusions, so a second opinion was not needed.

The final meeting consisted of putting together all the information and discussing settlement. We now knew the value of the assets and debts on both the date of separation and the date of marriage, and were able to reach a settlement. Since Sally’s pension was worth about the same and John’s business, it was agreed that she would keep her pension and John would keep his business. They would also divide their debt equally between them. Because most of the debt was in John’s name, Sally agreed to get a loan from the bank to pay off some of John’s debt. They both had the children for the same amount of time and both earned approximately the same income, so it was agreed that neither would pay the other child support. Instead, they agreed to equally share the costs for the children (clothing, extracurricular activities, etc.) and to communicate regarding the children via email.

At the last meeting, I had a draft separation agreement prepared for their review. Some minor changes were made to the agreement, and it was signed by both John and Sally. We shared a glass of champagne and orange juice to celebrate the resolution of all issues. The parties were very satisfied and were able to move on with their lives. The conflict between John and Sally was kept to a minimum, which certainly benefited the children.

To learn more about Ontario property division laws when separating or divorcing, read our guide and learn the answers to your most common property division questions.

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