Wife Gambled Away Company Assets: Husband Gets Money Back

By Vancouver & Calgary Family Lawyer Marcus Sixta

We are proud to announce our latest family law success at the British Columbia Supreme Court.

Our client was successful in proving that his wife had breached her fiduciary duty to the family business by gambling away nearly $700,000 during the marriage. This loss of family property due to gambling occurred over a period of five years leading up to separation.

This unusual case combined a corporate and family law action into one trial. The wife argued that this could not occur, but the judge found that the Court had the jurisdiction to entertain the corporate and family law actions at the same time.

The Court also found that where one spouse breaches a fiduciary duty against a corporate family asset during the marriage, the terms of the Family Relations Act are broad enough to allow for an unequal division of family assets.

This case provides protections for corporate family as the Court stated:

[281] In my view, a proved breach of fiduciary duty, breach of trust or fraud by on spouse toward a corporate family asset, is captured by s. 65(1)(f), even where the allegedly wrongful conduct occurred well before separation. As such, the existence of parallel civil and family law proceedings is reconcilable.

[282] To hold otherwise would mean that a spouse in a fiduciary role is at liberty to commit actionable wrongs against a corporate family asset, causing substantial losses, but as long as the impugned conduct did not occur "shortly" before separation, as contemplated by Newson, the resulting deprivation could not be given effect, even though an equal division of that asset would be abjectly unfair. Or, as noted by Justice Warren in B.W.M. v. J.L.M., the impacted company would have no ability to recover for the wrongful acts, including any common law entitlement to punitive, aggravated or special damages: at para. 148. This cannot be.

As a result, our client will get paid back half of gambled funds from the division of family property. The Court has yet to decide the issue of legal costs.

The decision of the Supreme Court of British Columbia can be found here.

Thanks to David Dahlgren at Burrard Law for his skilled work at trial as corporate counsel.

The British Columbia family lawyers at Crossroads Law are frequently retained on high net-worth separations and divorces involving businesses. Contact us for more information or to set up a consultation.

The information contained in this blog is not legal advice and should not be construed as legal advice on any subject. The information provided in this blog is for informational purposes only.