On separation, a wife was able to claim a substantial share of her husband’s business on the basis that her work around the home and her income from selling cosmetics freed up her husband’s time and capital to develop what would otherwise be his separate property.
A
Generally, business assets held at the time of a marriage are separate property and remain separate property when the relationship comes to an end. But any increase in the value of separate property attributable to the non-owner spouse is to be divided according to the contribution provided.
The Supreme Court drew a distinction between passive investment assets and a business requiring physical attention and application – such as a farm.
In respect of Cloverlea, the wife did not physically work on the property. But the court ruled that a spouse could benefit separate property without physically working on it. Indirect assistance could suffice. In this case, the work done around the home and the wife’s employment outside the home were assistance. Her financial contributions helped minimise farm debt. There was evidence that part of Cloverlea would have been sold to reduce debt, but for her financial contribution. It enabled the husband to contribute more resources to the farm: his separate property. It did not matter that the husband in fact provided the greater proportion of cash for household living expenses.
As a result, the court ruled that the wife was entitled to 40% of the increase in value of the Cloverlea business over the period of the marriage. This amounted to just under $300,000.
As regards Poplar, the husband’s share of the partnership increased during the marriage on inheritance from his father’s estate. Generally, inherited assets remain as separate property, unless the assets are acquired for the “common use or common benefit” of both spouses.
Finance to develop Poplars into a vineyard was secured over the family home. The husband had told his wife that “we own half [the vineyard]” indicating that his half share of the vineyard partnership was being treated as a marital asset. Profits which would otherwise be available for family expenses were ploughed back into developing the vineyard.
The court ruled that the husband’s share of increases in the value of the Poplar partnership from the date of conversion into a vineyard to the end of the marriage was relationship property to be split 50/50. The wife’s share amounted to $283,000.
Rose v. Rose – Supreme Court (19.05.09)
08.09.008