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Change in economic circumstances factor in divorce deals

TORONTO A sharp decline in a spouse’s post separation assets can be a factor in coming to a divorce settlement, Ontario’s top court ruled Wednesday in a decision that could have profound consequences for separating couples as the economy tumbles.

The case, involving a couple who split more than seven years ago, turned on whether normal rules for sharing assets would be grossly unfair to the ex husband given the downturn in his business fortunes.

“In my opinion, a court may take into account a post separation date change in the value of a spouse’s assets, and the circumstances surrounding such a change, for purposes of determining. whether equalizing net family properties would be unconscionable,” Justice Robert Blair wrote on behalf of the Ontario Court of Appeal.

The couple, Barbara and Harold Serra, married in 1976, separated in November 2000, and divorced in 2003.

During the marriage, Serra ran a highly profitable textile business in Ajax, Ont., that allowed the couple to live a luxurious lifestyle that included expensive cars and vacations.

Barbara Serra, who is in her late 50s and was 17 when she met her future husband, spent six months every year at the couple’s condo in Florida.

At the time of their separation, Harold Serra’s stake in his business was valued at between $9.5 million and $11.25 million.

Despite Serra’s best efforts, the value plunged dramatically amid, among other things, stiff competition from cheap Chinese imports and changes in trade policies.

“The decline in the value of the business could not be attributed to any fault or lack of effort on the part of Mr. Serra,” the court found.

Under Ontario law, the separation date is typically used for appraising a couple’s net worth, and the courts have held they have no discretion to change that.

Serra, who is in his 60s, argued it would be “unconscionable” to use that date.

Doing so meant paying his ex wife about $4.1 million more than his total net worth but the trial judge ruled she had no power to take into account the precipitous decline in the value of his business.

The Appeal Court found the trial judge was wrong.

“The trial judge erred in refusing to take into account the market driven downward impact on the value of Mr. Serra’s interest cheap jerseys in Ajax Textile,” Blair wrote.

“I am satisfied that an equalization of net family property would be unconscionable, given the dramatic downward turn in Mr. Serra’s fortunes and the factors giving rise to, and surrounding, it.”

While the “threshold of unconscionability” is high and circumstances have to be more than just harsh or unfair, a settlement that would “shock the conscience of the court” cannot stand, the Appeal Court ruled.

“An equalization http://www.cheapjerseys11.com/ of net family property that requires Mr. Serra to pay more than his total net worth and arguably as much as twice his net worth because of a marked decline in the value of his major asset post separation over which he had absolutely no control and in spite of his best efforts to save the business. is, in my view, unconscionable.”.

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