Shares not included in division of net family property in recent Ontario Superior Court of Justice case

Tremblay v. Tremblay

2016 CarswellOnt 922

Ontario Superior Court of Justice

Family law --- Division of family property — Assets which may be excluded from property to be divided — Business and employment assets — Shares in private corporations — Ontario

Parties married in 1992 — In 1993, husband's father, M, hired husband for his electrical business, which was owned by holding company, M Inc. — In 2009, M implemented estate freeze, which involved corporate reorganization — M's desire was to restructure ownership of M Inc. to allow growth to accrue 50 percent to husband's family and 50 percent to M's family — As part of estate freeze, common shares of M Inc. were equally divided between family trust in husband's name, Trust 1, and family trust in M's name — Parties separated in 2012 — Wife sought division of net family property (NFP) pursuant to Family Law Act (FLA) — Wife sought to have common shares of M Inc. held by Trust 1 (subject shares) included in NFP and valued at $540,440 — Trial was held with respect to NFP and other issues — Subject shares not included in NFP — Subject shares did not have any value beyond their nominal face value — Husband did not have interest in M Inc. as defined by s. 4 of FLA — Funds in M Inc. were entirely under control of M — Evidence of this included that M controlled composition of board of directors, that no distribution of assets could be made without M's consent, and that monies making their way to M Inc. did not necessarily flow to common shares — While intention of estate freeze may have been to share profits equally as between husband and M, that was not what they actually did.