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Financial Issues This forum is for discussing any of the financial issues involved in your divorce.

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  #11 (permalink)  
Old 01-14-2014, 01:33 PM
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And another

CanLII - 2002 NBQB 395 (CanLII)

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[127] Mrs. Dykeman claims an unequal division or an adjustment in the value of this asset claiming that Mr. Dykeman knowingly continued to trade in a risky stock despite its falling trend and at a time when the stock market itself was rocky. She says he should absorb the losses reasonably attributable to this reckless activity.
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Old 01-14-2014, 02:24 PM
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Thanks FB.

In my case compared to these and a couple others I read...I'd have some arguments to make on my side. For instance, I was unaware of the trading going on. He made a concerted effort to keep the activity secret including that kept the account solely in his name and he had the statements mailed to his brother's house in the U.S. to ensure I'd never see them.

Also, he traded without any expertise or expert advice...which again would lead one to qualify it as gambling.

However, this is pretty much what stands out in trying to make a case for Unequal Division of property.

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[23] Whether gambling can be “unconscionable” is a question of fact. Considerations to examine are discussed in the case of Naidoo v. Naidoo, 2004 CanLII 34415 (ON SC), (2004), 2 R.F.L. (6th) 362, 2004 CanLII 34415, [2004] O.J. No. 1458, 2004 Cars­well­Ont 1475 (Ont. S.C.). What portion of the family’s income was put at risk? Were the incomes significant enough that the gambling did not put the provision of essentials at risk? What resources did the parties bring to the marriage? Was the conduct condoned?
My situation doesn't really meet the bar for "unconscionable". My family's well-being was not put at risk during our marriage due to this activity. The money would simply have amounted to more assets to leave our children in an estate. In addition, I'm not coming out of my divorce situation in any debt or financial hardship and will still receive a substantial sum of equalization even with the losses. He doesn't benefit from the loses in any way either.

I will still instruct my lawyer to bring it up should my ex decide to be continue to be difficult in accepting my very fair offer. I've also made a comprehensive spreadsheet showing the losses which I think I might put in a frame and provide as a parting gift to my ex. It might be therapeutic in helping him avoid his tendency to boast about his expertise at trading. Nothing more pathetic than a braggart.




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Old 01-15-2014, 12:48 AM
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You might be really amazed in where the courts are at - or are leading towards - this document making direct references in Ontario decisions and supported even in cases where appeals were made - you would really have things to think about - I do not know how to attach pdf files but if you google:

here is the link:
http://www.macdonaldpartners.com/art...t_Remedies.pdf

TORT CLAIMS IN FAMILY LAW ľ THE FRONTIER
By Georgina L. Carson and Michael Stangarone
MacDonald & Partners LLP

it will come up - ddol1
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Old 01-15-2014, 09:50 AM
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Thanks ddol1.

There's always more litigation to be had in divorce. If I wanted to, there are other things in my situation that I could litigate and I'm sure that applies to most people here. But it doesn't make a lot of sense to do so.

What I thought last year due to my ex's absolute stonewalling over disclosure and the missing funds that I couldn't account for, was that my ex had embezzled a substantial sum of money out of the investment accounts.

But what actually happened is that I married, and stayed married to, an idiot. And I've long accepted my own culpability in that. Getting divorced was one of the smartest decisions I've made in my adult life.

I'm glad that I fought to get proper disclosure. It was worth it for me...I needed to know. But now its simply time to move on. Overall, I'm coming out of this situation extremely well and am grateful for that. You have to accept in divorce that, for most people, its not going to be perfectly equitable and you're not going to get completely vindicated for past injustices.
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Old 01-15-2014, 11:20 AM
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Regarding unequal division due to loses on the stock market.

I would hope that no one would obtain an unequal division based on this.

Totally disgusting to even make the argument when it is obvious if the person had made a killing trading stocks, that the spouse would definitely want half, and the courts would give them half.

My ex argued that I alone should pay for some back taxes that I owed when we split. She equally spent all the income that was taxed but wanted me to pay the tax bill on my own - amazing how greedy and selfish people get after separation.
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Old 01-15-2014, 11:34 AM
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billm I think PH was wondering if, unbeknownst to her, the ex had taken money from family coffers and gambled it away on stock market if she would have a claim for the losses in division of matrimonial property.

There is case law on this. From what I glean from cursory reading, it is important to determine whether the spouse knew about the trading or not. In determining this, some things that are looked at would include - what happened in past if/when gains were realized - were they put in family accounts. In other words, what was the typical disposition pattern? Was she ever made aware of past gains?

Very interesting subject. Some cases in BC about this but in many instances the wife knew about the trading account. PH's situation differs in that I believe she did not know about the account. Also, he might not have disclosed this at the time when divorce and matrimonial property division was considered. She seems to be ok with the 200k estimated loss. I personally can't afford to overlook that amount of money going "poof."
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Old 01-15-2014, 12:20 PM
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Billm:

First of all, I was totally unaware of one of the accounts that he kept to do this. I knew about the IRA account but had no idea that he was using the funds to day-trade. He had the statements from all the investment accounts mailed to a different address. He told me we didn't receive statements because they did paperless statements (which they also had) but he would frequently change the password to the account to keep me out of it and "tell" me what was in there. I take full blame for believing him. As I said, I have zero intention of trying any legal maneuvers to do anything about this. I consider it no different from having a spendthrift spouse who squanders assets which happens in bad marriages.

However, there is some interesting case law on gambling and what I was asking is if people considered gambling on the stock market with zero expertise on the same level as gambling.

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There is case law on this. From what I glean from cursory reading, it is important to determine whether the spouse knew about the trading or not. In determining this, some things that are looked at would include - what happened in past if/when gains were realized - were they put in family accounts. In other words, what was the typical disposition pattern? Was she ever made aware of past gains?
There were no gains in either one of the accounts but he did remove a substantial sum from the principle left in the invested amounts of the account that I didn't know about. My lawyer suggested that I ask for an accounting of where that money went but I can't be bothered since I'm not willing to stall the process any further waiting for more disclosure. Believe me, if there had been gains in the account, those would have been removed and used/put wherever he used/put the money he did take. He never mingled what he considered "his money" and our household money for any reason. Even years we could have used more money for home improvements or tuition or whatever...he would never consent to removing funds from any investment account and I agreed since I believed foolishly that he was saving for our retirement when he was actually day-trading large sums of money away. I paid all of the household bills and he used most of his income for investments.

Quote:
She seems to be ok with the 200k estimated loss.
The fact is that you're allowed to make bad investments. Just like if I had gone out during my marriage and spent egregious amounts of money on clothes, spas, and shoes....there isn't a hell of a lot my ex could do about it now.

With regard to the account I didn't know about that he removed accounted-for funds from...I definitely have a potential legal argument...but per the IRA account that I knew about, I could say that I didn't know about his gambling activity in the account but the reality is that I should have known. Realistically when I look back now, he wasn't worthy of my trust on other issues and I was willingly negligent to trust him in financial matters also. I consider myself a na´ve participant, not a victim.

I never had any issue with my own culpability in the fact that I married a financial idiot who squandered away large amounts of income...its one of the many reasons I wanted a divorce. My concern was that he was hiding income that he had embezzled out of our retirement accounts. I'm satisfied that there may be some amount that he's hiding but its probably not substantial enough for me to bother with.

Per my original post though. I do consider day-trading stocks bought without any personal expertise or professional consultation to be the same as gambling. And in circumstances where the other spouse wasn't aware of it and crucial family funds were used, I think I raises to the level of "unconscionable" which may qualify that spouse for unequal division.
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Old 01-16-2014, 01:02 AM
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I would agree that unreasonable losses that were caused by intentionally hidden activities using matrimonial assets, as in PH case, could be the responsibility of the lying spouse.

And that in the situation where gains were made, but also by lying/hiding the activity, those gains should be shared.

The key point is intentionally hiding the activity.
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Old 01-16-2014, 01:47 AM
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took me a while to do a short version...
it is when a spouse takes advantage of the vulnerabilities of the other, either through deceit, straight lies, in my case ( serious medical issues - which so many professionals have been brought speechless once they review the files for themselves; doesn't matter if it is bankers, doctors, now the psychologists). Lawyers!!

I have learned how hard it is for one to give honest review of a colleague's work - something against their legal code of ethics - the remedial reading specialists..... but regardless of how many professionals say "they have never seen the like of what my ex has been willing to do..... In the end I really did get it - and it is all to do with the kids and how I used to use the word "As the ex could just not stop using the kids as pawns".

Money is one thing - but to be told that you are being treated as I am not because I was a bad dad - it is now in/on the record files that it is due to the level of the worst level of child abuse that a parent can do to their own children.... to be told that their minds have been so harmed - for so long, that they may never get over what the ex has done to them..... and for what?? To cause me as much harm as her now disturbed brain can muster - no one is safe if they dare get between me and her now "only real cause in life".

I seriously hope these professionals are not "as right" as they are so very confident that it is no longer a case of subjective interpretation - our case, or should I say her case is so apparently textbook now....

Last edited by ddol1; 01-16-2014 at 01:50 AM.
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Old 01-16-2014, 10:47 AM
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Quote:
Originally Posted by Pursuinghappiness View Post

I'm still interested to know if any of the other experienced posters consider stock market day trading to qualify as "gambling" for the purposes of unequal division of assets though.
I think it might be considered "gambling" in a colloquial sense - i.e. spending money frivolously in the (unrealistic) hopes of getting more - bit not in any legal sense. "Real" gambling, like you do at a casino, doesn't involve buying and selling things (unlike day trading), and is organized as a game of chance with defined rules (or chance mixed with skill, like poker). In "real" gambling every player knows, or should reasonably be expected to know, that the house will always win. I think what your ex did is more like making dumb financial decisions, such as buying a big house in an area with falling property values or signing up for more credit cards than he can afford to pay off.

I'm not sure what it means that he hid his activities and used joint matrimonial resources to carry the out. I would hope that comes back to bite him. But it may also be analogous to a situation where one party is a spendthrift (of whatever kind). At the end of the day, the best you may be able to do is to limit the damage by disengaging with this loser. However, in your case the sums involved are so high that it might be worth consulting with a forensic accountant in tandem with a lawyer to see if you have a chance of getting any of it back. My ex cashed RRSPs to buy himself a motorcycle, which is annoying but not quite in the same league.
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