How Do You Value the Used Rolex, the Rare Wine Collection, and the Mercedes-Benz?
In this recent Ontario decision, the Family Court had to make valuation determinations on some interesting items that needed to be divided up as part of the equalization process involving a divorcing well-to-do couple. (It reminds me of that song by rap artist Notorious B.I.G. titled “Mo[re] Money, Mo[re] Problems”.)
The couple – both of whom were doctors – married in 1977 but separated just over 30 years later. For the purpose of equalization pending their divorce it came time to assess their matrimonial assets – which included about 1,000 bottles of wine agreed to be worth about $200,000, a property in Italy, plus several cars and joint accounts. But while the parties were able to come to terms on the values of most of their property, they still disagreed on a small number of items.
In particular the value of several items of jewellery were in dispute, including the wife’s Rolex watch, a Bulgari star pendant, a Peridot ring, and various gold and silver jewellery. The treatment of a Mercedes-Benz was also contentious: it had been replaced after a 2008 accident and the evidence was unclear on whether the husband got a loan or used joint funds to come up with the $106,000 replacement price.
The court tackled the valuation exercise by listening to the evidence of the parties – neither of whom had chosen to use the services of expert valuators or forensic accountants. And the evidence was confusing and inconsistent: For the Peridot ring for example – which the wife bought during a pre-separation shopping spree – she provided a receipt for $8,000, but the husband proved that it had covered several additional items as well, and that she had returned $3,000 worth of them. More importantly, there was evidence to show that the wife had actually given the ring to her mother just before the split. Yet she called no evidence from the mother to confirm the gift, which the court observed would have been a very simple task. It therefore included $5,000 in the wife’s Net Family Property.
The Rolex watch was also difficult to value: the husband claimed it was worth $25,000; the wife claimed it was only worth $5,000. Since the wife’s documentary evidence was the best it had available, the court accepted the wife’s valuation figure. It commented, however, that certain other evidence of hers was lacking, particularly in connection with proving the existence of certain pieces of jewellery. Having found that evidence inconclusive, it declined to give those items any monetary value at all.
Finally, the court turned to consideration of the Mercedes-Benz. After the car had been in an accident in 2008, the husband had received about $65,000 from the insurance company. To come up with the balance of the $106,000 purchase price, he withdrew money from the couple’s joint account, but claimed that he had repaid it all using money from a loan. The wife refuted this: she said the joint account was never repaid. To resolve the issue the court had to review in detail various bank transactions, cheques that had been written, and other documentation. It concluded that the allegedly repaid funds were simply not traceable, and that the husband’s claim to have arranged for a loan was “far from convincing.” As such, it found that the husband had taken $56,000 from the joint account, and that he was now required to reimburse the wife for half.
The court’s task was not an easy one. Indeed, in the course of its investigation the court commented – more than once – that since neither of the parties had chosen to use experts, it had been constrained to try to impose valuations on individual items using what it considered to be the best evidence available.
What’s the take-away lesson from this case? Maybe you don’t have a Rolex, it’s always a good idea to keep records and receipts that may help in any valuation process of your assets, should you and your spouse decide to divorce. And hiring an expert valuator is a good idea, too.
For the full text of the decision, see:
Golda v. Syty-Golda (2012), 2012 ONSC 6320 http://canlii.ca/t/ftxzd
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