Why family separations can get messy when the major asset is a corporation

by Davies Otwell
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Petrone did not stop there. He terminated Aubin’s employment with Quantiam and removed her as a director of the company, replacing her with his best friend.

The trial judge found that when it came to Aubin, Petrone was “incapable of thinking clearly,” and that he was irrational to a troubling degree.

In dealing with the issue of security for the $5.6-million equalization payment, Petrone took the position that Quantiam needed to use all its assets as it saw fit. He also said that if there was an attempt to execute against Quantium on the property judgment, the company would be liquidated.

As a result, the trial judge decided to secure the money judgment against Petrone’s shares and ordered a charge against the building owned by Quantiam, in effect making Aubin a secured creditor of Quantiam.

In hearing Petrone’s appeal, the central issue for Alberta’s Court of Appeal was whether the trial judge had erred in law in piercing the corporate veil — especially given the 19 other shareholders of Quantiam.

On this issue, the court split, with Justices Peter Martin and Jolaine Antonio finding that the trial judge had not erred by piercing the corporate veil, and Justice Kevin Feehan dissenting on this issue.

The court first considered whether there was a separate, more relaxed threshold test for family law matters. It did not find a lower one, but indicated  there may be an “added factor” to consider, that being the recognition that “obligations imposed by family law are on equal footing with other legal obligations and deserve fair balancing where interests compete.”

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