Compensatory Allowance: Recognition Beyond Your Marriage Contract

On July 9, 2021, a Superior Court judgment granted a spouse compensation for her contribution to the marriage in the approximate amount of $ 1.99 million, notwithstanding the partition of their common assets included in the family patrimony.

The parties married in the year 2000, following the signing of a duly notarized marriage contract under the matrimonial regime of Separation as to property. This matrimonial regime provides that, for all assets which are not already included in the family patrimony, each spouse will remain the exclusive owner of their property, will administer their property alone and will assume responsibility for their debts. This includes, for example, businesses solely registered under one spouse’s name.

During the marriage, the husband launched a business and registered it in his wife’s name, for technical purposes due to his prior bankruptcy claim. Years later, he purchased her shares for a paltry sum.

The wife was principally responsible for the administration of her husband’s business, without owning any actual equity in the company. According to the judgment, she opened accounts, processed the GST and TVQ returns, followed up on the files and managed the cost of her husband’s projects for invoicing purposes.

In addition to her work duties, she was also responsible for the daily care of the children and of the household, including grocery shopping and managing household expenses. When she ran out of money, her husband transferred to her additional sums to pay for taxes, electricity, or extracurricular activities of the children.

At work, she rarely completed a timesheet for her services rendered. According to her, there was no need for them, because it was her and her husband’s company.

During their marriage, the husband constantly assured her that the money generated by his company was to pay for their luxury goods and to serve as their retirement funds. It was their shared “nest egg”.

During the trial, her husband attempted to minimize her involvement and contribution to the success of his company, as well as her contributions towards childcare and family responsibilities. He justified his claims notably by producing her incomplete timesheets. According to his version, the wife was only an employee of the company and, therefore, the profits did not have to be shared.

To recognize the spouse’s extraordinary yet uncompensated contribution to the marriage and to her husband’s success, the judge granted the wife a sum of $1,985,086.00$ through the legal remedy of the payment of a compensatory allowance as provided in article 427 of the Civil Code of Quebec, despite the application of the marriage contract, which shelters the husband’s company from any partition.

Jessica Zegarelli, Attorney-at-Law

Alepin Gauthier Avocats Inc.

This text contains legal information of a general nature and should not replace legal advice with a lawyer or notary who will take into account the particularities of your situation.