Candle & Falkner

In the case of Candle & Falkner, the parties were involved in a dispute concerning the division of their property following their separation and subsequent divorce. The appeal focused on the treatment of notional property worth nearly $1,000,000, which had been received and spent by the parties post-separation. The husband argued that the trial judge had erred in the treatment of these notional properties, failing to consider whether all of the money should have been added back, and not permitting this issue to be explored in the oral evidence. The husband also contended that the trial judge did not properly consider the impact of the judgment on his share of the remaining property, and that the husband received only 32% of the remaining property, not 37.5% as initially calculated. The wife argued that the primary judge had dealt with the add backs in an entirely routine fashion in accordance with established authority.

The legal issues before the court involved the correct application of the principles governing the treatment of notional property and interim distributions in matrimonial property settlements. Specifically, the court had to determine whether the trial judge had erred in not considering the dissipation of interim distributions by the parties, and whether there was an error in the application of the add back principle. The court examined the relevant authorities on add backs and considered whether the trial judge had adequately engaged with the settled law on the matter.

The court found that the trial judge had indeed erred in the treatment of the notional property. The court held that the trial judge had prejudged the question of how interim distributions should be treated, and had prevented the husband’s counsel from exploring the manner in which those distributions had been spent by the parties prior to trial. Furthermore, the court held that while it was not an error in itself to include add backs on the balance sheet, there was no engagement with the settled law on add backs, and the trial judge had not explained why he added back the interim distributions in this case. The court concluded that these errors were material, as the husband received only 32% of the actual legal and beneficial interests of the parties at trial, which amounted to a failure to exercise the discretion entrusted to the Court.

The appeal was allowed, and the matter was remitted for further determination. The parties agreed that if the appeal succeeded, they should receive a costs certificate, and orders will be made accordingly.