Two years after graduation from GBC, Lily and James were married in Toronto in 1995. Neither spouse had significant assets or debts. They bought a condo for $200 000 with a down payment of $50 000 which was given to them by Lily's parents. Their daughter Grace was born in 1997 and their second child, Molly was born in 2000. Molly has a learning disability which means that she has extra tutoring at a cost of $100/week.

After the birth of each child, Lily took six months maternity leave but has otherwise worked part time as a dental hygienist. Her current totalincome is $40 000 annually.

James has built a career in management of a chain of restaurants. He is currently earning $80 000/year from that job. In 2003, Lilly asked James, who handles the family's finances, for $10 000 from their joint savings account in order to open a small dress shop with her sister. James said they couldn't afford it so Lilly borrowed the money from her parents. She continued to work as a dental hygienist while also working in the store.

The family lives a comfortable life style including an annual holiday but without enough extra for piano or dance lessons for the girls or a car for Lily.

In 2008 they sold the condo and bought a home in a subdivision outside Toronto. They now (in 2013) have a first mortgage of $200 000 on a house valued at $350 000.

In 2010 James persuaded Lily to take out a second mortgage on the home of $50 000 so that he could open his own restaurant. At the closing of the deal, Lily realized that James was putting an additional $60 000 into the deal. He eventually told her that he had saved the money over the past 15 years. He said that he earned the money so it is his to invest/spend as he wishes. James has continued to work for his original employer as a restaurant manager while opening his own restaurant. (This is known and agreed to by his employer).
Lily has brooded on the fact that James concealed this money from her and has concluded that he does not see the marriage as a partnership. Recently she has discovered that he has been having an affair for several years and that he has a three year old child with this "other woman". Lily now wants a divorce.

In addition to the house, which is owned jointly, (the mortgages are also in both names), James owns the restaurant (use book value), a car ($10 000) and an RRSP ($40 000). He has a joint contribution pension plan through his employer which has a value of $30 000. Last year he reported atotalincome of $90 000. He has paid family and business expenses on a variety of credit cards with a total debt of $50 000. He has $3000 in his bank account. Their joint bank account contains $2000.

Lily recently inherited $100 000 from her father, which she has invested primarily in Canadian bank stocks and is earning a 4% return. (Her father had written a will in which he specified that the inheritance and any income or capital gain from that inheritance would be the sole property of Lily). Lily has $2000 in her personal bank account and no credit card debt. She has a seven-year-old car which is worth $1000. She has a spousal RRSP of$5 000 and a personal RRSP of $3000.

Lily intends to give her share of the dress shop, which has been breaking even but not turning a profit, to her sister. Lily will try to increase her hours of work. This should increase her total income to $55 000.

The girls will live with their mother but will spend some weekends and holidays with their father.

James wants to sell the house and use his share for a downpayment on a loft. Lily wants to keep the house until the girls have finished high school. She concedes that she could rent a two bedroom apartment for less than the current mortgage/maintenance costs of the house but thinks that if the house is sold she should get all the proceeds to compensate her for the money James hid from her.
Lily wants child and spousal support with additional child support to cover the cost of tutoring for Molly, piano lessons for both girls and dance lessons for Grace. James disputes any need for spousal support and wants to pay the minimum possible in child support.

1. Calculate each person's NFP, the equalization payment and each person's final net worth.

2. Would you recommend liquidating all assets or performing a ‘trade?' Explain. Assuming that Lily is your client and that you do not recommend liquidating all assets, what assets do you recommend that she keep? Why?

3. Would Lily be entitled to spousal support? Explain whether her claim is likely to succeed. If her claim is successful, how would the amount be calculated?

4. How would child support be calculated? What is the probable amount of child support? Examine the factors which could either raise or lower this amount. Reach a conclusion.