Foreign Property Issues In Divorce

Quite often parties that are in the midst of finalizing a divorce will have foreign assets. The question of what should be done with those assets always arises when dealing with matrimonial property division. Two relatively recent decisions from the Alberta Court of Appeal are helpful in determining how the court will deal with foreign property.

In Alpugan v. Baykan 2014 ABCA 152 the court dealt with a case where the Appellant appealed the trial judge’s ruling relating to the distribution of matrimonial property, particularly the failure of the court to take into account the foreign assets. The Court of Appeal held that the trial judge did err in not considering the foreign property. The Court of Appeal opined that the Appellant was entitled to compensation for the division of foreign assets. The Court of Appeal valued the foreign assets at $150,000.00 and gave the Appellant a $75,000.00 credit. The value came from evidence given by the Appellant wife that was not refuted by the Husband.

The case is important from a matrimonial property context in that it is an illustration that while the court cannot force the division of assets outside of the jurisdiction, it can take the asset into account when completing a division of property under the Matrimonial Property Act.

In Chikonyora v. Chikonyora 2013 ABCA 320 the Court of Appeal dealt with the issue of disclosure of foreign assets. In this case the parties held property in Canada and in Zimbabwe. The property in Zimbabwe had renters and the wife was collecting the rent from the property. The Husband asked for financial disclosure related to the property in Zimbabwe. The wife argued that an Alberta court did not have jurisdiction to demand disclosure for a property outside the jurisdiction. Justice B.A. Millar ordered that the foreign property be disclosed. The wife failed and a contempt application was brought. Justice R.A. Jerke held the court had no jurisdiction to compel disclosure of the Zimbabwe property. The Husband appealed.

The Court of Appeal held that the order to disclose was an in personam (jurisdiction over the person) remedy that was the court was able to make. The Court of Appeal relied on section 31 of the Matrimonial Property Act which requires parties to disclose all of there property whether in Alberta or another jurisdiction. The Court of Appeal also placed reliance on sections 7(3) and 8(d) of the Matrimonial Property Act which directs a court to consider the income earning capacity, liabilities, obligation, property and other resources. Thus, making foreign property a factor to consider.

While the court’s cannot force a party to divide the foreign assets, the cases illustrate that full disclosure is a must and that the courts will consider foreign assets when finalizing a distribution under the Matrimonial Property Act.