Law Times

Law Times • February 22, 2016 Page 11 www.lawtimesnews.com Internet evidence can make or break a case YAMRI TADDESE Law Times M arriages breaking down over infidelity and cheating are not a new phenomenon. But as people's personal lives now spill online, and especially on social media, family lawyers are using evidence from the In- ternet to make their case in court. And judges, they say, are re- ceptive to such evidence as long is it's obtained in a legal way. Fam- ily lawyer Reesa Heft says a client found out her one-time husband was cheating before, during, and after their marriage after blacked-out items showed up on a credit card statement. On each statement, there was a mysterious charge say- ing AMBD — which stands for Ashley Madison, a web site set up to facilitate affairs. "We were like, 'What is that?'" says Heft. "It wasn't easy to find out, but eventually my client did some research and she found out that's how Ashley Madison charged your credit card," Heft says. Her client is now using that information to argue that her husband, who is busy with work and apparently travelled to vari- ous cities to meet with women from Ashley Madison, could not possibly be the primary caregiver for the purpose of spousal sup- port, says Heft. "The funny part is I needed something to have in court to show that AMBD actually stands for Ashley Madison, so I went on Ashley Madison and put up a profile," she says. "I had one line, 'Hi.'" While Internet and social me- dia evidence could prove helpful, lawyers know the web is a dou- ble-edged sword. Family lawyer Adrienne Lee was once counsel to a man who posted a drunken video of him- self and his friends rapping a song laced with profanity. Counsel on the other side at- tempted to use that evidence as proof of his ineptitude as a par- ent, Lee says. In that case, the judge still ruled in her client's fa- vour after finding he was a better parent than the mother, she adds. Family lawyers find social media useful to show lifestyle. Pictures from lavish vacations, or snaps of new cars and gifts come in handy when, for example, a person claims they can't pay child support due to low income, Lee says. "You can use all those pictures to say, 'Look, your honour, this person can afford a brand new car or a vacation down south but can't afford their child support," she says. "Judges are already hard enough on parents who claim they're suddenly low-income, [so] they're very willing to take that kind of evidence." In child protection cases, so- cial media posts that are open about drug use or absences when the parent should have been car- ing for a younger child also find their way to court. "That's the kind of evidence you can point to and say, 'We're not saying this is conclusive . . . but we think there's enough here for further investigation.'" When they take on clients in family law matters, many law- yers advise them to be careful of what they post on the Internet and to generally keep a low pro- file online. "What I would say to the client is, 'This is basically like a scrap- book you publish at work. No- body is saying there's anything wrong with this scrapbook . . . but are you really content with publishing it at work?" Lee says. But would lawyers advise cli- ents to delete posts that may not ref lect well on them? For Adam Black, a lawyer at Torys LLP, the answer is no. "You can't go back and change that. There's an obligation to pre- serve that where there's a reason- able possibility of litigation in respect to the issue," he says. Black says he wouldn't advise the client to remove the unf lat- tering posts even if the other side has not put them on notice for that evidence. "If a client is coming to see me, then there's certainly the prospect of future litigation and . . . I'm not going to counsel my client to de- lete that evidence," Black adds. Black also says the availabil- ity of salacious material on social media does not always mean law- yers should bring it to court. "If it's not relevant, you don't want to waste the court's time by leading that evidence," he con- tinues. In a 2009 case, Dearden v Dearden, an Ontario Court of Justice judge dismissed "sala- cious photos" as irrelevant in a child custody case. "The material relied upon by the respondent father contains not only statements of fact but also attempts to use the appli- cant's past non-child related con- duct to denigrate her character and enhance the respondent's request for custody. Thus, the court is told about the applicant's past marital infidelities, her past career as a stripper, her salacious photos on Facebook, and so on," the judge said. "[The] conduct, save as it bears upon the care of the chil- dren, is irrelevant to my deter- mination of temporary custody and access. Suffice to say that, until two weeks ago, neither par- ty felt it improper that the other care for the children, alone, from time to time." But in another case, West- haver v. Howard, a Nova Scotia Supreme Court judge considered a father's "crude" and homopho- bic online remarks in a custody matter. "His judgment is poor," the judge said. "His Facebook or a similar web based site containing an inappropriate crude remark." That evidence was part of the reason the father was denied ac- cess to this child. In Heft's case, going online to Ashley Madison to gather evi- dence for her client added some extra steps. It turns out that if you're a woman, you get to use Ashley Madison for free, and Heft's credit card wasn't charged. However, Heft was eventually able to corroborate the informa- tion through help from her cli- ent. There is no decision yet in that case. LT FOCUS Reesa Heft is using evidence from the Internet to build a case for one of her clients. D iscretionary trusts are common es- tate planning tools used for various reasons such as tax minimization (e.g., as part of an estate freeze and for income-splitting) and general wealth protection, including credi- tor protection. The trustees of a fully discre- tionary trust generally decide whether or not to pay trust income or capital to any or all beneficiaries, as well as when and in what amounts. Traditional trust law holds that a person named as the object of a trustee's discre- tion—to whom the trustee can choose to make distribu- tions but is under no obligation to do so—has only an "expectancy" and a right to be considered as a potential beneficiary when the trustee exercises discretion in making distributions. An expectancy is not considered an existing property interest under trust law. Nevertheless, matrimonial courts in recent years in certain Canadian jurisdictions have not only held that an interest in a discretionary trust is property for the purpose of dividing assets between spouses on matri- monial breakdown, but have also in some cases attached significant value to these interests. For example, in several cases Ontario family law courts have found that a spouse's interest in a discretion- ary trust is "property" under the Family Law Act (FLA), and have included the value of the interest in the benefi- ciary spouse's net family property (NFP) when calculat- ing each spouse's NFP and determining the amount of an equalization payment. While this conclusion may be questionable based on the definition of property under the FLA, it appears to align with the overall objectives of the FLA. Recent British Columbia legislation now expressly includes certain discretionary trust interests among the pool of assets subject to division on marriage break- down. Similar shifts in courts' treatment of discretionary interests have occurred in other common law countries such as the UK and Australia, while other jurisdictions (including many U.S. states) generally tend to continue to take a more conservative stance and exclude discre- tionary trust interests, including by statute, from matri- monial property division. In the Canadian context to date, no formal method- ology has been developed in the case law or by statute to reliably calculate the value of a discretionary interest. Courts typically rely on the valuation concept of "value to owner" as a more equitable approach than "fair market value". Value to owner focuses on what a spouse would pay to not lose his or her discretionary interest in the trust rather than what an arm's length third party would pay to acquire the interest. This approach is not easy to apply because there are many factors to consider, including the extent of control the spouse exercises over the trust, whether distributions to the spouse would be contrary to the purpose of the trust, and the past history of trust distributions to the spouse and other beneficiaries. Moreover, if a significant value is assigned to a spouse's discretionary trust interest, he or she may be unable to make a monetary payment without receiving a distribution from the trust. If the spouse does not control the trust, hardship could ensue if the spouse has to use all of his or her other assets to make the payment. Conversely, hard- ship may result for the other spouse as he or she may have a right without a remedy if the beneficiary spouse does not have sufficient other assets to make a monetary payment. These issues are emerging but not well developed in Canadian case law, creating sometimes unexpected and undesired results on marriage breakdown. Given the complexity and uncertainty of discretionary trust interests' treatment in the matrimonial setting, three considerations come to mind: Proper trust law advice is necessary during the planning and drafting stage of a discretionary trust agreement in light of recent case law and statutory developments with regard to property division on matrimonial breakdown. Treatment of discretionary interests during marital breakdown should involve expert family law and trust law advice, and where required, professional valuations based on actuarial evidence to employ a sound methodology and set of guidelines in responding to the valuation question. Discretionary trust beneficiaries should consider do- mestic contracts to deal with their trust interests, including where appropriate excluding them from property division. By Margaret O'Sullivan Family Law and the Treatment of Discretionary Trust Interests on Marital Breakdown Sponsored by

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