What happens to a business sale during a divorce in Quebec?

A business sale during a divorce in Quebec runs into two sets of rules in the Civil Code of Québec, and the order matters. Québec.ca says the division is made first under the rules on the family patrimony, and the rules of the spouses’ matrimonial regime or civil union regime are applied afterwards. Family law in Canada is partly federal and partly provincial or territorial, according to the Department of Justice Canada. This page covers Quebec only, and a couple with a marriage contract follows their contract for the regime part.

The family patrimony and a business

Under article 415, the family patrimony is made up of listed property owned by either spouse, including the family residences or the rights that confer use of them. A business is not in that list. Québec.ca says property that is not part of the family patrimony, including real estate, bank accounts and shares, is divided under the rules of the chosen matrimonial regime. Where property in the family patrimony was alienated or misappropriated in the year before a spouse’s death or the institution of proceedings for separation from bed and board, divorce or annulment of marriage, and was not replaced, article 421 lets the court order a compensatory payment to the spouse who would have benefited. Article 421 applies the same rule to property alienated more than a year before, if the alienation was made to decrease that spouse’s share.

The partnership of acquests

Under article 432, spouses who did not fix their regime in a marriage contract before the wedding are subject to the regime of partnership of acquests, and under article 518 divorce carries with it the dissolution of the matrimonial regime. Under article 457, income derived from the operation of an enterprise that is a spouse’s private property remains that spouse’s private property, subject to compensation, if it is reinvested in the enterprise. Under article 471, a spouse who misappropriated or concealed acquests, wasted them or administered them in bad faith forfeits his or her share of the other spouse’s acquests.

Compensatory allowance for work in the enterprise

Under article 427, the court, in declaring separation from bed and board, divorce or nullity of marriage, may order one spouse to pay the other an allowance for the latter’s contribution, in property or services, to the enrichment of the first spouse’s patrimony, taking into account, in particular, the advantages of the matrimonial regime and of the marriage contract. Where that right is founded on the spouse’s regular cooperation in an enterprise, it may be applied for from the time the cooperation ends, if this results from the alienation, dissolution or voluntary or forced liquidation of the enterprise. A sale of the business can therefore be the event that opens this claim.

The Code does not tell you whether a given sale is wise or safe. For a comparison with an Ontario scheme, see what Ontario’s Family Law Act says about selling before separating, which uses different rules.