Mediation Stories
Giovanni and Sophia - The Business
Giovanni and Sophia have been married for more than 20 years. This was a second marriage for Sophia who had one child by her first marriage who has been raised within this marriage. This child is now living independently.
Giovanni is a hard-nosed businessman. He was a successful salesman for many years and then developed his own business. Subsequently, his business has merged with that of a competitor. The revenues for this business are growing and so far the business has provided Giovanni with income of more than $100,000 per year.
Sophia is mild mannered and not aggressive. She works as an administrative assistant earning about $25,000 per year. Unlike Giovanni, who is ready to move on from this relationship, Sophia is presenting as being somewhat bewildered by the whole situation. Giovanni has always handled the family finances and Sophia is quite worried about her future financial situation.
In the initial separate meetings, the mediator becomes concerned that there may be an imbalance between the spouses. Giovanni is aggressive and very self-assured and his manner may be intimidating to Sophia, particularly in relation to the negotiation of financial issues. In the separate meetings, these concerns are noted to each spouse. Both are told that it is going to be important that Sophia at least has independent legal advice throughout the process and that this may be a situation where the process will have to be converted to mediation with counsel, or alternatively, terminated in favour of another process altogether.
In the first joint session, good progress is made in respect of identifying the need for financial disclosure and the principal issues, which will be spousal support and equalization of property. Giovanni is very well organized and has come armed with tax returns, RRSP statements and a detailed spreadsheet regarding the couple’s living expenses. He has obviously managed all financial aspects for this couple.
It is also obvious that Sophia has deferred entirely to Giovanni in regard to financial matters and has little, if any, notion of the couple’s finances and her future needs. The documentation in relation to Giovanni’s business interests is sparse and provides no indication of a fair market value for the business.
In the ensuing joint session, Giovanni and Sophia are able to narrow their positions in respect of spousal support to a reasonable range which they will both discuss with their lawyers before the next session.
The discussion then turns to the question of equalization of property. Giovanni and Sophia are quite agreeable in terms of dividing their contents, vehicles, and registered plans. They have already listed their home for sale and easily work out an arrangement for possession and maintenance of the home pending sale. The net family property statement is complete, except for one significant item, which is missing altogether; namely, a value for Giovanni’s business interests has not been included in the statement. There is no documentation of the value for the business. It is clear that for Giovanni, the inclusion of any value for the business in equalization of property is a highly charged and emotional issue. Sophia, on the other hand, appears to be ambivalent in this regard.
More private caucuses follow. Giovanni is told that he can expect that any lawyer advising Sophia will insist that this value be obtained and included. He is told that the failure to include this value in equalization of property could undermine the integrity of the agreement. Giovanni is adamant. It has already been explained to him by his lawyer that Sophia is fully entitled to this information and to the inclusion of this value in equalization. Nevertheless, under no circumstances will he sign an agreement that will in any way divide the value of this asset. Win or lose, he is ready to fight for this position.
In the private caucus with Sophia, she appears to fully understand her entitlements in respect of Giovanni’s business and its value. However, for Sophia this is a negotiable item, and apparently, something she is willing to concede in order to reach an agreement.
Back in joint session, there is a frank discussion as to the importance of this issue and both parties agree to canvas it carefully with their lawyers prior to the next mediation session.
By the time of the final mediation session, Giovanni and Sophia have each had an opportunity to speak to their respective lawyers at length about support and equalization of property. The lawyers have communicated with each other and have helped to create a climate for agreement. Essentially, Giovanni will make concessions that are important to Sophia in respect of quantum and duration of spousal support, and the conditions under which it can be terminated. In return, Sophia will agree that no value will be included for Giovanni’s business interests in the equalization of property and the agreement will contain a clear and specific acknowledgment by Sophia of her awareness of her entitlements in this regard and her specific and informed decision to waive these entitlements.
There were two keys to the success of this mediation. First, Giovanni was given the opportunity to be heard and have his feelings validated in respect of his contributions during the marriage. This was important because it allowed Giovanni to have a “principled” position on an issue where his legal position was poorly based. Secondly, this mediation showed the benefit of a process which is flexible and can allow for each spouse to realize success in respect of the interests which are of greatest importance to that spouse.