A recent Supreme Court of British Columbia decision provides important guidance on when courts may intervene in a privately held business pending the resolution of a family law dispute, regardless of whether the shares are excluded property.

In Madsen v. MacNutt, 2026 BCSC 1800, the Court declined to give the non-owning spouse operational control of the company she had managed for 15 years. However, it did order the Company to pay her $1.25 million after finding that the owning spouse’s use of corporate funds for personal expenses could adversely affect her potential interest in the Company.

This case affirms that even if a spouse is not entitled to control an excluded-property business, courts can still intervene to protect a potential financial interest pending trial.

Madsen v. MacNutt: Case Background

The claimant had served as a director and controller of the Company throughout the parties’ 15-year relationship. She oversaw all aspects of the Company’s business operations, including financial operations, management, customer service, asset management, and general business management. During her tenure, consolidated gross sales grew from approximately $5 million to more than $14 million, and she reinvested her net employment income into the Company through the respondent’s shareholder loan account.

After the couple separated, the respondent, who was the Company's sole shareholder, removed the claimant as a director and assumed operational control of the Company. This left her without an income or the means to meet personal expenses. The claimant sought to regain interim operational control of the Company, sole decision-making authority, and preservation orders, among other relief.

When Can a Spouse Gain Interim Control of a Family Business?

Although the shares were excluded property, the Court held that this did not automatically preclude relief under ss. 222 and 227 of the Family Law Act (FLA). The claimant had an undisputed interest in the Company's increase in value and had managed the business for years without owning its shares.

However, the Court noted that interfering with corporate governance requires “clear and compelling” evidence of conduct likely to prejudice rights asserted under the FLA. The factors asserted by the claimant, such as the fact that the claimant had historically operated the Company differently or that the respondent hired outside professionals at a greater cost, were not enough. The Court dismissed her application for operational control.

Can Courts Protect an Interest in an Excluded-Property Business?

The Court reached a different result when considering the claimant's financial interest in the Company.

Even though the Company's profits may have been excluded property, the Court held that the analysis should not end there. Section 91 of the FLA and Rule 12-1 of the Supreme Court Family Rules do not necessarily limit “property” to “family property.” Instead, it may include excluded property in the right circumstances. To determine this, courts consider the significant unfairness of not dividing the excluded property, as well as the spouse’s direct contributions to that property.

The claimant's potential interest was particularly relevant given her contributions during the 15-year relationship. Whether those contributions ultimately justify the division of excluded property under s. 96 of the FLA remains for trial, but the Court found that such an award could not be discounted at the interim stage.

When Can Corporate Spending Trigger Interim Family Law Relief?

The turning point was the respondent's use of the Company’s funds post-separation.

Before separation, the Company had paid a significant amount of personal expenses for both spouses. After separation, it continued paying the respondent's expenses but stopped all payments to the claimant.

The Court estimated that the respondent had used more than $1 million of company funds for his personal expenses between August 2025 and May 2026. This excessive spending not only ran the risk of the Company having no value by the time of trial but may have also delayed, adversely affected, or potentially defeated any interest to which the claimant might ultimately be entitled.

As a result, the Court ordered the Company to pay the claimant $1.25 million, representing the estimated amount of the respondent's post-separation personal expenditures. The Court also ordered that all payments to the respondent from the Company’s profits be matched by equal payments to the claimant. The Court made further orders regarding conduct and preservation.  

What Does Madsen Mean for Business Owners and Their Spouses?

Madsen highlights that the courts’ considerations when determining interim relief involving a private business are highly fact-specific.

For business-owning spouses, the decision highlights the importance of maintaining a clear distinction between legitimate corporate expenditures and personal benefits following separation. For non-owning spouses, the Court affirmed that excluded property does not necessarily prevent the Court from protecting a potential interest when the value of that interest may be at risk.

Most importantly, protection does not necessarily require control. Where the evidence does not justify interfering with day-to-day management, other means of protecting disputed interest may be used in the interim before trial.

For guidance on division of property disputes, contact Cozen O’Connor’s Canadian Family Practice to ensure that your financial future is protected.