SUPERIOR COURT OF JUSTICE - ONTARIO
DATE: 20120404
DOCKET: FS-10-360829
RE: Deborah Lynn Blaney, Applicant
AND:
Bradley John Blaney, Respondent
BEFORE: Czutrin J.
COUNSEL:
Karen Ballantyne, for the Applicant
Valois P. Ambrosino, for the Respondent
HEARD: February 9, 2012
ENDORSEMENT
1## Introduction
This endorsement deals with costs arising from several appearances before me leading to the appearance of February 9, 2012.
2As with many cases, delay in disclosure has prevented serious efforts at settlement or moving to trial readiness if settlement efforts fail.
3The Family Law Rules that first came into effect in 1999 had as its objective, promotion of settlement and early disclosure. It created a process that would allow early access to judges. The process was and is still dependant on readiness and parties and counsel being able to use the judicial time appropriately. Far too often, little, particularly where the issues are financial may be achieved, if disclosure remains an issue.
4Soon after parties separate, or perhaps even in anticipation of separation, parties no doubt look for information about the process and what is required of them. If they consult family counsel they will be advised that they need to start gathering documentation to deal with property and support issues.
5Particularly where a party is self employed, or is a shareholder of a company and works for that company they should know that, for support purposes, their Income Tax Returns may not be enough to establish income and that the value of their interests in a company will need to be established by the use of and need for experts in many instances. The obligation and onus to satisfy the court as to income and the value of assets and debts is on the person whose income or asset or debt is called into question. Here, the Respondent (husband) had that obligation. His obligation existed prior to any court orders, conferences or court attendances.
6## Background
This Application was commenced by the Applicant, wife on May 26, 2010, after the parties 27 year marriage ended on January 1, 2010. The husband was served on July 23, 2010.
7The parties have three adult children.
8In her Application, the wife identified the need for the husband to provide full and timely disclosure related to income, date of marriage, separation and current assets and debts.
9The husband was described by the wife’s application as a successful insurance underwriter with interests in numerous corporations. The wife has not worked outside of the home since 1985.
10She returned to school and hoped to graduate in spring 2012.
11The husband’s Answer was not served until November 12, 2010. Some nearly 3-½ months after service or 2-½ months after the required time to serve the Answer under the Family Law Rules. The wife agreed to late filing of the Answer.
12The endorsement informs me that on December 10, 2010, the parties had a case conference.
13At the case conference, the judge noted that the husband agreed to get a Business valuator to value his business and determine his annual income. Without his income being determined and the valuation of his assets and liabilities the conference (held approximately 12 months after separation) but within four weeks of the Answer being served) could not be as productive as it otherwise might have been.
14In his November 12, 2010 Financial Statement, the husband identified that he was employed by Unity Management Underwriters Limited and claimed gross income from all sources for the previous year of $116,089, yet as far as monthly income he indicated $8,400. (Approximately $100,000.) He also identified, that on valuation date his estimated value of bank accounts and savings (including RRSP’s) totaled gross $1,007,253.65). Additionally he had a life insurance cash surrender value (he and Unity Managing) of $218,000. He identified eight companies that he held an interest in, and except for companies that he claimed operating losses for or negative values, the companies he identified that they were to be valued. He works for a company of which he is a 34% owner of.
15At the case conference he agreed to pay on a without prejudice bases $10,000 as an advance on equalization, pay all household expenses, $1,400 monthly uncharacterized plus the wife’s tuition and books also as an advance on equalization.
16In his Answer he speaks to the wife’s efforts at retraining and employability and alleges extravagant spending by her of $6,000 monthly.
17It remained obvious that the husband had to satisfy the court as to the value of his businesses and his income. Without doing so, the case could not proceed. His disclosure remained in issue as of February 9, 2012, well over a year after the case conference.
18## History of the Proceedings
On May 10, 2011, I ordered on consent, on a further without prejudice basis $5000 per month spousal support and the wife was to pay $955 towards household expenses. The husband was to give a $75,000 advance on equalization and satisfy or make best efforts to satisfy wife’s disclosure requests in the motion she brought dated April 5, 2011.
19I then adjourned the motion to myself.
20When the matter returned on September 27, 2011, husband’s counsel was unavailable and I adjourned the motion to November 24, 2011 peremptory on the husband and provided that he was to serve by October 12, 2011 expert reports re: business valuations and income. I also gave him until November 7, 2011 to satisfy the disclosure requests outlined in the motion returnable that day. I reserved costs.
21On December 22, 2011, I dealt with a confidentiality agreement to allow wife’s expert to talk to husband’s expert and the husband’s accountant and provide information as requested by wife’s expert in a letter dated November 16, 2011 with supporting documentation to satisfy previous orders of disclosure not yet satisfied. Again costs were reserved to February 6, 2012.
22The issues of costs of previous attendances were further adjourned to February 9, 2012 so that husband could file reply material.
23## Analysis
The wife seeks costs and the husband essentially submits that all the efforts by the wife to pursue disclosure were unnecessary. I disagree.
24To consider the costs issue I reviewed all the material filed. The wife sought costs for the above attendances before me and the work leading to the attendances totaling $27,400.43, fees, disbursements and HST.
25I start, most costs analysis, with the questions: were the motions necessary, did it move the case along, who was successful?
26I reviewed the Wife’s Notice of Motion returnable on May 10, 2011.
27While she did not get the exact amounts she sought, I am satisfied that without the motion she would not have received the support, a further advance on equalization, timely disclosure and the expert’s report.
28I reviewed the husband’s cross motion.
29Based on a comparison of requests, the wife was more successful. The husband’s material was about blame and avoiding his obvious disclosure and support obligations. The husband’s affidavit of April 21, 2011 said he was retaining a business valuator “to determine my income for support purposes.” “It should not be ‘guestimated’.” In his affidavit of May 6, 2011, he identifies that he has retained Ivor Gottschalk as his expert but complains that his wife is “seeking to circumvent the process by requesting further spousal support and an advance n equalization without the benefit of these reports. I understood that this was discussed and the court expected this to be undertaken by reference to the case conference endorsement of December 10, 2010. I need to re-emphasize that this need to retain an expert should have been made known to the husband soon after separation and certainly by the time he consulted his counsel.
30References to production of voluminous disclosure being made by the husband fail to answer whether the necessary, relevant, complete disclosures for income and valuation purposes to meet disclosure obligations have been made.
31This process should have been undertaken by him soon after January 1, 2010. Had he done so, the need for motions, repeated attendances may have been avoided and the initial case conference may have been achieved more.
32His 2010 Income Tax Return shows employment income (T4) of $101,733.15, dividends of $3,544 and $10,364, taxable capital gains of $4,311.55, interest income of $883.04. He also shows net capital losses for some shares sold. In Schedule 3, he shows sales of shares in excess of $200,000). This is to be compared to his November 12, 2010 Financial Statement referred to above.
33I reviewed the husband’s December 20, 2011 affidavit appending business valuations and income analysis.
34The husband asserts that he had been timely with disclosure and denied the need for wife’s motions. I disagree.
35He suggests that the wife’s experts should have delivered her report by now as she was retained on March 3, 2011. I find this incredible. The obligation was on him and the need to have the wife retain experts was dependant on disclosure and a review of the husband’s expert’s reports.
36He claims that he has had to provide duplicate disclosure.
37He also asserts that the wife’s disclosure is deficient.
38He also again refers to the wife’s refusal to seek employment.
39The business valuations and income report of the husband was Exhibit “A”. It is a report by LBC International delivered to wife’s counsel on October 12, 2011, but dated September 23, 2011. The October 12, 2011 delivery was pursuant to my order of September 27, 2011.
40The reports provide a fair market value of 3934675 Ontario Inc. (the husband owns all common shares) at 1.1 million dollars approximately. The report stated that the numbered company held cash, third party investments and loan receivables from related companies. The related party loans are to Unity and Casna.
41With respect to Unity, the husband owns 30%, wife 20% and a 3 – parties 50%.
42The report raises question but suggests management salaries for the husband and his partner in the range of $300,000 to $400,000.
43The report talks about marketable securities in the company of 1.2 million and cash of $337,057.
44The estimate of equity value was provided as between $363,952 and $545,572.
45It is not my intention to raise issues at this point, but the husband, with this additional information, if he intended to rely on this report, and pursuant to the Family Law Rules should have provided a New Financial Statement and perhaps a draft net Family Property Statement.
46The opinion as to the value of Extra Pro Services “no value”.
47The other companies, according to husband’s expert had “no value”.
48The income analysis for the husband for the period of 2007-2010 takes up four paragraphs in the expert’s report with estimated income for support of $188,315 for 2010 compared to income for tax purposes of $120,837. Because of assumed distribution of retained earnings from Unity of $56,749, the report suggest income for support purposes reduced for 2010 to $131,566 and average of $202,575 between 2007 and 2009.
49In summary, the expert estimates Mr. Blaney’s equity and loan investments in private companies to be 1.22 to 1.28 million dollars.
50It will be interesting to see the wife’s expert’s analysis.
51## Conclusion and Costs Award
I am satisfied that the wife’s motions were necessary to compel the husband to produce business valuations and income analysis.
52It remains uncertain whether the values and income as the husband’s report suggests will ultimately be accepted by the court.
53However, the husband’s income as suggested by his expert is higher than the husband’s Financial Statement filed to date. It would also appear that his Net Family Property Statement will be higher.
54The wife responded to the husband’s costs affidavit.
55She maintained that disclosure is outstanding and efforts for her expert to speak to husband’s expert have not occurred because the husband’s expert was not given authority to do so.
56I reviewed the wife’s counsel’s Bill of Costs claiming $26,362.93 in fees.
57I have concluded that the motions were necessary to obtain disclosure and to compel the husband to provide the expert’s reports.
58I am disappointed at the suggestion that a judge’s endorsement at the case conference: “the husband has agreed to get a Business Valuation to value his business and to determine his annual income.” (December 10, 2010 was in fact not acted upon until, according to the expert’s report, he was retained on “April 15, 2011”) some four months after the case conference.
59In the circumstances, the wife, I find is entitled to costs of $20,000 payable forthwith.
60Counsel should arrange teleconference to advise whether the wife’s expert has now received what she requires and when she will be in a position to either provide a critique or her own income and valuation reports.
Czutrin J.
Released: April 4, 2012
