SUPERIOR COURT OF JUSTICE – ONTARIO
COURT FILE NO.: FS-12-375956
DATE: 20130308
RE: Yvonne Dwyer, Applicant
AND:
Kevin Matthew Lewis, Respondent
BEFORE: Czutrin J.
COUNSEL:
Jaret N. Moldaver, for the Applicant
Harold Niman, for the Respondent
HEARD: December 18, 2013
ENDORSEMENT
Background
1The parties were married for just over 14 years when they last separated in April 2011. They have three children. The mother (Applicant) is 39 and the father (Respondent) is 38.
2This endorsement deals with the Applicant’s request for support retroactive to July 1, 2012, and a request for fees and disbursements of $75,000 (in advance) with $32,000 for her expert to critique the Respondent’s expert’s valuation and income reports. The valuation report is dated November 28, 2012 and the income report is dated November 26, 2012.
3The Applicant has retained her own expert who has provided letters and memos to her and her counsel concerning the reports prepared by the Respondent’s expert raising issues, requesting more information and outlining his estimate of fees to do his reports.
4On November 19, 2012, I made the following endorsement:
Timing of motions and events that occur along the court process creates issues for parties and for the judge given responsibility to decide temporary issues.
5At the time of my endorsement, the parties had also commenced a custody assessment which was expected to be completed by February 2013. I noted that the parties should book a combined settlement conference and trial management conference for February 2013 subject to filing a trial scheduling endorsement and my further directions. I sought to target a trial date to avoid continuing delays in this case.
6The parties’ financial situation remains unclear. The father however earns a great deal more than the mother by any measure and since he is a shareholder and director and involved in various businesses his income determination for support purposes requires some expert analysis. That only became available after these motions began and since the parties had not opted for a jointly retained expert, it is not surprising that the mother’s counsel finds it necessary to have a review of the report. I find that she is entitled and as I will further outline she is entitled to an advance either on support, or equalization and subject to readjustment either as credited against the financial issues or costs so that the playing field is leveled.
7The parties also have competing valuation dates that may affect financial issues, claims to property, support and any accounting related to sale of properties, ownership and designation (the mother claims April 2011 and the father claims December, 2009). The parties will need to have the financial experts’ opinions reflect these competing dates and issues as the valuation date has yet to be established and to my knowledge there is no agreement on the valuation date.
8The father is a businessperson and a shareholder of several companies. According to the mother his 2010 income tax return discloses income approximately $569,000 and approximately $430,000 in 2011.
9Certain interim financial arrangements had been made by the parties. They were not to be disclosed to the court. I ordered that those arrangements continue, but wanted to wait until the expert reports were received before I made any further orders with respect to support or the request for advance fees and disbursements.
Expert Evidence and the Positions of the Parties
10On November 2, 2012 I learned that the father had retained his expert, Mr. Freedman, and it was expected that he would have his report ready sometime the week of November 5, 2012. I also learned that the expert was now retained not only for income purposes but for property and equalization purposes as well.
11I suggested that the Applicant may wish to wait until receipt of the Respondent’s expert’s reports for review by her expert.
12The Applicant had the two expert reports of the Respondent reviewed by her proposed expert.
13Counsel for the Respondent took some exception to statements made by the Applicant’s expert as not being in compliance with the rules and standards for professional business valuators. I saw the memos and letters from the Applicant’s proposed expert as merely preliminary comments to address what information that expert may need and the work he thought he needed to do to provide assistance to the Applicant to provide a critique report.
14The Respondent’s income analysis report is dated November 26, 2012, and states that the expert was retained to calculate the Respondent’s income for the years 2009 through 2012 for the purposes of determining support. The calculations were made pursuant to the Federal Child Support Guidelines.
15The report is summarized as follows: for 2009 the Respondent’s estimated income for guideline purposes is $620,000; for 2010 it is either $500,000 or $470,000 (if the nonrecurring source of income of an RRSP is deducted); for 2011 income is $970,000; and, for 2012 income is estimated to be $590,000. The expert’s report notes that the calculations for 2012 are based on certain estimates because the Respondent’s tax return and the financial statements of his operating companies for January 31, 2013 fiscal year end had not yet been prepared. When this information is received it may be necessary to revise the 2012 calculations.
16The Respondent’s expert reviewed several of the Respondent’s financial documents, including the following: tax returns for the years 2009 through 2011; notices of assessment for 2009 and 2010; unaudited financial statements for the companies Jety Holdings Inc., JetyPayments Inc., Voltage Pay Inc., Temkey Holdings Limited, and SellMyDeals Inc., compiled by chartered accountants.
17After setting out the scope of the financial documents examined, the expert’s report proceeds to summarize the Respondent’s various business interests. Jety Holdings Inc. is wholly owned by the Respondent and receives consulting fees from JetyPayments Inc. and Voltage pay Inc. Jety Holdings Inc. appears to be the Respondent’s holding company from which the Respondent receives salary and dividends. Jety Holdings Inc. receives a dividend from Voltage Inc. and the Respondent receives salary and dividends from Jety Holdings Inc.
18JetyPayments Inc. was established in 2008 and the Respondent owns 50% of the common shares of this company with the other 50% being owned by a numbered company wholly owned by an arm’s length party. After 2011 this business (JetyPayments Inc.) continued as Voltage Pay Inc.
19Voltage Pay Inc. acts as a broker of payment processing services between merchants and processors, both located in the United States. The merchants, due to their credit risk, are unable to obtain conventional payment processing services.
20The expert provides information as to Voltage Pay Inc.’s financial successes and failures from 2009 through 2012.
21Voltage Pay LLC was established in the United States in July 2011. The expert states that the sole purpose of this company is to facilitate the payments from the processors which are submitted to Voltage Pay Inc. This company has a bank account in Cincinnati, Ohio, which is utilized for this function. There are no operations for this company and financial statements are not prepared.
22The Respondent’s expert makes reference to other business interests of the Respondent including Temkey Holdings Inc. and reports that this is an inactive company in which each of the parties has a 50% ownership interest. Another business interest is Black Car Consulting Inc., incorporated in June 2010, in which the Respondent has a one third ownership interest. Revenues have not exceeded $12,000 per annum since incorporation and in 2012 the Respondent resigned as a director. No financial statements were available at the date of the report. Another company, Sell My Deals Inc., according to the expert, has an inactive website and no business income was earned by the company during the period under review.
23There are two other companies in which the Respondent maintains an ownership interest. Dealco Inc., incorporated in 2011, is a technology-based start-up company in which the Respondent holds a 25% ownership interest. The expert reports that there has been no income earned to date by this company and that no financial statements have yet to be prepared. The final company identified is ETJ Holdings Inc., incorporated in July 2012. The Respondent owns 100% of this inactive company.
24The Respondent’s expert’s valuation report for Jety Holdings Inc., JetyPayments Inc., and Temkey Holdings Inc. is dated November 28, 2012. The report summary provides that the value of the Respondent’s interest in Jetty Holdings Inc. is $264,000 as of December 10, 2009. (This is the father’s valuation date.) The expert finds no value for the other companies.
25In a letter dated December 10, 2012, addressed to Applicant’s counsel, the Applicant’s proposed expert outlines the additional disclosure he requires to address the Respondent’s income and the value to be attributed to his various business interests as of the valuation date. As there is a dispute over the valuation date, the Applicant’s expert was operating on the basis of an April 2011 separation date. The Applicant’s proposed expert makes the following statement in his letter December 10, 2012:
[...continues exactly as in the original decision...]
Czutrin J.
Released: March 8, 2013