CITATION: Blatherwick v. Blatherwick, 2015 ONSC 2606

COURT FILE NO.: 810/10 (Guelph)

DATE: 20150427

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

BARBARA ANN BLATHERWICK

Applicant

• and –

BRIAN EARL BLATHERWICK

Respondent

AND:

Court File No. CV-13-44774

B E T W E E N:

SEASONS (H.K.) LIMITED

Applicant

• and –

ROCKWOOD LANDCO INC.

Respondent

AND:

Division No. 5 – London

Court No. 35 - 1738020

Estate No. 35 - 1738020

IN THE MATTER OF THE BANKRUPTCY OF BRIAN EARL BLATHERWICK OF THE CITY OF GUELPH, IN THE PROVINCE OF ONTARIO

BEFORE: Ricchetti, J.

COUNSEL: J. Cox, Counsel for Mrs. Blatherwick

Brian Earl Blatherwick, self-represented

J. Ormston and H. Weir, Counsel for the Seasons (H.K.) Limited

No one appearing for the Trustee in Bankruptcy

HEARD: February 2-6, 9-13, 17-20 and 23-26, 2015

REASONS FOR JUDGMENT

Contents

Contents. 2

OVERVIEW... 6

THE PROCEEDINGS.. 9

The Matrimonial Proceeding. 10

Seasons (HK) Ltd.’s Application.. 15

The Bankruptcy Proceeding. 17

Breaches of Court Orders. 17

The Contempt Motions. 18

THE POSITION OF THE PARTIES.. 19

THE PERSONA.. 21

Mrs. Blatherwick. 21

Mr. Blatherwick. 21

Partners of Seasons Halloween Business. 21

The Offshore Companies. 23

The Offshore Corporate Holdings. 23

Seasons Limited – Macao Commercial Offshore (Seasons Macao) 23

Seasons (HK) Ltd. (Seasons HK) 24

Capital Rich Group Limited (Capitalrich) 24

Seasons Capital Limited (Seasons Capital) 25

Discovery Bay Limited (Discovery Bay) 25

The Canadian Companies. 26

Blatherwick Holdings Inc. (Blatherwick Holdings) 26

Rockwood Landco Inc. (Rockwood Landco) 27

Concept Marketing Canada Inc. (CMC) 27

Seasonal Design Group Inc. 28

Joanne Speight 28

THE ORDER REGARDING INADMISSIBILITY OF CERTAIN EVIDENCE AT TRIAL. 28

THE CREDIBILITY OF THE PARTIES AND WITNESSES.. 29

Mrs. Blatherwick. 29

Mr. Blatherwick. 29

Mr. Leung. 33

Joanne Speight 36

THE FAILURE TO PRODUCE DOCUMENTATION.. 37

THE RELIABILITY OF SEASONS’ DOCUMENTATION.. 42

1. Loans from Discovery Bay. 43

2. The Cottage Financing. 46

3. The Brownridge Property. 47

THE FACTS.. 50

The Marriage. 50

The Separation.. 52

The Blatherwick's Lifestyle Prior to Separation.. 54

The Background to the Seasons Halloween Business. 56

The Current Seasons Halloween Business. 60

The Cottage. 62

Brownridge Property. 64

Ownership of the Offshore and Canadian Companies. 64

Seasons Macao. 67

Seasons HK.. 69

Capitalrich.. 69

Seasons Capital 70

Discovery Bay. 72

The Current Founder and Principal Owner of the Seasons’ Halloween Business. 80

The FiancÉe’s. 81

The Shareholders Agreement 82

The Litigation Strategy To Put Pressure on Mrs. Blatherwick. 85

Ignoring or breaching Court Orders. 88

Payments from Discovery Bay. 89

Exceeding Authorized payment 90

Failure to Pay Cost Orders. 91

Failure to Preserve Emails. 91

Failure to produce the 2010 September/October Business Meeting documentation.. 92

The Bankruptcy. 92

Mauritius Trust Policy. 94

Mr. Blatherwick’s Income. 95

Line 150. 95

Monies from Discovery Bay. 96

Mr. Blatherwick's other evidence. 98

The Cash.. 99

Transfers to Mr. Blatherwick’s Fiancées. 100

Personal Expenses expensed to the Companies. 100

Income from the Factories. 101

Foreign Bank Accounts. 101

A Percentage of Sales. 102

Seasons Capital's Income. 103

THE ANALYSIS – MATRIMONIAL PROCEEDING.. 103

LAW - FAILURE TO MAKE FINANCIAL DISCLOSURE.. 103

THE EXPERT WITNESSES.. 105

Andy MacRae. 109

Melanie Russell 110

EQUALIZATION PAYMENT. 120

Ms. Russell’s Reports. 120

Mr. MacRae’s Reports. 122

Revisions by Mr. MacRae based on the trial evidence of Mr. Blatherwick. 122

The Significant Differences between the Experts. 123

Mr. MacRae’s estimated values. 129

Calculating the Equalization Payment 131

REVISED NFP.. 133

Money Transferred to the Fiancées. 141

Conclusion on Equalization.. 146

SPOUSAL SUPPORT. 147

What is Mrs. Blatherwick’s Income?. 147

What is Mr. Blatherwick’s income?. 147

Conclusion on Income. 152

The Law on Spousal Support 153

Spousal Support by way of a Lump Sum payment?. 156

Should Lump Sum Spousal Support be awarded in this case?. 159

Determining the level of Spousal Support 160

Duration.. 163

Determining the amount of the Lump Sum payment 164

Conclusion on spousal support 165

THE ANALYSIS – SEASON’S HK’s APPLICATION.. 166

The Issues. 166

Standing to oppose the Seasons HK application.. 166

Additional Factual Determinations. 168

The Declaration of Trust 172

The Loan Agreement 173

After the Acquisition Dealings. 176

The Trust Claims. 177

The Unjust Enrichment Claim.. 178

Conclusion on Seasons HK’s Application.. 179

ANALYSIS - THE BREACH MOTIONS.. 179

Continued Withdrawal and Transfer of Funds. 181

Withdrawal of $441,000 USD.. 184

Failing to Preserve Electronic Records. 185

Mr. Blatherwick’s Personal Accounts. 185

Denver, Colorado 2010 Meeting. 186

Conclusion on the Breach Motion.. 186

ANALYSIS – BANKRUPTCY.. 187

Breach of the Mareva/Freezing Order 188

False Representations. 190

Collateral Advantage. 191

Conclusion on the Annulment of the Bankruptcy. 191

ANCILLARY ORDERS.. 192

Divorce. 192

Return of Mr. Blatherwick’s Passport 192

Continuation of the Mareva/Freezing Order 192

Vesting the shares in Blatherwick Holdings. 193

Recognizance. 195

CONCLUSION.. 195

COSTS.. 195

CONTEMPT MOTIONS.. 196

SCHEDULE A (Offshore Companies Chart) 197

SCHEDULE B (FORM OF Judgment) 198

SCHEDULE C (Admissibility RULING) 202

The Law.. 204

The Background. 208

Undue Prejudice. 209

Adjournment 210

Conclusion on the Additional Financial Document's admissibility. 211

Impact on the Admissibility of Ms. Russell's January 29, 2015 Report 212

Conclusion.. 213

RICCHETTI J.

OVERVIEW

[1] Mr. and Mrs. Blatherwick were married for approximately 39 years. They started a business in Canada selling Halloween costumes and related products in approximately 1999. This business did very well. Eventually, the Halloween business was moved to China to take advantage of manufacturing in China. This Halloween business became operated and managed through offshore companies located primarily in Hong Kong and Macao. Eventually, companies in the British Virgin Islands (BVI) were also incorporated and used in the Seasons Halloween Business. The Seasons Halloween Business products are sold in many countries throughout the world. Eventually, other persons were brought into the Halloween business as partners. I call this related group of companies, the Seasons Halloween Business.

[2] In November 2010, Mr. and Mr. Blatherwick separated. Their children were adults. The only issues to be resolved were financial issues: spousal support and equalization. By the time this matter got to trial, these issues were reduced to two highly contentious issues: What is Mr. Blatherwick’s income? What was the value of his corporate interests at the time of separation?

[3] Four and a half years of litigation, over $2,000,000 in legal and expert fees, and the answer to these two questions are not capable of precise determination. Why?

[4] The first is that Mr. Blatherwick admits there is a "brotherhood of trust" amongst him and his partners in the Seasons Halloween Business. This brotherhood of trust “looks after each other”. During his cross-examination Mr. Blatherwick responded as follows:

Question: “In the event that one of you get into trouble in matrimonial proceedings, your partners quickly come to the rescue?”

Answer: “Yes”.

[5] The second is that Mr. Blatherwick admitted he was a liar and a cheat before Justice Lemon. He was asked at trial whether he conceded at trial that he is a liar and a cheat and carries on business with partners that are the same. His answer was “I concede that”.

[6] The third is that the companies which form the Seasons Halloween Business are located in China and the BVI. Complete financial disclosure was not produced by Mr. Blatherwick. The little corporate documents exist are entirely unreliable. Mr. Blatherwick's excuses for the lack of disclosure of many documents were fanciful and unbelievable. Mr. Blatherwick decided to engage in a "catch me if you can" game.

[7] The fourth was that Mr. Blatherwick's evidence changed, dramatically and on significant issues, regardless of whether his prior positions were in writing or under oath. Nothing short of fundamental changes in position of cataclysmic proportions were announced by Mr. Blatherwick at trial.

[8] The fifth was Mr. Blatherwick's deliberate and flagrant disregard for any and all court orders. Even when discovered to be in breach of an order, Mr. Blatherwick was not deterred from pressing on to do whatever he pleased regardless of whether he knew it continued to breach a court order.

[9] The obfuscation of the facts by Mr. Blatherwick began. Suspension of reality was a phrase that continually came to mind during the evidence.

[10] At the end of the trial, it is clear that Mr. Blatherwick has, and continues to earn, or has available to him, a substantial income. Clearly, Mr. Blatherwick had no desire to part with a reasonable amount of his income to Mrs. Blatherwick as support. He has gone to great lengths to hide his real income.

[11] At the time of separation, Mr. Blatherwick’s corporate interests in the Seasons Halloween Business were complex, stretching from China to the BVI, with sales through many countries in the world. These corporate interests had and have substantial value. These corporate interests generated and continue to generate large profits for the partners.

[12] Mr. Blatherwick threatened his wife that she would not be able to “get at” his offshore business interests. He has done everything he can to carry out that threat.

THE PROCEEDINGS

[13] The above proceedings were heard together with all trial evidence applying to all proceedings.

[14] The trial started on February 2, 2015.

[15] After years of being represented, Mr. Blatherwick was self-represented at trial. He was provided with written information as to the conduct of a trial and invited by this court to ask questions. From time to time during the trial, Mr. Blatherwick was provided information on procedural matters and granted adjournments so that he could properly prepare for the various steps at trial.

The Matrimonial Proceeding

[16] Mrs. Blatherwick commenced this proceeding on November 26, 2010 seeking support, equalization of net family property, declarations of trust over certain properties and transfers of certain property to Mrs. Blatherwick.

[17] Mr. Blatherwick did not take issue with his legal obligation to pay spousal support or make an equalization payment. Quantum was what he disputed.

[18] At the commencement of this proceeding, a motion was brought by Mrs. Blatherwick for a Mareva Injunction and an order freezing and preserving Mr. Blatherwick’s assets. Justice Belleghem issued an order on November 18, 2010 (Mareva/Freezing Order). Essentially, the Mareva/Freezing Order was an attempt to preserve Mr. Blatherwick’s assets pending trial. The list of companies subject to the Mareva/Freezing Order were extensive and clearly set out in the order.

[19] The Mareva/Freezing Order permitted Mrs. Blatherwick's counsel to seize computer hard drives in the Seasons Halloween Business' Ontario offices.

[20] The Mareva/Freezing Order required Mr. Blatherwick to preserve certain evidence and make certain disclosure.

[21] By Order dated November 30, 2010, the Mareva/Freezing Order was continued on consent of Mr. Blatherwick, through his counsel, Mr. Stuart Law of Simpson Wigle Law LLP. The November 30, 2010 order granted an exception to the Mareva/Freezing Order in order to have access to $100,000 from the frozen assets, with such monies to be divided equally between himself and Mrs. Blatherwick.

[22] By Consent Order dated January 25, 2011, the Mareva/Freezing Order was continued. This January 25, 2011 order also required Mr. Blatherwick to produce within one week: an organizational chart of his business interests worldwide and documentation from the Seasons Halloween Business meeting in Denver, Colorado held in September/October 2011. No accurate chart and no documentation from the Denver, Colorado meeting was produced in writing.

[23] By Order dated February 8, 2011, Mr. Blatherwick was granted an exemption of the Mareva/Freezing Order in order to access $50,000 from the frozen assets with such monies to be divided equally between him and Mrs. Blatherwick.

[24] Extensive questioning under oath of Mr. Blatherwick took place over 6 days. Many undertakings, refusals and under advisements were the result.

[25] By Order dated June 23, 2011, Mr. Blatherwick was granted a further exemption of the Mareva/Freezing Order in order to access a further $350,000 from the frozen assets with such monies to be provided to Mrs. Blatherwick as an advance equalization payment.

[26] A motion for interim support and an interim distribution of equalization was brought and scheduled. However, due to a number of issues, the hearing of the motion was delayed.

[27] By Consent Order dated January 25, 2012, the parties agreed to extensive financial disclosure. Mr. Blatherwick was to provide the specified disclosure by February 15, 2012. Production, in accordance with the order, by Mr. Blatherwick was not fully complied with and the issue of the failure to make full disclosure of relevant financial and other documentation began.

[28] Justice Lemon released his decision on interim spousal support and an advance on an equalization payment on February 28, 2012.

[29] Production of relevant financial disclosure from Mr. Blatherwick continued to be an issue. By order dated October 25, 2012, Justice Lemon ordered Mr. Blatherwick to respond to Mrs. Blatherwick’s Demand for Production by December 28, 2012. Again, Mr. Blatherwick failed to make productions in accordance with this court order.

[30] On October 11, 2013, Justice Tzimas dealt with a motion regarding the Seasons HK Application, bankruptcy annulment motion and various matters. Justice Tzimas’s decision on March 5, 2014, provided:

a. The Seasons HK Application was consolidated with the matrimonial proceedings with the specific logistics for trial to be worked out with the case management judge;

b. The bankruptcy stay of proceedings against Mr. Blatherwick was lifted with respect to Mrs. Blatherwick’s matrimonial application;

c. The motion to annul Mr. Blatherwick’s assignment in bankruptcy was dismissed without prejudice to its renewal by Mrs. Blatherwick at trial;

d. Mr. Blatherwick's motion to vary the support was dismissed;

e. The motion to sever the divorce was dismissed; and

f. Mrs. Blatherwick’s motion to find Mr. Blatherwick in contempt of multiple court orders was adjourned to the trial judge.

[31] On May 20, 2014, Justice Lemon, as case management judge, dealt with the logistics of a joint trial of the Seasons HK Application with the Matrimonial Proceeding. Justice Lemon continued to deal with disclosure issues.

[32] By Consent Order dated July 2, 2014, as an exception to the Mareva/Freezing Order, Mr. Blatherwick was permitted to collapse his RRSP and remit the monies to Mrs. Blatherwick’s counsel. This amount was credited to spousal support arrears outstanding to Mrs. Blatherwick. The matrimonial home was also ordered to be sold and the monies remitted to Mrs. Blatherwick.

[33] On December 11, 2014, less than two months before the scheduled trial date, Mr. Blatherwick brought several motions before me including seeking an order to compel the exchange of Affidavits of Documents. What Mr. Blatherwick really sought was the identification of which of his own documents Mrs. Blatherwick’s counsel would rely on at trial. I declined to make such an order. Mr. Blatherwick also sought the return of his passport from the Family Responsibility Officer (FRO). I refused to deal with that motion at the time, deferring it to trial. Mrs. Blatherwick sought a further order requiring Mr. Blatherwick to produce outstanding relevant documentation which had been sought from Mr. Blatherwick several times in the past. Full disclosure and production of relevant documentation by Mr. Blatherwick continued to be a very significant problem. I made the following endorsement:

Given the history of this file and the voluminous record, I doubt that anything at this stage will assist in moving the trial ahead efficiently. The parties have each made disclosure. There is[are] considerable documents, which are relevant which are alleged not to have been produced. This will be a significant trial issue. Ordering an Affidavit of Document will not assist on this issue.

Both parties should attend trial bringing with them proof that any of their productions (not what the other side has produced) has previously been disclosed to the other side. This applies whether they intend to use the document in chief or in cross-examination. If there are any last minute productions either side wants to make, they should do so by Dec 31, 2014. Otherwise any document either side wants to use which has not been disclosed to the other side will not be admitted without leave from me. Both parties should understand that if, during the course of the trial, the evidence discloses they have not produced relevant documents which have been requested by the other side to be produced, the court will consider such refusal or failure in deciding this case as it may affect credibility, result in an adverse inference or other consideration by this court. I urge both parties to make full disclosure of all relevant documents before Dec 31, 2014.

[34] On December 22, 2014, Justice Tzimas ordered Mr. Blatherwick to pay a total of $60,000 in costs to Mrs. Blatherwick.

[35] Where did the production issues stand on December 31, 2014?

[36] There had been six days of questioning Mr. Blatherwick under oath. Numerous undertakings were given. Numerous questions were refused to be answered. There were numerous documents requested to be produced by Mr. Blatherwick during the four and a half years. The result is Trial Exhibit 11. It is a Comprehensive Disclosure Brief which shows where production has been made and the failure by Mr. Blatherwick to respond or produce highly relevant documentation. Mr. Blatherwick was given an opportunity to review this Comprehensive Disclosure Brief before its admission as an exhibit. He agreed that the contents of the Comprehensive Disclosure Brief were accurate, save for a few minor items marked in yellow.

[37] The trial started with considerable, outstanding relevant disclosure by Mr. Blatherwick.

Seasons (HK) Ltd.’s Application

[38] This Application was issued on February 22, 2013. Seasons HK filed a complete application record – a Notice of Application and an affidavit of Mr. Simon Leung. Mr. Leung was one of the partners in the Seasons Halloween Business. This Application sought an order declaring that a property in Halton Hills, registered in the name of a company held by Mr. and Mrs. Blatherwick and their children, was beneficially owned by Seasons HK. Seasons HK in the alternative, sought a vesting order. Mr. Blatherwick consented to the relief sought by Seasons HK in this Application. Mrs. Blatherwick disputed Seasons HK's claim.

[39] On October 24, 2013, Seasons HK amended its Application to add trust and unjust enrichment claims.

[40] Justice Tzimas ordered that the Seasons HK Application be heard at the same time as the Matrimonial and other issues involving Mr. and Mrs. Blatherwick.

[41] Counsel for Seasons HK and Mrs. Blatherwick agreed that no responding materials were required to be filed by Mrs. Blatherwick and that her productions and evidence would be the same as those in the matrimonial proceeding. Essentially, counsel agreed that Mrs. Blatherwick’s legal position was to deny that the subject property was beneficially owned by Seasons HK. These agreements were confirmed by both counsel on the record at trial.

The Bankruptcy Proceeding

[42] Mr. Blatherwick made a voluntary assignment into bankruptcy on April 19, 2013.

[43] Mrs. Blatherwick brought a motion before Justice Tzimas to annul the bankruptcy. Initially, the motion was dismissed without prejudice to its renewal. The matter came back before the court at trial by way of a motion.

[44] The Trustee in Bankruptcy was provided notice of this proceeding and chose not to appear in person or by counsel.

Breaches of Court Orders

[45] Mrs. Blatherwick brought a contempt motion against Mr. Blatherwick for breaching various orders including that Mr. Blatherwick breached the Mareva/Freezing Order by continuing to make payments to fiancées, legal fees and expert fees. Justice Tzimas adjourned Mrs. Blatherwick’s contempt motion to trial. At trial, Mrs. Blatherwick's counsel chose not to proceed with a finding of contempt against Mr. Blatherwick, but instead chose to seek a finding by this court that Mr. Blatherwick had breached various court orders.

The Contempt Motions

[46] During the course of the trial, an issue arose regarding potential consequences of Mr. Blatherwick's alleged breaches of the Mareva/Freezing Order, should such a determination be made.

[47] It was apparent that, during the course of the trial, Mr. Blatherwick continued to pay legal fees to his counsel. Legal fees were also paid to Season's HK's lawyers. It is clear that the amounts paid to the two law firms exceeds $800,000. These amounts were paid to Messrs. SimpsonWigle Law LLP (Mr. Blatherwick’s matrimonial counsel until November 2014) and to Messrs. Ormston List Frawley LLP (Seasons HK’s counsel).

[48] Mrs. Blatherwick’s alleged that these law firms were in contempt because they had knowingly received monies in breach of the Mareva/Freezing Order. Mrs. Blatherwick made a claim for the return of these monies.

[49] Messrs. SimpsonWigle Law LLP, the former counsel for Mr. Blatherwick, were advised that this issue had arisen. Mr. Ormston of Messrs. Ormston List Frawley LLP was present in court when this issue arose.

[50] Rather than deal with this issue during the course of the trial, all parties agreed that this court would determine whether Mr. Blatherwick had breached the Mareva/Freezing Order as part of this trial. This court would make no finding of breach or contempt by the law firms.

[51] If this court were to find that Mr. Blatherwick had breached the Mareva/Freezing Order, then a further hearing would be scheduled, on notice to all parties and giving all parties the opportunity to adduce any evidence and make submissions on the issue of whether the law firms were in contempt of court and, if so, what remedial order should be made.

THE POSITION OF THE PARTIES

[52] Mrs. Blatherwick's seeks an order or finding that:

• Mr. Blatherwick’s income be determined to be as high as $2,850,000 CDN per year;

• Lump sum support be paid in the amount of $9,700,000 CDN;

• An equalization payment be paid in the amount of $4,950,460 CDN (after deduction of partial advance payment) to be enforced as spousal support;

• A declaration that there are no loans outstanding by any of the Canadian Companies to Discovery Bay or Seasons HK;

• Payment of the Mauritius Orangefield Insurance policy’s cash surrender value to Mrs. Blatherwick in partial satisfaction of the payments payable by Mr. Blatherwick under any judgment ordered in this proceeding;

• The bankruptcy of Mr. Blatherwick be annulled;

• Mr. Blatherwick breached the Mareva/Freezing Order and other court orders;

• Mr. Blatherwick appear before this court from time to time;

• The Mareva/Freezing Order be continued until the amounts payable by Mr. Blatherwick under this judgment are paid in full;

• Seasons HK’s application be dismissed with costs;

• a contempt hearing against SimpsonWigle Law LLP and Ormston List Frawley LLP;

• for costs, pre-judgment and post-judgment interest; and

• A support Deduction Order to issue.

[53] Mr. Blatherwick’s position is that:

• His income be determined to be $96,000 per year until his loans to Discovery Bay are fully repaid, at which time his income will increase by $250,000 per year. Spousal support should be determined based on this annual income;

• The equalization payment to be determined using the amounts set out in in his expert’s reports;

• All other relief sought by Mrs. Blatherwick be dismissed; and

• Costs.

[54] Seasons HK’s position is as follows:

• On the basis of various trust claims, a declaration that the Brownridge Property is beneficially owned by Seasons HK;

• In the alternative, Seasons HK is entitled to damages on account of unjust enrichment.

• Costs, pre-judgment and post-judgment interest.

THE PERSONA

Mrs. Blatherwick

[55] Mrs. Blatherwick was born on November 5, 1952. She is 62 years old now. She resides in Ontario. She is unemployed at this time and has no realistic prospect for employment in the future.

Mr. Blatherwick

[56] Mr. Blatherwick was born on November 1, 1950. He is 64 years old now. Mr. Blatherwick is the founder and current principal in the Seasons Halloween Business.

[57] Mr. Blatherwick considers the Philippines to be his home.

[58] Mr. Blatherwick considered his marriage to be over in 2004 or 2005. Ms. Domingo, Mr. Blatherwick’s current fiancée, resides in the Philippines and continues to be supported financially by Mr. Blatherwick. To some extent, Mr. Blatherwick continues to support either or both of his prior fiancées.

Partners of Seasons Halloween Business

[59] Use of the word “partner” or partners is intended to mean that the individual has an interest in one or more of the companies which carry on the Seasons Halloween Business described below. However, as will be seen below, not all partners have an equal interest in the Seasons Halloween Business.

[60] Simon Leung is one of the partners of the Seasons Halloween Business. He is a resident of Hong Kong. Mr. Leung was previously an employee of Funrise, a company which carries on the business of manufacturing and distributing children's toy products. He was recruited by Mr. Blatherwick approximately one year after Mr. Blatherwick had started the Seasons Halloween Business.

[61] Chan Chun Kwon is a resident of China and owns a number of factories in China. Mr. Chan joined Mr. Blatherwick and Mr. Leung during the early stages of the Seasons Halloween Business.

[62] Bill Gravelle is one of the current partners of the Seasons Halloween Business.

[63] Randy Williams is one of the current partners of the Seasons Halloween Business.

[64] Steve Austin is one of the current partners of the Seasons Halloween Business.

[65] Steve Wazkiewicz is one of the current partners of the Seasons Halloween Business.

The Offshore Companies

The Offshore Corporate Holdings

[66] Essentially, Seasons (HK) Ltd. and Seasons Limited – Macao Commercial Offshore are the two primary operating companies in the Seasons Halloween Business. These companies manufacture and sell Halloween products worldwide directly or through subsidiaries. These two companies are essentially operated by the partners as one company and one business. Sales are divided between the two companies: historically 60%:40% respectively but more recently closer to 50%:50%.

[67] Seasons Capital is primarily a holding company, holding properties and investments on behalf of the Seasons Halloween Business.

[68] These companies have subsidiaries. The more significant ones are set out in Schedule A.

Seasons Limited – Macao Commercial Offshore (Seasons Macao)

[69] Seasons Macao was incorporated in Macao on September 15, 2004. The corporate records show that Mr. Blatherwick is the 50% shareholder of this company, with the remaining 50% owned equally between Mr. Gravelle and Mr. Williams.

Seasons (HK) Ltd. (Seasons HK)

[70] Seasons HK is a company incorporated in Hong Kong on March 19, 2008. The corporate records show that 42% of the shares of Season HK are owned by Capitalrich Group Limited (Capitalrich). The remaining shares are owned by Messrs. Leung, Chan, Wazkiewicz and Austin, each owning 14% of Seasons HK. 2% of the shares of Seasons HK have not been issued.

[71] Seasons HK holds 99% of the shares of Season (UK) Limited with the remaining 1% owned by Paul Maurice Kulawy. There is no further information or documentation on Seasons (UK) Limited.

[72] Seasons HK also owns 72% of the shares of Concept Marketing Asia Limited. There is limited information or documentation on Concept Marketing Asia.

Capital Rich Group Limited (Capitalrich)

[73] Capitalrich is a company incorporated in the British Virgin Islands on March 11, 2008. The shares are held by a trustee. Because this is a BVI company, no corporate documents are available to the public to show who are the shareholders, directors or officers of this company.

[74] Capitalrich holds 42% of the shares in Seasons HK.

Seasons Capital Limited (Seasons Capital)

[75] Seasons Capital is a company incorporated in Hong Kong on October 27, 1998 as Seasons (H.K.) Limited. On March 10, 2009 this corporation changed its name to Seasons Capital Limited. This coincided with the commencement of operations for Seasons HK.

[76] MY Commercial Services (MY Commercial) are the accountants for the companies which form the Seasons Halloween Business: Capitalrich, Seasons HK, Seasons Capital, Discovery Bay, and Concept Marketing Asia.

Discovery Bay Limited (Discovery Bay)

[77] Discovery Bay was incorporated in the British Virgin Islands on July 20, 1998. The shares are held by a trustee, Integro Trust. Again, because this is a BVI company, there are no public records showing who are the shareholders, directors or officers of this company.

[78] The exact placement and role of Discovery Bay in the Seasons Halloween Business is difficult to ascertain given the lack of any documentation regarding Discovery Bay. There are virtually no documents which show Discovery Bay's dealings, financially and otherwise with the partners or the Seasons Halloween Business. No further information or documentation is known as to who are the beneficial owners of Discovery Bay. No documentation has been produced regarding Discovery Bay or where the money comes from or who is entitled to the monies in Discovery Bay. No financial statements have been produced regarding Discovery Bay. No agreements, no memorandums – nothing!

[79] What is known is that Discovery Bay has at least one bank account with HSBC located in Singapore and that Mr. Blatherwick is the person who had authority to direct the millions of dollars in that bank account. MY Commercial, the same accountants for the Seasons Halloween Business, is the authorized signatory on the HSBC bank account.

The Canadian Companies

[80] It is important to note that none of the other partners in the Seasons Halloween Business have any interest in the Canadian Companies nor are any of them an officer or director of any of the Canadian Companies. As will be seen below, the fact that Mr. Blatherwick and his family was the sole owner of the Canadian Companies was known to and accepted by his partners prior to the separation.

Blatherwick Holdings Inc. (Blatherwick Holdings)

[81] Blatherwick Holdings was incorporated on June 24, 2008. Mr. Blatherwick and Mrs. Blatherwick each hold 26% of the shares while the remaining shares are held by their three children.

[82] Blatherwick Holdings was incorporated as a vehicle to receive money from the Seasons Halloween Business back into Canada. Very little business is carried on by Blatherwick Holdings.

Rockwood Landco Inc. (Rockwood Landco)

[83] Rockwood Landco was incorporated on June 24, 2008. Blatherwick Holdings holds 100% of the shares of Rockwood Landco.

[84] There are two significant assets held by Rockwood Landco – an office building located at 17 Brownridge Road, Halton Hills (Brownridge Property) and a Cottage located at 14 Victoria Island, South Bruce Peninsula (Cottage).

Concept Marketing Canada Inc. (CMC)

[85] This was the initial company which Mr. and Mrs. Blatherwick incorporated for the Seasons Halloween Business. However, it is clear that over time, the Seasons Halloween Business was carried on by the Offshore Companies rather than CMC.

[86] Mr. Blatherwick holds 50% of the shares in Concept Marketing Canada. The other 50% of the shares are held by Mrs. Blatherwick.

Seasonal Design Group Inc.

[87] Mr. and Mrs. Blatherwick each hold 50% of the shares in Seasonal Design Group.

Joanne Speight

[88] Ms. Speight was a manufacturer and retailer of UV protection clothing in 1999. In early 2009 she met with Mr. and Mrs. Blatherwick. Mr. Blatherwick advised he had his own factories in China with unused capacity. Eventually, they agreed to create a new company – Seasons UV Solutions, where Mr. Blatherwick would own a one third interest, Ms. Speight would own a one third interest and a third party would own the remaining one third interest. Seasons UV encountered some product quality issues resulting in a loss of customers and the business relationship ended in September 2011. While involved with the Seasons Halloween Business, Ms. Speight became privy to certain information regarding the business.

THE ORDER REGARDING INADMISSIBILITY OF CERTAIN EVIDENCE AT TRIAL

[89] During the course of the trial, I refused leave to Mr. Blatherwick to produce and rely on certain new documents not previously disclosed by December 31, 2014, as well as an expert report prepared based on this new documentation. These new documents and additional final expert report were served on Mrs. Blatherwick's counsel on the first day of trial.

[90] I advised the parties of my ruling and that reasons for the ruling would accompany the reasons for judgment.

[91] The reasons are set out in Schedule C hereto.

THE CREDIBILITY OF THE PARTIES AND WITNESSES

Mrs. Blatherwick

[92] Mrs. Blatherwick’s evidence was given clearly and in a forthright manner. She did not attempt to embellish the evidence. She readily admitted what she did not know. She readily responded to any question asked by Mr. Blatherwick.

[93] Her memory was clear. She recalled details of events. She was not seriously challenged in her evidence, including her evidence that she has virtually no income and no realistic prospect of employment.

[94] I accept her evidence.

Mr. Blatherwick

[95] I reject the entirety of Mr. Blatherwick’s evidence. It is neither credible nor reliable. There are numerous reasons for rejecting his evidence. They include:

a) Mr. Blatherwick conceded that he is a “liar and a cheat” and carries on business with partners that are the same. Mr. Blatherwick conceded that he and his partners are friends and have a “brotherhood of trust”. Mr. Blatherwick admitted that the “brotherhood of trust” comes to the rescue when one of the “brotherhood” is involved in a matrimonial dispute. He and his partners met and agreed to assist Mr. Blatherwick in this matrimonial litigation to protect the Seasons Halloween Business from Mrs. Blatherwick. Mr. Blatherwick admitted several examples as to how this brotherhood of trust has operated in the past. In the first example, he helped one of his partners receive money from the Seasons Halloween Business in a manner to avoid the partner’s wife knowing about the monies paid to the partner. In another example, he admitted that one of his partners helped Mr. Blatherwick deliver cash to one of his fiancées during the course of these proceedings, clearly in a manner to prevent Mrs. Blatherwick's knowledge of the payment. In another shocking example, one of Mr. Blatherwick’s former fiancées was delivered money by one of the partners so that she would not speak with Mrs. Blatherwick’s investigators. The Seasons Halloween Business partners, including Mr. Blatherwick, have already lied and cheated to protect their corporate interests from matrimonial claims against other partners. I see no reason why they would not continue to do so;

b) Mr. Blatherwick falsely represented his income to Revenue Canada for many years until his income was about to become public in a court ruling. Then, he decided to make voluntary disclosure but, even the voluntary disclosure made, he did not make full disclosure of all his income over the years;

c) Mr. Blatherwick lied in his Citizenship & Immigration Canada application to sponsor his fiancée, Desiree Domingo by stating that he was widowed and that his wife had died on December 12, 2005. In another Citizenship & Immigration Canada application in 2010 to sponsor Vanessa Sagmit, he stated that he had never been married;

d) Mr. Blatherwick testified that he knowingly and admittedly breached several orders of this court. In particular, Mr. Blatherwick admitted, in his June 27, 2011 affidavit, that he knew he had breached the Mareva/Freezing Order by paying monies to his fiancées. Having admitted this, one would have expected Mr. Blatherwick to refrain from continuing to breach the Mareva/Freezing Order after June 27, 2011. Yet, he continued to make payments to his fiancées, contrary to the Mareva/Freezing Order. In another example, after testifying that he did not have money to pay court ordered interim support to Mrs. Blatherwick and having allowed the support arrears to accumulate to over $500,000, in approximately December 2014, Mr. Blatherwick sent cash to his current fiancée, hoping that by doing so, Mrs. Blatherwick and the court would not find out. However, this came to light when Mr. Blatherwick’s fiancée put a copy of the package with the $6,000 cash on her Facebook page;

e) Mr. Blatherwick carries on business in an illegal manner. He bribes government officials with “red envelopes” to have government officials do “favors”; he converts currencies by secretive illegal cash exchanges; and he expenses personal expenses to business accounts. Mr. Blatherwick bribes Chinese government auditors to keep the taxation level of the Seasons Halloween Business at lower levels;

f) Mr. Blatherwick decided that his marriage was over in as early as 2004 and after finding out that a divorce would result in him losing half his wealth and income, he reconciled with his wife telling his wife their marriage was “good” and that the affair had been a one night stand. This was a lie. Mr. Blatherwick was engaged. He continued to lie to Mrs. Blatherwick for years. Over the years, Mr. Blatherwick has had three fiancées and sent them, by bank transfers, $910,000.00 USD based on the limited documentation available from Discovery Bay. He also had at least one girlfriend. No doubt there were many other cash payments or expenses incurred by Mr. Blatherwick for these fiancées and his girlfriend in addition to the bank transfers;

g) Mr. Blatherwick repeatedly told his wife, before and after separation, how difficult her matrimonial claim would be and she would never be able to access his assets in China. He even threatened that he would go bankrupt if she didn't settle. All of this came to be;

h) Mr. Blatherwick deliberately failed to produce many documents which he could have and should have produced. He produced documents only when he thought they might assist him. In some cases, Mr. Blatherwick, rather conveniently, said he no longer had access to the many missing documentation. However, when he thought that a document might help him, he was able to produce it - even during his closing!

i) Mr. Blatherwick testified that Seasons Halloween Business corporate documentation is not reliable;

j) What few documents have been produced by Mr. Blatherwick are suspect. Some documents were undoubtedly produced after the fact and without regard to the truth or reality. The only criteria was whether a document would help Mr. Blatherwick in these proceedings; and

k) Mr. Blatherwick's testimony was evasive and made little sense;

[96] And if that weren’t enough to make this court’s determination difficult, there was an ever evolving change to which companies Mr. Blatherwick had an interest. One moment Mr. Blatherwick had shares in one company and next moment he did not – in one case, this revelation occurred on the witness stand when Mr. Blatherwick, after four and a half years of saying that he had no shares in a particular offshore corporation, suddenly admitted he did have shares in that company. If that wasn’t enough, Mr. Blatherwick had admitted having shares in another offshore company for four and a half years, announced at trial that he had been wrong all along and had no shares in that company.

[97] The suggestion by Mr. Blatherwick that his “brotherhood of trust” would not go so far as to commit perjury was laughable given the obvious false statements he made in affidavits under oath and evidence given during trial. Only one of the six remaining partners showed up to testify at trial. The partner that testified, Mr. Leung, brought with him an altered and backdated document on a key issue to be decided by this court!

Mr. Leung

[98] I reject much of Mr. Leung’s evidence. He is a long-time friend of Mr. Blatherwick. He is one of the “brotherhood of trust”. He was central to several documents that were created and back-dated. Some of my serious concerns regarding Mr. Leung’s evidence include:

a. Mr. Leung appeared confused when it came to the corporate structure of the Seasons Halloween Business despite the submission by Mr. Blatherwick and Seasons HK that it was Mr. Leung who was in charge of the Season Halloween Business and not Mr. Blatherwick. Mr. Leung did not appear certain as to who owned Seasons Capital or Capitalrich - two very significant companies in the Seasons Halloween Business. Mr. Leung testified he “thinks” Seasons HK owns Seasons USA, but again, he wasn’t really sure. Yet, amidst all of this alleged uncertainty, Mr. Leung was the person who allegedly told Mr. Blatherwick shortly before trial that Mr. Blatherwick does not own any shares in Capitalrich but does own shares in Seasons Capital. And for the first time, Mr. Leung suggested he owns 25% of the shares in Seasons Macao despite nothing in the records and four and a half years of evidence that Mr. Blatherwick (50%), Mr. Gravelle (25%) and Mr. Williams (25%) were the shareholders of Seasons Macao. Mr. Leung was also unable to name the Trustee for Capitalrich despite the approximately 42% of shares Capitalrich holds in Seasons HK – which Mr. Leung now says are his shares – not Mr. Blatherwick’s shares. Mr. Leung was also unsure whether Capitalrich had bank accounts. Mr. Leung testified using phrases such as “To the best of my knowledge” to avoid being definitive of any particular answer. Clearly, Mr. Leung was involved in this complex shell game of "who owns what" in the Seasons Halloween Business. Given Mr. Blatherwick's epiphany at trial as to what shareholdings he did and did not have, Mr. Leung's evasive and uncertain answers appeared designed not to conflict with any answers Mr. Blatherwick may have given to this court;

b. Despite his evidence that he is the principal person in authority at the Seasons Halloween Business, On July 2011 Mr. Leung completed an information package to Warner Brothers where he represented that he owned 15% of Seasons HK and Seasons Macao and that Mr. Blatherwick owned 55% of Seasons HK and Seasons Macao;

c. Mr. Leung was unsure whether or not Seasons owned the Crystal pumpkin patent, who owned it, or whether royalties or fees were paid or received. This is surprising giving that, according to Mr. Blatherwick, approximately $7,000,000 USD in sales (approximately one sixth of the entire Seasons Halloween Business sales worldwide) are generated by this product;

d. Despite being the sole affiant in support of Seasons HK’s application for the declaration that Seasons HK is the beneficial owner of the Brownridge Property, Mr. Leung could not remember if the Brownridge Property was listed as a current asset in the Seasons HK’s books. Mr. Leung had no independent recollection of when the Brownridge Property was purchased. Mr. Leung did not know what the purpose of Rockwood Landco was or who the shareholders were. Mr. Leung had no involvement in the purchase of the Brownridge Property (a multi-million dollar asset allegedly owned by Seasons H.K). Specifically, Mr. Leung never spoke to the lawyer or a real estate agent in Ontario who dealt with the purchase of the Brownridge Property. This lack of personal involvement seriously undermines Mr. Leung’s knowledge of the purpose and acquisition of the Brownridge Property;

e. Mr. Leung appeared to have little knowledge of the Discovery Bay monies and bank accounts despite the millions of dollars from the Seasons Halloween Business that found its way to the Discovery Bay bank accounts. From 2006 to 2010 Mr. Leung received approximately $1,600,000 USD from Discovery Bay. Mr. Leung, like Mr. Blatherwick denied knowing much about Discovery Bay. Mr. Leung set out in his affidavit of February 14, 2012 that Mr. Zheung (a third party whom the Seasons Halloween Business had a business relationship) deposited money into Discovery Bay and permits Mr. Blatherwick and himself to take $100,000 per year. This explanation doesn’t reconcile with the MY Commercial statements which show many transfers to or for Mr. Blatherwick and Mr. Leung well in excess of this amount. This explanation is also inconsistent with the calculation by Mr. Blatherwick’s former counsel that Mr. Blatherwick and Mr. Leung each withdrew approximately $1,600,000 over the years 2006 to 2010 from Discovery Bay. How could Mr. Leung not know details about Discovery Bay when he had received such large amounts of money from Discovery Bay? I conclude that Mr. Leung is a participant in this shell game regarding Discovery Bay and was not prepared to be forthright and honest when giving his evidence;

f. Despite the fact Mr. Blatherwick testified, Mr. Leung was advancing personal funds to pay for Mr. Blatherwick’s former lawyer, Mr. Leung knew little about the amounts paid and did not know how much money he or Seasons HK had paid to Mr. Blatherwick’s former lawyer. Prior to trial, Mrs. Blatherwick’s counsel wrote to Mr. Blatherwick asking Mr. Leung to bring copies of the bank statements for certain payments allegedly made by Mr. Leung personally to Mr. Blatherwick’s former lawyer. Mr. Blatherwick and Mr. Leung alleged that these were "loans" from Mr. Leung. Mrs. Blathewick's counsel wanted to verify from which bank accounts the monies originated - Mr. Leung's personal account or Seasons HK account. Mr. Leung failed to bring the documentation. The logical inference to be drawn is that Mr. Leung is assisting Mr. Blatherwick avoid the effects of the Mareva/Freezing Order by falsely characterizing monies paid to Mr. Blatherwick's lawyer as "loans" from Mr. Leung, instead of what they really were - payments to Mr. Blatherwick from the Seasons Halloween Business;

g. When questioned about a significant letter Mr. Leung wrote on June 7, 2011 confirming that Mr. Blatherwick owed money to Discovery Bay, Mr. Leung’s recollection as to how this letter came about was vague. The letter, as discussed below, was created to respond to a concern raised by Mr. Blatherwick's former counsel and to support a re-characterization of monies Mr. Blatherwick had received from Discovery Bay - the same company Mr. Leung knew little about during his evidence at trial. Mr. Leung did as he was asked and signed a letter confirming that the monies Mr. Blatherwick had received from Discovery Bay above a certain amount were loans. Mr. Leung could do that within a day, yet Mr. Leung could not provide this court with any information regarding Discovery Bay; and

h. When asked if he knew of an agency agreement between Mr. Zheung (Carnival Trading) and Seasons Halloween business, Mr. Leung responded: “I believe so.” Until shown the alleged agency agreements, Mr. Leung wasn’t even sure how much Mr. Zheung was paid despite testifying that he “oks” every payment out of Seasons HK. It is hard to imagine that Mr. Leung, particularly, if he was in charge of the Seasons Halloween Business as Mr. Blatherwick alleges and as Mr. Leung would like this court to believe, would not know whether there was an agency agreement with Mr. Zheung’s company when Mr. Zheung allegedly receives 7% of the gross sales of the Seasons Halloween Business. On last year's estimated gross sales of $42,000,000 USD, this would be approximately $7,000,000 USD!

[99] I conclude that Mr. Leung's evidence is neither credible nor reliable.

Joanne Speight

[100] Ms. Speight was called by Mrs. Blatherwick to establish two essential facts: Seasons Halloween Business owns factories in China and that Mr. Blatherwick had the ultimate authority in the Seasons Halloween Business, including over other partners. Ms. Speight also produced a renewal of her company's right to use Warner Brother trademarked characters while she was involved with Mr. Blatherwick and Seasons Halloween Business. This document was completed by someone in the Seasons Halloween Business and it showed Mr. Blatherwick as a 55% owner of the Seasons Halloween Business. Of course, Mr. Blatherwick did not know who completed this and said the shareholding in this document was wrong.

[101] I recognize that Ms. Speight was unhappy with the way the business arrangements with Mr. Blatherwick and the Seasons Halloween Business worked out. However, considering her entire evidence, including the fact much of it was confirmed by documentation prepared by the Seasons Halloween Business, I accept Ms. Speight’s evidence. It was clear and, essentially, un-contradicted.

THE FAILURE TO PRODUCE DOCUMENTATION

[102] Given the statements made by Mr. Blatherwick to Mrs. Blatherwick that, in a divorce, she would not be able to access his offshore holdings because he had "arranged" things, Mrs. Blatherwick obtained the Mareva/Freezing Order. This turned out to be fortuitous since, Mr. Blatherwick's computers were seized. Mr. Blatherwick's computers contained a number of financial and other documents, which provided the best glimpse into the actual operations of the Seasons Halloween Business. In particular, the seized documents were the only documents which showed some of the movement of monies in Discovery Bay for some years.

[103] There were certain provisions in the Mareva/Freezing Order for preservation and disclosure. These were ignored by Mr. Blatherwick. His failure to produce documents includes:

a) the deletion of all communications contained on Mr. Blatherwick's email: brianblatherwick@me.com. This email account contained Mr. Blatherwick's dealings with Discovery Bay. Mr. Blatherwick testified this deletion occurred automatically after a period of time. However, even if true, he failed to explain why he didn't "preserve" the information before they were deleted automatically;

b) the failure to provide the account numbers of Mr. Blatherwick's personal HSBC accounts in advance of accessing them and provide a tracing of significant expenditures made through these account. No explanation was ever given by Mr. Blatherwick for this failure;

c) the failure to produce documentation from the Seasons Halloween Business meeting in Denver Colorado in September/October 2010. Mr. Blatherwick's explanation was that there was no agenda, no presentation, no notes - nothing - from this "partner's" meeting despite the fact there was a detailed presentation for the February 2010 partners meeting.

[104] There were six days of questioning under oath of Mr. Blatherwick. Many undertakings were given by Mr. Blatherwick for production of documents. Many questions were refused. There were many disclosure requests in writing by Mrs. Blatherwick’s counsel. There was a consent order for the production of documents. Yet, many documents, primarily financial documents, have not been produced and the absence of highly relevant documents became a significant and recurring issue throughout the trial.

[105] The Comprehensive Disclosure Brief, Exhibit 11, is a lengthy brief which includes demands for disclosure and productions by Mrs. Blatherwick’s counsel. It also includes the responses from Mr. Blatherwick’s counsel or Mr. Blatherwick, if any, to the disclosure requests. The contents of the Disclosure Brief (except for a few highlighted items) were accepted by both parties as accurately reflecting what disclosure/production was requested and what was produced/not produced. It is a scathing compendium of non-disclosure and non-production of highly relevant documentation.

[106] Examples of highly relevant documentation not produced by Mr. Blatherwick include:

a) For a period of 11 years, only five pages of minutes for Seasons Macao were produced. No director/shareholder resolutions were produced. Only the certified corporate documents, obtained by Mrs. Blatherwick, were produced at trial;

b) There are no minutes or resolutions for Seasons HK;

c) There are no documents from Capitalrich. No financial statements. No minutes. No resolutions. No agreements. No bank statements. Nothing. This made it easy for Mr. Blatherwick, after four and a half years of admitting he had shares in Capitalrich, to advise this court that he had learned the week before trial that he had and has no shares in Capitalrich. Without documents, he could say whatever he wanted to regardless of what he had admitted for four and a half years. There was no documentary proof to the contrary;

d) There are no documents from Seasons Capital. No minutes. No resolutions. No agreements. No bank statements. As a result, it was easy for Mr. Blatherwick to deny for four and a half years that he had any shares in Seasons Capital and then testify that he found out a month ago that he in fact did hold 25% of the shares Seasons Capital. At trial, it was admitted by Mr. Blatherwick that the Seasons’ partners had met and decided not to produce documents with respect to Seasons Capital. The response to the questioning of Mr. Blatherwick to produce Seasons Capital documentation was: “Mr. Cox was advised on March 7, 2013 that Seasons Capital will not disclose this information since Mr. Blatherwick does not own any part of it.”

e) Despite Mr. Blatherwick admitting he had authority to transfer money from Discovery Bay’s bank account and had used his authority to transfer approximately $8,900,000 USD (based on the documents available), absolutely no documents were produced from Discovery Bay. No bank statements, no authorizations, no documents regarding who owns, controls or directs this Company. Nothing. Yet, the transfer statements found on Mr. Blatherwick’s computer showed that reporting and instructions for the Discovery Bay's bank account, remained with Mr. Blatherwick until at least December 18, 2012. As a result, it is easy for Mr. Blatherwick to say that he no longer has signing authority or that he no longer receives no money, he receives a limited amount of money from Discovery Bay, or that he owes Discovery Bay "loans". There are no documents to establish or confirm this allegation by Mr. Blatherwick;

f) MY Commercial Services are the accountants for: Capitalrich, Seasons HK, Seasons Capital, Discovery Bay, and Concept Marketing. Aside from some financial statements for Seasons HK and Seasons Macao, no other documents were produced from MY Commercial by Mr. Blatherwick. Only a few MY Commercial documents were found on Mr. Blatherwick's seized hard drive. MY Commercial, the accountants for the Seasons Halloween Business, advised it refused to produce any information or documentation regarding Discovery Bay. As accountants that would not have been its decision but that of the person instructing it – who for years was and likely continues to be Mr. Blatherwick;

g) Mr. Blatherwick admitted that the partners of the Seasons Halloween Business met for business meetings from time to time each year. As a result of the seizure of Mr. Blatherwick’s computer, a copy of the February 22, 2010 Business Plan presented in Las Vegas was available to this court. The Las Vegas Business Plan contained information regarding sales, profit, ownership structure, customers and so forth. This singular document provides the best evidence as to the details of the ownership and business of the Seasons Halloween Business. A further business meeting was held by the partners in Denver, Colorado in September or October 2010. Despite a court order to produce documents from this meeting, no business plan, no agenda, no notes were produced for this or any other business meeting prior to or subsequent to the Las Vegas meeting;

h) And then there were the Seasons Halloween Business investments. Some of the documents found on Mr. Blatherwick’s hard drive showed a number of investments. Two such investments were entitled “Barclay’s Funds”. Despite repeated requests, no specific documents regarding these funds were produced until trial. Eventually, Mr. Blatherwick produced them during the trial. The two Barclay Funds had a value of $7,400,000 HKD (just over $1,000,000 USD);

i) At times during his questioning under oath, Mr. Blatherwick admitted he had accounts with his fiancées. However, he produced none of those banking documents. Interestingly after lunch, on the same day of questioning when he admitted having these bank accounts, he returned and denied having any such bank accounts. In the end, none of the bank accounts were produced; and

j) At approximately the time of separation, there were some discussions about a sale of the Seasons Halloween Business for a price of $42,000,000. Mrs. Blatherwick testified that she heard of this. She also heard that the transaction didn't close. She didn't know what happened. Mrs. Blatherwick's evidence was confirmed when the evidence established that Mr. Blatherwick told his expert, Ms. Russell, about these sale discussions but he didn’t produce any documents or provide any detailed information to Ms. Russell about what had occurred with respect to the possible sale. This was significant as a value had been placed on the Seasons Halloween Business by a third party of $42,000,000 USD. When asked under oath, Mr. Blatherwick said nothing happened with respect to this discussion. Cross-examination of Mr. Blatherwick produced nothing more.

[107] In conclusion, there were serious limitations on financial statements, bank statements, corporate documents and many other documents which were relevant to the determination of Mr. Blatherwick’s income and the value of his assets and corporate interests on separation. I conclude that Mr. Blatherwick’s failure to produce many documents was because they would not assist his case. An adverse inference is drawn by this court arising from this failure.

[108] The evidence also satisfies me that this failure to produce relevant documents was a deliberate effort to deny Mrs. Blatherwick’s counsel and expert full and meaningful disclosure of all relevant documentation. The reasons for my reaching the conclusion include:

a) despite an obligation to produce relevant documents and orders of this court, when Mr. Blatherwick felt it was to his advantage he was able to produce additional documents. For example when additional documentation was requested by Ms. Russell, Mr. Blatherwick was able to produce, on short notice, almost a full box of new and additional financial documentation;

b) During the course of Mr. Blatherwick's cross examination, he admitted that he had a certain previously undisclosed financial document. He connected his laptop to the projector in the courtroom and the previously unproduced financial document was viewed by all; and

c) During the course of Mr. Blatherwick's closing he produced an additional statement of Discovery Bay despite having testified that he didn't have access to any other Discovery Bay documents other than those seized on his computer. Clearly, when Mr. Blatherwick wants to produce Seasons financial documentation which he thinks will help him, he can produce the documentation.

THE RELIABILITY OF SEASONS’ DOCUMENTATION

[109] Let me now turn to the reliability of what little documentation has been produced by Mr. Blatherwick.

[110] With respect to the corporate documents, Mr. Blatherwick testified that the documentation is completely unreliable and that an "outsider" would not be able to accurately understand the corporate information. It was unclear to me whether this related to all the corporate documentation or simply to the non-financial documentation - a position urged upon this court by Seasons HK's counsel.

[111] Giving Mr. Blatherwick the benefit of the doubt that he was not suggesting all corporate documentation is unreliable, let me go on to deal with the reliability of the financial documentation disclosed.

[112] As the discussion above indicates, the failure to produce a substantial number of highly relevant Seasons Halloween Business' documentation, which includes financial documents, leads to the irresistible inference that what Mr. Blatherwick doesn’t want to produce, he doesn't. As a result, how can any reliance be placed on the limited financial documents produced?

[113] In my view, there is a very serious concern regarding the reliability of the financial documentation produced, the most significant of which was that certain financial documents created during the course of this proceeding and back dated. A few significant examples will suffice:

1) Loans from Discovery Bay

[114] Mr. Blatherwick had taken the position in this proceeding that his annual entitlement from Discovery Bay was limited to either $100,000 per annum or $200,000 per annum. Mr. Blatherwick’s previous counsel reviewed the available documentation from Discovery Bay. He raised concerns in an email dated June 6, 2012 to Mr. Blatherwick that Mr. Blatherwick had received approximately $1,600,000 USD from 2006 to 2010. A copy of this email was also sent to Mr. Blatherwick’s expert, Ms. Russell. Mr. Blatherwick wrote back: “Re Money to Other Partners Out of DB” stating: “I will have Simon send a letter today stating that I took more than my allocation of $200,000.00 and the rest will be deemed a loan to Discovery Bay and we will draft a loan agreement.” (emphasis added)

[115] It would come as no surprise that Mr. Leung wrote a letter on June 7, 2011 confirming that Mr. Blatherwick had overdrawn monies from Discovery Bay and that Mr. Blatherwick owed a significant amount of money to Discovery Bay.

[116] It was clear to me that this letter from Mr. Leung appeared to be an after the fact re-characterization of monies Mr. Blatherwick had received from Discovery Bay. There is no document limiting Mr. Blatherwick's draw from Discovery Bay and, based on the limited documentation, he had already authorized transfers of approximately $8,900,000 USD out of the Discovery Bay bank account. Exactly how much is a mystery since the statements for all the Discovery Bay deposits and withdrawals for all years have never been produced.

[117] Mr. Leung originally testified that he thought Mr. Blatherwick’s counsel might have drafted this letter confirming that Mr. Blatherwick owed loans to Discovery Bay. However, within a few moments, this did not appear to be a good answer to Mr. Leung. So, Mr. Leung later testified he might have created the letter with help from Mr. Blatherwick. Essentially, either Mr. Blatherwick’s lawyer or Mr. Blatherwick and Mr. Leung together co-authored this letter and then sent it to Mr. Blatherwick’s lawyer as proof that Mr. Blatherwick had loans owing to Discovery Bay and his income was consistent with what Mr. Blatherwick had previously testified to.

[118] What prior letters or documents did Mr. Leung prepare for or on behalf of Discovery Bay? None.

[119] What documents show Mr. Leung having any authority over Discovery Bay? None.

[120] The amounts withdrawn from Discovery Bay are not fully identifiable due to lack of complete documentation from MY Commercial and the lack of any documentation from Discovery Bay. Mr. Blatherwick’s counsel wrote to Mr. Blatherwick on June 6, 2011, setting out that over the years from 2006 to 2010 the amounts received from Discovery Bay were:

• Mr. Leung $1,500,000

• Mr. Blatherwick $1,665,000

• Mr. Williams $765,475

• Mr. Gravelle $767,500

[121] The above total also suggests that Mr. Blatherwick received approximately $400,000 per annum from Discovery Bay alone. Not surprisingly and consistent with there being no loan, no one has suggested Mr. Leung (who received a similar amount of money as Mr. Blatherwick), Mr. Williams or Mr. Gravelle have any loans to Discovery Bay.

[122] The above makes it clear that, in reality, there are no loans owed by Mr. Blatherwick.

[123] Let me move on to another troubling aspect of alleged loans from Discovery Bay. Mr. Blatherwick’s June 27, 2011 affidavit attaches a copy of a Promissory Note dated March 26, 2009, from Rockwood Landco to Discovery Bay in the amount of $400,000. This Promissory Note only appeared shortly after Mr. Blatherwick’s counsel reviewed with him Mr. Blatherwick’s withdrawals from Discovery Bay. The Promissory Note dated March 26, 2009, simply makes no sense in light of all the evidence of Mr. Blatherwick's lifestyle and outstanding monies owed to him from Seasons Halloween Business. Eventually, after considerable cross-examination on the issue, Mr. Blatherwick admitted the Promissory Note was prepared in June 2011 and back dated to March 26, 2009.

[124] Clearly, the Mr. Leung letter and the Promissory Note are connected. They were fabricated after the fact to assist Mr. Blatherwick in these matrimonial proceedings by reducing Mr. Blatherwick's income by creating loans. Mr. Leung helped Mr. Blatherwick to produce these documents.

[125] I conclude that, since Mrs. Blatherwick's counsel had, because of the seizure, some of MY Commercial statements regarding transfer in Discovery Bay, Mr. Blatherwick needed documentary evidence to demonstrate that monies he had taken out of Discovery Bay was not income. So the Mr. Leung letter and the Promissory Note were created in June 2011to support Mr. Blatherwick's position in this proceeding.

2) The Cottage Financing

[126] Mr. Blatherwick’s financial statement sworn June 26, 2011 lists a $375,000 personal loan "from Discovery Bay re: Acquisition of Bruce Peninsula Cottage".

[127] However, this became problematic to Mr. Blatherwick since it was a personal loan, yet the Cottage was owned by Rockwood Landco which was held by himself, his wife and his children. His family would own the Cottage and he would have the debt!

[128] So in June 2011 Mr. Blatherwick re-categorized this as a $400,000 USD loan from Rockwood Landco to Discovery Bay and the Promissory Note dated March 26, 2009 was created. The hoped for result by Mr. Blatherwick was that Mrs. Blatherwick and the children's interest in the Cottage would become encumbered by the loan to Discovery Bay - an entity controlled by him. The result would be little or no equity in the Cottage for Mrs. Blatherwick and/or the children.

[129] There was no explanation how the debtor changed or the amount changed.

[130] Clearly, this was a fumbled attempt for Mr. Blatherwick to create a personal loan, but when that was problematic, he created documentation to suggest it was a corporate loan. Creating documents and back-dating them is not beyond Mr. Blatherwick.

3) The Brownridge Property

[131] Seasons HK’s accounting records were produced showing payments made for the Brownridge Property. The accounting records show that from June 22, 2010, to June 10, 2011, monies flowed from Seasons HK to CMC and were noted on the statement as “Mortgage & taxes for Rockwood Landco building, loan to CMC.” (emphasis added)

[132] These documents are very damaging to Seasons HK’s position in its application since the Seasons HK’s records show that the money advanced to purchase the Brownridge Property was a loan to CMC. The problem for Seasons HK is that this evidences the creation of a loan and not a trust arrangement. Even a claim for unjust enrichment is defeated if the juristic reason for the advance was a loan. Seasons HK's trust and unjust enrichment claims were at risk.

[133] This problem needed to be overcome by Mr. Blatherwick. How?

[134] When Mr. Leung came to trial to testify, he brought an “up to date copy” of Seasons HK's payment history to show the most recent payments. This document was admitted into evidence despite the fact it was not produced before December 31, 2014 because the court was advised that this new payment statement simply updated the payments from original statement. Not so. The new payment statement had changed the characterizations and purpose of the payments made by Seasons HK. Not just the recent payments, but the prior references to a loan to CMC had all been revised and re-written. A blatant attempt to introduce back dated re-characterized statement to help Season HK’s position.

[135] The new payment statement, including the older entries, had been changed and now many entries stated “Mortgage repayment & loan interest for Canada bldg.” In other words, it no longer suited Seasons HK to show that it had loaned money to CMC when it was taking the position that the Brownridge Property was beneficially owned by Seasons HK.

[136] This new clearly altered payment statement was presented to the court so that the new statement would be more consistent with Seasons HK’s position that it is the beneficial owner of the Brownridge Property.

[137] When the alterations and backdating came to light, Mr. Leung’s explanations were simply outrageous and unbelievable. He suggested that the accountants must have made mistakes, recently realized their mistakes and corrected them. His denial of any knowledge of the changes was not believed.

[138] I find that the recent Seasons HK payment statement has no reliability whatsoever. I also find that Mr. Leung was a participant in the alteration and back dating of the entries in the new payment statement to suit Seasons HK and Mr. Blatherwick's purpose - namely to exclude an exigible asset in this jurisdiction by way of a judgment which Mrs. Blatherwick might obtain in the Matrimonial Proceeding.

THE FACTS

The Marriage

[139] Mr. Blatherwick and Mrs. Blatherwick met in high school in Alberta. They were married on July 3, 1971. They now have 3 adult children.

[140] In 1976, after adopting their first child, both Mr. and Mrs. Blatherwick decided that Mrs. Blatherwick would remain at home while Mr. Blatherwick continued to be employed. There is no dispute that, for a number of years, Mrs. Blatherwick was the primary caregiver for the children while Mr. Blatherwick focused on financially supporting his family.

[141] In about 1980, after having adopted another child and giving birth to their third child, Mr. Blatherwick became employed by a company which required a significant amount of international travel. Mrs. Blatherwick’s primary responsibilities continued to be taking care of the children and managing the home. This permitted Mr. Blatherwick to focus on his employment career.

[142] In 1985, after the children had grown, Mrs. Blatherwick became employed part time. However, this did not diminish her responsibilities for the children and the home. Mr. Blatherwick’s employment continued to require him to travel significant periods of time.

[143] In the late 1980's Mr. Blatherwick’s employer went bankrupt. Funrise, a company which manufactures and retails children's products in Ontario, approached Mr. Blatherwick in 1989 to assist them in expanding their business to include Halloween products. Mr. Blatherwick accepted the job. His new employment required him to relocate to Ontario. In 1990, Mrs. Blatherwick and the children moved from Edmonton to Oakville.

[144] Mr. Blatherwick continued to be employed by Funrise for about nine years spending considerable time abroad. Mr. Blatherwick met Mr. Leung at Funrise. Mr. Leung reported to Mr. Blatherwick. Mr. Leung and Mr. Blatherwick became close friends.

[145] By 2004 or 2005 Mr. Blatherwick decided that his marriage was over. He had been engaged to a woman in the Philippines. He decided to seek legal advice. Mr. Blatherwick understood that, in a divorce, he would have to share 50% of his assets and his income with Mrs. Blatherwick.

[146] Mr. Blatherwick decided to remain married. Mr. Blatherwick sent a number of letters/emails to Mrs. Blatherwick confirming that he was committed to her and to their relationship. The "woman", according to Mr. Blatherwick was a "one night" fling. Unknown to Mrs. Blatherwick, the "woman" was Mr. Blatherwick's fiancée and Mr. Blatherwick continued to believe his marriage was over. In the end, the "woman" was the first of three fiancées for whom he bought or renovated all of their homes.

The Separation

[147] Mr. and Mrs. Blatherwick had some difficulties leading up to their separation in November 2010. During one attempt to save their marriage, they travelled to Vancouver. Things did not go very well towards a reconciliation. Mr. Blatherwick told his wife that she would not get any money from the Seasons Halloween Business and that, if needed, he would go bankrupt in Canada.

[148] Prior to separation, Mr. Blatherwick again told Mrs. Blatherwick that she would not get a fair share of the Seasons Halloween Business if she left him because he had made trust arrangements with his partners which put his offshore assets outside her reach.

[149] These statements were intended to intimidate Mrs. Blatherwick into settling her family law claims. These statements did not achieve the intended purpose.

[150] On October 13, 2010 Mr. Blatherwick moved out of the matrimonial home, 130 Milne Place. The matrimonial home was registered solely in Mrs. Blatherwick’s name.

[151] At separation, there was also a bank account in Mrs. Blatherwick’s name with approximately $127,000 CDN in the account. The agreed upon value of the matrimonial home on separation was $552,000 CDN.

[152] Mr. and Mrs. Blatherwick separated on November 18, 2010.

[153] The matrimonial proceedings started immediately thereafter with the attendance before Justice Belleghem to obtain the Mareva/Freezing Order.

[154] Since separation, Mr. Blatherwick has spent little time in Canada.

[155] In February 2012, there were attempts to settle the matrimonial litigation. In April 2012, Mr. Blatherwick again told his wife that, if his offer was not acceptable, he would go bankrupt.

[156] Mr. Blatherwick failed to pay interim spousal support as ordered by the court. The outstanding arrears for interim support was approximately $553,000 as of January 30, 2015.

[157] Mr. Blatherwick has failed to pay outstanding cost orders.

[158] Despite this, Mr. Blatherwick continues to support Ms. Desiree, including arranging for cash to be delivered to her. His rationale? Ms. Desiree has no other means of support.

The Blatherwick's Lifestyle Prior to Separation

[159] During the years leading up to the separation, Mr. Blatherwick provided large amounts of cash to Mrs. Blatherwick on a regular basis to pay credit cards, for travel, for expenses and so on. In one example, Mr. Blatherwick mailed home a Halloween Skull product filled with $25,000 in cash. Mr. Blatherwick would always bring back cash when he returned to Canada, he says about $10,000 each time while Mrs. Blatherwick suggested it was much more. What is clear is that there was never a shortage of cash in the Blatherwick household.

[160] Mr. Blatherwick only paid taxes on the approximately $48,000 annual income he reported to Revenue Canada. The rest of his substantial income was tax free.

[161] The Blatherwick’s travelled first class. They took numerous vacations.

[162] They bought a cottage. The cottage was mortgage free on separation.

[163] They had numerous vehicles – some lifestyle vehicles such as a Corvette, a Mercedes Benz, a Mini and several Sea-Doos.

[164] The matrimonial home was mortgage free.

[165] In addition to the cash, Mrs. Blatherwick was provided with an income of $4,000 per month from the Seasons Design Group. Monies were transferred to Mrs. Blatherwick’s bank account whenever necessary.

[166] RRSP’s had been established by Mr. Blatherwick for both of them and he ensured that monies were transferred into the RRSP. Mrs. Blatherwick’s RRSP was valued at approximately $120,000 on separation.

[167] The family had no debt on separation.

[168] Mr. Blatherwick had a fully paid up life insurance policy in the amount of $3,000,000 USD.

[169] Currently, all three children are employed by the Seasons Halloween Business:

a) Trevor Blatherwick works in the office on the Brownridge Property, and is employed by Seasons USA but is paid by Seasons Macao;

b) Kendra Boychuk is the Bookkeeper/Personal Assistant to Mr. Blatherwick and works at the Brownridge office. Kendra is paid by Seasons Macao and Seasonal Design Group; and

c) Andrea works in the Brownridge office for CMC and paid by Seasons Macao.

[170] Mr. Blatherwick provided the children with approximately an additional $30,000 per year in total. He provided each of the children with approximately $25,000 wedding gifts when they got married. He assisted the children with their down payments to buy their homes.

[171] In summary, Mrs. and Mr. Blatherwick enjoyed a very luxurious lifestyle prior to separation. It ended for Mrs. Blatherwick in November 2010.

The Background to the Seasons Halloween Business

[172] Funrise failed to make Mr. Blatherwick a partner, as they had led him to believe they would. In 1997 Mr. Blatherwick considered starting his own Halloween products business. As a result, Mr. Blatherwick incorporated Seasonal Design Group Inc. (Seasonal Design Group) on July 7, 1997. Mr. Blatherwick and his wife are each 50% shareholders. They remain equal shareholders to date in this company.

[173] The purpose of Seasonal Design Group was to design and develop Halloween products. Mr. and Mrs. Blatherwick would produce catalogues from which buyers would order Halloween products.

[174] Seasonal Design Group was initially operated out of the living room of the Blatherwick home. This was a family business. Both Mr. and Mrs. Blatherwick were involved in this family business for several years.

[175] About a year after Seasonal Design Group had started to carry on business, Mr. Blatherwick approached Mr. Leung to join them. Mr. Leung, a Hong Kong national, had been involved in Funrise's Halloween business in Hong Kong and had contacts in China with the owners of factories.

[176] Mr. Leung joined the Blatherwick’s Halloween product business. Thus began the Seasons Halloween Business in Hong Kong. In October 27, 1998 Seasons HK (now Seasons Capital) was incorporated.

[177] Essentially, when the Seasons Halloween Business started in Hong Kong, there were three business partners – Mr. Blatherwick (responsible for sales); Mr. Leung (he knew the factory owners, spoke Chinese and was responsible for manufacturing in China), and Mr. Chan (the silent partner from China who provided the factories and financial support during the initial years).

[178] Funrise decided to commence litigation against Mr. Blatherwick in Canada and in the United States. This took a toll on Mr. and Mrs. Blatherwick in terms of time and money. Mrs. Blatherwick returned to work for a period of time to support the family and to pay for the legal expenses defending the Funrise litigation. Fortunately, the Blatherwick’s were successful in defending the Funrise litigation. The Funrise actions were dismissed.

[179] Early in the establishment of the Seasons Halloween Business, Mr. Blatherwick approached “Zauders”, a company which manufactured Halloween makeup. This was a good "fit". Seasons got access to Zauders’ makeup for its catalogue and Zauders got access to Seasons’ customers. Zauders had a showroom in New York. Unfortunately, after a period of time Zauders went out of business. The Seasons Halloween Business took over Zauders’ showroom in New York and continued to supply its own Halloween makeup as part of the Seasons Halloween Business. The Seasons Halloween Business continued to grow.

[180] In the early years of the Seasons Halloween Business, Mrs. Blatherwick was involved in:

• Designing and sewing some costumes;

• Providing input and suggestions into the Halloween products to be acquired or produced by the Seasons Halloween Business;

• attending and participating in some of the early trade shows;

• Preparing business catalogues including being a model in some of the catalogue photographs. She arranged for their children (and their children's friends) to also model the Halloween costumes in the catalogue photographs as well. The catalogue photographs were taken in the Blatherwick home;

• Participating and supporting the acquisition of Zauders; and

• Providing input into design ideas generally, including the Halloween masks sold by the Seasons Halloween Business;

[181] Mrs. Blatherwick’s significant involvement in the business continued for a number of years until about 2003. By that time Mr. Blatherwick’s travelling to and from China increased to approximately six months per year. Mrs. Blatherwick’s primary responsibilities continued to be their home and children in Ontario.

[182] The Season’s Halloween Business continued to grow and became very successful. Eventually, the business was doing well enough that models and professional photographers were used for the Seasons Halloween Business products catalogue. A showroom was opened in Hong Kong.

[183] The Seasons Halloween Business purchased a factory, owned through a Chinese national. Mr. Blatherwick described it as a seven story building, three floors for Seasons’ offices/factory and four floors to be rented out to third parties.

[184] Mrs. Blatherwick knew that Mr. Blatherwick was incorporating new companies with the new partners but she did not know the details of what Mr. Blatherwick had established or details of the business after 2004 or 2005. The logical inference is that Mr. Blatherwick decided not to share details of the Seasons Halloween Business with Mrs. Blatherwick because he believed their marriage was over. Subsequently, Mrs. Blatherwick had limited involvement in the Seasons Halloween Business as it continued to focus on manufacturing and expanding sales throughout the world.

[185] Mrs. Blatherwick was never told of any companies in the British Virgin Islands. She only learned of this after the computer records of Mr. Blatherwick were seized pursuant to the Mareva/Freezing Order.

[186] During the course of the Seasons Halloween Business, Mr. Blatherwick obtained patents on at least two products, a Crystal Pumpkin and dropping spiders. Mr. Blatherwick testified that the Crystal Pumpkin sales last year were close to $7,000,000. This Crystal Pumpkin is exclusive to the Seasons Halloween Business. However, any and all information regarding these patents and any monies generated by these patents have not been produced by Mr. Blatherwick.

[187] As the Seasons Halloween Business grew, Mr. Blatherwick needed to bring additional persons into the business. Mr. Blatherwick recruited:

a) Randy Williams, a buyer for K-Mart, to join the Seasons Halloween Business;

b) William Gravelle, a sales representative of Funrise, to help the sales of the Seasons Halloween Business;

c) Steve Waskiewicz, a designer of Halloween masks, was also brought into the Seasons Halloween Business; and

d) Fred Austin, the owner of a company called Concept Marketing which Mr. Austen had inherited from his father, was brought in the Seasons Halloween Business.

[188] Prior to separation, Mrs. Blatherwick knew, met and dined with all the partners in the Seasons Halloween Business. She was familiar with their roles in the Seasons Halloween Business.

The Current Seasons Halloween Business

[189] Essentially, the Seasons Halloween Business’s sales are operated by two corporations, Seasons Macao and Seasons HK. Essentially, 40% of the Seasons Halloween Business sales were allocated to Seasons Macao while the rest of the sales were allocated to Seasons HK.

[190] Mr. Blatherwick denies that Seasons Halloween Business owned any factories in China. Mr. Blatherwick admitted that the Seasons Halloween Business uses about 34 factories in China. Mr. Blatherwick described the factories and buildings in China as owned by the Seasons Halloween Business to Mrs. Blatherwick, Joanne Speight, and to Seasons Halloween Business’ customers in its presentations. It appears convenient for Mr. Blatherwick to now deny ownership of the factories by the Seasons Halloween Business. These factories are located in China and Mr. Blatherwick has produced no documents relating to them, their income or their ownership.

[191] However, based on the record before me, I am satisfied on the balance of probabilities that Seasons Halloween did and does own factories in China through Chinese nationals. However, there is no evidence which factories are owned by the Seasons Halloween Business and which are simply hired to manufacture products for the Seasons Halloween Business. Again, the documentation falls extremely short of providing a clear understanding of this area of the Seasons Halloween Business.

[192] The Seasons Halloween Business has offices and operations in Hong Kong, Kowloon, Macao, China, the United Kingdom, Ontario and the USA. It is also clear there is an Australian distributor and perhaps distributors in other locations.

[193] In 2009 - 2010, the Seasons Halloween Business was carried on through three main corporations:

a) Seasons HK’s changed its name to Seasons Capital. The primary purpose of Seasons Capital was to hold property for the Seasons Halloween Business;

b) A new Seasons HK was incorporated to hold 60% to 50% of the gross sales of the Seasons Halloween Business; and

c) Seasons Macao continued to hold 40% to 50% of the gross sales of the Seasons Halloween Business;

[194] There are subsidiaries to some of these companies which carried on specific aspects of the Seasons Halloween Business. A chart setting out the corporate structure is set out in Schedule A hereto.

[195] Seasons Halloween Business is a major player in the Halloween products business worldwide. The Seasons Halloween Business’ customers include major retailers: Wal-Mart, Target, K-Mart, Right Aid and Costco.

The Cottage

[196] The Cottage was purchased by Rockwood Landco on December 1, 2008. At no time did Mr. Blatherwick tell Mrs. Blatherwick that the Cottage was purchased using a loan from Discovery Bay. As far as Mrs. Blatherwick knew, the Cottage was paid in full from monies which Mr. Blatherwick had received or was entitled to from the Seasons Halloween Business.

[197] As set out above, and like the Offshore Companies, the reliability of the documentation regarding the Canadian Companies is in serious question. For example, in Mr. Blatherwick’s Answer dated January 26, 2011, and his Financial Statement sworn January 26, 2011, he showed a personal loan for $375,000.00 from Discovery Bay to purchase the Cottage. Then, Mr. Blatherwick produced a Promissory Note in his affidavit of June 27, 2011. It became apparent to Mr. Blatherwick, months after saying under oath that his was a personal loan, that a personal loan did not work since the asset was owned by Rockwood Landco. So, six months later, Mr. Blatherwick produced a promissory note and Mr. Blatherwick testifies that this was a $400,000.00 loan by Rockwood Landco to Discovery Bay.

[198] Other than the Promissory Note, there is no other evidence of any borrowing, repayment or any documents or evidence indicative of a loan for the purchase of the Cottage.

[199] As set out above, there are no documents from Discovery Bay showing this as a debt from Mr. Blatherwick, Rockwood Landco or anyone at all.

[200] Since there is no registered loan against the Cottage and Mr. Blatherwick advances the position that such a loan exists, Mr. Blatherwick has the onus to establish that there is a loan on the balance of probabilities. He has failed to do so.

[201] As a result, I find that there is no such loan for the purchase of the Cottage.

Brownridge Property

[202] The Brownridge Property was purchased on March 5, 2010. Mr. Blatherwick admitted that there were discussions that the purchase of the Brownridge Property was to provide for his retirement from the Seasons Halloween Business. Exactly, how this would work given that Mr. Blatherwick now agrees that the Brownridge Property belongs to Seasons HK was never explained by him.

[203] The Seasons HK Application puts at issue who is the beneficial owner of the Brownridge Property.

[204] I will deal with the beneficial ownership of the Brownridge Property below.

Ownership of the Offshore and Canadian Companies

[205] The certified corporate records of the Seasons Halloween Business companies, where available, are the best independent evidence of the ownership of the various Offshore and Canadian Companies.

[206] As for the Canadian Companies, there is no dispute that the shareholdings in the registry accurately set out the shareholdings of Mr. Blatherwick.

[207] There is one further piece of reliable evidence as it relates to the Offshore Companies. On February 22, 2010, the Seasons Halloween Business partners held a business meeting in Las Vegas. A copy of the presentation was discovered on Mr. Blatherwick's seized laptop. The 2010 Las Vegas business presentation disclosed that:

• Seasons HK and Seasons Macao profit for 2009 before taxation was approximately $2,850,000 USD. The Gross Profit for these companies in 2009 was approximately $10,600,000 USD;

• Season Capital was owned 25% Mr. Leung, 25% Mr. Blatherwick, 25 % Chan, 12.5% Williams and 12.5% Gravelle;

• Seasons HK was owned 14% by each of the partners (indirectly through Capitalrich for Messrs. Blatherwick, Gravelle and Williams) with 2 % of the shares not issued;

• Capitalrich was owned 33 1/3% by each of Messrs. Blatherwick, Williams and Gravelle;

• Seasons Macao was owned 33% by each of Messrs. Blatherwick, Williams and Gravelle;

• Concept Marketing Asia Ltd was owned 75% Seasons Capital, 25% Costantino;

• Concept Marketing Canada was owned 50% Mr. Blatherwick and 50% “Vincent”; and

• Rockwood Landco was owned 100% Mr. Blatherwick.

[208] I recognize the difference set out in the Las Vegas presentation regarding the ownership in Seasons Macao. However, given the entire evidence relating to Seasons Macao, I am satisfied that the reference to the ownership in Seasons Macao was a mistake and should have in fact referred to 50% owned by Mr. Blatherwick and 25% owned by each of Messrs. Gravelle and Williams.

[209] On July 7, 2011, Mr. Leung completed credit information on behalf of Seasons HK and Seasons Macao for the continued use of Warner Brother's proprietary rights. In the package, Mr. Blatherwick was shown as a 55% management owner of the business. No explanation was given for this discrepancy.

[210] And then there is the evidence of what was disclosed to Wal-Mart by Mr. Blatherwick. The 2010 and 2011 Wal-Mart presentations disclosed:

• Seasons was a $50 million global manufacturing, distribution and marketing company;

• Seasons design, manufactures and distributed its own products from its own facilities;

• Brian Blatherwick was the founder and President of Seasons. “Brian oversees the company’s worldwide sales force, ..”

• Seasons recently opened a 250,000 square foot state of the art facility in China; and

• The advantage of ownership is manufacturing standards are set by Seasons

[211] For the reasons that follow, I find as a fact that Mr. Blatherwick has the following corporate interests in the Seasons Halloween Business’ operating/sales companies:

a) 50% in Seasons Macao which had 40% of the gross sales of the Seasons Halloween Business at separation; and

b) 14.3% (1/7^th) in Seasons HK (indirectly held through Capitalrich) which had 60% of the Seasons Halloween Business at separation.

[212] Essentially, this amounts to Mr. Blatherwick having a 34.3% interest in the Seasons Halloween Business based on a proportionality of Seasons Halloween Business’ sales.

[213] As for the Seasons Halloween Business holding company – Seasons Capital, I find that Mr. Blatherwick has a 14.3% interest (i.e. 1/7^th) in that company.

[214] I find that the shareholdings, as recorded in the corporate records of the Canadian Companies accurately set out the shareholder interests of Mr. and Mrs. Blatherwick in those companies.

[215] I conclude that Mr. Blatherwick’s interests in the Offshore Companies are set out in chart form in Schedule A.

[216] Let me explain briefly how I arrive at Mr. Blatherwick's interests.

Seasons Macao

[217] The corporate records disclose that Mr. Blatherwick owns 50% of the shares, with the remaining shares owned 25% each by Gravelle and Williams. Mr. Blatherwick admits he is a director of Seasons Macao.

[218] For four and a half years in this litigation Mr. Blatherwick repeatedly stated that he owned 50% of the shares in Seasons Macao. This is consistent with the certified corporate records produced at trial. Mr. Blatherwick’s expert, based on Mr. Blatherwick’s admissions, in late 2014 calculated the value of Season’s Macao based on Mr. Blatherwick’s 50% shareholding in Macao which he had disclosed to her.

[219] For the first time in the four and half years of this litigation, and despite repeated admissions under oath by Mr. Blatherwick that he owned 50% of the shares in Seasons Macao, Mr. Leung testified at trial that he was the beneficial owner of 25% of the shares of Seasons Macao (meaning half of Mr. Blatherwick’s shares). There is no document to support Mr. Leung’s statement. Mr. Blatherwick did not dispute this or challenge Mr. Leung when Mr. Leung gave this evidence. The corporate records do not support Mr. Leung’s statement. Mr. Blatherwick had not suggested that Mr. Leung had an interest in Seasons Macao during the four and a half years of litigation. Perhaps, the most definitive piece of evidence is the 2010 Las Vegas Business Plan which does not show that Mr. Leung has any interest in Seasons Macao. Mr. Leung was present at the meeting. There is no evidence he disputed the reference to him not owning any shares in Seasons Macao then or in the following five years.

[220] This is another example of Mr. Leung and Mr. Blatherwick fumbling awkwardly in a shell game of “who owns what”. Mr. Leung and Mr. Blatherwick are not to be believed.

[221] I conclude Mr. Blatherwick's interest in Seasons Macao is 50%.

Seasons HK

[222] 42% (i.e. 3/7ths) of Seasons HK is owned by Capitalrich.

[223] Mr. Blatherwick has no direct interest in Seasons HK. Mr. Blatherwick’s interest in Seasons HK is held through Capitalrich.

Capitalrich

[224] The shares are held by a trustee, Equity Trust BVI. There is no public record of shareholdings in Capitalrich. There are no documents at all from the trustee or this company.

[225] Initially in this proceeding, in early 2011, Mr. Blatherwick denied, under oath, that he owned any interest in any British Virgin Island company. However, when Mr. Blatherwick submitted an affidavit in this proceeding dated June 27, 2011, he admitted he held a 33% interest in Capitalrich and that each of Gravelle and Williams held 33% in Capitalrich. Over the years, up until late 2014, Mr. Blatherwick’s expert, Melanie Russell prepared an expert report valuing Mr. Blatherwick 33% interest in Capitalrich based on the representations of Mr. Blatherwick.

[226] During his testimony at trial, Mr. Blatherwick announced that he did not have any shares in Capitalrich. Instead, Mr. Blatherwick testified that Mr. Leung owned all of the shares in Capitalrich. However, Mr. Blatherwick continued to take the position that he was a 1/7th partner by virtue of the Shareholders Agreement - an agreement which I will deal with below.

[227] Given that the shares of Capitalrich are held by a trustee, and the trustee will not deal with third parties or provide any documentation, it appears that the partners can and do allege ever changing interests in Capitalrich without documentary contradiction.

[228] I am satisfied that Mr. Blatherwick does hold a 1/7 interest in Seasons HK, indirectly through Capitalrich. It is consistent with the position he has taken for years and there is no evidence to the contrary.

Seasons Capital

[229] The corporate records of Seasons Capital show that the shareholders are: Mr. Leung – 25%; Chan – 25%; and Mr. Leung Hoi Por (Mr. Leung’s father) – 50%. The Las Vegas presentation shows that Mr. Por holds those shares in trust: 25% for Mr. Blatherwick and 12.5% for each of Mr. Gravelle and Mr. Williams.

[230] Mr. Blatherwick for four and a half years maintained, under oath, that he had no shares in Seasons Capital. Ms. Russell, Mr. Blatherwick’s valuation expert, produced both her valuation reports which did not value Mr. Blatherwick’s interests in Seasons Capital because Mr. Blatherwick had represented to her that he did not have any shares in Seasons Capital. This is subject to the alleged Shareholders Agreement which I will deal with below.

[231] Faced with evidence that he had shares in Seasons Capital, during his evidence at trial, Mr. Blatherwick stated that “he had just learned” that he was a 25% shareholder in Seasons Capital. As a result, at trial Mr. Blatherwick admitted at trial that Mr. Por holds 25% of the shares of Seasons Capital in trust for Mr. Blatherwick.

[232] This was an obvious unsuccessful attempt, over a number of years, to thwart Mrs. Blatherwick’s matrimonial claims by denying that Mr. Blatherwick had any shares in Seasons Capital until trial.

[233] Seasons Capital owns 80% of the shares in Seasons USA Inc. The remaining 20% is owned by Wazkiewicz. There is limited or no information or documentation with respect to Seasons USA Inc.

[234] I conclude that Mr. Blatherwick has a 25% interest in Seasons Capital.

Discovery Bay

[235] The important questions are: who beneficially owns Discovery Bay; from where does Discovery Bay get its funds; and to who do the monies belong?

[236] A starting place would be to determine who had authority to direct MY Commercial to transfer funds.

[237] When Mr. Blatherwick’s laptop was seized, a limited number of yearly transaction statements from MY Commercial were discovered. For some years, these statements showed monies transferred in and out of the HSBC account of Discovery Bay. In some years, these statements only showed monies transferred out of the HSBC account. For some years there is nothing – no statements as to what occurred in the account.

[238] The MY Commercial statements, that are available, clearly show that MY Commercial reported to Mr. Blatherwick and took instructions from Mr. Blatherwick for any transfers out of the HSBC account, even when the transfers were to other partners in the Seasons Halloween Business. All instructions to MY Commercial for the transfer of monies came from Mr. Blatherwick. All reporting by MY Commercial appears to have only been made to Mr. Blatherwick – at least that is the only evidence adduced at trial.

[239] The December 31, 2012, MY Commercial statements located on the seized hard drives included the following references:

• “Advising the arrival of inward remittance to Mr. Brian Blatherwick from time to time”;

• “Advising the Company’s bank balances to Mr. Brian Blatherwick from time to time”;

• “Requesting Mr. Brian Blatherwick to fax us his duly signed payment instructions from time to time”.

[240] Documentation relating to Discovery Bay was on Mr. Blatherwick's email "@me.com", however, despite the Mareva/Freezing Order to preserve these documents, they were deleted. Not surprisingly, the deletion of the emails perpetuates the mystery surrounding Discovery Bay.

[241] Clearly, at least until 2012, Mr. Blatherwick controlled and authorized transfers of monies in Discovery Bay - a company expressly subject to the Mareva/Freezing Order.

[242] In Mr. Blatherwick’s June 27, 2011 affidavit, he states he determined that he had taken out of Discovery Bay in excess of $665,000 USD beyond his entitlement. Presumably, if there was a limit, this shortfall would have been noticed by the other parties entitled to the monies in Discovery Bay. It was not. It only appeared to come to light in June 2011. Mr. Blatherwick also testified that sometime in 2011 he no longer had authority or access to Discovery Bay or MY Commercial's documentation. As a result, Mr. Blatherwick says he could not produce documents relating to Discovery Bay. However, it is clear from the December 31, 2012 MY Statements that Mr. Blatherwick remained the person in authority over the monies in Discovery Bay. I do not accept his explanation as to why he did not produce Discovery Bay documents.

[243] Mr. Blatherwick stated that he had, over the years, overdrawn monies from Discovery Bay which were now “loans”. This evidence makes no sense, given that there is; no documentation as to who is entitled to the monies in Discovery Bay; no documentation to support a limitation on Mr. Blatherwick’s authority over Discovery Bay; and no loan documentation. Clearly, this was an attempt by Mr. Blatherwick to show a reduced income and create "loans" at the time of his separation to reduce the value of his property.

[244] I add one more factor that is consistent with their being no loans owed by Mr. Blatherwick to Discovery Bay. In the financial statements of Seasons Macao, as of December 2010, Seasons Macao owed Mr. Blatherwick MOP $1,696,159 (approximately $216,905 CDN). It makes no sense that Mr. Blatherwick would borrow money from Discovery Bay when Seasons Macao owed him a considerable amount of money and Seasons Macao had approximately $25,000,000 HK$ on December 31, 2010 in its bank account.

[245] Despite this evidence, Mr. Blatherwick continually denied under oath at trial that he had access to or possession of Discovery Bay’s financial documents showing deposits and movement of monies beyond what had been found on his seized computer. But this was not true. During Mr. Blatherwick’s expert’s evidence, it was apparent that Ms. Russell had received another yearly statement not produced to Mrs. Blatherwick’s lawyers. Further, Mr. Blatherwick produced yet another statement in his closing when he thought it would assist him with respect to one particular issue. The charade had unwound.

[246] There is another troubling aspect to Discovery Bay. The entire purpose and role of Discovery Bay has been constantly changing throughout the course of this litigation to suit Mr. Blatherwick. In Mr. Blatherwick’s Answer he stated that:

“the respondent also provides international sales services to Seasons Hong Kong business through a British Virgin Island company, Discovery Bay. The Seasons Hong Kong business causes Seasons Capital Limited (“Seasons Capital”) to pay Discovery Bay for the Respondent’s services and Discovery Bay then pays the Respondent. Discovery Bay pays the Respondent $100,000.00 per year. The Respondent pays $25,000.00 of these funds to the Applicant’s PC Financial bank account every year for her use. He transfers $30,000.00 of these funds to the parties children by way of cash.”

(emphasis added)

[247] Initially, during questioning Mr. Blatherwick stated that he provided international sales services to Seasons HK through Discovery Bay. This was consistent with what Mr. Blatherwick set out in his Answer. Mr. Blatherwick also admitted that he was aware Discovery Bay had an HSBC Singapore bank account where money was “parked”; that he controlled some of the funds in the Discovery Bay account by giving instructions to MY Commercial by way of email; and that some of the monies were used by him.

[248] However, in his June 27, 2011 affidavit, Mr. Blatherwick stated, under oath, that the monies in Discovery Bay belonged to Mr. Zheung who received the monies as a commission for purchases by Seasons HK and that Mr. Zheung controlled the monies going into and out of Discovery Bay. All of a sudden, the monies were no longer payment for sales services provided by Mr. Blatherwick. According to Mr. Blatherwick, it was Mr. Zheung who permitted Mr. Blatherwick and the partners to withdraw certain amounts of funds from Discovery Bay. The story changed.

[249] Who was Mr. Zheung? Mr. Zheung (although there appears to have several spellings of his name) is the owner of Carnival Trading Company, a Chinese company.

[250] Mr. Blatherwick now suggested that Mr. Zheung deposited 7% of the gross sales of the Seasons Halloween business. Mr. Blatherwick produced two contracts:

• Contract between Seasons HK and Carnival Trading Company purportedly made on April 1, 2009, signed by Mr. Leung on behalf of Seasons HK and Zhang-Wen-He (another spelling for Mr. Zheung); and

• Duplicate unsigned contract between Seasons Macao and Carnival Trading Company purportedly dated January 1, 2012.

[251] Neither of these contracts make reference to “Discovery Bay”. Despite the fact Discovery Bay received substantial amounts of monies over the years, there is no evidence as to what happened prior to 2009 when the Seasons HK contract allegedly came into being. Where did the pre-2009 money into Discovery Bay come from? What happened to the services for Seasons Macao from 2009 to 2012 when no contract existed? Mr. Blatherwick admitted during his evidence at trial that there is no document showing Mr. Zheung had or has any control over the monies in Discovery Bay. Even the limited MY Commercial statements produced showing monies transferred out of Discovery Bay (approximately $8,900,000 USD), have no evidence that Mr. Zheung had received any of the monies in Discovery Bay. On the other hand, on the limited documents available, Mr. Blatherwick authorized transfers of approximately $8,900,000 USD some of which was for “children, wife, girlfriends, cottage, and money”.

[252] Why would Mr. Zheung deposit millions of dollars into Discovery Bay and let Mr. Blatherwick transfer or use millions of dollars for himself, his fiancées and his family? Why would Mr. Zheung let Mr. Blatherwick overdraw his entitlement to the funds in Discovery Bay for years? Mr. Blatherwick’s evidence that this is Mr. Zheung’s money simply makes no sense.

[253] When asked during questioning who gave Mr. Blatherwick the authority to transfer money out of Discovery Bay, Mr. Blatherwick said under oath that he did not remember the person’s name and the person was referred to as “Mr. X” during the questioning. It is simply not believable that Mr. Blatherwick would not know the name of the person who authorized him to transfer almost $9,000,000 USD, as Mr. Blatherwick saw fit.

[254] Mr. Zheung was not called as a witness at trial to corroborate that the monies in Discovery Bay are his or that Mr. Blatherwick owes Discovery Bay monies for overdrawing funds from Discovery Bay. No explanation was given why he was not called as a witness.

[255] Despite his alleged significant role, Mr. Blatherwick never mentioned Mr. Zheung to Mrs. Blatherwick, a further factor which supports that Mr. Zheung is not a significant person or partner in the Seasons Halloween Business.

[256] Despite all this evidence, Mr. Blatherwick continued to testify at trial that he has no knowledge regarding the ownership of Discovery Bay. I reject that.

[257] The only reasonable and logical conclusion to be drawn from all the evidence is that Discovery Bay is a company beneficially owned by the Seasons Halloween Business and is controlled by Mr. Blatherwick for the benefit of himself and/or his partners.

[258] As for the question of loans owing to Discovery Bay, there is simply no credible evidence that there are any "loans" owing by Mr. Blatherwick or the Canadian Companies. I touched upon some of the reasons above, but let me summarize:

a) Mr. Blatherwick was the only person who had authority of the monies in Discovery Bay;

b) Mr. Blatherwick had no apparent limitation on the use of the monies in Discovery Bay;

c) Mr. Blatherwick transferred millions of dollars out of Discovery Bay for his personal use. If Mr. Blatherwick’s draws were limited, Mr. Zheung or the other partners would have realized they weren’t getting their share of the monies in Discovery Bay;

d) There is no evidence of any loans or that monies were “borrowed” from Discovery Bay. (aside from his alleged personal loan for the Cottage) Mr. Blatherwick only took the position that he owed a considerable amount of money to Discovery Bay in his June 27, 2011 affidavit after he told his counsel he would have the excess deemed to be a loan;

e) Mr. Blatherwick never reported the Discovery Bay monies to Revenue Canada until his failure to report these monies were about to become public in Justice Lemon’s endorsement on a motion; and

f) Having such large amounts of income available is consistent with Mr. Blatherwick’s historical pattern of spending money on things such as travelling first class, a Corvette, Mercedes Benz, a fully paid home, multiple women he supported in Asia, lavish gifts for these women, and a luxurious lifestyle with his wife and children; and

g) Using Discovery Bay to avoid taxes through the use of a tax haven jurisdiction like BVI, is also consistent with Mr. Blatherwick’s interest in Seasons HK which he chose to hold through Capitalrich, another BVI company.

[259] I am satisfied that whatever monies Mr. Blatherwick took out of Discovery Bay over the years were not loans but were profits Mr. Blatherwick was entitled to from the Seasons Halloween Business. In my view, Mr. Blatherwick’s evidence that he has “loans” and that his draws from Discovery Bay are limited is nothing more than Mr. Blatherwick’s attempt to reduce his income and decrease his exposed assets in this proceeding.

The Current Founder and Principal Owner of the Seasons’ Halloween Business

[260] Mr. Blatherwick disputes that he is the primary person in authority in the Seasons Halloween Business.

[261] Mr. Blatherwick suggests he is just an equal 1/7th partner by virtue of a Shareholder’s Agreement (which I will deal with later) and that Mr. Leung is the person primarily in charge of the Seasons Halloween Business. I do not accept this. Prior to separation, Mr. Blatherwick was the primary person in control of the Seasons Halloween Business. He was responsible for sales. He controlled the flow of funds out of Discovery Bay. He held 50% of Seasons Macao which, along with his interest in Seasons HK, was about 1/4 of the entire sales business of the Seasons Halloween Business. The other partners took instructions from Mr. Blatherwick. Mr. Blatherwick could get things done even when Mr. Leung could not. Even Mr. Leung needed his authorization to get money out of Discovery Bay or to buy a new vehicle for the Hong Kong showroom.

[262] I do not accept that, all of a sudden, after his separation from Mrs. Blatherwick, that he has been relegated to a minority role, taking instructions from Mr. Leung, and has limited money from the Seasons Halloween Business, a business that he founded and remains an essential part of. No reason has been put forward why Mr. Blatherwick's role would have changed after his separation.

[263] On the evidence before me, there is no doubt that Mr. Blatherwick was the founder of the Seasons Halloween Business. He started the business before Mr. Leung and Chan joined him about a year later. Mr. Blatherwick has been the primary person overseeing international sales for the Seasons Halloween Business – a central role to the profitability and success of the Seasons Halloween Business. Mr. Blatherwick testified that since his passport was seized by the Family Responsibility Office in September 2014, Seasons Halloween Business’ sales have suffered – there will be about $42 million in sales in 2014 rather than $47 or $48 million in sales had Mr. Blatherwick not been forced to remain in Canada. Clearly, by any standard, Mr. Blatherwick is pivotal to the ongoing success of the Seasons Halloween Business.

[264] There is no evidence as to if, and when, Mr. Blatherwick intends to retire or sell his portion of the Seasons Halloween Business.

[265] I conclude Mr. Blatherwick continues to be the primary person in control of the Seasons Halloween Business. This is consistent with all of the evidence of Mrs. Blatherwick, Joanne Speight and the flow of monies historically.

The FiancÉe’s

[266] Why are the fiancées significant? Because it demonstrates the available income that Mr. Blatherwick had in the years leading up to separation and several years after separation.

[267] Mr. Blatherwick testified that he believed his marriage was over in 2004 or 2005 when he met Ruth Miranda and, later, became engaged to her.

[268] In 2008, Mr. Blatherwick became engaged to Vanessa Sagmit.

[269] In 2009, Mr. Blatherwick became engaged to Desiree Domingo. Mr. Blatherwick remains engaged to Ms. Domingo and considers the Philippines their home.

[270] During the period of time between 2004 and 2012, approximately $910,000 USD was transferred to Ms. Miranda ($445,000), Ms. Sagmit ($305,000) and Ms. Domingo ($160,000) to either purchase homes for them or to renovate their homes. In 2010, Mr. Blatherwick transferred approximately $330,000 USD to his fiancées. This does not include cash and expenses paid by Mr. Blatherwick for these fiancées or other girlfriends. Mr. Blatherwick was able to support and pay substantial amounts to his fiancées and girlfriends over the years. After his separation, his lavish lifestyle continued.

The Shareholders Agreement

[271] Mr. Blatherwick testified that, regardless of what the corporate filing documents showed, he is only a 1/7th owner in the Seasons Halloween Business. In support of this Mr. Blatherwick produced a Shareholders’ Agreement dated January 4, 2010. This document was signed by the partners of Seasons Halloween Business.

[272] There are numerous questions regarding this document. This would have been a very significant reorganization of a very large, successful business with an already complex structure. Yet, the partners received no legal advice, there were no drafts, no valuations were obtained. Nothing. Just a document signed by the partners - the brotherhood of trust.

[273] The Shareholders Agreement makes little sense. Mr. Blatherwick was the owner of 50% of Seasons Macao - the corporate entity which held 40 to 50% of the Seasons Halloween Business’ sales. He already had a 1/7th interest in Seasons HK, the only other company with Seasons Halloween Business sales. The Seasons Halloween business was doing well and still growing. Why would Mr. Blatherwick exchange a 50% interest in Seasons Macao for a 1/7^th interest in Seasons Macao? This alleged drop in the value of Mr. Blatherwick’s interests in Seasons Macao alone was, based on Ms. Russell's valuations, to be between $900,000USD and $1,200,000 USD. Mr. Blatherwick’s explanation that this was necessary to grow the business made little sense.

[274] Further, in the February 2010 Las Vegas business meeting, which was a meeting held after the alleged Shareholders Agreement was signed, neither mentioned the Shareholders Agreement nor refer to the interests of the partners as 1/7th each. This document, prepared and discussed amongst the partners after the alleged Shareholders Agreement, continued to refer to the recorded shareholdings as set out in Schedule A. This is, in my view, clear evidence and proof that the Shareholders Agreement was a sham put together by Mr. Blatherwick to reduce his interest in the Seasons Halloween Business. Further, his partners, all of whom signed the Shareholders Agreement, were complicit in this sham.

[275] Finally, Mr. Blatherwick made a no-name voluntary disclosure letter to Revenue Canada on July 10, 2012. Referring to the Shareholders Agreement, Mr. Blatherwick's lawyer confirmed that the Shareholders Agreement had never been implemented:

We mention the foregoing [Shareholders Agreement] because the shareholder agreement as such might lead one to conclude that Mr. X [Mr. Blatherwick] had disposed of his interest in Company I in 2010. It appears, however, that Mr. X has not sold his shares in Company I, and so he was not required to include any amount in income in 2010 for the purposes of the Act in respect of the transactions contemplated by the shareholder agreement that were not in fact executed.

[276] Clearly, Mr. Blatherwick wants to report to Revenue Canada that he is a 1/7th shareholder in Seasons Macao because of the Shareholders Agreement but at the same time suggest that the Shareholders Agreement was not carried out to avoid tax consequences of a disposition resulting from the Shareholders Agreement. Mr. Blatherwick cannot even take a consistent position with Revenue Canada.

[277] Even if the Shareholders Agreement was not a sham, I am satisfied that the Shareholders Agreement has no legal effect for many reasons, the most significant of which are:

a) It was conceded that the company to be incorporated to carry out the Shareholder’s Agreement was never incorporated;

b) It was conceded that the essential terms of the Shareholder’s Agreement contain errors, some of which are significant. For example, a number of companies were included which had no part in the re-organization and some companies that needed to be included to effect the alleged reorganization were not included. It truly appears that the document was hastily put together by someone without legal training and without considering what and how the restructuring was to occur; and

c) The partners have done nothing for 5 years to put into effect the Shareholder’s Agreement.

[278] I conclude that the creation of the Shareholder's Agreement is another attempt by Mr. Blatherwick and his partners to structure the Seasons Halloween Business affairs to defeat any family law claims by Mrs. Blatherwick. The Shareholder’s Agreement is of no effect.

The Litigation Strategy To Put Pressure on Mrs. Blatherwick

[279] Mr. Blatherwick testified that all of his partners met and decided they would fund Mr. Blatherwick’s matrimonial litigation in order to defeat Mrs. Blatherwick’s claims to the Net Family Property. That is exactly what happened. The resources of Seasons Halloween Business’ were brought to bear against Mrs. Blatherwick. I do not accept that any of the personal resources of the partners were used for Mr. Blatherwick's matrimonial litigation. It was the corporate resources that were used.

[280] There is no doubt that the lack of information and documentation, in addition to the constantly changing information and production of, at the time, questionable documentation, was designed to make Mrs. Blatherwick’s claims difficult and expensive to litigate.

[281] When settlement attempts in 2012 failed and Justice Lemon released his order requiring Mr. Blatherwick to pay $20,000 per month for interim spousal support (and pay substantial arrears), Mr. Blatherwick decided he had to increase the pressure on Mrs. Blatherwick.

[282] Mr. Blatherwick took a number of steps to carry out that purpose:

• In July 2012, he made a voluntary disclosure to Revenue Canada disclosing a portion of his Discovery Bay income, resulting in a very large liability for Mr. Blatherwick to Revenue Canada. This was designed to put at risk the collection of any equalization payment Mrs. Blatherwick might obtain in a court judgment;

• In September 2012, Mr. Blatherwick sought legal advice to go bankrupt. Shortly after, in November 18, 2012, Mr. Blatherwick made his last $20,000 interim spousal support payments to Mrs. Blatherwick. Mr. Blatherwick knew that Mrs. Blatherwick had no other source of income and would have to continue to liquidate her assets to fund the matrimonial proceedings;

• In November 2012, Seasons HK sought legal advice to commence the legal proceeding against Rockwood Landco. The Brownridge Property was one property in Ontario which Mrs. Blatherwick might realize on to satisfy any judgment she might receive in the matrimonial proceeding. In December 2012, Seasons HK retained counsel to bring an application to seek a declaration that the Brownridge Property was beneficially owned by Seasons HK, potentially taking this asset beyond the reach of Mrs. Blatherwick and any judgment she might receive. On February 22, 2013 Seasons HK commenced its application. Mr. Blatherwick consented to the relief sought leaving it to Mrs. Blatherwick to have to defend the Seasons HK litigation;

• On February 15, 2013, Mr. Blatherwick brought a motion to reduce his spousal support to $0 and to eliminate all spousal support arrears;

• On April 19, 2013 Mr. Blatherwick made a voluntary assignment into bankruptcy. Mr. Blatherwick’s Canadian assets, including the vehicles, were seized and sold by the Trustee in Bankruptcy.

[283] During the above period of time, Mrs. Blatherwick had no source of income but had to incur substantial legal fees and expenses to deal with the above. On the other hand, Mr. Blatherwick, not deterred by the existing Mareva/Freezing Order, ensured that substantial amounts of money continued to be paid for legal fees and expert fees from offshore resources. He even continued to support his fiancée. Mr. Blatherwick’s lifestyle continued as though there were no change.

[284] How has the litigation impacted Mrs. Blatherwick? Mrs. Blatherwick’s major assets at separation included ownership of the matrimonial home (valued at $552,000), $127,000 in the bank account, and an RRSP with approximately $120,000. However, given the difficulties faced in this litigation, including the lack of productions, expensive investigation overseas, constantly changing positions and the multiplicity of proceedings to respond to, Mrs. Blatherwick testified she spent in excess of $1,200,000 in legal fees and disbursements to get to the commencement of trial. Her personal assets are essentially and completely depleted.

Ignoring or breaching Court Orders

[285] Mrs. Blatherwick submits this court should find:

a. Mr. Blatherwick breached the Mareva/Freezing Order by paying monies from his offshore companies: Discovery Bay, Seasons HK, and Seasons Macao to his counsel, SimpsonWigle Law LLP for Mr. Blatherwick's matrimonial fees;

b. Mr. Blatherwick breached the Mareva/Freezing Order by having Seasons HK pay the Ormston List Frawley, LLP for legal fees in the Seasons HK Application;

c. Mr. Blatherwick breached the Mareva/Freezing Order by paying Ms. Russell (Mr. Blatherwick’s expert) $60,000.00 from Seasons HK, and an undisclosed amount from Discovery Bay and Seasons HK;

d. Mr. Blatherwick breached the Mareva/Freezing Order by paying his fiancées, Ruth Miranda, Vanessa Sagmit, and Desiree Domingo $142,000.00 USD from Discovery Bay Limited after the Mareva/Freezing Order had been issued;

e. Mr. Blatherwick breached the amendment to the Mareva/Freezing Order which allowed the Respondent to withdraw $350,000.00 from his companies as an advance equalization payment to Mrs. Blatherwick when Mr. Blatherwick instead, withdrew $441,000.00 USD;

f. Mr. Blatherwick breached the Mareva/Freezing Order by voluntarily declaring bankruptcy on April 19, 2013;

g. Mr. Blatherwick breached the Mareva/Freezing Order by causing Mr. Leung to pay $40,222.85 on April 18, 2013 and $62,188.00 on November 8, 2013 for Mr. Blatherwick’s matrimonial fees from offshore accounts;

h. Mr. Blatherwick breached the Order of Madam Justice Tzimas dated December 22, 2014 by failing to pay a total of $60,000.00 in costs;

i. Mr. Blatherwick breached paragraphs 16 and 17 of the Mareva/Freezing Order by deleting communications with respect to Discovery Bay that were contained on his email brianblatherwick@me.com;

j. Mr. Blatherwick breached the Mareva/Freezing Order at paragraph 10 by failing to provide the account numbers of his personal HSBC accounts in advance of accessing them and failing to provide a tracing of significant expenditures made through these accounts; and

k. Mr. Blatherwick breached the Mareva/Freezing Order by failing to produce documentation from the “Seasons Group of Companies” meeting held in Denver Colorado in September/October 2010.

[286] I will deal with a number of these claims.

Payments from Discovery Bay

[287] There is no issue that Mr. Blatherwick authorized and made payments out of Discovery Bay in contravention of the Mareva/Freezing Order. Mr. Blatherwick authorized and made payments to his fiancées, his legal fees to SimpsonWigle Law LLP, Ms. Russell and others despite the clear and unambiguous wording of the Mareva/Freezing Order and without an exemption order permitting him to withdraw funds from any of his worldwide assets. Mr. Blatherwick knew that such exemption orders were required because he obtained three such orders. Therefore, it is beyond question that he knew he was making other payments for Discovery Bay knowingly in breach of the Mareva/Freezing Order.

[288] Mr. Blatherwick admitted that he realized he had breached the Mareva/Freezing Order on or about June 27, 2011 when he filed his affidavit. Despite this, based on the limited documents available, Mr. Blatherwick continued to transfer monies from Discovery Bay, approximately $640,000 USD in the balance of 2011 alone! And then the limited documentation shows an additional $252,000 USD was transferred from Discovery Bay in 2012 to Mr. Blatherwick, his fiancée or his lawyer! Since no documentation has been produced for 2013 and 2014, it is unknown if Mr. Blatherwick simply continued to ignore the Mareva/Freezing Order for years.

[289] As a result of these transfers by Mr. Blatherwick, I find that Mr. Blatherwick breached the Mareva/Freezing Order on numerous occasions.

Exceeding Authorized payment

[290] As an exemption to the Mareva/Freezing Order, Justice Lemon allowed Mr. Blatherwick to withdraw $350,000 from Mr. Blatherwick's corporate holdings. Despite this, Mr. Blatherwick withdrew $441,000 USD.

[291] By doing so, I find that Mr. Blatherwick breached the Mareva/Freezing Order.

Failure to Pay Cost Orders

[292] There is no issue that Mr. Blatherwick failed to pay $60,000 in costs ordered by Justice Tzimas on December 22, 2014.

[293] Mr. Blatherwick’s position was that he could not afford to pay the interim spousal support to Mrs. Blatherwick. For the reasons set out above, I do not accept this explanation. Mr. Blatherwick admitted he had sent cash to his current fiancée and has paid or arranged to pay his lawyer and his expert.

[294] I am satisfied that Mr. Blatherwick failed to pay the cost orders; it was not an inability to pay these cost awards.

Failure to Preserve Emails

[295] Mr. Blatherwick admitted that his emails on his @me account had been deleted and these contained his communications regarding Discovery Bay. His explanation was that these emails were not backed up and were automatically deleted.

[296] However, it is important to note that no emails were preserved by printing or saving the emails by Mr. Blatherwick. Either could have easily been done. Nothing was produced from this email account.

[297] I am satisfied Mr. Blatherwick failed to preserve and produce any emails from his @me account.

Failure to produce the 2010 September/October Business Meeting documentation

[298] The Mareva/Freezing Order provided that Mr. Blatherwick was to produce the documentation from the September/October 2010 Business meeting of the partners in Denver, Colorado.

[299] No such documentation was produced. Mr. Blatherwick testified that there wasn’t a single piece of paper from that meeting. No agenda. No notes. No summaries. Nothing.

[300] I find that there was documentation from this meeting - some documentation, any documentation - which was not produced by Mr. Blatherwick.

The Bankruptcy

[301] On April 19, 2013 Mr. Blatherwick made a voluntary assignment into bankruptcy. Mr. Blatherwick made false statements in his Statement of Affairs:

a) He valued his interest in the Offshore Companies at $1. Even Mr. Blatherwick’s own expert puts the value of his interest in the Offshore Companies at several million dollars. When confronted with this in cross examination, Mr. Blatherwick testified that he hadn’t valued his assets at this amount, it was his trustee in bankruptcy. The Trustee in Bankruptcy stated that she included this amount ($1) because “the asset is a known asset of the Bankrupt and has value, but that the value of the asset is unknown”. This approach makes little sense to put $1 when the value of the asset is unknown. Putting $1 as the value of the asset is entirely misleading when assessing whether the individual is insolvent. The better practice would be to put “unknown’ so that it doesn’t appear to creditors that the Trustee in Bankruptcy has valued the property. It would permit the creditors to properly consider their positions;

b) Mr. Blatherwick failed to disclose his 50% interest in Seasons Macao;

c) Mr. Blatherwick failed to disclose his indirect 7% interest in Seasons HK;

d) Seasons HK and Seasons Macao are established and profitable companies. In fact, near the date of Mr. Blatherwick’s assignment in bankruptcy, these two companies had almost $10,000,000 USD in bank accounts;

e) Mr. Blatherwick failed to disclose his 25% interest in Seasons Capital, the real estate holding company. At trial Mr. Blatherwick admitted to certain values attributed to Seasons Capital’s assets;

f) Mr. Blatherwick disclosed that he had a debt of $900,000 to Mr. Zheung. For the reasons set out herein, there is no such loan. This “loan” was nothing more than a sham to defeat Mrs. Blatherwick’s matrimonial claims; and

g) Mr. Blatherwick, in the Statement of Affairs, denied making any gifts in excess of $500 in the past five years. However, during those 5 years, he transferred $690,000 to his fiancées from Discovery Bay alone. He bought his fiancées engagement rings valued between $7,500 and $10,000 each.

[302] An examination under s. 161 of the Bankruptcy and Insolvency Act was conducted of Mr. Blatherwick’s affairs. Some of Mr. Blatherwick’s answers are ridiculous. For example, he continued to deny he had sent money overseas. He also stated he has authority over five business accounts but could not recall if the information had been given to the trustee in bankruptcy.

[303] I find as a fact that Mr. Blatherwick made false statements which were significant in his Statement of Affairs.

[304] I find as a fact that he made the assignment into bankruptcy to avoid making an equalization payment to Mrs. Blatherwick and to avoid his financial obligations arising from his voluntary disclosure to Revenue Canada.

[305] I find as a fact that the purpose of Mr. Blatherwick going bankrupt was to obtain a collateral benefit in the matrimonial proceedings.

[306] I conclude there was no bona fide financial reason for making a voluntary assignment into bankruptcy.

Mauritius Trust Policy

[307] A further issue arose during the course of closing submissions. Mrs. Blatherwick’s counsel sought the release of the entire amount of the cash surrender value of the Mauritius Trust Policy to Mrs. Blatherwick on account of an equalization payment. Mr. Blatherwick had included the value of this policy as part of his property in his sworn financial statement of January 2011. This appeared to be a non-contentious issue. However, it was not.

[308] Mr. Blatherwick announced during his closing that the policy was owned by Seasons HK. Therefore, Mr. Blatherwick announced he could not transfer the Mauritius Trust Policy to Mrs. Blatherwick. This was the first time Mr. Blatherwick had taken this position.

[309] Interestingly, Mr. Blatherwick prepared a new Net Family Property Statement on February 24, 2015. In that NFP statement of Mr. Blatherwick, he continued to show that Mauritius Trust Policy was an insurance policy owned by Mr. Blatherwick as he had done so in prior NFP statements.

[310] The Mauritius Trust Policy refers to Mr. Blatherwick as the "Client". It does not refer to Seasons HK as the client or owner.

[311] This is just another example of Mr. Blatherwick saying whatever he thinks best suits his position regardless of the truth. It also shows the length to which Mr. Blatherwick will go to avoid paying Mrs. Blatherwick an equalization payment or spousal support.

[312] I find that the Mauritius Trust Policy is owned by Mr. Blatherwick. As of the trial date, the cash surrender value, after expenses, is approximately $1,100,000 USD.

Mr. Blatherwick’s Income

[313] Mr. Blatherwick’s income adds yet another level of obfuscation in this trial.

Line 150

[314] While its evidentiary value is zero, Mr. Blatherwick’s Line 150 Tax Returns for the year 2008 to 2013 (excluding 2012) were as follows:

a) 2008 $64,077.23;

b) 2009 $45,372.72;

c) 2010 $62,824.00;

d) 2011 $91,592.46;

e) 2012 Unknown – Mr. Blatherwick refused or failed to produce this;

f) 2103 $55,293.53 (Pre-Bankruptcy); and

g) 2013 $12,869.42 (Post-Bankruptcy)

[315] In 2013, Mr. Blatherwick made a voluntary disclosure to Revenue Canada. The disclosure did not report all the monies that Mr. Blatherwick received from Discovery Bay or other income from the Seasons Halloween Business. From Discovery Bay, some was reported as income and some monies were alleged to be loan advances to Mr. Blatherwick. However, the actual documents submitted by Mr. Blatherwick with respect to his voluntary disclosure was not produced or made an exhibit at trial.

Monies from Discovery Bay

[316] For the reasons set out above, I find that all monies received by Mr. Blatherwick from Discovery Bay were part of his profits paid to him from the Seasons Halloween Business. There were no loans from Discovery Bay or from the other partners in the Seasons Halloween Business. As a result, Mr. Blatherwick’s voluntary disclosure does not assist in the accurately determining Mr. Blatherwick’s income.

[317] What is the amount of money available through Discovery Bay? It appears that 7% of the gross sales of the Seasons Halloween business (i.e. Seasons HK and Seasons Macao) is paid to Discovery Bay. With $42,000,000 USD gross sales last year, 7% would amount to approximately $3,000,000 USD. In 2011, from January 1, 2011 to November 18, 2011 approximately $2,600,000 USD was deposited into Discovery Bay. This is consistent with the diversion of approximately 7% of the Seasons Halloween Business to Discovery Bay as an expense; to a jurisdiction which the monies are received and disbursed tax free. I find that the amounts deposited into Discovery Bay was simply a means to take a deduction in the Hong Kong and Macao companies as an expense and paid that money to Discovery Bay in BVI, (which is not a taxable jurisdiction) and have the monies available to the partners on a tax-free basis.

[318] Based on the limited records, what are the amounts Mr. Blatherwick transferred from Discovery Bay?

2003 - $282,335

2004 -$749,997

2005 - $1,986,037

2006 -$1,884,027

2007 - $967,946

2008 - $576,921

2009 - $1,033,352

2010 -$1,419,756

Mr. Blatherwick's other evidence

[319] The rest of Mr. Blatherwick’s evidence also does not assist in accurately determining his income:

a) In Mr. Blatherwick’s Application to Sponsor Desiree Domingo, dated December 15, 2009, Mr. Blatherwick listed his income as $125,000.00 per year;

b) In Mr. Blatherwick’s Answer, signed January 26, 2011, Mr. Blatherwick stated that his annual income was $250,000.00 per year;

c) In Mr. Blatherwick’s Financial Statement, sworn January 26, 2011, Mr. Blatherwick stated that his income was $195,402.72 per year;

d) In Mr. Blatherwick’s Answer, Mr. Blatherwick stated that: “Discovery Bay pays the Respondent $100,000.00”;

e) In Mr. Blatherwick’s Affidavit, sworn June 27, 2011, Mr. Blatherwick stated that he received $200,000.00 per year from Discovery Bay;

f) In Questioning on September 16, 2011, Mr. Blatherwick stated as follows:

Q. 2759 Whatever Ms. Russell has written, you made a distinction saying personally, don’t you? Let me ask the question. Melanie Russell has said that your income for the purposes of support is $463,000.00 ok; do you agree with this figure? Mr. Law has said yes, I agree with it, assuming I have put the figure to you correctly, ok?

Answer: Yes.

Q. 2760: That is your personal income, do you agree with that?

Answer: Correct.

g) In Mr. Blatherwick’s Financial Statement, sworn November 29, 2011 Mr. Blatherwick stated under oath that his yearly income was $115,833.00;

h) In a second Financial Statement, sworn November 29, 2011, Mr. Blatherwick stated under oath that his yearly income was $110,004.00;

i) In his Financial Statement, sworn February 15, 2013, Mr. Blatherwick stated under oath that his yearly income was $346,008.00;

j) In his Financial Statement of February 24, 2015, Mr. Blatherwick stated under oath that his income was $96,180 per annum;

k) In Form 65, “Monthly Income and Expense Statement of the Bankrupt and the Family Unit”, sworn April 19, 2013, for the Trustee in Bankruptcy, Mr. Blatherwick stated under oath that Self-employment income gross was $29,166.00, and that his net income was $25,000.00 per month. This would yield a gross yearly income of $349,992.00; and

l) When completing his SSAG calculations after the trial for closing submissions, Mr. Blatherwick reported his income as $96,100 per annum.

The Cash

[320] And then there is the cash. $30,000 cash to the children each year; cash to pay bills; cash to pay for first class trips; cash to the children for their marriages; cash brought back each time Mr. Blatherwick returned to Canada; cash to support his fiancées. Where does it come from? How much cash has Mr. Blatherwick received each year? Even in December 2014 when Mr. Blatherwick, an undischarged bankrupt, denied he had money to pay court ordered support to his wife, he sent approximately $6,000 cash to Ms. Domingo by courier for her support. Clearly, Mr. Blatherwick has had and continues to have access to substantial amounts of cash.

Transfers to Mr. Blatherwick’s Fiancées

[321] And then there are the amounts Mr. Blatherwick transferred to his fiancées from Discovery Bay. In 2010, the amounts transferred to Mr. Blatherwick’s fiancée/previous fiancées, was $330,000 USD. In the same year, Mr. Blatherwick paid $50,000 to Mrs. Blatherwick as an advance on equalization, he paid his lawyer, he paid his usual expenses associated with the matrimonial home, the cottage, as well as incurring normal living expenses in Canada with his family and his fiancée in the Philippines, payments in the RRSP and so on. And then there are the cash amounts he pays to support Ms. Domingo (who is not and has not been employed for some time) or expenses that he incurred or incurs with his fiancées/girlfriends. For what and how much are questions that cannot be answered from the evidence at trial. Clearly, Mr. Blatherwick had a very large annual income to have been able to incur and pay these expenses for many years.

Personal Expenses expensed to the Companies

[322] The evidence establishes that some personal expenses of Mr. Blatherwick were expensed to the various Offshore Companies. How much cannot be determined on the record before me.

Income from the Factories

[323] Mr. Blatherwick told Mrs. Blatherwick and Joanne Speight that the Seasons Halloween business owned the factories. Mr. Blatherwick represented this to his largest customer – Wal-Mart that Seasons owned factories in China. Who owns the factories in China? Do the factories generate profits? Who receives the profits from those factories? This is all unknown.

Foreign Bank Accounts

[324] And then there are Mr. Blatherwick's bank accounts in the Philippines. Like most things Mr. Blatherwick was evasive on the questions asked regarding the bank accounts with his fiancées:

• Bank of Philippine Island, Angeles Branch in his own name;

• Metro Bank and Trust Company, Angeles Branch for Ruth Miranda;

• Bank of Philippines, Angeles Branch in Ruth Miranda’s name;

• Metro Bank and Trust Company in Vanessa Sagmit’s name;

• a joint account with Ms. Domingo.

However, no bank statements for these accounts were produced. How much money was deposited or went through these accounts is not known. Whether there are other bank accounts is not known.

A Percentage of Sales

[325] In August 2009 Mr. Blatherwick obtained a life insurance policy from ING. The "client" was Mr. Blatherwick. The beneficiary was "Orangefield Trust (Mauritius) Limited as trustee of the 1639 Trust (Mauritius Trust Policy). This policy was obtained by a one- time premium payment of $1,511,250 USD from "business proceeds" and provided a life insurance payout of $3,000,000 USD. From what was reported to ING in the Mauritius Trust Policy application it would appear that the expected net profit for 2008 was approximately 9.6% (or $2.4 million USD) of the gross sales of Seasons Halloween Business. In 2007, the net profit was reported as 8% of the gross sales of Seasons Halloween Business.

[326] This amount of "net profit" is consistent with the 2009 profit described in the February 2010 Las Vegas business meeting presentation. The Las Vegas business meeting presentation showed a "profit" (not gross profit) of just over $2,900,000 USD just from Seasons Macao and Seasons HK. Applying this to Mr. Blatherwick's shareholdings as set out in the same document results in the following for Mr. Blatherwick's 2009 income:

a) Seasons Macao profit $1,143,202 USD = 50% Mr. Blatherwick is $571,601;

b) Seasons HK profit $1,695,628 USD = 1/7th Mr. Blatherwick is $242,661.

Total $814,262 USD

[327] These amounts do not include any income from Seasons Capital.

[328] Mr. Blatherwick testified that the profit margin from the sales of the Seasons Halloween Business was 6 to 8%. On $40,000,000 USD in sales in 2013, this would amount to profit of $2,400,000 to $3,200,000 USD per year. It would be $4,000,000 USD using a 10% profit margin.

[329] Mr. Blatherwick testified that the Seasons Halloween’s Business’ 2014 gross sales will be $42,000,000. In that case, the net profit amounts available to the partners from the Seasons Halloween Business would be from a low (6%) - $2.5 million USD to a high (10%) - $4.2 million USD.

Seasons Capital's Income

[330] Whatever the profit from Seasons HK and Season Macao are, it must be noted that it does not include any profits from Seasons Capital. Mr. Blatherwick admitted that Seasons Capital was, on a percentage basis, more profitable than the Seasons Halloween Business. On the date of separation, Seasons Capital had two Barclay’s Investment Funds and owned 4 buildings - one of which Mr. Blatherwick admitted was sold despite the Mareva/Freezing Order.

THE ANALYSIS – MATRIMONIAL PROCEEDING

LAW - FAILURE TO MAKE FINANCIAL DISCLOSURE

[331] Where a party fails to provide financial disclosure, the Court may draw an adverse inference and, if necessary, impute income to that party. See Dewan v. Dewan, 2012 ONSC 503. Where necessary, this court may make findings of property value and a party’s income despite the absence of a complete financial record. This process does not involve mere speculation or guessing. Instead, it involves the drawing of reasonable inferences from the evidence and, in the absence of a reasonable explanation for the non-disclosure, drawing adverse inferences arising from the failure by a party to produce financial documents which could have been and should have been reasonably available to the party for production.

[332] In Crosbie v. Crosbie, 2012 ONCA 516, the Court of Appeal had the following to say where the husband had failed to produce financial information:

[19] The application judge arrived at an income figure for Mr. Crosbie based on the information the parties provided, primarily being Ms. Crosbie’s reconstruction of Mr. Crosbie’s gross income. While, the important task of imputing income is extremely difficult, the reasons should demonstrate that, notwithstanding the paucity of evidence, some degree of rigor has been applied in arriving at the amount. Here, given Mr. Crosbie was self-employed, the application judge should have indicated that he took other factors into account such as legitimate business expenses and taxable and non-taxable benefits.

[20] That said, Mr. Crosbie failed to provide evidence to support the business expenses he now argues the application judge should have taken into account. The application judge used the information the parties provided him to arrive at an amount of imputed income. A payor such as Mr. Crosbie, who does not disclose income information as required runs the risk that income will be attributed to him – accurately or otherwise. The application judge’s decision is entitled to deference. We would not interfere.

THE EXPERT WITNESSES

[333] Expert evidence is an exception to the general rule barring opinion evidence. The exception permitting expert witnesses to give opinion evidence was described in R. v. Mohan, 1994 CanLII 80 (SCC), [1994] 2 S.C.R. 9.

[334] Despite being retained and paid by one of the parties, expert witnesses are to provide independent and objective evidence to assist the court to make its findings of fact which are beyond the expertise of the court. Farley J. in Bank of Montreal v. Citak, 2001 CanLII 12419 (QC CQ), 104 A.C.W.S. (3d) 110, [2001] O.J. No. 1096, at paragraph 5 stated:

Experts must be neutral and objective, to the extent that they are not, they are not properly qualified to give expert opinions.

[335] It is well-settled law that experts should not become advocates for the party by whom they are retained. Objectivity and independence are severely compromised where the expert witness becomes an advocate for the party who hired him or her. The Ontario Court of Appeal in Alfano et al v. Piersanti et al, 2012 ONCA 297, 215 A.C.W.S. (3d) 637 discussed the role of experts:

[105] In determining whether an expert’s evidence will be helpful, a court will, as a matter of common sense, look to the question of the expert’s independence or objectivity. A biased expert is unlikely to provide useful assistance.

[106] Courts have taken a pragmatic approach to the issue of the independence of expert witnesses. They have recognized and accepted that experts are called by one party in an adversarial proceeding and are generally paid by that party to prepare a report and to testify. The alignment of interest of an expert with the retaining party is not, in and of itself, a matter that will necessarily encroach upon the independence or objectivity of the expert’s evidence.

[107] That said, courts remain concerned that expert witnesses render opinions that are the product of their expertise and experience and, importantly, their independent analysis and assessment. Courts rely on expert witnesses to approach their tasks with objectivity and integrity. As Farley J. said in Bank of Montreal v. Citak, 2001 CanLII 12419 (QC CQ), [2001] O.J. No. 1096, “experts must be neutral and objective [and], to the extent they are not, they are not properly qualified to give expert opinions.”

[108] When courts have discussed the need for the independence of expert witnesses, they often have said that experts should not become advocates for the party or the positions of the party by whom they have been retained. It is not helpful to a court to have an expert simply parrot the position of the retaining client. Courts require more. The critical distinction is that the expert opinion should always be the result of the expert’s independent analysis and conclusion. While the opinion may support the client’s position, it should not be influenced as to form or content by the exigencies of the litigation or by pressure from the client. An expert’s report or evidence should not be a platform from which to argue the client’s case. As the trial judge in this case pointed out, “the fundamental principle in cases involving qualifications of experts is that the expert, although retained by the clients, assists the court.”

[110] In most cases, the issue of whether an expert lacks independence or objectivity is addressed as a matter of weight to be attached to the expert’s evidence rather than as a matter of the admissibility. Typically, when such an attack is mounted, the court will admit the evidence and weigh it in light of the independence concerns. Generally, admitting the evidence will not only be the path of least resistance, but also accord with common sense and efficiency.

(emphasis added)

[336] Independence and objectivity for business valuators was specifically referred to in Moore v. Getahun, 2015 ONCA 55 at para 60 :

Second, the ethical standards of other professional bodies place an obligation upon their members to be independent and impartial when giving expert evidence: see Guideline: The Professional Engineer as an Expert Witness (Toronto: Association of Professional Engineers of Ontario, September 2011); the Actuarial Standards Board’s Standards of Practice (Ottawa: Canadian Institute of Actuaries, October 2014); the Canadian Institute of Chartered Business Valuators’ Code of Ethics (Toronto: Canadian Institute of Chartered Business Valuators, 2012), Standard No. 110: Valuation Reports (Toronto: Canadian Institute of Chartered Business Valuators, 2009) and Standard No. 310: Expert Reports (Toronto: Canadian Institute of Chartered Business Valuators, 2010). Further, pursuant to the Rules of Civil Procedure, every expert witness is reminded of the duty imposed by rule 4.1.01 to be objective and impartial when signing the acknowledgment of expert’s duty mandated by rule 53.03(2.1).

(emphasis added)

[337] Given the very heavy reliance placed on financial statements by the experts in arriving at corporate valuations and income estimates, involvement by the expert in the creation, shaping or altering of the financial statements, in any significant way, raises serious questions regarding the experts independence and objectivity.

[338] For example, if there are errors or discrepancies in the financial statements, the fact that there are significant errors or discrepancies in the financial statements initially provided to the expert is important as it shows the underlying financial information has limited reliability. If so, the expert's opinion based on that unreliable information has a corresponding lack of weight.

[339] This issue takes on greater significance if:

a) the discrepancies or errors in the original financial information is not brought to the court's attention in the expert's report; or

b) the discrepancies or errors in the original financial information is not brought to the attention of other side's expert when he receives the amended financial statements.

[340] In my view, it is not sufficient for the expert to say to this court, I only identified the discrepancies in the financial statements – “I didn’t make the changes”, the changes were made by the company’s accountants. The accountants who made the changes know the expert’s retainer. Those accountants are not bound by any obligation to this court. Perhaps the changes are appropriate. Perhaps the changes were made to assist the party who retained the expert.

[341] I am not suggesting that areas of clarification may not be raised by the expert. However, I would expect that, where a clarification is needed by the expert, the expert should refer explicitly to the “discrepancy”, set out clearly the clarification requested, set out the change(s) made to the financial statement and proceed to opine on the basis of the original financial statement as clarified.

[342] Both Mr. Blatherwick’s valuation expert and Mrs. Blatherwick’s valuation expert were qualified to give evidence on the issue of Mr. Blatherwick’s income and the value of his corporate interests.

[343] Mr. Blatherwick submits I should accept Ms. Russell's conclusions on asset value and income.

[344] Mrs. Blatherwick’s counsel submits that Ms. Russell’s reports should be rejected in their entirety because Ms. Russell’s expert’s reports are so lacking in independence and objectivity that they are unlikely to provide this court any useful assistance.

Andy MacRae

[345] Mr. MacRae was called as an expert witness by Mrs. Blatherwick. He was qualified as a business valuator to give opinion evidence on Mr. Blatherwick’s estimated income for spousal support purposes and the value of Mr. Blatherwick’s business interests on separation. Mr. MacRae executed the Acknowledgement of Experts Duty as required by the Rules of Civil Procedure.

[346] Mr. MacRae prepared four reports as follows:

a) Valuation of Mr. Blatherwick’s Business Interests as at November 18, 2010, dated November 3, 2014 (Nov. 3, 2014 Report);

b) Calculation of Mr. Blatherwick’s Income for Support for Calendar Years 2007 to 2010, dated November 30, 2011 (Nov. 30, 2011 Report);

c) Supplemental Report – Valuation of Business Interests as at November 18, 2010, dated January 5, 2015 (Jan. 5, 2015 Valuation Report);

d) Supplemental Report – Mr. Blatherwick’s Income – 2007 to 2013, dated January 5, 2015 (Jan. 5, 2015 Income Report).

[347] Mr. MacRae was hampered with the lack of complete financial documentation and inconsistency in the documentation produced.

[348] While suffering with the same limited financial information as Ms. Russell, Mr. MacRae was more objective and provided a greater degree of independent analysis than did Ms. Russell. His explanations as to why he made certain "judgment calls" to be more reasonable and even-handed. A number of assumptions made by Mr. MacRae were much closer to the facts as found by this court.

[349] I agree with the approach taken by Mr. MacRae. Where there was a difference in his approach to that of Ms. Russell, I preferred his approach.

Melanie Russell

[350] Ms. Russell was called as an expert witness by Mr. Blatherwick. She was qualified as a business valuator to give opinion evidence on estimated income of Mr. Blatherwick for spousal support purposes. Ms. Russell executed the Acknowledgement of Experts Duty as required by the Rules of Civil Procedure.

[351] Ms. Russell produced three expert’s reports:

a) Preliminary calculation of the Fair Market Value of Mr. Blatherwick’s Business Interests as at November 17, 2010 and his Income for Support Purposes from 2007 to 2010 dated June 27, 2011 (June 27, 2011 Report);

b) Calculation of the Fair Market Value of Mr. Blatherwick’s Business Interests as at November 17, 2010 and his Income for Support Purposes from 2007 to 2010 dated November 4, 2011 (Nov. 4, 2011 Report);

c) Calculation of the Income for Support Purposes of Mr. Blatherwick for 2007 to 2012 dated February 15, 2013 (Feb. 13, 2013 Report).

[352] After Ms. Russell was qualified as an expert, Ms. Russell testified that she had advised the Seasons Halloween Business' accountants in Hong Kong and Canada about certain "discrepancies" she found in the financial statements/documents of the Offshore and Canadian Companies. Over time, a number of these "discrepancies" were adjusted by the accountants and amended financial statements or clarifying documents were sent to Ms. Russell which she then relied on. Her involvement in identifying inconsistencies and working with Mr. Blatherwick’s accountants to correct or adjust the financial information, raised serious questions regarding her objectivity and independence.

[353] I made it clear to Mr. Blatherwick and Ms. Russell, while Ms. Russell was still giving evidence that it would be helpful for this court to know what changes were made to the financial statements/documents as a result of her identifying discrepancies and whether the changes to the financial statements were or were not significant. Ms. Russell and Mr. Blatherwick had an opportunity to deal with my concern during her evidence.

[354] Let me be more specific. Ms. Russell reviewed the corporate financial statements/documents of the Offshore Companies and the Canadian Companies. In particular, Ms. Russell identified “inter-company discrepancies”. She corresponded over a period of time with the respective accountants identifying these “inter-company discrepancies”. No doubt the accountants knew that Ms. Russell had been retained by Mr. Blatherwick in the context of matrimonial proceedings. Ms. Russell acted as a facilitator between the Chinese and Canadian accountants to attempt to reconcile the discrepancies. As a result of this dialogue, some changes were made to the financial statements or information as the revised information was provided to Ms. Russell. Ms. Russell relied on this amended financial information to arrive at her opinions.

[355] This process, and specifically Ms. Russell’s role in identifying and corresponding with the accountants to revise or correct the financial information, was not fully disclosed in her expert’s reports. To be perfectly clear, a few areas were identified but most were not, with Ms. Russell simply setting out the date of a document which she relied on for the clarification. But the reference to the document relied on did not set out the prior communication she had with the accountants leading to the financial information relied on by her.

[356] One area where Ms. Russell and the respective accountants dealt with relates to the Brownridge Property. Ms. Russell identified as a discrepancy, the treatment of the Brownridge Property, in particular, the financial treatment of how the advances for the purchase of this property and the carrying charges for this property were shown in the financial statements. In particular, Ms. Russell identified an inconsistency as to which company had advanced the money and which company showed the advances as a loan. Ms. Russell sent an email to Mr. Blatherwick on October 6, 2011 attaching an email from Yan Liu (Seasons HK’s accountant) dated October 3, 2011 explaining that certain journal entries recording CMC as the borrower of the funds should be corrected by adjusting a journal entry to show that the monies were not payable by CMC but instead by Rockwood Landco.

[357] How did this discrepancy identified by Ms. Russell find its way into the Seasons HK financial statements? On Schedule C5 of Ms. Russell's June 27, 2011 Report, the December 31 and March 31, 2010 entries show a "fixed asset, net" "Land & building -17 Brownridge, Units 4-6" with a value of approximately $12,000,000 HK$. On Schedule C5 of the Ms. Russell's November 4, 2011 Report, the same December 31 and March 31, 2010 entries for "Fixed assets, net" for "Land & building -17 Brownridge, Units 4-6” has zero value. Where did this asset go? It became a receivable from Rockwood Landco on the same page. Why is this highly significant? The Brownridge Property is the subject of a claim to beneficial ownership by Seasons HK which claim is disputed by Rockwood Landco. As such, the manner in which the advanced monies were recorded by the corporations in their books and records might be of critical importance to this determination.

[358] This issue took on an even greater significance when at the beginning of his evidence, Mr. Leung produced an amended updated payment statement of monies advanced by Seasons HK which updated statement removed any reference to a loan to CMC from the previous payment statement and replaced it to show advances were from Seasons HK to Rockwood Landco. The very “discrepancy” identified by Ms. Russell and changes she suggested went to the very issue of whether Seasons HK is the beneficial owner of the Brownridge Property or whether it remains an asset of Rockwood Landco.

[359] Trial Exhibit 60 are examples of some of the communications between Ms. Russell and the accountants regarding the "discrepancies" leading to the adjustments. The examples below show the type and scale of Ms. Russell’s involvement in the reconciliation of the discrepancies:

a) The chain starts with an email dated August 15, 2011 from Mr. Blatherwick to Ms. Russell and his counsel, enclosing updated “Financials”;

b) On October 18, 2011, a draft reconciliation statement was sent to Ms. Russell for “review”. This generated numerous follow-up communications discussing the proposed changes;

c) October 21, 2011 Letter from Ms. Russell to Mr. Blatherwick’s counsel stated:

…As is further explained below, we are not in a position to provide a final report at this time. As at the date of this letter, the fiscal 2009 and 2010 financial statements of the various companies in the group have not yet been adjusted to correctly reflect related party/inter-company transactions. Accordingly, if were to provide a valuation report relying on the unadjusted financial statements, we can confirm that our value conclusions would be inaccurate, although we cannot determine the extent to which our conclusions would be incorrect….

…we have been able to resolve certain of the discrepancies but further analysis is required. However, we are still working with the external/public and internal accountants of the Hong Kong and Macau companies, the external/public accountants of the Canadian companies, and the internal staff of the Canadian companies (including Mr. Blatherwick) to reconcile the figures.

.. I estimate that since the issuance of our preliminary report on June 27, 2011, there has been in the range of 10 to 200 e-mail messages (incoming and outgoing) as well as various telephone calls (some of them between Hong Kong and Toronto) relating to addressing this matter.

d) October 21, 2011 – the Canadian accountant wrote to a number of persons including Ms. Russell: “attached are the balance sheets for the Canadian companies, subject to Brian’s approval.”…"Rockwood Landco – The long term debt has been increased by $325,000 to represent the adjustments by Yan to get Concept Marketing Canada’s balance with Seasons HK to agree. The assumption is that instead of Concept Marketing Canada owing amounts to Seasons HK, it should be Rockwood Landco, so the balance sheet had been adjusted to reflect this”. Balance Sheets referred to were for the year end December 31, 2010 - the year the separation occurred and the date the assets were to be valued and relate to the Brownridge Property;

e) October 24, 2011 – the Canadian accountant wrote to Ms. Russell “There is no income tax impact as a result of the adjustments to SDG and Rockwood Landco”. Ms. Russell responded “Why not? My reading of the adjustments per Yan’s e-mail is that some of the Canadian companies have additional income and/or lower expenses. It may not be SDG or Rockwood, but my question relates to the companies with the income statement impact.”

[360] I conclude that Ms. Russell had a significant role in leading to the adjustments made on the financial information she used to arrive at her opinions. As a result, her objectivity and independence are, in my view, compromised.

[361] There are several other concerns regarding the reliability of Ms. Russell’s opinions:

a) Ms. Russell relied heavily on what she had been told by Mr. Blatherwick. Ms. Russell didn’t read, or take into account, 6 days of questioning under oath of Mr. Blatherwick when many questions related to the financial affairs of the various companies were asked and answered. Some answers given by Mr. Blatherwick under oath, including some documents referred to, were inconsistent with the information provided by Mr. Blatherwick to Ms. Russell. In some cases, more detailed. Ms. Russell could not take this financial information into account because she had not reviewed this extensive information from Mr. Blatherwick. Instead, Ms. Russell relied on Mr. Blatherwick’s unsworn statements made to her.

b) In some cases, her reliance on Mr. Blatherwick’s statements appeared to be unreasonable. For example, the 2010 financial statement of Seasons HK showed dividends were paid out. Ms. Russell was told that the dividends had been paid to Mr. Leung who then gave the monies to the employees and, therefore, the dividends were not income to the shareholders. There was no explanation how dividends could be paid to third parties and not be income to the shareholders. Only shareholders are entitled to dividends. However, Mr. Blatherwick’s statement was sufficient for Ms. Russell to exclude in her calculations the dividends from Mr. Blatherwick’s income. As set out in Alfano, this court is entitled to the "independent analysis and assessment" an expert brings to his or her evidence. Where there is a lack of documentation and heavy reliance is placed on what Mr. Blatherwick told Ms. Russell without question, there is missing the independent analysis and assessment expected of an expert witness. Furthermore, and perhaps more importantly, given the rejection of Mr. Blatherwick’s evidence, this destroys the validity of many of Ms. Russell’s assumptions used as a basis for her opinions;

c) One of the documents relied on heavily by Ms. Russell was the letter from Mr. Leung of June 7, 2011, which I concluded, for the reasons set out above, was false and drafted solely for the purpose of assisting Mr. Blatherwick in this matrimonial litigation to minimize his income by suggesting some of the monies received by him were loans. This conclusion might have been gleaned from the June 6, 2011 emails between Mr. Blatherwick and his counsel where Mr. Blatherwick said he would have Mr. Leung prepare such a letter to "deem" the amounts as loan. Ms. Russell was copied on these emails leading to this after the fact characterization of monies Mr. Blatherwick had received over the previous years. Ms. Russell subsequent reliance on Mr. Blatherwick's statements that going back to 2006 that certain monies from Discovery Bay were loans was questionable in these circumstances;

d) As set out above, Ms. Russell was fully aware of the “discrepancies” surrounding the treatment of the advances for the purchase of the Brownridge Property. Was it a loan from Discovery Bay? Was it a loan from Seasons HK to CMC? Was it a loan from Seasons HK to CMC? For the purpose of Ms. Russell’s calculations, in Ms. Russell's June 27, 2011 Report and her November 4, 2011 Report, she sets it out as a loan from Rockwood Landco to Seasons HK. Subsequently, two years later, Seasons HK position is that it was never a loan at all. Seasons HK submits it was payment by Seasons HK to beneficially acquire the Brownridge Property – i.e. not a loan to any company? This undermines Ms. Russell's assumptions used to arrive at her opinions;

e) this court found that Ms. Russell, when answering questions in cross examination, attempted to put forward Mr. Blatherwick’s position even when the answer was not responsive to the questions asked;

f) Ms. Russell’s June 27, 2011 Report and November 4, 2011 Report, considered two scenarios. The first, where Mr. Blatherwick had a 1/7th interest in the Offshore Companies but not including Seasons Capital. The second scenario, where Mr. Blatherwick’s holdings in Seasons HK and Seasons Macao were as set out in the reported shareholdings but not including Seasons Capital. Again, Ms. Russell did not calculate any value for Mr. Blatherwick’s interest in Seasons Capital since he had advised her he had none. As noted above, Mr. Blatherwick testified at trial that he had a 25% interest in Seasons Capital. This is a significant change to Ms. Russell’s assumptions she used for her opinions;

g) Capitalrich produced no financial statements, had no bank accounts – there simply were no documents. On Ms. Russell's Reports, Ms. Russell was told by Mr. Blatherwick that Capitalrich had no equity on the date of separation. She relied on this representation. This permitted Ms. Russell to only value Mr. Blatherwick’s 1/7^th indirect interest in Seasons HK essentially ignoring Capitalrich. However, no corporate or financial documents were provided to support Mr. Blatherwick’s statement regarding Capitalrich. Does Capitalrich have other investments, bank accounts, retained earnings, assets....? Further, how can any reliance be place on what Mr. Blatherwick said regarding Capitalrich given that he testified he thought he held shares in Capitalrich for years but found out at trial, he doesn't. It is clear that Mr. Blatherwick's own statements as to what shares he holds in what companies was a moving target. It appears that Ms. Russell was putting forward Mr. Blatherwick's representation without any analysis or scrutiny. The assumptions Ms. Russell relied on were wrong and impacted her opinions;

h) If Mr. Blatherwick’s share in the Seasons Halloween Business is 1/7^th, there appears to be no evidence that the other partners received from the Seasons Halloween Business 6/7ths of the income. Would this information support or contradict this alleged overriding 1/7^th interest each “partner” allegedly has? Given the scenarios and uncertainty of Mr. Blatherwicks shareholdings in the various companies, wouldn't a greater review and analysis be warranted? There was no independent analysis on this issue;

i) turning to the Seasons HK financial statements, only financial statements for the years ending March 31, 2009 and 2010 were produced. For the year ending March 31, 2009 there was little activity in Seasons HK. Audited Financial Statements by MY Commercial for the year ending March 31, 2010 were produced. This appeared to be the first full year of operations for Seasons HK. There was also available unaudited interim financial statement as of December 31, 2010 (9 months) for Seasons HK. This required some extrapolation and estimation by Ms. Russell to convert this interim financial statement to a full year end March 31, 2011 financial results. No one explained why Seasons HK didn't produce its Year Ended audited March 31, 2011 Financial Statements. It would have brought some precision to Ms. Russell’s analysis rather than the extrapolations and estimation Ms. Russell was compelled to do on Schedule C3. Perhaps the sales are not evenly recorded throughout the year so that the proportionate analysis done by Ms. Russell would be inappropriate, particularly given the seasonality of the Seasons Halloween Business. The lack of this information adds greater uncertainty to Ms. Russell's opinions;

[362] I recognize that some of the concerns set out above, are what lead to this type of report (i.e. it is not a comprehensive or estimate report). However, I am satisfied that the above concerns go to the reliability of the assumptions made and the degree of reliability which can be placed on Ms. Russell's opinions, regardless of the level or type of report produced.

EQUALIZATION PAYMENT

[363] Mr. Blatherwick has paid to Mrs. Blatherwick $425,000 USD as an advance on any equalization Mr. Blatherwick is obliged to pay.

[364] Fortunately, the parties were able to agree on the value of various properties at the beginning of trial.

[365] Both experts converted their final opinions on value, at the date of separation, to $ CDN.

Ms. Russell’s Reports

[366] In her June 27, 2011 Report, Ms. Russell concluded that the value of Mr. Blatherwick's reported shareholdings in Capitalrich/Seasons HK, Seasons Macao and Seasonal Design Group was between $2,554,000 and $3,384,500 CDN. She also concluded that based on the 1/7th shareholdings contemplated by the Shareholders Agreement, Mr. Blatherwick’s value for Capitalrich/Seasons HK, Seasons Macao and Seasonal Design Group was between $1,695,000 and $2,116,500. She found Mr. Blatherwick's personal and other interests in the Canadian Companies had some value but was offset by a significant loan from Mr. Blatherwick to Discovery Bay and a contingent liability to Revenue Canada from Mr. Blatherwick for an undetermined amount. In fact, she found that a debt owing by Mr. Blatherwick to Discovery Bay exceeded any value of the remaining assets in the Canadian Companies. There was no value estimated for Seasons Capital.

[367] In the November 4, 2011 Report, Ms. Russell concluded that Mr. Blatherwick's shareholdings in Capitalrich/Seasons HK, Seasons Macao and Seasonal Design Group based on the reported shareholdings, had a value between $2,584,000 to $3,469,000 CDN. In the alternative, if Mr. Blatherwick's interests in Capitalrich/Seasons HK and Seasons Macao were 1/7th as per the Shareholders Agreement, Mr. Blatherwick's shareholdings in Capitalrich/Seasons HK, Seasons Macao and Seasonal Design Group had a value between $1,743,000 to $2,226,000 CDN. In both scenarios, Ms. Russell did not include any estimate of value for Seasons Capital. She did include in the above amounts, a nominal value only for Seasonal Design Group of between $71,000 to $87,000 and no value for the remaining Canadian Companies. She determined that Mr. Blatherwick’s personal assets showed a net liability of $213,648 which arose from an alleged loan to Discovery Bay and an undetermined amount to Revenue Canada.

Mr. MacRae’s Reports

[368] In Mr. MacRae’s November 3, 2014 Report, he concluded that Mr. Blatherwick’s corporate interests had a value between $6,544,00 to $7,832,000. In addition, Mr. Blatherwick had a receivable from Seasons Macao in the amount of $285,825.

[369] Mr. MacRae’s January 5, 2015 Report, he took into account the agreed upon values of certain properties which resulted in changes to the value of Blatherwick Holdings and Seasons Capital. As a result of these changes, Mr. MacRae concluded that Mr. Blatherwick’s shareholding had a value between $6,323,000 and $7,585,000.

[370] Just over $2,000,000 in the differences between Mr. MacRae and Ms. Russell relate to the value of Mr. Blatherwick’s holdings in Seasons Capital. This leaves approximately a $2,000,000 CDN difference between the two expert opinions.

Revisions by Mr. MacRae based on the trial evidence of Mr. Blatherwick

[371] During his evidence, Mr. MacRae was asked to recalculate the value of Mr. Blatherwick shareholdings based on a 50% division of sales between Seasons HK and Seasons Macao. He did so. There are two difficulties with this. The first is that the 40:60 division of sales between Seasons HK and Seasons Macao existed at the date of separation. Secondly, the evidence was that the companies are moving in the direction of achieving this 50:50 division last year (2014). In my view, the valuation of the Seasons Halloween Business should be done in the manner that the Seasons Halloween Business was conducted in 2010 when the separation occurred that is to say 60:40 division of sales.

[372] Mr. MacRae was asked during his evidence to calculate the value of Mr. Blatherwick’s corporate interests with no minority discount applied to the “gross” values. He did so because of the request by counsel. However, I did not understand his evidence to be that he thought it reasonable and appropriate that no discount be applied in the circumstances of this case. I prefer his analysis and methodology used in his Reports with respect to his minority discount. In my view, not having any minority discount is unrealistic for the reasons expressed by both experts – primarily because Mr. Blatherwick is not a majority shareholder. For the reasons set out below, I will use the minority discounts determined by Mr. MacRae in his Reports.

The Significant Differences between the Experts

[373] The most significant differences between Mr. MacRae and Ms. Russell are the discount rate, goodwill, disposition costs and contingent tax. Let me deal with these areas of disagreement.

Discount Rate

[374] Both experts agree, in their reports, that some minority or illiquidity discount rate should be applied. The question is how much.

[375] This is a very subjective area relying upon the valuators understanding of the nature of the business, the industry and other specific factors associated with the particular shareholder’s circumstances and then, exercising judgment in a variety of areas to build up or calculate a minority discount.

[376] Ms. Russell applied a minority and illiquidity discount of 5% to 35% depending on the particular company. For Seasons HK she applied a discount of 27.45% to 31.80% and for Seasons Macao of 30.27% to 35.16%.

[377] Mr. MacRae applied a minority and illiquidity discount of 0% to 20% depending on what he considered to be the “unique factors in each corporation”.

[378] I do not accept Ms. Russell’s discount rates. I consider them to be too high and prefer methodology and reasons for the discount rates used by Mr. MacRae in his reports. There are only two likely sale situations: First, Mr. Blatherwick sells to another “partner” or the partners decide to sell the business en bloc. Should the partners decide to sell the Seasons Halloween Business en bloc, then there would be no discount applicable to Mr. Blatherwick’s shareholdings. This scenario is supported by evidence that a buyer had been interested in buying the entire Seasons Halloween Business just prior to separation but no documents were produced and the details of what had occurred were not expanded upon by Mr. Blatherwick, even when asked. In this scenario, there would be no minority discount applicable. The second scenario is where Mr. Blatherwick sells to another partner. In this scenario, it is unlikely this “brotherhood of trust” would extract a significant discount from Mr. Blatherwick, if any at all as they would likely want his continued assistance over some period of time given his very significant role in sales.

[379] I do recognize that there is a possibility that Mr. Blatherwick might sell his shareholding interests in the Seasons Halloween Business to a third party, in which case this would likely attract a minority discount. However, it is necessary to keep in mind that Mr. Blatherwick has the largest share in Seasons Halloween Business and, in any one company; he has at least as great an interest as other shareholders. Further, any buyer may need his assistance to transition customers which he has dealt with directly for many years.

[380] As a result, I conclude a minority discount is appropriate and I accept the lower minority discounts calculated by Mr. MacRae in his reports.

Recovery of Intercompany Loans

[381] Given my findings above regarding the reliability of the corporate and financial documentation, it is difficult to put any weight on what was recorded as related party loans/intercompany loans in the financial statements. I accept Mr. MacRae's approach to the intercompany loans which inter-corporate loans were essentially disregarded as, in reality, just being bookkeeping entries.

Goodwill & Intangible Assets

[382] Ms. Russell determined there was a fairly minimal value to “goodwill and intangible assets” in the Seasons Halloween Business. Mr. MacRae disagreed with this conclusion. Mr. MacRae testified that Ms. Russell’s valuations were too low, in part, because Ms. Russell did not consider that there was a significant goodwill component attributed by her to the Seasons Halloween Business. He considered that the Seasons Halloween Business had a significant goodwill value.

[383] I do not accept Ms. Russell’s assessment of the value of goodwill and intangible assets for the Seasons Halloween Business. First, the Seasons Halloween Business had longstanding relationships with the largest retailers in the world. Many suppliers would only dream of having, amongst its biggest buyers, worldwide retailers such as Wal-Mart, K-Mart, Right Aid, Target and Costco. Further, the Seasons Halloween Business has the rights to use the Warner Brothers “characters”, which rights this court was told are difficult to obtain. As a result, it is hard to imagine that after approximately 15 years in business and becoming one of the largest Halloween product suppliers in the world, the Seasons Halloween Business would not have significant value associated with its goodwill.

[384] As for intangible assets, we have heard that Seasons Halloween Business has exclusive rights to the “Sparkling” pumpkin developed by Mr. Blatherwick. This “sparkling” process is also used for other Halloween products. It is unique. Mr. Blatherwick had no evidence as to who holds patent rights for this process and what monies are generated by this patent(s). However, we do know that the sales from the “sparkling” pumpkins are a significant portion of Seasons Halloween Business' sales. This gives the Seasons Halloween Business a significant and positive differentiation from the other Halloween product suppliers - a competitive business advantage. Either Seasons Halloween Business holds the patent or it is Mr. Blatherwick who holds the patent. In either case, Seasons Halloween Business has exclusive use to these “sparkling” products and this access represents a significant intangible asset for the Seasons Halloween Business.

[385] I prefer the conclusions of Mr. MacRae and accept that there is a considerable value to goodwill and intangible assets in the Seasons Halloween Business.

Contingent Tax and Disposition Costs

[386] In her reports Ms. Russell identified contingent tax and disposition costs that should apply but did not calculate an amount for these costs.

[387] On the other hand, Mr. MacRae opined that no contingent tax costs should be applied since Canada Revenue Agency would never have knowledge of any disposition, triggering any tax.

[388] Mrs. Blatherwick’s counsel submits that it is inconsistent for Ms. Russell to suggest that Mr. Blatherwick would report such a disposition to Revenue Canada and pay taxes, when one of her assumptions on page 20 of her Nov. 4, 2011 Report she stated: “Mr. Blatherwick will continue to receive $200,000 per year from the Discovery Bay account and not include this amount in his personal income tax returns.”

[389] Mr. Blatherwick’s failure to report his foreign assets and income is consistent with Mr. Blatherwick’s 2011 and 2013 tax returns when he did not report to Revenue Canada having any foreign property with a value greater than $100,000.

[390] If Mr. Blatherwick makes his home in the Philippines, will there be any taxes payable in either China or the Philippines arising from the disposition of his shares? There is no evidence on this.

[391] As for disposition costs, there is no evidence what the quantum of disposition costs would be for the sale of Mr. Blatherwick’s shareholdings.

[392] On the evidentiary record before me, while I recognize that a disposition would normally attract some disposition costs, I cannot conclude what that amount would be.

[393] I accept Mr. MacRae’s conclusion that it is highly unlikely there will be any tax payable on a sale of Mr. Blatherwick’s shareholdings. Mr. Blatherwick will leave this jurisdiction and the sell his interests in the Seasons Halloween Business neither declaring nor paying taxes in Canada. Whether he would have to pay taxes in any other jurisdiction is speculation.

[394] As a result, I have not deducted for contingent taxes or disposition costs from the value of Mr. Blatherwick’s interests.

Mr. MacRae’s estimated values

[395] Mr. MacRae estimated the following for values for Mr. Blatherwick’s corporate interests:

• Capitalrich (indirectly Seasons HK) $1,418,000 to $1,851,000;

• Seasons Macao: $2,772,000 to $3,361,000;

• Seasons Capital: $1,914,000 to $2,154,000;

• Blatherwick Holdings Inc.: $190,000;

• Seasonal Design Group: $29,000.

Conclusion on the Value of Mr. Blatherwick’s Corporate Interests

[396] I find the following value for Mr. Blatherwick’s shareholdings to be:

• Capitalrich (indirectly Seasons HK) at $1,600,000 CDN;

• Seasons Macao (50% interest) at $3,000,000 CDN;

• Seasons Capital at $2,200,000 CDN;

• Blatherwick Holdings at $190,000 CDN;

• Seasonal Design Group at $29,000 CDN.

[397] The remaining companies are subsidiaries whose value would appear in the parent company or whose value appears to be negligible based on the evidence at trial.

[398] I find the value of Mr. Blatherwick’s other assets from the Season Halloween Business (i.e. receivables from Seasons Macao and other subsidiaries) to be $258,825 CDN as set out in Mr. MacRae’s reports.

[399] As a result, the valuation of Mr. Blatherwick’s interests in and receivables from the Seasons Halloween Business is $7,177,000 CDN.

[400] Let me make this final comment. I am certain that there are other assets that have not been disclosed by Mr. Blatherwick. This would include factories in China owned by Seasons Halloween Business, a fourth property owned by Seasons Capital on separation but subsequently sold, undisclosed bank accounts and other undisclosed assets. However, adding any amount for these undisclosed assets would be nothing more than mere speculation which I am not prepared to embark upon. However, it is appropriate, in my view, to add a further amount based on speculation of such other assets.

Calculating the Equalization Payment

[401] Both parties filed updated NFP statements at the end of the trial.

Life and Disability Insurance

[402] The first disputed item is found in Part 4 (d) Life and Disability Insurance. Mr. Blatherwick includes the Mauritius Trust Policy as owned by him. He shows no cash surrender value for the Mauritius Trust Policy. However, from the terms of the policy, the cash surrender value is approximately $1,112,436 CDN (after expenses associated with the cash surrender). This was an asset purchased by Mr. Blatherwick in 2009 by a $1,500,000 USD one-time payment. This policy has a cash surrender value which can be accessed at any time. I see no reason why the cash surrender value for the Mauritius Trust Policy is not "family property". I accept Mrs. Blatherwick’s treatment of this asset.

Offshore Companies

[403] The next disputed item is the valuation of Mr. Blatherwick’s shareholdings in the Offshore Companies. Mr. Blatherwick included the amount of $4,823,000 CDN in his NFP. Mrs. Blatherwick included the amount of $8,991,305 in her NFP. For the reasons set out above, I find that the value of Mr. Blatherwick’s Offshore Companies holdings is $6,800,000 CDN.

Canadian Companies

[404] The next disputed item is the valuation of Mr. Blatherwick’s shareholding in the Canadian Companies. Mr. Blatherwick includes a $79,000 value for Seasonal Design Group as an asset of Mrs. Blatherwick. Mrs. Blatherwick includes a valuation for Blatherwick Holdings of $380,000 and a valuation for Seasons Design Group of $58,000 both of which were equally divided between the parties. For the reasons set out above, I find the valuation of the Canadian Companies to be as set out in Mrs. Blatherwick’s NFP Statement.

Receivables

[405] The next disputed amount is found in Part 4(f). Mr. Blatherwick calculates the amount owed to him as $262,652 while Mrs. Blatherwick calculated the amount owed to Mr. Blatherwick to be $258,825. Giving the benefit to Mr. Blatherwick, I will use the lower of the two amounts in the NFP statement to be amended.

RRSP

[406] The next disputed amount is with respect to the RRSP accounts of both Mr. and Mrs. Blatherwick. Mrs. Blatherwick has shown as a 27% contingent tax liability for the value of the RRSP’s. Mr. Blatherwick uses 35% contingent liability on his RRSPs. Mr. Blatherwick makes no corresponding entry for Mrs. Blatherwick’s RRSP. I will use the amounts set out in Mrs. Blatherwick’s NFP as I consider them to be a correct approach and more reasonable amount for the contingent tax liability.

Debts and Liabilities

[407] Mr. Blatherwick seeks to include in his debts and liabilities of just over $2,000,000 in contingent tax and disposition costs and $476,300 as monies owed to Discovery Bay. For the reasons set out above, I will not include any amount for disposition costs or contingent tax as I have found that all monies received by Mr. Blatherwick from Discovery Bay were not loans but receipt of income.

REVISED NFP

[408] I conclude that the Net Family Property Statement to be as follows:

Table 1: Value Of Assets Owned on Valuation Date

PART 4(a): LAND

Nature & Type of Ownership

(State percentage interest)

Address of Property

Mrs. Blatherwick

Mr. Blatherwick

Matrimonial Home (100% interest)

130 Milne Place

Rockwood Ontario, N0B 2K0

$552,450.00

15. Totals: Value of Land

$552,450.00

$0.00

PART 4(b): GENERAL HOUSEHOLD ITEMS AND VEHICLES

Item

Description

Mrs. Blatherwick

Mr. Blatherwick

Household goods

Contents divided (50%) on September 9, 2014

& furniture

Cars, boats, vehicles

2006 Chevrolet Corvette

2009 Mercedes Benz R320

Sea Doo

Sea Doo

Trailer

2005 Mini Cooper (Traded in November 2010 for Ford Escape with $6,700 credit)

$6,700.00

$35,000.00

$36,000.00

$14,000.00

$6,000.00

$500.00

Jewellery, art, electronics, tools, sports & hobby equipment

Brian-Wooden model airplanes, die cast planes, electronic trains “O” gauge, goalie figures, philatelic/numismatic collections

$10,000.00

Barb-jewelry and art, boss radio, assortment of tools including an old drill, hacksaw, etc.

$5,500.00

Other special

items

16. Totals: Value of General Household Items and Vehicles

$12,200.00

$101,500.00

PART 4(c): BANK ACCOUNTS AND SAVINGS, SECURITIES AND PENSIONS

Category

(Savings, Checking, GIC,

RRSP, Pensions, etc.)

Institution

Account Number

Mrs. Blatherwick

Mr. Blatherwick

Multi-Currency

Savings

Chequing

Chequing

Chequing

Investment Portfolio

Investment Portfolio

Investment Portfolio

Chequing

Savings

TFSA

HSBC – Hong Kong (HKD $259,870.03)

PC Financial (joint)

PC Financial (joint)

HSBC (USD)

HSBC (CAD)

Edward Jones (RSPs)

Edward Jones (LIRA)

Edward Jones (RRSP)

President’s Choice

President’s Choice

President’s Choice

XXXXXX33

XXXXXX97

XXXXXX71

XXXXX-306

XXXXXX-150

XXXX82 CC

XXXXX-1-7

XXXXX62

XXXXXX12

XXXXXX48

$3.31

$1,336.12

$120,446.86

$4,353.71

$209.86

$1,044.77

$33,775.61

$3.31

$1,336.12

$126.98

$871.39

$203,103.30

Unknown

17. Totals: Value of Accounts And Savings

$127,394.63

$239,216.71

PART 4(d): LIFE AND DISABILITY INSURANCE

Company, Type &

Policy No.

Owner

Beneficiary

Face

Amount ($)

Mrs. Blatherwick

Mr. Blatherwick

Sun Life, Term, R8584383

Manulife, 856026

ING Insurance (through Orangefield Trust Mauritius)

Cash surrender value of $1,172,124.00 USD as per the policy, minus cash surrender charge of

Brian

Barbara

Barbara

$500,000.00

$1,000,000.00

$1,500,000.00

$1,112,436.48

$81,500.00 USD = $1,090,624.00 USD x 1.02 to convert to $1,112,436.48 CAD)

18. Totals: Cash Surrender Value Of Insurance Policies

$0.00

$1,112,436.48

PART 4(e): BUSINESS INTERESTS

Name of Firm

or Company

Interests

Mrs. Blatherwick

Mr. Blatherwick

Capitalrich Group Limited

33.3% (Brian)

which indirectly is 1/7^th of Seasons HK

$1,600,000.00

Seasons Limited – Macao Commercial Offshore

Seasons Capital Limited

Blatherwick Holdings Inc.

Rockwood Landco Inc.

Seasonal Design Group

50% (Brian)

25% (Brian)

26% each

Included in Blatherwick Holdings

50% each (Brian and Barbara)

$190,000.00

$29,000.00

$3,000,000.00

$2,200,000.00

$190,000.00

$29,000.00

19. Totals: Value Of Business Interests

$219,000

$7,109,000

PART 4(f): MONEY OWED TO YOU

Details

Mrs. Blatherwick

Mr. Blatherwick

Receivables due to Mr. Blatherwick from Seasons Limited – Macao Commercial Offshore, Concept Marketing Asia, Seasons U.V. Limited, Blatherwick Holdings, and Seasonal Design Group Limited

$258,825.00

20. Totals: Money Owed To You

$0.00

$258,825.00

PART 4(g): OTHER PROPERTY

Category

Details

Mrs. Blatherwick

Mr. Blatherwick

21. Totals: Value Of Other Property

$0

$0

22. VALUE OF PROPERTY OWNED ON THE VALUATION DATE, (TOTAL 1)

(Add: items [15] to [21])

$911,104.63

$8,730,978.19

Table 2: Value Of Debts and Liabilities on Valuation Date

PART 5: DEBTS AND OTHER LIABILITIES

Category

Details

Mrs. Blatherwick

Mr. Blatherwick

Contingent income tax on RRSPs

Brian (based on 27% liability)

$54,837.89

Contingent income tax on RRSPs

Barbara (based on 27% liability)

$32,520.00

23. Totals: Debts And Other Liabilities, (TOTAL 2)

$32,520.00

$54,837.89

Table 3: Net value on date of marriage of property (other than a matrimonial home) after

deducting debts or other liabilities on date of marriage (other than those relating directly

to the purchase or significant improvement of a matrimonial home)

PART 6: PROPERTY, DEBTS AND OTHER LIABILITIES ON DATE OF MARRIAGE

Category and Details

Mrs. Blatherwick

Mr. Blatherwick

Land (exclude matrimonial home owned on the date of marriage, unless sold before date of separation).

General household items and vehicles

Bank accounts and savings

Life and disability insurance

Business interests

Money owed to you

Other property

3(a) TOTAL OF PROPERTY ITEMS

$0.00

$0.00

Debts and other liabilities (Specify)

3(b) TOTAL OF DEBTS ITEMS

$0.00

$0.00

24. NET VALUE OF PROPERTY OWNED ON DATE OF MARRIAGE, (NET TOTAL 3)

$0.00

$0.00

Table 4: PART 7: VALUE OF PROPERTY EXCLUDED UNDER SUBS. 4(2) OF “FAMILY LAW ACT”

Item

Mrs. Blatherwick

Mr. Blatherwick

Gift or inheritance from third person

Income from property expressly excluded by donor/testator

Damages and settlements for personal injuries, etc.

Life insurance proceeds

Traced property

Excluded property by spousal agreement

Other Excluded Property

26. TOTALS: VALUE OF EXCLUDED PROPERTY, (TOTAL 4)

$0.00

$0.00

TOTAL 2: Debts and Other Liabilities (item 23)

$32,520.00

$54,837.89

TOTAL 3: Value of Property Owned on the Date of Marriage (item 24)

$0.00

$0.00

TOTAL 4: Value of Excluded Property (item 26)

$0.00

$0.00

TOTAL 5: (TOTAL 2 + TOTAL 3 + TOTAL 4)

$32,520.00

$54,837.89

Mrs. Blatherwick

Mr. Blatherwick

TOTAL 1: Value of Property Owned on Valuation Date (item 22)

$911044.63

$8,730,978.19

TOTAL 5: (from above)

$32,520.00

$54,837.89

TOTAL 6: NET FAMILY PROPERTY (Subtract: TOTAL 1 minus TOTAL 5)

$878,524.63

$8,676,140.30

Mrs. Blatherwick Pays Mr. Blatherwick

Mr. Blatherwick Pays Mrs. Blatherwick

$0.00

$3,898,807.84

Money Transferred to the Fiancées

[409] Mrs. Blatherwick seeks to include in Mr. Blatherwick’s property the sum of $762,000 being the amounts paid to Mr. Blatherwick’s fiancées/girlfriends from 2004 until separation. Mr. Blatherwick disputes this. Mrs. Blatherwick's counsel submits this amount should be included by virtue of s. 5(6) (d) and (h) of the Family Law Act. These provisions provide:

(6) The court may award a spouse an amount that is more or less than half the difference between the net family properties if the court is of the opinion that equalizing the net family properties would be unconscionable, having regard to,

(d) a spouse’s intentional or reckless depletion of his or her net family property;

(h) any other circumstance relating to the acquisition, disposition, preservation, maintenance or improvement of property.

[410] This claim is properly dealt with after the calculation of the equalization payment in accordance with para 37 in Serra v Serra 2009 ONCA 105:

The steps to be taken when s. 5(6) is engaged are well- established. The court must first ascertain the net family property of each spouse by determining and valuing the property each owned on the valuation date (subject to the deductions and exemptions set out in s. 4). Next, the court applies s. 5(1) and determines the equalization payment. Finally -- and before making an order under s. 5(1) -- the court must decide whether the equalization of net family properties would be unconscionable under s. 5(6), having regard to the factors listed in paras. 5(6)(a) through (h): see Rawluk v. Rawluk, 1990 CanLII 152 (SCC), [1990] 1 S.C.R. 70, [1990] S.C.J. No. 4, at pp. 93-94 S.C.R.; Berdette v. Berdette (1991), 1991 CanLII 7061 (ON CA), 3 O.R. (3d) 513, [1991] O.J. No. 788 (C.A.), at pp. 525-26 O.R.; Stone v. Stone (2001), 2001 CanLII 24110 (ON CA), 55 O.R. (3d) 491, [2001] O.J. No. 3282 (C.A.), at para. 39; LeVan v. LeVan (2006), 2006 CanLII 31020 (ON SC), 82 O.R. (3d) 1, [2006] O.J. No. 3584 (S.C.J.).

[411] In Serra at paras 47 and 48, the Court of Appeal set out the “exceptionally high” threshold to meet to engage “Unconscionability” to order an unequal division of assets.

[47] In this regard, the threshold of "unconscionability" under s. 5(6) is exceptionally high. The jurisprudence is clear that circumstances which are "unfair", "harsh" or "unjust" alone do not meet the test. To cross the threshold, an equal division of net family properties in the circumstances must "shock the conscience of the court": see Merklinger v. Merklinger (1992), 1992 CanLII 7539 (ON SC), 11 O.R. (3d) 233, [1992] O.J. No. 2201 (Gen. Div.), affd (1996), 1996 CanLII 642 (ON CA), 30 O.R. (3d) 575, [1996] O.J. No. 4080 (C.A.); Roseneck v. Gowling (2002), 2002 CanLII 45128 (ON CA), 62 O.R. (3d) 789, [2002] O.J. No. 4939 (C.A.); McDonald v. McDonald, 1988 CanLII 8635 (ON SC), [1988] O.J. No. 518, 11 R.F.L. (3d) 321 (H.C.J.); and LeVan (S.C.J.).

[48] I note, for example, the following comments of Backhouse J. in LeVan, and of Jennings J. in Merklinger [(Gen. Div.)]: LeVan, at para. 258:

"Unconscionability" is a much more difficult test to meet than "fairness" and as a result, the courts have only minimal discretion to order anything other than an equal division of family property. Unconscionable conduct has been defined as, among other things, conduct that is harsh and shocking to the conscience, repugnant to anyone's sense of justice, or shocking to the conscience of the court. (Citations omitted) [page178] Merklinger, at para. 54:

Section 5(6) of the Family Law Act, 1986 permits me to order an unequal allocation of value if to do otherwise would be unconscionable. The legislature deliberately chose to strictly define the severity of the result of the application of s. 5(1) which must pertain before there can be any judicial intervention. The result must be more than hardship, more than unfair, more than inequitable. There are not too many words left in common parlance that can be used to describe a result more severe than unconscionable. (Emphasis added)

[52] The rationale behind the statutory direction in s. 5 of the Family Law Act that net family property is to be shared equally -- with the rare exception provided in s. 5(6) -- is set out in s. 5(7) of the Act:

5(7) The purpose of this section is to recognize that child care, household management and financial provision are the joint responsibilities of the spouses and that inherent in the marital relationship there is equal contribution, whether financial or otherwise, by the spouses to the assumption of these responsibilities, entitling each spouse to the equalization of the net family properties, subject only to the equitable considerations set out in subsection (6). (Emphasis added)

[53] This rationale is affirmed in the Preamble of the Act, which states:

Whereas it is desirable to encourage and strengthen the role of the family; and whereas for that purpose it is necessary to recognize the equal position of spouses as individuals within marriage and to recognize marriage as a form of partnership; and whereas in support of such recognition it is necessary to provide in law for the orderly and equitable settlement of the affairs of the spouses upon the breakdown of the partnership, and to provide for other mutual obligations in family relationships, including the equitable sharing by parents of responsibility for their children[.] (Emphasis added)

[412] There is no doubt that Mr. Blatherwick’s wire transfers to his three fiancées/former fiancées result in an “unfair” depletion of family property from Mrs. Blatherwick’s perspective. The amounts are substantial but so is Mr. Blatherwick’s income. The purpose of the transfers to his fiancées is inconsistent with a single family economic unit which is the basis for an equal division of assets.

[413] There is no evidence that these payments were made by Mr. Blatherwick to deliberately deplete the family assets as he had been directing transfers of monies to his fiancées for years before the separation.

[414] This is the same conclusion that Justice Perkins concluded in Biant v. Sagoo, [2001] O.J. No. 1685 where he said:

[126] The first hurdle the wife, as claimant, must overcome is the establishment of unconscionability. Is the diversion of this sum of money while the couple were still cohabiting unconscionable? It would be a novel proposition that a philandering spouse is responsible under subsection 5(6) for paying to the other spouse a sum equal to the cost of an affair, either direct costs (jewellery and such) or indirect costs (diminished profits from business). In this marriage, both parties ended up with substantial net worth and little in the way of debts, even after a substantial equalization payment by the wife. At its best (full compensation for $50,000), the wife's claim would reduce her equalization payment by $25,000 and increase her already considerable net worth after equalization by 8.3%. There was no evidence that the husband's expenditures materially affected the family in any way and certainly no evidence that the wife has been called on to shoulder any portion of them. If the husband had secretly given $50,000 to charities the wife disapproved of over the years, would the wife be making the same argument? Should it make any difference?

[127] The cases under subsection 5(6) all indicate that the unconscionability standard is a high one and that the circumstances must be shocking to the conscience of a reasonable person. Much as one disapproves of the husband's conduct, these expenditures do not meet that test. Nor do they meet the language of clause 5(6)(d), as there was no evidence that the husband intended, was reckless about or actually brought about a depletion of his property rather than an unwise expenditure of some of his income over the years.

[128] There will be no adjustment of the equalization payment on this account.

See also Cosentino v. Cosentino 2015 ONSC 271 at paras 47-50.

[415] The onus is on Mrs. Blatherwick to establish an unequal division of the family property.

[416] I am satisfied that the amount of approximately $180,000 USD which Mr. Blatherwick transferred to his current fiancée, Desiree Domingo to purchase or renovate her home, which is now Mr. Blatherwick’s home, constitutes an unconscionable depletion of family assets. Mr. Blatherwick used family property to acquire or renovate a home which he considers to be his home. If Mr. Blatherwick had bought or renovated a home in Ontario, which he now considers to be his current home, using family property, it would be unconscionable for him to have or use that home without a corresponding liability to Mrs. Blatherwick for half the amount spent from the family property or, conversely, to show an interest for the amount invested in that home on Mr. Blatherwick’s NFP statement.

[417] As for the other payments to Mr. Blatherwick’s prior fiancées for the acquisition or renovation of their homes, there is insufficient evidence on which to make a finding of unconscionability.

[418] There will be a $100,000 CDN (i.e. approximately $90,000 USD) adjustment to the equalization payment on account of the amounts transferred to Mr. Blatherwick's fiancées.

Conclusion on Equalization

[419] Before deducting for any advance payments, the equalization payment by Mr. Blatherwick to Mrs. Blatherwick is determined to be $3,898,807.84. As Mrs. Blatherwick has received an advance equalization payment of $425,000, this amount is to be deducted from the amount payable by Mr. Blatherwick. To be added to this is $100,000 on account of the amount transferred to Ms. Domingo for her home.

[420] In conclusion, Mr. Blatherwick shall pay to Mrs. Blatherwick the sum of $3,573,807.35 CDN on account of an equalization payment with interest payable from November 18, 2010 at 2% per annum in accordance with the Courts of Justice Act.

SPOUSAL SUPPORT

What is Mrs. Blatherwick’s Income?

[421] Mrs. Blatherwick’s expected income in 2014 was $12,721 per annum. There was no challenge to this amount. Essentially, this amount consists of some pension income and a small amount of spousal support paid by Mr. Blatherwick. Mrs. Blatherwick’s 2015 expected income continues to be limited to the minor pension income she receives.

What is Mr. Blatherwick’s income?

[422] This is a difficult case. No precision is available primarily because of the lack of full and complete financial information, as well as false documentation and information provided by Mr. Blatherwick. It is ironic that Mr. Blatherwick submits that this court should only make orders based on what has been proven by Mrs. Blatherwick when he himself has failed to produce full, complete and accurate financial documentation to permit the court to do so:

I Respectfully, but firmly remind the court that it has to base its decision on the evidence adduced at trial, not bald allegations. This is not about simply saying I am a bad man so I should pay my wife whatever number she wants. That number needs to be based firmly on the evidence the court heard during the trial, including the evidence in the Continuing Record. That number needs to be the product of the application of the law to those facts.

The Experts' Opinions

[423] Both experts averaged Mr