Leitch v. Novac, 2019 ONSC 794

COURT FILE NO.: FS-14-00398336-0000

DATE: 20190131

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Jennifer Ann Leitch

Applicant

– and –

Anthony James Charles Novac in his personal capacity and in his capacity as trustee of The Novac Family Trust (2013) and the Lulu Trust (2006)

Respondent

– and –

Michael Novac in his personal capacity as trustee of each of The Novac 2011 Trust and The Novac Family Trust (2013)

Nelly Novac in her capacity as a trustee of the 2011 Novac Family Trust

Sonco Group Inc.

The Novac 2011 Family Trust

The Novac Family Trust (2013)

John McLure, in his capacity as trustee of the Lulu Trust (2006)

David Tam, in his capacity as trustee of the Lulu Trust (2006)

Third Party Respondents

S. Gibb, I. Zylberman-Dembo and K. Warren for the Applicant

A. Rosen and K. Eckert for the Respondent

B.R. Smith and L. Love-Forester for the Third Party Respondents

Gavin Tighe

HEARD: May 17, 18, 28, 29, June 13, November 1,2,5, 6, 2018

Gilmore, J.

ruling on motion for summary judgment and cross-motion

I. OVERVIEW

[1] This is a case in which the parties, Jennifer Leitch and Anthony Novac, were determined to live beyond their means to the point that they have mostly obliterated the significant assets and capital they owned on the date of separation over six years ago.

[2] Jennifer’s insistence that she is the subject of a massive and complex conspiracy and Anthony’s past misrepresentations to Jennifer about his actual income have led to distrust, revenge, litigation, enormous legal fees and the likelihood that their children will suffer a drastically reduced lifestyle from the one they have known.

[3] Before the court is a motion for summary judgment brought by Michael Novac in his personal capacity and as trustee of each of the Novac 2011 Family Trust and the Novac Family Trust (2013); by Nelly Novac, in her capacity as trustee of the Novac 2011 Family Trust; and by Sonco Group Inc. For ease of reference, the moving parties will be referred to as the Novac/Sonco third party respondents or simply Novac/Sonco.

[4] Novac/Sonco seeks to dismiss the applicant (“Jennifer’s”) claims that Novac/Sonco and Anthony conspired in the sheltering and/or concealing of Anthony’s income and/or assets to deprive Jennifer and Jennifer’s children of their respective support entitlements.

[5] Anthony Novac (“Anthony”) is not a party to the summary judgment motion but does not oppose it. No relief is sought against the respondents John McClure and David Tam as trustees of the Lulu Trust (2006) and they did not participate in this motion.

[6] Jennifer has brought a cross-motion for partial summary judgment. She seeks a declaration from this court confirming the existence of the conspiracy. She requests that the assessment of damages related to the conspiracy be heard at trial.

[7] Anthony has brought his own motion for a reduction in child and spousal support. Novac/Sonco takes no position on this motion. Jennifer defends Anthony’s motion and takes the position that support should remain at the current level until trial.

[8] The Novac/Sonco motion and Anthony’s motion were originally scheduled to be heard in January/February 2017. The hearing of the motions was delayed for various reasons, as will be set out below. Given the delay, Anthony requests that this court make an immediate order for a reduction of support following the hearing of this motion and pending release of the final ruling, given the length of time his motion has been outstanding.

[9] Given the complexity of the issues at stake, the court requested oral evidence. As such, Michael and Anthony were cross-examined over the course of five days. Oral argument took place over four days.

[10] The documentary material in this matter was simply massive given the transcripts, undertakings, emails, affidavits, exhibits, compendia and case law. I wish to thank counsel for their cooperation in ensuring that all documents were available to the court electronically.

II. PRIOR PROCEEDINGS AND BACKGROUND FACTS

[11] Michael Novac (“Michael”) and Nelly Novac are Anthony’s parents. Jennifer and Anthony were married for 15 years and separated on September 29, 2012. They have 13-year-old twins, namely S.N. and O.N. The children share time with their parents on a week about basis.

[12] Jennifer graduated from Dalhousie Law School in 1997 and articled at Davies, Ward & Beck LLP in Toronto. She was hired as an associate in the construction law group at Goodmans LLP in 1999 where she worked for nine years until she left private practice in 2008 to study for her LL.M. The applicant was earning approximately $250,000 per annum when she left Goodmans.

[13] Jennifer’s position is that she left Goodmans because it was made clear to her that she would not be asked to become a partner. She says that she and Anthony agreed she would pursue her LL.M full time and be able to spend more time with the children. Anthony does not agree. His position is that Jennifer unilaterally quit her job at Goodmans in order to pursue her academic interests and that her intention was always to return to private practice after receiving her LL.M.

[14] Jennifer continued with her academic studies and obtained her Ph.D. at Osgoode Hall Law School after the parties separated. She currently works on teaching contracts at both Osgoode Hall Law School and the University of Toronto.

[15] Anthony is an entrepreneur who has been working in the gaming business for over 20 years. He has particular expertise in the management of casinos and casino resorts. Anthony is the President of Sonco Gaming Inc., which is owned by Michael under the umbrella of the Sonco Group of Companies (“Sonco”).

[16] In 2006, Anthony developed and sold an on-line gaming platform, “Gamebookers.” Anthony netted $11.5 million from the sale. This allowed the parties to live a very luxurious lifestyle, including purchasing a $3.5 million house in Rosedale, vacation properties in Florida and Caledon, employing a full-time nanny and part-time housekeeper, purchasing an expensive art collection and memberships at Royal Canadian Yacht Club and the Caledon Ski Club. During the marriage, Anthony controlled the family finances.

[17] A significant portion of the funds from the Gamebookers sale were paid into a spousal trust known as the Lulu Trust. Anthony was one of three trustees of the Lulu Trust. Jennifer was the beneficiary. The Lulu Trust was wound up post separation as the funds had all been exhausted to fund the parties’ lifestyle and expenses.

[18] After the Gamebooker’s success, Anthony began to work on a new project through a company named Spreed Inc. That business venture failed in 2012.

[19] The nature of Anthony’s work with Michael is in dispute in this litigation. Jennifer’s position is that Anthony was the driving force behind all the casino related businesses with which he assisted his father, starting with Casino New Brunswick in 2008. Anthony’s position is that Sonco is his father’s company. In the mid 1990’s Anthony did some work for Sonco, for which he was paid $30,000 a year. Between1997 to 2010, Anthony did not do any work for Sonco. From 2010 to date he has worked as a consultant on specific projects for Sonco.

[20] Anthony currently works for his father by way of a consulting contract which commenced in June 2016. He is paid $120,000 per year plus $5000 per year for Board fees. The consulting contract is meant to give Anthony an income while he pursues new casino and development projects for Sonco. In the event that he brings a new venture to Sonco, he will receive 25% of the net profit from that venture.

[21] Jennifer disputes that the consulting contract is representative of Anthony’s income and submits it is simply another ruse concocted by Anthony and his father to deprive Jennifer and the children of the support to which they are entitled. She submits that $120,000 does not even cover the rent for the home that Anthony currently occupies in Forest Hill.

[22] Michael Novac is 84 years old. He came to Canada when he was 19 from Romania. He has an engineering degree from McGill. Michael married his wife Nelly in 1967. Michael and Nelly have two children. Their son, Anthony, was born on December 30, 1967.

[23] Michael is not your average man in his eighties. According to his affidavit sworn December 5, 2016, he continues to be “fully engaged in running [his] businesses from an overview perspective, and [is] involved in many of the day-to-day projects.”[^1]

[24] Michael created Sonco, which now includes various entities controlled by him including a full service real estate company that engages in building and land development and other entities involved in the ownership, operation and development of gaming properties. Michael is the President and Chief Operating Officer of Sonco.

[25] After university Michael began to work for Trizec and was transferred to Halifax, Nova Scotia to manage Trizec’s properties east of Quebec. In 1978 Michael started his own property development and management company, namely, Michael M. Novac Development Ltd. (“MMND”). When Michael became involved in the gaming industry, MMND was amalgamated with Sonco.

[26] Sonco was incorporated in 1980 and began to acquire land and engage in commercial development in downtown Halifax, Montreal and Toronto. By the early 90’s Sonco owned the Canada Trust building in Halifax and a parking garage in St. John’s. Anthony had nothing to do with the establishment of Sonco’s real estate development business.

[27] Michael’s first real encounter with the gaming business was a bid for a casino in Halifax. Although he knew little about the gaming business, at that time he devoted hours to learning about it and formulating a bid. Michael, along with a partner, hired a bid expert and a public relations firm to assist. Anthony, who was 27 at that time, helped with the bid and received payment for his work. Anthony did not assume a leadership role with this bid. He had neither the experience nor the capital resources to be integrally involved. Ultimately, the bid was unsuccessful.

[28] Jennifer alleges that Anthony co-founded Sonco’s gaming business. This is not accurate according to Michael. He deposes that Jennifer has greatly exaggerated Anthony’s role in the gaming business.

[29] Several years ago Michael began to take some concrete steps towards his own estate planning. As he knew that Nelly did not have the expertise to make decisions about his business interests, Michael named Anthony as an officer of Sonco Gaming Inc. on February 28, 2008, an officer of 998523 Alberta Ltd and Sonco Gaming (Holdings) Inc. on October 1, 2011 and an officer of Sonco Hospitality Alberta Ltd. when it was incorporated in September 2013. Michael has never transferred ownership of the Sonco Group to Anthony.

[30] Michael’s position is that the fact that Anthony worked for the Sonco Group in various capacities does not make him an owner. Anthony was paid for his work but the growth and success of the Sonco Group is solely attributable to Michael.

[31] Jennifer and Anthony’s marriage broke down when Jennifer admitted to having an extra-marital affair with a professor at Osgoode Hall Law School where she was studying for her LL.M. and her Ph.D. Jennifer and her partner remain together although, according to Jennifer, they do not live together. Anthony says this position is self-serving and that, in fact, Jennifer and her partner are living together and sharing expenses.

[32] Anthony re-partnered after separation. He and his partner have co-habited since then and had a child in 2016.

[33] On the date of separation, Jennifer owned the matrimonial home on McKenzie Avenue in Toronto. The home sold in August 2014 for $3,525,000. As the home was owned by Jennifer, she retained the net sale proceeds of $1,066,361.53.

[34] Jennifer issued her application on October 20, 2014. She claimed a divorce, custody, access, child support, spousal support, an equalization of net family property and costs. Anthony issued his Answer on January 6, 2015. He sought a divorce, custody, child support, access, an equalization of net family property and costs.

[35] In January 2015, the parties had their first case conference. A consent order was made requiring Anthony to provide a valuation of his income by March 15, 2015. In February 2015, Anthony’s counsel offered to pay child support based on Anthony’s approximate 2014 income of $409,000. That offer was rejected.

[36] After a case conference on June 29, 2015 Anthony agreed, on consent, to pay child support of $5,629 per month and spousal support of $11,193 commencing July 15, 2015. The support payments were based on Anthony’s estimated income for 2015 of $500,000. Anthony is current with his support payments.

[37] Jennifer amended her application on July 15, 2016. She added as parties Michael Novac in his personal capacity and as trustee of the Novac 2011 Family Trust, and The Novac Family Trust (2013); Nelly Novac in her capacity as a trustee of the 2011 Novac Family Trust; and the Sonco Group. Jennifer also added various new claims as follows:

• A claim for resulting/constructive trust in Anthony’s business/property interests;

• Damages for breach of Anthony’s fiduciary duty in his role as trustee of the Lulu trust and a tracing of all sums removed by Anthony from the Lulu trust;

• An order that Anthony and Novac/Sonco are jointly and severally liable to pay damages to Jennifer as they conspired in sheltering/concealing Anthony’s income/assets to deprive Jennifer and the children of their support entitlements;

• An order for all written or digital communications between Anthony and Michael, including all email and text messages from May 2011 to trial;

• An order for production for inspection of the original trust deeds; and,

• An order for damages as a result of Anthony’s continuing engagement of third parties to make renovations to Jennifer’s farm without her approval.

[38] The conspiracy claim in Jennifer’s pleadings is instructive and is the crux of the summary judgment motions:

• Jennifer alleges that Anthony conspired with this parents, namely Michael Novac and Nelly Novac, to structure his business interests and his income from the businesses both just prior to separation and post separation with the intention of concealing, diverting, and sheltering Anthony’s assets and income to defeat and hinder Jennifer’s claims and entitlements to both child and spousal support. In particular, Anthony and his parents used various trust and corporate vehicles to conceal Anthony’s true interests and entitlements to assets and income from an adjudication of support in favour of Jennifer. Further, through the structuring and creation of the Novac Family Trust (2013) and Sonco Gaming Management Inc. (“SGMI”) after separation and through subsequent transactions between the Novac Family Trust (2013), SGMI, Sonco Group Inc. and the Novac 2011 Family Trust, they have concealed and diverted millions of dollars in assets and income that would otherwise be accounted for in the determination of Anthony’s obligations to Jennifer for both the support of the children of the marriage and herself.

[39] Novac/Sonco provided an amended Answer on August 25, 2016 in which it made the following statements;

• …Anthony’s businesses are not intermingled with those of Michael. To the extent Anthony and Michael have made investments in business interests, they have always done so in their own respective names through their own respective holding companies.

• …Michael holds no assets in trust for Anthony, directly or indirectly.

• …Michael is the Trustee of two trusts and Anthony is a beneficiary of both trusts. Neither trust has allocated any property or income to Anthony nor is any trust property owned by Anthony.

[40] There are extensive transcripts in this matter. Michael was questioned for four days during April, May and June 2017. Sonco’s outside accountant, Keith MacIntyre (“KM”) of Grant Thornton was questioned on his affidavit on the summary judgment motion on May 9 and June 1, 2017. Jennifer was questioned on April 3 and June 27, 2017. Michael was questioned on multiple days. The parties have sworn many affidavits, both in support of this motion and various other motions brought in this litigation.

[41] As a result of Jennifer’s amended application, she sought further extensive disclosure. There were disputes about the disclosure sought, from whom, and whether privilege could be claimed. A long motion was heard on November 7, 2017 and a lengthy decision was released in relation to the disclosure motion on November 17, 2017. The court ordered that Michael produce 124,724 emails from Anthony (other than those over which privilege were claimed), Burchells LLP’s file with respect to the Grey Eagle and Gorsebrook Park projects and a tracing of the $5.75 million received by Sonco from River Cree management contract.

[42] KM was required to produce undertakings from his questioning on May 9 and June 1, 2017 and a large number of specified emails.

[43] Anthony and Novac/Sonco were ordered to pay costs of $40,000 to Jennifer.

[44] The parties attended a pre-trial conference in December 2017 and the within motions were re-scheduled due to the time needed to produce and review the documents ordered to be disclosed on November 17, 2017. At my request, Michael and Anthony were cross-examined on key issues on May 17, 18, 28, 29 and June 13, 2018. Submissions took place over four days on November 1, 2, 5 and 6, 2018.

III. SONCO INC.

[45] Sonco is comprised of various entities that are engaged in the ownership, operation and development of casinos, resorts and entertainment centres and land development. According to Jennifer, Sonco has been involved in the following gaming projects:

a. Great Blue Heron Charity Casino (Port Perry, Ontario);

b. Grey Eagle Casino and Resort (Calgary, Alberta);

c. Casino New Brunswick (Moncton, New Brunswick);

d. Grey Rock Entertainment Centre (Edmunston, New Brunswick); and

e. River Cree Resort and Casino (Edmonton, Alberta).

[46] Anthony holds the following positions with Sonco:

a. Sonco Gaming Inc.: President and Chief Operating Officer; Director;

b. Sonco Gaming (Holdings) Inc.: President and Chief Operating Officer; Director;

c. Sonco Gaming Management Inc.: President; Director;

d. 998253 Alberta Limited: Executive Vice-President; Director;

e. Sonco Hospitality Alberta Limited: Vice-President;

f. Sonco Group: Director;

g. 641103 New Brunswick Limited: President and Secretary; Director; and

h. The Novac Family Trust (2013): Trustee and beneficiary.

[47] It is Jennifer’s position in this litigation that Anthony has been and continues to be involved in all of the abovementioned projects. Further, it is Anthony who has been the driving force with respect to Sonco’s ventures into the gaming industry. Jennifer’s position is that it is disingenuous for Michael to minimize Anthony’s role in these projects. According to Jennifer, Anthony conducts and represents himself to others as a principal and owner of Sonco’s gaming businesses.

[48] Jennifer submits that a careful review of Anthony’s real role at Sonco is necessary. His father is 84 years old and spends six months of the year in Florida. It is Anthony who is the “serial entrepreneur”, the deal-maker and represents himself as an experienced developer, manager and financier. Jennifer provides a chart filled with examples of representations in which Anthony has described himself as:

a. Being involved in “the acquisition, application, development, and/or operation of casinos in 5 Canadian provinces including New Brunswick, Ontario and Alberta.”

b. “Instrumental in the growth of Sonco Gaming Inc., one of Canada’s best-known casino developers and managers. Anthony has been involved in the construction, development, and management of four casinos in Canada that combined gross over $600M in annual revenue and collectively employ over 2000 full time employees.”

c. Having worked “in and around the gaming industry for almost 20 years.”

d. “President of Sonco for more than 24 years…”

[49] Jennifer claims that although Anthony has no ownership interest in Sonco he and his father conduct themselves as if he does.

[50] Anthony provides a different history. In the spring of 1997, Anthony was employed as a project manager at Sonco and was involved in the Great Blue Heron casino. After Jennifer graduated from law school in June 1997, the parties moved to Toronto, as Jennifer had been offered a position at Davies, Ward & Beck in Toronto. Anthony accepted a position at Trillium Gaming in Toronto. Trillium was a competitor to Sonco.

[51] Anthony lived in Antigua for most of 1999 where he worked for a start-up online gaming company. He had no ownership interest in that company.

[52] In 1999/2000, Anthony started 1X. By 2003 he employed 20 people and was the COO of the company. In 2005 he created Trident Gaming which had over 200 employees in five countries. Anthony had minimal income until 2005 and no involvement with Sonco between1997 to 2007. In 2005, Anthony earned $221,654 for his work with Trident. Jennifer earned $156,000 in 2005, even though she was on maternity leave for part of the year.

[53] In 2006, both Anthony and Jennifer benefitted from the $11.5 million windfall sale of Gamebookers. It gave them a lifestyle they had never dreamed of. Unfortunately, they spent beyond their means and all of the net proceeds from the Gamebookers sale have been exhausted. It should be noted that Anthony’s work from last half of 1997 to 2007 did not involve Sonco in any way.

[54] Anthony did not offer to share any of the windfall proceeds from Gamebookers with his father.

[55] Anthony was financially secure in 2008 but reconnected with his father and began doing unpaid consulting work at Grey Eagle as a project manager. Later in 2008 he was paid for his work on the Casino New Brunswick project. Jennifer earned $307,000 in 2008.

[56] From 2009 to date, Anthony has done paid work for Sonco. His income has varied dramatically from a high of $976,000 in 2014 to now $120,000 per year on his consulting contract.

IV. THE PROJECTS

a) Great Blue Heron Charity Casino (Port Perry, Ontario)

[57] According to Michael, in 1995 he negotiated and concluded an agreement with the Mississauga of Scugog First Nations for the construction and operation of a casino on their reservation in Port Perry. Anthony was hired as a project manager on the construction of the casino. He was paid as a Sonco employee and had no interest, direct or otherwise, in the Great Blue Heron gaming project. While it is true that Anthony introduced his father to Ron Steiner (who became a partner in the project), Michael conducted the challenging negotiations with the First Nation along with Peter Newell of Meighen Demers LLP.

[58] Anthony is the President, Chief Operating Officer and a director of Sonco Gaming Holdings Inc. (“Sonco Gaming”). Sonco Gaming is the entity under the Sonco umbrella which holds a partnership in the Great Blue Heron Company which is the management company that manages the casino. As the project manager, Anthony was involved in the procurement and the coordination of professionals such as designers and architects. The casino opened in 1997.

[59] Anthony deposed that he was 28 years old at the time that Great Blue Heron opened. Anthony was involved with the project for only 13 months. He did not play any role in the project’s financing.

[60] In this litigation, Anthony’s position is that he had no further involvement with the casino after the 1997 opening. Jennifer disputes this and deposed that “Anthony remained integrally involved in the ongoing operations of the casino throughout our marriage.”[^2] She stated in her March 3, 2017 affidavit that Anthony regularly travelled to Great Blue Heron during the marriage and attended their annual golf tournament and other social events.[^3]

[61] Anthony denies that he had any substantive involvement with Great Blue Heron between1997 to 2012. He concedes that during that period he went to the casino approximately six times. These were for anniversary or holiday celebrations, processing deficiencies and warranty claims or photo opportunities. He attended their annual golf tournament twice. In 2011 or 2012, he attended a few meetings in his capacity as a director at Sonco. The hope was for possible future opportunities but nothing came of it.

[62] Great Blue Heron hired a full time manager after Anthony moved to Toronto as a result of Jennifer’s job opportunity with Davies, Ward & Beck in 1997. Neither Anthony nor Michael deny that that they often discussed matters relating to Great Blue Heron and other projects in Jennifer’s presence. These discussions did not elevate Anthony to the level of involvement suggested by Jennifer.[^4]

b) Grey Eagle Casino Development and Casino Expansion (Calgary, Alberta)

[63] According to Michael, he entered into discussions with the Tsuu T’ina Nation in 1998 regarding the development and operation of a casino on its lands adjacent to Calgary. The agreement was not finalized until 2004. Sonco was to be a partner in the development of the project and manage the gaming operations. The casino opened in December 2007. Michael deposed that Anthony’s role at this point was only as a part-time consultant on the procurement of furniture, fixtures and equipment. It was Michael, on behalf of Sonco, who found the necessary investors and did the negotiations.

[64] Jennifer denies Michael’s description of Anthony’s role in this project as “part-time.” Her position is that Michael and Anthony were business partners in this project which they discussed endlessly and passionately.

[65] Anthony’s position is that his father developed a relationship with the Tsuu T’ina Nation between 2005 and 2007. At this time, Anthony was fully engaged with developing his own businesses, Trident Gaming and Spreed. Anthony’s involvement in the development of the casino was an investment of 2.5% in 998252 Alberta Ltd., following the sale of Gamebookers. Anthony described his involvement with the development of the casino as limited to procurement only. Later, his involvement was limited to managing the hotel and entertainment facility. He was paid for the work he did.

[66] Contracts related to the development and management of the casino and entertainment complex are held by Sonco Hospitality Alberta Limited Partnership (“SHALP”) and Sonco Gaming Limited Partnership (“Sonco Gaming LP”). 998253 Alberta Ltd. is the holding company for SHALP and Sonco Gaming LP.

[67] The 2011 Novac Family Trust owns 95% of 998253 Alberta Ltd. (“998”). A third party owns a 2.5% interest in 998 and Anthony owns the remaining 2.5%. Anthony invested $200,000 in exchange for this interest in 2007. He received net income based on his shareholding interest of 2.5%. Michael deposed that Jennifer is incorrect in stating that Anthony and Michael own 97.5% of 998253. The 2011 Trust owns 95% and Anthony owns 2.5%. Anthony also received management fees for the Hospitality Management Contract once the expansion took place.

[68] In 2012 Michael proposed an expansion to the Grey Eagle Casino to include the development and construction of a theatre and resort. An agreement was reached in the fall of 2012 for the construction of a 178 room hotel, a 2000 seat entertainment complex and 300 additional slot machines to the existing casino. Sonco Group was the project manager and developer for the expansion and renovations. Sonco also entered into contracts with the Nation to manage the hotel and entertainment facilities once built.

[69] Michael has deposed that Anthony was not involved in the negotiation of the expansion. Rather, his role was limited to project management of the expansion between May 2012 and May 2014 for which he was paid.

[70] Jennifer’s position is that Anthony has described himself as the lead of the expansion project in his own resume and that he was “integrally involved in every aspect of the design process…. and for reporting directly to the Tsuu T’ina Boards.”[^5]

[71] Anthony agrees that he had significant involvement in the casino expansion but not until May 2012. Anthony was the project manager and attended meetings regarding the hotel and event centre throughout 2013. Once the expansion was completed, Anthony managed the Grey Eagle hotel on behalf of Sonco. Anthony was paid for this work which he says was fully accounted for in Mr. Gobrin’s income reports. Anthony is clear that he never managed the casino which is a completely separate entity from the hotel and event centre.

[72] In November 2015, Anthony was banned from attending at the Grey Eagle casino. The reasons for this were never made clear to the court but suffice it to say that all parties agree that Anthony never returned to the casino. Novac/Sonco’s position is that Adam Digby has taken over Anthony’s position. He was never formally appointed to replace Anthony, as that was not necessary according to the contract which Sonco has with Grey Eagle.

[73] Jennifer disputes this. She does not believe that Adam Digby has the experience to take on Anthony’s role, nor did his salary increase to reflect new responsibilities. Jennifer alleges that Anthony continues to have a significant role in managing Grey Eagle. He simply manages it off site.

[74] Anthony does not agree. He submits that he was very upset about being banned from the Nation. So upset, that he called Jennifer to tell her even though they had been separated for over three years. He has no further income from Grey Eagle. He concedes that he will, from time to time, answer questions from Adam Digby or try to help him, but effective management of Grey Eagle simply cannot be done off site.

[75] Jennifer maintains that Anthony misrepresented to his income valuator, Mr. Gobrin, that River Cree was the only consulting project he had in 2015. Jennifer insists that in fact Anthony received 40% of Sonco’s net management fees for Grey Eagle as per his counsel’s own chart. Anthony initially represented that he only received 10% of the Grey Eagle management fees.

[76] Anthony’s position is that apart from paid work the only interest he has ever had in the Grey Eagle Resort and Casino is the 2.5% interest in 988 that he purchased in 2007.

c) Casino New Brunswick

[77] Anthony and Michael worked together in 2007 and 2008 to win a bid by Sonco Gaming New Brunswick Limited Partnership (“SGNBLP”) for a destination casino on Magnetic Hill. Anthony and Jennifer and their extended family travelled to New Brunswick for the opening of the casino in June 2010.

[78] Anthony’s personal service corporation is Conrose Park Inc. (“Conrose”). Conrose owns 641103 New Brunswick Ltd. which acquired a 2.2% interest in SGNBLP for $1,040,374. This investment was funded by way of the parties’ personal line of credit.

[79] The 2011 Trust owns 640854 New Brunswick Limited which holds a 2.8% interest in SGNBLP.

[80] Anthony was the project manager for Casino New Brunswick. He was involved in the design of the casino, as well as managing public relations. Anthony was paid $10,000 per month for being a project manager on the building of the casino between the end of 2008 and the spring of 2010. According to Michael, Anthony was paid approximately $200,000 for his role in the development portion, being 10% of the total development fee of $2,000,000. Anthony’s numbered company also received a 2.7% share of profits until the casino was sold.

[81] SGNBLP continued to manage the casino until it was sold on October 1, 2015. Jennifer’s position is that Anthony continued to be involved in the Casino from the time he worked on the bid in 2007 until its sale in 2015 and that he received income for doing so. Anthony denies this. He deposes that his management role ended with the opening of the casino and he was not paid after that.

[82] Anthony represented that his father and the former CFO of Sonco, Harry Hamilton, decided that Anthony would receive 10% of the development fees earned by Sonco for Casino New Brunswick. Jennifer submits this makes no sense as Anthony played a key role in securing the successful bid for the casino, was the project manager during construction and had an ongoing management role with the casino. Jennifer suspects that the “arrangement” between Anthony and his father with respect to the management fees is similar to that of the River Cree Casino. That is, that there was nothing in writing between Anthony and his father with respect to Anthony’s percentage in order to ensure the arrangement was “flexible” and hidden from Jennifer.

d) River Cree Resort and Casino

[83] Anthony and Michael became involved with this business when River Cree Casino (“RCC”) wanted to buy out a third party owner, namely Paragon Gaming. Anthony and Michael assisted RCC by soliciting investors for a bond raise which would allow RCC to buy out Paragon. Anthony attended some of the meetings as a representative of Sonco, the proposed manager of the casino. Anthony was not the lead for the soliciting of investors. Crosbie & Co. did this as advisors to the Enoch Cree Nation.

[84] Michael deposed that he was personally approached by Crosbie & Co., a company involved with the raising of capital financing, about Sonco possibly replacing the third party management company if the buyout of the third party owner was successful. In anticipation of this new venture, Michael established the Novac Family Trust (2013). He then incorporated a numbered company the day after the Trust was established. The numbered company changed its name to Sonco Gaming Management Inc. and the Trust received the common shares of SGMI. RCC then entered into a management contract with the numbered company for five years.

[85] Michael was clear that, although Anthony participated in the negotiations, it was Sonco Group’s reputation and experience in the gaming industry and its gaming license that resulted in the deal being secured. Further, all expenses leading up to the contract were paid by the Sonco Group. Anthony was not paid for any work he did on Sonco’s behalf in relation to the financing of the buyout of the Enoch Cree Nation’s existing managers. It was understood that if the buyout succeeded and Sonco was awarded the management contract, Anthony would be the Project Manager and receive fees for those services.[^6]

[86] Sonco’s management contract with RCC began on January 15, 2014. Anthony’s evidence was that all of the income he earned from the RCC management contract has been accounted for in Mr. Gobrin’s income report.

[87] RCC determined at some point that they wanted to manage their own resort and casino. As such, they bought out SGMI’s management contract in mid-2015 for $5.7 million. In July 2015, Anthony and Michael transferred ownership of SGMI from the 2013 Trust to Sonco Group Inc. Sonco Group Inc. is owned by the 2011 Trust of which Anthony is a beneficiary but not a trustee. One month later, Sonco Group Inc. sold its shares in SGMI (and the management contract for RCC) to the Enoch Cree Nation, the owner of RCC.

[88] Jennifer is concerned that Anthony claims he did not review any documentation related to these business decisions nor did he know the terms of or the value of the buyout contract. Jennifer submits this is impossible given that Anthony is a trustee of the 2013 Trust, both an officer and director of SGMI, and a director of Sonco Group Inc.

[89] By way of disclosure in October 2016, Jennifer received documents which evidenced that Anthony signed the Resolutions and Share Purchase Agreement regarding the transfer of shares from SGMI to Sonco Group Inc. A heavily redacted copy of the Share Purchase Agreement has two copies of the signature page. One signed by Michael and the other by Anthony.

[90] During the currency of the RCC contract with SGMI, SGMI received management fees. Anthony’s holding company (Conrose) received $641,319 from SGMI for his work on RCC. Anthony’s counsel advised that Anthony worked on the management of the RCC project on an “as needed” basis and no formal written agreement was ever prepared.

[91] Jennifer is insistent that Michael’s involvement in River Cree was marginal. However, that is not borne out by the documents. In an email from Michael to Anthony dated October 21, 2013 (Exhibit Y to Jennifer’s affidavit sworn March 3, 2017) Michael, states:

BMO told me on Friday that they are not funding TTN [Tsuu T’ina Nation] unless the Hospitality Management Agreement is signed. We shall see….. All carpets are ordered.

[92] This email suggests, as Michael and Anthony submit, that Michael was involved in RCC with respect to both procurement and financing.

[93] Jennifer’s position is that Michael’s involvement in RCC was minimal and that the so-called fee percentage arrangement was a ruse meant to obfuscate what Anthony should have really received. Her belief is that once this litigation is over Anthony will receive the balance of the management fees and the RCC buyout. She says it makes no sense for Michael to have received the bulk of the management fees and all of the buyout, as Anthony did all the work on the contract.

e) The DeGroote Project

[94] Anthony was paid $231,546.55 for his preparation of an expert report in the DeGroote litigation matter. The entire fee paid to Sonco was $452,568.56 which included expenses. Anthony’s position was that his portion of the DeGroote fee was unilaterally determined by his father.

[95] Jennifer claims that this arrangement was not realistic based on Anthony’s involvement in the DeGroote matter. Anthony (not Michael) was approached to prepare the report. Anthony researched, drafted and signed off on the report. If the matter had gone to trial, Anthony would have been the one to testify.

[96] Jennifer’s position is that this type of loose, undocumented arrangement between Anthony and his father has allowed them to collude to hide money from Jennifer.

V. THE TRUSTS

[97] Jennifer takes the position that Michael and Anthony used and continue to use the trust structure to shelter Anthony’s income and defeat her support claims.

[98] Jennifer is concerned that Anthony did not list his status as beneficiary of both family trusts in his financial statements sworn May 7, 2014, January 6, 2015 and September 16, 2015. Anthony claimed this omission was through “inadvertence” and did not know he was a beneficiary of either trust until his father told him.

[99] Further, Anthony claimed that he had never seen the 2013 Trust until only a few days before his questioning, yet he signed the 2013 Trust Deed only a few months before this litigation was commenced. Anthony says this was because he was only sent a signature page which was falsely witnessed by the Executive Assistant at the Sonco Halifax office.

[100] Anthony stated that he had never read either the 2011 or the 2013 Trust Deed until he was questioned about them by Jennifer’s counsel. Jennifer submits this is simply a lie. Anthony signed documents for both Trusts and given Anthony’s business experience and acumen it is not believable that he knew nothing about their structure until his questioning.

[101] Jennifer submits it is disingenuous for Anthony to say he is ignorant about trust structures, as he set up the Lulu Trust for Jennifer as a spousal trust in 2006.

a) The 2011 Family Trust (“2011 Trust”)

[102] The 2011 Trust was created on September 30, 2011. The settlor of the Trust is Harry Hamilton (former CFO of Sonco). The trustees are Michael and Nelly. Michael is the principal trustee. As principal trustee, Michael has the power to remove and appoint trustees during his lifetime and to appoint trustees on his death.

[103] The beneficiaries are Michael, Nelly and their children and grandchildren. Payment of any Trust income or capital is at the discretion of the trustees. According to Michael, the 2011 Trust has never allocated any property or income to Anthony since it was settled in 2011.

[104] The 2011 Trust owns a 95% interest in 998253 Alberta Ltd. This company is the holding company for other companies which hold the management and entertainment contracts for Grey Eagle Casino in Alberta.

[105] The 2011 Trust also wholly owns 640854 New Brunswick Limited. 640854 owns a 2.8% interest in a limited partnership which has an interest in Casino New Brunswick.

[106] According to Jennifer, it was actually Anthony’s idea to set up the 2011 Trust by way of an estate freeze to reduce taxes upon Michael’s death. Michael and Anthony deny this to be the case. Jennifer does not take the position that the 2011 Trust was set up as part of the conspiracy she alleges between Michael and Anthony. Rather, she raises its formation as another example of Anthony’s role in his father’s personal and business affairs.

[107] Michael’s position is that it was his accountant who urged him to set up the 2011 Trust for estate tax planning purposes. Anthony was not involved in this decision. The accountant prepared a plan for Michael which is commonly known as an “estate freeze.” Michael liked the idea as the plan would “freeze” the value of his companies with the growth being passed on to his loved ones. Further, he would retain control of his companies which he had no plan to give up at that point.

[108] According to Michael, the decision to undertake the estate freeze was his alone without input from Anthony. While Anthony was a beneficiary of the trust, he did not own any of its assets. The establishment of the 2011 Trust was not undertaken to conceal, divert or shelter Anthony’s assets because in 2011 Michael had no idea that Anthony would be separating in September 2012.

b) The Novac Family Trust (2013) (“2013 Trust”)

[109] The 2013 Trust was established on October 28, 2013. The settlor of the Trust is Harry Hamilton. Anthony and Michael are the trustees. The beneficiaries of the trust are Michael and Nelly, and Michael and Nelly’s children. According to Michael, the trust has never allocated any income or property to Anthony.

[110] Jennifer claims that Anthony caused the Trust to be established and then one day later incorporated SGMI of which the 2013 Trust is the sole shareholder. Anthony is the President and a director of SGMI.

[111] Jennifer alleges that the 2013 Trust was used to hide significant income from the RCC buyout. Michael denies that this is the case. Michael deposed that in order to protect his businesses from future liability concerns and satisfy licensing requirements the RCC buyout proceeded by way of a share transfer with Enoch Casino LP, purchasing SGMI (thereby assuming all liability of SGMI and protecting Sonco and the 2013 Trust from liability). After the sale in June 2015, SGMI changed its name back to 8676569 Canada Inc.

[112] In accordance with tax planning recommendations from Sonco’s external accountant, KM, and its internal accountant, Richard Landzatt (“RL”), the buyout was structured such that the 2013 Trust no longer had an interest in SGMI but received preference shares in Sonco Group Inc. Sonco Group Inc. sold its common shares in SGMI to Enoch Casino Corporation. As such, the transaction was a sale by Sonco Group Inc. and not a disposition by the 2013 Trust. No sale proceeds were paid to the 2013 Trust. As a result, the 2013 Trust remained in the same financial position as it was before the transaction, but the value of Sonco Group Inc. grew substantially.

[113] Another reason for setting up the 2013 Trust related to a radius clause in the Project Agreement with Grey Eagle Casino (“Grey Eagle”). The radius clause prevented Sonco Gaming Limited Partnership from entering into an agreement relating to the management of another gaming facility in Calgary or within 200 miles of its city limits. As RCC was to be located near Edmonton (the location of Grey Eagle), the radius clause was a potential problem.

[114] The 2013 Trust was set up so that SGLP’s shares were held by a new Trust to ensure the radius clause was not offended. Michael sought legal advice from Sonco’s counsel Bruce Clarke (“BC”) at Burchells LLP to ensure that this issue did not interfere with the completion of the deal. This had everything to do with ensuring the proper corporate structure was in place and nothing to do with hiding or sheltering Anthony’s income, as alleged by Jennifer.

[115] According to Michael, the establishment of SGMI, the 2013 trust and the 2015 share exchange were not intended to injure Jennifer and all of the transactions were lawful. Anthony had no entitlement to income or assets of the 2013 Trust or SGMI. He received only consulting fees during the currency of the RCC management contract.

[116] Jennifer alleges that Anthony received only 40% of the significant consulting fees on the management contract with RCC and that 60% of the fees remain unaccounted for. Michael submits that Anthony had no right to receive all of the management fees. They were payable to SGMI which was also responsible for paying the third party manager of the casino, Rodney Foutz. The balance of the fees were paid to Michael or Sonco. Anthony received his share of the management fees from January 2014 to May 2015.

[117] The decision to terminate the Casino Management Agreement was made by the Enoch Cree Nation. Michael negotiated the best deal he could which resulted in a lump sum being paid for the shares of SGMI which owned the Casino Management Agreement. No fees were due to Anthony after April 2015.

[118] Michael denies that the 2013 Trust was established to conceal or divert Anthony’s income or assets from Jennifer. Rather, it is Michael’s practice to establish a separate legal entity for each gaming operation entered into by the Sonco Group. As such, the 2013 Trust was established for both estate planning and legitimate commercial reasons.

VI. The Alleged Conspiracies

[119] Jennifer alleges the following conspiracies:

a. Hiding and diverting the proceeds from the River Cree buyout of the Casino Management Agreement;

b. Hide/divert the last two River Cree payments owed to Anthony;

c. An agreement to cover up the conspiracy by hiding and/or falsifying disclosure;

d. An agreement to hide Anthony’s ongoing management fees for Grey Eagle;

e. An agreement to hide one-half the fees Anthony earned in the DeGroote case;

f. An agreement to hide ongoing new business deals.

[120] Jennifer submits that these conspiracies allowed Anthony to tell her he had no money and that his father controlled everything. This is exactly what he did in 2013 and 2014, according to Jennifer.

[121] She alleges that Anthony has been able to shelter his money within Sonco with his father’s help. When Sonco could not reliably shelter the RCC management contract income through Sonco, the 2013 Trust and SGMI were set up to shelter Anthony’s income from Jennifer. Anthony continues to shelter his income behind Sonco and his father, claiming he has no control over it, despite the fact that he and his father are the directing minds of SGMI and the 2013 Trust.

[122] According to Jennifer, the conspiracy began in August 2012 when she says the parties “recognized that the marriage was not likely salvageable.”[^7] This however, was not Anthony’s view. He knew the marriage was in trouble but he did not know that Jennifer was secretly continuing her relationship with her current partner.

[123] Jennifer claims that Anthony went to Halifax on August 21, 2012 to visit with his parents for three days and discuss the beginnings of the conspiracy with his father. In fact, the parties had planned to go on vacation with the children to Halifax but in the wake of problems in their marriage they cancelled their vacation plans. Jennifer asked Anthony to cancel her ticket to fly to Halifax. Anthony did not plan a trip to Halifax expressly to conspire with his father. He already had a ticket from the planned family vacation.

[124] While Jennifer is certain that the trip to Halifax was the end of their marriage and the birth of the conspiracy, Anthony was not in the loop. He received an email from Jennifer on August 21, 2012 which is signed “Love Jennifer.” He was not of the same view with respect to the state of their marriage. Anthony was not even aware of the actual date of separation until he received Jennifer’s Application.

[125] Additionally, Anthony sent an email to both sets of parents on September 2, 2012 advising them of the couple’s problems but telling them he wanted to “save the marriage.” He asked for the love and support of both sets of parents, as he and Jennifer worked through their issues.

[126] Michael responded to Anthony with a heartfelt email on September 3, 2012. He offers his support to both of them and assures Anthony he will help ease his burden at work. These emails between Anthony and Michael do not reflect any animus towards Jennifer, notwithstanding that everyone knew the marriage was in trouble because of Jennifer’s relationship with her current partner.

[127] Whether the alleged conspiracy began in August 2012, or some other date, Jennifer submits that Anthony and the Novac/Sonco respondents have engaged in unlawful conduct, not undertaken in the ordinary course of business, as follows:

a. Intending to defeat Jennifer’s family law claims;

b. Working together to conceal Anthony’s income and assets;

c. Working together to force Jennifer to deplete her assets;

d. Making false representations under oath; and

e. Producing misleading information including letters, financial statements, corporate ledgers and balance sheets.

[128] Jennifer seeks damages (to be assessed at trial) in relation to the conspiracies of Anthony and Novac/Sonco. Specifically, she has suffered damages as follows:

a. The liquidation of her RRSPs ($149,000), home ($3,525,000) and one-half of her whole life policy have caused combined losses in the millions of dollars;

b. Humiliation and distress as a result of financial distress, particularly prior to the issuance of her Application;

c. Underpayment of child and spousal support;

d. Significant legal expense to uncover the conspiracy;

e. She cannot collect damages from Anthony alone as he is judgment proof; and

f. She will never be able to determine Anthony’s actual ongoing income due to continuing conspiracy.

[129] Jennifer submits that Michael has actively participated in the conspiracy by:

a. Actively hiding/sheltering Anthony’s income until the litigation is concluded;

b. Lying to minimize Anthony’s role in the family business;

c. Engaging advisors to credit-proof Anthony’s income; and

d. Using litigation strategies, including tailoring evidence, financial statements and financial records and hiding accounting entries.

[130] Novac/Sonco submits that Jennifer cannot establish damages because:

a. She had no direct entitlement to the RCC proceeds nor did Anthony;

b. Jennifer has remedies under the appropriate family law legislation to impute income to Anthony if she believes he is underemployed; and

c. Any damages flowing from the sale of the matrimonial home or the collapse of her RRSP had nothing to do with Novac/Sonco nor has Jennifer alleged this in her affidavits.

VII. Specifics of the Alleged Conspiracies

a) The River Cree Buyout

[131] This alleged conspiracy has two parts; the 2013 conspiracy when the 2013 Trust was created and SGMI established, and the buyout in 2015.

[132] Jennifer alleges that Anthony should have been paid significantly more of the fees under the Management Contract and at least 40% of the $5.75 million buyout. Her position is that Anthony had equal control over the income-producing asset and was integral in the negotiating and structuring of the buyout.

[133] Jennifer alleges this entitlement because:

a. Anthony was the lead in securing the River Cree contract and did most of the management work;

b. He was integrally involved in negotiating and structuring the buyout deal;

c. Certain memos prepared by KM are proof of an intention not to show income in Anthony’s hands; and

d. The creation of the 2013 Trust, the incorporation of SGMI and the structuring of the 2015 buyout had nothing to do with estate planning or a radius clause. It was done to “prevent income from being shown in Anthony’s hands” as per the KM memo.

i) Anthony’s Involvement in the River Cree Project

[134] There is no denying that Anthony was involved in the entire River Cree project from the “road show” financing to having some input with respect to the buyout of the management contract.

[135] During his cross-examination on May 17, 2018, Anthony conceded that, having looked at some of the correspondence related to the structuring of the management contract deal, he recalled that he had spent several days on the proposal and wrote the final submission. He agreed that, looking back, his involvement in the management contract deal was likely more than he described at his questioning in 2016 and 2017 but not as much as Jennifer’s counsel alleged.

[136] With respect to the buyout deal, in his cross-examination on May 17, 2018 Anthony was referred to his 2016 questioning in which he said he had not seen any of the documentation related to the buyout. At his cross-examination in 2018, he conceded that he was involved in the sale and had access to the sale documents.

[137] Anthony also conceded during his May 17, 2018 cross-examination that he was involved in determining the buyout price and made comments by email about the various amounts offered by the Enoch Nation. It was his father, however, who suggested a buyout structure. Anthony did the math based on his father’s idea and agreed that a buyout would be more advantageous than continuing to the end of the contract term. He further conceded that had the management contract stayed in place, he would have continued to receive income from it and that the lump sum effectively represented a buyout of the work he would have done.

[138] It is unfortunate that Anthony’s credibility was damaged by his refusal to admit the extent of his involvement in both the management contract and buyout negotiations before he was cross-examined for the purposes of this motion. However, the matter does not end there. The fact that Anthony was involved in these negotiations does not mean that the predominant purpose of them was to harm Jennifer. Anthony wanted to get the best deal he could for himself and for his father’s business.

[139] I accept that Crosbie & Co. approached Michael about financing for the buyout of the third-party contract. Michael was the person with capital resources and a known reputation in financing circles. Michael fronted the expenses and risk while negotiations were ongoing. If the bond raise for the third party buyout had failed, Sonco would not have secured the casino management contract. Anthony did attend some meetings and had discussions during the “road show” bond raise, but it must be kept in mind that without Michael’s access to capital, his willingness to front the risk and expenses, and his connections in the financial world, none of this would likely have come together.

[140] I do not accept Jennifer’s contentions that Anthony was integral to securing the River Cree contract. He was never Sonco’s “sole” representative. Anthony certainly had skills to lend to the project but it would be disingenuous to say that Anthony could have secured a contract of this magnitude without the financial backing and expertise of his father.

[141] Anthony received significant funds ($855,000) for 16 months’ work managing the River Cree Casino. All of this was accounted for in the Fuller Landau report. He gave evidence that he would have liked to share in the $5.75 million buyout of the contract, but that was ultimately up to his father.

[142] As for the buyout, Anthony was much more involved in this than he originally admitted on questioning. However, his involvement related to the amount of the buyout and ensuring that, based on his math, the net present value of the lump sum equaled at least as much as the balance of the contract. He hoped to receive a portion of the buyout but his father decided to retain all of the proceeds. Anthony did not appear to begrudge his father for this decision. He was familiar with his father’s way of doing things. After all, he had not offered to share his windfall from the sale of Gamebookers with his father.

ii) The Creation of the 2013 Trust and Incorporation of SGMI

[143] Jennifer claims that the structuring of the 2013 Trust and SGMI was intended to conceal millions of dollars in assets and income.

[144] Jennifer does not take the position that the establishment of the 2013 Trust and SGMI was unlawful.[^8]

[145] The Sonco/Novac pleadings[^9] and Michael’s December 5, 2016 affidavit[^10] confirm that the 2013 Trust was established for legitimate commercial purposes (including the radius clause issue) on the advice of Sonco’s corporate counsel and was not intended to harm Jennifer.

[146] Jennifer claims that the radius clause was a red herring and that the original legal advice given by BC was that an entity controlled by Anthony should be established, or a family trust.

[147] I have reviewed the Sonco/Novac River Cree Compendium.[^11] The memos and emails between Anthony, Michael and BC reflect a real concern about how to deal with the radius clause. There are discussions about how to properly set up another entity to ensure compliance and how to deal with Chief Whitney, who was making veiled threats of breach of contract against Sonco. In the end, it was Michael who wrote to the Chief on November 7, 2013 about a number of issues including the radius clause to assuage the Chief’s concerns on all fronts.

[148] The tenor of these communications is business-like and focussed. I do not find that the radius clause was a “red herring,” as Jennifer suggests. It was a real concern that could have affected Sonco’s ability to ultimately land the management contract and required such steps as the 2013 Trust having two trustees with equal power such that neither Anthony nor Michael had complete control.

[149] During his cross-examination on May 17, 2018, Anthony was shown a copy of the 2013 Trust document. It was put to him that he and his father had equal control as trustees. Anthony had stated that he was under the impression that he had no control over the trust and that his father could remove him as a trustee. He seemed genuinely surprised that this was not the case and that any disagreement between he and his father would result in a deadlock.[^12] He told the court that he had never received any legal advice about the trust and therefore could not really comment.

[150] Jennifer made much of this claiming it was similar to Anthony claiming he had never seen the RCC buyout documents (he had), and that his testimony should not be believed.

[151] I agree that Anthony backtracked on some of his previous evidence during his cross-examination in May 2018. He was forced to concede some rather obvious points. This is not inconsistent with other findings this court has made about Anthony in this judgment. He was not always forthright with Jennifer and likely during previous questioning. I accept that he attempted to right those wrongs during the course of his cross-examination in May 2018. That is likely insufficient to completely resurrect his credibility. However, those concerns relate to Anthony only and I find that they cannot be imprinted with any form of agreement with his father. That is, Michael cannot be blamed if Anthony did not fully understand the terms of the 2013 Trust or if Anthony cannot recall if he read or signed the trust documents.

[152] An issue came up during the course of this motion in relation to a memo written by Ms. Kelly Greenwood of Burchells LLP and dated October 25, 2013 (River Cree Compendium, Volume, page 89). The memo was produced as part of Burchells productions, subsequent to the filing of the Novac/Sonco motion material, and before the questioning of Michael. Jennifer’s counsel had the memo but did not put it to Michael during his questioning or on his cross-examination. Jennifer’s counsel objected to it being put to Michael during re-examination because although it was produced as part of Burchells disclosure it was not part of an undertaking, an exhibit on questioning or part of the continuing record. It is therefore hearsay unless it forms part of evidence from either Ms. Greenwood or Mr. Clarke.

[153] The memo reference line refers to the River Cree Casino radius clause and the memo describes the necessary steps to set up the 2013 Family Trust such that Michael would not have control of it. Anthony’s name is not mentioned in the memo. Michael’s counsel argued that the memo was important because it supports the Novac/Sonco position that the 2013 Trust was created, in part, to deal with the radius clause issue and that the radius clause is not a “red herring” as alleged by Jennifer.

[154] Jennifer did not deny that the radius clause was an issue but it was not the dominant purpose of the establishment of the 2013 Trust.

[155] Michael’s counsel relied on R. v. Stirling[^13] with respect to the document being admissible as an exception to the rule, excluding prior consistent statements. Counsel submitted that the document supports the position that the radius clause was the predominant purpose of the 2013 Trust.

[156] I agree with Michael’s counsel that the memo may be relied upon by the Novac/Sonco defendants for the following reasons:

a. The memo was disclosed and available for counsel to use during Michael’s questioning and cross-examination.

b. The memo has some probative value to confirm that the predominant purpose of the 2013 Trust with respect to the radius clause existed before a motive to contrive existed (i.e. the commencement of the litigation against Sonco/Novac).

[157] I therefore accept Michael’s evidence that it was imperative to ensure that an entity was created over which neither he nor Anthony had complete control. A breach of the radius clause would potentially put the fees earned for the management of the Grey Eagle Casino in jeopardy ($75,000 per month) which obviously Michael did not want to risk.

[158] Jennifer acknowledged that the establishment of the 2013 Trust and that the sale of the SGMI shares from Sonco to Enoch were lawful. Further, there is no doubt that the Enoch Nation initiated the buyout, not Michael or Anthony.

iii) The Buyout of the River Cree Management Contract

[159] Details of this buyout have already been set out, but to reiterate: Sonco received common shares in SGMI which it sold to Enoch Nation in 2015 for $5.75 million. Sonco received those proceeds. The 2013 Trust had held the common and preferred shares in SGMI. When the common shares were transferred to SGMI, Michael received the preferred shares in Sonco. The structure is complicated but resulted in tax savings and estate planning benefits to Michael.

[160] Michael deposed in his March 29, 2017 affidavit that the structure of the buyout was driven by tax considerations, i.e. to minimize tax on the buyout proceeds.[^14]

[161] Sonco hired a new in-house accountant, RL, in May 2015. Michael asked RL to work with his external accountant, KM, to determine the best tax options on the buyout.

[162] KM swore an affidavit dated March 29, 2017 in which he deposed:

4. …While I had nothing to do with the negotiation of the River Cree deal, I was the architect of the actual final structure, from a tax perspective to ensure the most tax efficient result and it was the result of this advice that the transactions occurred as they did. I was asked to come up with a plan that would minimize the taxes payable…the estimated estate tax savings from this planning is approximately $1.2 million and mirrors tax planning done in prior years.[^15]

[163] The sale by Sonco to River Cree generated a tax-free capital dividend account. This allowed Michael to receive payment in respect of a portion of his preferred shares (obtained in the 2011 freeze) on a reduced tax basis.

[164] As a result of Michael’s instructions, two memos were drafted by KM. The memos were the source of significant evidence and submissions at this motion. Jennifer viewed the memos as confirmatory evidence of Michael’s attempts to use his advisors to help shelter Anthony’s income and assets.

[165] Jennifer questions KM’s credibility and suggests that KM’s tax planning explanations are simply a cover for the real intent of the plan which was to put the RCC sale proceeds out of the control of 2013 Trust and thereby out of Anthony’s control as co-trustee. Jennifer’s position is that the memos prepared by KM and the sequence of events surrounding the creation of the memos is incontrovertible evidence that the predominant purpose of the 2015 buyout transaction was intended to hide Anthony’s share of the buyout proceeds.

[166] The memos were both dated June 22, 2015. Both contained a DRAFT watermark. Both were memos to “file” from KM re “Sonco Alta Sale” and copied to KM’s partner at Grant Thornton LLP, John Roy. KM’s evidence at para. 14 of his March 29, 2017 affidavit was that he sent memo #1 to his partner, John Roy, and discussed it with RL. He sent memo #2 to RL. He neither sent nor discussed either memo with Michael.

[167] The parties agreed that date on the memo is incorrect and that memo #1 was actually sent on June 23, 2015 and memo #2 on June 24, 2015.

[168] Memo # 1 is a lengthier memo and is reproduced below:

Alternatives

Layering Steps

Steps

1. 2013 Trust transfers 55% of it commons shares (CS) in SGMI to 998523 Alta Ltd. for preferred shares (PS) of equal value on a rollover basis.

No tax is triggered.

2. 998 sells the 55% interest to Sonco Group for fair market value;

Gain is triggered on the sale;

This will provide access to Alberta rates that are 5% lower;

3. 2013 Trust transfers the remaining 45% of its CS in SGMI to 998 for a note.

Deemed dividend is triggered a portion is treated as a capital dividend and a portion is an ordinary dividend.

The ordinary dividend recovers refundable tax.

Result pay tax on 55% of the gain.

The related savings are $730,000.

4. 998 sells the 45% interest to Sonco Group for FMV.

5. Sonco Group sells the shares of SGMI to the native band.

6. The Trust allocates the taxable & capital dividend to a permitted corporation before th end of the year.

7. The permitted corporation is combined with Sonco Group, SDA and DRTOH are used to redeem Michael Novac’s preferred shares and reduce his estate tax liability;

8. Michael Novac takes his tax free proceeds and lends to Anthony his portion as a loan that will be forgiven when Anthony’s divorce is final. [Emphasis added].

Alta and Estate

1. 2013 Trust transfers 100% of its common shares (CS) in SGMI to 998253 Alta Ltd (988) for preferred shares (PS) of equal value on a rollover basis;

No tax is triggered;

2. 2013 Trust rols PS in 998 to Sonco Group for PS of equal value;

3. 998 sells shares of SGMI;

4. 998 redeems PS by Sonco Group with refundable tax and CDA;

5. Sonco Group redeems Michael Novac preferred shares with CDA and RDTOH;

6. Michael Novac takes his tax free proceeds and lends to Anthony his portion as a loan that will be forgiven when Anthony’s divorce is final; [emphasis added].

This reduces Michael Novac’s estate tax.

7. Michael Novac takes his tax free proceeds and lends to Anthony his portion as a loan that will be forgiven when Anthony’s divorce is final; [emphasis added].

[169] Memo #2 is similar to the second part of Memo #1 with a few changes and additions. The body of the memo is reproduced below;

Alta and Estate

1. 2013 Trust transfers 100% of its common shares (CS) in SGMI to Sonco Group for preferred shares (PS) of equal value on a rollover basis;

No tax is triggered.

2. Sonco Group sells shares of SGMI;

3. Sonco Group redeems Michael Novac preferred shares with CDA and RDTOH;

4. Michael Novac takes his tax free proceeds and lends to Anthony his portion as a loan that will be forgiven when Anthony’s divorce is final;

This reduces Michael Novac’s estate tax;

This keeps income out of Anthony’s hands; [emphasis added]

5. Michael Novac takes his tax free proceeds and lends Anthony his portion as a loan that will be forgiven when Anthony’s divorce is final;

Again this prevents income from being shown in Anthony’s hands. [Emphasis added]

[170] Anthony acknowledged during questioning that he saw a copy of memo #2 at some point. He agreed that he received an email from RL on June 24, 2015 with memo #2 attached. On June 25, 2015, Anthony attended a retirement party for Harry Hamilton, the former CFO of Sonco. KM, RL and Michael were also at the party. It was suggested to Anthony on May 17, 2018 that the memo was discussed at the party, including structuring the buyout, in order to shelter/hide his income/assets while the divorce proceeding was ongoing.

[171] Anthony denied any such discussion took place. He testified that it was a retirement party for Harry, a long-time employee of Sonco, and such discussions simply did not happen. Anthony denied any knowledge of whether his father had instructed KM to structure the buyout to hide Anthony’s income from Jennifer. In any event, paragraphs 4 and 5 of memo #2 were never implemented. His evidence at the hearing in May 2018 was those parts of the memo were “never considered.”

[172] Anthony agreed that he was copied on a series of emails between KM, BC and Michael about the memo. He testified that he was not involved in any calls or feedback about the memo.

[173] Jennifer’s position is that Anthony was involved in a call with Michael, RL and BC on June 22, 2015. The purpose of the call was discuss their concerns about Jennifer and how to structure the buyout to ensure she did not find out about it, given the upcoming Case Conference on June 29, 2015. Jennifer relies on KM’s dockets for that day, which show 3.75 hours docketed to “Planning, M/A”.

[174] Michael admitted that he was likely involved in the conference call on June 22, 2015 and that the purpose of the call was to discuss the buyout. Michael’s evidence on May 28, 2018 was that he was not aware at the time that KM had drafted memo #1, although he is aware of it now. The memo was not directed to him and he never received it. In any event, the memo is “uninformed”, according to Michael, because 998 is not solely owned by him. He is only a 95% owner of that company, so the structure contemplated in memo #1 is not viable.

[175] Michael did receive a copy of memo #2 via RL as an attachment. He did not open the attachment on receipt. He saw it later. He was unaware on whose instructions the share transfer was proposed to be made to Sonco rather than 988. His evidence was that he did not discuss memo #2 with RL nor did he discuss it with anyone at the Harry Hamilton retirement party. Further, he was unaware at that time that a case conference in Anthony’s family law litigation was scheduled for June 29, 2015.

[176] Michael testified on May 28, 2018 that he never considered items 4 and 5 in memo #2 as options and they were never implemented. He told RL this. He did not tell Anthony because Michael was the final decision maker in such things and Anthony’s input was therefore not necessary. There was a conference call held on July 2, 2015 during which memo #2 was discussed. However, only points 1 through 3 were discussed. Points 4 and 5 were “out of the picture by then”, according to Michael.

[177] The July 2, 2015 conference call lead to KM receiving instructions to pursue the tax planning steps set out in points 1 through 3 in memo #2. This is reflected in KM’s letter of instruction dated July 3, 2015 to BC at Burchells LLP. The letter contained four appendices with transaction steps, existing corporate structure, proposed corporate structure and the corporate structure subsequent to the sale. Anthony’s name is not mentioned in the letter of instruction.

[178] BC’s handwritten notes from the July 2, 2015 conference call were produced and reviewed by the court. There is no mention of points 4 and 5 from memo #2, nor is there any mention of Anthony. The notes reflect instructions to move forward with steps 1 through 3 in memo #2. Of note is that Mr. Clarke’s notes focused on both estate and tax planning for the buyout.

[179] Michael was reminded that at his questioning on June 13, 2017 he was asked about memo #2. His evidence at that time was that he was not copied on the memo and only saw it when it was disclosed for this litigation. His response was that he likely confused memo #1 with memo #2.

[180] When the buyout closed on August 14, 2015 Michael told RL that the proceeds from the buyout were his alone. After 40 years of financial risk, Michael felt this was owed to him. He denied any awareness of an email from Kelsi Campbell to RL advising that the closing was upcoming and money would be available to Michael and Anthony. He does not know who Kelsi Campbell is. He denied knowing of any discussions relating to loaning Anthony money in 2016 in an arrangement similar to the one set out in paragraphs 4 and 5 of memo #2.

[181] During his cross-examination on May 29, 2018, Michael testified that Anthony never asked him for a share of the buyout proceeds. If he had, Michael would have said no.[^16] This evidence is inconsistent with Anthony’s evidence, as Anthony testified that he asked his father for a share of the proceeds and was turned down. While the evidence is clearly inconsistent, not much turns on it. Anthony did not and has not received any portion of the buyout proceeds.

[182] Jennifer insists that the memo #1 was the direct result of the call on June 22, 2015 and planning for the upcoming buyout and the Case Conference. On June 24, 2015 Anthony came to Halifax. That same day KM created memo #2 and docketed 1.25 hours to Michael/Anthony. KM forwarded a copy of the memo to Sonco the same day and RL became involved. He sent a question to BC, copied Michael and Anthony with the question, and includes the memo as an attachment.

[183] While KM testified that the memo was simply a recording of his thoughts, a “stream of consciousness” type of thinking that he often uses when considering estate planning transactions, Jennifer’s position is that memo #2 represented a more focused approach to hiding the asset, especially given the repetition at the end of the memo with respect to keeping income out of Anthony’s hands.

[184] KM deposed that the memos were prepared “without any input or discussion with Mr. Michael Novac or Anthony Novac…I did not have instructions to come up with a plan to reduce income available to Anthony. In fact, when the time came to proceed, I was asked to provide the plan that is set out in the July 3, 2015 letter that was sent to BC for implementation.”[^17] At his cross-examination on May 9, 2017, KM confirms that Michael, not Anthony, was his client. He took his instructions from Michael or from Michael via RL.[^18]

[185] KM confirmed at his May 9, 2017 cross-examination that neither BC, RL, Michael nor Anthony sought his advice as to how to hide any of Anthony’s portion of the buyout.[^19]

[186] KM also testified during his May 9, 2017 cross-examination that, while loaning money to Anthony was something he considered, it was not agreed to by Michael. The proceeds of the buyout were to be owned by Michael and the trust; there was to be no sharing of the proceeds by Anthony and Michael.[^20] Money that went into Anthony’s hands could only be by way of an early inheritance as a beneficiary of the 2011 Trust.[^21] Such distributions were not within the scope of KM’s involvement with the buyout.

[187] Jennifer submits that it is significant that Anthony was in Halifax at this critical time and going into the Sonco office. Keeping in mind that Michael admitted that the buyout was the second biggest deal Sonco had done in the last 15-20 years, Jennifer asks the court to infer that there is no doubt that Michael, Anthony, RL and KM were having detailed discussions about memo #2 at this time and how to keep the buyout proceeds out of Anthony’s hands.

iv) The River Cree Management Fees

[188] Jennifer alleges Anthony was underpaid for his work under the RCC Management Contract because of Anthony’s involvement in securing the deal for the contract. Michael denies this. His evidence was that he agreed to pay Anthony 40% of the net fees as, “being the father of a son that I loved that was badly hurt, and he was paid about double what I would have paid somebody else. That got factored in.”[^22] Anthony was paid $885,000 for 16 months work on the RCC contract. That is not insignificant. All of this income was included in the Fuller Landau report.

[189] Jennifer also alleges that Michael and Anthony conspired to hide Anthony’s final two payments under the Casino Management Agreement. She makes very serious allegations that Sonco’s employees Karen Saulnier and KL created false charts and general ledgers to hide two payments owing to Anthony in May 2015, which totalled $143,464.58. She alleges that Michael and Anthony buried journal entries in SGMI and Sonco’s general ledgers to effect the conspiracy to hide the two payments.

[190] Jennifer alleges that disclosure from Novac/Sonco provided a general ledger which did not capture the book entries for the two payments from SGMI to Conrose in May 2015. Only after being pressed did Michael produce a second version of the general ledger which showed those amounts payable to Conrose in May 2015 and then in July 2015 an account payable to Sonco Group Inc. for the same amount.

[191] Jennifer’s position is that this accounting manipulation and the co-opting of Sonco employees was unlawful.

[192] Anthony’s evidence on questioning on June 18, 2017 was that payments to Conrose for work on the RCC management contract ended in April 2015. At his cross-examination on May 17, 2018, he stated he was originally not aware that he was owed additional amounts for May 2015. Near the end of June 2015 he became aware of additional amounts owed to Conrose through Karen Saulnier, an employee of Sonco. He agreed that he asked Karen not to distribute these amounts to him because he was not sure the distribution was correct.

[193] It was suggested to Anthony in his cross-examination on May 17, 2018 that he asked RL and Karen to remove those payments from a summary of his income from Sonco that was to be sent to Epstein Cole for this litigation. He agreed that the payments were removed. His evidence was that there was some confusion about these payments and that this income has now been included and he must pay tax on it and re-file his 2015 income tax return. He denied the suggestion that he asked Karen not to distribute this money, as he was worried about support exposure. He denied the suggestion that he tried to hide the money because of the upcoming Case Conference. He denied that he colluded with his father about this which is why Jennifer did not find out about the payments until 2.5 years later.

[194] Michael’s evidence on May 29, 2018 was that he did not become aware of the error in the first general ledger re: the Conrose payments until much later. He does not prepare general ledgers. He did have a discussion about this with Anthony who told him to keep the money owed to Conrose because he and Jennifer owed him $200,000 for funds he lent to them during the marriage. He denied the suggestion that Anthony told his staff to hold back the payment and redirect it to Sonco without his knowledge.

[195] By way of response to an undertaking given at his May 9, 2017 questioning, Michael advised that Sonco Group Inc. owes Conrose Park $143,464.58 for management fees from RCC. Separately, Anthony owes Sonco Group Inc. $200,000. This is set out in the ledgers provided with the undertaking and is reflected in Anthony’s financial statement.

[196] Michael denies that there were two versions of the general ledger created. In fact, there were income statement general ledgers and balance sheet general ledgers. When Michael became aware of the issue, he forwarded the balance sheet general ledger. Only the income statement general ledger had been provided previously. Michael’s position is that the accounting entries accurately reflect the transactions and were not manipulated at a later date.

[197] During his cross-examination on May 29, 2018, Michael denied that he and Anthony agreed that the two payments owing to Conrose Park would be transferred to Sonco Group Inc. He agreed that when the discrepancy was discovered he discussed with Anthony holding back the payments, given that Anthony and Jennifer owed Sonco $200,000.[^23]

[198] Michael did not remove the May 2015 payments owed to Conrose from any disclosure list. Michael has come to learn that Anthony asked Karen Saulnier to remove the May payments from the list before it was sent to Jennifer’s counsel or Anthony’s valuator. This had nothing to do with Michael and Michael was not involved in forwarding the list that did not include the May 2015 payments.

[199] DivorceMate calculations provided by Jennifer’s counsel at the motion show that even when the two Conrose payments are added to Anthony’s income he underpaid spousal support by $1,514 per month. This is an adjustment that can easily be made by the trial judge.

VII. Alleged Non-Disclosure/Misrepresentation by Michael and Anthony

[200] As part of her conspiracy allegation, Jennifer submits that Michael and Anthony conspired to falsify documents and make misrepresentations both personally and through their staff/advisors in order to harm Jennifer.

[201] Many of Jennifer’s allegations about financial misrepresentations relate only to Anthony including:

a. Pressing Jennifer in October and November 2013 to borrow $500,000 from his father to pay household expenses at a time when Anthony knew the RCC management deal was imminent.

b. Pressing Jennifer to sell the matrimonial home and collapse her RRSPs, which she did in November 2013, on Anthony’s representations about their lack of cash flow. These representations were made at time when Anthony had secured the RCC deal and knew he would be earning $50,000 to $70,000 per month from that deal.

c. Anthony sending himself an email in August 2014 estimating he would earn $1,410,000 in 2014.

d. Anthony telling Jennifer in June 2014 he was “out of funds” and that he did not get a salary from RCC. It was a draw against earnings and he was hoping to soon become a salaried employee of Sonco.

e. Many other representations from Anthony, which are detailed throughout this judgment that related to Anthony’s lavish lifestyle, while claiming he had no money to give to Jennifer.

[202] None of the above allegations relate to Michael. They relate solely to Anthony’s conduct. There is no evidence that Michael pressured Jennifer to sell her home or collapse her RRSPs.

[203] During his cross-examination on May 28, 2018, Michael denied that he knew about the upcoming Case Conference in June 2015 or that he had any discussion with Anthony on the day of the Case Conference with respect to a concern about how his case was going.[^24] Michael adamantly denied that he discussed with Anthony that day going ahead with steps 4 and 5 of memo #2 as a result of concerns about the direction of the litigation.[^25]

[204] Jennifer alleges that Sonco’s corporate counsel, BC, has provided “misinformation” throughout. Jennifer points to a letter sent to BC by her counsel on August 4, 2015 requesting details of the assets held by 2013 Trust. BC provided a preliminary response on August 31, 2015. He indicated that the Trust held discretionary preferred shares in Sonco Group Inc. He went on to write that to his knowledge Anthony had never been provided with the trust documents, was one of several discretionary beneficiaries and that no distribution had ever been made from the Trust.

[205] Jennifer’s counsel was concerned that no mention had been made of the River Cree transactions. However, BC was not requested to provide that information. Further, the details of the RCC transactions were the subject of confidentiality terms and a Sealing Order in this litigation.

[206] Jennifer also alleged that BC changed the 2013 Trust’s financial statements to conceal the RCC buyout proceeds. However, BC has never been questioned by Jennifer nor was he cross-examined in the course of this hearing. BC has never been in a position to defend this serious allegation.

[207] What is known about BC’s actions is that he forwarded financial information related to the 2013 Trust to Epstein Cole on January 18, 2016. He was apparently unaware of certain emails which had been exchanged between KM and RL about changes to the information. BC was not copied on these emails.

[208] Michael’s evidence was that he was not aware of BC having sent the statement and he never instructed anyone to do so. It was suggested to Michael in cross-examination that BC’s information in the January 18, 2016 letter was deliberately misleading because it does not mention the 2013 Trust’s disposition of its shares in SGMI to Sonco Group. The letter implies that the trust had no value.[^26] Michael denied this. His evidence was that there were no discussions between him and Anthony about the presentation of the financial information for the 2013 Trust nor did he have any conversation or exchange any emails with RL or KM about it.[^27]

[209] Jennifer alleges there was a further financial misrepresentation by Michael by way of misleading financial statements for Sonco Group Inc. produced to Jennifer’s counsel in March 2017. She submits that the balance sheet only reflects Michael’s preference shares and does not mention the 2013 Trust’s EF-2 shares. Jennifer regards this as material because the EF-2 Preference shares represent a debt of $4.3 million owing by Sonco.

[210] Michael’s response was that this was simply an error and not intended to harm Jennifer. He points out the following by way of information/disclosure that Jennifer had in her possession related to the Sonco shares.

a. Jennifer was aware by way of previous disclosure from Novac/Sonco (January 3, 2016) that the 2013 Trust held 10,000 EF-2 class preference shares in Sonco Group.

b. When Novac/Sonco filed their Answer in August 2016, they included details of the 2015 RCC buyout, including a description of the exchange of 100 of the 2013 Trust’s common shares in SGMI to Sonco in exchange for 10,000 EF-2 preference shares.

c. In October 2016, the Novac/Sonco parties delivered a Brief of Documents relating to the 2013 Trust. The Brief of Documents included a reporting letter from BC, dated September 2, 2015, which detailed the buyout transaction.

d. In March 2017, Novac/Sonco delivered to Jennifer’s counsel two disclosure briefs which included the finalized financial statement for 2015 and 2016, and a General Ledger statement showing dividends paid to Michael in December 2014, 2015 and 2016.

e. On May 12, 2017, Novac/Sonco delivered to Jennifer’s counsel minute books for all of the Sonco entities which included the resolutions authorizing the dividends paid to Michael on his Class EF shares.

f. On May 16, 2017, Grant Thornton sent a draft financial statement for the year ended January 3, 2017 and an updated redemption value for the EF-2 shares. The 2017 financial statements contained the required corrections. Those corrected statements were available to Jennifer prior to the motion for summary judgment.

[211] After the financial statements were finalized in June 2016, KM wrote to RL in December 2016 noting that the EF-2 shares held by the 2013 Trust had not been included in the financials for the year ended January 3, 2016.

[212] Jennifer alleges that BC falsely represented to Jennifer’s counsel on July 10, 2015 that Anthony had no ownership interest in either of the Novac Family Trusts. Jennifer views this as false because the 2013 Trust is controlled equally by Michael and Anthony. She also alleges that the documents for the RCC buyout deal were signed by Michael and Anthony on July 21, 2015 but backdated to July 3, 2015.

[213] Michael responded that none of this was done to harm Jennifer. It was done because the structure put in place was to be effective July 3, 2015. The draft documents always showed July 3, 2015 as the effective date. This is clearly set out in the email dated July 14, 2015 from Meaghan Strum (who was assisting BC) to KM and copied to BC, Michael, Anthony and RL. In the email she references attached draft sale and corporate reorganization documents effective July 3, 2015.

[214] Jennifer alleges that Michael has not complied with Justice Faieta’s order dated November 17, 2017. Michael was ordered to produce a tracing of the proceeds of the RCC buyout. The tracing was provided on November 27, 2017. However, Jennifer alleges that the tracing is incomplete as it traces funds within Sonco Group Inc., but there is no tracing of the funds once they were paid out to Michael.

[215] Between August 18, 2015 and July 11, 2017, Michael withdrew a total of $5,554,154. He used $2.4 million to buy a house in Toronto. He provided no supporting documentation for this or for the remaining $3,154,154.

[216] Michael disagrees on the interpretation of Justice Faieta’s order which was to “provide a detailed tracing of the $5.75 million in funds that were received by Sonco Group Inc. as a result of the River Cree management contract within seven days.”

[217] Michael produced two briefs with all supporting documentation. All of the payments were traced to deposits to his joint account with his wife. The details concerning the home purchase in Toronto were provided. Michael was not required by the court order to show how he spent the money, once it was transferred to him.

VIII. The DeGroote Expert Fees

[218] Jennifer alleges that Michael and Anthony agreed to shelter Anthony’s income received from the DeGroote Expert fees.

[219] In 2014, Anthony was retained as a court-appointed expert to assess the financial viability of a casino in the Dominican Republic in DeGroote v. DC Entertainment Corporation.[^28] Anthony negotiated a fee of $452,568 in December 2014.

[220] Anthony did not disclose this income to Jennifer until production of the Fuller Landau report on June 30, 2015. Sonco received $341,513 in fees net of expenses. Sonco paid Anthony $204,908 through Conrose. Sonco kept $136,605. He therefore received more than 50% of the net fees. He was paid well for four to five weeks of work.

[221] Anthony’s position is that the amount he received for this project was unilaterally determined by his father, although that agreement/understanding was never reduced to writing. Anthony maintains it was Sonco who was retained, even though he researched and drafted the report, signed off on it and would have given expert evidence if it had been required. Jennifer submits that Anthony could have easily put the retainer into Conrose’s name if he chose. Instead, he conspired with his father to divert income to Sonco, thereby harming Jennifer and the children.

[222] Michael points out that the Chief Restructuring Advisor entered into a contract with Sonco Gaming Inc. as the “manager.” Sonco’s license and probity was paramount to give credibility to the receiver and Anthony could not have been hired on his own. Anthony was not a party to the contract nor did he have the required gaming license or credentials. While Anthony’s expertise was essential to the deal, that alone was insufficient.

[223] In calculating the amount to be paid to Anthony, Michael stated in cross-examination on May 29, 2018 that he took into consideration Sonco’s overhead, expenses and the risk involved (p. 235). Michael submits there was nothing unlawful about this arrangement. Sonco took on the risk and paid the expenses, and Anthony was paid a generous agreed-upon fee.

IX. The Grey Eagle Fees

[224] Jennifer alleges that Anthony and Michael conspired to hide ongoing income from the Grey Eagle Casino as of December 2015. She alleges that, although Anthony was banned from attending the casino, he continues to do work behind the scenes and is paid for this work.

[225] In 2012 Anthony worked as a consultant for Sonco in the Grey Eagle expansion. He was paid $143,000 for that work. As the construction manager for the hospitality project in 2013 and 2014, Anthony earned 40% of Sonco’s net fees, which was $195,000 in 2013 and $45,000 in 2014.

[226] When construction was completed in 2014, Anthony managed Grey Eagle hospitality on behalf of Sonco until he was removed by the Nation on October 26, 2015. For that work he was paid 40% of Sonco’s net fees which totalled $211,645 in 2015. Anthony stopped receiving fees for Grey Eagle at the end of December 2015. With both Grey Eagle and RCC finished, Anthony’s income was substantially reduced.

[227] Jennifer does not take the position that Michael and Anthony conspired to have Anthony’s banishment occur, but, rather, that they have now hidden the income Anthony continues to receive for doing the same job remotely.

[228] The fact that Anthony was banned from Grey Eagle cannot be ignored. Steps were taken by Sonco after Michael tried to get Grey Eagle to reconsider. Adam Digby, another Sonco employee, was assigned to take over Anthony’s duties. Anthony provides consulting advice to Adam Digby from time to time, but he is no longer involved because he could not do the job effectively off site. Productions provided to Jennifer confirm that Adam Digby travels to Calgary regularly to fulfil his duties as Anthony’s replacement at Grey Eagle. Board meeting Minutes from Grey Eagle confirm that after the date of his banishment Anthony did not attend Board meetings.

[229] Specifically, Jennifer alleges that:

a. Certain emails were sent following Anthony’s removal in 2015 as to how to keep him involved;

b. Adam Digby was never formally appointed to Anthony’s former position as hospitality manager; and

c. Anthony continues to receive information about Grey Eagle.

[230] Jennifer relies on an email sent by BC to Anthony in which he suggests that “the current plan, although an incomplete one, would seem to be to keep Anthony at one arm’s length and see whether this blows over in time.”[^29] Anthony denied the suggestion that the plan was to use Adam Digby as the interface with Anthony doing the work behind the scenes.[^30]Anthony’s evidence was that it would have been impossible for him to continue in the same role at Grey Eagle, but secretly. His evidence was “obviously, that couldn’t happen.”^31

[231] As to the fact that Adam Digby was never formally appointed as the hospitality manger, Anthony’s evidence was that he did not recall being formally appointed either.[^32]

[232] Specifically, Anthony denied that he was actively engaged in working on Grey Eagle hospitality matters other than rendering the occasional opinion.[^33] Anthony does not deny that he continues to receive information about Grey Eagle because he is an owner of 998253 Alberta Inc., which has a 2.5% interest in Grey Eagle.

[233] Michael’s evidence was that Anthony is no longer involved in Grey Eagle. Michael and Adam Digby have traveled to every Grey Eagle meeting and all of those travel records have been produced.[^34]

X. The Alleged Conspiracy to Hide New Opportunities

[234] Jennifer alleges that Anthony continues to earn income from a variety of new opportunities at Sonco, including Gorsebrook Park, Sonco Advisors, Argyle Capital Partners, St. John’s AP Parking Garage, Granville Hotel and London Casino.

[235] Anthony’s income was reduced to $25,000 when he lost the income from both RCC and Grey Eagle. Anthony signed a consulting agreement with Sonco on June 8, 2016. The details of this arrangement are set out above.

[236] There is no evidence that Sonco has earned revenue from any new projects since RCC. Sonco’s only revenue producing projects are Grey Eagle and Great Blue Heron. Anthony is not involved in either. He is occasionally consulted or asked for advice, which he gives as part of his consulting contract.

[237] Currently, Sonco has no new income producing projects. The Gorsebrook condominium project is underway but no fees have been generated. There are no new casino projects although Anthony has been traveling to London, England to investigate an opportunity there. The St. John’s Parking Hotel project has not commenced and does not generate any profit.

XI. Summary Judgment

[238] Not much needs to be said on whether this case is suitable for summary judgment. The court has had access to extensive transcripts, undertakings, facta, affidavits, the oral evidence of both Anthony and Michael and extensive written and oral submissions.

[239] There is more than enough material on which the court may rely in order to make findings of fact and credibility. I find that all parties have put their best foot forward with respect to a record to substantiate both the pursuit and/or defence of the relevant claims.

[240] Further, dealing with the conspiracy claim now will allow for a streamlining of any remaining issues for trial and hopefully clear a way for settlement of many issues which have been effectively put “on hold” awaiting this motion and the resulting decision.

[241] Finally, a determination of the conspiracy claim by way of summary judgment would support the policy and principles enunciated in Hyrniak v. Mauldin[^35] and Rule 2(3) of the Family Law Rules which require this court to deal with cases justly, including ensuring that the procedure is fair to all parties, saves expense and time, and deals with cases in a manner appropriate to their complexity and importance.

XII. The Law of Conspiracy

[242] It is settled law that there are two types of actionable civil conspiracies:

a. Predominant purpose conspiracy; and

b. Unlawful conduct conspiracy.

[243] In Canada Cement LaFarge Ltd. v. British Columbia Lightweight Aggregate Ltd.,[^36] the Supreme Court of Canada set out the test for both types:

…the law of torts does recognize a claim against them in combination as the tort of conspiracy if:

(1) whether the means used by the defendants are lawful or unlawful, the predominant purpose of the defendants' conduct is to cause injury to the plaintiff; or,

(2) where the conduct of the defendants is unlawful, the conduct is directed towards the plaintiff (alone or together with others), and the defendants should know in the circumstances that injury to the plaintiff is likely to and does result.

In situation (2) it is not necessary that the pre-dominant purpose of the defendants' conduct be to cause injury to the plaintiff but, in the prevailing circumstances, it must be a constructive intent derived from the fact that the defendants should have known that injury to the plaintiff would ensue. In both situations, however, there must be actual damage suffered by the plaintiff.

[244] There is no doubt that conspiracy is a serious allegation and must not be taken lightly nor can it be proven based on assumptions or speculation.[^37]

[245] Jennifer has the burden of proof. In order to prove that Anthony and Novac/Sonco are liable with respect to the predominant purpose conspiracy, she must prove that they:

a. Acted in concert or with a common design or intention;

b. Their predominant purpose was to harm Jennifer;

c. They acted in furtherance of their common design or intention; and

d. Their conduct caused harm to Jennifer.

[246] In order for Novac/Sonco to be liable for the tort of unlawful conspiracy, Jennifer must prove:

a. Novac/Sonco and Anthony acted in concert, by agreement, or with a common design or intention and that the conduct of both parties was unlawful, and;

b. That the conduct of Novac/Sonco and Anthony was directed towards Jennifer and that they ought to have known it would harm her.

c. Novac/Sonco and Anthony acted in furtherance of their agreement, and;

d. The conduct of Novac/Sonco and Anthony caused harm to her.

[247] In order to prove that conduct is “unlawful,” it must include acts that are wrong in law. Highly competitive commercial activity, such as receiving money to which one did not have the right has not been found to be an unlawful act.[^38]

[248] The Ontario Court of Appeal in Agribrands Purina Canada Inc. v. Kasamekas[^39] has determined the scope of the meaning of “unlawful” in the civil conspiracy context as follows:

a. There must be unlawful conduct by each conspirator;

b. The tort is not intended to turn lawful conduct into tortious conduct;

c. Conduct not authorized by convention or understanding is not unlawful;

d. Once unlawfulness has been established, an enquiry into the predominant intent of the conspiracy is not necessary.

[249] While there must be intentional participation with a view to further a common design or purpose, an agreement between defendants may be inferred and need not be in a specific form.[^40] That is, the standard of proof is high but not so high as to reach a “beyond a reasonable doubt” standard. There must, however, be a factual underpinning from which a reasonable inference can be made.

[250] An issue in this case is the application of the tort of conspiracy in the family law context. There are both policy concerns and a question as to whether the current legislative framework precludes the application of the tort of conspiracy.

[251] In Frame v. Smith[^41] the Supreme Court of Canada made it clear that the tort of conspiracy did not apply in the context of custody/access claims as follows:

It seems obvious to me that the legislature intended to devise a comprehensive scheme for dealing with these issues. If it had contemplated additional support by civil action, it would have made provision for this.

[252] In this case, the comprehensive legislation and guidelines contained in the Divorce Act, Family Law Act, Child Support Guidelines and the Spousal Support Advisory Guidelines apply and provide a comprehensive code to deal with support issues relating to both spouses and children.

[253] Jennifer does not disagree with the policy concerns raised in Frame v. Smith, however, she submits that those do not constitute an absolute bar to the application of the tort of conspiracy in family law cases. She submits that the policy concerns raised in Frame v. Smith do not apply here, and, there are other valid policy concerns which would support the application of such a tort in these circumstances. She suggests that there is a place for the tort of conspiracy in family law in the narrow and unusual circumstances of this case.

[254] Jennifer submits that the family law statutes do not provide a fulsome remedial framework because, for example, they cannot compensate her for the losses she suffered in cashing in her RRSPs or selling her home nor is there an ability to award punitive damages.

XIII. Analysis and Application of the Facts to the Law

a) Does Michael Solely Own and Control Sonco?

[255] Jennifer alleges that Anthony has both equitable and legal ownership in Sonco. She disputes the position of Novac/Sonco that Michael’s transactions were taken out of self-interest and had nothing to do with harming Jennifer.

[256] Her view is that the conspiracy started at or around the date of separation. Michael and Anthony intentionally sheltered Michael’s income and assets over a period of five years with the predominant purpose of harming Jennifer and defeating her family law claims. The predominant purpose conspiracy played out as follows:

a. Starting from the date of separation, Anthony and Michael wanted to ensure that Anthony was put in a position where he could represent to Jennifer that he had no income.

b. When they were unable to hide the River Cree management contract fees using the 2011 Trust, they structured the 2013 Trust and SGMI in order to shelter Anthony’s income and the buyout proceeds. The directing minds behind the 2013 Trust and SGMI are Anthony and Michael, who have equal control over the Trust. Michael has misrepresented that only he has control over the 2013 Trust. The only asset of the 2013 Trust was the proceeds from the RCC management contract and the buyout proceeds.

c. After Jennifer commenced her court action, Anthony hid behind Sonco to avoid producing information, claiming it was his father’s company and such productions were beyond his control.

d. Michael and Anthony continue to hide Anthony’s involvement in new projects under the guise of the consulting agreement.

[257] Jennifer also alleges that Anthony and Novac/Sonco engaged in unlawful conduct by:

a. Intending to defeat Jennifer’s legitimate family law claims;

b. Working together to conceal and shelter Anthony’s income and assets and forcing Jennifer to deplete her assets;

c. Making false representations under oath;

d. Producing misleading information through their financial advisors, corporate legal counsel and employees; and

e. The actions taken by Anthony and Michael were not undertaken in the ordinary course of business but were intended to mislead Jennifer and her counsel.

[258] Jennifer highlights several facts which she says demonstrate Anthony’s control over Sonco. For example, when Anthony retained a family law lawyer, he asked an assistant at his father’s office to prepare a cheque for $10,000 and send it directly to his lawyer. He suggested in an email to his father on September 5, 2013 that it might make sense if “it [the cheque] never hits my bank account.”

[259] However, what is important in this transaction is that Michael asked Anthony if he wanted the money as an advance on expenses or fees from Sonco or as a personal loan from his parents. This is not a situation where Anthony simply directed Karen Saulnier to send a cheque. He had to ask his father for the money. There was no suggestion that this was “free” money. It was either an advance or a loan, i.e., it had to be accounted for.

[260] I reject Jennifer’s position that this email demonstrates that Anthony and Michael are trying to hide and mislead the true nature of what is happening. If that were the case, they could have done any number of other things (such as Michael withdrawing the money and simply giving it to Anthony and not characterizing it as either a loan or an advance).

[261] Jennifer’s position on Anthony’s control/ownership is somewhat confusing. She is clear that she is not alleging that Anthony’s beneficial or other interest in the 2011 and 2013 Trusts is the subject of a conspiracy. Jennifer now submits that Anthony held title to SGMI and therefore holds legal and equitable title to the $4.3 million worth of Sonco Group EF-2 preferred shares. However, I find that there was nothing unlawful about the share exchange which occurred between the trusts.

b) The Start of the Alleged Conspiracy

[262] Jennifer alleges that when Anthony flew to Halifax to see his parents on August 21 -24, 2012 he did so to consult with his father about how to structure matters financially in order to protect Anthony from Jennifer’s claims.

[263] Her position is that Anthony’s call to Kristina Soutar, a tax lawyer at Thorsteinssons, immediately upon landing in Toronto on August 24, 2018 supports Anthony’s frame of mind at the time.

[264] I do not agree. First, the reason for the call to Ms. Soutar related to an “Alberta Trust” question. It is difficult to infer that this call must have related to the Lulu Trust, as Jennifer alleges.

[265] Second, the email from his father on August 15, 2012 extending his support and understanding has been misconstrued by Jennifer in this court’s view. It was not sent for some nefarious purpose. On its face, it is clearly an email from a father worried about his son.

[266] The more realistic view of this time period is that Anthony’s family life was falling apart, his wife was already in another relationship and his family summer vacation had been cancelled. It is not surprising that Anthony turned to his parents for some respite.

[267] I reject entirely Jennifer’s contention that the trip to Halifax by Anthony in August 2012 was the beginning of the dialogue between Anthony and his father about the alleged conspiracy.

c) Pressure to Sell the Matrimonial Home and Collapse RRSPs and Anthony’s Misrepresentation of his Income.

[268] Much time and effort was spent on this subject during the course of the motion. It is clear that Jennifer sold the home and collapsed her RRSPs as a result of Anthony’s insistence. It is also clear that at the same time Anthony was draining the Lulu trust,and knew that the RCC management deal was on the horizon.

[269] In November 2013, Anthony was putting pressure on Jennifer to borrow money from his father which would be paid out of the house sale proceeds. Anthony signed the RCC contract on November 19, 2013. He knew that he would start to receive significant funds under that contract as of January 2014.

[270] Should Anthony have told Jennifer about the RCC contract and its implications, given their financial circumstances? Yes. Did Anthony misrepresent his income, while asking Jennifer to liquidate her assets? Yes. Anthony’s behaviour at this time was certainly blameworthy, however, there is no evidence that Michael had anything to do with Anthony persuading Jennifer to sell the home or collapse her RRSPs. In fact, Anthony sold the Florida property and collapsed his own RRSPs as well. The parties needed money to fund their extravagant lifestyle. There was no evidence that Michael had anything to do with those ill-advised choices.

[271] Jennifer complains that in 2014, while Anthony was receiving significant income from both RCC and Grey Eagle (about $65,000 to $90,000 per month), he continued to misrepresent his financial circumstances to her, including swearing a financial statement in May 2014 claiming his annual income was $114,850. In fairness to Anthony, this financial statement clearly states that this was his income for the previous year (2013) so it would not have included his RCC management contract fees. However, by May 2014, when he swore the financial statement, there was no reason for him not to have indicated that his income had gone up significantly.

[272] At his cross-examination on May 17, 2018 Anthony admitted that when he sent an email to Jennifer in March 2014 stating he had not earned over $115,000 since 2006. At the time he sent that email, he was earning $800,000 a year from the RCC management contract.[^42] That was not the only time during 2014 that Anthony misrepresented his income to Jennifer. [^43]There is no evidence that Michael knew anything about Anthony’s misrepresentations about his income to Jennifer.

[273] There were many other examples throughout 2014 when it was clear that Anthony was misrepresenting his income to Jennifer. The most egregious of those is the fateful communication on October 16, 2014 when Anthony told Jennifer that reimbursing her $354 for the children’s dental appointments would essentially leave him with no money. At that moment, Anthony had $739,238 in his personal account and spent $610 on dinner that night with his girlfriend.

[274] Anthony may well have arranged to “stop” payments coming to him from Conrose in May 2015. He also conceded that he did not tell Mr. Gobrin about that additional May 2015 income so it would not have appeared in the second income report.[^44] There is no evidence that Michael knew that Anthony had not reported this undistributed income to Mr. Gobrin. Anthony acknowledges that those payments will have to be included in his 2015 income both for tax and support purposes.

[275] There was a further concern raised by Jennifer that Michael and Anthony conspired to hide those payments (totalling approximately $143,000) and that the general ledger originally produced by SGMI for the period of January to December 2015 does not include the May 2015 payments to Sonco. At Michael’s questioning in May 2017 he said he did not have an independent recollection of whether Anthony received any management fees paid from SGMI to Sonco in May 2015.[^45]

[276] In October 2017, in response to an undertaking, Michael produced a second version of SGMI’s ledger for the period of January to August 2015. This version shows accounts payable to Sonco in the amount of $143,464 on May 8 and 31, 2015. Jennifer alleges that the co-opting of legal advisors and the inaccurate financial statements amount to unlawful acts in the course of the conspiracy.

[277] I do not find that any such unlawful acts took place for the following reasons:

a. Michael was not aware that Anthony had requested that the May payments were to be held back. When he read the bookkeeper’s note about the holdback he asked Anthony about it who told him that he asked that it be withheld as he and Jennifer owed Sonco $200,000 from prior to separation and that the Conrose payments would be a credit towards that debt.[^46] Jennifer suggests that this is not a real loan as no payments have been made on it in six years. Michael was aware of the $200,000 loan but there was no evidence that he had attempted to collect payments on it. Like many family loans, it was recorded but simply not enforced.

b. The two ledgers are not two “versions” of the accounting. The original productions were the income general ledgers which showed payment of the May fees to SGMI. The second production was the balance sheet general ledgers which showed that payable owed by Sonco to Conrose.

c. I accept that the fact that Anthony “directed” that the payments owed to Conrose be held back does not mean that he controls Sonco. Michael questioned Anthony about this when he saw the discrepancy. If Anthony truly controlled Sonco, Michael would not have questioned Anthony’s instructions to the bookkeeper.

d. I do not find that Michael and Anthony conspired to manipulate disclosure from SGMI and Sonco in order to obscure that funds owing to Anthony were being held back. I do find that Anthony alone was aware that receiving those funds would impact on his income for support purposes and directed that the funds be held back without his father’s knowledge. That is a misrepresentation on Anthony’s part but not a conspiracy with the Novac/Sonco parties.

[278] By March 2015, Anthony had received his income valuation prepared by Mr. Gobrin. He knew that his income for 2014 was $967,000, according to that report, but he did not produce that report for the June 29, 2015 Settlement Conference because of purported confidentiality concerns. However, according to Michael and Anthony’s evidence, Michael had no idea that Anthony had a Settlement Conference on June 29, 2015. Sonco/Novac had not been added as a party at this time and I accept that it does not necessarily follow that Michael would know about Anthony’s court appearances in his family law matter. Even if he did, there is no evidence that Michael conspired with Anthony to withhold Anthony’s known income.

[279] Any underpayment of support during 2014 and 2015 as a result of Anthony’s misrepresentations can be dealt with by the trial judge or by way of costs. However, I do not find that the sale of the matrimonial home or the collapse of the RRSPs can possibly attract damages by way of a conspiracy because any cause of action in conspiracy cannot be founded on Anthony’s actions alone.

d) Was SGMI and the 2013 Trust Part of a Conspiracy?

[280] Jennifer alleges that SGMI and the 2013 Trust were set up solely to shelter Anthony’s income from Jennifer’s claims. She alleges that the logical choice would have been to set up an entity controlled by Anthony to avoid the radius clause issue. BC had given Michael and Anthony advice in this regard.

[281] According to Jennifer, the only reason to set up the 2013 Trust with Anthony and Michael as the two trustees without a casting vote was to allow them to take the position that neither of them controlled it. That suited Anthony’s purpose of hiding income and assets.

[282] Jennifer has not alleged that the setting up of the 2013 Trust or SGMI was in and of itself unlawful. Therefore, there must be an examination of whether those entities were set up with the predominant purpose of harming Jennifer. I find that they were not for the following reasons:

a. Sonco received advice from its corporate counsel, BC, that a new corporation, with its shares owned by a new trust, should be set up to deal with the radius clause issue.[^47]

b. The radius clause is not a red herring. Grey Eagle Casino was being operated by Sonco at the time, and Grey Eagle knew about the radius clause issue and was concerned about it. Tab 8 of Volume 1 of the River Cree Compendium contains correspondence and emails starting in August 2013 through to November 2013 about how to resolve this issue. The correspondence includes BC, Michael and Anthony and a letter from Chief Whitney as referenced above.

c. The fact that Michael’s affidavit sworn December 6, 2016 indicates that the 2013 Trust was created for “legitimate commercial reasons” but does not mention the radius clause, does not mean that the 2013 Trust was set up to harm Jennifer. I accept Michael’s explanation that “the commercial reasons seem to say everything….and if that is not a commercial reason, I don’t know what it is, what is.”[^48]

d. I have already ruled on the Kelly Greenwood memo, which sets out that the main purpose of the structure related to the radius clause issues.

e. It is logical that Michael and Anthony, with the assistance of BC, would want to ensure that the lucrative RCC management contract was not put in jeopardy as a result of their existing agreement with Grey Eagle.

f. Jennifer’s position is that there were other ways to structure this such that Anthony would have control. However, Jennifer’s view on the legal advice given to Sonco is not relevant nor is it proof that Michael and Anthony intended to harm her.

e) Was There a Conspiracy to Hide the River Cree Buyout Proceeds?

[283] Jennifer alleges that Anthony and Michael conspired to hide Anthony’s share of the $5.75 million in buyout proceeds. The background of this is detailed above, including Jennifer’s concerns regarding the two memos from KM.

[284] Jennifer’s position was that Michael, Anthony, BC, KM and RL carefully orchestrated an arrangement to ensure exactly what KM’s memo outlined – to keep income from the buyout of Anthony’s hands.

[285] While it cannot be disputed that Anthony was involved in the buyout because he was self-admittedly a “numbers” person, there are several key points which Jennifer chooses to ignore in concluding that Michael and Anthony conspired to hide Anthony’s share (which she says should have been at least 40%) of the buyout proceeds:

a. Anthony did not control the RCC contract, nor was he a party to it.

b. The structuring of the 2013 Trust and SGMI was for legitimate commercial and estate tax and tax planning purposes, which included dealing with the radius clause issue as discussed above.

c. Jennifer’s counsel has conceded that the sale of the SGMI shares from Sonco to Enoch Corporation was lawful.

d. There is no doubt that as a result of steps recommended by KM and RL that tax savings occurred. KM estimated that tax savings secured as a result of his recommended structure were approximately $1.2 million.[^49] Jennifer disputes this and submits that the tax savings were only in the range of $42,000. However, I accept that Jennifer does not account for the tax savings related to the 2011 estate freeze which were the tax savings gained by Michael’s estate. That is, the capital gain was triggered in Sonco Group Inc. where Michael held the estate freeze shares.[^50]

e. I find that the predominant purpose of the steps taken was to reduce tax on the buyout proceeds, implement the 2011 estate planning, and deal with the radius clause issue but not to harm Jennifer.

f. I do not find that steps 5 or 6 of the impugned memos were ever carried out, nor were instructions ever given to do so by Michael, Anthony or Michael and Anthony together.

g. If Anthony and Michael had truly conscripted KM to assist them in “keeping income out of Anthony’s hands,” why would they produce the memos? If Michael, Anthony and KM were the conspiratorial menaces Jennifer makes them out to be, I infer they would have chosen not to produce the memos.

f) Did Anthony and Michael Conspire to Put a Creditor Proofing Plan in Place re the RCC Buyout?

[286] Jennifer makes multiple serious allegations regarding the conduct of Michael, Anthony and KM with respect to the RCC buyout proceeds. Jennifer submits that Michael and Anthony, with the help of their professional advisors, conspired to keep the buyout proceeds out of Anthony’s hands to ensure it was not treated as income for child support purposes. In summary she alleges that:

a. KM drafted memos #1 and #2 with the purpose of hiding Anthony’s portion of the buyout.

b. KM circulated the memos and sought feedback from Anthony, Michael and RL on the transaction steps.

c. Neither Michael nor KM made any mention of the memos in their initial affidavit evidence, although KM was well aware he had the memos in his file before swearing his December 8^th affidavit. Without Jennifer’s counsel pressing for production of KM’s file, the memos would never have been produced.

d. KM’s explanation that the memos were a “stream of consciousness” is demonstrably false. While KM seemed to imply he was working in a vacuum, he admitted during questioning that he would always check with Michael to ensure that plans reflected Michael’s goals and objectives.

e. KM changed his evidence to minimize Michael’s role by claiming that he dealt with RL about the RCC buyout, even though RL did not work at Sonco for the first two months that Anthony, Michael and KM were discussing the buyout. Further, KM was regularly docketing to “M/A” during this period, which Michael admitted stood for Michael and Anthony.

f. KM failed to produce any written notes for the period of April 27, 2015 to July 2, 2015.

g. KM originally deposed that he did not review any of the memo scenarios with Michael. This is false and KM later admitted during his questioning on June 1, 2017 that he could not recall if he reviewed the memos with Michael.

h. KM falsely characterized the memos as “streams of consciousness” or “initial plans” which he created on a whim without input from Michael or Anthony. Jennifer says this is false because there were four very specific steps taken by KM over two months, with input from Anthony and Michael, which included the drafting of the memo #1 and memo #2 and the July 3, 2015 letter to Burchells.

i. KM falsely asserted that memo #1 was never sent to Michael Novac but only to his partner John Roy and to “file.” KM also falsely asserted that he sent memo #2 to RL without a copy to Michael. However, that email has never been found or produced, so there is no record of to whom memo #2 was sent. It is extremely significant that this key email was never produced by Novac/Sonco or KM. Jennifer says this is because the email was sent to RL but also to Anthony and Michael.

j. Michael falsely downplayed his role regarding the memos. He claimed he did not recollect receiving either memo, although he conceded it appeared that memo #2 was forwarded to him by RL. He feigned an interest in the memos, claiming he only approved the plan in the July 3, 2015 letter to BC. Later, in his cross examination on May 28, 2018, Michael conceded that RL probably spoke to Anthony about the memo and that he must have spoken to RL at some point to tell him that steps 4 and 5 in the memo were not going to happen. Prior to May 28, 2018, Michael had always taken the position that he had never reviewed the first memo. At his cross-examination on May 28, 2018, he conceded he may have confused which memo came first.

k. There is no affidavit evidence from Anthony (or anyone) as to whether Anthony received and reviewed memo #2, yet the evidence is clear that he was copied on RL’s June 24, 2015 email containing memo #2. Anthony fails to address this in his affidavit, which is a significant omission.

l. The respondents are hiding behind RL who only started to work at Sonco half way through the RCC buyout structuring. It does not make sense that RL was discussing the memos only with KM; he must have been directed by Anthony and Michael. RL did not swear an affidavit or produce him as a witness.

m. The existence of the Kelly Greenwood memo and the radius clause are insufficient to vindicate the respondents with respect to their plan to hide Anthony’s income under the Sonco umbrella.

n. Even if steps 4 and 5 in the memo had taken place, KM admits he would not have been responsible for their implementation. Legal counsel would have implemented steps 4 and 5.

o. While the 2013 Trust may have been set up, in part, for legitimate commercial and tax reasons, this does not end the analysis. The structures were also used for an improper purpose in family law.

p. KM falsely swore that the buyout structure was put in place to reduce estate tax in Michael’s hands. In fact, it could only reduce tax in the hands of the estate beneficiaries. In any event, it was well known that Michael had life insurance in place to cover all estate taxes, a total of $2 million between Michael and Nelly, more than enough to cover the tax on any share redemptions on Michael’s death. Therefore, the tax planning explanations are simply attempts to cover up Michael and Anthony’s plan to shelter Anthony’s share of the RCC buyout proceeds.

q. Even after the buyout transaction closed, the conspiracy continued. For example, in response to an enquiry by Jennifer’s counsel, BC wrote that Anthony had no ownership interest in the 2013 Trust, that Anthony had never seen the trust documents and that the trust only held discretionary preferred shares in Sonco Group Inc. He did not mention the buyout proceeds and Jennifer did not even learn of the buyout until January 2016.

r. Michael provided misleading financial statements for the 2013 Trust in March 2017 (and prior) without information about the $4.3 million in preferred shares.

s. Michael and Anthony falsely insisted that only Michael was entitled to any benefit from the RCC buyout proceeds. Further, Anthony falsely claimed he did not know how much Sonco received from the buyout, even though he was a trustee of the 2013 trust and a director of SGMI (which owned the RCC contract).

t. Anthony claimed both during his questioning and during his cross-examination in May 2018 that he had never seen the 2013 Trust document until it was put before him during his questioning in 2016. However, the email database shows that a copy of the Trust Deed was sent to him on at least three occasions. Anthony is clearly lying about his knowledge of the 2013 Trust. Both Anthony and Michael wanted to distance Anthony from knowledge or control of the 2013 Trust to support their claim that he had no entitlement to its assets.

u. Anthony insisted he was not involved in the RCC buyout, was unaware of the final number negotiated by his father and did not have a copy of the buyout agreement. This is in contrast to BC’s emails which show that Anthony was very involved in the buyout negotiations. Even in the face of being shown an email from Burchells dated August 14, 2015 and an email dated June 3, 2015 from BC, both of which contained details of the buyout price, Anthony refused to acknowledge that he knew the buyout price during prior questioning. Only when cross-examined in the course of this hearing did he finally concede that he was more involved in the buyout negotiations than he originally admitted and that he did know what the buyout number was.

v. Michael also lied about Anthony’s knowledge and involvement with the RCC buyout. In his questioning in 2017 Michael insisted that he never discussed the buyout price with Anthony and that Anthony was not part of the buyout negotiations. During his cross-examination, in May 2018, Michael finally agreed that Anthony did know what the buyout number was at the time it was negotiated and that Anthony did make comments, via email, throughout the negotiations.

w. Jennifer was never given any information about the buyout price until Michael was questioned in 2017. The amount was purposely hidden from her.

x. Anthony was instrumental in driving the negotiations and the ultimate price of the buyout. Anthony and Michael conspired to minimize Anthony’s involvement and control with respect to the buyout. Anthony is entitled to 40% of the buyout proceeds, not only because of his involvement, but because it represents the income of the balance of the management fee contract. Further, BC and RL’s emails and KM’s memos assume that the buyout proceeds would be distributed between Anthony and Michael.

y. Anthony and Michael contradicted one another about sharing the buyout proceeds. Anthony testified in May 2018 that he was hoping to get a share of the buyout proceeds and asked his father for a portion. His father turned him down. Michael testified in May 2018 that Anthony never approached him about receiving a share of the proceeds.

[287] I do not agree with Jennifer. In summary, I make the following findings:

a. Anthony had no ownership interest in the buyout contract, nor was he a party to it.

b. The structuring of the buyout was meant to save tax, provide for estate planning and deal with the radius clause issue.

c. Michael had no legal obligations to Jennifer until he was added as a party on July 15, 2016.

d. While I agree that the buyout proceeds could be characterized as a lump sum of income derived from a future stream of payments, and that therefore Anthony may be entitled to a portion of it, conspiracy is too blunt an instrument to use to get at this for support purposes. A trial judge may well find that a portion of the buyout proceeds should be characterized as income for support purposes and that income would form part of the retroactive calculation of support. The Family Law Rules and the Child Support Guidelines have plenty of tools for the court to choose from to achieve those ends.

[288] The details related to my findings above are as follows. Jennifer did not plead or depose that the establishment of the 2013 Trust was unlawful. Therefore, the respondents must prove that its primary purpose was to harm Jennifer. The respondents are unable to prove such a proposition because Michael has sworn, and I accept, that the purpose of the 2013 Trust was for tax and estate planning purposes. In addition, I find there were legitimate commercial reasons for setting up the trust in relation to the radius clause as detailed above.

[289] I reject Jennifer’s position that the predominant purpose of the 2013 Trust was to ensure that control of the Casino Management Agreement was taken away from Anthony. Jennifer’s statements on this issue are conclusory and viewed through her conspiratorial lens. She fails to account for the fact that ensuring both Anthony and Michael had equal control with no “tie-breaking” ability was the ultimate solution to the radius clause problem.

[290] There was a tax saving in setting up the buyout, as recommended by KM. KM’s estimate of the tax saving based on his March 29, 2017 affidavit was $1.2 million.[^51] Even if the tax saving was as small as Jennifer alleges ($42,396), the contention that the structure was set up, in part, to save taxes cannot be defeated by Jennifer’s theory.

[291] There were no agreements to harm Jennifer. There was a verbal agreement that Anthony was to receive 40% of the management contract proceeds. If he failed to advise her of the funds he received from that arrangement that is an issue for the judge determining retroactive support. There was also an agreement to structure the 2015 buyout in a manner that would address the radius clause and tax planning aspects. That agreement was not meant to harm Jennifer, as already detailed above.

[292] The 2013 Trust’s sale of shares to Sonco was lawful for the following reasons:

a. The buyout was initiated by the Nation and not by Sonco;

b. The transactions undertaken by the 2013 Trust were in accordance with the Trust Deed; and

c. The exchange of shares between the 2013 and the 2011 Trust was lawful.

[293] The predominant purpose of the 2013 Trust structure in relation to the buyout was to benefit Michael but not to harm Jennifer. The structure was set up based on KM’s recommendations in consultation with RL. To be clear, I do not find that there is any evidence that the steps 4 and 5 of the memo #1 or memo #2 were ever implemented. While it may well be that at some point both Michael and Anthony were aware of those recommendations, there is nothing upon which to base a finding that they actually executed them or gave instructions to execute them. The structure finally implemented in accordance with the July 3, 2015 legal transaction letter did not mention anything about steps 4 and 5. A more detailed analysis regarding the KM memos is set out below.

[294] It is true that Anthony’s involvement in the buyout negotiations and the decision as to the final buyout price was more significant than admitted by both Michael and Anthony. Michael admitted during his cross-examination on May 29, 2018 that he was not aware that Anthony knew the final buyout price until an email from June 2015 was shown to him.[^52]

[295] However, is Anthony’s involvement in the RCC buyout and pricing, whether significant or not, evidence of a conspiracy? It is not. Certainly Anthony had more knowledge of the transaction than he was originally prepared to concede, but one must consider that he was working for Sonco at the time, and it was a transaction which occurred post separation. The transaction was lawful as outlined above. There is no evidence that Anthony’s involvement in buyout was intended to harm Jennifer. Once again, Anthony’s failure to initially disclose the extent of his involvement in this transaction may speak to his credibility with respect to whether income should be imputed to him, but this court has not been asked to engage in that exercise.

g) The MacIntyre Memos

[296] Jennifer relies heavily on the draft memo prepared by KM with respect to her theory that Anthony and Michael conspired to credit proof Anthony and hide his share of the buyout proceeds.

[297] I do not find that memo #1 or memo #2 are evidence of a conspiracy for the following reasons:

a. In his March 29, 2017 affidavit, KM specifically sets out that he was not instructed by Michael, Anthony, BC or RL to prepare a plan which would reduce income to Anthony.[^53] He confirmed this at his cross-examination on May 9, 2017.[^54]

b. The evidence is clear that memo #1 was sent to “file” and to KM’s tax partner. KM discussed it with RL and not Michael. Memo #2 was sent by KM to RL who in turn sent it to Michael, Anthony, BC and Harry Hamilton. While it is true that Michael may have been confused as to when he saw the memos (i.e. his evidence at his questioning in April 2017 when he testified he had not seen memo #2), and who he may have discussed them with, that is immaterial in my view. I accept Michael’s evidence that steps 4 and 5 “were not in the cards” and “non-starters.” When he saw the memos and who sent them is therefore of little consequence. I find that only the steps set out in the July 3, 2015 letter were ever implemented.

c. It cannot be ignored that Michael was confused at his cross-examination on May 2018. He told the court he had second thoughts about when he saw memo #2 for the first time. He said he may have confused which memo came first and that he was generally confused because there were too many memos. I do not find that this impugns Michael’s credibility. The memos were sent three years prior to his May 2018 cross-examination. His confusion was understandable in terms of sequence of receipt of the memos. He was trying to correct his previous testimony in order to be accurate but he told Ms. Gibb he felt tricked into giving different dates. The important point is that Michael never wavered from his position that steps 4 and 5 were never implemented and never discussed.

d. Jennifer insists that Michael did discuss the memos because he was part of an email chain initiated when RL sent memo #2. However, when reviewed carefully, it is clear that Michael’s handwritten comments relate to tax structuring and not hiding money from Jennifer.[^55]

e. KM did not discuss the memos with Michael other than at a July 2, 2015 telephone conference with Anthony, Michael and others which lead to the instructions being given for the July 3, 2015 letter. Steps 4 and 5 were not discussed.[^56] Michael confirmed this at his cross-examination in May 2018.[^57] BC’s notes from that call confirm that contents of the conversation which do not include any discussion of steps 4 and 5.[^58]

f. There is no evidence to demonstrate that KM’s instructions were to do anything other than proceed with steps 1 through 3. Michael approved those steps and the plan implemented was the one that was legally documented in the July 3, 2015 letter to Burchells. If steps 4 and 5 were to have been implemented, there would have been a formal loan put in place.[^59] KM was never instructed to prepare such loan documentation.

g. KM’s perspective was the SGMI was owned by Michael and that Michael/Sonco was his client. KM never viewed Anthony as his client. He took his direction from RL and ultimately his instructions on this structure from Michael.[^60] While it is true that loaning funds to Anthony was something KM considered, it was never agreed to by Michael.

h. KM understood that the buyout proceeds would be held by the trust but he had knowledge of how, or if, the buyout proceeds would be divided between Michael and Anthony.[^61] KM viewed the buyout proceeds as belonging to Michael. Any money that went to Anthony would be by way of a beneficiary of the 2011 Trust.[^62]

i. In summary, while steps 4 and 5 of memo #2 may have been discussed, even between Michael, Anthony, BC and KM, there is no evidence of an agreement to implement them. Without such an agreement, there is no evidence of harm to Jennifer.

h) Was There a Conspiracy to Hide Anthony’s Share of Fees from Grey Eagle?

[298] Jennifer does not accept that Anthony’s income from Grey Eagle has dropped to zero. She alleges that Anthony continues to manage Grey Eagle from behind the scenes and that Anthony and Michael have conspired to hide this income in order to defeat Jennifer’s family law claims.

[299] Jennifer believes that it is simply too coincidental that this source of income dried up within a few months of the date of the first Gobrin report.

[300] It is uncontested that Anthony received $308,395 in management fees from Grey Eagle between April 2015 and February 2016. This represented 40% of the net fees for managing the hotel and the entertainment facility.

[301] While Jennifer does not contest that Anthony was banished by the Nation, she believes that this had made no difference to Anthony’s involvement. She further believes that Adam Digby’s alleged involvement to replace Anthony is a sham because it is well known that both Michael and Anthony believe that Adam Digby is too inexperienced to handle such a job.

[302] I do not accept that there is any agreement between Anthony and Michael to harm Jennifer by keeping money from Grey Eagle out of Anthony’s hands. The facts that support this position are as follows:

a. Jennifer agrees that the Nation was not part of a conspiracy and agrees that the Michael and Anthony did not play any part in the writing of the letter from the Nation advising of Anthony’s banishment.

b. Michael and Anthony’s evidence at the motion was that it is not possible for Anthony to manage Grey Eagle off site. They did not deny that Anthony provides consulting to Sonco about Grey Eagle issues. However, this forms part of his yearly consulting fees. It makes sense that it would not be possible for Anthony to manage the Grey Eagle hotel off site. His evidence in relation to River Cree and other hotel or casino management roles demonstrated that frequent travel was required to ensure on site efficiency.

c. Jennifer has been provided with disclosure including proof of Adam Digby’s regular travel to Calgary, emails and board meeting minutes which show Adam Digby’s integral involvement with the management of Grey Eagle. I accept Michael’s evidence that 90 to 95% of Adam Digby’s time is spent on the management of Grey Eagle and that is his only job at Sonco.[^63]

d. While Michael agreed that Adam Digby was lacked business judgment, he explained that is why he stepped into that role to assist Adam.[^64]

e. Anthony continued to receive memos and information about Grey Eagle not because he was still involved in its management but because he was a shareholder and received the same information as all shareholders.

[303] In short, I accept that Jennifer is stretching credulity in trying to implicate Anthony in the management role of a hotel that he has not been directly involved with for over three years. There is no doubt he may be involved in some consulting work in relation to Grey Eagle, but his role has been diminished and he is being compensated for that diminished role through his consulting fees paid by Sonco.

i) Is There a Conspiracy to Hide Income from Ongoing Projects?

[304] Jennifer alleges that Anthony continues to be involved in and develop new projects. However, his involvement and ownership interest in these projects has been minimized and carefully managed by Michael and Anthony to ensure that no income from these projects can be attributed to Anthony.

[305] There are several different projects, including Gorsebrook Park. This is a $65 million condo development project in Halifax. Sonco Urban Developments Limited owns a 33% interest in Urban Capital Gorsebrook Park Inc. Anthony and Michael have equal control of Sonco Urban Developments Limited.

[306] Anthony describes his involvement in this project as passive with his father being the one who has invested the money and takes on the more participatory role. While it is clear that Michael and Anthony’s name (as well of those of the other business partners) appeared on a Gorsebrook VIP launch party invitation and that Anthony attended a business lunch with his father and a Mr. David Wex concerning this project, the fact is that the project has generated no income to date. If income or management fees are generated and paid to Sonco Urban Developments, those amounts will clearly from part of Anthony’s income, given his ownership interest in that company.

[307] However, the income or fees (if any) will be reportable when earned and not before. It cannot be the case that Michael and Anthony can be found to be conspiring to harm Jennifer by withholding income or fees which may be years away or which may never become payable due to any number of intervening factors.

[308] Jennifer makes the same allegations with respect to a number of other projects including the St. John’s parking garage and hotel, the Granville Hotel in Halifax and Argyle Capital. Anthony’s connections to these projects are more tenuous than to the Gorsebrook project. My findings in relation to any of the other projects are the same as with Gorsebrook. If Anthony’s involvement generates income or management fees over and above his consulting contract with Sonco, he must disclose them to Jennifer when they are available to him.

[309] Anthony is an entrepreneur by nature. At any given time, it appears that he has a number of potential projects in development. It is hoped for the sake of both parties and their children that one of those projects becomes vastly successful as they will all benefit. For now however, it appears that Anthony is in a lull without any current income-producing projects. There is simply no evidence to support that this lull has been orchestrated by Anthony and his father in order to deprive Jennifer and the children of support.

j) Was There a Conspiracy to Hide Part of the DeGroote Fees from Jennifer?

[310] During the summer of 2014, Anthony was retained as a court-appointed expert to assess the financial viability of certain casino operations in the Dominican Republic. The total fees paid to Sonco Group Inc. on the DeGroote matter were $452,258.56 plus $43,000 in expenses. Of these amounts, Anthony received $231,456.55. Jennifer alleges that there is no reason why Anthony should not have received the entire fee. These fees were received by Anthony only two months after Jennifer commenced her Application and were not disclosed until the first Gobrin report in June 2015.

[311] I find that Michael and Anthony did not conspire to harm Jennifer with respect to the DeGroote fees for the following reasons:

a. Sonco Gaming Inc. was the entity that entered into the required contract with the Chief Restructuring Advisor. Sonco’s license was paramount with respect to the necessary qualifications to enter into the contract.

b. Anthony worked for Sonco but it is clear he could not have been hired on his own, as he did not have the required license.

c. Sonco’s financial backing was required as the expenses had to be “fronted” by Sonco. The expenses were not insignificant given the risks. For example, Anthony was required to hire a bodyguard when he was there.

d. I do not find there was anything unlawful with respect to the agreement between Sonco Gaming and the Chief Restructuring Advisor. I also do not find that there was anything unlawful about the agreement between Anthony and Michael regarding the apportionment of fees. The agreement reflected the reality of the situation in that Anthony had neither the financial means nor the license to undertake this project on his own.

e. I am unable to find any evidence to conclude that Michael entered into an agreement with Anthony to hide the DeGroote fees from Jennifer. If Anthony chose not to disclose this significant income to Jennifer in 2014, that is an issue for the trial judge with respect to assessing Anthony’s credibility. The income is now well known and will form part of the assessment of retroactive support prior to January 2017.

k) Can Jennifer Establish Damages?

[312] Given my findings above, Jennifer is unable to establish actual damages. Jennifer is unable to establish that Michael had anything to do with what she describes as the forced sale of her home or the collapse of her RRSPs.

[313] While Anthony is a trustee of the 2013 Trust, Jennifer is unable to establish that this entitled him to any portion of the River Cree buyout proceeds. Notwithstanding the two memos drafted by KM, there is insufficient evidence to show that any steps were taken with the intent of harming Jennifer. In fact, there is evidence that advice which might have been interpreted as an agreement to keep money away from Jennifer was never acted upon nor was it even considered by Michael. Michael decided to retain the proceeds, as it was his company that entered into the agreement with the Nation. He had the right to act in that manner.

[314] Jennifer is pushing matters too far when she attempts to portray Anthony as any more than a consultant with respect to Grey Eagle. The fact is that managing a hotel/entertainment centre cannot be done off site. Adam Digby and Michael have taken Anthony’s place as the face of Sonco for Board meetings and other management roles. The fact that Anthony may, from time to time, answer an email or give his views on an issue is not something that would automatically entitle him to anything other than the consulting fee he is already being paid.

[315] As for the ongoing projects, it is not realistic for Jennifer to claim a conspiracy with respect to events which have not yet happened and may never happen. Such a claim is far too speculative to be entertained in this judgment. Certainly it appears that at some point, the Gorsebrook Park project may generate some income or fees, but that is perhaps years away and would form part of Anthony’s disclosure in the normal course.

XIV. THE CASE LAW

[316] I remain unconvinced that the facts in this case require the court to go outside of the statutory framework in the Divorce Act, the Child Support Guidelines or the SSAGs. The underpinning of many of Jennifer’s claims relate to the possibility of imputing income to Anthony both retroactively and prospectively. This is the best case scenario for Jennifer but any awards would be in the form of support awards and not damages for conspiracy.

[317] I rely on the case of Waters v. Michie[^65] in which the court considered the leading cases of Canada Cement and Frame v. Smith. In Waters, the trial judge struck the appellant’s plea of conspiracy against her former husband and his current wife in a family law action. The appellant plead that the husband transferred the properties by of conspiracy with his new wife in order to deprive the former wife of child support.

[318] The Court of Appeal held that the trial judge did not err in striking the claim based on the principles in Frame v. Smith. The court began by citing the principles in Canada Cement with respect to the scope of the tort of conspiracy. The court also discussed problems with the tort of conspiracy including the fact that the tort of conspiracy “may have lost much of its usefulness in our commercial world, and survives in our law as an anomaly.”[^66]

[319] The court held that the appellant could not claim damages against the respondent by way of an additional enforcement remedy for child support “not otherwise available under either the family law or creditor protection statutory schemes”.[^67]

[320] The court also adverted to the requirement that the appellant prove actual damages. In Michie, the appellant claimed that the respondent had not complied with an order to pay retroactive child support, however, the appellant had taken no steps to enforce the outstanding order for support. The court found that any losses the appellant might suffer by way of an inability to enforce the support judgment were too speculative.[^68]

[321] In terms of policy considerations, the court held that the appellant’s claims for support were governed entirely by family law legislation. The court adverted to the caution set out in Frame v. Smith with respect to extending the tort of conspiracy to family law. The court was aware that those pronouncements in Frame v. Smith were not binding but provided guidance.[^69]

[322] Jennifer submits that the Frame v. Smith and Michie line of cases do not apply here because while those cases do raise policy concerns with respect to the application of the tort of conspiracy in family law, there is no absolute bar to such as application. Jennifer also argues that the facts of this case are different from Frame and Michie and support the application of tort of conspiracy.

[323] As for the already existing statutory framework, Jennifer argues that the framework does not allow for the award of damages against co-conspirators nor does it allow for damages to compensate Jennifer for the losses she suffered for having to sell her house and collapse her RRSPs.

[324] It is clear that this case does not relate to custody and access and, as such, the concerns raised by the Supreme Court of Canada in Frame do not directly apply. Jennifer argues that Michie does not apply because the case at bar involves sophisticated business people who devised a complex plan designed to defeat her claims.

[325] Jennifer’s assertion that the case law does not preclude the application of the tort of conspiracy in family cases is quite correct. However, I part ways with her with respect to her insistence that the facts of this case are ripe for its application.

[326] First, I find that this case contains similar principles to those enunciated in Michie. Jennifer has the entire statutory family law framework at her disposal to ensure that she and the children receive the correct amount of support. Given the history of this case, there is no doubt that Anthony will be required to provide extensive disclosure each year he is required to pay support. Given Jennifer’s allegations, the disclosure will be reviewed and parsed extensively to ensure that support is paid based on the correct income. There may well be a claim to impute income to Anthony. All of these remedies are at Jennifer’s disposal now and in the future.

[327] Second, I am concerned about the far-reaching implications of extending the tort of conspiracy where family members are involved. Section 19 of the Child Support Guidelines specifically deals with situations in which a spouse alleges that the payor has diverted income, or is the beneficiary of a trust. Schedule III to the Guidelines specifically deals with payments from persons who do not deal with the payor spouse at arm’s length. Allowing damages for conspiracy would effectively be a form of punitive damages. The family law statutory framework is already set up to deal with spouses who are diverting or minimizing income in order to reduce their support obligations. Acts of intentional bad faith can also be readily dealt with in the costs regime under the Family Law Rules.

[328] If the damages Jennifer requested were permitted, policy concerns are raised with respect to damages being claimed in every case where a payor spouse, in conjunction with their new spouse/relative/business partner, did not fully disclose income, unreasonably deducted expenses or received income in the form of cash or goods. One could argue that such deliberate actions are all intended to harm the payee spouse and children by reducing the payor’s support obligation. The tort of conspiracy, already much criticized by courts, would become the new norm and family courts further mired in the task of unravelling conspiracy related arguments when the simple and workable solution is to impute income to the payor spouse. The case law with respect to imputation of income has become ever expansive with no requirement now that bad faith is required.[^70]

[329] In summary and apart from any policy considerations, Jennifer has failed to meet the required threshold with respect the tort of conspiracy. I do not find that Anthony and Michael acted in concert or agreement for the following reasons:

a. There is no evidence of such an agreement.

b. Inaccurate representations by Anthony about his income were not made in concert with Michael.

c. The steps taken by Michael were not intended either actually or foreseeably to harm Jennifer.

d. Jennifer cannot establish damages.

e. None of the actions of Michael or Anthony are wrong at law.

XV. THE SUPPORT VARIATION MOTION

[330] Anthony seeks to substantially reduce his child and spousal support obligations, which were formalized in a without prejudice consent order dated June 29, 2015. In that order, Anthony agreed to pay Jennifer child support of $5,629 and spousal support of $11,193 per month, commencing July 15, 2015. The order is temporary and specifies that:

Paragraphs 6 and 7 are strictly without prejudice to the Applicant’s position that the Respondent should be paying more on both a retroactive and prospective basis, and to the Respondent’s position that he should be paying less.

[331] Expert reports, which are now available, calculate Anthony’s income to be $967,000 in 2014, $630,000 in 2015 and $97,000 in 2016. He submits he can no longer go into debt and liquidate his assets to pay support which was based on his 2015 income. His position is that there has been a material change in his income and a material change in Jennifer’s income and circumstances.

[332] Anthony has paid $335,790 in support to Jennifer since the consent order was made. Anthony has not been able to proceed with his motion for almost two years because of what he describes as Jennifer’s “sidetracking” of the litigation in order to add new claims and seek extensive disclosure. He has had to deplete capital which must be equalized with Jennifer. The parties have been separated for more than six years and Jennifer has, according to Anthony, lived with a new partner since before the date of separation.

[333] Anthony seeks to reduce support and claims a significant overpayment from Jennifer retroactive to January 1, 2017.

a) Anthony’s Income

[334] Anthony’s affidavit sworn February 1, 2017 provides a chart setting out the parties’ respective incomes since their marriage in 1997.[^71] Certainly for the first seven years of their marriage, Jennifer was the higher income earner. After the sale of Gamebookers, both parties’ incomes increased dramatically as money was distributed from the Lulu Trust. Anthony’s income from 2009 forward has not been exceptional other than in 2014 and 2015 when he was receiving income from both the RCC and Grey Eagle management contracts. Anthony’s income for 2009-2016 was as follows:

• 2009: $137,718.26;

• 2010: $292,000;

• 2011: $82,000;

• 2012: $197,000;

• 2013: $269,000;

• 2014: $967,000;

• 2015: $630,000; and

• 2016: $97,000.

In 2017 and 2018, his income was derived primarily from the $120,000 consulting contract with Sonco, plus $5,000 in Director’s fees.

[335] There is no doubt that the parties’ lives were transformed by the sale of Gamebookers in 2006 and the resulting $11.5 million in sale proceeds. The parties quickly adopted a new lifestyle which they apparently do not want to give up. Both have lived and are living far beyond their means. The Gamebookers proceeds have long since been depleted and the parties must face the reality of a much less affluent lifestyle.

[336] Between the date of separation and July 2015, the parties had no formal arrangement in place for the payment of support. Anthony would deposit varying amounts into the parties’ joint account for household and child-related expenses.

[337] Initially, this arrangement was satisfactory, however, it became problematic when Jennifer alleges that Anthony did not deposit sufficient funds into the account for Jennifer to pay basic household expenses. Further, the monthly amounts were inconsistent making it impossible for Jennifer to adequately plan.

[338] In 2013, Anthony told Jennifer that he was having cash flow problems. The parties’ joint chequing account often dropped below $500 and sometimes into overdraft. Anthony emailed Jennifer and told her that he had no funds available. Since Anthony was in charge of the family finances, Jennifer believed him.

[339] Anthony deposed that by 2013 the Gamebookers proceeds in the Lulu Trust had been exhausted, but the parties were continuing to live a lavish lifestyle. Anthony earned $269,000 in 2013 (according to the Gobrin report) but the parties had combined net expenses of $840,689.

[340] Anthony does not deny that he insisted that Jennifer collapse her RRSPs to help with family expenses but he did the same and deposited the net proceeds ($61,000) into the parties’ joint account. Anthony also sold the Florida vacation property, which was solely in his name, and deposited the net sale proceeds of $222,066 into the parties’ joint account. In 2013, the parties were running a monthly deficit of $45,000.

[341] By January 2014 Jennifer was very frustrated with Anthony. Her credit card was being declined and there were insufficient funds in the joint account to pay the cleaning lady. This was at a time when Anthony had just returned from a week-long vacation in Miami with his girlfriend.

[342] In March 2014, the heat for the matrimonial home was cut off as Anthony had not paid the bill. According to Jennifer, Anthony had just returned from a nine-day vacation in the Bahamas with the twins and his girlfriend. Further, Anthony told Jennifer repeatedly that he had never made more than $115,000 since 2006.

[343] Anthony then told Jennifer that the only option was to sell the matrimonial home and use the proceeds to pay family expenses as the house-related costs represented over $30,000 of the monthly deficit. Jennifer was hesitant to do so, given that Anthony had not provided her with any financial disclosure. When the home sold in August 2014, Jennifer retained all of the proceeds as the home was in her name alone.

[344] The matrimonial home was sold and closed on August 28, 2014. Two days later, Anthony sent Jennifer an email request that she pay for the children’s private school tuition (about $60,000), nanny, school activities and clothing out of the sale proceeds. Anthony refused to make any contribution to those costs in 2014. Anthony was frustrated that Jennifer refused to put the house sale proceeds in the joint account, as he had done with the valuation date assets he had cashed in. Instead, Jennifer paid for certain expenses (such as the children’s private school fees of approximately $60,000) and then asked Anthony to reimburse her for 50%.

[345] In October 16, 2014, Jennifer requested that Anthony reimburse her for a children’s dental bill of $354. Anthony was hesitant, claiming he only had $800 in his bank account and that would be 43% of everything he had. By that point, Anthony had ceased using the joint chequing account and opened his own account. A year later, in September 2015, Anthony produced his personal chequing account statements. Jennifer learned that on the day he had refused to reimburse Jennifer for dental expenses. He had $739,238.02 in his personal chequing account and spent $610 on dinner at Bar Isabel that evening. Of course, the matrimonial home had sold only two months prior to this and Jennifer retained all of the $1.1 million in proceeds. She refused to share them with Anthony. Anthony’s reaction over the dental bill was regrettable, but was in response to Jennifer failing to provide any financial assistance from her own resources.

[346] Anthony asserts he has been more than generous towards Jennifer since separation. He has transferred her a vehicle worth $35,000, paid child and spousal support, paid thousands of dollars for Jennifer’s RCYC membership as well as her personal charges there for meals, alcohol, and gym fees, including those of her partner. Anthony estimates that between October 2012 to April 2015 he paid over $110,000 in credit card charges for Jennifer’s travel expenses including those of her partner, her parents and her nephew.

[347] Anthony should have told Jennifer about the RCC deal in 2013, however, it may well be immaterial in hindsight. The $641,319 Anthony earned in 2014 from the RCC deal was already $200,000 less than what Jennifer claimed in expenses that year, before accounting for Anthony’s own expenses.

[348] On July 15, 2015, Anthony agreed by way of consent order to pay child and spousal support of $16,822 per month based on an approximated income of $500,000 for 2015. Based on the Mr. Gobrin’s second income report, his actual income was $630,000. Anthony agrees that the additional $143,000 received from the RCC Management Contract in May 2015 should be added to his 2015 income. However, Anthony does not seek to adjust support prior to January 1, 2017. His counsel submits that this should be left to the trial judge.

[349] Anthony now seeks to reduce support to a combined figure of $1,352 per month ($1,351 for child support and $1.00 per month for spousal support). Anthony claims there has been a material change in his circumstances as well as Jennifer’s. Anthony can no longer afford to pay Jennifer over $200,000 per year in support, an amount he agreed to when he was earning $630,000 per year.

[350] Anthony has had two income valuations prepared by Mr. Ohran Gobrin of Fuller Landau LLP. The first income valuation was dated March 13, 3015 and calculated Anthony’s income for 2014 at $967,000. The second income valuation calculates Anthony’s income for 2016 at $97,000.

[351] Jennifer was very upset about receiving the first income report the day after the June 2015 case conference despite the fact that it was dated in March 2015. She was shocked to see the income calculated for 2014 at $967,000, the same year she says that Anthony forced her to sell the matrimonial home and told her he had no funds for utilities or dental bills.

[352] Jennifer later learned that one week after the case conference, that the ownership of SGMI was transferred from the 2013 Trust to the Sonco Group Inc. Sonco Group is owned by the 2011 Trust of which Anthony is a beneficiary but not a trustee. One month later, Sonco Group sold its shares in SGMI (and with it the management contract for RCC) to Enoch Cree Nation.

[353] Anthony deposed in his February 1, 2017 affidavit that he was not aware that the assets and operating business of Casino New Brunswick would be sold at the time of the June 2015 Case Conference. Anthony’s holding company, Conrose Park, received $1.05 million (interest and principal) with $330,000 held in trust under an indemnity agreement for 18 months after the closing of the sale. Anthony’s 2015 income was therefore composed of the notional gain on Casino New Brunswick, plus income that Conrose Park received from the management contracts for RCC and Great Eagle.[^72]

[354] Anthony’s 2016 Income Tax Return reflects income of $113,814.19. This income is made up of salary from Conrose Park and interest income. Anthony paid total child and spousal support of $201,864. Anthony’s position is that he has not been able to afford the spousal support he agreed to pay in 2015. His income has not been as projected because he has not been able to find any income producing ventures. He has been keeping support current but only by incurring debt and liquidating assets, including assets he owned on the date of separation.

[355] Jennifer claims that that Mr. Gobrin’s November 9, 2016 income report cannot be relied upon because Anthony misrepresented to Mr. Gobrin that RCC was Conrose Park’s only consulting project in 2015. Anthony’s response is that the information given to Mr. Gobrin was likely not sufficiently detailed for him to separate the income from RCC and Grey Eagle and he therefore combined the operations in Calgary and Edmonton. Anthony says he has not hidden any income from Mr. Gobrin.

[356] Jennifer also claims that Mr. Gobrin’s first income report for the period of 2010 to 2014 cannot be relied upon because Anthony did not accurately report management fees from SHALP. Anthony submits that SHALP received no management fees up to 2014. In 2015, Anthony received payments totaling $31,420 and $34,355 for 2016 for hospitality and gaming in relation to his interest in 998 Alberta. 998 Alberta has two separate assets related to the Grey Eagle casino; an interest in the casino management contract and an interest in the management of the hotel event centre.

[357] Anthony’s position is that his income has materially changed. First, as a result of the share purchase of SGMI by the Enoch Casino Corporation in August 2015, the Enoch Cree Nation became the managers of their own casino and no longer paid management fees to SGMI. A large portion of Anthony’s income was related to the RCC management fees before the buyout.

[358] Second, Anthony was removed by the Tsuu T’ina Nation band from its lands in November 2015. Anthony was banned completely from further management of the Grey Eagle casino facilities and received no further management fees.

[359] Anthony submits that as a result of the RCC buyout and his termination of involvement with Grey Eagle, he lost the majority of his income and has had to resort to debt and depletion of capital to meet his support obligations. Anthony requested to adjust support on this basis as far back as October 2016. According to Anthony, Jennifer’s counsel ignored these requests. Anthony had no choice but to bring his support variation motion in February 2017.

[360] Jennifer seeks to have support continue at the current rate until trial. She says that Anthony has not been forthcoming about his financial circumstances. The loss of all of his project income in 2015 and 2016 was simply too coincidental. Further, his current consulting contract for $120,000 per year does not even cover the $10,000 per month he pays for his Forest Hill rental home. It is inconceivable that Anthony’s income would be reduced so drastically. Finally, according to Jennifer, Michael and Anthony colluded about Anthony’s income and assets such that Mr. Gobrin was provided with an inaccurate picture of Anthony’s financial circumstances. As such, the two income reports produced by Anthony cannot be relied upon.

[361] The children continue to attend the York School. The combined tuition is approximately $60,000. $12,800 remains in trust from the proceeds of the parties’ joint life insurance policy. The tuition for the 2018/19 academic year is in arrears. Both parties claim they are not in a position to pay it.

b) The Parties’ Lifestyles

[362] Anthony has re-partnered and had a child with his new partner in September 2016. Anthony’s new partner does not work and Anthony supports both his partner and their child.

[363] Anthony and his partner have resided in a well-appointed home in Forest Hill since September 2015. The rental and utility cost per month is $11,500. The house was not furnished. Anthony denies Jennifer’s allegation that he bought all new furnishings for the home. In fact, he bought a few items for the children and a sofa for the basement. Most of the furnishings came from the Florida property or belonged to his new partner.

[364] Throughout 2015, 2016 and 2017, Anthony took many personal vacations. He spent lavishly on hotels, airfare, clothing and high-end restaurants. In 2016 alone he spent $18,116 for platinum level Raptors tickets, $12,695 on meals outside the home, $75,263 on rent and utilities and $33,195 on retail purchases (exclusive of groceries and household supplies). Based on disclosure provided to Jennifer, her counsel calculated that Anthony spent at least $410,449 in the first six months of 2016 when he claimed he was earning no income (other than $5,000 in Director’s fees).

[365] Anthony agrees that he spent $18,116 on Raptor’s tickets in 2016. However, he has sold most of them and recouped almost $13,000 for the 2016/17 season. Anthony also points out that of the $410,449 spent in the first six months of 2016, $100,932 was paid to Jennifer by way of support, $31,580 for the children’s private school expenses and $6,935 for the RCYC including Jennifer’s expenses there. Anthony also had significant legal and accounting fees during this period.

[366] Anthony does not disagree that he has been living beyond his means. The only way that he has been able to do so and pay support is by depleting capital. Anthony’s counsel provided a chart during argument which showed that in January 2017 Anthony’s capital was $563, 215.75. Added to that were deposits of $278,259 from the sale of Casino New Brunswick in April 2017 and $234,850.18 for the sale of shares in Community Lend in November 2017. By July 2018, Anthony’s capital was reduced to $140,471. Jennifer has received over half the funds from those two sales, both of which represent capital which is to be equalized with her. Anthony submits that Jennifer is double-dipping.

[367] Anthony is frustrated with the $273,913 in expenses claimed by Jennifer in her March 3, 2017 financial statement. For example, she claimed monthly nanny expenses of $3,470 when she no longer employs one. She claimed meals outside the home of $1000 per month which she says included meals at the RCYC. Anthony has paid for all of Jennifer’s RCYC expenses (approximately $20,000 since the date of separation) including meals for Jennifer and her partner.

[368] After Jennifer obtained her Ph.D. in 2016, she applied for numerous academic and research positions but with limited success. Her ability to obtain a tenure track position is significantly compromised by the fact that she cannot move outside of Toronto because of the children. Jennifer was offered a position at Dalhousie University in Halifax but could not commit to it due to the children. In 2016 Jennifer earned $16,231 from various short-term contracts.

[369] Anthony’s position is that Jennifer is not currently entitled to spousal support. He is willing to pay her $1.00 per year in the event her entitlement changes. Jennifer has been in a serious relationship. Jennifer’s affair with her current partner caused the breakdown of the marriage. Anthony deposes that according to the Ontario Public Sector Salary Disclosure online Jennifer’s partner earned $230,822 in 2015. Anthony submits that Jennifer and her partner reside together and share expenses. They reside with the children at her partner’s country residence and at Jennifer’s home in Toronto.[^73] Given that Anthony’s new partner does not work, he submits that Jennifer’s household income far exceeds his and that she is not currently entitled to spousal support. Further, based on her current income, she should pay some child support to Anthony.

[370] Jennifer denies that she cohabits with her partner. She does not deny that they are in a committed relationship but they maintain separate residences and he does not support her or her children.

[371] There is a factual dispute about Jennifer’s decision to pursue her Ph.D. Anthony says that Jennifer unilaterally chose to quit her job at Goodmans in 1998 to complete a thesis for a Masters in Law program which she had begun earlier. She told Anthony she would take a year off and they could live off the capital from the 2006 sale of Gamebookers. Anthony refers to an email (exhibit K to his affidavit sworn February 1, 2017) between the parties from the summer of 2009 in which Jennifer discusses looking for new legal employment. Her decision to pursue a Ph.D. was not reasonable. According to Anthony, Jennifer should be looking for opportunities where she can earn $200,000 per year as she was doing before and for which she has the appropriate skills. However, for the purposes of this motion, Anthony does not seek to impute income to Jennifer.

[372] Jennifer denies Anthony’s version of events. Her position is that Anthony was well aware of and supported her decision to pursue academic opportunities. He bragged to his friends and colleagues about Jennifer’s intellect and there was never an issue about the decline in family income as a result of her decisions.

[373] Jennifer does not want to return to being a litigator. It is no longer suited to her skills. It is disingenuous for Anthony to now say that he did not support her decision to pursue her academic dreams.

[374] In 2016, Jennifer took on a position that paid her an annual income of $68,650. She left this job because she claimed it was too administrative. She then took on a teaching position that paid less than $26,000 per annum. She is currently on a contract for three different university teaching positions. Jennifer has never paid child support to Anthony. Jennifer has always been able to claim her legal fees for tax purposes. Anthony has never been able to do so.

[375] Jennifer’s view is that Anthony cannot live the lifestyle he continues to live without knowing that he will be receiving significant funds from his father once the litigation is over. He is reducing his capital at a significant rate, all the while knowing that he now has three children and two spouses to support.

XVI. ANALYSIS AND THE TEST TO ADJUST AN INTERIM ORDER

[376] The parties have, not surprisingly, different views of the applicable test to vary an interim order. Jennifer submits that the 2015 consent order can only be varied upon Anthony proving that there has been a material change in circumstances since the making of the order, and further, that the current circumstances provide a compelling reason to make the change. In her factum, Jennifer gives examples of compelling reasons such as undue hardship or a continuation of the order resulting in an absurdity.[^74]

[377] In Damaschin-Zamfirescu v. Damaschin-Zamfirescu,[^75] Chappel, J. considered the request of the wife to increase spousal support from $350 to $850 per month. The original order was made on an interim, interim without prejudice basis. The court characterized interim, interim orders, as “imperfect solutions based on very limited and usually untested information.”[^76]

[378] Given this characterization, the court did not determine that a material change was required to vary such orders. Rather, the court followed the reasoning in Oxley v. Oxley[^77]: “I agree with the conclusion reached by Boswell, J. in Oxley v. Oxley that the court should reconsider the issue of spousal support as a hearing de novo on the more complete record before the court, without the necessity of the moving party having to establish a substantial change in circumstances.”[^78]

[379] This approach was confirmed in Ciarlariello v. Iuele-Ciarlariello,[^79] in which the court refused to vary an interim with prejudice support order.

[380] Jennifer submits that this case is very different from the Damaschin-Zamfirescu line of cases because:

a. The June 29, 2015 order is not a temporary, temporary order.

b. The order was made when the parties had been separated well over two years. In Damaschin-Zamfirescu, the parties had only been separated for two months and there was limited information available to the court.

c. Anthony knew that the Fuller Landau report dated March 13, 2015 was available at the time the consent order was made. He chose not to make it available until after the order was made. Jennifer was the one with the disadvantage in terms of information, not Anthony. The consent order was based on Anthony having an income of $500,000 for 2015, far less than what the Fuller Landau report attributed for that year.

[381] The hesitation of courts to vary interim orders is understandable. Allowing such variations would permit the parties to come back to court regularly pending trial, potentially to argue changes every few months. Thus, the courts view that interim with prejudice orders should only be varied where there is a material change and compelling circumstances.

[382] It is clear that the consent order of July 2015 in this case was a temporary, without prejudice, order. It was made based on an estimate of Anthony’s income and without the complete record that is now before me. As such, I find Anthony is not required to prove a material change. As in Oxley, a consideration of support de novo is required based on the additional evidence now available and the intention of the parties that either party was entitled to argue that support should be more or less than the amounts in the consent order.

[383] In Baker v. Strauss,[^80] the husband delivered an expert report on his income after the consent support order was signed and with a trial date already set. The court granted the husband’s motion to vary, notwithstanding the impending trial date, and found that the wife had had the opportunity to provide contradictory evidence to challenge the husband’s income report but had not done so. In this case, Jennifer had extensive opportunities to question Anthony. As well, she received significant disclosure which could have been passed on to an expert for analysis. As such, although Jennifer has clearly stated that she does not agree with the Fuller Landau reports or Anthony’s income in 2017 or 2018, she has provided no expert evidence to corroborate her allegations.

[384] The fact that Anthony had income information available for 2015 and chose not to disclose it is regrettable but is a matter which can be dealt with by the trial judge from the aspect of both retroactivity and credibility. This court is only being asked to make a change from January 1, 2017.

a) Was There a Material Change?

[385] If I am wrong and Anthony is required to show a material change, I would have found one. Such a change is based on the following reasons:

a. I have not found that Anthony continues to earn undisclosed income from Grey Eagle. If he does, it is part of the consulting fees for which he is paid via his current contract.

b. Anthony continues to pursue new business opportunities but, unfortunately, none of them have been income producing to date. If new income is earned, Anthony will be required to disclose it on an ongoing basis, given that he is a support payor and subject to the ongoing disclosure requirements of the Child Support Guidelines.

c. I would not impute income to Anthony based on his lifestyle at this time. If I was inclined to do so, I would be inclined to impute income to Jennifer as well. Both parties are living beyond their means. Jennifer may have a partner who earns a good income and she may also be underemployed. However, I have not been asked to make findings with respect to these circumstances. Bak v. Dobell[^81] does not apply in these circumstances, as this court has not found a conspiracy in which Anthony is receiving undeclared income. The manner in which he is funding his lifestyle and the payment of support is through the liquidation of capital, all of which has been disclosed.

d. There is no evidence to confirm that Anthony is comfortable with depleting capital because he knows he will be receiving money from his father. He is depleting capital to pay his support and to finance his unwise financial choices. This court cannot speculate on what will happen when the capital is gone.

e. His current support obligations, even with some capital included for child support purposes, have become an absurdity in the face of his actual income. It is unrealistic for Anthony to be required to deplete all of his capital (most of which must be equalized with Jennifer) for support purposes.

f. The fact is that apart from the sale of Gamebookers Anthony’s income has not been extraordinary other than during a couple of banner years in 2014 and 2015, which have not been replicated either before or since. If I am wrong, and the income reports are effectively challenged, the trial judge may choose to impute income to Anthony.

[386] There is another issue which lends itself to a common sense approach to this variation. This motion should have been heard in early 2017. Due to Jennifer’s amendment of her pleadings, the case has been stalled and adjourned multiple times for reasons which are explained above. Given the intervention of these motions and the necessity of having a ruling on them prior to taking further steps, no trial date has been set. While the trial of this matter will be significantly streamlined now that the conspiracy claim has been dismissed, a trial could still be far off if appeals of this judgment are taken.

[387] The consent related to support was entered into before the significant amendments were made to Jennifer’s pleadings and without an actual income amount stated for Anthony. Clearly, the intent was a short-term solution pending trial. No one could have anticipated that the support payments would go on for over three and a half years without a change.

[388] Finally, the court would also be remiss in not mentioning that both parties are clearly living beyond their means. The court cannot repair this unwise course, but it can put a stamp of reality on what has become a somewhat alternate financial universe.

[389] The conspiracy claim has been dismissed and the parties must face the cold, hard reality of a new lifestyle based on their actual incomes and not income and assets they once had.

b) What are the Parties’ Incomes in 2017 and 2018 for Support Purposes?

2017

[390] There does not appear to be a dispute that Jennifer’s income for 2017 was as per her income tax return: $29,817. This includes employment income of $20,987, plus interest and other income (but exclusive of child and spousal support).

[391] Anthony’s position is that his income for 2017 for child support purposes was $194,823. This includes his employment income of $125,000 (the consulting contract plus director’s fees), capital gains from the sale of Community Lend shares ($37,873), repayment of capital from 9988253 Alberta ($22,768) and income from the sale of Coventry Diagnostics ($9,182).

[392] For spousal support purposes, Anthony submits his income for 2017 was his T4 income ($125,000) plus income from Coventry Diagnostics ($9,182). Coventry had a $0 value on valuation date.

[393] Jennifer submits that Anthony’s 2017 income should be at least $743,805. Anthony received $278,259 as additional money owed to Conrose on the sale of its interest in Casino New Brunswick, $234,850 which Anthony received on account of the sale of shares in Community Lend, and $73,747 in capital gains in addition to his income. Jennifer argues that the “exit” money from Casino New Brunswick and Community Lend must be included in his income and should not be considered “double dipping” for support purposes. If his consulting fee and director’s income of $125,000 and his line 150 income for 2017 of $193,823 are added to the “exit payments” and capital gains, his income for 2017 would be $743,805.

[394] Ms. Rosen’s submission on behalf of Anthony is that the Conrose monies relate to the sale of Casino New Brunswick and are capital payments, and that the only amounts which should be included for child support purposes are the dividend amounts. Similarly, with the sale of Community Lend shares, only the taxable capital gain should be included as those shares were a valuation date asset.

[395] In Shepley v. Shepley,[^82] the court considered a request by the husband for a termination of spousal support upon his retirement. In the past, he had agreed to a generous amount of spousal support which was partly funded by the income from some inheritances he received from his parents during the marriage. However, over time, that capital became depleted and he was only earning $100 per month from those assets at the time of trial. Further, the court found he did not retire in order to avoid his spousal support obligations, but for legitimate reasons. His pension had been valued and divided with the wife many years before.

[396] The court in Shepley adverted to the principles in Boston v. Boston[^83] with respect to the conclusion that “double dipping” was inequitable. However, the court cited Meiklejohn v. Meiklejohn,[^84] for the proposition that in certain cases the rationale for avoiding double recovery is not applicable. In that case, the wife was in poor health and received only a modest equalization payment.

[397] The court went on to say that Mr. Shepley had been very generous in the past by voluntarily sharing his capital resources with Mrs. Shepley, however, given his changed circumstances, he was not to be punished for having been generous in the past. The income he generated from his remaining capital assets was not to be shared with Mrs. Shepley for support purposes (para 70).

[398] Given the principles in Boston and Shepley, I do not see why the Conrose payments should be included in Anthony’s income in 2017. Those payments relate to (presumably) holdback monies from the sale of Conrose’s interest in Casino New Brunswick in a prior year. These amounts should not be included for child or spousal support purposes; only the dividend payments should be included for child support purposes.

[399] Similarly, the capital gain on the shares in Community Lend should be included for child support purposes. It is unclear to me what the capital gain of $73,747 is in Anthony’s 2017 Income Tax Return. In fairness, however, that number should be used rather than the $37,873 in Anthony’s DivorceMate calculation. The full amount of the share sale ($234,850) should not be included for either child or spousal support purposes. This amount represents the sale of a valuation date asset.

2018

[400] I agree with Jennifer that her income is 2018 was not $52,101. Given the nature of her contracts, the income must be prorated for the period of the contract. As such, I accept that her income for 2018 will be $36,050.

[401] I have not included any investment or interest income for 2018, as those amounts are not known for either Jennifer or Anthony. If any significant amount of investment or other income is earned in 2018, support can be adjusted once the parties’ Notices of Assessment have been received in 2019.

[402] Jennifer did not make any specific comments about Anthony’s 2018 income. However, I infer that her position with respect to the conspiracy would apply. However, with the conspiracy claim dismissed and no other evidence about Anthony’s income in 2018, I find it is $125,000 for the purpose of both child and spousal support.

c) The New Support Amounts

[403] Attached to this judgment are three DivorceMate calculations, Appendix “A”, “B” and “C”.

[404] Appendix A is the calculation for child support for 2017 based on the findings above. Child support for 2017 would be $3,200 per month.

[405] Using this child support number, Appendix B calculates spousal support at the mid, low and high range. I see no reason to award any spousal support in these circumstances. The parties share time with the children. Allowing spousal support in the mid-range would result in Jennifer having 60.7% of the Net Disposable Income (“NDI”) between the parties. A 50/50 NDI split also results in a $0 spousal support payment. As such, spousal support for 2017 would be $0.

[406] Appendix C calculates support based on Anthony’s and Jennifer’s contract income in 2018. Set off child support would be $1,230 per month. A 50/50 NDI split would result in spousal support of $1,489 per month.

[407] While there would be a significant overpayment owed Anthony from January 1, 2017 based on these numbers, he is not seeking this overpayment at this motion. Rather, he seeks to have it credited to him for equalization purposes at trial.

[408] It is this court’s view that Anthony’s counsel has been fair in arriving at the support numbers. She has not sought to impute income to Jennifer, to attempt to include any of Jennifer’s partner’s income, nor does she seek any overpayment amounts at this time.

[409] While the reduction in support for Jennifer is significant, it is long overdue. It does not preclude a further adjustment of support at trial.

[410] I do not make any order with respect to the children’s private school expenses. It appears that neither party can afford the fees, but there was no evidence concerning the detriment/benefit of the children remaining there. It is hoped that the parties can co-operate as they seem to have done in the past with respect to what is best for their children.

XVII. FINAL ORDERS

[411] The Sonco/Novac third party motion for summary is granted. The applicant’s claims for damages for a civil conspiracy related to any of the respondents are dismissed.

[412] The applicant’s motion for partial summary judgment is dismissed.

[413] The respondent, Anthony Novac’s motion to vary interim support is granted retroactive to January 1, 2017.

[414] The respondent, Anthony Novac’s support obligation for 2017 will be retroactively varied to:

a. Set off child support of $3200 per month.

b. No spousal support.

c. These amounts are based on the DivorceMate calculations attached as Appendix A and B to this judgment.

[415] The respondent, Anthony Novac’s support for 2018 will be retroactively varied from January 1, 2018 and ongoing to:

a. Set off child support of $1,230 per month.

b. Spousal support of $1,489 per month.

c. These amounts are based on the DivorceMate calculation attached as Appendix C to this judgment.

[416] Any credit owed to the respondent Anthony Novac for overpayment of child and spousal support in 2017 and 2018 will be calculated by his counsel and provided to the applicant’s counsel within 30 days of the release of this judgment. The overpayment may be used as a credit toward equalization, retroactive child or spousal support or in any manner which the trial judge sees fit or the parties agree.

[417] The parties to set a date for Trial Management Conference to move the remaining issues to trial as soon as possible.

[418] Given my knowledge of the background of this case, and in accordance with the principles in Hyrniak, I am prepared to hear the trial of the remaining issues if scheduling permits.

[419] Jennifer has had no success on any of the motions. The parties are urged to settle the issue of costs. If they are unable to do so, the parties shall provide written submissions on costs of no more than five pages in length, exclusive of any Offers to Settle, Bill of Costs or other required attachments. The third parties and Anthony Novac shall serve their costs submissions on the applicant within seven days of the date of this judgment. The applicant shall serve her response to both sets of costs submissions seven days later. The third parties and Anthony Novac shall serve any reply within 7 days of receipt of the applicant’s costs submissions. If no costs submissions are received within 35 days of the release of this judgment, the issue of costs shall be deemed to be settled.

Gilmore, J.

Released: January 31, 2019

COURT FILE NO.: FS-14-00398336-0000

DATE: 20190131

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Jennifer Ann Leitch

Applicant

– and –

Anthony James Charles Novac in his personal capacity and in his capacity as trustee of The Novac Family Trust (2013) and the Lulu Trust (2006)

Respondent

– and –

Michael Novac in his personal capacity as trustee of each of The Novac 2011 Trust and The Novac Family Trust (2013)

Nelly Novac in her capacity as a trustee of the 2011 Novac Family Trust

Sonco Group Inc.

The Novac 2011 Family Trust

The Novac Family Trust (2013)

John McLure, in his capacity as trustee of the Lulu Trust (2006)

David Tam, in his capacity as trustee of the Lulu Trust (2006)

Third Party Respondents

REASONS FOR JUDGMENT

Gilmore, J.

Released: January 31, 2019

[^1]: Affidavit of Michael Novac sworn December 5, 2016, para 10.

[^2]: Affidavit of Jennifer Leitch sworn March 3, 2017, para 51.

[^3]: Ibid, para 53.

[^4]: Affidavit of Michael Novac sworn March 29, 2017, para 32.

[^5]: Affidavit of Jennifer Leitch sworn March 3, 2017, para 86.

[^6]: Affidavit of Michael Novac, sworn March 29, 2017, para 87.

[^7]: Factum of the Applicant, Jennifer Leitch, submitted May 8, 2018, para 25.

[^8]: Questioning of Jennifer Leitch, April 3, 2017, page 197.

[^9]: Answer of Sonco/Novac, August 25, 2016, para 43.

[^10]: Affidavit of Sonco/Novac sworn December 5, 2016, paras 110-111.

[^11]: Vol. 1/tab 8(a-k).

[^12]: Cross-examination of Anthony Novak, May 17, 2018, pages 88-89.

[^13]: 2008 SCC 10, para 5.

[^14]: Affidavit of Michael Novac sworn March 29, 2017, para 110.

[^15]: Affidavit of Keith MacIntyre sworn March 29, 2017, para 11.

[^16]: Cross-examination of Michael Novac, May 29, 2018, page 130.

[^17]: Affidavit of Keith MacIntyre sworn March 29, 2017, para 16.

[^18]: Questioning of Keith MacIntyre, May 9, 2017, page 118.

[^19]: Ibid, pages 102, 106-108.

[^20]: Ibid, page 95.

[^21]: Ibid, pages 96-97.

[^22]: Questioning of Michael Novac, May 9, 2017, page 618.

[^23]: Cross-examination of Michael Novac, May 29, 2018, page 194.

[^24]: Cross-examination of Michael Novac, May 28, 2018, page 98.

[^25]: Ibid, page 99.

[^26]: Ibid, pages 143-144.

[^27]: Ibid, page 152.

[^28]: See 2013 ONSC 7101.

[^29]: Cross-examination of Anthony Novac, May 18, 2018, page 191.

[^30]: Ibid, page 194.

[^32]: Ibid, page 195

[^33]: Ibid, page 196.

[^34]: Cross-examination of Michael Novac, May 29, 2018, pages 223-224.

[^35]: 2014 SCC 7.

[^36]: 1983 CanLII 23 (SCC), [1983] 1 S.C.R. 452.

[^37]: See Sweda Farms v. Egg Farmers of Ontario, 2014 ONSC 1200, para 84, aff’d 2014 ONCA 878, leave to appeal to SCC refused, 36341 (9 July 2015).

[^38]: Bank of Montreal v. Tort