Caskie v. Caskie, 2020 ONSC 7010

COURT FILE NO.: FS-19-96085

DATE: 2020 09 22

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

KATHRYN LYNN CASKIE

Belinda Rossi, for the Applicant

Applicant

• and -

BLAIR WILLIAM CASKIE

Carmen A. De Facendis, for the Respondents

Respondent

DATE: September 22, 2020, at Brampton, Ontario – in Chambers

Price J.

ENDORSEMENT

1The Case Conference in this proceeding was held on September 14, 2020.

2At this time, the Superior Court of Justice’s regular operations have been modified due to the COVID-19 pandemic. Owing to the emergency measures undertaken to ensure public safety, this Case Conference was held remotely by videoconference by means of the Zoom application.

3The following documents were electronically filed:

(a) The Confirmations and Affidavits of Service from each of the parties;

(b) The Applicant/Wife’s Case Conference Brief, redacted Financial Statement dated September 2, 2020, and Certificate of Financial Disclosure of the same date, and

(c) The Respondent/Husband’s Case Conference Brief dated September 8, 2020, and attachments A to F, including an “Estimate Valuation Report” prepared by BDO dated July 21, 2020;

(d) The Husband’s Financial Statement dated December 13, 2019, and his Certificate of Financial Disclosure of that date;

(e) The Husband’s Financial Statement dated September 8, 2020.

(f) The Applicant’s reply to the Respondent’s submissions on costs.

4For the reasons that follow, a temporary Order shall issue in the terms of the draft Order of today’s date, which I have signed.

5On February 28, 2019, the Wife’s counsel sent a detailed request for disclosure to the Husband’s counsel. Despite the Husband being the sole and/or controlling shareholder of multiple corporations, the trustee of the Caskie (2016) Family Trust, and an indirect beneficiary of the Family Trust through his interest in 1033625 Ontario Inc. (“103”), he failed or refused to provide disclosure beyond personal tax returns, some financial statements and corporate tax returns (which were provided over a year after separation).

6On May 14, 2019, in place of a business valuation, the Husband provided: (1) an Excel Spreadsheet labelled “Exhibit A” in support of his purported value in Premium Tire Sales & Service Ltd. (“Premium Tire”) but as at January 31, 2016; (2) an appraisal of the commercial property held by 103 as at May 12, 2017. Both “values” were unrelated to the date of separation and not reliable evidence as to the fair market value of either entity.

7On August 28, 2020, the Husband produced an updated appraisal by the same appraiser with reference to the valuation date; the value of the commercial property had increased from $3.2 million to $4 million in under a year. The Wife retained her own expert, Paula White, to undertake an income determination and business valuation.

8On June 12, 2020, the Wife served her Case Conference Brief. In it, she sought reimbursement for the costs incurred requesting and receiving piecemeal and incomplete disclosure. On July 21, 2020, the Husband produced a business valuation and income report. None of the scope of review documents (“scope documents”) were provided. Repeated requests were made for the production of the scope documents. Despite the availability of these documents electronically, none were produced until August 20 and August 28, 2020. When they were produced, the “select” general ledgers (extracts) in Excel format were locked. The Excel columns could not be expanded to permit a review of the complete information. This impeded access to the information contained in the documents and significantly slowed the analysis of it.

9Many of the documents provided on August 20, 2020 had print dates showing that they were available in 2019. Significant portions of the Family Trust Settlement/Deed were unreadable.

10The Husband argues that he has substantially complied with his disclosure obligations. He relies, in particular, on the BDO Estimate Valuation Report that he has produced and that is attached to his Conference Brief. Newbould J. noted in Cummings v. Solutia SDO Ltd., 2008 CanLII 42017 (ON SC), at paras. 33 to 34, the professional standards for valuation which apply to Chartered Business Valuators and describes the different types of valuation reports. An Estimate Valuation Report is not a Comprehensive Valuation Report, which is given with the highest level of assurance, and is not a Calculation Evaluation Report, which is given with the lowest level of assurance. An Estimate Valuation Report lies in between. The standards provide that that level of report is to be based on “limited review, analysis and corroboration of relevant information.”

11The BDO Report states:

a Comprehensive Valuation Report is defined as a report that “contains a conclusion as to the value of shares, assets or an interest in a business that is based on a comprehensive review and analysis of the business, its industry and all other relevant factors, adequately corroborated, and generally set out in a detailed valuation report.… We were not engaged to prepare a Comprehensive Valuation Report, as defined under the CICBV Practice Standards. The scope of review was inherently limited by the nature of the valuation report being provided, and the conclusion expressed in the Report may have been different had a Comprehensive Valuation Report been prepared.”

12The Husband has not explained why he chose this level of Report, but the Court must consider the Report’s limitations in determining whether it should relieve him of the obligations that otherwise lie upon on him to provide full financial disclosure that the Wife including, in particular, the information and documents that her Chartered Business Valuator requested. I find that it does not.

13BDO relied heavily on representations made by “management”, which is to say, the Husband. The valuator relied on the Husband to tally personal expenses recorded as operating expenses of the company. While complete and navigable General Ledgers have yet to be provided, the Husband’s ‘tally’ is inaccurate and appears to underestimate the value of the business. This materially impacts the conclusions in the income and business valuation reports. In 2018 (the year of separation) and in 2019, the Husband’s nephew, Brent Caskie, who worked for Premium Tire, received compensation greater than that paid to the Husband (inclusive of income splitting). While the timing of “bonuses” received by Brent Caskie is unclear, Brent Caskie’s bonus amounts have tripled since 2016.

14The Husband’s choice to tender an Estimate Valuation Report does not, in itself, support a conclusion that he has failed to meet his disclosure obligations. However, this Report, by reason of its acknowledged limitations, is not a substitute for the full financial disclosure that the Husband was required to make and did not relieve him of his obligation to provide the information that the Wife’s Chartered Business Valuator requested.

15In April 22, 2020, Ms. White confirmed by letter the anticipated fees for the income determination and business valuation reports in the range of $30,000.00 to $40,000.00 plus tax. The Wife’s counsel notes that additional market research is required, the cost of which Ms. White estimates to be $4,000.00 plus HST. Additionally, given the loss of confidence in the appraisal of the commercial property, a separate, independent appraisal of the commercial property is being undertaken, the cost of which is $6,840.00 plus HST. Together, with HST, the cost is anticipated to be $60,000.00. The Husband shall be ordered to pay this amount to the Wife on account of those disbursements.

COSTS

17. (18) Costs shall not be awarded at a conference unless a party to the conference was not prepared, did not serve the required documents, did not make any required disclosure, otherwise contributed to the conference being unproductive or otherwise did not follow these rules, in which case the judge shall, despite subrule 24 (10),

(a) order the party to pay the costs of the conference immediately;

(b) decide the amount of the costs; and

(c) give any directions that are needed.

O. Reg. 114/99, r. 17 (18); O. Reg. 235/16, s. 3; O. Reg. 298/18, s. 12 (4); O. Reg. 535/18, s. 5 (4).

16The Husband did not respond to the Wife’s request for disclosure dated February 28, 2019 until 1 year, 5 months later, on August 20, 2020. He still has not provided the items requested by the Wife’s Chartered Business Valuator, Ms. White.

17For 2 years, 5 months, following the parties’ separation, the Husband left the Wife to ‘piece together’ his financial circumstances and identify the various issues that required further investigation, including trying to determine shareholdings through schedules on tax returns. He failed to disclose the Family Trust Deed, over which, as trustee, he had control. The Wife spent over $20,000 seeking disclosure, following up, piecing information together, and making independent inquiries to obtain information that should have been provided, as appears from the Wife’s Bill of Costs, filed.

18The Husband shall be ordered to pay the Wife $20,000.00 as reimbursement for the expenses she incurred as a result of his delayed and incomplete disclosure, including the expense of her having to redo her Case Conference Brief following his recent disclosure.

19The Wife claims the costs of this conference in the amount of $10,000.00. The Husband’s counsel, who was called in 1994 and has a partial indemnity hourly rate of $450.00, spent 2 hours reviewing the Applicant’s Case Conference Brief and supporting material and 4.7 hours drafting the Husband’s Case Conference Brief and supporting material. Having regard to the amounts at stake in this proceeding, (the Husband’s own Report values his net interest in his companies at between 3.7 and 4.3 million), the amount of time the Husband’s counsel spent in preparation for the Conference is not determinative of whether the amount the Wife claims is excessive. I find that the time the Wife’s counsel spent is proportionate.

20The litigation strategy the Husband has adopted has delayed the resolution of the issues and contributed to this Case Conference being unproductive. The Husband shall pay the Wife $10,000 as the costs of this Case Conference.

Price J.