Zantingh v. Zantingh

COURT FILE NO.: 35/38/014254/15

DATE: 20211202

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Karen Ann Zantingh, Applicant

AND:

Peter Michael Zantingh, Respondent

BEFORE: Justice R. Raikes

COUNSEL: D. John Kirby - Counsel, for the Applicant

Peter Eberlie - Counsel, for the Respondent

HEARD: November 1, 2021

ENDORSEMENT

[1] There are two motions before me:

1. a motion by the applicant to increase interim spousal support retroactive to January 1, 2021; and

2. a motion by the respondent to compel the applicant to approve the valuation reports of the jointly retained expert.

[2] Subject to directions provided, both motions are dismissed for reasons which follow.

Motion to Increase Spousal Support

[3] The applicant initiated this litigation by Application dated June 30, 2015.

[4] At a case conference held December 9, 2015, Justice Hebner ordered, on consent, that the respondent pay interim monthly spousal support of $2,000, monthly car insurance of $80, and one-half of the home insurance and property taxes for the matrimonial home. The quantum of spousal support was based on the respondent’s 2014 personal income of $135,956 found at line 150 of his 2014 income tax return.

[5] The applicant brings a motion to vary interim spousal support payable; specifically, she seeks to increase spousal support to $56,999 per month commencing January 1, 2021. This is not the first time she has moved to increase interim spousal support. On September 7, 2018, Gorman J. dismissed her motion to increase spousal support because spousal support was a triable issue and the attribution of corporate earnings to the respondent could not be determined before completion of Mr. Hoare’s final report.

Background

[6] The parties began living together in May 1995. They married August 10, 1996. They disagree on the date of separation. She contends that they separated May 6, 2015 when the respondent moved out of the matrimonial home. He contends that they separated November 30, 2011 when she moved to the basement of their matrimonial home.

[7] The parties are the parents of two sons, now 22 and 20 years old. Both sons have resided with the respondent since soon after he moved out of the matrimonial home. He has taken complete financial responsibility for the children with no contribution from the applicant. The children are no longer in school and both are working in their father’s business.

[8] The applicant has not worked since 2001 when she applied for and was granted a Canada Pension Plan disability pension. Her disability pension pays her $8,343 annually. The respondent maintains that the applicant can work but has not. The applicant avers that she is physically and mentally disabled and unable to work.

[9] The respondent is a businessman. He was a 1/3^rd owner of the Zantingh Group of companies at the date of separation, regardless which date is used. The other 2/3rd interest was owned by his brother and sister. According to Mr. Hoare’s valuation reports, the value of his interest in the Zantingh Group increased significantly between 2011 and 2015 – from approximately $3,069,100 to $8,682,900.

[10] The Zantingh Group was reorganized in late 2019. The respondent and his siblings have divided and transferred their interests in the many companies that comprised the Zantingh Group so that each now owns and operates independent from one another.

[11] On December 11, 2020, I ordered that an updated income report be prepared by Mr. Hoare for the period post-2016. He previously prepared a joint income report for the period 2011-2016.

[12] The updated income report remains unfinished. The full details of the reorganization remain undisclosed. Some, but not all, of that information has been provided to Mr. Hoare who has made several requests for information necessary to his report. The information needed by Mr. Hoare comes in drips and drabs, usually as court dates loom. The respondent claims not to have the information or that the details are in the hands of his accountant or legal counsel who acted for all three siblings. They have provided some information albeit with strings attached ostensibly for confidentiality reasons.

[13] From the material filed and the several case conferences held, it appears to me that the respondent is dragging his feet with respect to financial disclosure. I noted same in my endorsement dated March 26, 2021. While there has been some improvement since then, financial disclosure remains unnecessarily slow and inefficient.

September 28, 2021 Draft Hoare Report

[14] On September 15, 2021, the applicant asked Mr. Hoare to prepare a limited scope income report for the respondent’s 2020 income for spousal support purposes. Mr. Hoare was asked to base that report solely on the respondent’s personal 2020 tax return, and his holding company’s 2020 financial statement and corporate tax return. Income or dividends obtained by other companies held by Mr. Zantingh, his holding company, or a family trust were not considered.

[15] Mr. Hoare produced a draft Income Report dated September 28, 2021 in which he indicated that:

• Mr. Zantingh’s 2020 income tax return shows no employment income.

• His personal income tax return discloses a taxable dividend from Peter M. Zantingh Ltd. (his holding company – hereafter “Holdco”) of $82,800. The actual dividend paid was $60,000.

• No other income was reported by Mr. Zantingh personally.

• The 2020 statement of operations and retained earnings for Holdco shows dividend income in 2020 of $963,252. The dividend income was comprised of a dividend from 406 Farm Inc. of $962,776 and other dividends of $476.

• The dividend from 406 Farm Inc. was one component of the re-organization of the Zantingh Group. Before the re-organization, Holdco held 50% of the common shares of 406 Farm Inc.. His brother’s holding company owned the other 50%. On or before October 31, 2019, 406 Farm Inc. redeemed Holdco’s common shares for $962,876. That amount was paid by way of a demand, non-interest bearing, promissory note.

• Thus, Holdco divested its 50% interest in 406 Farm Inc. in return for the promissory note.

• The amount due from related companies in 2019 was $334,000. The 2020 balance sheet for Holdco shows as an asset, “Due from related companies” $2,143,191. It does not particularize from whom the monies are due nor does the balance sheet disclose any liability for amounts due from Holdco to specific companies.

• On the balance sheet, the liability “due to shareholder” increased from 2019 to 2020 from $293,400 to $369,400. There is no explanation for the increase.

• Holdco’s income before taxes is $922,602. Net income after tax is $849,469.

• The balance sheet indicates that retained earnings at the start of the year were $919,011 and at the end of the year, $1,598,201. Thus, retained earnings increased by roughly $679,000 in 2020.

• The company’s taxable income for 2020 was $375,041. The capital dividend account (“CDA”) at end of year was $445,211.

[16] Mr. Hoare indicated that he could not determine whether the demand, non-interest bearing, promissory note from 406 Farm Inc. had been paid or was a component of the $2,143,191 shown as due from related companies and remains unpaid as at year end (July 31, 2020).

[17] At para. 35 of his draft report dated September 28, 2021, Mr. Hoare wrote:

Based on our review of the Holdco 2020 Corporation Income Tax return, as at July 31, 2020, Holdco had a Capital Dividend Account (“CDA”) of $445,211. The CDA account represents the amount of capital dividends that could be paid to the shareholder (Peter) on a tax free basis. The payment of a capital dividend would reduce Holdco's CDA account. Peter would receive a tax free dividend that is not required to be reported as income for income tax purposes. At some point when the promissory note, reported as due from related parties, is collected, these funds will be available to be withdrawn from Holdco and could be considered available income. [Italics added.]

[18] Mr. Hoare declined to attribute the CDA account balance to Mr. Zantingh as “available income” at this time. He wanted additional information including whether that promissory note had been paid. He also wanted additional information about monies payable by Holdco as part of the re-organizing transaction.

September 29, 2021 Harris Report

[19] Presumably unhappy with Mr. Hoare’s unwillingness to include Holdco’s gross earnings in the calculation of Mr. Zantingh’s available income, the applicant then retained Ms. Amy Harris, a recently licenced chartered accountant, to provide an opinion as to Mr. Zantingh’s income for spousal support purposes. Ms. Harris reviewed Mr. Hoare’s September 28, 2021 report. Unlike Mr. Hoare, she expressly assumed that the $962,876 demand promissory note payable to Holdco is or could be paid because it is a demand note and there is no information to the contrary.

[20] Ms. Harris opined that the respondent’s available income for spousal support purposes in 2020 under Schedule III (6) of the federal Child Support Guidelines is $1,849,098. That amount includes the pre-tax income of Holdco. She calculated his available income as follows:

Personal income $86,957

Adjusted taxable gain to pre-tax dollars $3,911

Holdco income $,1,758,229

[21] She calculated Holdco’s pre-tax income as follows:

Income before taxes $922,602

Less: capital gain on F/S ($4,136)

Sale of 406 Farm $835,626

Sale of TD Investments $4,137

[22] Ms. Harris relied on the same documents referred to by Mr. Hoare. Her report also refers at para. 12 to unspecified discussions with applicant’s counsel.

October 15, 2021 Hoare Report

[23] Following receipt of Ms. Harris’ affidavit and report, the respondent engaged Mr. Hoare to respond to Ms. Harris’ report. Information that Mr. Hoare had been seeking, or at least some of it, was suddenly available to him. Instead of the usual delays in getting information from the corporate accountant, Mr. Hoare received some of the missing details with alacrity. I infer that when information is needed for Mr. Zantingh’s benefit, it is quickly provided.

[24] Mr. Hoare provided a report in response to that of Ms. Harris. Mr. Hoare based his review of Ms. Harris’ report, in part, on documents received recently and in August 2021, and conversations with the accountant for the Zantingh Group of companies. In fairness to Ms. Harris, Mr. Hoare was privy to and relied on information and documents not available to her.

[25] In his October 15, 2021 report, Mr. Hoare indicated that on completion of the re-organization, Holdco had an ownership interest in BPS. To facilitate the re-organization, there were a number of notes payable/receivable between the different entities. In the end, Holdco and BPS had a net payable to the other parties. The promissory note held by Holdco from 406 Farm Inc. was offset against that debt and the note was thereby effectively paid in full.

[26] At para. 14 of his report, he wrote:

Based on my discussions with Ms. Aveiro, the promissory note has in fact been paid. It was paid in a series of transactions related to the re-organization. As a part of the re-organization, the assets of the Zantingh group were effectively divided equally between Peter, Brad and Susan and/or their respective holding companies. The re-organization was accomplished by way of non-interest bearing notes and cash payments. Holdco made cash payments to other parties. The cash payment made by BPS/Holdco to Brad/Brad’s holding company was net of the promissory note received from 406 to Holdco.

[27] Mr. Hoare criticized the conclusions reached by Ms. Harris including that she had assumed that the promissory note had been paid in full and was thus available income to the respondent. He opined that based on the information provided by Ms. Aveiro and the documentation he had seen, the dividend received by Holdco on redemption of its shares in 406 Farm Inc. was used to offset notes payable by Holdco/BPS and was not available to the respondent. That conclusion is not absolute and depends on additional information required. He indicated that “An analysis of the inter-company accounts as at the 2020 year ends of the companies is required as confirmation.” He has requested that additional information.

[28] Mr. Hoare was also critical of Ms. Harris’ report in that:

1. she double counted the $60,000 dividend actually paid to the respondent; and

2. she ignored the difference in accounting versus income tax treatment of the sale of the shares in 406 Farm Inc..

[29] In the result, Mr. Hoare is unable to say whether the dividend accrued from the sale of Holdco’s shares in 406 Farm Inc., as evidenced by the promissory note, is truly available income for spousal support purposes. He is not prepared to assume it is. The information he has from the corporate tax accountant indicates that it is not. He requires additional information to confirm what she has told him and to check that the figures are correct.

Law – Motion to Vary Interim Spousal Support

[30] Spousal support is governed by s. 15.2 of the Divorce Act. The authority to make interim spousal support orders is found in subsection (2). In making an interim order, the court is required to take into consideration the length of time the spouses cohabited, the functions each performed during the marriage, and any order or agreement relating to support of either spouse: s. 15.2(4) Divorce Act.

[31] The objectives of an interim spousal support order are:

a) to recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown;

b) to apportion the financial consequences between spouses for the care of any children of the marriage;

c) to relieve any economic hardship of a spouse arising from the breakdown of the marriage; and

d) so far as practicable, to promote the economic self-sufficiency of each spouse within a reasonable time: s. 15.2(6).

[32] Subsection 17(4.1) of the Divorce Act permits variation of a spousal support order where the condition, means, needs or other circumstances of either spouse has changed since the making of the order. While variation of an interim spousal support order should be an infrequent event, it is within the jurisdiction of the court where circumstances justify it. The court should consider whether: 1) it is necessary to prevent undue hardship, 2) failing to make the variation order would be incongruous or absurd, and 3) there is a pressing and immediate urgency: Innocente v. Innocente, [2014] O.J. No. 5842 (S.C.J.).

[33] In Oxley v. Oxley, 2010 ONSC 1609, at paras. 25 and 26, Boswell J. wrote with respect to the test for varying an existing interim order:

[25] Temporary orders for support, as the name suggests, are not final orders. They were formerly known as ‘interim orders”, referencing the fact that they were intended to cover the interim period between the commencement of proceedings and trial. The Family Law Rules now use the term temporary to underscore the notion that they are not intended to be long term solutions. They are by their nature imperfect solutions. They are based on limited and typically untested information. They are meant to provide “a reasonably acceptable solution to a difficult problem until trial”: Chaitas v. Christopoulos, 2004 CanLII 66352 (ON SC), [2004] O.J. No. 907 per Sachs J..

[26] Variations of temporary orders are not encouraged. They should not become the focus of the parties’ litigation: Cutaia-Mahler v. Mahler, 2001 CanLII 28138 (ON SC), 2001 CarswellOnt 3054 (S.C.J.) per Benotto J.. There is, therefore, a heavy onus on a party who seeks to vary a temporary order - essentially replacing one imperfect solution with another imperfect solution - pending trial: Boissy v. Boissy, 2008 CarswellOnt 4253 (S.C.J.) per Shaw J.. A substantial change in circumstances is typically necessary before a variation to a temporary order will be granted: Biddle v. Biddle, [2005] O.J. No. 737 (S.C.J.) per Blishen J..

[34] Interim orders may be varied where there has been a material change in circumstances: Lawless v. Lawless, 2008 CanLII 39218 (ON SC). An interim, non-time limited spousal support order may be varied before trial where the circumstances of the case permit it. Such circumstances may include: where the record shows that the delay lies at the feet of the responding party; there is still a significant amount of time before trial; the new information put forward by the moving party is essentially unchallenged; and the lifestyle of the recipient will be negatively impacted without the variation: Baker v. Strauss, [2018] O.J. No. 431 (S.C.J.); see also Zhao v. Zhou, 2020 BCSC 516, at para. 25, 26-28.

[35] Sections 18 and 19 of the Federal Child Support Guidelines are the starting point for determining income for purposes of spousal support where the payor spouse derives all or a substantial portion of his or her income from a privately held corporation. Sections 18 and 19 of the Guidelines are to read in tandem: Nabeta v. Nabeta, [2017] O.J. No. 5099 (S.C.J.).

[36] Section 18(1) states:

(1) Where a spouse is a shareholder, director or officer of a corporation and the court is of the opinion that the amount of the spouse’s annual income as determined under section 16 does not fairly reflect all the money available to the spouse for payment of child support, the court may consider the situations described in section 17 and determine the spouse’s annual income to include

(a) all or part of the pre-tax income of the corporation, and of any corporation that is related to that corporation, for the most recent tax year; or

(b) an amount commensurate with the services that the spouse provides to the corporation, provided that the amount does not exceed the corporation’s pre-tax income.

[37] Section 19(1) of the Federal Child Support Guidelines states:

(1) The court may impute such amount of income to a spouse as it considers appropriate in the circumstances, which circumstances include the following:

(f) The spouse has failed to provide income information when under a legal obligation to do so;

(h) the spouse derives a significant portion of income from dividends, capital gains or other sources that are taxed at a lower rate than employment or business income or that are exempt from tax;

[38] Subsection 19(1) is intended to capture cases that, in fairness, require an adjustment to the payor’s presumptive income and gives the court the discretion to impute income when appropriate to do so. The list of circumstances in subsection 19(1) is not exhaustive nor are they to be rigidly applied. Analogous circumstances may justify their application: Bak v. Dobrell, 2007 ONCA 304, [2007] O.J. No. 1489 (ON CA).

[39] The onus rests on the payor to demonstrate to the court that corporate earnings, whether in the form of retained earnings or pre-tax corporate income are not available for support purposes: Lachance v. Campbell, 2015 ONSC 6551, at para. 40. The onus rests on the payor because he or she knows more about the business and is in the best position to explain why some or all of the company’s pre-tax income is not available for support: Elder v. Dirstein, 2012 ONSC 2852.

[40] Parties in matrimonial litigation have a positive duty to provide complete, accurate, and timely financial disclosure: Family Law Rules, r. 13; Sickinger v. Sickinger, [2018] O.J. No. 6511 (ON CA); Roberts v. Roberts, 2015 ONCA 450, [2015] O.J. No. 3236 (ON CA); Rizzo v. Rizzo, 2001 CanLII 28119 (ON SC), [2001] O.J. No. 303. Non-disclosure and/or partial disclosure that begs more questions than it answers is clearly insufficient and non-compliant. It delays and adds to the cost of the litigation. It undermines the objectives of the Family Law Rules and the legislation dealing with family property and support. It is the bane of family litigation: Cunha v. Cunha, 1994 CanLII 3195 (BC SC), at para. 5; Michel v. Graydon, 2020 SCC 24, at para. 33; Sickinger.

Analysis

a. Delay and Financial Disclosure

[41] Justice Hebner’s order was made, on consent, near the outset of this litigation more than six years ago. Financial disclosure was incomplete at the time. It still is.

[42] Almost a year ago, I ordered an updated income report for the respondent. That task has been complicated by the corporate re-organization. Some of the necessary information is in the hands of expert advisors – accountants and lawyers – who were acting throughout for the three siblings and their many corporations. Understanding that complex transaction is fundamental to any determination of the respondent’s income.

[43] Mr. Hoare has made repeated requests for information since engaged to do the updated report. Those requests have been answered to an extent. He clearly has received some documentation and some information. By the same token, the information provided has not been timely nor complete. Even his October 15 report indicates that he cannot confirm the use of the promissory note without examining the inter-company notes exchanged for the re-organization and that information is outstanding.

[44] I am case managing this matter. Several case conferences were held before these motions were brought. The issue of financial production/disclosure has dominated those conferences. Some but not all requested information is provided to Mr. Hoare generally soon before a scheduled conference. There is a pattern of delay and obfuscation, responsibility for which lies primarily at the feet of the respondent. The scope, pace, and timing of disclosure has been altogether too slow.

[45] I am mindful that some of the information requested by Mr. Hoare involves third parties to this litigation – the respondent’s siblings and their corporate holdings. They are understandably concerned for their privacy, confidentiality, and solicitor client privilege. The respondent points to questionable conduct by applicant’s counsel to justify the hesitancy to provide information to Mr. Hoare or the applicant and her counsel; in fact, some of the information relied on by Mr. Hoare for his October 15, 2021 report was given on condition that the information not be shared with the applicant or her counsel.

[46] I previously ordered that all documentation received by Mr. Hoare and any notes made by him be shared with counsel for both parties. I have also circumscribed the use that can be made of those documents by the applicant or her counsel. Failure to abide by those terms would have serious consequences for the applicant and her counsel.

[47] Nevertheless, the information needed by Mr. Hoare is incomplete. The applicant and her counsel are left to rely on Mr. Hoare without the opportunity to assess what he provides based on shared documents and information. This has fed animosity and mistrust. Everything provided to the expert or the applicant leads to more and more allegations that the respondent is hiding income or misleading the court.

b. Trial Date

[48] As mentioned, this litigation is now more than six years old. Surely the parties never imagined that the interim order of Justice Hebner would still be in place six years later.

[49] The timing of the trial in this litigation remains unknown. Applicant’s counsel wishes to cross-examine the respondent on the financial disclosure. He awaits Mr. Hoare’s report and disclosure of all documents provided to him for the updated income report and his earlier reports. A settlement conference has not yet been scheduled.

[50] If the parties truly wish to bring this litigation to a close, which they should by now, then it is entirely within their control to move the action forward meaningfully. A settlement conference by March 2022 is a realistic timeframe if counsel and the parties work cooperatively. A trial in 2022 is doable.

[51] The sine qua non to progress toward trial is completion of Mr. Hoare’s updated income report. Until that is completed, the parties remain in a vortex of recrimination and delay.

c. Material Change in Circumstances

[52] The evidence of the respondent’s 2020 income is far from satisfactory. He has no employment income although he works full-time. His income tax return discloses only a $60,000 dividend actually paid to him 2020 from Holdco. Subsections 18(1) and 19(1)(h) of the Guidelines are engaged. His income is derived significantly from dividends, capital gains or other sources that are taxed at a lower level.

[53] The applicant seeks to impute more than $1.8 million dollars in corporate earnings to the respondent. That income is tied to the sale of Holdco’s shares in 406 Farm Inc. and the promissory note received. Ms. Harris assumes that promissory note was paid, and the income from same is available to the respondent to withdraw from Holdco as income.

[54] I disagree. The sale of the shares of Holdco in 406 Farm Inc. was a piece of a much larger transaction. Taking it in isolation is unfair and inappropriate. It denudes the transaction of its context and yields a distorted result, albeit one most favourable to the applicant.

[55] I prefer the evidence of Mr. Hoare on this point. First, he is better informed than Ms. Harris as to how the promissory note arose and how it fits into the larger transaction. Second, he is informed that the note was “paid” but as an offset to debts owed by Holdco and its subsidiary BPS as part of the larger transaction. The promissory note has not been paid in cash to Holdco nor is it sitting there uncollected to minimize earnings available to the respondent.

[56] Mr. Hoare indicates that the promissory note is not available income. Although he requires access to further information to verify and confirm that conclusion, he indicates that his conclusion is based on information provided by the tax accountant involved in the whole transaction and corroborated to a limited extent by bank documents provided to him. Should Mr. Hoare later ascertain that he was misled, he will no doubt bring it to the attention of the parties and the issue can be revisited.

[57] I am not prepared to impute additional income from Holdco to the respondent. The existing spousal support order was predicated on income of $135,956. The respondent does not seek a reduction based on lower income in 2020. Imputing income above $135,000 on the evidence before me would be an exercise of pure speculation. I decline to do so.

[58] Where does that leave the applicant? She deposes that there are arrears of spousal support owing. The respondent disputes any underpayment. I cannot determine that issue on the material provided.

[59] The applicant deposes that because she is receiving so little by way of support and has no other source of income beyond her disability pension, she has had to forgo necessary chiropractic treatment that assists with her pain management. She has had to stop using a drug for her diabetes that was helpful but is too expensive. The respondent is critical of these claims.

[60] I am not satisfied that the applicant is suffering undue hardship or that there has been a material change in her condition or circumstances. No medical evidence was adduced to corroborate a need for the specific drug she has stopped using, nor for increased chiropractor visits. I observe that she was able to purchase a new car which, on its face, belies her inability to afford the cost of chiropractic treatment or her preferred diabetes medicine.

d. Summary of Findings and Order

[61] In summary, for the reasons above, I find that:

1. the evidence does not show a material change in the circumstances of the applicant or respondent since the earlier interim order was made;

2. the issue of appropriate spousal support including retroactive support remains a live issue best determined on a full evidentiary record at trial; and

3. the respondent has failed to comply with his financial disclosure obligations thereby delaying this litigation. That failure will be addressed in costs of these motions and likely will be a factor considered by the trial judge on the issue of costs.

[62] The applicant’s motion to vary interim spousal support is dismissed. However, merely dismissing the motion leaves the issue of financial disclosure to linger and continue unabated. That is unsatisfactory. As a term of the dismissal of the motion, I order the respondent to immediately take all reasonable steps available at his sole expense to provide whatever information and documentation is needed by Mr. Hoare to complete his updated income report as soon as possible.

Motion to Compel Report Approval

[63] At the December 9, 2015 case conference, the parties agreed to a consent order by Hebner J. to jointly retain Mr. Hoare, a Chartered Business Valuator, to prepare an expert valuation report of the respondent’s income and interests in the Zantingh Group of companies. The respondent has paid for the work done with the applicant’s share of that cost to be a credit against the amount payable to her for equalization.

[64] On March 7, 2018, Mr. Hoare sent both counsel his draft Income Report covering the period 2011-2016. He received approval to issue the report in final form from both counsel in February 2020. The report was issued in final form on February 25, 2020.

[65] On May 7, 2019, Mr. Hoare sent to counsel a draft Valuation Report based on a November 30, 2011 date of separation. He updated the report on October 23 and November 22, 2019, although the updates did not change his findings. The aggregate value of the respondent’s interest in the share capital of Holdco, BPS Ventures Inc., and JN Ventures Limited was indicated to be $3,069,066.

[66] On October 23, 2019, Mr. Hoare sent to counsel a draft Valuation Report based on a May 6, 2015 date of separation. The aggregate value of the respondent’s interest in the Zantingh Group shares was indicated to be $8,741,500. He updated that report on November 22, 2019 to correct an error in the original draft. The value was adjusted to $8,682,900.

[67] The respondent has approved those Valuation Reports and asked Mr. Hoare on December 6, 2019 to issue them in final form.

[68] The applicant has not approved the reports and refuses to do so. She maintains that notwithstanding that she approved the Income Report, there is no obligation on her to approve the Valuation Reports. She puts forward several reasons for her unwillingness to approve the reports being issued in final form including:

1. In his March 6, 2018 affidavit, the respondent deposed that “many people” were involved putting together the information to ensure the accuracy of the reports, including accountants, lawyers, bank managers, his business partners [his siblings] and himself. The applicant has not been privy to all source documentation and communications between Mr. Hoare and those individuals.

2. Mr. Hoare indicates in his Valuation Report that he relied upon information obtained from others, including the respondent in preparing his estimates of value. The respondent has not provided complete and candid information in the past. She does not trust that he did so in respect of these reports.

3. Mr. Hoare relied on information provided by the respondent and property appraisal reports. Mr. Hoare has not received appraisals for every property owned by the Zantingh Group on May 6, 2015. For example, he has not received appraisals for lands held by 406 Farm. Inc.. Instead, Mr. Hoare’s Valuation Report indicates that he assumes fair market value of the lands and buildings owned by 406 Farm Inc. is equal to net book value.

4. The property appraisals relied upon by Mr. Hoare indicate that the highest and best use for the properties appraised is as farm land; however, the applicant alleges that, in fact, the Zantingh Group had filed applications to rezone some of the lands to Lakeshore Residential.

[69] In his Valuation Reports, Mr. Hoare wrote:

…Our estimates of value are conditional on the completeness, accuracy and fair presentation of the above noted information. We have not audited or otherwise independently verified the aforementioned information. Consequently, we disclaim any responsibility or liability for any losses suffered by any party as a result of our use and reliance on this information print

[70] The applicant submits that she cannot “approve” the reports that are based on information beyond her “knowledge or control”.

[71] The respondent submits that the concerns raised by the applicant are irrelevant and distract from the real issues. The applicant should be directed to approve the reports in final form, or this Court should direct Mr. Hoare to do so. The reports are now two years old. They are necessary for trial.

Analysis

[72] Where the parties wish to engage a joint expert but do not agree on a matter relating to the engagement, either of them may apply to the court for directions: Family Law Rules, r. 20.2(9). In my view, that provision includes disagreements that arise after the expert has been engaged and before his or her report is complete.

[73] To ensure the efficacy and reliability of the jointly retained expert evidence, the parties are required to “cooperate fully with the expert and make full and timely disclosure of all relevant information and documents to the expert”: r. 20.2(12). The court may draw any reasonable inference against any party that fails to do so: r. 20.2(12).

[74] The predominant purpose of retaining a joint expert is to avoid the battle of competing experts. That usually means a savings of time and expense, and often aids in resolution of some or all issues.

[75] A neutral, independent, jointly retained expert investigates the issue(s), sets forth the facts on which his or her opinion is based, sets out the documents he or she relied on, and provides an opinion and the rationale for that opinion: r. 20.2(2),(3), and (5). The expert owes a duty to the court to be fair, objective and non-partisan. That duty to the court trumps any obligation owed by the expert to a party: r. 20.1(3).

[76] Where the parties have engaged a joint expert, no other litigation expert may present opinion evidence on that issue unless the court orders otherwise: r. 20.2(13). Thus, once the expert report is finalized and absent a supplementary report, the parties are not permitted to adduce other expert evidence on the issue without leave of the court.

[77] I turn to the applicant’s professed reasons for not approving the Valuation reports.

[78] First, she contends that she has not been given disclosure of all relevant documents and was not privy to discussions that Mr. Hoare had during his engagement.

[79] On December 11, 2020, I made the following order at a case conference:

1. On consent, Mr. James Hoare to provide to D. John Kirby, Counsel for the Applicant Karen Ann Zantingh, copies of all documents received by him in this matter from any source. Any such documents provided to Mr Kirby shall not be disclosed to any third party without order of the court or consent of the parties. That includes documents provided to date and those that may be provided in future. In the event Mr. Hoare speaks to and obtains information from any third party in the course of his work, he shall provide copies of his notes of such communications to both counsel. Those notes are subject to the same Confidentiality Order as above. [Italics added.]

[80] There is no motion before me to compel compliance with the above order. Whatever documents Mr. Hoare has, and whatever notes of conversations he has, have been ordered to be provided to counsel. There is no evidence that Mr. Hoare has refused or failed to obey the order as it relates to the two Valuation Reports in question.

[81] Second, the applicant and her counsel do not trust the respondent to provide complete and accurate information. Mr. Hoare is a very experienced business valuator. He has a reputation for thoroughness. There is no indication in his draft Valuation Reports that he feels he was not provided with whatever information and documentation he required to do the task assigned.

[82] The applicant and her counsel should have whatever notes Mr. Hoare made of any discussions with the respondent. If there is misinformation conveyed, they should have already alerted Mr. Hoare to same. If they subsequently become aware that information or documentation provided to Mr. Hoare is incomplete or inaccurate as it concerns these reports, they are free to advise Mr. Hoare. If he feels it appropriate, he can issue a supplementary report and bring the facts misstated to the court’s attention.

[83] The applicant agreed to the joint retainer of Mr. Hoare to prepare these Valuation Reports. She is not entitled to now frustrate their completion by simply saying “I don’t trust the respondent so I can’t trust a report based on what he told the expert.” Reasonable reliance on Mr. Hoare’s experience and thoroughness is appropriate.

[84] Third, Mr. Hare did not obtain appraisals for the 406 Farm Inc. properties and appears to have relied on their book value. That is a genuine question that should be put to Mr. Hoare. He may have a ready and reasonable answer that would satisfy that concern. There is no evidence that counsel for the applicant has asked Mr. Hoare.

[85] Fourth, Mr. Hoare’s report relies on appraisal reports that value the property based on its value as farm property. The applicant has recently learned of efforts to rezone the property before or around the date of valuation. Should a different highest and best use have been used? Again, that is a fair question, one that should be put to Mr. Hoare who can, in turn, seek an answer from the appraiser. Again, there is no evidence that counsel for the applicant has done so.

[86] I am not privy to the terms of engagement with Mr. Hoare. Did his retainer agreement call for a draft report, comments and questions by the parties, and a final report? It appears that that is exactly the process followed for the 2011-2016 Income Report. For applicant’s counsel to now suggest he does not have to give approval is disingenuous. His earlier conduct says otherwise.

[87] The applicant submits in the alternative, that if her “approval” is necessary, she should be permitted to defer same until after she has conducted her cross-examination of the respondent. She points to many alleged inconsistencies in his various affidavits, the failure to disclose the re-organization earlier, and the lack of full and timely disclosure to Mr. Hoare for the updated Income Report. She also urges me to find that until the updated income report is complete, she should not have to sign off on the Valuation Reports because new and relevant information may come to light.

[88] I disagree. The Valuation Reports examine the value of the respondent’s interests in the Zantingh Group of companies as at the dates of separation alleged, both of which pre-date the re-organization in 2019. If Mr. Hoare discovers new and relevant information to the estimates of value in the course of doing the updated Income Report, he will undoubtedly bring that to the attention of the parties. He may do a supplementary report. Likewise, if new information comes to the attention of the parties before trial, it is open to them to provide same to Mr. Hoare and ask whether it affects his valuations. If not satisfied with his response, they may apply for leave to call other expert evidence on the issue.

[89] I do not agree that approval of the reports should await the outcome of cross-examinations, if any. The reports should be finalized. If new information subsequently comes to light, whether or not from the cross-examinations, it can be provided to Mr. Hoare for his consideration. He may or may not prepare a supplementary report given the new information and his duty to the court.

[90] I do not agree, however, that this court should, in these circumstances, direct the applicant to immediately provide her approval of Mr. Hoare’s report, nor should an order be made directing Mr. Hoare to issue his reports in final form. Rather, the process for finalizing the Valuation Reports should be as follows:

1. The applicant shall raise any questions or concerns with those reports within 30 days of release of this decision.

2. Mr. Hoare will consider those questions and concerns and advise the parties whether any changes to the draft reports is warranted as a result, and if not, why not.

3. If Mr. Hoare revises the draft Valuation Reports as a result of any questions or concerns raised by the applicant, the parties will have 15 days from receipt of the revised reports to provide their approval of the reports.

4. If Mr. Hoare declines to revise his Valuation Reports, the reports will be deemed ready to be issued in final form.

[91] Both parties remain at liberty to provide Mr. Hoare with new information or documents uncovered after the reports are final. Mr. Hoare will determine whether a supplementary report is needed. Further, both parties are at liberty to seek leave to adduce other expert evidence on the issue(s) under r. 20.2(13). This endorsement should not be read as inviting either party to do, nor as an indication that the request should be granted if requested.

[92] Therefore, the specific relief requested by the respondent in his motion is denied but directions above are hereby provided pursuant to r. 20.2(9).

Costs

[93] If the parties cannot agree on costs, they may make written submissions not exceeding 3 pages within 15 days hereof. For clarity, the submissions should address both motions in the three pages.

Justice R. Raikes

Date: December 2, 2021