McPherson v. McPherson, 2012 ABQB 581

Court of Queen ’ s Bench of Alberta Citation: McPherson v. McPherson, 2012 ABQB 581 Date: 20120921 Docket: 4801 13796 Registry: Calgary Between: Angelique Ela McPherson Plaintiffs - and - Neil Edward McPherson Defendant Editorial Notice: On behalf of the Government of Alberta personal data identifiers have been removed from this unofficial electronic version of the judgment. _______________________________________________________ Reasons for Judgment of the Honourable Madam Justice S.L. Martin _______________________________________________________ 1.

Introduction [ 1 ] After twenty-two years of marriage Angelique and Neil McPherson separated in February 2010. They are unable to agree on financial matters, including division of matrimonial assets, spousal and child support. The main issue before me concerns the extent of the resources available to the husband to pay child and, potentially, spousal support.

[ 2 ] During the marriage a complex web of corporations, sole proprietorships and a family trust was used to control their businesses, properties and investments. After case management, various interim orders, and arbitration, a trial was held. At the end of trial, both parties agreed to a divorce and this was granted on the basis of a one year separation. They first separated on October 7, 2008.

They had a period of reconciliation but the final separation began on February 10, 2010. [ 3 ] The husband argues that, despite their previous lavish family lifestyle of multiple and extended family holidays; a second house in Panorama, British Columbia; a private plane and hangar; expensive cars; and three children in private school, they were really living on the economic edge. He claims the companies they built and the assets they acquired were and remain marginal performers, mired in debt, financed to the limit and fully leveraged.

Since their separation in January 2010 he has continued to operate the businesses and manage the assets established during the marriage, with the exception of an insurance business, which was broken up and sold in 2006 and 2007. His current business activities consist primarily of seeking out investors and investment opportunities in Canada and the United States. He spends most of his time in Texas, where he lives with his girlfriend. He testified that he has not paid the court-ordered amount of $3,000 per month to the wife since October 2010 because he does not have the money to do so.

He says that he only stays afloat because his girlfriend has lent him a large sum of money and because he moves monies around between the various business entities he controls; in his words, “robbing Peter to pay Paul.” [ 4 ] The wife argues that during the marriage, while she did not understand the exact nature of their businesses and holdings, they had whatever funds they needed to live well and acquire income producing assets. She does not accept that after separation he lives off nothing but the kindness of others.

He appears to have sufficient funds to continue to live a lavish lifestyle, well beyond the $60,000 per year which he suggests should be used as his income for child support purposes. She questions the existence of any loan from his girlfriend and his professed lack of funds. She argues that he is redirecting, using, hiding and dissipating marital assets and that he is not forthcoming about how he currently generates income and how much he earns. His refusal to pay her the court-ordered support contributed to her declaration of personal bankruptcy in April 2012.

She asks the court to both impute and attribute a much larger income to him, and seeks retroactive and future child support and retroactive and future spousal support. 2. Issues [ 5 ] Divorce having been granted, three issues remain. First, what marital assets and debts were accumulated during the marriage? [ 6 ] Counsel have agreed that most of the issues concerning the valuation and division of matrimonial property were not to be addressed by the court at trial due to Mrs. McPherson’s declaration of personal bankruptcy.

The stated intention is for the husband to work with the trustee on issues relating to the division of the matrimonial property and debt. The husband provided certain information to the wife’s trustee, which the trustee had not had the opportunity to fully review. While the parties have not addressed the value of the marital properties in evidence and are not seeking its division, a review of the matrimonial property remains necessary for many reasons. The Court is called upon to determine what marital assets and debts exist.

What the parties own, earn and owe is important when assessing the husband’s capacity to pay child and spousal support, especially since his major reported economic activity is the management of these assets. As well, the Court is called upon to characterize certain payments made by Mr. McPherson and to determine whether certain actions and appropriations by each are advances on the anticipated property division. [ 7 ] The second issue concerns what child support is payable. This requires a consideration of Mr.

McPherson’s true economic situation to determine what income, if any, should be attributed to him, as well as the status and whereabouts of each child of the marriage. The question of arrears also arises. [ 8 ] Third, is Mrs. McPherson entitled to spousal support and if yes, in what amount and for what duration? [ 9 ] I will canvass the agreed and contested facts and the arguments advanced in relation to these specific issues. 3. Evidence and Agreements [ 10 ] The evidence consisted of various exhibits and viva voce testimony. Both parties testified. Mrs. McPherson called witnesses

including Ms. Tracy Osuala, a neighbour who gave $50,000 to Mr. McPherson for investment purposes, Mr. Randy Repass, a friend of Mr. McPherson’s who invested in the Aegis Texas fund, Mr. Jeff Jebson, the owner of Wicked Hostel who rents premises from one of the McPherson companies and Mr. Mike McGee, managing director of Wurkman Capital, a fund that gave Mr. McPherson $1.25 million to invest. Mr. McPherson called Mr.

Malley, a chartered accountant who had some dealings with the family’s businesses over an 18 month period in 2004 and 2005, and their eldest child. [ 11 ] A great deal of information is necessary to make sense of what the parties own, earn and owe and to look behind the complexity of their financial affairs to determine what is in fact happening.

The following sections are intended to provide context for the various conclusions reached and is organized on the following basis: the parties and their activities; their marital assets, including their businesses, corporations, bank accounts, debts and credit cards; Mr.

McPherson’s testimony about the businesses; my findings on credibility and how the businesses were in fact operated; the loan the husband says was made to him by his girlfriend; the allegation that the wife took certain funds to which she was not entitled and the characterization of the payments made to the wife between separation and October 4, 2010. A. The Parties and Their Activities [ 12 ] Neil Edward McPherson was born in February 1967 and is currently 45 years old. He has a High School Diploma and some university courses and was licensed to sell life insurance policies until 2009, when his licence expired.

It has not been renewed and, in light of the outstanding lawsuits against him arising from his subsequent investment activities, he believes and the Court accepts that he would not be able to renew this licence. [ 13 ] Angelique Ela McPherson was born in May 1968 and is currently 44 years old. She has a High School Diploma and a two year Business Diploma from Mount Royal College, which she completed during the marriage. In 2006 she started a business coaching people who have lost their jobs. They have three children. [ 14 ] Neither party worked as an employee during the marriage.

Before they embarked on their joint economic enterprises, Mrs. McPherson cut hair and sold children’s books and Mr. McPherson worked as a commissioned insurance agent for his uncle’s agency. [ 15 ] At some point, Mr. McPherson began his own insurance agency, which became known as the McPherson Financial Group Inc. During the marriage the parties accumulated various other assets, which were for the most part held by separate corporate entities created for that purpose. Mrs.

McPherson participated in the businesses in a limited way. [ 16 ] Their insurance business was sold during 2006 and 2007, although income from insurance contracts secured before the sale of the business still appears to be coming in. After selling the insurance business, Mr. McPherson shifted his focus to the investment field, advising individuals and brokering various deals, both in Canada and the United States.. [ 17 ] The parties went to Spain for four months, between August 2009 and December 2009 with their two youngest children. [ 18 ] After separation Mr.

McPherson continued to operate all the businesses and properties acquired during the marriage and has used these marital assets to support himself. [ 19 ] After separation Mrs. McPherson worked for an hourly wage at Jugo Juice to supplement her income from her coaching business. Her business is growing, she enjoys her job and does not intend to retrain or find alternate full-time employment. B.

Marital Assets [ 20 ] As no evidence was provided with regard to exempt property under the Matrimonial Property Act, and given the long tenure of the marriage, it seems as though all assets accumulated throughout the marriage are “matrimonial assets” and subject to division on that basis.

i. The Matrimonial Home [ 21 ] The McPhersons lived together at [...] Harvest Oak Circle N.E..The husband kept the matrimonial home from the date of separation in February 2010 until May 21, 2012, at which time an Exclusive Possession Order was granted in favour of the wife, who had previously lived in rental accommodation. [ 22 ] Mr. McPherson admitted, and his air line travel records substantiate, that since separation he has spent the majority of each year in Texas. In cross examination he agreed that he spent about 55 days in Canada in 2011.

During the time when he had possession of the matrimonial home but was really living in Texas, he had their 17-year-old middle child living in the house to ensure that the occupational requirements of their home insurance policy were met. [ 23 ] I am told by both counsel that Mrs. McPherson’s trustee in bankruptcy has determined that the matrimonial home is exempt from the bankruptcy proceedings due to its limited equity. Mr. McPherson took the position at trial that Mrs.

McPherson may continue to reside in the home and that he would remain on title and continue to remain on the mortgage until the youngest child has finished school, including university. He concedes that the wife may then have the house and retain whatever equity exists and arises. This is accepted by the Court and any existing or future equity in the home belongs to Mrs. McPherson. ii. The Family Businesses a. Overview [ 24 ] Both parties agree that the following businesses existed during the marriage and Mr. McPherson admitted to operating them alone after separation and until the time of trial.

The parties are divided on what these assets are worth and what monies they generate. The exact position or role each party held or had in relation to each such business or venture was not addressed systematically or completely by the parties, but little turns on this. [ 25 ] There are three main corporations through which most of their business ventures were and are conducted: the McPherson Financial Group, 904558 Alberta Inc. and Mountain Properties International Inc. [ 26 ] The vacation property in Panorama is held by Mr.

McPherson under a sole proprietorship called 1910 Powder Co. [ 27 ] After the sale of the insurance agency Mr. McPherson entered into the investment world and tried to facilitate business transactions to earn commissions or other forms of payment. Sometimes his investment activities involved the family’s then existing corporate entities and other times he created new structures. For example, he incorporated Inter-Se Financial Services, a wholly owned subsidiary of the McPherson Financial Group.

No financial information of any kind concerning Inter-Se Financial Services was presented at trial, although there are three lawsuits that have been filed in relation to it and the Statements of Claim were in evidence. McPherson also was involved in various deals involving Hyperion Capital Partners Ltd.; SBM Capital Limited Partnership and various Aegis investment funds. [ 28 ] In addition, there was the McPherson Family Trust, (hereinafter the “Trust”). The Trust plays a key role in how Mr. McPherson conducted his financial affairs after separation and will be discussed frequently in this judgment. b.

McPherson Financial Group Inc [ 29 ] For several years they had a life insurance agency, the McPherson Financial Group, (“McPherson Financial”). Mr. McPherson testified that at some point there were approximately 40 people employed in this business. Mrs. McPherson testified that they had approximately 200 insurance salesmen working with them in Red Deer, Lethbridge and Calgary. Mr. McPherson lists himself as

president and CEO of this company. He testified that the McPherson Financial Group Inc. was the primary vehicle by which he ran the insurance agency, and even though he is no longer actively engaged in the insurance industry, it continues to receive commissions, which are placed into a separate bank account. When the insurance part of their business was wound down and pieces were sold off in 2006 and 2007, the company continued and has been used for other things. [ 30 ] Mr. McPherson produced profit and loss statements for McPherson Financial for a period of two years.

According to these unaudited documents this company lost $215,039.29 in the corporate year July 2009 through June 2010 and a similar amount of $214,775.48 during the corporate year July 2010 through June 2011. [ 31 ] It is interesting to note the range and amount of expenses charged to McPherson Financial. For example, $71,652.38 was expensed as “rent” in 2009-2010, with $6,831.62 claimed for the subsequent year. There were no separate business premises and Mr. McPherson testified that all businesses were run out of the matrimonial home as long as he lived there.

Various legal documents in evidence list the matrimonial home as the address of the McPherson Financial Group, 904558 Alberta Ltd. and Mountain Properties International. Since the exclusive possession order was issued in favour of Mrs. McPherson, these businesses are now being operated from his Texas residence. [ 32 ] In each of the two profit and loss statements, Mr. McPherson deducted legal and professional fees of over $35,000 and $50,000, respectively, with a further unexplained miscellaneous expense of $30,000 in the 2010 - 2011 statement. [ 33 ] Further, in each of those two years Mr.

McPherson paid bank charges, interest and credit card fees of over $16,000 and $20,000, respectively, through McPherson Financial. Also in each year significant amounts were charged in relation to the use of a vehicle: over $5000 a year for fuel and parking and over $7,000 per year for lease payments, insurance, registration and repairs.

Further deductions were made for business travel, a cell phone and Internet, air travel, car rental, hotels, meals, taxis and entertainment, all of which totaled over $20,000 per year, with an additional amount averaging about $5000 being charged each year for meals and promotion. [ 34 ] McPherson Financial owns the 1973 Cessna airplane that used to be flown by Mr. McPherson. Mr. McPherson stated that the plane has not been used since 2009. However, Mr.

McPherson claimed aircraft fuel expenses of $5,588.23 and $2,963.53 for the 2009-10 and 2010-11 years; being part of overall expenses of over $67,000 and $44,000 claimed in relation to aircraft insurance, lease payments, repair and maintenance in that time frame. [ 35 ] Mr. McPherson testified that there was a loan on the plane, the value of the plane decreased, the loan came due in March of 2010, and because the loan was secured by way of a general security on all properties, he was forced to refinance and commit to a repayment of $5,000. per month.

It appears from the bank statements that he has paid this amount. He claims that McPherson Financial is in debt in the approximate amount of $406,000, including a $85,000 line of credit with Wells Fargo. [ 36 ] Mr. McPherson informed the court that the McPherson Financial Group also has a $1 million default judgment against it in respect of an individual he described as the previous owner of a building who lost money with RBC insurance. He says he is seeking to appeal and/or to set aside that judgment. c. 904558 Alberta Ltd. [ 37 ] Mr. McPherson is listed as director and president of this corporation.

It is owned by Mountain Properties International. An unaudited financial statement for this corporation was in evidence for the year ending March 31, 2009. There was also an unaudited balance sheet for the year ending March 31, 2011.

Each document was prepared by a different accounting firm, and both contain a “notice to reader” advisory, meaning that the statement of earnings and deficit for the year comes from information provided by management, the accountants performed no audit and they can express no assurance about what is contained therein. [ 38 ] 904558 Alberta Ltd. holds a commercial property on Macleod Trail. Mr. McPherson testified that the property is worth about $550,000 and that it had a mortgage of $600,000.

The value of the land and building, taking amortization into account, is on the company’s books at a value of $927,465 in 2008; $ 900,367 in 2009; $894,104 in 2010; and $855,725 in 2011.

[ 39 ] Various parts of the property are rented out. The primary tenant is Mr. Jebson of Wicked Hostels, who pays $12,000 per month. Other tenants pay an additional $25,000 and $3,750 per year. Revenue from this source was stated to be $143,017 in 2008, $183,519 in 2009, $190,800 in 2010 and $162,375 in 2011. Net earnings from the building in the amounts of $11,226 in 2008 and $55,486 in 2009 were claimed. After the separation in 2010, however, the records show a net deficit of $41,394.

A profit of $12,546 was claimed for the year 2011, but a cumulative deficit is entered at the end of the overall four-year period. Mr. McPherson said that with the various expenses he pays this is a break-even proposition. [ 40 ] The records also indicate that in 2008 the sum of $215,937 was due to a shareholder, and $20,163 was payable to “related parties.” In 2009, $196,537 was said to be due to a shareholder and $21,399 to related parties.

In 2010, after separation, zero dollars are payable to a “related person” but there is $275,989 owing to “related companies.” In 2011, the “related person” is shown as being due $3,402 while $254,045 is due to the related companies. No information is provided on the identity of the shareholder, the “related parties,” the “related person” or the “related company.” Presumably, they are one or more of Mr. McPherson, Mrs. McPherson, the two older children, or any of the other companies.

Nor was any explanation provided as to why, after separation, amounts were owed to related “companies” rather than related “parties” as previously recorded. [ 41 ] Mr. McPherson also says that he is pursuing a previous tenant for unpaid rents of $170,000. d. Mountain Properties International Inc. [ 42 ] Mr. McPherson testified that Mountain Properties owns the aircraft hangar, 904558 Alberta Ltd., and various property related to the eldest child’s hardwood installation business. Income of about $450 per month is received for renting the hangar. [ 43 ] In cross-examination Mr.

McPherson admitted that Mountain Properties is held equally by himself and his wife and was struck from the Corporate Registry as of March 2, 2011 because no annual returns were filed for the years 2009 to 2011. [ 44 ] Mr. McPherson placed into evidence two profit and loss statements he created for Mountain Properties, showing a loss of $27,106.79 for the year ending May 31 2010 and a further loss of $11,468.86 recorded between June 2010 and May 2011. [ 45 ] The largest single expense from the 2010-2011 year was a payroll advance of $11,288.62. to an unnamed party, which Mr.

McPherson says was a payment to the eldest child for work done by that child and run through this company. There was approximately $3,000 expensed for fuel, insurance, registration and repairs to the truck the eldest child uses in the hardwood business as well. [ 46 ] The 2009 - 2010 profit and loss statement contains various different types of expenses. e. 1910 Powder Company [ 47 ] Mr. McPherson admitted that 1910 Powder Company (PowderCo) is the operating name for a sole proprietorship under his name, which controls the vacation property in Panorama. [ 48 ] There are two parts to the Panorama property.

One is always rented and the other is either used by the family or, when not required, made available for rental. Mr. McPherson gave the value of the Panorama property as being $515,000, with a mortgage of $420,000. The mortgage on this property is set up on an interest-only basis. [ 49 ] Profit and loss statements for PowderCo for each of 2010 and 2011 were put into evidence. Again, these were unaudited statements created by Mr. McPherson.

They show that in 2010 the rental income was just over $21,000 and the single largest expense was “Int Ex” in the amount of $10,702.16, with an overall loss of $13,754.51 claimed for the year. In 2011 the rental income was $36,208.76, with an “Int. Exp” of $13,626.32, plus various other expenses, resulting in an overall profit of $1938.41.

f. Hyperion, SBM and the Aegis Investments [ 50 ] In relation to a separate set of investments, Mr. McPherson became partners with a lawyer, Mr. Brent Hooey, in Hyperion Capital Partners Ltd. (“Hyperion “) Hyperion managed a private equity fund they established called SBM Capital Limited Partnership (“SBM”). It involved a limited partner/general partner structure. SBM made investments in another set of funds called the “Aegis funds”: these included funds named “Aegis Texas” and “Aegis New York.” Mr. Brent Hickey, who is Mr. McPherson’s half brother and lives in New York, helped operate the Aegis funds.

Two of the three investors who testified at this trial said they do not know where their investments went. [ 51 ] From the documents in evidence Hyperion, owned and controlled by Mr. McPherson and Mr. Brent Hooey, apparently earned a $175,000 commission for bringing investors into the SBM investment scheme. Mr. McPherson said only $105,000 was ever paid and that he does not know how much was paid out either to himself or Mr. Hooey, only that whatever he received would have been placed into the McPherson Financial account. Mr.

McPherson also testified that he expects no more management fees will be paid as Hyperion is a shell which currently has no assets and the funds have suffered significant losses. g. The McPherson Family Trust [ 52 ] Mr. McPherson testified that the McPherson Family Trust was set up when the McPherson Financial Group was formed. Mrs. McPherson says it was established in June 1998. It was originally intended to act as a tax planning mechanism to benefit the children, who were the only ones described as income beneficiaries. However, no T-3 tax statements have ever been issued to any of the children. Mrs.

McPherson, who was originally listed as a capital beneficiary and one of three trustees, was at some undisclosed point after the separation unilaterally removed, along with the third trustee, by Mr. McPherson. She was not advised of this at the time. This action is of debatable validity under the terms of the Trust, but her April 12, 2012 declaration of bankruptcy would disqualify her from acting as a Trustee after that event. [ 53 ] The original property settled under the Trust deed was a gold coin. However, it became clear from Mr.

McPherson’s testimony that the Trust was used to hold various other types of property, including stocks. In cross-examination Mr. McPherson admitted that the Trust had, at one point, an RBC trading account associated with it, but he was not specific as to when that was. He said he used that account to buy and sell leveraged trades, but said the bank stopped his trading and cut him off from the trading account because he was buying and selling with funds that were not there. When asked what was the source of the funds he used to purchase the shares held in the Trust he replied that he did not know.

When he eventually placed the Family Trust documents into evidence when he was re-called at trial, he referred to stock accounts that were not before the court. [ 54 ] In chief, he testified that the current balance in the Trust was $22,000. h. Financial Dealings [ 55 ] Mr. McPherson testified about his financial dealings and how he moves money between the various businesses and bank accounts. In cross-examination, he said that the Trust holds money in trust for the other businesses and that he takes money out of the Trust and moves it around as he sees fit.

He confirmed that certain amounts, including what he claims was a loan from his girlfriend, were initially placed in the US Family Trust account, then moved from the US Family Trust into the Canadian Family Trust account, and then funneled into and between the various corporations. Sometimes he moves money from one corporate account to another, and he testified that there are, and always have been, loans between the companies, which he has not always recorded.

His stated goal is to keep as much of the funds as he can in the Canadian Family Trust account and to disburse and distribute only so much money as is necessary to his other accounts and corporations. He admitted that his strategy is intended to protect the assets available in any one corporations at any one time against potential creditors. He claims there is not sufficient money in any of the companies to carry themselves. [ 56 ] Mr. McPherson claimed that throughout the marriage they lived off of credit cards at a level that was well beyond their means.

He said he could not remember a year in which any of the companies made money. When asked whether Mrs. McPherson would have appreciated this sobering fact, he said that she filed the papers concerning their businesses and he believes she was fully aware of everything, as well as enjoying the benefits of their lifestyle. Later comments in his testimony, however, seem to contradict that assertion.

iii. Bank Accounts [ 57 ] After cross-examination the court asked Mr. McPherson to list his bank accounts and he testified that he held the following accounts: 1. A personal chequing account in his own name at the Royal Bank in Calgary; 2. A personal savings account in US funds in his own name at the Royal Bank in Calgary; 3. A business account at the Royal Bank in Calgary in the name of McPherson Financial Group Inc. (the “MFG Commission Account”); 4. A business account at the Royal Bank in Calgary in the name of McPherson Financial Group Inc. (“MFG General Account”); 5.

A business account at the Royal Bank in Calgary in the name of 904558 Alberta Ltd. (“904558 Account”); 6. A business account at the Royal Bank in Calgary in Mr. McPherson’s name but operating as 1910 Powder Co. (“PowderCo Account”); 7. An account with the CIBC in Calgary which has no name on the documents in evidence but which, he says, is used by Mountain International Properties (“MIP Account”); 8. A personal account at the Royal Bank in Calgary in the name of the N.E. McPherson Family Trust,; (“Canadian Family Trust Account”); and 9.

A personal savings account in US funds, also at the Royal Bank in Calgary, and also in the name of the N.E. McPherson Family Trust (“US Family Trust Account”). [ 58 ] He testified he has no other bank accounts anywhere in the world, including the United States. [ 59 ] A few preliminary observations. Bank statements were put into in evidence for the post-separation period for accounts 1 - 7, and these substantiate Mr. McPherson’s testimony that money is routinely moved between corporations.

The statements also show that most accounts are brought to a near zero balance by the end of each month, corroborating that only so much money is deposited monthly and that whatever the amount, by the end of the month most of and sometimes all the funds are transferred into other accounts.

Often funds are used to pay expenses, whether on credit card or arising from the operations of the property held. [ 60 ] There was very limited information on account 2 and between December 17, 2010 and December 16, 2011 there is no reported activity in this account. [ 61 ] Two accounts at the Royal Bank were in the name of the McPherson Financial Group Inc.. Mr. McPherson spoke of account 3, the MFG Commission Account, as a relatively modest one into which the residual commissions from the remaining insurance contracts are paid.

My rough calculation indicates that over $165,000 went into and was taken out of that account between the date of separation and the date of trial. Some of those funds came from third party transfers, and some were transfers from other Royal Bank accounts held by Mr. McPherson, but most appeared to be direct payments from insurance companies. Mr. McPherson provided no information on whether any of the third party transfers were commission.

Backing out all transfers and restricting matters to situations where the depositors’ names are well-known insurance companies, there appears to be an unexplained discrepancy between what was paid into this Commission Account and the amount of commission revenue recorded in the relevant McPherson Financial Profit and Loss Statement. That statement says commission earned was $35,580.27, whereas the bank account shows over $60,000 was in fact deposited between July 2010 and June 2011. For example, Manulife deposited $28,433.78 in January 2011 and every month after made numerous other payments of varying amounts.

Mr. McPherson testified that all the figures matched but he was not directly cross-examined on this particular discrepancy. It is one of many anomalies in Mr. McPherson’s evidence. [ 62 ] Bank account 4 is the MFG General account. Statements from January 2010 to April 2012 were placed into evidence. The pattern in this account is similar to that in the MFG commission account; specifically, whatever sums are put into the account on a monthly basis are removed by the end of the month through bill payments and transfers.

The amounts put into this account vary each month. $15,000 is the norm, but there were certain months in which the amount was significantly greater, for example: $48,000 was deposited and withdrawn in May 2010; $103,000 was deposited and withdrawn in July 2010; and $31,000 was deposited and withdrawn in May 2011. These larger sums were noted to be made through ATM deposits. There are however, no documents indicating where the funds actually came from.

[ 63 ] The overall amount of money that flowed through this particular account in the post-separation period exceeded $470,000. [ 64 ] There is another business account (5) in the name of 904558 Alberta. In evidence were documents from January 2010 to May 2012, showing the same pattern of monthly amounts being deposited and then expended by the end of each month. [ 65 ] The 904558 account appears to have to do with monies received from and spent on the Macleod Trail property. There are deposits which represent the rent paid by Mr. Jebson, who testified at trial.

Expenses recur for a loan repayment and sometimes include Enmax and refrigeration. [ 66 ] From the cheques in evidence attached to the account statements it appears that during the relevant time period, from the date of separation to trial, about $88,000 was transferred from this account to the McPherson Family Trust, $2,000 was withdrawn as cash, and $15,000 was paid to Mountain Property International. [ 67 ] The amount of $9,870.85 was deposited into this account by a branch to branch transfer under item number 1371 on a monthly basis.

It did not come from either of the McPherson Financial accounts. [ 68 ] Statements from January 2010 to May 2012 were in evidence for the PowderCo account, account 6. The largest single expense from this account were monthly payments to Mosaic MasterCard. [ 69 ] Account 7 is the general business account for Mountain Properties. Like the others, it shows the pattern of deposits and withdrawals leading to a near-zero balance each month. [ 70 ] The two accounts for the Family Trust see a significant amount of activity. Mr.

McPherson agreed that the habitual way funds were moved involved transfer from the U.S. funds Family Trust account, into the Canadian Family Trust account and then distributed as he deems necessary into any of his personal account or those of McPherson Financial Group, 1910 Powder, Mountain International Properties and 904558 Alberta Inc. Mr. McPherson described the U.S. dollar account as the primary route through which money enters his economic system, and tried to give the impression that it is then passed on to the Canadian dollar account or directly to the other businesses.

However, between the time of separation and trial, over $2.5 million went into the USD account, while only $800,000 flowed through into the Canadian Dollar (“CD”) account. The source and disposition of those funds were never clarified by Mr. McPherson. [ 71 ] Mr. McPherson testified that he held no other assets anywhere in the world, in any form, except that he may have a contingent interest in his father’s estate when his step-mother passes, but he was not sure of that. Mr.

McPherson testified that when he is in Texas he owns nothing, rents no car, and has no American bank account, explaining that his girlfriend provides for him. In contrast, Mrs. McPherson testified that she has seen a Bank of America card in his possession. iv. Family Debt a. General [ 72 ] Mr. McPherson testified that both at the time of separation and currently there is a debt of $50,000 owed to American Express and $40,000 to Diners Club and both cards are at their limit. [ 73 ] A further $50,000 is owed on what was a joint Royal Bank Visa. For this credit card the monthly expenditures made by Mrs.

McPherson, Mr. McPherson and their middle child were separately listed. After separation, Mrs. McPherson used this card for a short period, paid $860 for her portion, and then stopped using the card. Detailed monthly statements from a Royal Bank Visa Platinum Card from February 2010 to April 2012 were produced. They show that the middle child used it during this period for clothing, groceries, numerous meals taken outside the home, dry cleaning, movies and drugstore purchases.

[ 74 ] McPherson Financial also has a Wells Fargo line of credit that has a credit card associated with it, but no information was provided about this card. [ 75 ] Mr. McPherson said he is currently in debt and owes about $1.2 million in addition to the $1 million default judgment against him. He asserted that all his corporations have extensive debts and that he has given general securities on all interrelated properties and also signed personal guarantees. [ 76 ] Mr. McPherson argues that he has paid the vast majority of the marital debt.

He claims a great deal of joint debt exists within the business structures and is paid by and through the businesses. The interest-only mortgage on the home has been paid by Mr. McPherson. While the overall balance of the credit cards has remained the same, he has used the cards extensively in the time between separation and trial and has therefore both paid for the charges he has made and serviced the interest. b. Money Owed to the Canada Revenue Agency [ 77 ] It took quite some time to determine the following facts concerning the filing of Mr.

McPherson’s income tax returns and the circumstances of their indebtedness to the Canada Revenue Agency. [ 78 ] Mr. McPherson admitted to income splitting between himself and Mrs. McPherson throughout the marriage. He had not filed personal tax returns for either of them for the years 2004 through 2009. He testified that the Canada Revenue Agency (CRA) nevertheless audited both of them and assessed an amount owing for those years and demanded that they file income tax returns. [ 79 ] On January 9, 2009 Mr.

McPherson eventually filed tax returns for each of them for the five years between 2004 and 2008. [ 80 ] These tax returns were in evidence. In each and every income return filed for those years, Mr. McPherson claimed a loss. In 2004, a loss of $57,174.00; In 2005, a loss of $37,328.00; In 2006, a loss of $16,418.32; In 2007, a loss of $41,740.24; In 2008, a loss of $3,064.78; In 2009, a loss of $9,389.75; and In 2010, a loss of $13,754.51. [ 81 ] The last two returns were in evidence but were unsigned and undated. [ 82 ] Mr.

McPherson testified that he chose not to file the tax returns for 2009 and later because, he asserts, no tax is payable and filing returns is too difficult and time consuming when he is also undergoing the emotional turmoil of divorce. For the 2011 tax year, he testified, he made a profit of $1,938.41. In 2012 he claimed a loss of $720.06 as of the date of trial. There was no information presented at trial about what, if any, steps the CRA has taken in relation to the 2009 and 2010 tax returns. [ 83 ] On the basis of the information filed by Mr.

McPherson, the CRA reassessed him for the tax years 2004, 2005 and 2006. The one document in evidence pertaining to Mr. McPherson’s situation emanating from the CRA is a May 4, 2011 Statement of Account, indicating an amount previously owing recorded at $75,228.20; with additional interest of $113.43. The Statement of Account outlines that the following amounts are owed for reassessments conducted on the following tax years:

2004: $152,870.69; 2005: $187,683.05; and 2006: $121,267.55. [ 84 ] A further interest charge of $1621.18 was added. The total amount owing on this Statement of Account was $538,784.10 [ 85 ] Mr. McPherson testified that he personally has a tax bill of $538,784.10, based on reassessments for the tax years 2004 to 2006. Mrs. McPherson has a tax bill of $196,819.77. Both parties have appealed these reassessments. [ 86 ] Mr. McPherson seemed optimistic about his ability to reduce the overall amount of his tax indebtedness, a result which may also benefit Mrs. McPherson.

His appeal will address his claim that the CRA wrongly characterized as income approximately $300,000 in his bank account. He explained that during the relevant time monies went in and out of their various bank accounts and that he refinanced the matrimonial home. He says that he has documents in his possession to establish that this amount was in his account temporarily and was the result of a mortgage refinancing.

However, he also explained that he has chosen not to participate in the CRA’s ongoing audit or inquiry by providing them with this documentation at this time, preferring instead to appeal their assessment and file any such documents after the divorce proceedings have concluded and his stress is reduced. [ 87 ] Mrs. McPherson also testified that in December of 2010 Mr. McPherson cashed in her $40,000 RRSP to apply against taxes, but she does not know whose taxes he paid with that money. c. The Loan from His Girlfriend [ 88 ] Mr.

McPherson put into evidence a loan agreement dated February 15, 2011 between LK Freyer Investments LLC at [...] Rockcliff Road in Austin Texas as lender and Neil McPherson, the McPherson Financial Group, 904558 Alberta Ltd. and Mountain Properties International Inc, collectively, as the borrower. [ 89 ] In that document the lender promises to loan $1,250,000 USD, with advances to be made from time to time up to the principal amount of the loan, payable on 10 days notice, at an interest rate of 14% per annum. A general security is granted over the borrowers’ property. [ 90 ] Mr.

McPherson signed on behalf of himself and the three corporate entities listed as borrowers. A photocopied signature page signed by an unreadable name, with the word ”Manager” under the signature line for LK Freyer Investments was placed into evidence. Mr. McPherson testified that Ms. Lee Freyer Kennedy signed this loan agreement as the principal for the lender. In cross-examination it eventually became clear that Ms. Kennedy is the girlfriend with whom he lives in Texas. [ 91 ] In chief, Mr. McPherson testified that this loan enables him to pay the debts and expenses of the corporations to keep them alive.

At first he said he had drawn down about $890,000 by way of several advances. Later in his examination in chief he stated that by April 13, 2012 he believed he owed $894,073. 4. Financial Disclosure [ 92 ] Mr. McPherson, who was in possession of the financial information of the companies and parties, claims there has been complete disclosure. However, I find that disclosure has been neither complete nor timely, and there are very real limitations to the financial evidence Mr. McPherson has chosen to put before this court. Much of the information that has been withheld was demanded in the Notice to Disclose.

However, in a trial there is an independent and ongoing obligation to provide relevant and material documentation touching on the matters in issue. In the case at bar this means all documents that relate to Mr. McPherson’s personal and business financial resources, as his capacity to pay child and spousal support is very much in issue. Mr. McPherson did not provide complete, reliable or up to date information for all the entities at play, with the result that a complete and accurate picture of his financial resources was not in evidence.

[ 93 ] There were problems with Mr. McPherson providing disclosure throughout the various interim proceedings. The parties went to private arbitration in May 2010, as a result of which Mr. McPherson was required to make disclosure of his financial arrangements and to complete and file both of their 2009 personal tax returns. On September 7, 2010 Mr. McPherson was ordered to participate in an examination for discovery on September 21, 2010. This examination was subsequently adjourned by consent to October 14, 2010, which date was made peremptory on Mr. McPherson.

Eventually the parties were directed to attend before a Master on February 9 and 10, 2011 for questioning. [ 94 ] At trial there were frequent and significant gaps in the evidence provided. One example, but there are more, is that no document was placed into evidence by Mr. McPherson outlining his assets and liabilities. The Court had Mrs. MacPherson’s bankruptcy application which listed her assets and liabilities. [ 95 ] Mr. McPherson failed to provide key documents, either at all or not until very late points during the trial.

Examples of complete and current information being withheld include his personal and corporate income tax returns from 2010 and 2011 or any financial statements or information for any business after July 2011. Mr. McPherson testified that he has not filed tax returns for the McPherson Financial Group since 2008 because no profit was made.

I do not accept his explanation that he is too busy or emotionally distraught to fulfill his legal obligations. [ 96 ] Some financial statements, bank accounts and credit card statements were tendered midway through his cross-examination at trial. [ 97 ] The most salient example of this late disclosure concerns documents on the Family Trust. During discoveries and before trial Mr. McPherson repeatedly claimed that the specifics of the McPherson Family Trust were “confidential” and that for some undisclosed reason he was “not at liberty to discuss them.” [ 98 ] At trial, Mr.

McPherson testified that he placed funds borrowed from his girlfriend and received from other sources into the Trust account and then distributed them, as he thought necessary, to his various other accounts and/or corporations. The Family Trust thus was said to be a significant entry point for funds. At the close of his testimony, Mr. McPherson had not produced any statements, ledgers or bank records documenting the holdings or workings of the McPherson Family Trust.

Given his oral testimony about how he controlled funds through the Family Trust, this was a serious omission of key documents. [ 99 ] On the last day of trial Mr. McPherson applied to the Court for permission to be recalled to enter as exhibits, and explain, certain bank statements from the Family Trust. Counsel for Mr. McPherson said the documents were released at that point to prevent the Court from drawing an adverse inference from their obvious absence. Counsel for Mrs. McPherson objected, primarily on the grounds that Mr.

McPherson had an ongoing obligation to disclose, which he had failed to comply with; that he was given ample opportunity to substantiate what he had testified to and yet in the two and a half years since separation he had not produced these documents; and that he had been tainted, in the sense of having the benefit of having been fully cross-examined, and without counsel having ever seen these documents. While these are all valid arguments, the Court allowed Mr. McPherson to be recalled, based on overarching concerns of trial fairness and to promote accurate fact finding. [ 100 ] When called the second time Mr.

McPherson put into evidence records for two bank accounts associated with the McPherson Family Trust, being bank accounts 8 and 9 listed above. As will be explained in the next section, the records for these two bank accounts were very revealing and told a very different story than that told by Mr. McPherson in his previous oral testimony. [ 101 ] Even with the U.S. and Canadian accounts associated with the Family Trust, the supporting documentation was incomplete. Mr. McPherson referred to one other trading account tied to the Family Trust. Mr.

McPherson testified shares were bought and sold and that such amounts may appear as on-line transfers of funds into, or out of usually the U.S. funds account. Over time it also became clear that the court was missing another key piece of evidence, the documentation from the account used to hold the shares said to be owned by the Family Trust. This is very important as the bank account records showed that more than $723,000 has flowed from that investment account into the Family Trust bank accounts since separation. [ 102 ] Mr.

McPherson admitted that he did not disclose the tax returns for this Trust and such were not before the court either. [ 103 ] Even when documents were placed into evidence, they often had limited or no probative value, such that little or no weight could be attached to them. Mr. McPherson said that he personally creates and keeps all financial records for the various corporations and

entities with which he is involved. He uses a computer program called QuickBooks and he decides how funds are characterized as well as what amounts go where. [ 104 ] The Profit and Loss statements from the various companies provide limited reliable information as they were all unaudited and Mr. McPherson prepared them himself. Further, the back-up documents for the entries made on these statements were not in evidence or, if they were, they were not in any form that allowed for verification. Mr.

McPherson’s accounting was thus partial in both senses of that term: incomplete and self-interested. [ 105 ] Similarly, many deposits and withdrawals to and from the various bank accounts were made by way of transfer, on-line banking or ATM deposit, so there is no information about the source or recipient of many significant sums of money that went through these accounts. [ 106 ] A very few of the documents submitted in evidence by Mr. McPherson had passed through the hands of an accountant.

However, even they had limited probative value as they were issued under “notice to reader” advisories indicating the information in them had been provided by management without audit and that therefore the accountant could express no assurance about their completeness or accuracy. [ 107 ] There was never a forensic audit, either. I spent many hours working with the documents in evidence to try to understand the flow of funds. While a few entries matched up, many matters did not coincide with Mr. McPherson’s testimony or even make sense. For example, Mr.

McPherson pulled together some figures as at June 10, 2012 in an attempt to outline what he says each corporation owed the others. However, there is no supporting documentation for these loans and no convincing explanation as to how they fit in with the other documents he created and provided to the court. 5. Credibility Assessments [ 108 ] Each party attacked the credibility of the other. A. Mr. McPherson [ 109 ] Throughout his testimony, Mr. McPherson sought to create an appearance of vague earnings, extensive debt and overall impecuniosity.

After a thorough review of all the evidence before me I conclude that Mr. McPherson has not provided a complete, reliable or truthful account of his financial affairs. Mr. McPherson often spoke in generalities, using ambiguous references and repeated assertions, but many of these statements were unsupported by any independently verifiable and corroborating documentation. Many of the facts and figures found in documents which I do accept call his testimony into question, and many of his key assertions are not supported by the little reliable evidence before me.

Upon closer analysis, in many instances even the evidence that was produced does not fit together and there are unexplained inconsistencies. I am left with the overwhelming impression that information has been deliberately withheld and that which has been disclosed has been carefully contoured in an attempt to create a very specific financial impression. He wished matters to remain murky because what could be seen in clear waters would undercut Mr. McPherson’s credibility and bring into question his claims of impecuniosity as the reason for his refusal to pay support.

In my view, his conduct goes well beyond his counsel’s submission that Mr. McPherson is simply not a good bookkeeper and is, perhaps, prone to procrastination. [ 110 ] His general lack of credibility is both based on and buttressed by the court’s many factual findings which are contrary to Mr. McPherson’s assertions during testimony, some of which are outlined in the following

section of this judgment. At this point I provide three examples of his reduced credibility. [ 111 ] A first example concerns his personal income tax returns. The size of the re-assessments for the years 2004-06 tends to impugn the veracity of the initial returns. Further, at one point Mr. McPherson testified that he owes certain amounts because he “forgot” to mention to the CRA that he received $475,000 in capital gains from the sale of flow throw shares while under stress due to his father’s illness. It is not clear whether the CRA knew of these monies when they conducted their reassessment or whether the reassessment was based on other considerations.

[ 112 ] I do not accept that such amounts could be “forgotten” because of stress. Even if I accepted that his failure to include this amount was inadvertent, which I do not, there are two inferences I could draw from this admission. The first is that he is capable of forgetting sums of money of a significant size. The second is that, in his financial world, that amount of money was “forgettable”, meaning it was of such small import to his overall picture that it did not make much of an impression, somewhat like finding five dollars in the pocket of a jacket not worn since last winter. Neither inference helps Mr.

McPherson. [ 113 ] Secondly, I do not accept that he has failed to file income tax returns because of stress. His explanation for not dealing with the CRA on the audit for 2004-2006 and preferring to wait to give documents he has claims to have in his possession is not convincing. His behaviour is more consistent with an individual who believes ambiguity and vagueness on income and assets, coupled with frequent assertions regarding his debt load, may improve his position in the case at bar. [ 114 ] The third example concerns his lack of candour about the Family Trust, as previously noted.

The documents produced on the last day of trial show that over $2.5 million dollars went into the US Family Trust Account during the post-separation period. This is very important as Mr. McPherson testified that the U.S. Family Trust was used as the entry point for funds. The bank statements show that the deposits into this account were made in American funds in contrast to some withdrawals, which were noted as involving foreign currency.

Further, none of this $2.5 million can be traced as coming from any of his other businesses or accounts. [ 115 ] The very serious limitations on the financial evidence put forward by Mr. McPherson mean it is difficult to know how much money he received since separation or where it went. The evidence given by Mr. McPherson is so rife with inconsistencies, contradictions, and generalities it would be unsafe to accept any evidence, apart from admissions against his own interest, that is not corroborated by an independent source which I do accept. B. Mrs. McPherson [ 116 ] Mr.

McPherson attacked the credibility of Mrs. McPherson on many grounds. Counsel for Mr. McPherson questioned Mrs. McPherson alleging a prior inconsistent statement between a detailed police statement which she provided during an post-separation altercation and her description of the event in court. In my assessment, there is no material inconsistency and I accept Mrs. McPherson’s explanation that she merely gave the court a condensed version of events, but that the more detailed version was also accurate. [ 117 ] Second, they suggested that Mrs.

McPherson was not living at the matrimonial home when she applied for bankruptcy on April 16, 2012 and thus misrepresented her living arrangements to the trustee in bankruptcy so that the marital home could be exempt as her principal residence. Mrs. McPherson testified that on April 16, 2012 when she applied for bankruptcy she had moved some of her personal effects and toiletries into the matrimonial home. She stayed both there and in her apartment and had slept at the matrimonial home. She had both places and was moving things between. Ms.

Megan McPherson, who is not related to either party, works as an insolvency administrator. She testified that they do not have specific or fixed criteria for when a person is living in a residence. She testified that many people have multiple properties at the date of bankruptcy. Ms. Megan McPherson said that what is most important is what the person calls their principal residence. Ms. Megan McPherson understood that Mrs.

McPherson had clothes and toiletries at the matrimonial home and that she slept there on April 16, 2012 and testified that this would satisfy their requirements and establish the matrimonial home as Mrs. McPherson’s principal residence. No negative inference can be drawn from this testimony. [ 118 ] Mr. McPherson also alleged that Mrs. McPherson breached a confidentiality agreement he required her to sign before he provided her with certain disclosure; disclosure which she was entitled to.

He suggested this alleged breach was evidence of untrustworthiness and showed how she had jeopardized his business opportunities in Calgary. The agreement, such as it is, purports to prevent Mrs. McPherson from discussing Mr. McPherson’s business arrangements. He provided no evidence that she breached this agreement. None of the witnesses he called testified to any breach. Mrs. McPherson explained that while she may have discussed her marital situation with others, she did not reveal his business dealings.

Therefore I find that there has been no breach of this agreement nor is there any evidence that her conduct had any impact on his general business reputation. Indeed, Mrs. McPherson said that it was his actions which ruined his business reputation. [ 119 ] At trial Mrs. McPherson admitted she lied during questioning by Mr. McPherson’s counsel by saying she had paid back a rent cheque she had redirected from 90448 Alberta into her personal account. She explained that she felt justified in taking marital property she believed she had a right to, as she was not receiving the promised monthly funds from Mr.

McPherson and Christmas was approaching. She explained the lie on the basis that she was frustrated, overwhelmed and became frazzled as she thought the questioning was being conducted in an intimidating manner. Lying under oath is not to be encouraged or condoned and frequently operates to

undermine an individual’s overall credibility. However, in the circumstances of the case at bar Mrs. McPherson understood what a lie was and admitted to telling one. This was an isolated incident. At trial, she demonstrated an ability and commitment to telling the truth, she admitted when she did not know something, and I have accepted much of her evidence as being credible and reliable. [ 120 ] On a final matter, it appears that the eldest child’s truck and tools disappeared from the matrimonial home at some point. Mr. McPherson and the child suggested that Mrs.

McPherson sold these and retained the proceeds of sale. There is no evidence to support this assertion. Mrs. McPherson testified that when she moved into the matrimonial home on April 16 the truck and tools were not there and she knows nothing about them. No negative inference can be drawn as there is nothing to support the allegations against Mrs. McPherson and she provided an equally reasonable explanation. [ 121 ] Accordingly, although there have been a few issues surrounding her truthfulness and reliability, Mrs.

McPherson withstood a lengthy and detailed cross-examination without any sign that she was trying to hide the truth from the Court, and for the most

part I accept her evidence. [ 122 ] Mr. McPherson argues that Mrs. McPherson has not provided full disclosure either. For example, her credit card statements other than the joint Visa card were not in evidence. However, she provided sufficient information in other produced records so as to enable the court to obtain an accurate picture of her overall financial position. The same cannot be said for Mr. McPherson. 6. Findings Concerning Mr. McPherson ’ s Financial Position [ 123 ] After a full review of all the evidence I make the following findings. A. Mr. McPherson Controlled All Businesses and Assets [ 124 ] Mr.

McPherson controlled all assets and reporting of the family finances and business ventures and was the sole directing mind for all companies, both during the marriage and after separation. While Mrs. McPherson did some filing and other minor tasks, I accept that she did not understand the nature of the various holdings or direct their movement. While she admitted she was happy their family could live so well, it was Mr. McPherson who made the business and financial decisions. As part of the read-ins, Mr. McPherson also admitted “Mrs.

McPherson doesn’t have any clue of what goes on in any of these companies, nor has she ever.” [ 125 ] Mr. McPherson often acted unilaterally and without following proper corporate or procedural channels, especially after separation. Some corporations were struck from the Registry as he failed to file annual returns. In addition, there were no directors' or shareholders' resolutions in respect of many of the transactions, including loans, that he says were made. Nor did he at any time consult with Mrs. McPherson as to how the business should be conducted post-separation. [ 126 ] Mr.

McPherson admitted that they were engaged in income splitting and I find that he controlled the content of their tax and corporate returns, to the extent such returns were prepared. I accept Mrs. McPherson’s testimony that Mr. McPherson dealt with their income tax returns, that he had access to her digitally stored signature, that he had all the dealings with the CRA, that she had not spoken with any auditors and that the first time she saw her 2009 tax return was when she received it as part of Mr. McPherson's disclosure obligations in late 2011 or early 2012.

She testified that she assumed he knew what he was doing, but now says “I was wrong." B. Extensive Personal Expenses Were Run Through the Various Businesses by Mr. McPherson, Both Before and After Separation . [ 127 ] Mr. Malley, the accountant who worked with Mr. McPherson in 2004 and 2005, testified that like some other people who had companies, Mr. McPherson used the corporations like a “back pocket.” Mr. Malley said they disagreed on this issue and, in part, this led to the parting of their ways. The evidence I accept establishes this to be an accurate description of how Mr.

McPherson conducted himself at that time and continues to conduct himself to this day. Indeed, Mr. McPherson admitted that traditionally (meaning as a common and ongoing practice), he ran personal expenses out of the businesses, including all his travel expenses, cars, meals and promotion. He also admitted that he was running the eldest’s child’s business and personal expenses through Mountain Properties. A review of relevant evidence shows that most expenses of daily living were paid by a company, with limited exceptions, such as the

interest-only mortgage on the matrimonial home. [ 128 ] The extent, pattern and content of the various deductions raise serious questions. For example, Mr. McPherson testified that the last flight taken on the plane was August 3, 2009, in part because its engines are timed out and need to be replaced. However, the profit and loss statements he produced for 2010 and 2011 contain deductions for airplane fuel. [ 129 ] Three conclusions flow from this pattern of claiming personal expenditure as business expenses, which exists in all the McPherson corporations, but most of all in respect of McPherson Financial Group.

First, the Profit and Loss statements in evidence are not reliable indicators of the true value of the businesses or what they yield. Second, Mr. McPherson has received extensive personal benefits from these businesses, benefits that form part of his earnings. Third, he is prepared to put forward documents which contain, at best, partial truths. C. Mr. McPherson Treated all Assets as if they were Part of One Pool [ 130 ] I find that despite the separate legal existence of Mr.

McPherson personally and the McPherson Family Trust, the McPherson Financial Group; PowderCo; Mountain International and 904558 Alberta Inc., Mr. McPherson treats all such interests as one. Together, they form an amalgam, without regard to legal form, where monies are moved whenever he thinks it is warranted. These accounts are not only treated as a single pool, they have been used as extensions of himself, much like a multi-branch personal bank account. In short, all these assets form a single pool, and all these assets are marital assets. [ 131 ] This includes the Family Trust. While Mrs.

McPherson argued that it was never a trust because it lacked and failed to maintain the three certainties of a true trust, I need not decide that point as I find that Mr. McPherson used the Family Trust as a personal account, as he did with all the business accounts. By his own evidence he used the Family Trust as a place to hold funds that were then distributed or doled out as necessary to his other companies. In that way the funds available in each company which might be called upon to repay creditors were limited. He also admitted that he ran investment funds through the Trust accounts.

There was little evidence that it was a “trust” in anything but name. The Trust is used as a device, as just one more part of Mr. McPherson’s inter-related business dealings. D. Mr. McPherson has Significant Cash Flow: An Unexplained $2.5 million USD went into Bank Accounts Mr. McPherson Controlled [ 132 ] Only the monthly bank

summary statements for the Trust accounts were eventually placed in evidence, without any supporting documentation. Nevertheless they show that between February 2010 and the date of trial over $2.5 million dollars has gone into the USD Trust account. There is nothing to show where these funds originated, and in most cases the bank records merely indicate that there was a “deposit" or “on-line transfer.” Moreover, all of the deposits into the USD Trust account were made in American dollars.

This means they were not the subject of a transfer from Canadian or foreign currency accounts, because where such transfers occur, there is an express notation on the bank statement that a foreign currency exchange rate was applied.

Certainly this occurred each time money was taken from the USD Trust account and transferred to the Canadian Trust account by interbank or on-line transfers, and it is of note that both accounts are held by the same bank. [ 133 ] Certain funds entering the US Family Trust account merit special mention. [ 134 ] On February 1, 2011 there is a notation that a $225,000 deposit was made into the USD Trust account by “Funds transfer credit TT Aegis Texas”, with a $15 funds transfer fee marked TT AEGIS TEXAS. [ 135 ] On April 29, 2011 there were two further “Funds transfer credit TT 72008” of $33,971 and $86,249 respectively, each with a separate $15 funds transfer fee marked “TT 72008”.

Mr. McPherson testified that both payments came from one of his girlfriend’s companies, but on their face they appear to be associated with the AEGIS funds. [ 136 ] A further “deposit” of $138,687 was made on June 25, 2011 and was the subject of an immediate online transfer to places

unknown. It is noteworthy and troubling that this significant sum came in and out of the US Trust account on the exact same day: two transactions of identical amounts in a short period of time which involved a very specific and distinctive amount. This can be contrasted with the round figures of $75,000, $50,000 or $25,000 he put into the Canadian Trust account from time to time. Mr.

McPherson said that, again, the money came from one of his girlfriend’s companies and that he took the money out to invest in some stocks, but he said he could not remember what stocks he purchased. [ 137 ] On August 19, 2011 $100,000 was deposited and there was a withdrawal labeled “funds transfer Interactive Bro.” On September 1, 2011 a withdrawal of $100,030.40 was made and noted as “funds transfer Interactive Bro.” This strongly suggests that these monies were placed into a stock trading account, an account which Mr.

McPherson did not mention and for which the court has no documentation or information. [ 138 ] On November 4, 2011, $675,411.66 is simply listed as a “deposit.” Mr. McPherson testified that this money came from one of his girlfriend’s investment companies, but again there is no corroborative documentation of the source. [ 139 ] On March 27, 2012 there was an online transfer of $757,391.35 into the account. The next day Mr. McPherson transferred $850,030.37 in funds from the same account to “Hungry Otter Co.” Mr.

McPherson testified that he received this money by way of a stock sale and that the transfer was a repayment to his girlfriend of monies previously loaned. [ 140 ] There are two key aspects to the information about the Trust accounts. First, Mr. McPherson described the USD Trust account as the starting point for his system of moving money between his various accounts and companies. Some transactions track once the money enters his economic system, but many do not.

However, the crucial finding is that, with the exception of the monies that came from the admitted sale of shares or from the Aegis Texas fund, no satisfactory explanation has been provided for where the remainder of the $2.5 million came from and how it entered his account. I do not accept Mr. McPherson’s bold assertion that most of it came from the either his girlfriend or one of her investment companies. [ 141 ] The second aspect is that only about twenty-five percent of the $2.5 million USD went into the Canadian Trust account.

Many large amounts were simply withdrawn from the USD Trust account under the heading “scheduled payment ONLINE TRANSFER”, without any explanation of where the payments went.

Withdrawals by way of ONLINE TRANSFER in this category total $862, 287 and include the following: April 9, 2010 $50,000 May 10, 2010 $50,000 May 20, 2010 $8,600 June 25, 2010 $138,687 February 24, 2011 $150,000 May 13, 2011 $25,000 August 2, 2011 $40,000 November 18, 2011 $100,000 December 19, 2011 $300,000 [ 142 ] This money, combined with the amount paid to Hungry Otter, makes up the more than $1.8 million that was taken out of the USD Trust account but not put into the Canadian Trust account. E. Extensive Expenditures on Mr.

McPherson ’s Credit Cards [ 143 ] The manner in which he testified suggested that he had only one American Express card and that it was tied to his line of credit, and that both this card and the Diners Club card were at their limits from the time of separation to the time of trial. The clearly intended

inference was that the cards were not used during that period, that they were, and still remain, "maxed out." [ 144 ] He did produce statements of account for the American Express line of credit card for the months of January, February and March 2012. These three statements showed no purchase activity in the relevant time frame and only modest payments being made, with outstanding balances in the neighbourhood of $47,000. There were also 3 payment

summary statements from the Diners Club card in evidence, dated January to March 2012. While there was monthly activity on this card, including a payment to the Ranchman’s Club and other purchases, the overall indebtedness on this card remained within the $35-$37,000 range. [ 145 ] However, it appears that Mr. McPherson has more than one American Express card. In his evidence there were airplane tickets he purchased, which show at least two different American Express cards were being used.

When asked about this discrepancy he replied that maybe one was a replacement card as his account had been compromised, or maybe one was his girlfriend’s card. [ 146 ] The confusion persists, however, because it also became clear that different American Express cards were being paid from his different bank accounts. From the MFG Commission account, for example, payments were made under two separate headings: on November 3, 2010 there was an online payment of $3,488 from this account to “AMEX REGULAR”. The same day there was another online payment of $1,512.00 to “AMEX - L OF CRED.” .

The next day a further online payment of $2,757.33 was made to “AMEX REGULAR”. There are also separate payments made to AMEX REGULAR and AMEX Line of Credit reflected in the MFG General Account, and still other payments made to “AMEX,” such as one for $8,101.16 on April 19, 2012 or one for $15,373.84 on July 20, 2011. The different names linked to the different payments strongly suggest the existence of at least two, and as many as three, separate American Express Card accounts in Mr.

McPherson’s name. [ 147 ] While not all the credit card statements were in evidence for the relevant time frame, regardless of the number of credit cards a review of payments made from various bank accounts indicate that almost a quarter of a million dollars ($243,498) has been paid towards credit card debt in the period between separation and trial. Thus while the balances at separation and trial may be similar, there have been very significant expenditures run through and paid for on these cards. F.

Extensive Non-arm Length Transactions [ 148 ] The existence of so many transactions between related persons and companies is cause for caution and concern. This includes the extensive dealings between the various entities and the fact that certain investments and income involve his girlfriend and his half- brother. G. Insufficient Reliable Evidence of the Alleged “Loan ” made by his Girlfriend [ 149 ] In the absence of independent third party corroboration, this alleged loan has not been established on a balance of probabilities and to my satisfaction. Mr. McPherson’s girlfriend, Ms.

Kennedy, was not called as a witness at trial. Thus she was not present to testify to the loan agreement or to her signature, or explain the source of the funds she purportedly loaned to Mr. McPherson, or when or how the funds were advanced, or whether any part of them had been repaid. A full explanation, with supporting documentation, was required in this case as even if there had been a very large transfer of funds from Ms. Kennedy to Mr.

McPherson, there is no proof that the funds were hers originally and that he did not just move the funds to her and then back to himself via this purported loan in order to allow him to point to a source for the funds and to claim the existence of a debt in order to shield this money from consideration in relation to child or spousal support. [ 150 ] Further, Mr. McPherson’s statement that the transfer of $850,030.07 from the USD Trust account to Hungry Otter was a repayment of the loan makes no sense and is not accepted. Before the two Family Trust account records were produced, Mr.

McPherson testified in his initial examination in chief that by April 2012 he had drawn down about $894,000 on the “loan” made by his girlfriend. He said nothing about repayment, leaving the impression that he continued to be indebted in this amount. Further, the loan document he put into evidence is between him and Freyer Investments, and there is no mention of "Hungry Otter." [ 151 ] More importantly, a payment of $850,030 in March 2012 would have retired almost all of his stated indebtedness of $894, 073.

This evidence raises many unanswered questions and calls into question his explanation of the source of the funds.

H. No Findings are Made in Relation to his Investment Business [ 152 ] As a result of his career as an investment broker and adviser, which he embarked on after selling the insurance agency, there is a one million dollar default judgment against his investment company, which he says he is taking steps to have set aside. [ 153 ] There are also three lawsuits filed against the McPherson Financial Group, Inter-Se Financial Services and Mr. McPherson personally, arising in relation to certain debentures he sold to investors. Each plaintiff asserts that Mr.

McPherson was their financial and insurance advisor and recommended that they invest in the debentures of Inter-Se, with a guaranteed interest rate of either 8% or 10% and redeemable on 30 days notice. All parties allege that Mr. McPherson failed to inform them that Inter-Se was owned by McPherson Financial and that he was its sole director. One set of investors purchased $600,000 in debentures; another put in $85,000, but was repaid $45,000; and the third invested just over $213,000.

Each claim is for the return of the investment and payment of the promised interest, in each case based on different allegations of misrepresentation and misappropriation. [ 154 ] Friends and other investors also claim to have lost money from other transactions with Mr. McPherson. Three investors testified. Randy Repass, a longtime friend of both parties, testified that he made an initial investment through Mr. McPherson of $40,000 USD, that Mr. McPherson had paid him back just over $30,000 and that he was still hoping that Mr. MacPherson would return the remainder of his funds. [ 155 ] Mr.

Mike McGee is the current managing director of a sophisticated investment fund which invested $1.25 million in the SBM venture at a point before Mr. McGee joined the fund. Mr. McGee was a knowledgeable witness with a good grasp of commercial concepts, who clearly articulated the many concerns he had about his fund’s investment with SBM. Mr. McGee testified that when they requested information from Mr. McPherson it was at first withheld and then, after many persistent attempts to obtain the information, what was provided gave rise to even more questions and increasingly grave concerns.

The information was seen as partial and incomplete, raising many red flags. It contained numerous important inconsistencies about what was held and owed. Any documents eventually provided were unaudited, having prepared internally, and without oversight, by Mr. McPherson. This documentation, in Mr. McGee’s view, was “not worth the paper it was written on.” He added that he had never received the certified final version of the limited partnership agreement with signatory pages and that in contravention of the limited partnership agreement, no reports issued and no annual general meetings were ever held. Mr.

McPherson testified that he could not pass on information because he himself could not obtain it from the other entities involved in this complex scheme. [ 156 ] Mr. McGee was also troubled by the fact that only $3.5 million was raised, whereas SBM initially sought to raise $25 million, with most of the funds coming from two major parties. Mr. McGee also understood that Mr. McPherson was putting $1 million of his own money into this investment. He subsequently discovered, and Mr. McPherson admitted in testimony, that Mr. McPherson did not in fact make any personal contribution to this investment. [ 157 ] Mr.

McGee’s main concern was with where the funds actually went and the many non-arms-length transactions involved. He discerned that Mr. McPherson had invested approximately $1 million of the total SBM fund in a series of US-based funds called the “Aegis Funds”. Mr. McPherson said his half-brother, Brent Hickey, controlled the Aegis fund but that Mr. McPherson did not get to sit on the investment committee as originally promised. Mr.

McGee also believed that SBM invested $75,000 in a company which was a tenant in a commercial building owned by 904588 Alberta, which is owned by Mountain Properties International, which is owned by Mr. McPherson. [ 158 ] Another witness, who had been the McPhersons' next door neighbour, testified that she had invested $50,000, did not know where her money was, and had not received the paperwork she claims was promised to her. She received an unaudited statement in 2009 that led her to file a caveat against the matrimonial home.

Despite her professed fear that fraud had taken place, she admitted that she has taken no other action against Mr. McPherson, other than speaking with the RCMP and Mr. McGee. Mr. McPherson said her money went into SBM and while he thought there may have been a realiz

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