C.V. v. S.G., 2019 ONCJ 159

ONTARIO COURT OF JUSTICE CITATION: C.V. v. S.G. , 2019 ONCJ 159 DATE: 2019 03 12 COURT FILE No.: Toronto DFO-16-13893 BETWEEN: C. V. Applicant — AND — S. G. Respondent Before Justice Sheilagh O’Connell Heard on November 27, 2017, December 15, 2017, August 8, August 9, August 13 and August 30, 2018 Reasons for Judgment released on March 8, 2019 [1] , as amended on March 12, 2019 Judith M. Nicoll............................................................................... counsel for the applicant S.

G.................................................................................................................. on her own behalf O’CONNELL J.: Introduction: [ 1 ] The applicant father (the “father”) has brought a motion to change the child support provisions of a Domestic Agreement dated February 3, 2009 (“The Agreement”) regarding the child of their relationship. [ 2 ] In accordance with the terms of the Agreement, the father should pay $18,000.00 per month in child support for the child. [ 3 ] The respondent mother (the “mother”) opposes the father’s motion and seeks her own relief. [ 4 ] The child who is the subject of this motion to change (“CJ”) is now 10 years old. [ 5 ] The father is retired professional basketball player.

He earned a very high income with the NBA during his career. The father brought this motion to change following his retirement from basketball. [ 6 ] One of the central issues in this motion to change is the determination of the father’s income for child support purposes. Although I had been the case management judge in this proceeding, both parties requested that I conduct this motion to change as a focused hearing.

I did not conduct a settlement conference in this case. [ 7 ] The parties’ direct evidence was comprised of their sworn affidavits and financial statements, subject to cross-examination. [ 8 ] The hearing commenced before me on November 27, 2017. I heard two days of evidence on November 27 and December 17, 2017 [2] . [ 9 ] The hearing was then adjourned for a lengthy period of time.

[ 10 ] This was because during the cross-examination of the father on his sworn affidavit and financial statement in November of 2017, it became apparent that there were some significant omissions in his financial disclosure for reasons discussed later in this decision. [3] [ 11 ] The parties subsequently requested an adjournment of the hearing to obtain and examine the further, significant disclosure required. [ 12 ] On March 20, 2018, after receiving the father’s additional disclosure, the parties then agreed to retain a joint income valuator to conduct an analysis of the father’s sources of income for child support purposes.

A consent order was made on that day incorporating the terms of the parties’ agreement. [ 13 ] According to the March 20, 2018 Order, the parties also agreed to a without prejudice order reducing the father’s child support obligation to $13,500.00 per month, commencing April 18, 2018, in addition to one lump sum payment of $2,500.00 for the month of June 2018 for special expenses until further court order or agreement. [ 14 ] The valuator’s report regarding the father’s income was completed on June 29, 2018. [ 15 ] The hearing resumed before me on August 8, 2018.

I heard further evidence on August 8, August 9, August 13 and August 29, 2018. The father was permitted to file an updated affidavit and an updated sworn financial statement. [ 16 ] At the resumption of the hearing on August 8 th , the mother was no longer represented by counsel. She chose to be self- represented. She cross-examined the father and income valuator and introduced voluminous affidavit briefs which contained purported exhibits, many of which were inadmissible as evidence. [ 17 ] The mother was provided with the Ontario Court of Justice Guide for self-represented litigants.

The court also attempted to assist the mother, as a self-represented litigant, during the conduct of the trial. This proved to be very challenging at times, and I sincerely regret that I may have lost my patience on one or two occasions. [ 18 ] Again, the parties’ direct evidence was largely comprised of their sworn affidavits and financial statements, subject to cross- examination and additional testimony. The jointly retained expert, Ms Bonnie Prussky, also testified and her Expert Report was admitted into evidence. The Issues : [ 19 ] The main issues in this case are as follows: 1.

Whether there has been a change in circumstances warranting a variation of the child support provisions in the parties’ Domestic Agreement; 2. The determination of the father’s income for child support purposes, whether income should be imputed to him, and if so, how much; 3. Whether there should be a departure from the table amount of child support, given that the father’s income is over $150,000; 4. The determination of the child’s

section 7 expenses; 5. In assessing the

section 7 expenses and the parties’ support obligations, whether income should be imputed to the mother, and if so how much; 6. Whether the Domestic Agreement that the parties entered into should be set aside in its entirety and retroactive support and

section 7 expenses ordered; 7. Whether there should be retroactive determination of child support, and if so, whether an overpayment or an underpayment should be ordered, to what effective date and on what terms; 8. Whether the mother breached the terms of the Domestic Agreement and if so, what penalties or remedies can be considered when determining the issue of retroactivity. The Orders Sought by the Father : [ 20 ] The father seeks the following relief in his motion to change, in addition to his costs: 1.

An order that child support for the child be varied from January 1, 2017 for the child on the following terms: a. For the period January 1, 2017 to December 1, 2017, in the amount of $8,811.00 per months, based on the father’s annual income of $1,193,000.00, with credit to the father for the payments made during that time; b. From January 1, 2018 and thereafter, in the amount of $3,702.00 per month based on the father’s annual income of $483,684.00, with credit to the father of the payments made to date. 2. An Order that the father shall pay his pro-rated share of ordered

section 7 expenses, commencing September 1, 2018, on those expenses found by the Court to be appropriate and reasonable

section 7 expenses. 3. An Order that the mother shall refund the father the sum of $202,152.00, being the amount of overpayment of child support

that the father has made from January 1, 2017 to August 31, 2018, together with any further overpayments made until the Court releases this decision. The sum to be paid by the mother within 180 days of the order made. 4.

An order for annual exchange of financial disclosure and in particular, the father shall, by April 1, 2019, provide the details of his income and tax return for the prior year and make any adjusting payment arising from the actual income earned from all sources in 2018 and for January 1, 2019 to the date of recalculation such that the father shall pay child support based on his actual income rather than his projected income and will continue to do the same in each year following commencing April 30 th .

The Orders Sought by the Mother : [ 21 ] The mother is seeking the following relief regarding the financial issues, in addition to her costs: 1. An Order that ongoing child support continue to be paid at a rate of $18,000.00 per month based on income imputed to the father. In the alternative, an order that child support be in the amount of $17,402.00 per month, based on the average of the father’s last three years of income of $2,386,596.00, commencing January 1, 2017; 2. An order that the father pay his proportionate share of the child’s

section 7 expenses, being 90 percent of the total

section 7 expenses; 3. An order setting aside the Domestic Agreement dated February 3, 2009 and re-adjusting child support based on the father’s actual income for the years 2008 through to 2016 for a retroactive amount of child support owing in the amount of $2,469, 904.00 (without calculating

section 7 expenses). Background : [ 22 ] The father is 34 years old. The mother is 37 years old. [ 23 ] The parties are the biological parents of CJ. The parties never married but they had been in a relationship. As indicated, CJ is 10 years old. [ 24 ] The father has one other child of a subsequent relationship who is approximately three years old. The mother has no other children. [ 25 ] The parties met while the father was playing for the Toronto Raptors. The mother was working in Toronto and training to be a make-up artist. They began dating in 2005.

Their relationship ended in 2008 after CJ’s birth. [ 26 ] CJ lives with the respondent mother in Ontario and has done so since his birth. [ 27 ] The father lives in the United States. He was a professional basketball player with the National Basketball Association (NBA) for approximately eleven years. [ 28 ] The father has now retired from professional basketball. His NBA career ended in November of 2016 when he was 32 years old.

He is currently living in Texas and is involved in developing and investing in real estate and other business ventures. [ 29 ] The mother has been unemployed since July 8, 2014, according to her sworn financial statement and her evidence in this hearing. She owns two rental properties (condominiums) in Toronto that generate some income [4] for her and she currently plans to study real estate and become a real estate agent.

According to the mother’s sworn Financial Statement, dated November 5, 2017, her income is approximately $19,249.80 per annum, (excluding child support). [ 30 ] Prior to the mother’s unemployment, she was enrolled in a three year marketing program at Sheridan College, however, according to the mother’s affidavit, she was unable to complete the program for a number of reasons, including CJ’s increasing needs, the demands of this court case and injuries arising from a car accident causing physical health issues.

It is also the mother’s evidence that she also has a number of emotional health issues due to these court proceedings and her relationship with the father. [ 31 ] The custody and access issues between the parties have been the subject of contested litigation for a number of years, starting when CJ was two years old. Initially, these court proceedings were commenced by the father in 2010 to obtain access to CJ following the terms of the parties’ Domestic Agreement. [ 32 ] In 2015, the Office of the Children’s Lawyer released a report setting out its recommendations regarding the parenting issues.

The parties agreed and the report recommended that the mother maintain sole custody and the father have increased and generous holiday access with CJ. Recommendations regarding communication and counselling were also made. [ 33 ] Currently, CJ spends time with his father in the United States during American Thanksgiving, for two weeks over the Christmas holidays, and for six weeks in the summer, in addition to any other time that the parties are able to agree upon. The Domestic Agreement : [ 34 ] On February 3, 2009, parties entered into a domestic agreement (the “Domestic Agreement” or “Agreement”) regarding CJ.

The agreement provides, among many other provisions, that CJ reside primarily with his mother and have access with his father. [ 35 ] The Domestic Agreement further provides the following relevant provisions regarding the child support arrangements between the parties: 1. The father shall pay child support in the amount of $18,000.00 per month to the mother, commencing June 18, 2008. Pursuant to 5.1 of the Agreement, the child support was based on the father’s 2007 income of $2,500,000.00 (U.S.) and no income for

the mother. 2. From the $18,000.00 payable to the mother, $13,500.00 is to be directed into the mother’s account and $4,500.00 is to be directed into a savings account which the mother will hold in trust for CJ. 3. The funds in the saving account held in trust by the mother “will only be used and invested on the consent of both parties, and will be used to meet the reasonable needs of the child.

If there is any money remaining in this account once the child reaches the age of 24, the money will be released to the child. [The mother] will ensure that both parties receive regular monthly statements for this account.” [5] 4. The quantum of child support shall remain “non-variable for six years from June 18, 2008 until June 18, 2014 provided that [the father’s] income does not drop below $2.5 million (U.S.) per annum.

If it does, or in the event of any other material change in circumstances, then at [the father’s] sole option, the quantum of child support may be reviewed.” [Paragraph 5. 2 of the Agreement.] 5. Pursuant to paragraph 5.3 of the Agreement, the parties acknowledge that “given that the [father’s] income has increased for 2008 and will likely continue to increase each year, the amount of child support being paid is below the Guideline amount, but having regard to the age of the child and his current needs, the amount set out in this agreement fully satisfies all of the child’s financial needs.” 6.

As long as the father is paying support in accordance with the Agreement, there would be no

section 7 special or extraordinary expenses for the child. 7. When the child begins to live away from home for educational purposes, the parties will review the amount of child support payable by the father. 8. Paragraph 5.8 of the Agreement provides that “until support is adjusted by an amending agreement, court order or arbitration award, [the father] will continue to pay child support under the parties’ most recent written agreement, court order or arbitration award.” 9.

Pursuant to 5.9 of the Agreement, “[the mother] shall not ask [the father] for the financial information prescribed in s. 21 of the Guidelines before 6 years from the child’s date of birth.” 10. The father shall also pay retroactive child support to the mother in the amount of $144,000.00 pursuant to the terms of the agreement and concurrently with the execution of the agreement, the father will pay the mother $125,000.00 for her use as a down payment on a home she has purchased for herself and the child.

The mother agrees that she will protect the value of the home from any encumbrances that would reduce the current equity in the home and from any partner that she may enquire and ensure that he Will is consistent with this provision. 11. The $125,000.00 will be repaid to the father by taking into account an $84,633.21 credit to the mother on account of retroactive child support owed and the remaining balance of $40,366.79 to be repaid by a deduction in child support in the amount of $2,000.00 per month for 21 months (total $42,000.00). 12.

Paragraph 7 of the Agreement contains the Dispute Resolution clause, which provides that if the parties disagree about a reviewable or variable term of the Agreement, they will try to resolve the dispute through negotiation, either between themselves or with their respective counsel. If either party seeks a change in the child support or parenting arrangements, he or she will give the other, in writing: 1. notice of the proposed change; 2. evidence supporting the proposed change; and 3. any requests for information from the other necessary to determine the issue. 13.

Paragraph 8.1 of the Agreement provides that “the parties disagree as to whether or not the [mother] is entitled to spousal support but the issue of entitlement need not be determined because the parties agree that having regard to the amount of child support being paid by the [father], there will be no spousal support owing between the [parties].” 14.

In addition, commencing January 1, 2010, and annually thereafter until January of 2015, in addition to the child support above, the father agreed to pay into an investment account of his choosing, for the sole benefit and trust of the child. $25,000.00 per year for each additional $1,000,000.00 (U.S.) of income that the father earns in the previous year above $2,500,000.00 (U.S.). These funds shall be controlled by the father but not withdrawn without the consent of both parties.

The father shall provide the mother with annual proof of his income and evidence of what, if any, funds have been contributed to the investment account. The parties intend, subject to the child’s best interests, that the monies remaining in the account will be released to the child when he reaches 24 years of age. 15.

Paragraph 13. 8 of the Agreement provides that both parties have disclosed their income, assets, and other liabilities existing at the date of this Agreement, and have exchanged and provided all financial disclosure requested. [ 36 ] The evidence filed by both parties demonstrate that the Domestic Agreement was signed by the parties after lengthy negotiations. Both parties had independent legal advice.

The father was represented by the law firm of Cassels Brock and the mother was represented by the law firm of Epstein Cole. [ 37 ] At the time of the motion to change hearing, it was not disputed that the father has always paid child support in accordance with the terms of the Domestic Agreement until April 18, 2018, when the parties agreed to the without prejudice court order reducing the child support to $13,500.00 monthly pending further court order or agreement.

There is no evidence that the father has been in arrears. [ 38 ] Further, pursuant to paragraph 5 of the Agreement, the father has also paid into a trust account for CJ the additional sums of $25,000.00 per year for each additional $1,000,000.00 of income he earned the previous year. At the time of this hearing, the accumulated funds in the trust account set up by the father for CJ amounted to approximately $564,000.00 US or $741,575.00 Canadian. [ 39 ] In contrast, the savings account held by the mother in trust for CJ pursuant to the Agreement contained approximately

$12,000.00 Canadian at the time of this hearing. The mother has used most of the funds for a number of reasons, including household renovations, private school fees, her legal fees, and other expenses. [ 40 ] Other than the private school fees for CJ, which were paid from the account with the court’s permission following a contested motion, the father states that he has never consented to any of the other depletions of the trust account by the mother, particularly for her own legal fees and household renovations.

The father estimates that at this time, the mother should have at least $378,000.00 (Canadian dollars) set aside for CJ in the trust account held by her. [ 41 ] The mother denies this and states that the father was aware of all of her use of the funds from the savings account that she held in trust for CJ and that the father consented to this use, or at least did not object to the use of these funds for CJ’s benefit. [ 42 ] In 2014, the father brought a motion to remedy what he described as a breach of the mother’s fiduciary duty by using the funds in CJ’s savings account for her own benefit.

He sought damages for the breach of the agreement. The motion was contested. On October 20, 2014, for oral reasons delivered, the court dismissed the father’s motion for lack of jurisdiction, “without prejudice to the father re- framing the relief sought as a variation or enforcement issue under

section 35 of the Family Law Act ”. The father has now done so in this motion to change hearing. The Father’s Position at Trial: [ 43 ] The father states that the ongoing child support should now be adjusted to reflect his actual and current income for 2018, which he states is $483,684.00, based almost entirely based on the interest income and capital gain from his investments. [ 44 ] The father submits that since he has retired from the NBA, his income has been significantly reduced. He is no longer capable of working as a professional basketball player, despite his best efforts.

He is now 34 years old and he has not been able to obtain employment as a professional basketball player since November of 2016, when his last NBA contract ended. He states that at the time the Domestic Agreement was signed, it was inevitable that he would be retiring from basketball at some point. Both parties knew that this day was coming. [ 45 ] The father further submits that he is now re-inventing himself as a businessman and a real estate developer. He has leveraged some of his considerable savings from his basketball career for real estate and business development.

However, the new reality is still a considerably reduced monthly child support amount. [ 46 ] Further, he submits that this is not an appropriate case to impute income to an amount that is greater than the actual income that he earned in the first three months of 2018. He also seeks a retroactive adjustment to January 1, 2017, the day he provided formal notice of his request for a variation to the mother. He states that in 2017, his income was $1,193,000.00 and therefore for 2017, child support should be adjusted in accordance with that amount. [ 47 ] The father acknowledges that he should contribute to ongoing

section 7 expenses for CJ, in addition to basic child support, but he disputes a number of the expenses that the mother asserts are appropriate

section 7 expenses. Further, he submits that income should be imputed to the mother when determining both parties contribution towards these expenses. According to the father, the mother has been significantly underemployed for many years and she is capable of earning some income, at a minimum at $40,000.00 per annum. [ 48 ] Finally, the father submits that the mother has not come to court with clean hands.

She has been in direct breach of the parties’ Domestic Agreement for many years by using the funds in the savings account for CJ, (over and above the child support that she was receiving) for her own personal benefit without the consent of the father.

At this time, there should be well over $378,000.00 in that fund for CJ, but there is less than $12,000.00. [ 49 ] The father is not expecting re-payment of that amount but he asks the Court to consider this as an aggravating and relevant factor when determining what overpayment the mother owes to the father once child support has been retroactively adjusted to January of 2017. The Mother’s Position: [ 50 ] The mother submits that the child support should not be lowered and that it remain payable at $18,000.00 per month until CJ reaches the age of 18.

The mother asserts that income should be imputed to the father because he has not acted in good faith, misled the court, underreported his income since the beginning and has not been forthcoming on his financial statements.

She states that he has brought matters to court prematurely and lied on two separate occasions on numerous issues. [ 51 ] The mother further submits that the father has not made adequate efforts to seek other sources of income prior to or after his retirement from the NBA “to ensure that his financial obligation to his son would remain at the same level it has been since birth.” She asserts that the father did not make sufficient efforts to establish a professional basketball career overseas, such as in China or Europe, nor did he inquire into becoming a professional basketball coach for the NBA or any other leagues, which he is capable of doing, but has chosen not to do so. [ 52 ] The mother asserts that the father is earning and capable of earning significantly more than the interest income from his investments, including income from his business and real estate ventures which he initially failed to report during his testimony and in his sworn financial statement.

The mother submits that the court should draw an adverse inference against the father for his failure to make full and frank disclosure in these proceedings and impute income to him. [ 53 ] In the alternative, the mother submits that income should be imputed to the father at a minimum of $2, 386, 596.00 annually, which is the income that he earned in 2016 from his investments, real estate and business ventures, and professional basketball. [ 54 ] In the further alternative, the mother submits that the court should take a rolling average for his past three years of income (2015 to 2017) which totals $2, 119, 397.00 annually, when determining income for child support.

[ 55 ] The mother does not agree that income should be imputed to her when determining each parties’ contribution to CJ’s

section 7 expenses. She asserts that she has not been able to work outside of the home since July 2014 for a number of reasons, including being CJ’s primary caregiver, CJ’s special needs, the mother’s personal health issues and this litigation. [ 56 ] The mother further submits that she felt pressured and coerced into signing the original Agreement while she was in an abusive relationship with the father and that it is an unfair agreement. The Agreement should therefore be set aside and child support should be retroactively varied commencing 2010 based on the father’s actual income and a retroactive calculation of

section 7 expenses and spousal support. The mother asserts that the original Agreement was not to their son’s benefit because it did not reflect the father’s actual income, nor did it allow for any increases in child support payments for the following six years, even if the father’s income had increased. Moreover, the father was not required to pay any

section 7 expenses or spousal support. [ 57 ] In the alternative, the mother submits that any retroactive calculation should be made commencing 2014, the year the Domestic Agreement was to be reviewed by the parties. The mother submits that both parties brought a motion to change in 2014, and although the father withdrew his motion, she did not withdraw her motion. [ 58 ] Finally, the mother disputes that she breached the Domestic Agreement by using the monies that were to be held in trust for CJ in a separate savings account.

The mother submits that she started using this money to meet CJ’s “reasonable needs” immediately after the agreement was signed and that the father knew she was using these funds and consented to the use of these funds from the start, including to pay her legal expenses.

Summary of the Relevant Evidence : The Father’s Basketball Career : [ 59 ] The father was drafted by the NBA at the age of 21, while he was in his sophomore year of college. He did not complete college as a result of being drafted and he has played professional basketball in the NBA for eleven years, from 2005 to 2016. [ 60 ] The father has had a very successful career in basketball. The particulars of his career are as follows: 1. Toronto Raptors: 2005 to 2006 2. Milwaukee Bucks: 2006 to 2009 3. Detroit Pistons: 2009 to 2014 4.

Dallas Mavericks: 2014 to 2016 [ 61 ] It is not disputed that after the parties’ entered into the Domestic Agreement, the father started earning significantly more than $2.5 million US annually, which was what the child support was based upon in Agreement. [ 62 ] The father testified that the mother knew this would happen when she signed the Agreement and that the Agreement made specific reference to future increases in the father’s income as a professional basketball player.

The parties agreed that there would be no variation or increase for a minimum of 6 years, unless the father sought to decrease the support as a result of a change in his circumstances. The father testified that he had been very lucky in his basketball career in that he did not suffer any serious or career- ending injuries. [ 63 ] The father’s biggest earnings took places between 2009 and 2014 when he was playing with the Detroit Pistons. He signed a five year contract for $40,000,000 (40 million US) while playing with them.

In particular, the father reported the following total income on his US income tax returns, (converted into Canadian funds) since 2010: 1. 2010: $6,671,000 Canadian 2. 2011: $5,703,000 Canadian 3. 2012: $8,099,000 Canadian 4. 2013: $8,678,000 Canadian 5. 2014: $8,121,000 Canadian [ 64 ] The father sought to review the terms of the Domestic Agreement after his contract with the Detroit Pistons ended in April of 2014 and the father became a free agent.

The father was 30 years old at the time. [ 65 ] However, in 2014, the father was able to secure two one-year contracts with the Dallas Mavericks, earning an additional approximately $3.2 million US over the two year period. The father then withdrew his motion to change child support at that time because it was premature. [ 66 ] The father’s playing career with the NBA finally ended following the 2014/2015 season.

The father became a free agent again in July of 2016. [ 67 ] It is the father’s evidence that he had hoped that other options might be available for him in basketball, including finding a position with another team, playing in Europe or Asia, or becoming a coach. [ 68 ] The father testified that after he explored these options he has not been able to find employment in basketball. After becoming a free agent again, no teams were interested in inviting him to their training camps.

[ 69 ] The father testified that he has one of the best agents in basketball and that he has had this agent, Mr. Jeff Schwartz, since the beginning of his basketball career. The father instructed his agent to look for teams overseas, including China, when it became clear that there were no NBA offers. According to the father’s evidence, there were no offers in Europe, China or the NBA. The father also explored opportunities in the National Basketball Developmental League (“NBDL”) and was not successful. [ 70 ] The father last received NBA earnings on November 1, 2016, due to the way NBA contracts are paid.

He was 32 years old at the time. He testified that he was one of the oldest players on his team when his final NBA contract ended. [ 71 ] Mr. Schwartz did not testify in these proceedings. Instead, the father produced a letter signed by Mr. Schwartz (attached to the father’s Affidavit). It was not a sworn document and it was dated August 5, 2017. The letter sets out some of Mr. Schwartz’s efforts to procure employment for the father in basketball and his opinion regarding the father’s future in basketball.

The letter was inadmissible hearsay and not relied upon by the court. [ 72 ] In cross-examination on November 27, 2017 [6] , and again in August of 2018, the father testified that he had not looked for work as a basketball coach. He also testified in chief that he had no coaching experience. [ 73 ] When asked why he had not looked for work as a coach, the father testified that coaching was not an interest of his and that he had not made any applications for jobs as a coach in the United States or elsewhere.

He further testified that he believed a college degree is needed in order to be a coach, which he does not have, as he was drafted in his second year of college. He has not made efforts to complete his degree or contact his former college about coaching opportunities. [ 74 ] There was no expert evidence filed regarding the average career span of a professional basketball player. However, the father testified, based on his own personal experience in the profession, that four years is the average career span for a professional basketball player.

He testified that he felt very fortunate to be able to play for eleven years, as it had been his dream and passion to play in the NBA since he was ten years old. The Father’s Transition Plan: [ 75 ] The father gave evidence on November 27, 2017 that he had been thinking about a transition plan in 2014 or 2015 regarding his future after basketball.

He decided to get into real estate investment or as a real estate agent and that he was attempting to secure employment in that field. [ 76 ] In July of 2015, in an effort to plan for his post-basketball future, the father attended a two day symposium organized by the NBA and taught by Avison Young about real estate investing and career development after retiring. [ 77 ] Further, the father testified that he permanently re-located to Dallas in June of 2014. He did so to be close to family members and his daughter, and to work on developing a real estate business with his brother.

The father’s brother, Robert Carlos, is a real estate agent who also resides in Dallas and the father hoped to “one day start a real estate business with him when [the father] got some training.” [ 78 ] The father also deposed that he had reached out to the NBA regarding further real estate license courses. Since 2008, the NBA has been offering courses and assistance to permit players to finish their degrees.

The Father’s First Financial Statement and his Testimony on November 27, 2017 regarding his Financial Circumstances: [ 79 ] When this hearing started on November 27, 2017, the father relied on his sworn financial statement, dated August 7, 2017, which was filed with the court and formed part of his evidence (the “first financial statement”).

He further relied on his Affidavit sworn August 7, 2017, also filed with the court as part of his evidence. [ 80 ] At that time, the father deposed and testified that since November 1, 2016, after his last NBA contract ended, his only source of income was derived from his investment income of $424,800.00 Cdn based on an exchange rate of 1.3275. [ 81 ] The father deposed that he had also earned some very minimal income, approximately $1,000.00 (net of expenses) from speaking engagements regarding Alopecia in 2017. The father is a spokesman for the National Alopecia Areata Foundation.

For many years he has spoken to groups of children dealing with Alopecia, an autoimmune skin disease, which the father has lived with throughout his life. [ 82 ] In addition, the father testified that he has a non-profit entity called Alopecia Apparel that sells t-shirts and hats. He testified that all of the profits from that business go to the National Alopecia Areata Foundation. [ 83 ] According to the father’s first financial statement dated August 7, 2017, the father deposed that he had investments and savings of $10, 592, 339.00 US, from which he derived his investment income.

He had two properties, one in New York, which he valued at $1,400,000.00, and a property in Florida, which he valued at $2,227, 377.00.

He testified that the Florida property was purchased in 2015 for his own use and that he purchased the New York property approximately ten years ago for his mother. [ 84 ] In addition, the father estimated personal property of cars and jewelry at approximately $200,000.00. [ 85 ] The father deposed that he had no business interests in his first Financial Statement and that his income for support purposes was solely based on his investment income. [ 86 ] The father’s investments are held by three firms, JP Morgan, Wells Fargo, and Merrill Lynch.

The father testified that he retains an accounting and wealth management firm to manage his investments. He has been using their services, and in particular his accountant Mr. Tom Fitzgerald, for more than eleven years, since he was first drafted into the NBA.

[ 87 ] In addition to his personal investments and savings, the father also has monies in trust for CJ in the amount of $528, 947.00 US or $700, 854.00 Canadian. [7] [ 88 ] The father’s monthly expenses in his first financial statement totaled $86,817.00 per month or $1,041,804.00 per year. In addition to the monthly child support for CJ, the father also pays $1,710.00 US in child support for his other child, who resides in Dallas, Texas.

According to the father, the child support he pays for his daughter is pursuant to Texan law. [ 89 ] The father testified in November of 2017 that he was selling both the Florida and New York homes to reduce his expenses. He had purchased another home for this mother in Dallas, Texas (closer to family) for about $410,000.00 US on a line of credit and had recently sold her New York home for $1, 499,000.00 US.

Once the New York sale closed, he would pay off the line of credit for the purchase of the Dallas home for his mother. [ 90 ] In cross-examination, the father testified that he received no capital gain for the sale of the New York property because he purchased the property initially for 1.4 million, he sold it for 1. 499 million, and after his expenses and realtor fees, he will declare a loss.

There was no mortgage on the New York home, so the father estimated that he would “pocket” about one million after expenses. [ 91 ] During his examination on November 27, 2017, the father testified in chief that he owned one corporation, called CV3 Inc., which was not listed on his sworn financial statement. The father explained that he did not list CV3 because it does not generate income.

It is funded by him to pay family members and his personal chef while he was a basketball player for services that they provide him. [ 92 ] The father has paid multiple family members through CV3, including his brother and sister. The father pays his younger sister, a college student at the time, approximately $500.00 US per month from this corporation, essentially to help her out. The father also pays his mother $3,000.00 US per month through CV3.

This is his mother’s only source of income, as she is disabled. [ 93 ] In cross-examination, when asked by the mother’s previous counsel if the father’s accountant declares any of the monies payable to family members as salary, thereby permitting the father to claim deductions beneficial to him, the father first acknowledged that this may be accurate, then stated that he did not know, only that he funds the business, it does not generate income, and it operates annually at a loss. [ 94 ] During cross-examination, when asked if his name was on title for his Florida property, the father testified that his name is not on title and that the name on title is “7 Properties LLC”, a Limited Liability Corporation (LLC).

When asked why the father did not declare this LLC on his Financial Statement as a business interest, the father stated that it is just called the ‘Florida property’ on his financial statement and that the LLC did not own any other properties. [ 95 ] When asked if he filed tax returns for the Seven Properties LLC, that father testified that he assumed so, but that mother’s counsel would have to ask his accountant. [ 96 ] When asked if he reviewed the Request for Information served by the mother’s previous counsel, the father testified that the request went to his financial advisors.

When asked again, the father acknowledged that he had he reviewed the Request for Information and all of the financial documents produced at that time by his accountants. [ 97 ] When asked if he had any other business interests, that father testified that he did not. [ 98 ] When asked if he had purchased any other property in Texas, other than the property for his mother, the father testified that he had not purchased any other properties in Texas or otherwise. [ 99 ] When asked if he had purchased any other land in Texas, the father testified that he had not.

When asked if he had made any plans to purchase any further properties in Texas, the father testified that he had no plans to do so. [ 100 ] When asked if the name “13TX Properties means anything to you”, the father testified “No.” When asked if he owned a company under that name, the father testified “No.” [ 101 ] After this line of questioning, the mother’s counsel produced extracts of a private investigator’s report that the mother had obtained regarding the father’s business interests and assets. The Report alleged that the father owned 13TX Properties.

A copy was provided to the father’s counsel and shown to the father. Father’s counsel objected to the father being questioned on the extract in the report, given that the report had not been produced before and the author of the report was not available to testify at that hearing. [ 102 ] The report had never been produced before and it was certainly not admissible as an exhibit or as evidence in this hearing, but the court permitted the mother’s counsel to show the father the report in cross-examination and to question him on it, so as to avoid any violation of the rule in Brown v. Dunn .

The court also directed the mother’s counsel to provide the full report to father’s counsel. [ 103 ] When asked if there was any other information not disclosed on his Financial Statement or to the Court, the father testified that there was no further information to be disclosed. [ 104 ] When asked if the father operated any businesses with his brother, who is a real estate agent, the father testified that he did not. [ 105 ] When later asked if he had a company called “Believe In”, the father initially denied it and then testified he had forgotten about this company because it was something that he and his two brothers were going to develop as a non-profit tied to ‘Alopecia Apparel’ but they never did anything with it. [ 106 ] The father also testified that he did not disclose Believe In Inc. on his financial statement because it did not produce income. [ 107 ] When asked again he was involved in any other companies or real estate ventures, including a company called 31 Properties, the father testified that he did not.

[ 108 ] When asked if the name “Villanueva Ventures” meant anything to him the father testified that this was his brother’s company. When asked if he had an interest in the company, the father testified that he did not.

When asked how his brother obtained the operating capital for that company, the father testified, “You’d have to ask him.” When asked why the father was named as President of Villanueva’s Ventures on his LinkedIn Profile, the father testified that he did not create this LinkedIn profile and that the information contained in it was not true. [ 109 ] After this line of questioning continued, and with further objections from the father’s counsel about the private investigator’s report, the court adjourned the hearing until a full copy of the report was provided to the father and his counsel for review and the parties and counsel could have further discussions about the contents of the report and hopefully narrow the issues. [ 110 ] Prior to adjourning for the day, mother’s counsel showed the father a further document purporting to be a copy of a public record from the Dallas Central Appraisal District regarding a search for the company known as “13TX Properties LLC”.

The father was listed as manager of the company on this document. Counsel for the father again objected, the father again testified that he had no recollection of the company and that it did not “ring a bell”. When asked if the address listed on the document as the company address “ring[s] a bell”, the father testified that it was his accountant’s address. [ 111 ] After this hearing adjourned, the parties returned before me on December 15, 2017 with the intention to hopefully conclude the hearing on that day.

However, counsel for the father requested, on consent, that her client be re-called to give further evidence in chief, based in information that she had now obtained from the father’s accountant, and which came to light after the cross-examination by mother’s counsel. [ 112 ] Father’s counsel advised the court that she contacted the father’s accountant and financial advisor during the adjournment period and learned for the first time that the father’s accountant had not included certain properties and business interests when assisting the father with his financial statement.

Father’s counsel subsequently was able to obtain a list of further companies and real estate interests that the father owns. Father’s counsel was unaware of these business interests until that time. [ 113 ] Although an unusual request, the court permitted the father to be re-examined by his counsel, as it was agreed to by counsel. [ 114 ] The father testified in his direct evidence that his first financial statement was prepared with the assistance of his accountant and financial advisor with Monarch Wealth Management.

He testified that he understood that he only needed to include all of his personal income and personal property on his financial statement.

He and his accountant did not understand that he was to include all of his property, including all of business interests and companies on his financial statement. [ 115 ] The father now testified that he owned the following businesses or Limited Liability Corporations: a. 7 Properties LLC; b. 31 Propertied LLC; c. 70X Properties LLC; d. 13TX Properties LLC; e. 31TX Properties LLC; f. 824TX Properties LLC. [ 116 ] The father further testified that each of these LLCs own a number of different real estate properties, some of which generate rental income, and some which have been purchased to be renovated and re-sold at a profit. [ 117 ] During his evidence, the father identified approximately twenty different properties in total.

None of these properties or LLCs had been disclosed on his first financial statement, including a number of properties that he had purchased in Texas. [ 118 ] The father gave detailed direct evidence about when each of the properties were purchased and sold and what he planned to do with them. He described how he would purchase and renovate or fix up some of the properties and then sell them, or to “fix and flip” them, as he described it in his testimony.

He also described how he had purchased some vacant land in Texas with the view to building townhouses on the property and then once completed, he planned to sell them. The father also disclosed three lines of credit which he used to finance some of the purchases and renovations prior to re-sale. The lines of credit were secured against his considerable savings and real estate. [ 119 ] The father testified that he had purchased a number of these properties in 2017, after he left the NBA. He testified that his brother, who is a realtor, had been guiding him and “taking him under his wings”.

It was the father’s intention to develop a career of purchasing real estate for development and then later re-sale. In addition to being guided by his brother, he has also been educating himself about developing his real estate and business ventures. [ 120 ] The mother’s counsel was then permitted to cross-examine the father again for obvious reasons. The father acknowledged that he had previously testified under cross-examination that he had no knowledge of 13TX Properties LLC during the hearing on November 27 th .

He now testified that he had let his brother “take the lead” on a lot of things for him and that there were certain things that he did not know. [ 121 ] When reminded that he denied having any interest in any businesses with his brother at the last hearing, the father testified that he had “misunderstood the question”. The father responded in a similar manner to a number of other questions. [ 122 ] At the conclusion of this hearing date, the parties agreed to a lengthier adjournment as the father now had to prepare and

significantly revise his financial statement and produce significantly more financial disclosure regarding his Limited Liability Corporations, businesses and properties. [ 123 ] The matter returned on January 19, 2018, but counsel agreed that it could not proceed on that day for a number of reasons, including a number of outstanding disclosure issues arising out of the recent evidence provided by the father. [ 124 ] The matter was again adjourned to March 20, 2018 and on that date the parties agreed to further adjourn the hearing to retain a financial expert to provide a valuation of the father’s income for child support purposes.

The hearing did not resume until August 8, 2018. The Father’s Revised Financial Statement and Affidavit Sworn July 26, 2018 [ 125 ] At the resumption of the hearing on August 8, 2018, the father filed an updated and revised Financial Statement and Affidavit as well as a document brief containing significantly more financial disclosure, including a USB stick containing all of the disclosure that he provided to the income valuator in this hearing. [ 126 ] The fresh Financial Statement dated July 26, 2018, was significantly different than the Financial Statement dated August 7, 2017.

It was the father’s evidence that this Financial Statement now contained all of his real estate holdings and all of his Limited Liability Corporations. [ 127 ] The father also filed an updated Affidavit dated July 26, 2018 in which he again provided evidence that the financial advisors who assisted him with his previous financial statement did not realize that both his personal and business assets had to be included. [ 128 ] The father deposed that he “mistakenly believed that he did not have to note any properties that he owned through a business or did not have any net income.” He regretted his mistake and deposed that this was not intentional but an error on his part and on the part of his accountant and financial advisors. [ 129 ] In cross-examination, the father was shown the Request for Information, dated October 23, 2017 that was served upon him prior to the commencement of this hearing.

This was filed as an exhibit in this proceeding. The Request clearly seeks all of the father’s financial documents regarding business interests. The father testified that he did not remember seeing this document and again reiterated that he made a mistake and “let the professionals do their job.” [ 130 ] The father was also shown the Court Endorsement dated May 3, 2017 which included as a

schedule a detailed list of disclosure requested by PMVI, an income valuator that the mother had previously retained in 2015 (but did not testify in this hearing).

Again, the list of disclosure requested was very similar to the Request for Disclosure delivered in October of 2017 and included a request for “details with supporting documentation of all income earned from all sources, from January 1, 2015 to present” and a request for details with supporting documentation” of all real estate activities and involvement with real estate. [ 131 ] The father testified that he was aware that PMVI wanted further disclosure but did not know that this disclosure had also been requested, nor was he aware that the mother’s income valuator had sent an email to the father’s accountant requesting this disclosure. [ 132 ] The updated Financial Statement indicated the following: 1.

The father’ deposed that as of July 26, 2018, his total annual income from all sources in 2018 continued to be only derived from his investment income, now at $483, 684.00, derived from his savings and investments now valued at $11,745.547.72, (not including the trust account for CJ). During his testimony, the father confirmed this amount was in US dollars; 2. The father listed his current monthly personal expenses at $67,604.50, or $811, 244.00 annually. 3. For the year 2017, the father now deposed that his income from all sources was $1,193, 298 Cdn, in accordance with the income valuator’s calculation.

In his previous financial statement, the father deposed that his income for 2017 was $424, 800.00, based on his investment income; 4. Under the “Interests in Business” section, the father now listed ownership of seven Limited Liability Corporations (LLCs) containing nineteen real estate holdings and five additional bank accounts, as well as three other corporations, including a corporation called “Villanueva Enterprises” in which the father owns an 80 percent interest in a sports bar called “Kulture”, which he valued at $500,000.00. The father valued his business and real estate holdings at $7,334,621.01.

He did not include any income, dividends, or otherwise from any of his business holdings; 5. Under the “Debts” section, the father listed three lines of credit from the banks that hold his investments totaling $5,919, 297.95. The father deposed that he purchased the properties listed under his LLCs through lines of credit at a very low interest rate from the banks where he holds his investments. He gets a preferred rate as his investments are used as collateral for the lines of credit. 6.

The father now listed his personal property (cars and jewelry etc.) to be estimated at $300,000.00 (increased from $200,000.00 as he had estimated in his previous statement); 7. The father’s net worth, according to the updated financial statement, is $13,991.776.71; [ 133 ] In his updated Affidavit and evidence at the resumption of the hearing on August 8, 2018, the father testified that he is trying to carve out a new career for himself as a real estate developer. He has been purchasing reasonably priced properties in the Dallas area, renovating them and selling them.

He has also tried to re-develop one or two properties by building other properties on the land he had purchased. [ 134 ] In addition to his real estate ventures, it was the father’s evidence that he recently invested $500,000.00 in a restaurant venture

called “Kulture” in Dallas with his brother through Villanueva Enterprises LLC. He testified that he wanted to diversify his portfolio and thought that this could be another source of income that could be derived more quickly, as real estate development can be a slower return. [ 135 ] The father testified that there are three partners in the business, and they each put in $500,000.00.

The father’s brother is not one of the three partners but the father testified that he gave him a 20 percent interest in this investment because he brought him this opportunity and manages his interest in the business. [ 136 ] The restaurant had its official opening in April of 2018, but had a “soft launch” prior to that a few months earlier. He has not seen any return on his investment at this time. He did not estimate what the future profits from this business would be.

The income valuator did not ask him to provide projections of its future profitability. [ 137 ] It was the father’s evidence that his income for 2018 is far less than the income he earned in 2017, which was $1, 193, 298.00 Cdn, according to the income valuator, and derived from investment income and the rent and capital gains income from the purchase renovation and sale of real estate. [ 138 ] The father testified that at the time of the resumption of the hearing on August 8, 2018, he had not earned any capital gains, rental income or business income and that he did not know what further sales, if any, he would have in 2018.

He continued to assert that his income for 2018 should be based solely on the investment and dividend income derived from his investments. [ 139 ] However, the father also testified that he currently had one property up for sale and he recently sold his Florida property after it had been on the market for little over a year. The property was sold for 2.25 million and the father will receive a “balloon payment” of 1.25 million in January of 2019 after the mortgage is paid.

According to the father, there will be no capital gain on this property as it operated at a loss, however, he will receive the balloon payment. [ 140 ] When explaining how he calculated his income for 2018, the father deposed as follows: based on the income derived from his investments for the first three months of 2018 ($158,421.00), according to the income valuator, the father obtained advice from his financial advisors regarding what further investment income he had to June 30 th , 2018. He was advised by his accountant that his investment income to June 30 th was $148, 014.00.

He then multiplied this by 2 and added in the capital gains he earned in the first three months of 2018. [ 141 ] The father did not annualize his capital gains as he did not know what further sales he would have in 2018. He then converted the amounts to Canadian dollars to get an estimated income of $483, 684.00 for child support purposes. [ 142 ] Based on this analysis, it was the father’s position that the basic child support should be set at $3,702.00 per month, which is the Table amount for an income of $483, 684.00 under the Child Support Guidelines and not including

section 7 expenses. [ 143 ] When asked to explain how he was able to fund personal monthly living expenses of $67, 604.50, or $811,254.00 annually, on an annual income of $483,684.00, the father testified that he is spending more than what he is making but he is currently funding his personal expenses from his chequing and savings accounts. [ 144 ] The father testified that he was able to save a considerable amount of money while he was playing professional basketball and he is drawing from his savings at this time, but he is hoping that will change. [ 145 ] During his testimony in August of 2017, the father testified that he started transitioning from being basketball player to real estate developer in 2017 and although he is not there yet and still learning, he is hoping that will change. [ 146 ] The father was asked about non-arms lengths payments to family members from his real estate businesses.

The father confirmed that he pays his current girlfriend $2,000.00 per month and his brother, who is a real estate agent, $1,000.00 per month, in addition to any commission that he earns on the sales of his properties. He testified that his girlfriend provides all of the landscaping, interior design, colour, appliance choices, flooring, and staging etc. for his properties and that she is probably paid significantly less than market value for her services.

The father’s brother is the general contractor and manager for his Houston properties. [ 147 ] He continues to pay his mother $3,000.00 US per month and his sister approximately $500.00 US per month to assist with their support. [ 148 ] The father was also asked about the sale price for the New York property that he had purchased for this mother. The father testified that he sold the New York property occupied by his mother on January 3, 2018 for $1, 499,000.00 US. The house was mortgage free at the time of sale, however, he had purchased it in 2007 for 1.4 million.

He testified that he received 1.4 million in cash and used that money to pay off his credit lines. The Evidence of Ms Bonnie D. Prussky, BBM, DIFA, CBV: [ 149 ] Ms. Prussky is a Principal at AP Valuations Limited, a valuation firm specializing in matrimonial valuations and other litigation matters. Pursuant to a consent court order dated March 20, 2018, entered into when the mother was represented by counsel, Ms.

Prussky was jointly retained to calculate the father’s income for support purposes for the years 2015, 2016, 2017, and for the first three months of 2018, from January 1 st to March 31, 2018. [ 150 ] Ms Prussky prepared an Expert Report as defined by the Canadian Institute of Chartered Business Valuators and testified in this hearing. A voir dire was first conducted regarding Ms Prussky’s qualifications to provide opinion evidence as an expert in this hearing. [ 151 ] Ms. Prussky is a Chartered Business Valuator who holds a Diploma in Investigative and Forensic Accounting (DIFA).

She has been a member of the Canadian Institute of Chartered Business Valuators since 1997, and obtained her Bachelor of Business Management (BBM) in 1990. She has specialized exclusively in business valuations and litigation matters primarily concerning family

law issues, as well as commercial litigation, for more than 20 years. Her casework includes valuing business interests, calculating personal income and net family property, and conducting financial investigations on behalf of individuals, corporations and enforcement agencies. [ 152 ] Ms. Prussky has testified as an expert witness in numerous court cases and arbitration hearings. She has also lectured to law professionals on business and income valuations in relation to family law matters. [ 153 ] Ms Prussky testified that she has conducted hundreds of income calculations in family law cases for support purposes.

She estimated that she has been qualified as an expert witness in income calculation for support purposes approximately fifteen times because most of the cases settle. [ 154 ] When asked, Ms Prussky further testified that she is a member in good standing with her regulating body and that she has never had any disciplinary matters. [ 155 ] Ms Prussky’s executed an Acknowledgment of Expert’s Duty, which was attached to her Report in accordance with Rule 20.1 of the Family Law Rules . [ 156 ] Ms Prussky also states in her Report that in calculating the father’s income, she has been guided by the Federal Child Support Guidelines . [ 157 ] Although Ms.

Prussky was jointly engaged by the father and mother to provide evidence in relation to this proceeding, the father paid all of Ms. Prussky’s fees, including her witness fee for this hearing. Ms Prussky testified that she received payment of approximately $20,000.00 for her services from the father. She testified that her fees were based strictly on professional time expended and were not contingent on the outcome of these proceedings. [ 158 ] In conducting her analysis, Ms Prussky met with the father’s counsel and the mother at an initial meeting that lasted approximately 1.5 hours.

She again met with the mother alone prior to the release of her report in a meeting which also lasted approximately 1.5 hours. [ 159 ] During her engagement, Ms Prussky testified that the mother had alerted her to significant concerns that the mother had regarding the father’s financial disclosure or lack thereof.

The mother had directed Ms Prussky to a number of real estate ventures, social media reports, and the private investigator’s report that the mother had commissioned regarding the assets and business interests not disclosed in the father’s first financial statement. [ 160 ] In addition, Ms Prussky received a substantial amount of disclosure from the father’s lawyer, the father’s accountant and the mother. She itemized the disclosure in her report and set out the scope of her review as well as its limitations.

Ms Prussky testified that in conducting her investigation, she considered the mother’s concerns carefully. [ 161 ] The mother also sent email correspondence to Ms Prussky in which she identified a number of concerns regarding potential business ventures and interests that the father may have with a number of third parties such as his girlfriend, his brother and a developer from New York, based on social media reports and other information that the mother had obtained.

Ms Prussky summarized the mother’s concerns in an email to the father’s counsel and his accountant requesting further information prior to finalizing her report. Ms Prussky advised that she received a detailed response to her queries and did not have any further changes to her Report. [ 162 ] Following the voir dire , Ms. Prussky was qualified as an expert to provide opinion evidence regarding the calculation of the father’s income for support purposes for the years 2015, 2016, 2017 and the period ending March 31, 2018 (only the first three months of 2018). [ 163 ] Ms.

Prussky’s Report dated June 29, 2018 and her Curriculum Vitae were filed as exhibits in this hearing.

Summary of Ms Prussky’s Findings : [ 164 ] Based on her scope of review, assumptions and restrictions noted, Ms Prussky calculated the father’s income for support purposes by taking the total income reported in his U.S. tax returns, subject to adjustments that she made following her investigation: 1.

January to March 2018 : $200, 355.00 (comprised of interest and dividend income, capital gains, rental real estate and other income, subject to adjustments made and converted into Canadian dollars); 2. 2017 : $1,193, 298.00 (comprised of interest and dividend income, business income, capital gains, net rental real estate income, royalty income from the NBPA, and converted into Canadian dollars); 3. 2016 : $2, 689, 774.00 (Comprised of salary from professional basketball, interest and dividend income, net rental income and royalty income and converted to Canadian dollars); 4. 2015 : $2, 475,119.00 (Comprised of salary from professional basketball, interest and dividend income, capital gains, net rental income, royalty, and other income, and converted into Canadian dollars). [ 165 ] According to her findings, in the years 2015 and 2016, the father’s “professional income” from basketball included his salary from the Dallas Mavericks, his endorsement income, paid through CV3, Inc., the father’s company, and royalties from the sale of merchandise paid by the National Basketball Players’ Association. [ 166 ] During those years, the father also earned income from ordinary dividends, business income, capital gains and rental real estate income. [ 167 ] Since retiring from basketball, Ms Prussky determined that the father’s income is comprised of the following, and continues to

be his source of income currently: 1. “Passive Income”: income earned on the father’s investments and managed by others, such as interest and dividends from investments and capital gains earned on investment accounts; 2.

Income (including rent and capital gains) from the purchase, renovation and sale of real estate held personally and through Limited Liability Corporations (LLCs), the real estate being located in Texas, Florida, Wisconsin and New York,; [ 168 ] Ms Prussky determined that during the years under review, the father owned the following LLCs and real estate: 1. 7 Properties LLC which owns the father’s former residence in Florida (sold in July of 2018) and a home in Orlando Florida occupied by his father; 2. 7TX Properties LLC which owns three properties in Texas; 3. 13TX Properties LLC, which owns four properties in Texas, including a property occupied by the father’s mother); 4. 31 Properties LLC which owned three properties in New York that were sold in 2014; 5. 31TX Properties LLC, which owns two properties in Texas; 6. 824TX, which owns six properties in Texas, including two properties purchased in 2018. [ 169 ] Most of the properties owned by the father are being renovated for the purposes of resale.

The net rental income and gains from the sale of the real estate owned by the LLCs and owned personally by the father are reported on the father’s personal income tax returns. [ 170 ] In addition, Ms Prussky determined that during the years under review, the father owned the following additional companies: 1. 100% of CV3, Inc. (“CV3”), a company that previously generated endorsement income, formed for income tax purposes. Ms Prussky found that CV3 earned minimal income, paid various discretionary and other personal expenses and reported losses each year.

She assumed that the losses generated by CV3 related to discretionary expenses and added back these amounts to the father’s income for support purposes; 2. 80% of Villanueva Enterprise LLC, which owns a one-third interest in a Kulture, a sports bar in Houston, Texas. Ms Prussky found that to date, the father has not earned any income from this LLC or Kulture.

The father’s brother owns the other 20% of this company; 3. 33% of BelieveIn LLC (which was owned by the father and two of his brothers), the holding company for Alopecia Apparel, a non-profit organization that promotes awareness of Alopecia through the sale of clothing. Ms Prussky was advised that the father did not earn any income from Alopecia Apparel.

Ms Prussky testified that she understand BelieveIn no longer exists and that she understood that Alopecia Apparel did not earn any income; [ 171 ] In addition, Ms Prussky found that the father had previously owned 50% of Villanueva Ventures LLC, a company which owned real estate in New York. The father’s brother was the other owner. The father transferred his interest to his brother in 2014, prior to the years in review under Ms Prussky’s mandate.

However, the sale of the father’s shares in the LLC to his brother was reported as a gain on his 2017 income tax return. [ 172 ] This LLC owned one real estate holding in New York that was purchased for $320,000.00 in 2016 and sold in July of 2017 for $645,000.00. When questioned, Ms Prussky testified that the capital gain from the sale of this property was not reported on the father’s 2017 income tax return, only the sale of his shares to his brother.

When asked what the gain on the sale of the shares was reported, Ms Prussky was unable to ascertain the specific amount during her testimony. [ 173 ] In determining the father’s income for support purposes, Ms Prussky made the following adjustments: 1. All of the losses from CV3, Inc. were added back for the reasons noted above at paragraph 142 of this Judgment; 2. The deferred gain from the sale of a New York property that the father sold in December of 2017 was added back.

The father received a total gain of $158,000.00 for the sale of the property but reported the gain based on the instalment method, and reported $59, 249.00 on his 2017 income tax return. Ms Prussky reflected the total gain of $158,000.00 in 2017; 3. All tax exempt interest and dividend income was added back in accordance with the Child Support Guidelines ; 4. Business income was deducted. Ms Prussky was advised by the father’s accountants that the business income reported on the father’s tax return represented reimbursed expenses and did not reflect actual income.

She therefore deducted those amounts from the father’s income; 5. When calculating the income for the first three months of 2018 (Jan. 1 to March 31 st ), Ms Prussky assumed that the taxable interest, dividends, rental income and capital gains earned on investment income approximated prior years. Only the actual capital gain income from the sale of real estate received during those three months was reflected. [ 174 ] Ms Prussky also made a number of significant assumptions, as set out in her Report, including: 1.

The unaudited financial information and personal income tax returns reviewed would not change materially if subject to an audit;

2. The father’s personal income tax returns included income from all sources; 3. The father did not earn any income from CV3, Inc., Alopecia Apparel, BelieveIn LLC, or Villanueva Enterprise, LLC (Kulture Sports Bar); 4. The information received accurately reflects the father’s corporate interests and real estate holdings; 5. The expenses related to the real estate properties occupied by the father’s parents were not deducted for income tax purposes; 6.

There were no material party-related or personal discretionary expenses paid on behalf of the father or any related parties that were deducted from the father’s personal income tax returns; 7. Information provided by the father was accurate and free of any material misstatement. [ 175 ] When questioned, Ms Prussky acknowledged that the father reported net rental losses in his income tax returns, however, she did not see an itemized list of those expenses. She was further unaware if the father was charging his brother a below market rate for the property that he is renting from the father.

She testified that if the father is doing this, then the difference between what the brother is charging his brother and the market rate could be imputed to the father for child support purposes. [ 176 ] Ms Prussky further acknowledged that there were a number of non-arms’ length transactions in the father’s business activities, such as the sale of his shares in Villanueva Ventures LLC to his brother in 2014 for an undetermined amount and the salary paid to his girlfriend for her work on his properties.

Ms Prussky testified that if the salary to his girlfriend was a straight income splitting arrangement, then it would be appropriate to add that expense back into the father’s income, however, she understood that his girlfriend was getting paid for a number of services relating his property. [ 177 ] Ms Prussky testified that she did not receive any itemized reports regarding the expenses deducted to determine the net rental income and net capital gains reported on the father’s income tax returns.

Other than the commissions paid at the market rate for the sale of his properties, none of the other expenses deducted to calculate the net capital gain were listed on his income tax returns. [ 178 ] Ms Prussky further testified that she did not examine a detailed HUD statement in connection with the sale of properties. She further explained that in any event, renovation costs are not included in HUD [8] Statements. She confirmed that she only added back the expenses related to CV3, when determining the father’s income for support purposes.

She received some invoices for renovations in some of the documents provided. [ 179 ] Ms Prussky testified that she did not examine bank statements or credit card statements. When questioned, Ms Prussky testified that she did not conduct what is called a “lifestyle review”.

She testified that she had not been requested to do this as part of her initial mandate, as confirmed in the joint engagement letter. [ 180 ] When asked what the difference was between an income report and a lifestyle review, Ms Prussky testified that a lifestyle review is when she is asked by a client to look at how much money somebody is spending by examining their bank statements, credit card statements and living and personal expenses.

It is then up to the court to determine whether how much money somebody spends is reflective of how much income they have. [ 181 ] Ms Prussky explained that a lifestyle review is usually conducted in cases where the person has not filed income tax returns or financial statements, earns a cash income or has other sources of income that are not easily quantifiable. [ 182 ] Ms Prussky testified that she did not believe that this was the case here because she had the father’s personal income tax returns, including his basketball contracts and salary, and further financial disclosure regarding his investments and real estate development.

She calculated the father’s income based on the father’s reports and the other information provided to her. [ 183 ] When asked if she was aware of the discrepancy between the father’s first and second sworn financial statements in this hearing, Ms Prussky testified that she was advised that the first financial statement had been prepared in error. The Mother’s Evidence : [ 184 ] The mother filed a very lengthy affidavit which formed part of her evidence in chief. The Affidavit was approximately sixty- eight single spaced pages in length (566 lengthy paragraphs) and contained over one thousand pages of exhibits.

As indicated previously, many of the exhibits were inadmissible in these proceedings and the court did not rely upon them. However, the court reviewed the affidavit and all exhibits carefully. [ 185 ] The mother also filed her sworn financial statement dated with attachments… Early History according to Mother : [ 186 ] It is the mother’s evidence that the parties started dating in November of 2005 when the father was playing for the Toronto Raptors. At the time, the father was 21 years old and the mother was 23 years old. [ 187 ] The mother testified that she was financially independent when she met the father.

She had purchased a pre-construction condominium with a down payment of 25 percent and had been working in a hospital and as a bartender. At the same time, she was training to be a make-up artist. [ 188 ] However, at the time the parties met, the mother deposed that she had been unemployed for one year as she had been involved in a motor vehicle accident in December of 2004. She was unable to work for one year due to her injuries and was just returning to work shorter shifts and modified duties. The mother had received a financial settlement for treatment and loss of income as a result of the car

accident. [ 189 ] According to the mother, in May of 2006, the mother went to stay with the father in New York during off season until October of 2006, a period of approximately four months. It is her evidence that she spent the majority of her time with the father during that period although she returned to Canada “from time to time” so as not to lose her health insurance. [ 190 ] When the father was traded to Milwaukee, the mother joined the father in Milwaukee from sometime after May of 2006 to September of 2007.

The parties’ relationship ended and mother returned to Canada in September of 2007 after she learned that she was pregnant with CJ. However, the mother testified that the parties had and “on again off again” intimate relationship again for a period of time in 2010 and 2011. [ 191 ] It is the mother’s evidence that at the beginning of the parties’ relationship, the father was loving and supportive, but as things progressed the relationship deteriorated due to the father’s increasing verbal and physical abuse towards her.

The mother states that she left the father in September of 2007 after a very intense altercation between them when she discovered that she was pregnant with CJ. The parties separated and the mother returned to Toronto. [ 192 ] The mother states that when she was in Milwaukee with the father, she gave up her ability to work and that prior to moving, the father agreed to pay for a full-time esthetician and make-up artist program in Milwaukee and help her to obtain a work visa as a make-up artist.

The mother’s evidence is that while she was attending school full-time to be a make-up artist, she also acted as the main caretaker of the home, including grocery shopping, cleaning, laundry, meal preparation and pet care. Mother’s Evidence regarding the Domestic Agreement : [ 193 ] It is the mother’s evidence that at the time of the negotiation of the Domestic Agreement, she was emotionally distraught and physically exhausted from all of the father’s abuse and after eight months of negotiation. She states that she was not in the right frame of mind to be negotiating or finalizing any Agreement.

The mother testified that she was under duress when she signed the Agreement. [ 194 ] The mother testified that she shared her concerns with her lawyer. It is the mother’s evidence that following an incident on January 4, 2009, less than one month before the parties signed the Agreement, the father was abusing her in the presence of their son. The mother states that she recorded this incident and shared it with her lawyer prior to signing the Agreement.

It is the mother’s evidence that her lawyer advised her prior to signing the Agreement to stay at a hotel for all future access visits she facilitated for the father, in order to minimize the possibility of future conflict. The mother previously filed this audio recording in another Affidavit, dated April 10, 2014 that she filed in this proceeding. [ 195 ] According to the mother, she was exhausted from the battling back and forth with the father and signed the Agreement in the hopes that the Applicant’s abuse would stop.

It is the mother’s evidence that at the time that she signed the Agreement, she was “young and naïve” and could not have a

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