Financial analysis in the context of a matrimonial dispute

When conducting a forensic analysis in the context of a matrimonial dispute, the business valuator or the forensic accountant (the “Expert”) generally requests access to a number of documents deemed useful and to various parties to provide additional information and explanations. However, as we explain below, this access may be refused. This article provides examples of the types of documents and information usually requested by the Expert (joint expert or otherwise) to determine the value of the assets of the wealthiest spouse and the income earning ability of the wealthiest spouse (” notional income “or” real income “) for the purposes of calculating support for the spouse or child, the lump sum or the compensatory allowance. The article also argues why some of these documents and information are useful for the Expert’s analysis.
In Quebec, the rules governing expertise in the new Code of Civil Procedure2 are found, while the regulations governing child support payments prescribed by the new Code of Civil Procedure and the Civil Code of Québec3 are set out in the Quebec Code of Civil Procedure. Regulation respecting the determination of child support payments. The Civil Code contains the Child Support Determination Form (seven pages) and the contribution table. There are also Spousal Support Guidelines and the Federal Child Support Guidelines, which provide guidance on the definition and determination of notional income, taking into account, among other things, adjustments to terms of Schedule III (Income Adjustments).
In many cases, the less fortunate spouse may be a crucial source of information about the financial situation of the other spouse. When their marriage was in good shape, the Respondent may have revealed valuable information about the operation of its business, its investments, its other assets, its sources of cash flow, and the various economic benefits from which it controls (eg, nominees, trusts or foreign accounts). For example, the Claimant could claim that the activities of private enterprises (the “Companies”) over which the Defendant or he himself exercises control are in fact very profitable, and that he or the Defendant and these Companies have considerable undeclared income. The Claimant could also reveal that the family’s lifestyle is largely cash-settled by the Respondent, whether it is expensive cruises or other trips to exotic tourist complexes, where the family stays in hotels. luxurious suites of five-star hotels.

It may be noted that, ordinarily, personal travel expenses in the United States or Canada are incurred through the business, which recognizes them in its accounts as operating expenses (instead of expenses). advances to shareholders). Other personal and living expenses, such as babysitting, golf club membership, hockey tickets, landscaping, gardening, interior design, renovations housing, roof repairs, electronic equipment, the cottage, summer children’s summer camp, art, jewelry and vintage wines, are paid in cash by the Respondent. It could also reveal that the Applicant’s vehicles and children are leased by the company to the dealer and accounted for by the dealer as “Vehicle Expenses”, as are fuel, oil and maintenance. land and water vehicles (used at the country cottage or condominium in Florida). Or that condominium fees in Florida are accounted for by the company as travel expenses.
The Applicant could also hold important documents, such as copies of deposit slips or credit notes issued by banks abroad, plans and specifications from interior designers or architects and copies of invoices of suppliers.
Although this example may seem exaggerated, by experience, the authors of these lines know that often, the reality really looks like what is described here, as many of the decisions rendered by the Superior Court of Quebec (House after lengthy in camera proceedings in each case.
In the context of a matrimonial dispute, when assessing the Respondent’s participation in a business, the Expert prepares a detailed list of the documents and information he needs to perform the financial analysis.
The Respondent’s legal counsel may refuse to provide the client with the documents and information requested by the Expert on the grounds that most of the material is not relevant. In this case, the Claimant’s legal counsel could ask the Expert to prepare an affidavit to be filed with the court, in which he would indicate the documents and information he needs to conduct an income assessment and analysis. , specifying how each document or piece of information is necessary for the completion of a conclusive analysis to be used in the preparation of the expert report. The Expert (whether a joint expert or a consultant) could be questioned about the sworn statement by the Respondent’s legal counsel, requiring him to justify the merits of his claims (including including interviews or on-the-spot checks). Often, the Respondent’s legal counsel tries to show that, by his request for documents and information, the Expert is just going fishing. However, the latter should instead claim that he goes hunting to find out the truth.
This article provides a partial list of the documents and information often requested by the Expert as well as their usefulness for the purposes of his analysis. The last part of the list identifies other types of documents and information that the Expert might consider appropriate in the circumstances, without specifying for what reasons.