Law Times

LAW TIMES COVERING ONTARIO'S LEGAL SCENE | APRIL 29, 2019 5 www.lawtimesnews.com BY ANITA BAL AKRISHNAN Law Times AN Ontario judge says a father may provide redacted disclo- sures of his crypto-currency assets in a child support dis- pute. The father and respondent told the court that there was "a substantial risk that production of information could lead to at- tacks and give third parties the ability to access and perhaps steal these assets," according to the April 5 Superior Court of Justice decision, M.M.D. v. J.A.H., 2019 ONSC 2208. Jus- tice Llana Nakonechny wrote that there was a greater risk of prejudice to the father if he were required to produce the unre- dacted records. "I have no expert evidence on this issue. It is clearly a volatile, emerging, intangible source of wealth which the courts will have to grapple with more fre- quently in future," wrote Na- konechny in the decision. Evan Thomas, counsel at Os- ler Hoskin & Harcourt LLP in Toronto, who was not involved in the case, says the decision will be of interest to family law- yers and commercial lawyers alike, given that there is so little case law in the area of crypto- currency. For example, he says, privacy around crypto-currency hold- ings also came up in the context of a lawsuit involving creditors and Canadian company Quad- riga. Thomas noted that there have been reports of crypto-currency holders being attacked. "Looking beyond simply family law matters, there are going to be issues of disclosure of information about crypto- currency assets in potentially any kind of litigation. That in- formation may end up being filed in court. Then what's inter- esting is it can, absent a ceiling order, become a matter of public record," says Thomas. "The individual who had the crypto-currency was concerned not just for his privacy but also his personal security if informa- tion about his crypto-currency holdings was filed in court." The applicant and respon- dent are parents to 24-year-old university student "S.H.," ac- cording to the decision. The mother and applicant "has no income other than the $1,200 per month taxable child support she receives from the Respondent," although she has used savings, upcoming inheri- tance and money from a friend and romantic partner to pay for legal expenses, living costs and S.H.'s education, summing to annual expenses of $72,822 per year, Nakonechny wrote. The respondent is the self- employed producer of videos for the deaf and hearing impaired, with minimal debt and yearly expenses of $383,649, includ- ing monthly child support pay- ments for two other children of $2,500 and $2,100 each, said the decision. However, the respondent's earnings were disputed in the case, including his crypto- currency assets. The child support case had stagnated since 2006, until the applicant learned in 2017 that the respondent was worth "mil- lions of dollars," said the deci- sion. The respondent said his in- come was $225,000 in 2015, $249,000 in 2016 and $172,000 in 2017 (aside from a capital gain of about $2.8 million that year from "liquidating,") the decision said. But the applicant said the gross earnings from the business were between $600,000 and $1,000,000, pointing to his yearly expenses, a Cirrus air- craft, $3 million in managed funds and crypto-currency val- ued between $10 million and $18 million depending on the date. The value was $9,502,416 as at February 8, 2019, said the de- cision. "She questions the Respon- dent's failure to provide actual evidence of the value of this in- vestment and seeks production of unredacted statements of the Respondent's cryptocurrency holdings," the decision said. "The Respondent advises that he has or will produce the relevant documents available to him evidencing his bitcoin investments. However, he states that he does not have records of historical transactions and that evidence of the transactions themselves exist only at the time of exchange. Bitcoin 'accounts' are not held by third parties like bank accounts and, therefore, he says, the account documents listing transactions cannot be produced like traditional bank accounts." Julie Layne, principal of bou- tique firm Layne Family Law, who represented the applicant, declined to comment because the matter was still before the courts. Martha McCarthy and Maureen Edwards, who repre- sented the respondent, did not respond to a request for com- ment. LT Evan Thomas says a recent Superior Court decision will be helpful beyond the family law context. 'No expert evidence' on the issue Judge allows redactions on crypto-currency disclosure NEWS A FUNDRAISER FOR LAWYERS INTERNATIONAL FOOD ENTERPRISE (LIFE) FEATURING LAWYERS WHO PLAY MUSIC 72.<2*,$17621(6+27%$1' 6+$5.6$1':,&+28,%-$021 7KXUVGD\0D\30 '225623(1$730 R I V O L I )5(($'0,66,21 6,/(17$8&7,21 DONATIONS TO EITHER WORLD VISION OR THE STEPHEN LEWIS FOUNDATION WOULD BE GREATLY APPRECIATED Untitled-3 1 2019-04-09 4:39 PM

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