Qualifying as an Expert Witness
Disqualification by Court of Individual as a Valuation Expert
Refusal by Court to let Individual Give Opinion Evidence
Rogers v. Rogers (2013 ONSC 1859) was one of nineteen cases that were reported in the Canadian Institute of Chartered Business Valuators’ (CICBV) February 2014 edition of The Valuation Law Review. I obtained permission from the CICBV to provide the attached excerpt from the Review on the case.
The Court did not recognize an individual as a valuation expert or to give valuation opinion evidence. The reasons include the fact that the individual was not a CBV, he was not arm’s length, his report lacked key information (scope of review, key assumptions and any restrictions). The court cited a host of reasons for its finding, 12 of which are set out below.
THE VALUATION LAW REVIEW — Family Law Decisions
Volume 20, Issue 1, February 2014
The following has been reprinted with permission from the Canadian Institute of Chartered Business Valuators, 2011. Unauthorized copying or reproducing in any way is strictly prohibited.
Rogers v. Rogers, 2013 ONSC 1859
The parties were married in 2000 and separated in 2009. One of the issues was a valuation of the husband’s 20% interest in a company known as Digital Holdings on the date of marriage. During the course of the marriage, all of the shares of the corporation were sold to a third party purchaser for $2.5 million.
A year before the marriage, in 1999, the firm’s external Chartered Accountants had done a valuation of the company for estate freeze purposes. At the time the estate freeze, the common shares in the company were valued at zero and the preferred shares were valued at $1.3 million.
The external Chartered Accountants had been the Chartered Accountants for the company from 1995 until its sale in 2006.
The husband had commissioned Mr. Goldsmith, an accountant, to prepare a report valuing his 20% interest in the company on the date of marriage. The court refused to recognize Mr. Goldsmith as an expert or to give opinion evidence. The court stated a host of reasons including:
1. He was a social friend of Mr. Rogers’ parents. They socialized together. Thus, Goldsmith could not be described as being at arm’s length;
2. He worked actively in the negotiations, resulting in the successful sale of the business in 2006. As such, the court viewed him as an “employee” of the husband’s father;
3. He admitted in cross-examination, that the respondent’s father was a “fan” of his and referred business to him;
4. He admitted that he was paid or compensated to prepare his report and to give testimony;
5. He admitted that he was not a chartered business valuator (although he testified that he did business valuations in his practice);
6. He had never been qualified as an expert witness prior to his court appearance;
7. He admitted that he never had any training or education offered by the Canadian Institute of Chartered Business Valuators. He admitted that he was not familiar with their Practice Standards;
8. The report, itself, lacked any “scope of review”, “key assumptions”, and any “restrictions” due to the limited material available to him;
9. He testified that he relied on information that was “largely in his head” retrospectively as to the documents he would have needed. It appeared that such documents were not made available to him;
10. He admitted that the company’s potential “future” contracts were based on his memory;
11. He testified that if documents produced to him contradicted his memory, he would have to change his opinion;
12. He admitted, in cross-examination, that there would be no purchaser for a 20% interest in the closely-held corporation.