Case study: Dying billionaire ‘Slimeball’ fathered multiple children

Note: The people described in this article are are hypothetical. Any resemblance to real persons, living or dead, is purely coincidental.

The situation

By the time he was diagnosed with bone cancer at age 50 in 2015, microchip wizard Richard Sitka (aka the Silicon North Slimeball) had a stack of patents that reached his shoulder.

He also, if the rumours were true, had a string of illegitimate children in both his native Waterloo, Ont., where he still resides, and across the country in greater Vancouver. Sitka, who has property in both provinces, has stalwartly refused to acknowledge he fathered any of the kids, and won’t give a DNA sample without a court order. Thus far, none of the women claiming his paternity in either province has gained such an order.

With an estimated net worth of $2 billion, no spouse or acknowledged children, and an announced intention to leave his entire estate to the Wilderness Trust, there’s a lot at stake for five Vancouver-area mothers who claim Sitka is the father of their children—ages 2, 3, 5, 9 and 12, respectively.

Three of the five B.C. women connected on a Facebook group dedicated to chronicling the Slimeball’s party antics. They located the other two through personal contacts. The five formed a support group and recently retained a lawyer with the aim of pursuing a paternity claim and securing child support payments.

Four of the women work at technology firms in high-paying jobs. Their net worths are adequate: two own homes, and all four have six figures scattered among TFSAs, RESPs, RRSPs and non-registered accounts. Two are married and have additional children, while two are single mothers who remain in their jobs in order to retain generous childcare benefits offered by their firms. The fifth mother worked as a waitress in a Vancouver coffeehouse when she met Sitka.

The experts

• 

  Anna Laing

  partner, Farris, Vaughan, Wills & Murphy LLP, Vancouver

• 

  Karon Bales

  founding partner, Bales Beall LLP, Toronto

  

• Lorne MacLean

  founder, MacLean Law, Vancouver

News of Sitka’s imminent death has the five wondering if they could also secure a legacy for their children. While they’re all strong environmentalists, kids still cost money to raise.

They’re also heartened by some news from Central Canada. A woman in Ontario has successfully brought forward a paternity suit, and is leading a group of six other women claiming he is the father of their children. The group of seven women also say they’ve obtained a DNA sample from Sitka. A private detective they’d hired followed Sitka to one of his last outings, a fast food restaurant near his latest Waterloo startup, where the spy managed to swipe the drinking straw from the billionaire’s soy milkshake.

Tests show a positive paternity match for all seven children in Ontario. And, while Sitka denies the straw came from his drink, paparazzi photos corroborate his visit. And, their lawyers told the press, “What are the odds that anyone else at the restaurant at that particular time could be genetically proven to have fathered all seven children?”

The five Vancouver-area mothers have reached out to the Ontario women, requesting access to the lab reports so they can conduct their own tests. So far, they have not been answered.

With the clock ticking before Sitka dies, the five B.C. plaintiffs need proof fast—getting him to admit his paternity will secure some promise of support now. Otherwise, they could spend years trying to wrangle money from the named parties in his will after he dies. What’s their next move?

Act quickly

MacLean: For the B.C. women, the priority is commencing a child support application immediately on behalf of each of the children—separately, not as a class action. They’re seeking a declaration of parentage under our B.C. Family Law Act because these parties aren’t married.

They’d be seeking a parentage test, and I’d say the threshold is really low now. Both in Ontario and in British Columbia, when a court is asked to decide whether a child is legitimate or not, it should have the best evidence available. A handy, cheap, quick test—I don’t think there’s any doubt this would be ordered.

The next thing would be seeking some sort of lump sum or security for child support, and that it be binding on the estate, which our Family Law Act allows a court to do.

You want to try to secure this before this man tries to transfer these assets, and to get a financial restraining order to prevent him from disposing of money and wealth. You’re probably going to bring a separate estate claim as well, and possibly some sort of fraudulent conveyance, if he tries to remove all assets out of his estate and give them to the Wilderness Trust before he dies.

Fraudulent conveyance is if these moms are coming after you on behalf of the child, and you don’t want them to succeed, so you try to get rid of the assets and put them in the name of the trust.

Laing: The first thing you do is put the Wilderness Trust on notice that a claim is being made against this fellow. To the extent that he takes steps to put assets out of his estate and into the hands of the Wilderness Trust, these claimants are going to look at it as a deliberate attempt to defeat their potential judgment. They will look at the Wilderness Trust as a party to this potential fraudulent conveyance.

The Wilderness Trust will presumably lawyer up, and be told, ‘You don’t want to be participating in a fraudulent conveyance.’ People have gone after lawyers before for participating in those schemes.

Who’s ahead?

Bales: If there is already an application started in Ontario, and one of the women has been successful, she would have started not just a paternity action but [also] a claim for support. If the court has found he is the father, based on the DNA test, there would be a support order. These applications are not at all difficult to start. If there is some nexus between the claimant and Mr. Sitka, that they had a relationship, that’s all you need to show. I agree with Lorne: the court’s going to make an order, because they need to determine who the parent is, especially if the gentleman is not well.

Laing: They all have some chance of success. With the ability in B.C. to get a declaration of paternity even after he dies, that will at least give the women the ability to bring some wills variation claims in B.C.

The women have different financial circumstances, so the [will variation] provisions for the children may not be equal. Some kids are in well-to-do families. Perhaps they do not have as great a need as the child whose mother works as a waitress.

A lump sum

MacLean: I’d be suing in B.C. for the B.C. women, and I would have the B.C. women sue in Ontario as well. Don’t delay, do it ASAP. You bring your application for support in B.C., you ask for it to be a lump sum, and you ask for it to be secured and charged against some of these assets before he dies.

You’ve got your wills variation and your fraudulent conveyance, but you’ve also got your claim in Ontario. You want to be a dependant; that’s what you need in Ontario. You need to have a finding of a paternity and an order for child support, which can come from B.C., [and then] you bring an estate claim in Ontario as well.

The only problem is you’d have two sets of litigation, as opposed to one court trying to decide it all. But we’ve got assets in two different jurisdictions, and if there are two different wills, that may be necessary.

So, step one, you claim he’s the dad. He says no. Step two, you get the test that proves he’s the dad. Step three, dad, now you pay. Step four, you give it to Ontario, and now you’re a dependant for the will claim.

Laing: B.C.’s got a robust will variation provision in the Wills, Estates, and Succession Act. Under that law, the court would look at making provision out of the estate for the children, and it wouldn’t be just the children in B.C. It would be all children, regardless of location.

The amount awarded doesn’t have to be tied to the support amount. The court could say, ‘OK, this guy’s got $2 billion, and 12 kids?’

Bales: $2 billion goes a long way.

Laing: His obligations to the children come ahead of obligations to anyone else, including charity.

A court will look at this and say, ‘There’s enough here to do right by everybody.’ There will be a sizeable amount that could be carved off for each of the kids. When I talk about a provision being made out of the estate, that’s going to be a provision out of the estate in B.C.

To the extent that he’s got most of his property outside of B.C. and real property here—like a $20-million Vancouver penthouse—that’s what the court can deal with. If we were saying there was $20 million in assets here in B.C., and $2 billion less $20 million in Ontario, the kids would get all the estate here.

MacLean: Then try your chances for additional top-up out of the Ontario courts.

Bales: An Ontario court looking at this might say, ‘Oh, there was $20 million in B.C., and the court in B.C. allocated it all to the kids. Well, they’re pretty well looked after.’ [The B.C. women] might not get an order in Ontario.

[For the women in Ontario] a support order is automatically binding on the payer’s estate, and the fraudulent conveyances legislation would apply if he, in the face of a support order for one child, starts trying to transfer his assets prior to death. You can unravel those transfers.

I agree with Anna’s suggestion to contact the Wilderness Trust and advise him and his lawyers. We would also send the order to the Ontario Family Responsibility Office, which collects support orders.

MacLean: My other question is if there are any spouses who say they were in a common-law relationship, because they can get 50%.

Laing: Well, that’s if he had no will. It would be $150,000, plus half of the remaining estate in B.C. For common law, they must have had a marriage-like relationship for not less than two years.

Sitka’s will

Laing: If he wanted to be really clever, he could have a will in Ontario that deals with his corporate interests and other things in Ontario, and then a separate will that deals with just his B.C. property. That will limit the B.C. claim to that B.C. property.

Bales: If you were acting for Mr. Sitka in Ontario, and you knew there were these various applications in the offing, one could suggest he do a will dealing with only his B.C. property, appointing a B.C. executor. Then you do what we call a private or corporate will, dealing with his corporate holdings, to save them from estate fees in Ontario on the assumption that he’s resident here.

Then you do a general will that deals with all his bank accounts, personal investment holdings, things in his name, etcetera, and name an Ontario executor. In Ontario, if he’s left a will and has not made adequate provision for the children, the test is not as wide as it is in British Columbia, as far as what the court can do. If a lump sum [for support] is ordered, it’s going to be paid into court and paid out to the child when they turn age 18. No common-law spouse inherits in Ontario. If there’s no will, a common-law spouse is only entitled to support if they lived together. You restrict the assets available to a B.C. court order under the B.C. legislation, and have the rest of the assets dealt with in Ontario. They would be subject to a dependant’s relief application in Ontario, which is a more limited application.

Interviewed by Simon Doyle, deputy editor of Advisor Group.