22 August 2023

Accounting Information: Johnson v. Johnson

 

They separated in 2014 and have kept lawyers very busy with a multitude of claims and accusations.  Maria Johnson has been ordered to pay $1.13 million to former spouse Craig; he asked for a suspended arrest warrant as leverage when seeking information about her business assets.

Before separation, the two jointly invested in a number of preschool businesses.  As part of their relationship property settlement, they agreed to divvy up the seven schools owned by their company, Little School Ltd: Ms Johnson took control of five; Mr Johnson two.

The market value of these schools is in dispute.

Armed with a court ruling in his favour for $1.13 million, Mr Johnson applied for a court-ordered examination of his former spouse’s net worth.  Court examinations on oath are used to identify assets that can be seized in payment of court judgments.

Included in the assets disclosed was Ms Johnson’s shareholding in Little School Ltd.  Mr Johnson questioned the value disclosed; it was the same dollar amount as an earlier December 2021 valuation he was aware of.  He asked to see the financial information used to derive the share value.  Ms Johnson refused.  The asset she owns is shares in the company; the company itself is a separate legal entity and it is not under examination in court, she said.

Further, her former spouse is seeking information about profitability for a collateral purpose, she said.  He is a business rival, operating his own preschool business.

Financial information about the company is necessary to determine an appropriate value for the company’s shares, Justice Gwyn ruled.  She ordered this information be disclosed for analysis by an accountant nominated by Mr Johnson’s lawyer.  Mr Johnson personally is not allowed access.

To ensure disclosure, Mr Johnson asked an arrest order be made, suspended pending production of the required accounting information within two weeks.  Justice Gwyn said it is for the court to decide later on any arrest if the required information is not provided.

Johnson v. Johnson – High Court (22.08.23)

23.142