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Former Shark Tank Star Ordered to Pay Ex-Wife $125,000 Per Month in Support

Former Shark Tank Star Ordered to Pay Ex-Wife $125,000 Per Month in Support

In a recent ruling by the Ontario court the husband, well-known TV-celebrity Robert Herjavec was ordered to pay his ex-wife, Diane Plese, $125,000 per month in spousal support for an indeterminate period.  He was also ordered to pay her about $25 million, representing an equalization payment and her entitlement to shares in a cottage and vacation property. This is in addition to about $20 million she already received in assets from the marriage.

Herjavec, one of the stars of television’s Shark Tank and Dragon’s Den reality shows, had been married to Plese for 24 years before they split in 2014.  Their separation was prompted by the revelation that he had been having an extramarital affair.

At stake in the divorce was what they considered an “unimaginable fortune,” which had snowballed from an original $31 million sale of Herjavec’s cyber-security company called “Brak” in 2001.  This funded the development of a similar, equally-lucrative business later on.  The influx of wealth had a significant effect on the couple’s lifestyle, as the court explained:

After the Brak sale, the family’s spending patterns changed dramatically.  A new family home was purchased for over $7 million.  It was located in the exclusive Bridle Path area of Toronto.  In addition to many bedrooms, bathrooms, living and dining and family room, it also featured an indoor swimming pool, a ballroom, teahouse, and a huge garage, large enough to store many vehicles. 

They acquired a new recreational property on Fisher Island in Florida.  It cost more than $2.6 million.  Boats and cars were purchased.  The children were sent to exclusive private schools.  Ultimately, Ms. Plese stopped working outside the home altogether.

In the context of settling their family law issues, the court turned to valuing the former couple’s property, including their 22,500-square-foot matrimonial home now valued at around $17 million, their $5 million cottage, their $4.8 million property in Fisher Island, as well as various boats, vehicles, and even their Aeroplan points.  This was a considerable challenge due to the significant difference in valuations provided by their respective experts:   For example, respecting the value each expert attributed to Herjavec’s current business alone, there was a spread of $30 million.

After concluding that Plese was entitled to about $25 million for her share of these items, the court turned to the issue of how much spousal support Herjavec should pay her.  In doing so, the court cited from a paragraph of his own book, as evidence of the importance of the marriage and Plese’s support to his success. The court said:

This was a lengthy marriage of nearly three decades.  The parties both testified they worked as a team.   Mr. Herjavec himself perhaps put it best in his book titled Driven: How to Succeed in Business and in Life.  At page 286 he says:

I’m fortunate in so many ways to have Diane as my spouse.  She earned her optometry degree over six strenuous years of study, years that included countless nights of study and work as an intern.  She knows what it’s like to work eighteen or twenty hours a day in pursuit of a goal; she understands the motivation behind it.  Having obtained her degree she could count on a good income from steady employment, providing a safety net if one of my projects went belly up.  This was enormous comfort to both of us, especially during my first years as an entrepreneur. 

Clearly, Ms. Plese’s contributions from her own work were critical to Mr. Herjavec’s financial success, particularly in the early years of the marriage when he began Brak.   Brak, of course, provided the foundation for [the later company] and its ultimate success.  What Ms. Plese lost when she stopped working outside the home was that very steady employment and her own financial safety net created from her own separate earnings.  This is a compensable loss.

In all the circumstances, the court concluded that Plese was entitled to spousal support of $125,000 per month, with no set termination date.  Although this amount was actually lower than what the Spousal Support Advisory Guidelines would otherwise dictate, it incorporated the ongoing capital positions of each of the former spouses, and represented a reasonable balancing of the economic consequences of the end of their marriage.

For the full text of the decision, see:

Plese v. Herjavec, 2018

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders.  For more information, visit us at RussellAlexander.com

Cottages as Matrimonial Homes – It Can Get Complicated

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Cottages as Matrimonial Homes – It Can Get Complicated

With the recent improvement in the weather, it seems my mind is on cottages lately. I have written before  that matrimonial homes enjoy special legislated protection under Ontario family law. I have also written about how second homes and often-used cottages – and sometimes even sailboats can sometimes satisfy the legal requirements for what constitutes a “matrimonial home” in some cases.

Sometimes the status of a particular property falls into the “grey zone”, or separated/divorcing spouses may disagree as to whether it should be included as part of their matrimonial home. In such cases it may be necessary to go to court to get a declaration one way or the other.

The recent case of Logotech v. McConnell included this kind of application – but it was actually a lender who dragged the married couple to court to get the declaration. This is because there were several other elements in the mix, namely: the lender, a failed investment, a mortgage in default, a looming power of sale, the husband’s bankruptcy, and an injunction application. All of this “thickened the plot”, legally speaking.

The husband had mortgaged certain Muskoka cottage property he owned as part of a family compound of several cottages. To do so he swore a declaration – which the court later concluded was likely false – to the effect that the properties were not occupied by him and his wife as family residences, and that a different property had been designated as a matrimonial home. This technically eliminated the need to get his wife’s written spousal consent to the cottage mortgage, so it was all arranged without her knowledge.

When the husband allowed the mortgage to go into default, the lender asked the court to declare the cottage excluded from the “matrimonial home” designation, so that it could take unimpeded steps to enforce it security by way of power of sale. It also asked for an order forcing the couple to give up possession.

The wife resisted, and in fact asked the court for an injunction to stop the lender’s mortgage enforcement process until the entire matter could be brought to a full trial.

The court looked at the facts, and found many of them in dispute. Contrary to the husband’s sworn declaration, there was actually strong evidence that the family regularly used the cottage during both the summer and the winter each year since 2002. There was also strong evidence that the lender knew the property was a cottage and was used as such. Finally, the validity of the lender’s mortgage was up for debate, they had been arranged by the husband without the wife’s knowledge and without the spousal consent as required by law.

As part of applying the test for an injunction, the court remarked that the wife would naturally suffer irreparable harm if she had to give up possession, pre-trial, of a property in which she likely had a legal interest. When viewed in the balance against the risk of harm to the lender if the injunction is not granted, it was evidence that the wife faced a much more severe risk of harm.

The court granted the wife’s request for injunction, which prevented the lender from taking mortgage enforcement steps, and ordered that the question of whether the cottage was a matrimonial home should be fully explored at trial. The validity of the mortgages would also be given scrutiny by the court at that time.

For the full text of the decision, see:

Logotech Inc. v. McConnell, 2012 ONSC 4386

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders. For more information, visit us our main site.

 

Case Update: Family Island Dispute Goes to Appeal

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Case Update: Family Island Dispute Goes to Appeal

A few years ago I wrote about a case called Clarke v. Johnson which involved a dispute over a family-owned island on which a camp had been built.
Martha, the matriarch of the family was one-third owner (the other two thirds were owned by her deceased husband’s siblings) and the question was whether Martha’s son-in-law Donald should be allowed to use the camp after his 1991 separation from Martha’s daughter Victoria. In happier times and with Martha’s permission, Victoria and Donald had built a $15,000 pre-fabricated cottage on Martha’s portion of the property. Post-separation, Victoria wanted nothing to do with the camp at all and never visited it even once, whereas Donald continued to use the camp with their children over the years.

One of those children was Wesley, who had been living out west for a decade. When he returned he indicated that he wanted to use the camp, but he and his father Donald got into various conflicts and Donald eventually barred Wesley from using the camp entirely.

Martha then stepped in to threaten Donald with a trespass notice, pointing out that she was the rightful owner of the property. If Donald was unwilling to share it with Wesley and his other children, then his use would be circumscribed.

Donald took the matter to court, claiming an equitable right to occupy the property and camp. Initially, the matter was heard by an Ontario trial court. The appeal of that matter was heard recently, and the original decision was confirmed. The appeal judgment began this way:

A cottage, a camp, a cabin, a country house, a ranch: these are the different names given to second homes across Canada. No matter the description, Canadians’ affinity for their recreational properties is deep, abiding and renowned. This appeal involves such a recreational property, a camp located on Lake Panage near the city of Sudbury in Northern Ontario. …

It was indisputable that Donald had maintained and improved the camp for more than 20 years, paying the bills and taxes, and making improvement such as building a new dock, a new shed, a gazebo, and also reconstructing the sauna, roof and porch; his case for unjust enrichment was made out. In endorsing the trial judge’s decision to craft a minimally-intrusive solution (which used the legal concept of constructive trust and essentially gave Donald a personal, exclusive lifelong license to use the land), the Appeal Court pointed out that it would have been simply inadequate to award him monetary damages in light of the significant emotional attachment to the property. This was a delicate family situation calling for a nuanced solution, and the trial judge’s approach had been reasonable.

For the full text of the decisions, see:

Clarke v. Johnson (2012), 2012 ONSC 4320, 2012

Clarke v. Johnson (2014), 2014 ONCA 237

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders. For more information, visit us at www.RussellAlexander.com.

Son-In-Law Gets Lifelong Licence to Use Mother-in-Law’s Portion of Family Island

Son-In-Law Gets Lifelong Licence to Use Mother-in-Law’s Portion of Family Island

One of the main components of my Family Law practice is guiding clients through the process of property division upon separation and divorce. The question of how to divide property is not always easy; some properties are unusual, have long family histories, or have sentimental memories attached to them.

The recent decision in Clarke v. Johnson is precisely such a case: the property in question was a family-owned island, and a camp that had been built on it. The issue was whether a son-in-law – who had separated from his wife – should be entitled to use the portion of a family island owned by his former mother-in-law.

The matriarch of family, Martha, was one-third owner of a Sudbury-area island on Lake Panache, which had been purchased around 1971 with her now-deceased husband. The remainder of the island was owned by her brother-in-law and sister-in-law, who each owned a one-third share. Under an informal and unwritten agreement, each owner (together with his or her family) was entitled to use their own one-third, although a “Main Lodge” building was reserved for common use by all.

Martha’s daughter Victoria had married a man named Donald, and they had two children together. Early on in their marriage, and with Martha’s permission, Victoria and Donald had built a camp on Martha’s share of the island, using $5,700 from Donald’s RRSP, and $17,000 loan from Martha’s husband (which was never repaid, apparently with his concurrence). Victoria and Donald placed a $15,000 prefabricated cottage on the property.

Victoria and Donald separated in 1991. Since that time – and because in the separation process Victoria had “washed her hands of the camp” and now “wanted no part of it” – Donald and the children had enjoyed exclusive of the camp on the island. According to Victoria, the camp was not Donald’s to deal with, but she was content to have him and the children use it, as long as he maintained it. She never once visited the camp since the 1991 separation.

Enter Wesley, the son of Victoria and Donald. Wesley had been living out west for 10 years, but had moved back to Sudbury. He expressed an interest in using the camp, which was fine with Donald as long as it did not interfere with his own planned use. Unfortunately, Donald and his son Wesley could not come to terms on this point, and their relationship became strained. Donald then decided to refuse to allow Wesley to use the camp at all.

This was where Martha stepped in again. Pointing out that she was the legal owner of the one-third of the island on which the camp was situated, and asserting that her son-in-law Donald’s use was predicated on his willingness to share it with the children, she claimed that she would terminate Donald’s use, and issue a trespass notice to him.

Donald brought an action to determine his rights in connection with the island, claiming that while he was not himself an owner of the island itself, he was an owner of the camp that was situated on it. More to the point, Donald claimed that he had an equitable right to occupy the property and the camp, based on the principle of unjust enrichment.

After hearing a good deal of evidence, the court allowed Donald’s action. First of all, it had to characterize the camp structure itself: despite its prefabricated nature, it had become a permanent structure on the land when Donald and Victoria had it installed. It was not merely a “chattel” that could be removed.

Next, the court found that Donald had successfully established a legal claim for “unjust enrichment,” by showing that: 1) Martha had been enriched by Donald’s actions; 2) Donald had suffered a corresponding deprivation as a result; and 3) there was no juristic (legal) reason for the enrichment.

Legally, it was clear that his former mother-in-law Martha still owned the portion of the island in question. However, Donald had not only contributed funds to constructing the camp in the first place, but over the subsequent 20 years he had also paid the bills, made improvements, and had sole responsibility for upkeep and maintenance. All of these benefited Martha. Furthermore Martha never occupied the camp herself, whereas Donald had enjoyed exclusive possession of it for about 20 years.
In these circumstances, there was clear enrichment to Martha, deprivation by Donald, and no juristic reason for it. The court was then left to craft the appropriate remedy.

Given what the court called Donald’s “very real and significant emotional attachment” to the camp – and the fact that this could not easily be quantified in dollars – the proper legal remedy was to impose a constructive trust on the camp, which would reflect Donald’s interest. Also, given his long period of uninterrupted use and sole responsibility for maintenance, Donald was also entitled to regulate the use of the camp by his children. This, the court found, would reflect the legitimate expectations of the parties.

As such, the court’s solution was to give Donald a licence to occupy the camp until he died, or until he was no longer physically able to attend there. Such a licence was personal to him, and could not be assigned or sold in any way. Moreover, the court imposed a condition that he was required to maintain the camp in a good state of repair, to refrain from materially altering its nature or character, and to pay taxes and utility costs related to it.

For the full text of the decision, see:

Clarke v. Johnson (2012), 2012 ONSC 4320, 2012  http://canlii.ca/t/fs65x

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders. For more information, visit us at www.RussellAlexander.com.

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