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Posts from the ‘Matrimonial Home’ Category

Family Law Now | Episode 4: Top 10 Things You Should Know About a Financial Professional



On this episode, Russell Alexander is joined by Carrie Heinzl to share insight into understanding financial documents, developing creative solutions, and compromising with family members - all while going through a divorce.

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Tick, Tock: What’s the Legal Deadline for Trying to Set Aside a Separation Agreement?

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Tick, Tock: What’s the Legal Deadline for Trying to Set Aside a Separation Agreement?

In a recent case called F.K. v. E.A. the court was asked to rule on a novel question: If a spouse wants a court order setting aside his or her signed separation agreement as invalid, what is the deadline for applying? And when does it begin to run?

The couple began their relationship in 2000, and the husband proposed in 2004. The wedding itself was hastily-planned over a period of less then 30 days, and took place in June of 2005. Against that background, the couple entered into what they called a “Prenuptial Agreement” based on a template that the wife found on the internet. It was witnessed by a mutual friend. In it, the couple agreed that each of them:

1) Waived the right to claim spousal support from each other, and

2) Would remain separate as to property, and not be subject to an equalization of Net Family Property.

The Agreement also purported to confirm in writing two events that did NOT actually happen, namely:

1) That the parties had provided fair and reasonable financial disclosure to each other before signing, and

2) That both of them retained their own lawyer and received independent legal advice.

The wife later explained that they did not bother “going through the motions” to fulfil these two duties because the Agreement was wholly uncontentious: Both before and after the wedding they had conducted themselves with financial independence; the Agreement merely confirmed and documented that agreed status.

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Unfortunately, the spouses split in October of 2012, after 7 years of marriage. The wife gave the husband $1,600 to help with first and last months’ rent, but made it clear he could expect nothing further from her.

He then went to a lawyer to discuss his legal options, and explained the lack of legal advice and financial disclosure in particular. Although his lawyer advised that the Agreement was “not worth the paper it was written on”, the husband took no concrete steps at that time.

A full five years later, in 2017, he applied to the court to have the Agreement set aside. In addition to its other shortcomings impacting validity, he claimed it was signed after the wife issued an ultimatum; this left him feeling rushed and in a state of duress, he said.

The wife countered by stating the husband was simply out of time to have the Agreement set aside. She said this type of claim was subject to a two-year limitation period set by provincial legislation, and that the husband had failed to take any steps with the court within that deadline. She asked the court to grant her summary judgment.

The court addressed the various legal arguments. First, it concluded that husband’s bid to set the Agreement aside was indeed tantamount to a legal “claim”, and was theoretically subject to the general two-year deadline. The more pressing question, however, was precisely when the clock on that two-year period began to run.

In law, this “discoverability” threshold was the point at which the husband knew or ought to have known that:

1) He had suffered some loss, and

2) A legal proceeding was the appropriate method for trying to redress it.

In this case, that point was back in 2012, when the husband first attended his lawyer’s office post-separation.

At that point, he knew there was some potential legal issue with the validity of the Agreement and the circumstances in which it was signed, based on the advice from his lawyer. He also knew he could expect “nothing further” from the wife after separation, beyond the $1,600 in rent money, and that all other financial issues were off-the-table. So he knew in 2012 that he was facing a potential loss, and he knew that a legal claim would be the only way to potentially recover it.

Since it was now 7 years past that discoverability point, the husband was too late to bring his claim to set the Agreement aside.

As a last-ditch argument, the husband had also asked for special forbearance in the circumstances: The law should not be applied to him, since his case was the first time in all the Ontario jurisprudence where a claim to set aside a marriage contract was being foreclosed by the two-year deadline.

But the court rejected this argument too. The husband’s error or ignorance about the limitation period did not stop it from running, it said. All citizens are presumed to know the “law of the land”, and it applied equally to his situation even if the husband’s thwarted claim was the “test case”.

Since the husband was out of time to bring his claim, there was no genuine issue for trial. The court granted the wife’s application for summary judgment.

For the full text of the decision, see:

F.K. v. E.A., 2019 ONSC 3707 (CanLII),

How To: Make a Valid Separation Agreement

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

Can Husband Be Forced to Obtain a Separate Home Appraisal?

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Can Husband Be Forced to Obtain a Separate Home Appraisal?

In a recent case called Kraemer v. Kraemer, the court confirmed two important procedural points relating to property valuation:

  • The divorcing spouse who “owns” or controls an asset has the primary obligation to obtain an accurate valuation of it; and
  • In the event of a dispute as to an asset’s value, each spouse may be obliged to get a separate expert appraisal.

The couple had been married for almost 15 years and had three children.   In the course of their divorce proceedings, they ended up asking the court to help with their disagreement over the proper value of the matrimonial home they previously shared.

The wife had had it formally appraised at $735,000.   In contrast, the husband claimed it was worth $800,000, but offered no evidence to support that figure.  He resisted getting an expert appraisal of his own.

To this last point, the court replied:

Mr. Kraemer takes the position that he cannot be required to value the home and, essentially, the value will be decided when the house is sold. In my view, he is wrong in that position.

Indeed, the husband’s (incorrect) position overlooked the core principles that in Family Law proceedings:

  • Each party just take disclosure “very seriously”, and is duty-bound to provide meaningful disclosure of asset values.
  • Each spouse has an obligation to provide credible, realistic values, including independent valuations – not a “guess” or a “fictional amount”.
  • A failure to provide credible evidence to support a value may result in a less-advantageous value being assigned by the court.

On the issue of which spouse is responsible for obtaining an accurate valuation:  The primary responsibility for establishing an asset’s accurate value on the valuation date lies with the spouse who “owns” or controls it.  This is particularly true if that spouse makes an assertion in his or her filed affidavit about the asset’s value.  The spouse then has the burden of proving the stated value is correct;  this may require the input of an expert.  If the other spouse does not agree to the value proposed, then he or she can respond with a valuation from a different expert entirely.

Having reasoned this way, the court found that the husband in this case was obliged by law to hire his own expert to provide a separate, accurate valuation of the matrimonial home.   The court also declined the husband’s requires to treat the latest valuation as a shared expense;  it noted that the wife had already paid for her own valuation, so the overall fees for both appraisals would effectively be split between them.

For the full text of the decision, see:

Kraemer v. Kraemer, 2019 

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

 

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

Can Court Order be Set Aside Due to Wife’s ADHD?

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Can Court Order be Set Aside Due to Wife’s ADHD?

In a case called Hatuka v. Segal, the couple separated in 2016 and started the process of untangling their financial affairs.  The wife continued to live in the $1.7 million matrimonial home with their two school-aged children.

By early 2017, the husband was having financial challenge:  He could not afford to service the home’s $610,000 mortgage and also carry the costs of a separate residence.   He asked the court to compel a sale of the former matrimonial home.   After two court hearing dates in which wife appeared without counsel and requested an adjournment, the court finally granted the husband’s request and ordered the home sold immediately.

The wife then brought a motion to have the order set aside.  She relied on Rule 25(19) of the Family Law Rules, which allows a court order to be changed in certain circumstances, namely those involving fraud, mistake, or lack of notice.  (And – as was clarified in a recent Blog, a court has recently concluded that – despite its wording – the Rule allows for orders not merely to be “changed”, but to be set aside entirely as well).

The wife – who happened to be a foreign-trained but non-practicing lawyer – claimed that to sell the home now would bring her hardship and distress, since there were no child or spousal support orders yet in place.  Although both spouses filed extensive materials in support of their respective positions, the court noted that the wife’s included a 93-page personal affidavit with 32 exhibits.

In examining the merits of wife’s argument on the motion, the court began by stating:

 The basis upon which [the wife] seeks to apply Rule 25(19) to set aside the Order of March 22, 2017 is unclear. …

[The wife] does not raise any issue of mistake.

[The wife] does not raise any issue of lack of notice or non-attendance.

[The wife’s] affidavit of August 18, 2017 claims that she has suffered litigation disadvantage as a result of the following assertions.  These were the initial focus of her counsel’s submissions on this motion to set aside:

(a)               she has ADHD and learning disabilities;

(b)               she is a recent immigrant with limited English skills;

(c)               she has been largely self-represented, with gaps in representation; and

(d)               she strongly believes that [the husband] has taken advantage of her, while abusing the court process.

The court concluded simply:  “These are not grounds for a Rule 25(19) analysis.”  The court also rejected the wife’s contention that the husband had failed to disclose his full income, and there had accordingly been fraud, adding:

Setting aside an order under Rule 25(19) (a) carries a high threshold.  Fraud within Rule 25(19)(a) does not have a special meaning outside the common law.  A moving party must clearly prove that the other party knowingly or recklessly made a false statement with knowledge of the falsehood, and did so with wrongful intent.

The court dismissed the wife’s motion.

For the full text of the decision, see:

Hatuka v. Segal 

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

 

 

 

If the Wife Goes to Stay with Her Mother – Does the “Clock” on their Relationship Start Over?

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If the Wife Goes to Stay with Her Mother – Does the “Clock” on their Relationship Start Over?

In Whalen-Byrne v. Byrne, the issue for the family court seemed simple enough: It was to determine the precise duration of the former couple’s relationship, which in turn would drive the duration of spousal support the husband had been adjudged to owe the wife.

And the beginning and end dates were uncontentious:  both husband and wife agreed that they began living together in 1993, and separated in 2010, which on a straightforward calculation was a span of 17 years.

But the problem was that at one point – from October 1996 to March 1997 – the wife moved out of the matrimonial home and went to stay with her mother.    After this brief separation they reconciled, and went on to get married a few years later.

The court was therefore left to determine what effect this separation had on the duration of their union.  A trial court had pegged it to be 13 years, on the basis that the separation essentially “restarted the clock” on their relationship, and that it really only commenced to run after they reconciled.  The trial judge explained it this way:

It appears that following the [wife] moving in with her mother the parties continued to be open to the possibility of continuing a relationship; however, both parties were taking steps to put distance between themselves (i.e. cessation of cohabitation and pursuit of relationships with other persons other than the other party). The most reasonable interpretation is that the parties intended to be separate from one another subject, at best, to the possibility of resumption of cohabitation. I find therefore that the period of cohabitation for consideration in respect of the [wife’s] claim for spousal support commences March 1997 and concludes with separation on April 10, 2010 for a period of thirteen years.

The wife appealed this ruling, and the Court of Appeal agreed with her reasoning.

In determining the length of cohabitation, the trial judge had been incorrect to “reset” it at the reconciliation point.  Instead, the facts showed that even when the wife went to live with her mother, the couple never formally separated; they merely had what the court called an “interim separation” that included “the possibility of resumption of cohabitation.”  In drawing this conclusion, the court considered the following evidence:

  • They lived apart for only a brief 5-month period;
  • They did not separate their finances;
  • The husband continued to support he wife financially, including allowing her to use a credit card in his name;
  • The wife took only a small suitcase of clothes with her, and no furniture;
  • Although the wife went on a few dates with another man, she was not involved in another relationship;
  • In December 1996, the husband proposed marriage to the wife with a ring and in front of their children, to which she replied “not yet”; and,
  • By February 1997 the parties were discussing marriage.

The Appeal Court concluded that for determining the duration of the husband’s spousal support obligation, the correct period of cohabitation was 16 years and 10 months, less 5 months for the brief separation, for a total of about 16.5 years.

The Court recalculated the wife’s support entitlement accordingly, and determined that she was entitled to spousal support from the husband that would last 14 years from the agreed date of their separation in 2010.

For the full text of the decision, see:

Whalen-Byrne v. Byrne

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

Even Judges Get it Wrong Sometimes

Even Judges Get it Wrong Sometimes

A few weeks ago, I wrote about a case called Butty v. Butty. This was a decision by Justice Pazaratz in which he considered how the parties’ separation agreement, which was intended to exempt the husband’s farm property from the normal property-equalization regime, should be interpreted after it came to light that the husband owned two separate parcels of land, rather than one as originally thought.

At trial, Justice Pazaratz had declared the separation agreement invalid, and set it aside for what he concluded was the husband’s failure – and the failure of his lawyer – to disclose the existence of the two properties. The husband’s property was then divided in keeping with the usual Family Law Act rules, notwithstanding what the parties’ separation agreement may have intended.

The husband appealed, successfully. The Court of Appeal disagreed with Justice Pazaratz’s assessment of the facts as to the alleged lack of disclosure, and reversed his ruling. For one thing, it found that the judge had been highly critical of the husband’s trial lawyer, Mr. Jaskot, accusing him of suppressing facts and deliberately misleading the court and opposing counsel. The Appeal Court found these accusations unwarranted, writing:

As we have mentioned, the trial judge believed that Mr. Jaskot tried to hide the fact that there were two separate properties. In his reasons for decision, he describes Mr. Jaskot as having purposely suppressed information in an attempt to mislead opposing counsel and the court into believing that the farm property was a single parcel of land.

In light of the foregoing evidence, this characterization of Mr. Jaskot is completely unfounded. Opposing counsel and the court had documents clearly showing that the farm property consisted of two separate properties.

As a result of the reasons for judgment, Mr. Jaskot has suffered unwarranted personal and professional embarrassment.

And rather than lay blame on the husband’s lawyer for hiding the information, the Appeal Court found that the parties actually shared in the mistaken initial belief that the there was only one piece of property at stake.   After noting that Justice Pazaratz could have easily remedied the procedural fallout from the parties’ mutual misapprehension at the trial itself, the Appeal Court said:

This court cannot truly repair the damage that Mr. Jaskot has suffered. Having said that, its comments are intended to serve as an unequivocal statement that there was nothing improper in his conduct in this matter. We regret what appears, on this record, to be unwarranted judicial criticism levied against him.

Next, the Appeal Court found that the parties’ mutual misapprehension did not detract from a key fact: The wife was aware that the separation agreement was designed to circumvent the normal property-division scheme under the Family Law Act, and that she was giving up all her claims to the entire tract of property, whether consisting of one lot or two. The Appeal Court also observed that the wife had not been under duress when she signed the agreement, and had received independent legal advice (which she did not heed) before doing so.

Based on this and other errors by Justice Pazaratz, the Appeal Court restored the parties’ separation agreement, and proceeded to divide their property in accord with its express terms.

For the full text of the decision, see:

Butty v. Butty, 2009 ONCA 852 (CanLII)

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

 

Two Properties, or One? Justice Pazaratz Sorts It Out – For Now

Two Properties, or One? Justice Pazaratz Sorts It Out – For Now

Here’s another noteworthy ruling by Justice Pazaratz – and one that was ultimately reversed on later appeal. Written in his inimitable style, the judgment begins this way:

You wouldn’t think the singular or plural should be so complicated.

Property.

Properties.

The same word. Add an “s”.

You really wouldn’t think that in a nine day trial, involving four presenting counsel — and three more lawyers as witnesses — they couldn’t keep it straight.

Or, that the court wouldn’t find out until the end of the seventh day of evidence – from the very last witness — that all the time we were talking about “property”, we really should have been talking about “properties”.

The Applicant’s lawyer — apparently the only one who knew all along about the mistake — says whether it’s “one property or two” really doesn’t matter.

I’m not so sure he’s right. Or that what he did was right.

This is a story about two houses; 151 acres; a benevolent matriarch; a pregnant bride; and a marriage contract apparently suffering from too many “cut and pastes”. More importantly, it’s a story about two children, still trapped under the same roof with a mother and father who can’t agree on either the past or the future.

With that prologue delivered, Justice Pazaratz went on to examine the merits of the former couple’s dispute, which (at least on the property side of things) related to a 151-acre piece of land that the husband owned at the date of the marriage. The matrimonial home was one of two houses on the property, the other being the husband’s mother’s home.

In 1996, the spouses had signed a marriage contract providing that in the event that they separated, the husband was entitled to exclude the assets that he owned at the time of the marriage. Neither spouse (nor their lawyers) knew at the time that the 151 acres were actually two separate properties, rather than one, and that the husband owned them both.

When the true state of affairs came to after the parties’ separation light years later, the wife claimed that the husband’s non-disclosure about owning both properties invalidated the marriage contract that they had purportedly reached.

Justice Pazaratz agreed with the wife, and held that the marriage contract should be set aside due to the material misrepresentation. At the time the contract was drafted and signed, the wife and her lawyer were misled that there was only one property. This omission rendered the contract inadequate to satisfy the disclosure requirements of the Family Law Act since it undermined the factual basis of the parties’ ostensible deal, and left the wife unable to accurately assess her rights and options.

After setting the marriage contract aside, Justice Pazaratz proceeded to divide the parties’ assets through the normal equalization process. (That ruling was later reversed by the Court of Appeal, which included comment on a “serious matter arising from the reasons for judgment given by the trial judge.” The later appeal ruling will be the subject of an upcoming Blog].

For the full text of the decisions, see:

Butty v. Butty, 2008 CanLII 23946 (ON SC)

Appeal level:

Butty v. Butty, 2009 ONCA 852 (CanLII)

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

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