The Rise of the New Consumer: Millennials fix, recycle and hunt for deals
“And look at this chair, we got it off the curb!” My daughter Meaghan grinned…
Having almost survived a divorce proceeding which started in June 1991 and is almost wrapped as of June 2019, I’ve learned a thing or two.
Divorce is war. Sure, there’s always the odd couple who manage it amicably, but for the most part, it’s a battlefield where the goal seems to be to bleed each party financially dry.
With this in mind, my best advice to those contemplating divorce, especially if you are the moving party: Take the money and run. Run. Run for the hills. Make a pre-emptive strike for the equity of the house, sell everything surreptitiously and disappear to Thailand or Bali or somewhere.
Don’t rely on any agreement or Minutes of Settlement because those agreements are virtually worthless if my experience is anything to go by.
Why do I say this? Pull up a chair, pour a long drink and have a second on standby, it’s a long, sad tale.
First, have a read of the background here which explains how this sordid story started and lays out the twists and turns.
You’ll see that the other party made a pre-emptive strike on the equity of the matrimonial home. They secured a mortgage from a private lender – essentially a loan shark – for $36,000 at 49 per cent interest. No that’s not a typo. Go read Part 1 again and weep.
So, back to today. The money was quickly squandered on a cocaine-up-the-nose fantasy of a topless maid and butler service they’d seen on Geraldo, a popular daytime TV talk show.
The problem out of the gate is that the Ontario Family Law Act Section 21 expressly prohibits encumbering title on the matrimonial home. This section was created to stop exactly the kind shenanigans I am encouraging pre-divorcees to execute.
It was written to stop a man, because traditionally men managed the investments and mortgages, jacking up the mortgage or putting a loan against the house to free up more than his rightful share of equity and then taking off.
It’s a well-meaning clause but the problem is the courts and judges don’t give a fuck about it and they don’t enforce it. Have a look for case law, there’s hardly anybecause that’s how rarely anyone takes it seriously.
You see, the law says you can’t encumber without spousal consent and signature. That means to get that mortgage you’d have to have both parties sign. Banks and big lenders are careful about this and indeed my spouse was refused by our bank and turned to a private predatory lender.
Securing this mortgage encumbered and stained the title such that the property could not be sold because no one was willing to risk getting embroiled in the legal battle. And at 49 per cent interest it wasn’t long before the interest brought the total owed to millions and millions of dollars with not one penny repaid.
As you will have read in the background, the parties were faced with a dilemma. The house equity could not be divided because I could not get clear title with which to secure a mortgage to pay off the other party’s interest in the home.
Still, recognizing that there was no issue to go to trial over, in 1995 Madame Justice G. Speigel pulled the parties into her chambers and worked out a settlement which became the Minutes of Settlement.
They provided the house should be appraised professionally, a value set and from that value deducted the first mortgage and real estate fees to arrive at an equalization.
I was to wait until the other party removed the loan from the title and paid off all the liens against her for non-payment of rent subsequent to her separating from our marriage in June 1991. She was also to pay of $20,000 in liens from Legal Aid Ontario which paid for her lawyer.
The Minutes of Settlement were duly drafted and signed.
And I waited. And waited and waited for the other spouse to fulfill her responsibilities to I could pay her off. Meanwhile, our two children who had been living with her grew tired of the emotional and physical abuse they suffered at the hands of her new husband and moved in with me.
So I shelved any further legal action and set about raising my kids and maintaining the home, paying off the mortgage.
In 2006 I represented myself in a motion at court trying to get the mortgage struck off under Section 23 of the Family Law Act which provides remedy in the event the matrimonial home is encumbered. She opposed me and Justice Backhouse wasn’t interested and ignored the pleadings though she did order nominal child support to be paid to me for two children at $50 a month per. I don’t think I ever saw more than $350 of that over the next year and then it stopped.
Fast forward to April 2017 and she suddenly finds funds to bring an action under the Partition Act to strike the mortgage and have the house sold at market value with the proceeds divided between us 50-50. You can read her first pleading here.
Clearly I had to fight back. So a lawyer was hired, Sage Harvey, and skirmishes began. I filed my affidavit.
There were some early exchanges of documents. Her original lawyer withdrew and it delayed things until she got a new lawyer, Ira Book.
There’s a couple of delicious points in her testimony where she denies the mortgage is, in fact, a mortgage and was just a loan.
This despite her earlier testimony from 1992 that she couldn’t get CIBC to issue a mortgage because it was the matrimonial property and that’s why she ended up at the private lender, aka the Loan Shark Robert Kernohan and his wife Elizabeth Smith.
Here’s the exchange:
Q. You secured a loan from Robert Kernahan in 1991, correct?
A. Right, correct.
Q. Do you know how much the loan was for?
A. It was for $30,000.00, and by the time Kernahan paid himself and Robert Price, or I think Robert Price, but Mr. Price paid himself it was $36,000.00.
71. Q. This loan was secured as a mortgage?
A. No, it was actually a loan.
Q. But, it was secured against the property. It was put on title, is that correct?
A. I didn’t — it was never brought to me as a mortgage on the home.
Q. Just referring to your supplementary Affidavit at Exhibit H.
A. You have to realize that this is a person who had never taken even out a car loan in my life, so I didn’t get into mortgages or anything. I thought it was a loan.
Q. I’m referring to the date of instrument as November 27th, 1991, a charge —
Q. My question, it’s for $36,000.00, is that for the loan you received from Robert Kernahan?
MR. BOOK: Counsel, you should know that that’s not what happened. Mr. Kernahan took the loan and put then — he’s the one who negotiated putting this money — this loan into an RRSP, and then transferred it out, and Laurentian Bank held his RRSP. 9 That’s how it came about as a mortgage.
Q. I’m just asking questions. You got a $30,000.00 loan from Robert Kernahan —
Q. — which you’ve already testified, yes? 17
A. Yes, yes.
Q. Which wound up to be $36,000.00, and that loan was eventually secured on title
A. As far as I was concerned I was taking out a loan.
Q. Is your testimony that you never consented for this loan to be secured on title as a mortgage?
A. Mr. Nadler was my lawyer as well as Mr. 1 Kernahan’s lawyer at the same time, so he wrote up all the papers and consulted with Mr. Kernahan, and I’m — I didn’t know how it was being — all I know is it was told to me it was a loan.
A. However they handled it, but I was told it was a loan.
Q. I actually do have a copy of the mortgage here. Sorry, I’m just going to provide the copy of the mortgage to Ms. Herrington. My question is, is that your signature?
A. Yes. Okay.
Q. You agree you signed for a $36,000.00 mortgage to be put on title?
A. Well, if that’s what you have in front of you then I did.
What a nightmare for a client. She either doesn’t know her ass from a hole in the ground or she’s consistently lying and making up stories.
At this point, she’s also arguing that she was forced to leave the house because I was violent throughout our marriage and basically threatened her and she fled with the kids in fear of her life.
That wasn’t an issue she raised at the onset of our divorce in 1991, surprising I guess because that was very common back then to claim abuse and whimper at court for protection. It wasn’t an issue when we signed the Minutes of Settlement in 1995. It wasn’t an issue when she opposed my motion to have the mortgage struck in 2006. And it wasn’t an issue in her 2017 affidavit. Suddenly in 2018 it was.
I counter in my testimony saying it was never an issue and that I would be more than happy to have all the women I’ve lived with since her departure to swear affidavits as to me nature. I’m not that guy. Never was and I felt slimed to be so accused.
Her lawyer declined. But I also said the only abuse that went on was at her house where the kids were abused emotionally and figuratively by her new husband, the same guy she left me for. Her lawyer tried to shoot that down.
But here’s the exchange.
A. We’re talking about a woman who lives in a complete fantasy world. She doesn’t know – – she lives in a delusion. This is not true, it was never true, and it’s now being conjured up to curry sympathy for her as a victim, which is – – and the opposite is
true. I am the victim, my children are the victims here. They were abused. Emotionally abused, physically abused while they lived with their mother, and still suffer to this day.
Q. What evidence do you have of that? Are you going to call your – – the children as witnesses?
A. We may well do.
Q. I think we might have to do that.
A. I think we will. We’d have to fly them in from Edmonton, though. If you’re going to make accusations like that, then I am going to respond.
Q. Absolutely. That’s what it’s all about.
23 With the facts.
And so I did get my daughter and son to swear affidavits in Edmonton which were duly notarized and sent to my lawyer. Her lawyer refused to allow them and the claims of violence went away. Grab box of Kleenex. You will cry at the story they tell and why they ended up living with me.
The real reason she abandoned the house in Feb. 1992, of course, is because the original Master who heard our first pleading in Nov. 1991 was enough to know what was going on.
He wasn’t going to allow the boyfriend, who had abandoned his own two children and their mother, the Ex’s best friend growing up, and who had a cocaine problem to reside in the matrimonial home while the kids were there. So they had to find a new place to live. That’s the reality.
Finally, on June 4, 2019, Justice David Stinson takes the case to judicial mediation.
Here’s what we said going into what we thought was trial.: I would pay her $22,000 or so instead of $60,000 since I had covered all the costs since I took over the house.
Then we made submissions specifically for mediation: The way we saw it, she owed me $100,000.
Yes, it’s a bit of a game. Each side asks for the sun, moon and stars and we settled on some rocks and seashells.
So, for shits and giggles, here’s what they asked for going in. $772, 295.55.
No, those figures aren’t a mistake. She wanted me to pay $772,295.55 to her based on half the house value of $900,000, plus rent for the past 28 years and pre-judgement interest.
Reading the documents together you can see we were quite a ways apart.
First, there’s no recognition of the costs I carried over the years, second, she was never entitled to rent and lastly, pre-judgement interest. I think her lawyer was having a laugh, seriously I do.
Now, mediation is a curious affair. It’s not a courtroom, it’s a small boardroom on the third floor of the courthouse at 361 University Ave in Toronto.
I’m there with my lawyer Sage Harvey and she’s there with the asshole and her lawyer.
I know a little of how this works, having written about lawyers, law and justice for decades.
First, the judge reads the riot act to both parties and tries to scare you into the next millennium. Settle this today or take the gamble of going to trial where you may lose, pay a lot more in lawyers fees and still not get what you think is due.
He’s right of course but I did love the stern, reading glasses on the nose tip dramatics. It’s a good show.
And so we begin. We leave and the lawyers thrash out the arguments. Then each of us is brought in and the judge gives you his opinion on how he might rule if this matter came before him in court, bearing in mind that the whole idea is to avoid trial.
I don’t know what was said to her. I do know that the Judge looked at the Minutes of Settlement and picked out two clauses which her lawyer had harped on.
Section F on Page Three reads:
These Minutes of Settlement are subject to either party and their respective council receiving third party independent legal advice in order to satisfy themselves that these Minutes of Settlement can be acted upon without any liability to either party.
Later, in Section G, which says that the terms of the entire Minister of Settlement a set out herein are further conditional on the following:
(l) If one or more of the terms of these Minutes of Settlement is not satisfied then the entire Minutes of Settlement are null and void.
This is where the technicality comes into play. It’s cost me $45,000 in legal fees since 1992 and a further $125,000 in equalization, beyond the $60,000 I agreed to pay pending the mortgage being struck and the Legal Aid Lien being satisfied in 1995.
The question is, did I or my lawyer get independent third party legal advice on these Minutes of Settlement?
As I said in discovery, I don’t know. I didn’t personally. Why would I? I was sitting in front of a very distinguished family court justice who dictated them. I wasn’t going to quibble with her wording. My lawyer seemed fine with it as did her lawyer. Did my lawyer get a second opinion? I don’t know. It’s 24 years later and Steve Skolnik is now in his 70s and a Small Claim Court judge in Oshawa. He doesn’t remember.
Maybe he asked his office mate, a real estate lawyer, for an opinion over morning coffee? Who knows.
This, Justice Stinson declared, was the wobbly factor. Since there was no legal advice, according to Section L it’s all null and void.
This is a technicality and it negates the entire spirit and intent of the agreement but again, it’s hard to argue with a judge.
The other side had long telegraphed this as one of their lines of attack so I wasn’t shocked but I felt sick to my stomach. For 24 years I had upheld my end. I had money arranged on standby to pay my equalization and I took care of the loan my father had advanced us.
And it all comes down to this. Did they get third party legal advice? FFS.
Time to go on the attack. Fine, I said. If the Minutes of Settlement are off the table then she owes me for the mortgage I paid off plus interest, the $200,000 in renos and maintenance sunk into the house, the taxes, insurance and of course the $25,000 grand from my father plus interest.
And so the bartering began. I suspect the Judge told them to stop smoking the hallucinogens and ask for a more reasonable starting number than $772.000.
Dropping the rent and pre-judgement and recognizing the money I’d spend brought it down to $200,000 out of the gate.
But as I said, I’m 63 years old now. Yes, 25 years ago I could have got a mortgage. No one will give me a mortgage now that I’m retired and my working income has dropped to a couple of grand a month which I supplement with my pension and investments.
So, $200,000 became $150,000 and then $125,000 with me coming up from $100,000 to $115,000 to $125,000.
As the judge said: “The best settlement is the one in which neither party is happy.”
No, I was not happy. At $150,000 or $200,000, I would have said fuck it and rolled the dice, hoping for a judge with more insight into family law (Justice Stinson is a commercial and civil litigation lawyer by background and on the bench.) In fact, I think I should have taken his first aside asking if I wanted to go back before Justice Speigel. Or at least back to Family Court where things are not so black and white.
Ironically as we sat down Justice Stinson explained the conundrum was worthy of a law school exam.
And I said: “Ironically, that’s exactly what Justice Speigel said 27 years ago when we sat down in her chambers and she dictated these Minutes of Settlement. And yet here we are. This mortgage should have been struck down way back when under Section 23. It should never have been allowed to stand.”
Stinson looked at me and said: “But here we are.”
No one wanted to deal with the mortgage because they felt Kernohan should have got something for his loan. Yet ironically now the Ex will not have to pay back that $36,000 and skates away from the stinking pile of shit she made.
She will, however, have to pay $45,000 to Legal Aid Ontario which paid for her original divorce lawyer. And, I don’t know what Mr. Book’s hourly rate is but I’m going to guess that based on his age and experience it is up around the $500 an hour or more mark. I know my legals for this round since 2017 comes up to about $20,000 and I suspect her fees are up around $30,000 or $40,000.
So out of that $125,000 she gets maybe $40,000. There’s some work yet. Her lawyer was heading for court June 27, auspiciously my 63rd birthday, and seeking to have the mortgage struck off the title on the basis that it hasn’t been enforced and the parties are dead. There’s still a question as to whether Elizabeth Smith, Kernohan’s estranged wife will send legal counsel to oppose so we’re not out of the woods yet.
I have 90 days from June 4 to come up with $125,000 after, of course, paying off my own lawyer’s invoice.
People say, oh, well, at least it’s over. Could have been worse. You can move on. Sure, try dragging the ball and chain of this ordeal over 27 years and then get screwed at the last.
So why am I writing these two blog entries? Am I picking at scabs? Partly because it’s a catharsis and partly because people just don’t understand how this could happen or how people lie in court or they just don’t believe me.
Maybe I’ll launch a malpractice suit against my former lawyer for fucking up. He should have got certified third-party advice and he should have had the MoS filed and endorsed by the court. He dropped the ball and 24 years later it bites me on the wallet.
This can’t be. But it can. And it was. Imagine if this could have been settled in 1995 with a court order removing the mortgage from title? But no. No court had the intestinal fortitude to make that call under Section 23 of the Family Law Act and that’s why it’s a completely impotent clause as is Section 21.
And for what? She’s lost her children who aren’t talking to her and alienated her own family. Why? All because she had a coked-up idea about a topless maid and butler service. It’s so sordid and pathetic.
And you dear readers? Take the money and run. Trust me. If your ex or their lawyer can figure a way to fuck you over, they will. Don’t be a target. No one cares, everyone lies in Family Court, it’s a cesspool where justice and fairness go to die and where it’s always about money, money money.
No one in this province gives a flying fuck about Sections 21 and 23 of the OFLA.