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…
Almost everyone who goes through a divorce knows about the economic and emotional upheaval that comes with it.
This is my story, so forgive me if I tell it my way. It’s not about the emotional upheaval, the kids, the child support, or the equalization, it’s about a divorce which never ends.
Twenty seven years and it is still not finished.
It’s a story of an ex-wife, since remarried, who reneges on an agreement to settle. She signed an agreement to sell the house to me at an agreed price pending her undertaking to clear the title of two loans she had improperly placed against the matrimonial home
Having authored the stain on title through her ill-advised action as we separated in 1991, pre-emptively grabbing almost all the equity she was due, she then defaulted on the agreement through inaction and then turned around and demanded the agreement be struck because she had failed to meet her obligations.
Talk about someone charged with murdering their parents and then throwing themselves at the court pleading for mercy because they are an orphan.
So, 23 years after signing that agreement she is today hounding me in the courts for half the value of my home at today’s market value. It is now into the hundreds of thousands of dollars and probably beyond what I can raise in a mortgage.
If I lose this battle – and while I think I have a good case, all litigation is a gamble – I will essentially lose my home of 37 years where I raised our two children.
Seriously. Read on. Better pour a drink. It’s a long story.
When my wife of 11 years walked out with our kids back in June 1991 the world as I knew it came crashing down. I was suddenly thrust into a new world, one with lawyers, court dates, court documents, child support and visitation arrangements. I was completely unprepared.
It didn’t help that my mum was institutionalized with dementia at the same time, nor did it help that I was also working as a reporter at a daily newspaper with all kinds of different pressures.
And, truth be told, there were a few times I cracked under the strain.
A couple of things saved me, the love of some very beautiful and supportive women I met in the ensuing years and my own damned stubbornness.
To me it wasn’t the child support or just seeing my kids on weekends. It wasn’t the horrendous costs of paying a lawyer. It was about trying to move on an secure a future for myself and the kids.
To her it was about money and that meant it was about the house and today, 27 years later, it’s still about that damned house.
Let me explain. In 1981, a year after getting married, we bought a bungalow in south Scarborough for about $64,000. My parents gave us a $25,000 loan and we had a $40,000 mortgage. We immediately set to work renovating and redecorating it.
Two years later we took the roof off and added two more storeys, preparing ourselves for the children who followed, a daughter in 1986 and a son in 1990.
Now I should add here, I designed the house. I knew from the moment we bought I was going to add two stories and I spent the next year sketching it out and laying out the plans which I had a professional engineer draft up.
I arranged for a $75,000 mortgage to cover the existing mortgage and the renovation costs.
They were duly approved and I, as general contractor, started hiring crews. I hired framers, aluminum guys, drywallers, electricians, plumbers, the works. I arranged a loan through CMHC to advance money as each milestone was completed and hired a lawyer to register each advance on title.
This house, this home, is me. Yes. Me. I have a deep, probably unnatural, fetish-like attachment to this house, this home. It’s the only home I’ve owned, for a variety of reasons as you’ll learn and I am deeply vested in it, beyond mere dollars.
It is literally the product of my blood, sweat and tears. Not to mention money.
But I digress. In 1991 I took pity on a family friend, someone who had married one of her best friends and were part of our inner social circle. He’d been down to Texas for drug rehab subsequent to his cocaine addiction. Ontario had so many coke heads they couldn’t deal with them all and shipped many to the US to programs there.
His wife had kicked him out. He had nowhere to go. At my wife’s urging, I let him stay in the basement to get on his feet.
Turns out they’d been having an affair for over a year. One thing led to another and the next thing I know, she’s left with the children and he’s still in the basement, feeding me lies and reporting back to her on my every move. And yes, cocaine was a factor.
Lawyers were retained, court proceedings launched.
The first was an interim order setting out child support, who would live where and what access and custody would be. Fair enough.
Two other points were also ordered, one being that neither party should encumber any matrimonial assets, including the house. She promptly ignored this, getting a $36,000 loan from a loan shark at 49% interest. This in addition to the monies advanced against the title by Legal Aid to pay for her lawyer.
The court was also wily enough to see, given his cocaine issues, it probably wasn’t a wise idea to have him living with her in our house. So there was an order that he could not be in the house when the children were there, which was basically Monday to Friday.
That threw a wrench in their plans. They’d been telling anyone who listened that they were going to get custody of his two children and our children and they’d all live in the same house like the Brady Bunch at my expense.
Okay, I paid child support and the mortgage and struggled to rebuild my life that summer and on into the winter. Even then they were falling behind with the bills and suddenly they packed up and left the house in February 1992 claiming that they would rather move out than have to live with the restrictions of the court order.
So, I moved back in, cleaned up the mess they’d left and kept on rebuilding my life.
A year or so later, however, something strange happened. I was served with a notice that someone claiming to have issued a loan as a mortgage on the house was suing for possession of the property because the loanee had defaulted.
That $36,000 against the house as a mortgage on top of the CIBC mortgage of about $60,000 was in default but at the time I knew nothing of this.
This was strange for two reasons: One, as noted, the interim order warned against any encumbrance of matrimonial assets and two, the Ontario Family Law Act specifically provides under Section 21 that no spouse shall encumber the matrimonial home without the other spouse’s consent. I was never asked about it so clearly, I did not consent.
And let’s stop here for a second and consider this clause. Why is it there? Because traditionally men took care of family finances. They worked with the bank to arrange mortgages, refinancing, balancing credit card debt with Lines of Credit ect.
The clause is there because a man, let’s say of a certain age, who is banging a colleague on the job, the neighbour’s wife or whatever, should be restrained in contemplating divorce from making a pre-emptive financial strike against the family’s financial core: the matrimonial home, or any other assets such as the investment accounts and the retirement funds.
Imagine this: a man is looking to greener pastures, remortgages the house, wipes out the equity and leaves his wife with a crushing mortgage she can’t carry and thus loses the house.
Not fair is it?
So why, when it happens to a man and is engineered by a woman, do the courts just sit back and shrugs? I mean, is that clause purposeful or just designed for women?
As a man, however, no one thinks I’m entitled to this protection
Back to this lawsuit. So secondly, despite getting this cash, she didn’t appear to have invested in a new home for herself, hubby (who had zero money and was months behind in his own child support) and the kids.
Just as an aside here, they couldn’t even get the charge against title right. Initially, it was against her share (and there is no share of a matrimonial home without spousal consent) but since we were listed as joint tenants not tenants in common, again there are no shares.
It wasn’t until March 1992 that someone filed a change to the title, severing the joint tenancy and listing us as tenants in common.
Finally, we’d both signed an agreement with CIBC not to mortgage or otherwise incur charges against title without the bank’s consent since they held the first mortgage. Again this was not done.
It’s all moot, though, because no one seems to care that due process wasn’t followed.
So, where did the money go? Well, the answer was in a column by Rosie DiManno of the Toronto Star published Monday,Feb. 17, 1992. Entitled A dirty little cleaning business, it detailed the start up of a topless maid and butler service.
They got the idea, apparently, from watching Geraldo Rivera who had a guest on talking about his new business. They scraped together the cash and flew to Las Vegas to meet with the coke head who dazzled them and squeezed CAN$30,000 from them for the “franchise fee.”
On further investigation, more strange things materialized. One, he was never heard from again, nor did they ever see the cash. Second, they did secure a $36,000 loan from one predatory loan shark named Robert Kernohan who made a business of offering such loans to desperate people at the time.
As I said, it was structured to kick in at 49% interest six months after being issued.
Yes. 49%. That’s no typo. That’s the rate, just below the usury rate described in the Criminal Code of Canada.
Further, $6,000 went to the broker who arranged the loan. You see, she went to the bank which explained they could not mortgage the matrimonial home without spousal consent. She then met a guy who knew a guy and bingo-bango, they got a loan. Screw the law. Here’s your money, don’t forget the vig is 49% starting in six months.
Why sure! This venture was gonna fly. They were going to be rich!!! Rich. They could not only pay off the loan within the first few months, the divorce would soon be over and they’d have all the money from her share of the equity shortly!
What could go wrong?
Glad you asked. Everything went wrong. And then some.
First, of course, no divorce ever wraps up in a couple of weeks. It took nearly a year of her lawyer claiming I was hiding my pension funds before they suddenly realized the actuary they demanded audit my statements was the same actuary who had issued the valuation for me two years earlier.
Whoops. There go a bunch of billable hours up in smoke.
By the time we actually got to the Honourable Madam Justice Gertrude F. Speigel’s chambers in 1995, everything had been settled, the custody, the support, the equalization of pension and assets. Even the furniture had been divided.
So what was the sticking point? Why not just rubber stamp the agreement and move on?
The house. Yep. The house. You see, when you encumber the title you can’t sell the property without discharging the mortgage and by then, that mortgage was heading towards a face value of $1 billion dollars. Clearly, even today Toronto single family homes haven’t hit $1 billion.
There was also the matter of the Legal Aid certificate lien against title. It was for $20,000 or so and hadn’t been paid. Today it’s around $40,000 with 23 years interest.
Presented with his can of worms back in 1995, Justice Speigel was perplexed and called us into chambers and with our lawyers there she laid out the problems.
“You’ve got a case here law student might ponder over in the years ahead,” she said. “Let’s see if we can find a way out.”
She then dictated the terms of the Minutes of Settlement, which you can read here, but I will summarize.
We had tried to sell the house for $220,000 but between the mortgage and the market it did not sell.
The court ordered a paid professional appraisal and they duly reported, with documentation, that the house was worth $180,000.
The judge took that valuation, deducted the first mortgage with CIBC, the cost of what a real estate agent would charge to sell it and arrived at an equity of about $120,000 to be divided equally.
First, however, she stipulated that the wife should pay off all debts and charges including the mortgage and the Legal Aid lien.
When that was done and title cleared I would have the right to purchase it by transferring $65,000 to her. Of course, all that money was pretty well spoken for between the mortgage and the Legal Aid Lien.
So let’s recap the numbers in simple form: A house worth $180,000, a mortgage for $60,000. Equity is about $120,000, split two ways, that’s $60,000.
And she had already taken $56,000 in cash out of the house, leveraging against it. So, yes, she’d been paid, unfairly from my point of view, but paid out. Also, let’s not forget, at the time, $60,000 was a chunk of change. It was a year’s salary and one third of the value of the house. To put it in context, imagine one third of the value of a Toronto detached home today and you’re thinking about $300,000 to $400,000.
And so we went our merry way. She got remarried and I continued to live in a house I designed and built and sunk my heart into with the hope that one day soon I would get clear title.
I figured, heck, we’ll get through this.
I paid off the mortgage. I kept up the maintenance, I painted the exterior, I added a bathroom, renovated the kitchen, I added a new kitchen, I put on a new roof. All in all over the years I have put $200,000 or so into this house in materials and labour.
I have also paid the taxes, the hydro, the gas bills and the insurance and everything a responsible homeowner would do.
And she’s done Butkus. Nada. Nothing. Zipperoony. For 23 years she’s done nothing. She didn’t even try to clear the title or pay off Legal Aid. Heck, she got her money, not her concern.
Here’s the thing though. I was a prisoner of my own home. I couldn’t sell and move on. I was trapped.
At this point, and I do apologize, I’m going to have to bring up all the related court cases that flow from this mortgage, above and beyond the divorce matter.
This part is highly technical. You can skip it if you want but if you want to really get to the facts, you might want to read through and follow the links.
But, I warn you, it’s dry and boring.
First Gail was sued by Laurentian Bank in action 93-CQ-45325 as noted, claiming $74,686.06 due from the mortgage.
On (at the time) counsel’s advice, I initiated Court File RE 4413/94 under OFLA Section 23 to order the mortgage struck and for $17,000 in special damages and $135,000 in punitive damages against Laurentian, the Ex and Robert Kernohan.
Then, in 1995 the loan shark, Kernohan, had his wife, Elizabeth Smith, to whom the mortgage was assigned in her RRSP issued application RE 4843/95 which sought to have court declare that Laurentian, as trustee for RRSP 204-001-572 had an equitable second charge against the Ex and her interest in the property.
Here’s what you need to know though about the bank. They weren’t really involved at all.
Laurentian Bank did not initiate any of those actions. Kernohan, the loan shark, launched them putting the bank’s name on the court papers to make it seem more ominous. In fact, Kernohan, who is a slime ball IMHO and has never responded to any of my attempts to reach out to him and has a history of being a constant litigant in the Ontario Courts
In fact, Laurentian was miffed at being dragged into this and threatened to demand its costs as the price of its withdrawal.
Here’s the ever more curious thing about this intrigue: At 49% interest that mortgage had a face value of $100,000 within a year or so. It was rolled into Elizabeth Smith’s RRSP at a face value far in excess of the initial $36,000. And as such it triggered a massive tax deduction for Elizabeth Smith, didn’t it? A deduction which may have more than offset the loan itself.
And guess what? If you have a financial instrument in your RRSP worth, say $200,000 you can pretty well borrow against it at a good interest rate and invest that money wisely. That’s what the Global Financial Crisis was about in 2008, inflated paper money. Underpinning that $200,000 RRSP was a bogus $36,000 mortgage.
Kinda smelly, don’t you think? Jes’ saying.
Subsequently, the three matters were joined in one.
On July 5, 2000 Mr. Justice Dunnet set the matters down for trail ‘sine die’ noting: ‘this matter involves evidence and ruling concerning credibility that cannot be dealt with by summary application. There are serious matters in dispute and viva voce evidence is necessary.”
At that point I had spent $20,000 on counsel just for this matter, a case he confidently assured me at the outset “would be settled with just a few letters.”
This was in addition to the $20,000 or more I spent on my matrimonial counsel.
Having signed off on the Minutes of Settlement we each went our separate ways, though it wasn’t long before my daughter moved in with me, tired of the emotional abuse from her mother and new husband.
Years later she told me how she lived in fear of him; how she’d been banished to the basement with bread and water, forced to sleep on the concrete floor among the mice (which also terrified her) because of some minor transgression. My son told me of being forced to stand for hours as punishment. He followed at 14-years-old.
They told me these stories well after the fact. If they had told me at the time I would probably be in prison because I would have gone after him with a baseball bat and I doubt I would have stopped once he went down.
Anyway, back to the house. With two kids and a partner living with me, I had little choice but to make repairs, redecorate, do the maintenance required for a healthy, comfortable living space.
Over the years, as you can see here, there have been substantial renovations. Bathroom tiles fail, tubs start to rust, kitchens get worn out, gardens need landscaping and care. The list never ends.
Luckily, I’m handy and I have acquired some useful skills and the tools required to renovate a house over the years.
In 2006, stressed at 11 years of being unable to resolve this matter I filed my own modest application under OFLA Section 23 asking for the mortgage to be struck down as the section allows. Instead of working with me to resolve this – and I offered cash under the table since she was now due nothing from her “share” of the house – she hired a lawyer and opposed me.
The court brushed me off but did order support which was never paid past the first couple of months.
So much for that.
Still, seeking closure and security of title, I realized I’d have to get legal advice so I then shopped the case around but few lawyers were willing to take it on with the exception of Bastedo Stewart who spent 18 months futzing around with it and billed me $5,000 and basically said, it’s not worth litigating. At this point, I suppose the house may have been worth about $300,000 to $400,000 because it was prior to the market going crazy.
This took us to about 2008 where I was in the middle of a relationship break up with no appetite for a fight with another at that point.
Not long after that the Ex’s liver started failing and it wasn’t clear if she was going to survive the wait for a transplant or even qualify for one because of her lifestyle issues. Eventually, she did survive the transplant and later joined the local church where she masquerades as a fine upstanding Christian.
Years went by. I never heard a peep, though I did suggest through messages with the kids that perhaps if she joined with me the courts might be more sympathetic and we could work something out for her.
And then in April 2017 my Ex launched CV-17-573-587 against me and Laurentian Bank (which doesn’t hold the RRSP anymore BTW) making an application for an order directing the property be portioned or sold and, among other things, deleting the Kernohan mortgage. Her affidavit is here and my response is here but it’s pretty much the what I’m describing in this post.
She also wanted rent from me for the past 27 years (!) though she hasn’t contributed one since penny to the upkeep of this property. Go figure.
I responded by saying, yes!!! By all means, strike the mortgage!
Once that is done, I said, there is estoppel which means the other related issues have already been dispensed with by prior process. By this, I meant that with the title cleared, the terms of the Minutes of Settlement could be fulfilled.
Check and check mate I thought?
Not so fast. We’ve been to case management and everything now rides on those Minutes of Settlement. Some lawyers who I shopped this around to took a rather narrow reading but I think, given that Madam Justice Speigel dictated the terms and looking at the bigger picture here, that the terms, the contract must not be parsed but read in whole.
My lawyer, Sage Harvey (no relation) agrees. Well he would, I’m paying him aren’t I?
So here is where I am at. If the Minutes of Settlement are struck down then the question of how much the house is worth on the open market comes into play.
It could be $1 million. From this, you’d have deduct the value of my father’s loan to me since I took it off the table as part of those Minutes of Settlement. Then you’d have to add up the taxes paid over the last 27 years, the renovations, which are about $200,000 plus the costs of the design and planning, the cost of that $60,000 mortgage which I paid off, which with interest is probably $100,0000 and on and on. You can see a visual documentation of the changes the house has been through since 1981 here.
The fear I have is that I’m no longer pulling down six figures a year. I’ve slid into semi-retirement and my income is half what I made three years ago much of it from my pensions and investments. I do have access to about $65,000 which I set aside for that happy day when I might get full title and pay the Ex off but not much more without seriously jeopardizing my retirement funding.
At 62-years-old the fact is no one wants to hire me because they think I’m too old, and that’s a tragedy in itself because I have some incredible skills to offer. The media industry, as everyone knows, is dying and there are layoffs weekly. So the prospect of me going back to newspapers or to running a website are pretty slim. Still, I’ve moved on from that and I chose to work from home for the last 15 years and I have loved it.
The reality is I could end up not being able to afford to buy back my own home which I thought I had bought at an agreed price back in 1995.
And to add insult to injury I’m again paying thousands of dollars for a lawyer. I’ve pleaded since 1992, when I first found out about this “mortgage,” for the parties to come to a settlement conference.
They have refused.
I don’t even know what the Ex’s position on the Minutes of Settlement is. Does she dispute signing them? On reflection doesn’t like what she agreed to? Clearly, she wants more money but the question is why didn’t she do anything to clear title all these years?
Why? Because there was no money in it for her. Now, her lawyer seems to have advised her that since the mortgage hasn’t been enforced for 10 years it can be struck. This, she thinks, means that she should get half of today’s value of the house, less all those other expenses noted earlier.
But again, what is her reason for dismissing the Minutes of Settlement? We don’t know. No cohesive argument has been put forward.
At this stage, I’m very stressed out as I think most people can imagine. I’d even discuss mediation or arbitration. Going to court is horrendously expensive for everyone involved and really should be avoided.
As of today, the Ex’s lawyer has just told us he is no longer acting for her. We don’t know whether he quit, whether she fired him or whether her parents, my kids’ maternal grandparents have stopped paying the bills.
This means the full day of discoveries slated for my birthday won’t proceed. She will need to find other counsel if she can afford it and since she owes Legal Aid $40,000 still, there’s little hope the money will come from there.
And I just wait. I can’t borrow against the house to invest. Even my line of credit isn’t secured against the house and thus is set at a higher interest rate.
This battle has cost me more than just dollars. It’s been an emotional grind stretching over nearly three decades and when it flares up I get a constant sinking feeling in the pit of my stomach. It’s very difficult to explain to people because it is so long and involved and I have never really said anything publicly about it.
Ultimately, this is my children’s inheritance. Given their strained relationship with their mother, I seriously doubt she’ll leave them anything. So they will get screwed over as well.
I’m at the point now of saying, screw it. I will be silent no longer.
I am shouting out my story because I know I am not alone. There’s something wrong here with the system and I’m not the only one who has been screwed over.
This is not the course of natural justice. This is unnatural.