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Former Dragons’ Den Star’s Divorce Case Highlights Trouble With ‘Expert Testimony’ In Family Law – F…

Former Dragons’ Den Star’s Divorce Case Highlights Trouble With ‘Expert Testimony’ In Family Law – F…

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The more complex our world has become, the more likely it is
that litigation will involve expert evidence. Many family law cases
require the expert testimony of psychologists or social workers who
make recommendations on what is in a child’s best
interests.

Other experts appearing frequently in the family courts include
real estate appraisers and chartered business valuators, who
testify about the value of shares in private companies and income
for support purposes.

Some years ago, judges began to express concern about the
independence of the experts appearing before them: some experts
were perceived as being simply another advocate in the courtroom,
rather than providing a balanced opinion for the court’s
consideration.

As a result, the rules governing experts changed. Experts giving
evidence in an Ontario court are now obliged to sign an
acknowledgement that confirms that they are aware of their
obligation to be independent, with their obligation being to the
court, and not to the party who retained them.

Despite this change, Justice Ruth Mesbur of the Ontario Superior
Court in Plese v. Herjavec, a decision released last
month, seems to suggest that problems with expert testimony
continue to plague the courts.

The case was a lengthy family law dispute over millions of
dollars involving Robert Herjavec, an entrepreneur and Canadian
reality television personality best known for his appearances on
Dragon’s Den and Shark Tank. Herjavec had separated from his
wife of twenty-four years, Diane Plese, leaving her for his dance
partner on Dancing with the Stars.

Despite the details of the marriage breakdown, Justice Mesbur
succinctly described the lengthy trial before her, as follows:
“Ultimately, the real conflict between the parties lies not in
the historical facts of their case or who did what, but rather on
the considerable difference in the expert opinions each has
proffered both to determine the value of these assets and to
determine Mr. Herjavec’s income.”

The family law trial finally took place four years after the
parties separated. It involved an expert in forensic accounting who
was required to reconstruct records Mr. Herjavec had failed to keep
for his family trust; two real estate experts, who valued the
parties’ properties, including a 22,000-square-foot Toronto
home; investment experts; two chartered business valuators, who
valued the shares of Mr. Herjavec’s company; and a chartered
business valuator who gave evidence about Mr. Herjavec’s income
for the purposes of the payment of support.

The experts differed by $3.6 million on the value of the
parties’ Toronto home, and by more than $30 million on the
value of Mr. Herjavec’s shares in his private company.

Justice Mesbur’s frustration with several of the experts
appearing before her was apparent early in her judgment.

“In each case, each valuator, supposedly acting
independently, suggested values that benefitted the position of the
party who had hired him,” she wrote. “Similarly, when it
came to expert opinion on Mr. Herjavec’s income, Mr.
Herjavec’s expert, in particular, seemed particularly aligned
with Mr. Herjavec’s position. Sadly, this is often the
case.”

After analyzing each real estate expert’s evidence in
detail, Justice Mesbur determined that she was unable to accept
either expert’s opinion, adding, with some frustration,
“While I recognize the valuation is an art, not a science, I
would have expected the ultimate opinions to have been much closer
to one another.”

She then went on to parse at length, the differences between
each expert, increasing the $14,000,000 value for the Toronto home
proffered by one expert and discounting the other expert’s
value of $17,600,000. She determined that the home was valued at
$15,500,000 at the date of separation.

Her Honour’s frustration appeared to increase when she
turned to the value of Mr. Herjavec’s shares in his private
company. “As was the case with the real estate appraisers,
their opinions squarely align with the interest of the Party who
retained them,” Justice Mesbur wrote. “I am astonished
that there should be this kind of disparity between them. I wonder
if their results would have been the same had they been retained by
the other party. This case highlights in very stark fashion the
continued problem with expert evidence. Notwithstanding the
experts’ clear duties, they nevertheless end up supporting the
position of the party who hired them. The changes in the expert
rules and the requirement for experts to acknowledge their duties
of independence and impartiality were supposed to solve the problem
of experts simply being ‘hired guns.’ Sadly, the problem
remains. I must therefore approach each expert’s opinion with a
certain degree of caution and skepticism.”

Mr. Herjavec’s valuator estimated that his private company
shares were worth $24,000,000; his wife’s valuator estimated
the same shares at about $52,500,000. After careful analysis of the
nearly $30,000,000 difference between them, Justice Mesbur
determined that the value of the shares was $32,000,000.

Two accounting experts, however, not only escaped Justice
Mesbur’s sharp criticism, but received her approbation: the
expert who traced the disbursement of $21,000,000 from the trust,
and the wife’s expert who gave evidence on Mr. Herjavec’s
income for support purposes.

Her Honour’s comments left no doubt about what is expected
by the court from experts, saying the wife’s income expert, was
“fair and balanced.”

“I did not find her unduly aligned with Ms. Plese’s
position. Her evidence was helpful and measured. She clearly took
her duties to the court seriously.”

Her Honour went further, and suggested a way to resolve the
difficulties with experts, saying “it seems to me that in
order to provide the court with truly independent, unbiased and
reliable opinions, it would be preferable to require the parties to
jointly retain a single expert, or perhaps, to require the parties
to fund an expert who would be retained by the court, at the
parties’ expense.”

Despite the millions of dollars at issue, Herjavec is unlikely
to be remembered for its legal principles.

Instead, it may portend the beginning of the end of the
“hired gun.”

This article was originally published in the National Post.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.



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