Spouses going through divorce fight over big property: houses, cars, boats, and rare works of art. Smaller tag items, such as furniture, will come out in the wash-cancel each other out in the equalization of net family property,
But sometimes, couples will fight over smaller items. Like the immortal line said by Harry Burns in the 1989 Nora Ephron film When Harry Met Sally: "Cause someday, believe it or not, you’ll go 15 rounds over who’s gonna get this coffee table. This stupid, wagon wheel, Roy Rogers, garage sale COFFEE TABLE."
This week, Daniel Shak, ex-husband of professional poker player, Beth Shak, launched a law suit against his former spouse. The object of the lawsuit? Shoes. Louboutins. Well, a collection of Louboutins.
According to the Huffington Post, Mr. Shak is claiming that his ex-wife failed to report her 1,200-pair designer shoe collection in their divorce proceedings three years ago. According to Mr. Shak, his ex-wife hid the shoes from him in a "secret room" during their marriage.
Now you may be thinking, "shoes...really? How much could these shoes really be worth?"
Mr. Shak estimates the shoe collection to be worth an estimated $1 million. And he wants a cut; a 35% cut to be exact. That's $350,000, quite a substantial sum when you consider the fact that some homes aren't even worth that much.
In Ontario, section 5 of the Family Law Act entitles the spouse with the lesser net family property to an equalization payment from the wealthier spouse (of half the difference of between the two spouses' net family property). Assuming that Ms. Shak was wealthier than her former husband, she would have owed him an equalization payment. If the value of the shoe collection had been included in the calculation of her net family property, the equalization payment owed would be substantially higher.
According to the Examiner, Mr. and Ms. Shak's settlement agreement implies that Mr. Shak would be entitled to 35% of the shoe collection's value (as opposed to the legislated 50% normally ordered in an equalization of net family property).
Under Ontario's equalization law, however, Mr. Shak would only be entitled to the value of the shoes accumulated during the course of the marriage, not any shoes brought into the marriage by Ms. Shak or shoes bought after the separation (valuation) date.
But does Mr. Shak have a legal action against his ex-spouse three years after their divorce proceedings? Legally speaking, he likely does.
The courts in Ontario do not take financial disclosure lightly. Often, a spouse's failure to give accurate financial disclosure will result in cost consequences against that spouse. That means that a judge may order that the spouse who fails to give accurate disclosure must pay a portion or all of their spouse's legal fees.
And, a settlement agreement may be set aside on the grounds that either party did not make complete and accurate financial disclosure prior to signing the agreement.
While Ms. Shak could make the argument that she was unaware that her shoe collection would be considered "property" for the purposes of equalization, this argument is weak at best. Prior to entering the professional poker circuit, Ms. Shak ran a private vintage designer clothing business for 10 years. In recent years, she launched a website dedicated to women's shoes. Both these facts indicate that Ms. Shak knew how valuable her shoe collection was.
In the end, however, it will likely be difficult for Mr. Shak to prove that his ex-wife "hid" the shoes from him over the course of their marriage. A court may dismiss his action on the basis that this claim should have been raised during the original action and that he had knowledge of the shoe collection.
If the shoe fits, you should disclose it.