Can A Breach Of Trust Be Innocent?

In 1996, Mr. Herjavec set up a family trust, and settled $100 into the trust. The next year, he transferred 75% of his shares in his growing company, Brak Enterprises ("Brak"), into the trust. AT&T subsequently purchased Brak for $31 million, and $21 million of the proceeds were paid into the trust. After Brak was purchased, the family's spending patterns changed drastically, and Mr. Herjavec semi-retired until 2003, when he established The Herjavec Group ("THG"). THG grew and prospered. Mr. Herjavec and his wife, Diane Plese, separated in 2014, and it was only after they separated that Ms. Plese discovered the trust had virtually no assets remaining. As a result, Ms. Plese argued that (1) Mr. Herjavec owed money to the trust; (2) Mr. Herjavec breached his fiduciary duties by taking benefits from the trust for himself and THG; and (3) the trust should be awarded an equity interest in THG. The Court was therefore faced with the daunting task of determining how the