Litigating a separation or divorce can be costly, particularly in high-net-worth situations or if child or spousal support issues are involved. Because of this, courts in Canada are able to award what are known as interim support orders, which can be used to award child and/or spousal support to one of the parties of the separation or divorce before the case has been decided. In a recent case before the Supreme Court of British Columbia, the court was asked to award interim support of $350,000 to a husband in order to facilitate the funding of his divorce from his wife.
The couple’s history
The couple were married in China in October 2003. The wife started a business with her sister shortly thereafter (“the company”). They had a son together, who was 12 years-old at the time of the hearing. In 2011 they had applied to come to Canada. The couple owned a house together in West Vancouver, while the wife was the sole mortgagee of another property.
They separated in either late 2017 or early 2018. They had been living in Canada but agreed to return to China to obtain a divorce. These proceedings started in January 2018. By 2018, Chinese documents showed the wife’s adult daughter from a previous relationship as being the sole shareholder of the company, though the wife had stated her net worth to be $1.8 million when she applied to come to Canada in 2011, owning 80% of the company.
A dispute over finances
The wife claimed to have been in debt to her adult daughter, having borrowed money to finance property purchases as well as living expenses. She calculated the amount of her debt to be over $6.2 million. The husband claimed to have been unaware of the loans, arguing they were fictitious.
The husband, who worked as a police officer in China, had an annual income of approximately $26,000 before he came to Canada. He had not been gainfully employed in Canada, and his assets in China were frozen during the divorce proceedings. Pending access to his assets, he claimed various relief, including child and spousal support, as well as orders regarding the division of property. He also estimated his litigation budget to be $400,000. Additionally, despite being ordered by another judge in February 2018 to not dispose of any property, the husband alleged the wife to have sold a property for $920,000. The wife said she used this money to pay off the mortgage on their home, though a search indicated the property still have a mortgage registered against it.
The wife’s argument was that her debt to her daughter leaves her unable to make an interim advance, and that her debt had left her with no net worth. She claimed the only way to finance an interim advance would be to sell her only asset – her home.
The husband, arguing that the loans were fictitious, stated the adult daughter would not have been able to build such a large company in such a short period of time, at least not large enough to have access to over $6 million to loan her mother. The court did not find it would be able to make a reasonable finding on whether the loans were real or not. However, the court also did not take into account the wife’s argument that having to sell her house would leave her unable to pay back her sister, with the court writing “No authority has been provided that a third party lender’s interests ought to be taken into account when an interim distribution is ordered out of property held by a party who has borrowed from that lender. Whether that lender is a family member or otherwise is of no consequence.”
The court’s decision
The court found that the husband would be unable to fund the litigation – which promised to have substantial costs – without an interim advance. In addition, he wouldn’t even be able to pay his counsel for fees already incurred. The court stated he “cannot realistically act for himself. Quite apart from having no familiarity with the management of a complex family law case, he is not proficient in English. The cost of translation throughout a 15-day trial would be prohibitive.”
The couple’s home, which had a value of $2,000,000 was identified as the only family property that couple be a potential source of funds for an advance. Without selling it, the husband would not be able to continue with the litigation, leaving the balance of prejudice in favour of an interim distribution. The court did not agree with the wife’s argument that the property must be used to pay back her adult daughter.
The court ordered the wife to borrow $350,000 against their home in order to provide the husband with an interim advance. The court also ordered the wife to pay $414 per month in spousal support and $1,170 per month in child support until another order is made.
Contact Jason P. Howie, an exceptional and experienced Windsor family lawyer, if you are going through a separation or divorce or are dealing with issues around spousal support or child support. With more than 25 years of experience, Jason has seen all of the possible permutations when it comes to separation and divorce. Call 519.973.1500 or contact us online. Many of our clients are referred to us by former and current clients, as well as by lawyers, accountants and other professionals.