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In the recent case of Parente v Parente, the wife brought a motion to Ontario requesting advance costs (interim disbursements) and an advance on equalization. The husband opposed these requests.
The husband argued that he had already advanced significant funds to the wife, including a transfer of a condominium, which the wife then sold, as well as her share of the proceeds of the sale of the matrimonial home, an earlier order for $50,000 in interim disbursements, and $330,000 as an advance on equalization as the result of an earlier urgent motion. The husband further argued that there was insufficient evidence that his assets would have sufficient value to warrant a further equalization advance.
The Court agreed that the wife was entitled to interim disbursements and an advance on equalization, although not in the amounts sought by the wife.
Family Law Rules permit a court to order that one party contribute to the other’s costs of carrying on the case (“interim disbursements”)
The Family Law Rules permit the court to order that a party pays a sum to the other party to cover part or all of the expenses of carrying on the family law case, including legal fees. Such an order is to be considered in the context of the primary objectives of the Family Law Rules set out in subrules 2(2)-(5). These objectives include dealing with cases justly and ensuring the procedure is fair to all parties.
Interim disbursements do not require exceptional circumstances; they are intended to “level the playing field”
As noted by the Court in Parente, for the procedure to be fair, both sides must be able to request, give, and evaluate disclosure, including addressing complex financial issues. This is more challenging when there are unequal resources available to each party. The court has the discretion to order interim disbursements to “level the playing field” and support the primary objective of the Family Law Rules.
The case of Stuart v Stuart sets out the factors to be considered by the court when making an order for interim disbursements:
- Proof of the necessity of the requested disbursements given the needs of the case and the funds available
- Proof that the claimant cannot fund the requested amounts
- The claims being advanced in the case must be meritorious, at least as far as can be determined at the time the request for interim disbursements is being advanced
- Interim disbursements are not limited to only those cases where it would be an advance on equalization
The wife in Parente was entitled to interim disbursements but not in the amount that she claimed
The wife in Parente requested $250,000 in interim disbursements to cover anticipated upcoming costs in the litigation. She provided a summary of the tasks and estimated costs but did not include a detailed Bill of Costs nor details of hourly rates for professionals such as valuators and lawyers. The court found that the fees submitted were excessive and needed to be more detailed to support the requested $250,000.
The wife established that interim disbursements were necessary
However, the court did agree that the wife had established that some interim disbursements were necessary. In this case, the wife’s only source of income was her child and spousal support payments, which were barely sufficient to maintain her home for her and her children. She also had no further ability to leverage her existing real estate assets.
The wife established that she could not fund the requested amounts herself
The court also considered the relative resources of the parties. The husband, in this case, had not seen his wealth diminish post-separation, and he acknowledged a support arrears obligation of over $100,000. The husband was also a beneficiary of a large family trust.
The wife’s claims had merit
Regarding the merit of the claims, the court had “no difficulty in accepting that the wife’s claims have merit.” There was, without question, a child and spousal support obligation. There was also a prima facie entitlement to an equalization payment of an undetermined quantum. The equalization payment could not be quantified with any specificity due to the husband’s delays in providing disclosure for over three years. These delays had caused the wife to incur additional legal fees.
The court substituted its assessment of upcoming costs, which was much less than the wife’s estimate
As the court had rejected the wife’s cost estimates, the court assessed the costs and found that the following would be reasonable for the upcoming steps in the litigation:
- $10,000, the costs of this motion
- $1,500 for the amendment of pleadings
- $13,500 for a joint settlement conference and trial management conference
- $25,000 for a further long motion set for August of 2023
- $25,000 for oral questioning
This totalled $75,000.
The wife could bring another motion for interim disbursements later in the case
The court also noted that the wife was able to bring a further motion to request further disbursements to help prepare for and fund the preparation for and participation in the trial, if she had the evidence to support same.
The wife was entitled to an advance on equalization
The husband argued that the wife had not demonstrated that he would owe further equalization or in what quantum and that she should not be entitled to a further advance, given that he had already advanced $330,000 in November of 2022.
The court noted that, as was the case for interim disbursements, the wife had made out of financial necessity. The difficulty arose in determining the value of the husband’s assets and, based on that, what possible equalization payment could be owed.
The husband’s delays in providing disclosure impeded court’s ability to determine potential equalization payment
The court noted that the disclosure missing was from the husband’s side and that there had been substantial delays in providing court-ordered disclosure. The court drew an adverse inference from the lack of evidence called by the husband to support his claim that there would not be a large enough equalization payment owed to cover prior disbursements, advances, and the current advance being sought. The court wrote that the husband had known the wife’s position for some time, which was that she was entitled to an advance of $750,000. The husband could introduce evidence to oppose that claim (for instance, that the corporations or properties he had interests in were heavily encumbered). He did not do so.
The court ordered a small advance on equalization; gave the husband a timeline to provide evidence to avoid a larger advance being ordered
The court ordered that the husband advance $50,000 to the wife and that the motion on this issue be adjourned to May of 2023, in which the court would consider whether the husband should advance further funds to the wife. This would allow the husband to provide additional evidence to support his contention that the wife was owed less than the claim. The court warned the husband that if he did not deliver additional evidence, the court “may draw an adverse inference that the husband has the assets to cover the wife’s request for $500,000, and may an order accordingly.”
Contact Johnson Miller Family Lawyers in Windsor for help with financial issues in family law litigation
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