$1 Million To Level The Playing Field

Litigation is expensive. Often in family law one party has more financial resources than the other to fund the litigation. This creates an inherent unfairness and often leads one party to simply give up as they cannot deal with the financial upheaval that litigation can often cause. In family law, when parties are faced with the prospect of giving up and there are significant assets and financial resources available to the other side, they are able to bring an application for an interim advance to help even the playing field.

A slew of recent cases in Alberta and Ontario have recently given interim advance awards to assist a party in funding family law litigation. For example, in Lakhoo v. Lakhoo Mr. Justice M.D. Gates of the Alberta Court of Queen’s Bench awarded $400,000 and in Hughes v. Hughes Mr. Justice S. Sanderman of the Alberta Court of Queen’s Bench awarded $500,000 for an interim advance award. There is extensive case law that discusses when an interim advance should be provided. The leading case being the Supreme Court of Canada‘s decision in Okanagan Indian Band. A good summation of the principles in the case law was provided in the Ontario Superior Court decision of Stuart v. Stuart. Justice Rogers identified the following factors:

(1) The ordering of an interim advance is discretionary;
(2) The party asking for the advance must demonstrate that the absent an advance the claimant cannot present or analyse the case;
(3) The proposed expenses that the interim advance would cover must be necessary;
(4) The claim in the case being advanced must be meritorious;
(5) Interim costs may be granted in matrimonial proceedings to level the playing field.

In a recent decision of Rea v. Rea from the Ontario Superior Court the wife sought an interim advance of $1 million. The basis of her argument was that her husband had substantial assets ($40 million) and a significant income and that his financial position was far superior to hers which resulted in an uneven playing field. The wife also argued that the husband’s obstructive conduct in the litigation had increased the costs even more and resulted in the wife depleting her financial resources very quickly. Lastly, the wife argued that because of the complexity of the financial holdings of the husband, she required experts to analyze the parties finances.

Not surprisingly, the husband didn’t agree with the wife’s position. He said he had no present source of income and was bleeding capital. He also said he had paid $100,000 in an interim advance already. The wife provided estimates from experts as to the costs that could be incurred in retaining the experts and the court agreed. One of the wife’s experts suggested a cost of $250,000 for his/her services in the litigation. The court thought that the estimates were “as good as possible.” The court also found the wife had no assets and the previous $100,000 had already been used on lawyers and accountants and paying down debt. What was of concern to the court was that in the absence of an interim advance, the wife would not be able to prosecute her legal claims.

What was likely also fatal to the husband was that he had recently sold a company for $80 million and received $40 million from the sale as he was a 50% owner of the company. He then took $22 million and put it into a family trust. This likely raised suspicion in the eyes of the court. Critical to the wife’s success was the presentation of satisfactory evidence that she was in need of the interim advance.