In a recent decision, an Ontario court considered one spouse’s plea for an order of interim costs and disbursements to cover the expenses of carrying on the parties’ litigation.
The Parties’ Story
The parties began cohabiting in October 2008, married in June 2011 and separated in 2017. The parties had signed a marriage contract the day before they got married. Both parties had legal advice and there was financial disclosure attached. The contract outlined what would happen to the parties’ property in the event of a marriage breakdown, and stipulated that neither party would be entitled to spousal support from the other.
In March 2017, the wife was presented with, and signed, an agreement which was supposed to amend the marriage contract. Among other things, this amending agreement provided that the wife released the husband from all claims that she may have had or would acquire to any interest in the matrimonial home. The agreement also contained full spousal support and property equalization releases. The wife had no legal advice or financial disclosure before signing this agreement.
The wife, who wanted to set aside the amending agreement, maintained that she was out of money and required the husband’s financial assistance to properly litigate this matter. As a result, the wife brought a motion for payment of interim costs and disbursements.
The Relevant Legal Principles
The court has the discretion to order one party to pay an amount of money to another party to cover part or all of the expenses of carrying on the case, including a lawyer’s fees. The rationale for making an order for interim costs and disbursements is that it levels the playing field between litigants of different economic means. This furthers the primary purpose of the Family Law Rules (FLR), which is to ensure that cases are tried justly.
The court referred to a leading Ontario case, which outlines seven “themes” concerning the granting of interim costs and disbursements, including that:
- the ordering of interim disbursements is discretionary;
- the claimant must demonstrate that the interim disbursements are necessary to pursue his or her case. That is, the claimant must demonstrate that absent the advance of funds for interim disbursements, he or she cannot present or analyze settlement offers or pursue entitlement;
- the interim disbursements must be shown to be necessary;
- the claim advanced must be meritorious;
- the exercise of discretion should be limited to exceptional cases;
- interim costs are for the purpose of leveling the playing field; and
- monies may be advanced against an equalization payment.
The Court’s Decision
The court granted the wife’s motion and ordered the husband to pay $40,000 as an advance towards the wife’s costs and disbursements. In doing so, the court first noted that the threshold for a meritorious claim was fairly low in claims for interim costs under rule 24(18) of the FLR. The court explained:
All that the material has to demonstrate is that this is a case that is worthwhile to prosecute; would it be reasonable for an individual of modest means to expend legal fees on a case such as the present one?
In this case, the court found that the wife’s case for setting aside the amending agreement was, on its face, meritorious. The result of the agreement signed by the parties appeared to be unconscionable, and the court was left to ask why any reasonable person would sign this particular amending agreement.
While the husband argued that the only funds available to him were his RRSPs, the court found that the husband could not suggest that his RRSPs – which totaled nearly $1,000,000 – should remain intact while the wife had been forced to cash in her RRSP to live on and to fund her separation and this litigation.
In the end, the court determined that the appropriate amount for an advance was $40,000. This amount was intended to bring the wife to the end of the trial regarding the amending agreement.
Lessons Learned
If you do not have enough money to fund your litigation and your spouse has a lot of money at their disposal, it is possible that you may be entitled to an order for interim costs and disbursements.
Contact Gelman & Associates if you are involved in a separation or divorce and have questions about your rights. At Gelman & Associates, our lawyers provide exceptional legal representation in all family law matters. Our goal is to always empower clients to make informed decisions about their future. We give all prospective clients a comprehensive family law kit during their initial consultation, as well as a copy of our firm’s handbook on separation and divorce. This information is full of resources that will help you understand and navigate the difficult and often complicated separation and divorce process.
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