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An Ontario court recently considered a case where a husband appealed from an interlocutory order that required him to pay his wife $150,000 for interim costs and disbursements.
What Happened?
The parties were married in 2002 and separated in 2013. They had four children together.
In 2007, following a period of difficulty, the parties entered into a domestic contract. It provided, among other things, that:
In 2007, following a period of difficulty, the parties entered into a domestic contract. It provided, among other things, that:
[The husband’s] Family has substantial wealth and assets and wishes to involve him in their affairs but only on the basis that, should the relationship between [the husband] and [the wife] end for whatever reason, [the wife] has no claim on the assets which [the husband] derives from the Family, or their value and have requested the parties enter into this Domestic Contract to release all property rights but for [the husband’s] personal assets and joint assets as described below.
In 2008, the husband purchased a property for $1,200,000 and registered it in his name alone. The parties and their children lived in this property and used it as their matrimonial home.
Following the parties’ separation, the husband first claimed that his income dropped by about two thirds. By the time the wife brought a motion for interim costs and disbursements, the husband claimed to be destitute. The motions judge rejected the husband’s claim, found that he had resources or access to resources, and ordered him to pay the wife interim costs and disbursements in the amount of $150,000.
The husband appealed from this order.
The Legal Principles With Respect to Interim Costs and Disbursements
The court explained that the criteria to be considered on a motion for interim costs and disbursements are found in another Ontario case, Ludmer v. Ludmer. That is, the party seeking an order must demonstrate that:
- their claim is meritorious;
- they are unable to fund the litigation;
- the other party has the resources to pay; and
- the fees and disbursements are necessary and reasonable to pursue their claims.
Furthermore, the court noted that it would not interfere with the motions judge’s findings of fact unless the error, if found to be palpable (i.e., obvious), could be shown to have affected the result. It stated that, in short, if the totality of the evidence before the motions judge was capable of supporting the result despite the error, it would accord deference to the motions judge.
The Court’s Decision
In dismissing the husband’s appeal, the court found that the motions judge did not err in finding that all four parts of the test outlined above were met (the husband disputed only the first three parts of the test).
Firstly, the court concluded that it was reasonable for the motions judge to hold, in light of uncontested facts and aware of the wife’s evidence in the civil trial, that her claim had some merit. It noted that the threshold on this part of the test is not a high one, given that the moving party simply needs to show that they have an “arguable” case.
The court also found that there was enough evidence for the motions judge to conclude that the wife was unable to fund the litigation. It explained that there did not need to be explicit evidence of the wife’s counsel’s refusal to continue to act for her, particularly in a case like this where it would have been improper for counsel to abandon the wife on the eve of trial.
Finally, the court concluded that there was evidence before the motions judge, apart from the evidence of retained earnings shown in the financial statement of the husband’s corporation, which was capable of supporting the finding that the husband had either resources or access to resources to pay interim costs.
The court indicated that the motions judge had to assess the evidence on a paper record and that the judge was entitled to accept some, none or all of the evidence. It explained that it could not interfere if there was some evidence upon which a fact could reasonably be found, as was the care here.
Lessons Learned
The court will consider a four-part test in determining whether or not to award a party interim costs and disbursements. The order is a discretionary one, and is granted in an effort to level the playing field where there appears to be a very significant disparity in resources between two parties.
If you have questions about your separation or divorce, contact Gelman & Associates. Our lawyers – who are knowledgeable and compassionate, but also tough when necessary – 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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