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The courts have the discretion to decide whether or not to award interim disbursements to a party in a family law proceeding. Sometimes, as in this recent Ontario case, the court will award one party interim disbursements to pay for various expenses related to litigation, such as the cost of legal fees, business valuation reports or income reports.
The parties lived together for over four years before getting married in October 2010. They separated six or seven years later.
The husband was very wealthy (and was at the time the parties married). The wife was in poor health.
The wife brought a motion for an order for $425,000 in interim disbursements. The amount she sought included $50,000 for legal fees, as well as $375,000 for a forensic analysis of the husband’s income and financial circumstances, and for the preparation of an income report and a valuation report.
The Legal Framework for an Order for Interim Disbursements
Rule 24(18) of the Family Law Rules permits the court to order one party to pay all or part of the expenses of another party in a proceeding. According to recent case law, the purpose of an award for interim disbursements is to “level the playing field to ensure that meritorious claims in the family law context are not abandoned or forfeited by those who lack financial resources and, as a result, are at a significant financial disadvantage relative to the other party in the proceeding.” That is, the court should exercise its discretion to ensure that all parties can equally provide or test disclosure, make or consider offers, or possibly go to trial.
The party seeking an order for interim disbursements must demonstrate that:
- the interim disbursements for which an advance payment is requested are important to matters in issue in the proceeding as a whole;
- the disbursements are necessary and reasonable given the needs of the case and the funds available (if the disbursements are for payment of an expert, the moving party must demonstrate a clear need for the services of the expert);
- the moving party is incapable of funding the requested amounts;
- the claim or claims being advanced in the case are meritorious as far as can be determined on the balance of probabilities at the time of the request for disbursements; and
- the imposition of the payment on the responding party will not cause undue hardship to the payor.
Overall, an order for interim disbursements is meant to allow cases to proceed fairly.
The Court’s Decision
In awarding interim disbursements to the wife, the court found that disbursements for legal fees and expert fees were important to the matters in issue, namely, spousal support and equalization of net family property. It noted that the litigation had already been very expensive (for example, there was an interim support motion that cost the wife over $150,000 in legal fees).
The court also found that the legal fees outlined in the wife’s budget were necessary given the issues raised in the litigation, the fees already spent, the steps already taken, and the number of counsel each party had involved. In addition, in light of the complexity of the husband’s financial affairs, it was reasonable and necessary for the wife to test the husband’s conclusion that his date of marriage deductions exceeded his net family property on separation. Indeed, the court agreed that this would require the preparation of a valuation report.
However, the court found that an income report was not reasonable and necessary in this case, as the husband already acknowledged that his income was whatever he wanted it to be. The court therefore concluded that any award of spousal support would be driven by the wife’s needs, measured against her standard of living during the relationship.
The court concluded that the wife was not able to fund all of her legal and expert expenses over the next year; rather, she would be able to contribute $50,000 to pay for her litigation fees. This amount represented approximately 25% of the wife’s miscellaneous budget from a temporary spousal support order that she had previously been awarded.
The court found that to the extent the wife’s proposed legal fees related to her claim for spousal support, her claim for interim disbursements was also meritorious. In addition, it noted that the husband was able to pay interim disbursements.
In light of the above, the court ordered the husband to pay the wife $200,000 to cover the legal fees and the expert valuation report that she was incapable of funding herself.
If you are struggling to fund your litigation, it is possible that a court will award you interim disbursements to help you cover your costs. If you have questions about how to proceed with your case, it is best to speak with a lawyer. 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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