KPA Lawyers – July 24, 2019

The short answer is yes, it’s possible, but it’s also highly unlikely.

Pursuant to Rule 24(18) of the Family Law Rules the court may make an order that a party pay an amount of money to another party to cover part or all of the expenses of carrying on a case, including a lawyer’s fees.

This is a much more serious type of court order compared to, for example, awarding the successful party a sum of money (to be paid by the unsuccessful party) as reimbursement for some of their legal expenses after the case has concluded.

Litigation is generally expensive for most Canadians and, after all, who wouldn’t want the spouse they’re divorcing to pay their legal bills in advance? With that in mind, it’s important to note that Rule 24(18) isn’t intended to be triggered on a whim, and there must be compelling reasons to do so.

Hypothetically, it may be the case that a low-income spouse with few assets wishes to divorce his or her very wealthy spouse, who owns vast business assets. Even if the low-income spouse is entitled to a portion of the value of their spouse’s business, how could that low-income spouse be expected to pay a Chartered Business Valuator tens of thousands (or even hundreds of thousands) of dollars to perform a formal valuation of the wealthy spouse’s corporation(s)?

Moving away from hypothetical situations, the actual circumstances regarding when a court might grant such an order under Rule 24(18) were discussed in Beasley v. Beasley, a 2019 decision by the Ontario Superior Court of Justice. In that case, a wife sought from her wealthy husband the sum of $100,000 as advanced payment for her legal expenses (unsuccessfully, I might add).

The Court relied upon the case of Stuart v. Stuart (2001), 24 R.F.L. (5th) 188 (Ont. S.C.J.).

In Stuart, the Court stated that to interpret the meaning of Rule 24(18) of the Family Court Rules, the court must look at the primary objective of the Rules of Civil Procedure (a related law). Among the several obligations of the court in carrying out its mandate to actively manage cases is the responsibility to ensure that the procedures are fair to all parties, to identify the issues and to set timetables to control the progress of the case.

The court also stated that it is the court’s duty to ensure a fair procedure, which means that both parties should be able to request and get disclosure and to tackle valuation issues equally (a “valuation issue” refers to determining the monetary worth of business owned by one or both of the spouses).

The court stated that one party should not be disadvantaged in the litigation by being unable to test the evidence of the other party. As well, both parties should be equally wary about the potential of a costs order against them.

The court then set out a number of factors to be considered when determining whether to make an order for interim disbursements. The factors come from both the law and Rule 24(18). These factors under Rule 24(18), listed at paragraph 8 of the Stuart case, are:

a) The court must consider which of these principles adhere to the primary objective of the Family Law Rules.

b) The court interprets the new Family Law Rules to require the exercise of the discretion in Rule 24(18) on a less stringent basis than the cases that call for such discretion only in exceptional cases. The discretion should be exercised to ensure all parties can equally provide or test disclosure, make or consider offers or possibly go to trial. Simply described, the award should be made to level the playing field.

c) An order under Rule 24(18) should not immunize a party from costs awards. The order is to allow the case to proceed fairly and should not be such that a party feels a license to litigate.

d) Certainly the proof of the necessity of interim disbursements would be critical to the successful claim. The claimant must clearly demonstrate that the disbursements are necessary and reasonable given the needs of the case and the funds available. In particular, if an expert is the subject of a requested disbursement, the claimant must demonstrate there is a clear need for the services of said expert.

e) The claimant must demonstrate that he or she is incapable of funding the requested amounts.

f) The claim or claims being advanced in the case must be meritorious as far as can be determined on the balance of probabilities at the time of the request for disbursements.

g) The order for interim disbursements should not be limited to cases where it would be taken out of an equalization payment. There are cases where there will not be an equalization payment. The litigants could be a child suing a parent, an elderly parent suing an adult child or a family that has not acquired assets. It may be that a party with a minimal income stream and no liquid assets needs disbursements to test evidence that might lead to him or her resisting an equalization order. The levelling of the playing field should not be limited to those with an expected equalization payment.

Returning to the case of Beasley, in refusing to grant the wife’s request for advanced payment for legal fees in the sum of $100,000, the judge stated that

“I have been given very little evidence to substantiate the sum of $100,000. There is no evidence of experts that need to be paid or quotations for services to be rendered. While the net worth of William is clearly in excess to that of Laura, Laura is far from impecunious. Again, the purpose of this rule is to give Laura the opportunity to hire the professionals she requires in order to test the evidence and ensure that she is satisfied with his stated net worth and his income. At this juncture, the Respondent has not even provided his position on his income or his assets, which was one of the reasons that this motion was brought. While the Applicant may know of her legal fees to date, there is no evidence of funds required to hire her own accountant or valuator.”

Although the wife was unsuccessful in asserting Rule 24(18), a slightly different factual scenario could have easily turned this issue in her favour. This case should be read closely by litigants who are in a similar situation as the parties in the case of Beasley.