Advance Payment of Costs

Income for Support in Canada, particularly in Ontario, becomes complex and expensive once there are business interests involved. Private business interests are more complex due to a variety of factors, including absence of an active market such as the ones enjoyed by most public companies.

However, even with an active market, price and value are often not the same. Take the following publicly traded stock price of one pharmaceutical company, which was listed on the Nasdaq.

On Fridays, we used to play a game when we used to work, primarily, in the public company world, prior to the last recession, in which we used to “guess that company” – yes, geeks and finance. For anyone curious, the above company was one of the leaders in the Ebola vaccine, back in 2014 when people thought the world was going to end due to Ebola. 

Coming back to the complexities of support calculations for determining income – especially with private business interests. We use the recent case of Beasley v. Beasley, 2019 ONSC 1562 to discuss the concept of advance payment of costs, given that litigation at times can be lengthy. Pursuant to r.24(18) of the Family Law Rules, O. Reg. 114/99, 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 lawyers’ or valuators’ fees.

In British Columbia (Minister of Forests) v. Okanagan Indian Band, 2003 SCC71, the Supreme Court of Canada laid out 3 requirements, as follows:

  1. The party seeking the order must be impecunious to the extent that, without such an order, that party will be deprived of the opportunity to proceed with the case;
  2. The claimant must establish a prima facie case of sufficient merit to warrant pursuit; and
  3. There must be special circumstances sufficient to satisfy the court that the case is within the narrow class of cases where this extraordinary exercise of its power is appropriate.

In Stuart v. Stuart, Rogers J 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. 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, as follows:

  1. The court must consider which of these principles adhere to the primary objective of the Family Law Rules;
  2. The court interprets the new Family Law Rules to require the exercise of the discretion in r. 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.
  3. An order under r.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.
  4. 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.
  5. The claimant must demonstrate that he or she is incapable of funding the requested amounts.
  6. 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.
  7. 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.

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