No Litigation Funds for “Advantaged” Husband

GeorgiaLeeLang025Before March 18, 2013 there was no level playing field in British Columbia between litigating spouses. The spouse with financial resources, usually the husband, could easily “bully” his spouse, by virtue of his much deeper pockets.

All of that changed when the Family Law Act came into effect with the long-awaited provision in section 89 that if a spouse did not have the funds to hire counsel, or pay for experts, including accountants, there was now a legal avenue to obtain an advance on the family property for that purpose.

Section 89 provides:
“If satisfied that it would not be harmful to the interests of a spouse and is necessary for a purpose listed below, the Supreme Court may make an order for an interim distribution of family property that is at issue under this Part to provide money to fund

(a) family dispute resolution,

(b) all or part of a proceeding under this Act, or

(c) the obtaining of information or evidence in support of family dispute resolution or an application to a court.”

My sense is that since the inception of section 89, most applicants have been awarded funds ranging from $50,000 to $400,000 to level the playing field between spouses, with few cases being denied.

Kerby v. Kerby 2020 BCSC 1078 is a recent case where the applicant husband’s request for litigation funds in the amount of $100,000 was denied, for the following reasons:

1. The parties were married for 3 years and disagreed on how long they had cohabited pre-marriage. The husband said prior cohabitation was 2 years, while his wife said 6 years;

2. The husband was a pilot with a 2019 income of $162,000 and his wife’s income was $26,000. At the time of the application and since late 2019 the husband was receiving $104,000 per annum on “stress leave”, on account of the litigation. He produced a doctor’s note that read: “Pilot seen today. Unfit to fly”. The wife was laid off due to covid-19 and received government funds.

3. The husband deposed that he had already spent $140,000 on legal fees and could no longer afford to pay for a lawyer. He said he required between $93,000 and $188,000 to pay a lawyer to act for him and complete a 7-day trial in November 2020;

4. The sum of $416,000 was held in trust on behalf of the parties;

5. The wife argued that despite the disparity in earnings her husband had not paid spousal support and had paid no child support for their two young children for several months and never paid the required Guideline amount of support.

6. She maintained that her claim for lump sum spousal support could amount to as much as $184,000, so if her husband received the advance of funds he requested, there would be insufficient monies left to pay her share of the trust monies and lump sum support, if her claim was successful.

Relying on IF v. RJR 2015 BCSC 793 Master Muir confirmed that the purpose of section 89 was to assist economically disadvantaged spouses:

“it is meant to help level the litigation playing field that is so often skewed when one spouse controls all or the majority of the wealth and assets. Application of s. 89 calls for a purposive interpretation, where the need of the applicant spouse to receive an interim distribution and the potential entailing harm to the other spouse are evaluated contextually with an eye on the larger objectives endorsed by the FLA…

For example, would the distribution being sought in the particular case require a sale of property or of the encumbering of assets; what income tax ramifications might be triggered and what other transactional costs would arise? The concept of harm under s. 89 would also encompass economic implications such as whether the distribution would adversely impact the other spouse’s lifestyle or effectively undermine or prejudice his or her argument for reapportionment.”

The court agreed with the wife’s counsel that the husband’s request “turns the purpose of section 89 on its head”, denied his application, and awarded costs to the wife.

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