Interim Distribution Complex Family Financial Disputes require lawyers with a proven track record of obtaining the highest interim distributions to level the playing field in high net worth divorce disputes. MacLean Law lawyers have a proven track record of obtaining the highest interim advances in our huge wins in our BC Supreme Court wins in Devathasan of $800,000 and JWP v AP. of $350,000. If you have a high net worth case involving millions and you need to win big read this. Both these cases are the highest interim distribution award precedents for BC lawyers moving forward. These successes are in part a reason why MacLean Law has been named an awardee of excellence for Top Canadian Family Law Firm for 2023. If you have questions on Interim Distribution Complex Family Financial Disputes, contact us immediately.
Vancouver Interim Distribution Complex Family Financial Disputes Tel: 604 602 9000
Joanthan Wai explains the law for how you can obtain interim financial monies to obtain justice. Your family law trial date is months or even a year away, and you need money now for your lawyer fees. Will you be able to obtain an “interim distribution” from monies that are held in trust, from the sale of the family home? What happens when, as unfortunately happens in family law cases, your spouse’s parents claim that the money from the family home is actually their money, and not yours? Senior associate Jonathan Wai of MacLean Law comments on a recent BC Supreme Court Case that serves as an example of an Interim Distribution in Complex Family Financial Disputes.
In the recent case of R.D. v. R.S.D. 2023 BCSC 6, the court was considering the application of a wife for an interim distribution of $200,000 to be paid from proceeds of the sale of a home, pursuant to s.89 of the Family Law Act. This section is often used for interim distributions, when a spouse needs money to pay legal fees or to pay for experts such as appraisals or corporate valuators when needed for the family law trial.
However, this case was not a simple one. While the wife and her husband had lived in the two properties in question during the marriage, both were registered to the husband’s mother (including the one that had been sold, and that had proceeds of the sale in trust). The husband’s mother claimed that the properties were hers, and thus not “family property” i.e. property divided between her son, the husband, and the wife.
The wife, for her part, claimed that the properties were enhanced by contributions made by her and her husband during the marriage, such contributions made on the understanding that they would acquire an interest in the properties. In other words, while the husband’s mother was the registered owner, the wife and husband had made contributions that enriched the value of the properties, such that it would be unjust to the wife and husband if they received nothing for their efforts.
The court considered the recent Court of Appeal case of Etemadi v. Maali, 2021 BCCA 298, and recited the test from that case: regarding interim distributions
a) A chambers judge must determine whether the applicant is economically disadvantaged in relation to the prosecution of the litigation or otherwise in pursuit of dispute resolution. If so, then it may be appropriate to make an order that “levels the playing field” or provides for “balanced participation” in dispute resolution.
b) The judge must go through a preliminary assessment of the circumstances that considers both of the s. 89 requirements: namely, whether the applicant can show that it would not be harmful to the interests of the other spouse and it is necessary for the purpose of funding dispute resolution.
c) Whether an interim distribution is necessary involves careful consideration of the quantum required. A judge should not order distribution in an amount greater than what is necessary.
d) The judge must always exercise the discretion conferred by s. 89 on the basis of whether it is in the interests of justice to grant the order sought.
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This being an Interim Distribution Complex Family Financial Disputes case, the court further noted:Z
[11] A preliminary merits issue may arise, as it did in Etemadi, if the property at issue is not agreed upon to be family property. In such circumstances, the court must consider whether to grant the interim order for distribution of funds despite that the level of interest spouses may have in such property has not yet been agreed upon or determined. Where a party raises a threshold issue on the merits, the applicant must show that there is a reasonable prospect of success on that threshold issue: Bartch at para. 19 citing I.F. at paras. 190–194.
…
[13] Applicants do not have to present a strong prima facie case [i.e. good case at first glance] because this standard would “pose too high a bar to meet at the interim stage. Rather … the applicable threshold test is whether the evidence shows there is a reasonable prospect of success …”: I.F. at para. 172.
[comment and emphases added]
Not surprisingly, the evidence of the wife, as against the husband and the husband’s mother, conflicted on many points, including what the intent of each of the parties’ were and whether contributions were made, what the extent was, and the reasons for them. To sort this out, the court looked at where the parties’ evidence actually did agree, regarding the property that had been sold, at paragraph 46:
a) The husband’s mother had bought and paid for the building;
b) The husband was on the mortgage, up until the property was sold;
c) The wife did cleaning of a portion of the house, some management of the rentals of one of the suites, and some AirBnB business for the property
d) The husband, wife, and their children lived there rent-free;
e) The husband made some payments towards utilities, property taxes.
The agreed-upon evidence was similar for the remaining property.
Given this, the court found that the wife enough of a claim for an “unregistered” interest in the property pursuant to the Family Law Act:
[63] … the parties’ evidence on this application on whether the legal title was subject to an unregistered beneficial interest that could be the subject of a successful claim to family property under the Family Law Act cannot be reconciled. However, given all of the evidence, as well as some uncontroverted evidence of contributions by R.D. and R.S.D., R.D.’s assertion that the contributions that she and R.S.D. made were based on an agreement that they were owners of the property is sufficient to raise a prima facie case that one or both of them have a beneficial interest in the properties.
The court also found that the wife had enough of a claim under the common-law doctrine of unjust enrichment. In simple terms, that the wife provided the husband mother a benefit, to the wife’s detriment, and there was no “juristic” or legal reason why she should not be compensated. In this regard, the court commented:
[71] Based on the uncontradicted evidence, R.D. has made out a reasonable prospect of success on unjust enrichment. She has established substantial contributions and deprivations that rise above the level of minor.
[72] These include the “property management” services she provided for the short- and long-term rental of the Vancouver property, her financial contributions to the households, R.S.D.’s commitment to the mortgages for the Vancouver property and the Surrey property and his financial contributions to the households.
[73] In particular, R.S.D.’s agreement to the indebtedness for those properties put R.D. and R.S.D. seriously at risk given that the evidence is that S.D. was collecting all of the income from the properties and they had no formal recourse to address matters if she did not pay the mortgages. In addition, although contested, the evidence that R.D. worked on the revenue generating aspects of the Vancouver property, R.S.D. contributed to the building of the Surrey property by hiring and supervising trades, and that R.D. contributed groceries and household supplies to both properties adds to the evidence to support a prima facie case for unjust enrichment, as does the uncontradicted evidence that R.S.D. put significant funds towards utilities and property taxes….
[74] With regard to juristic reason, S.D. submits that they had an agreement that R.S.D. and R.D. would not pay rent and/or R.S.D. and S.D. donated whatever contributions they made in lieu of paying rent. The evidence of R.S.D. signing on the mortgage is evidence that undermines this assertion because there is too big a mismatch between the burden he accepted and the benefit of not paying rent, especially given that he contributed about $22,000 towards property expenses over the same time period. I accept that R.D. has made out a prima facie case that none of the traditional categories of juristic reason applies.
Surrey Interim Distribution Complex Family Financial Disputes Tel: 604 602 9000
The court then considered the remainder of the Etemadi test, which we re-state here, along with the court’s comments in this case:
a) A chambers judge must determine whether the applicant is economically disadvantaged in relation to the prosecution of the litigation or otherwise in pursuit of dispute resolution. If so, then it may be appropriate to make an order that “levels the playing field” or provides for “balanced participation” in dispute resolution.
[92] Given the context of the extreme emotional and psychological disadvantage that R.D. has incurred at the hands of R.S.D., coupled with the financial disparity in their respective positions, I am satisfied that a s. 89 order is justified to level the playing field.
b) The judge must go through a preliminary assessment of the circumstances that considers both of the s. 89 requirements: namely, whether the applicant can show that it would not be harmful to the interests of the other spouse and it is necessary for the purpose of funding dispute resolution.
[98] On the evidence, I am satisfied that R.D. cannot afford the fees she has incurred to date nor fees to take the matter through trial.
[99] I consider the necessity requirement has been met.
c) Whether an interim distribution is necessary involves careful consideration of the quantum required. A judge should not order distribution in an amount greater than what is necessary.
[103] While it has been observed that a risk that funds will be distributed that are not family property, or beyond the amount ultimately determined to be the applicant’s interest in family property, is inherent in s. 89 applications (see Bartch at para. 75 and I.F. at paras. 192 and 197), still the court must carefully assess the quantum to be distributed against this: Jadavji at para. 40. …
[107] The total of the potential family property I have identified ranges from $1.3 to $2.3 million. However, it is at least possible, and perhaps likely, that only a percentage of this would be family property and that S.D. would retain a significant increase not only in what she put into the property but its increase in value over the years that R.D. and R.S.D. contributed to it.
[108] Given this, and despite the estimates of the costs of the litigation going forward, I am of the view that an interim distribution of $200,000 is too high at this stage.
…
[110] It is proportionate and appropriately balances the risk of too great a distribution versus the downside of underfunding R.D. in this high conflict litigation, to approve distribution of the same amount, $105,000, to R.D. under s. 89 with leave for her to seek further distribution in the future.
d) The judge must always exercise the discretion conferred by s. 89 on the basis of whether it is in the interests of justice to grant the order sought.
[115] I consider the potential of irreparable harm to S.D. to weight against making a s. 89 order. However, it is attenuated by R.D. having net the merits threshold and can be attenuated further by making an order to permit the payment out of the Antrim mortgage on the Surrey property, a matter which is causing S.D. cash flow issues.
[116] Also, I conclude that making no s. 89 order would be against the interests of justice. This case involves very serious issues to be tried on property but also on parenting, child support and spousal support in the context of what has been found to be extreme family violence perpetrated over years. To refuse R.D. resources to do so when she has established a reasonable prospect of success for an interest in the funds held in trust and in the Surrey property would not be in the interests of justice.
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The result in this case was that the wife was able to demonstrate a prima facie case based on the evidence the parties actually agreed upon, but did not obtain the full amount she sought for the interim distribution.
We stress that the above is a court decision on an Interim Distribution in Complex Financial Case. It is not the final decision on whether or not the wife in this case will receive an interest in the lands registered to the husband’s mother. As above, the court notes she has a “prima facie” case or a good case “at first glance”, and grants an interim distribution, but the final decision would have to wait for a full hearing with in person witnesses, unless this case were to settle.
As you can see, obtaining an Interim Distribution in Complex Financial Case where a spouse’s parents are the registered owners of land considers a variety of factors. Interim Distribution Complex Family Financial Disputes are tricky and you need experienced lawyers to win.
We at MacLean Law, in all of our offices Greater Vancouver, Victoria, Kelowna, Calgary and Toronto remain open by telephone, video and email to advise you regarding your Interim Distribution in Complex Financial Case, and whether such interim distribution would be available in your case, as well as preparing your case for settlement or trial.
