Tomkins v Tomkins, 2013 ABQB 416

Court of Queen ’ s Bench of Alberta Citation: Tomkins v Tomkins, 2013 ABQB 416 Date: 20130731 Docket: 4803 153870 Registry: Edmonton Between: Lana May Tomkins Plaintiff/Applicant - and - Michael James Tomkins Defendant/Respondent _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice Donald Lee _______________________________________________________ Introduction [ 1 ] This application is before me as the case management judge. The Plaintiff/Applicant, Lana May Tomkins (“Ms.

Tomkins” or “Applicant”) seeks an Order of this Court for interim advance costs of $50,000 (fifty thousand dollars) payable by the defendant forthwith, to assist her obtain a critique and current valuation from her expert and to fund the within litigation, which would be accounted for at trial. Ms. Tomkins also applies for a further advance of $100,000 (one hundred thousand dollars) from the sale proceeds of the matrimonial home held in trust by the real estate counsel, to be accounted for at trial as an advance on matrimonial property equalization. The Defendant/Respondent, Michael James Tomkins (“Mr.

Tomkins” or “Respondent”) opposes the application.

Test for Interim Costs ’ Award [ 2 ] The test for the grant of an interim costs was articulated by the Supreme Court of Canada in British Columbia (Minister of Forests) v Okanagan Indian Band , 2003 SCC 71 at para 36 , [2003] 3 SCR 371 [ Okanagan Indian Band ], where it stated that in the exercise of the court’s discretionary power to grant an interim costs order: There are several conditions that the case law identifies as relevant to the exercise of this power, all of which must be present for an interim costs order to be granted.

The party seeking the order must be impecunious to the extent that, without such an order, that party would be deprived of the opportunity to proceed with the case . The claimant must establish a prima facie case of sufficient merit to warrant pursuit.

And 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 powers is appropriate ... [In] the usual case, where the court exercises its equitable jurisdiction to make such costs orders as it concludes are in the interests of justice, the three criteria of impecuniousity, a meritorious case and special circumstances must be established on the evidence before the court . ( emphasis added ) [ 3 ] Both parties concede that the above statements of the Supreme Court constitute the test to be applied by this Court to the facts and evidence presently before it.

I agree with their positions as an accurate representation of the law on the issue before me. [ 4 ] Also, the parties to this application have filed affidavit evidence used to prepare both their written briefs and oral submissions. Parties ’ Positions Impecuniousity Ms. Tomkins ’ position [ 5 ] Ms. Tomkins indicates that in 2011, she was awarded advance or interim costs of $20,000 which she spent on legal fees incurred in obtaining child support, including the defence of an appeal filed by Mr. Tomkins at the Alberta Court of Appeal regarding the original child support order.

In September 2012, both parties received a $75,000 advance from the sale proceeds of their matrimonial home and Ms. Tomkins’ advance was used to obtain accommodation for herself and the children, general expenses for herself and children, and payment of legal fees, including service of debts incurred in obtaining draft expert reports. [ 6 ] The Applicant’s evidence is that she had spent more than $70,000 on accounting expert reports for corporate valuations, a critique of the Respondent’s valuation reports and to obtain income reports to establish the Respondent’s Guideline income for support purposes.

This sum of money was expended following the termination of Ms. Tomkins’ employment, corporate income and the withdrawal of the family Land Rover from her control by Mr. Tomkins, who alleged the lease on the SUV was up and it had to be returned. She currently works as an administrator in a fitness club earning about $15,730 a year. Ms. Tomkins deposes that presently, other than her interest in assets controlled by Mr. Tomkins, she has $25,500 in a TFSA which is the remainder of the interim distribution from the sale of the matrimonial property.

She plans to use this in setting up a new home which was recently acquired for herself and the children, and to commence the repayment of a $100,000 loan that she obtained from her father to finance her litigation and expert reports up to this point of the litigation. [ 7 ] She submits that she has no other resources except her low paying job, child and spousal support which are inadequate to fund the litigation: McDonald v McDonald , 1998 ABCA 241 at para 23 ,163 DLR (4th) 527 [ McDonald ]. In relative contrast, Ms.

Tomkins notes that the Respondent has the income flow which empowers him to continue in expensive litigation. She notes that the

sources of the Respondent’s income include interests in profitable Boston Pizza businesses which have not yet been properly appraised. According to Ms. Tomkins’ evidence, a report has identified serious conflict of interest as well as serious information deficiencies in the previous business valuation reports. The Applicant contends that she “needs” the interim costs to fund an objective, accurate and current expert report to be presented to this Court. She plans that her new legal counsel working with a newly retained expert will be paid their professionals fees from the interim costs, if awarded.

Without this advance costs, she submits, the opportunity to proceed with her case before the courts will evaporate. [ 8 ] Ms. Tomkins argues that impecuniousity is established having regard to the relative resources of the parties to litigation. In support of this proposition she refers to Pokorski v Pokorski , 2009 ABQB 276 at para 38 , 68 RFL (6th) 405 [ Pokorski ], where Veit J awarded “interim costs to allow [the Applicant wife] to be on a more equal footing with her husband relative to the valuing of matrimonial property.” Mr. Tomkins ’ Position [ 9 ] The Respondent submits that Ms.

Tomkins’ evidence does not demonstrate that she is impecunious in the sense of being “poor, penniless, lacking money.” He observes that she drives a $130,000 Range Rover that she said was a gift from her father, and yet claims she is indebted to her father in the sum of $100,000. Mr. Tomkins points to his successful appeal at the Court of Appeal which directed a review of this Court’s previous interim costs award; and Ms. Tomkins still owes him monies from that appeal. The Respondent argues that given Ms.

Tomkins’ background with a diploma in marketing from NAIT and experience as an insurance broker and sports manager, she had been intentionally underemployed for the past three years. [ 10 ] Mr. Tomkins contends that the newly retained expert is unnecessary as he will be the third financial professional to provide a report in this matter. The alleged conflict with his corporate accountant was specifically waived for Ms. Tomkins, who at that time anticipated some advantage in utilizing them to critique the original report prepared for both parties. The Respondent submits that if Ms.

Tomkins now chooses to have a third assessment, she ought to bear the cost. Mr. Tomkins deposes that between June, 2010 and May, 2013, the Applicant had the benefit of approximately $507,415 which equates to about $14,095 per month at her disposal. While comparably, he had access to $517,908, out of which support payment of $249,524 was paid, leaving a net proceed of $153,839 (after deducting $114,545 as taxes). In effect, Mr. Tomkins’ evidence is that he had $5,304 per month at his disposal during the same time period. [ 11 ] In any event, Mr.

Tomkins infers that the Applicant has money following her deposition that she has already provided her new counsel with $20,000 as a retainer for legal fees and a down-payment to retain the expert for financial report, albeit her claim that it was from money which she hoped to use for the new home.

Has the Applicant established impecuniousity ? [ 12 ] Before exercising this Court’s equitable jurisdiction and discretionary power to grant interim costs as are appropriate in the interest of justice, the test in Okanagan Indian Band demands that I must consider whether, based on the evidence before me, the party seeking the award order has established impecuniousity. [ 13 ] Foremost, I note that in Okanagan Indian Band , the Supreme Court did not expressly indicate that the assessment of the Applicant ’ s “ impecuniousity ” is to be conducted from a “ relative ” perspective vis- à -vis the Respondent ’ s financial position.

The Court indicated that “ the party seeking the order must be impecunious to the extent that, without such an order, that party would be deprived of the opportunity to proceed with the case. ” The implication of this, in my opinion, is that it is not a pre-condition that the Applicant must be “ poor, penniless, lacking money ” before a court could find that he or she is entitled to an interim costs award.

In effect, if the court is otherwise satisfied that the resources available to the Applicant would be inadequate to support or fund her litigation, an Order awarding interim costs may be made by the court. [ 14 ] That said, case law has also established that the objective for the award of an advance cost is to put the parties on equal financial footing such that each party has the same quantity of assets with which to fund subsequent litigation relative to the valuing of matrimonial property: McDonald at paras 22, 36 ; Pokorski at para 38 .

Thus jurisprudence has, in some sense, introduced the concept of relativity to the analysis required for making a determination as to eligibility for advance costs in matrimonial proceedings of this nature.

[ 15 ] Therefore the analytical question to ask is whether Ms. Tomkins is impecunious to the extent that she would be deprived of the opportunity to proceed with this case, if this Court declines to grant the advance costs order? ( Okanagan Indian Band at para 36 ). In making this assessment, I have to consider (

i) Ms. Tomkins ’ “ needs ” by evaluating whether her income from other sources, aside support payments, is otherwise adequate to fund her litigation? ( McDonald at para 23 ) and (ii) whether the parties are on equal financial footing in terms of their abilities to fund the present matrimonial property litigation ( Pokorski at para 38 ). [ 16 ] Apparently, based on the evidence before me, Ms. Tomkins has borrowed a large amount of money to sustain the litigation momentum up to this point.

The information and submission of the Respondent as to the amount of money that the Applicant had access to between June 2010 and May, 2013 appears to me to have ignored the fact that within that period, Ms. Tomkins had moved residences, purchased a half-duplex accommodation for herself and children, commenced needed renovations on the new home, and paid legal and accounting professionals to fund the present litigation, including an appeal to the Court of Appeal. [ 17 ] Further, although Ms.

Tomkins holds credentials that make her potentially eligible for better jobs, the reality is that currently she does not have an employment that pays more than $15,730 a year. [ 18 ] Given the standard of living which Ms. Tomkins is accustomed to prior to her separation from Mr.

Tomkins, the circumstances of her financial commitments which include expenses on the new home for herself and the children, and the need to pay the professionals who will assist her in this litigation (i.e. her new legal counsel and the financial expert, who will bring the expert reports to fruition), I find that her income from other sources, aside the support payments she receives, is inadequate to fund her present litigation. As such, I conclude that she needs the interim costs in order to proceed with her litigation.

There is the risk that if the advance costs is not awarded at this point she may be deprived of the opportunity to present her case in court. [ 19 ] Relative to Ms. Tomkins’ employment salary of $15,730 a year, Mr. Tomkins has economic and financial interests in at least two Boston Pizzas’ businesses. The valuation appraisals of these businesses are disputed by the parties. In this application, I have no clear evidence before me to demonstrate that those businesses are performing poorly or successfully. The benefit of that doubt should be given to the Applicant, at this stage.

In addition, the evidence before this Court indicates that the Respondent, Mr. Tomkins, has an imputed income of over $200,000 per annum. [ 20 ] I am therefore of the view that it is appropriate and just to put Ms. Tomkins on an equal financial footing with Mr. Tomkins in order to fund her litigation regarding the parties’ matrimonial property. In the result, I find that Ms. Tomkins is impecunious to the extent that, without an interim costs order, she would be deprived of the opportunity to proceed with her case. Meritorious case Ms. Tomkins ’ Position [ 21 ] Ms.

Tomkins submits that she filed the only Notice to Disclose in this action and has voluntarily disclosed information requested from her, attended Questioning, answered undertakings and prepared an Affidavit of Records. In contrast, she notes, the Respondent provided his last information in 2011, and up until the time of her written submission, dated July 3, 2013, has neither filed a statement of defence nor pleaded exemptions. [ 22 ] In this regard, it is worthwhile to note that Mr. Tomkins only recently (i.e. two days after the date on Ms.

Tomkins’ written brief), filed a Statement of Defence and a Counterclaim for Divorce and Division of Matrimonial Property on July 5, 2013. In his

counterclaim, Mr. Tomkins broadly indicates that his exemptions shall be proven at trial. [ 23 ] The Applicant argues that she has a prima facie meritorious case before this Court which is based on: (

i) her entitlement to child support under the Federal Child Support Guidelines , ss 2(3), 18-19, Alberta Rules of Court , Alta Reg 124/2010, r 12.41, and DBS v SRG ; 2006 SCC 37 , [2006] 2 SCR 231; (ii) the legal presumption of equal division of matrimonial property, pursuant to the Matrimonial Property Act , RSA 2000, c M-8, and a matrimonial property which is yet to be valued and distributed between the parties, either by agreement or at trial; (iii) the incomplete and outdated nature of disclosures made so far; and (iv) the fact that she was in a traditional long term marriage which ordinarily attracts spousal support entitlement, as established by jurisprudence and various legislation, including the Divorce Act , RSC 1985, c 3 (2nd Supp).

Mr. Tomkins ’ Position [ 24 ] As indicated earlier, Mr. Tomkins filed his pleadings on July 5, 2013 and asserts that it is “ordinary practice” not to file these materials until a matter is set for trial, especially since the issues should not surprise the Applicant. [ 25 ] Apparently, and going by the Respondent’s oral and written submissions, he does not explicitly or in any serious terms dispute the Applicant’s position that she has a meritorious case. Has the Applicant established a meritorious case ? [ 26 ] It is disconcerting that Mr.

Tomkins’ would dismissively characterize his failure to file pleadings prior to July, 2013 as “ordinary practice.” I am unaware of a practice in this province that justifies an approximately three-year delay in filing a statement of defence, after service of the Plaintiff’s pleadings. If indeed there is a practice of that nature, I am of the view that it should genreally no longer be condoned either by the bar or the bench. That type of practice deprives the other (opposing) party of the ability to know fully and ascertain what the issues at stake are. For instance, prior to Mr.

Tomkins formal filing of his counterclaim, there was no indication that he was going to plead or claim “exemptions.” The first time that Mr. Tomkins formally raised the issue of “exempt monies” was in his Affidavit of June 26, 2013 (pretty close to the filing of his pleadings). It is an unfair situation to keep the Applicant in the dark about a potential exemption claim. Our legal system, the associated procedures and the fundamental principle of natural justice require that notice of such claims should be given to the Applicant in order to enable her prepare a response. [ 27 ] Nevertheless, the fact that Mr.

Tomkins has now filed a statement of defence and a counterclaim for divorce and division of matrimonial property, in which he agrees with some reliefs sought by the Applicant and objects to some others, indicates to me that there is merit in the Applicant’s case which is worthy of being defended and counterclaimed against. [ 28 ] In addition, I agree with the Applicant that the facts of this case, including the length and nature of the marriage (which in this case leads to a legal presumption of equal division of matrimonial property), in conjunction with the weight of existing jurisprudence in this area of the law, as well as a considerable number of legislation, as cited above, support the merits of her case: Pokorski at para 8 . [ 29 ] In the result, I conclude that Ms.

Tomkins has established a prima facie meritorious case that warrants pursuit. Special Circumstances Ms. Tomkins ’ Position [ 30 ] Ms. Tomkins submits that the matrimonial property and income determination issues in this case are complex. There are nine interrelated companies, including two Boston Pizza franchises for appraisal. She deposes that she has no further ability to access credit to fund this litigation to trial and she is unable to commit further resources to prepare for trial. She notes that Mr.

Tomkins has not disclosed any financial information since 2011 to business valuators and he has total control of the management of his businesses. Ms. Tomkins contends that the Respondent has access to capital required for the payment of his debts.

[ 31 ] The Applicant states that she has had problems with legal representations for reasons beyond her control, which include prohibitive cost of these proceedings. One of the lawyers she retained ceased to act on the basis that he could not handle the business complexities involved in the case. This has resulted in unintended delay in moving this case forward. Mr. Tomkins ’ Position [ 32 ] Mr. Tomkins observes that the financial statements of the companies which he has interests in are all labelled “Notice to Reader” statements and that is the primary reason for hiring a valuator to appraise those interests.

He notes that the “book value” of the assets of the corporations has been adjusted to reflect market value by the experts (Affidavit of Mr. Tomkins, June 26, 2013 at para 21). Has the Applicant established special circumstances ? [ 33 ] Based on the evidence and submissions of both parties in this application, I find that the professional service of an accounting and/or financial expert is essential to clarify the business, financial and income complexities involved in this matrimonial litigation.

Notably, the Respondent’s affidavit confirms that a valuator is required to appraise his interests in the companies that are at the centre of this litigation. [ 34 ] In my view, this Court, the legal counsel representing both parties and the parties themselves will benefit tremendously from an updated and current expert report which brings clarity to knotty financial and income issues that are central to the present matrimonial litigation between Mr. Tomkins and Ms.

Tomkins. [ 35 ] I am satisfied that, in view of the complexities inherent in the valuation of the parties’ matrimonial property, there are sufficient special circumstances in the present case which locates it within the narrow class of cases in which the extraordinary exercise of this Court’s powers to grant interim costs is appropriate. [ 36 ] Consequently, I direct Mr. Tomkins to pay the sum of $50,000 as advance costs to Ms. Tomkins forthwith in regard to this matrimonial litigation.

This award is made strictly to assist her obtain a critique and current valuation from her expert and to fund the within litigation. Both parties must bring this decision, awarding interim costs and its payment, to the attention of the trial judge for consideration and accounting in the process of distribution or division of matrimonial property: Tollestrup v Tollestrup , [1995] AJ No 443 at para 4 (Alta CA) . Further Advance from Sale Proceeds [ 37 ] Based on my decision on the application for interim costs, I need not consider at this stage, Ms.

Tomkins’ request for the relief seeking a further advance of $100,000 (one hundred thousand dollars) from the sale proceeds of the matrimonial home held in trust by the real estate counsel. Disposition [ 38 ] On the evidence before me in this application, I conclude that the Applicant has met the test established by the Supreme Court of Canada in Okanagan Indian Band for the granting of interim costs. She has established the three criteria of impecuniousity, a meritorious case and special circumstances . [ 39 ] The application for interim costs in the sum of $50,000 (fifty thousand dollars) is granted.

The advance costs is payable by the Defendant/Respondent forthwith to the Plaintiff/Applicant, and is to be accounted for at trial.

Heard on the 30 th day of May, 2013. Dated at the City of Edmonton, Alberta this 30 th day of July, 2013. Donald Lee J.C.Q.B.A. Appearances: Linda L. Long, Q.C. Long Family Law Group for the Plaintiff/Applicant Michael L. Pollock and Melanie J. Bowbell Pollock & Pollock for the Defendant/Respondent