T.H.O.G. v. L.N.G.

2003BCSC0287 IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: T.H.O.G. v. L.N.G., 2003 BCSC 287 Date: 20030225 Docket: F993397 Registry: Vancouver Between: T.H.O.G. Plaintiff And L.N.G. Defendant Before: The Honourable Mr. Justice Parrett Reasons for Judgment Counsel for the plaintiff: R. Basham, Q.C. Counsel for the defendant: H. Shapray, Q.C. Date and Place of Hearing: January 10, 2003 Vancouver, B.C. [1] The present application seeks an immediate order directing the interim distribution and release of one-half, or alternatively $300,000 U.S., from funds held in trust by F.[ ]. The funds in question are the net proceeds of the disposition of a capital asset; a family home owned by and registered in the names of both parties. [2] This family proceeding was held before me in April of 2002, with judgment being reserved on April 17, 2002. Subsequently counsel jointly requested that the court not deliver judgment as a result of events occurring which may significantly affect the value of underlying assets. The present application is now made by the defendant who has also filed an application to reopen the trial. BACKGROUND [3] The defendant, in advancing the present application, takes the position that she is the presumptive, and, on the basis of the evidence led at trial, the admitted 50% owner of several family assets, including two businesses that generate gross annual sales of some $55,000,000 CDN. The source of the funds in the F.[ ] trust was a residential property at B.[ ] which, prior to its sale, was held in joint tenancy. [4] The defendant submits that the court can, of its own notion in the interest of justice, appoint an independent expert, under the provisions of R. 32A, to inquire into the fair value of the business interests and report to the court. [5] The defendant further submits that the plaintiff is by "capricious and arbitrary" actions severely prejudicing her interests. Ms. L.N.G. submits that she has "an urgent, pressing need" for the funds; (a) to meet her capital requirements with respect to her own business interests; and, (b) to engage experts and professionals in regard to her application to reopen the trial. [6] The plaintiff opposes the present application seeking its dismissal and costs. The plaintiff's position is that in seeking a distribution for legal fees, expert fees and/or business purposes, she seeks relief that she is not entitled to in law. [7] The plaintiff also submits that there is no authority supporting the defendant's position that a partial judgment can be given. He submits that such an approach is both inappropriate and unjust and that the proper course is to dismiss the present application and to render judgment. DISCUSSION [8] Ms. Basham's position in this matter is summarized within her written argument at paras. 5 to 7: 5. The Defendant has submitted that she intends to apply to court to reopen the trial and she has now filed a motion in that regard. Most of the affidavit material filed by the Defendant relating to this motion is inadmissible and is also fraught with factual inaccuracies. However, even if all the material were admissible and factually correct, there is no basis in law on the material that would support reopening of the case. The material put forward demonstrates the fundamental flaw as to the basis upon which the Defendant seeks to reopen the case. When all the smoke and mirrors are removed, what the Defendant is seeking is not a reopening of the case but a retrial because she now has different counsel. 6. The Plaintiff says first that all relevant issues were argued fully and capably at the trial. The Defendant had senior matrimonial counsel throughout. It cannot be said that there was any information missed or any arguments not made. 7. In any event, however, even if it could be said that arguments were not made, authorities not used or that new counsel might use a different expert who wishes to in effect criticize the expert evidence tendered at trial, including her own expert, and perhaps provide a different opinion, there is still no basis in law to reopen the case. [9] This submission, and significant portions of Ms. Basham's oral submission, focuses on the merits of the defendant's pending application to reopen the trial itself rather than on the present application. This is an approach which is not without merit; for if there is no possible merit to that application, the present application accomplishes little beyond causing further delay and obtaining a further interim distribution of capital. [10] Ms. Basham, at paras. 9 and 10 of her submissions, takes the position that: 9. The court has no jurisdiction to reopen a trial for the purposes of eliciting expert evidence or opinion. This is so even if a party has chosen not to call an expert of their own or cross examine an opposing expert. Here, however, not only did the Defendant have her own expert give evidence at trial and cross examine the Plaintiff's expert, the Defendant had professional expert assistance from early on in the proceedings. Mr. McMann, Mr. Louie and Mr. Harder have all acted for or assisted the Defendant and the Plaintiff was very open about giving each access to the information and documentation requested. There was no suggestion that the Defendant required an adjournment of the trial because of insufficient information or documentation. 10. Accordingly, even with the use of inadmissible material, the Defendant cannot even make out a prima facie case for reopening the trial. It is submitted that this inherent weakness should is [sic] yet a further reason to dismiss the Defendant's application for funds. [11] The position advanced in this portion of the plaintiff's written argument, in my view, overstates the issue. The issue on the application to reopen the trial, as I perceive it, will not be whether the court should allow the trial to be reopened "for the purpose of eliciting expert evidence or opinion", but rather, whether the expert evidence and opinion led by both sides at the trial is now premised on underlying assumptions that have proven false or inaccurate in light of subsequent events. I do not for a moment suggest that there are not significant obstacles standing in the way of an application to re-open, but to state the issue as the plaintiff has serves to obscure the real underlying issue. [12] At the trial of this matter the parties were aware of the existence of what was referred to as the Designing Health lawsuit in the United States and its potential impact on the value of the underlying business assets. Both sides utilized experts who considered the existence of that lawsuit as part of their valuation process. [13] Since the conclusion of the present trial, a jury in the litigation has returned a verdict awarding damages of $1,280,000 U.S. against the Flora Group. The verdict requires each of the defendant Flora companies to pay damages of $640,000 U.S., but no judgment has yet been entered. Various motions are outstanding and counsel estimate that the litigation will not be concluded for some eighteen months. [14] The material filed in support of the present application appears, to me at least, to be drawn in anticipation of the application to re-open. The application to re-open is one which has within it inherent difficulties, many of which have been commented on by Ms. Basham. It is inappropriate and unwise for me, at this stage, to comment on those difficulties until that application is heard. [15] I view the present application somewhat simplistically. I have reviewed all of the material. I am satisfied that there is a reasonable possibility that the evidence and opinion led at the trial may have been based on inaccurate financial information and that as a result the values derived may materially misrepresent the actual values. Whether that possibility can be brought home in the application to re-open is quite a different question. [16] In reaching this conclusion I am particularly concerned about the acquisition of "V.[ ] Inc." and the way in which that acquisition may have been funded. I am also satisfied that the outcome of the Designing Health lawsuit may impact the accuracy of the evidence at trial, and that the proper assessment of both these issues requires the defendant to engage the services of experts and professionals. [17] I am satisfied that there is jurisdiction within this court by virtue of s. 66 of the Family Relations Act to entertain an application to provide a lump sum payment to meet those legal expenses directly related to the litigation. [18] In exercising the court's discretion to direct such a payment, the court must consider - (a) whether the payments jeopardize the other party's position at trial; (b) whether the payment sought is "necessary and reasonable to give effect to any determination that may be made at trial"; and, (c) whether the party seeking the payment likely holds an interest in the funds from which the payment is sought.[1] [19] Kirkpatrick, J., in Jiwa v. Jiwa, [1992] B.C.J. No. 3024 (S.C.), considered both Erskine and Belzberg before concluding, at para. 8: In my respectful view, a case has been made by Mrs. Jiwa for the payment out from what would ultimately be some portion or perhaps all of what she may be entitled to at trial. It seems to me that the test which has been set down in these series of cases would appear to be a twofold. Is the advance required to mount a challenge to the other spouse's position at trial? It seems to me that this a [sic] case which has already gone to the Court of Appeal on one important issue. I think that I can acknowledge that that is an expensive undertaking. What the costs are to proceed further, I have no particulars of. The second arm of the test is whether an advance or a payment on an interim distribution basis jeopardize the other spouse's position at the trial? [Emphasis added] [20] The assets at issue in this litigation are substantial and if the partial distribution of the F.[ ] trust monies would jeopardize the plaintiff's position I presume he would not have previously consented to the equal distribution of approximately $1.1 million of that fund to he and his wife. I am satisfied that a partial distribution of this fund to the defendant to fund her review of the matter and this litigation would not jeopardize the plaintiff's position. [21] I am equally satisfied that such a distribution is, within the words of the second criteria, necessary and reasonable to give effect to the determination to be made at trial. In reaching this conclusion I recognize that although this trial has, at this stage, technically concluded, the defendant's application to re-open, if successful, will alter that. [22] Finally, the fund in question originated from the sale of an asset held in joint tenancy. The parties, by a course of conduct, have already distributed a substantial amount of this fund in equal shares and there are other substantial assets remaining which are subject to adjustment. [23] The defendant's request for additional funds or capital to allow her to meet the needs of businesses she has invested in since the separation is quite another matter. I am not satisfied either that the court has or that it should exercise such a jurisdiction particularly in a case where the defendant has herself asked for the delay in judgment that she now suggests is creating financial difficulties. [24] The defendant's submission that the court should exercise its authority under R. 32A should only be considered as part of the potential order if the defendant succeeds in establishing a basis for re-opening the trial. [25] I order the distribution of 30% of the F.[ ] trust funds to the defendant for the purpose of funding her legal and professional costs of the assessment of the situation related to her application to re-open the trial. [26] In my view, the interests of both parties and that of justice generally dictates that this matter be proceeded with as soon as possible. I direct counsel to arrange a telephone conference call as soon as possible to address the fixing of dates by which time the outstanding application can be brought to hearing. "W.G. Parrett, J." The Honourable Mr. Justice W.G. Parrett [1] Erskine v. Erskine (1991), 31 R.F.L. (3d) 273 (B.C.S.C.) Belzberg v. Belzberg (1991), 56 B.C.L.R. (2d) 325 (S.C.)