The Ontario Superior Court of Justice’s recent decision in Vargas-Hernandez v. Graff-Guerrero, 2024 ONSC 4164, released by Maxwell J. on July 24, 2024, offers valuable guidance for family law practitioners navigating motions for the advance of equalization payments, interim disbursements, and disclosure enforcement. This case underscores the evidentiary burden on moving parties and the judiciary’s reluctance to intervene absent compelling need—insights that can sharpen our advocacy in similar disputes.
Case Overview
The Applicant, Juan Carlos Vargas-Hernandez, sought a $100,000 advance of the equalization payment or, alternatively, an interim disbursement to fund legal fees (~$60,000). A 5-day trial was scheduled for early 2025. He also pressed for an order compelling the Respondent, Dr. Graff-Guerrero, to provide outstanding disclosure per prior court orders. The Respondent, a high-earning psychiatrist ($570,000 in 2023), resisted, arguing the Applicant’s financial need was unproven given a prior $100,000 payment in 2023, ongoing $12,000 monthly spousal support, and significant discretionary spending.
Maxwell J. dismissed the financial relief requests but ordered limited disclosure updates, providing a roadmap for practitioners on what works—and what doesn’t—in these motions.
Advance of Equalization Payments: A High Bar
Under s. 9(1) of the Family Law Act, courts may order an advance on equalization payments, but Vargas-Hernandez reaffirms that the presumption favours parties funding their own litigation. Citing Mikhail v. Mikhail, 2023 ONSC 5289, Maxwell J. applied a four-part test: (1) likelihood the advance won’t exceed the ultimate equalization; (2) certainty of entitlement; (3) reasonable need for funds; and (4) fairness considerations, such as delay.
While the Respondent’s liability for a “substantial” equalization payment was undisputed (para. 24), the Applicant faltered on need. Key pitfalls included:
Unexplained Depletion Of Prior Funds: A $100,000 advance in May 2023 (per Diamond J.’s order) went largely unaccounted for, with only $30,000 traced to legal fees (para. 27).
Surplus Income: With $144,000 annual spousal support and $117,535.20 in expenses, the Applicant had a $26,500 surplus (para. 28).
Discretionary Spending: Over $50,000 yearly on entertainment, vacations, and dining undermined claims of financial strain (para. 29).
No Employment Efforts: Post-separation unemployment, despite a university degree, weighed against him (para. 30).
Evidentiary Gaps: No bill of costs or detailed affidavit evidence supported the $100,000 request (para. 31).
Takeaway: Counsel must arm clients with meticulous financial records and a clear narrative of need. Vague assertions or lifestyle inconsistencies invite dismissal.
Interim Disbursements: Necessity and Proportionality
Under Rule 24(18) of the Family Law Rules, interim disbursements hinge on necessity, reasonableness, inability to self-fund, and a meritorious claim (Stuart v. Stuart, 2001 CanLII 28261). Here, the Applicant’s failure to explain depletion of prior advance, coupled with discretionary spending and lack of job efforts, weakened his case (para. 36). Maxwell J. also considered the Respondent’s ability to pay, noting his $570,000 income was offset by $538,000 in expenses, including spousal support and property costs (para. 37).
While the Respondent earned a high income, his substantial financial obligations—including spousal support and property costs—led the Court to conclude that he was not in a markedly superior position to the Applicant when assessing the request for interim disbursements (para. 38). The parties’ financial positions did not justify an order to “level the playing field.”
Takeaway: A high-income payor’s resources does not guarantee relief—prove your client’s inability to pay with hard evidence, as spending habits can trump financial statements.
Disclosure: Progress Over Perfection
The Applicant’s push for a blanket disclosure order faltered. While the Respondent lagged prior to counsel being retained , Maxwell J. found substantial compliance after counsel was involved, with outstanding items tied to third-party delays (e.g., bank records) (para. 41). Only two specific items—details of a pre-marriage debt and a property purchase date—warranted further response within 30 days (para. 43).
Courts prioritize practical progress. While blanket orders are unlikely when disclosure is actively progressing, lingering delays—especially when previous court orders exist—may still justify targeted enforcement.
Takeaway: Respondents should document diligence (e.g., bank requests, authorizations); Applicants should pinpoint unresolved gaps. General complaints are less persuasive when compliance is underway.
Practice Pointers
Prep Your Client’s Story: Affidavits must detail fund use, job efforts, and litigation costs. Omissions are fatal.
Leverage Financial Statements: Highlight need, but reconcile discretionary spending to avoid credibility hits.
Disclosure Advocacy: Respondents should document diligence; Applicants should narrow requests to actionable items.
Costs Strategy: With costs unresolved (para. 46), unsuccessful motions carry cost risks—early settlement offers can soften the blow.
Conclusion
Vargas-Hernandez reminds us that courts guard against premature financial relief absent airtight evidence of need and fairness. For Ontario family law lawyers, it’s a call to tighten our clients’ cases—whether seeking funds or defending against such motions. With trials like this one set for 2025, early preparation can tip the scales.
Let’s continue to elevate the practice of family law in Ontario!
Cheryl Goldhart is a mediator and arbitrator who can make a difference in resolving your family disputes.
- Nearly Four Decades of Family Law Experience: With close to 40 years practicising solely on family law, Cheryl provides a wealth of practical experience to her clients.
- Masters Degree in Counselling: With a Masters Degree in Counselling, Cheryl approaches each case with a unique blend of empathy and insight.
- Certified Family Law Specialist : The Law Society of Ontario has recognized Cheryl’s expertise by certifying her as a Family Law Specialist.
- Accredited by the Ontario Association for Family Mediation: Cheryl’s mediation expertise have been acknowledged through her accreditation by the OAFM.
- Designated as an Arbitration Professional by the ADR Institute of Ontario: The ADR Institute has certified Cheryl’s arbitration expertise with a professional designation.
- Honored with Numerous Accolades for Excellence in Family Law: Cheryl’s exceptional contributions to family law have been recognized through numerous awards and honors, including the prestigious Ontario Bar Association’s Award for Excellence in Family Law.
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