Preservation orders in family law

BY: VALERIE DYE 

In family law proceedings the most common orders sought are divorce, child or spousal support, child custody and equalization. Apart from these orders, some parties may need a restraining order to prevent one spouse from molesting, harassing and or interfering with them by any means.

Spouses who are separated and pursuing a divorce may also seek a non-depletion or freezing order, also called a preservation order. Section 12 of the Family Law Act allows the court to make either an interim or final order restraining a party from depleting their property and for the delivering up of property for safekeeping or preservation. 

Such an order may be necessary where one party deliberately dissipates assets in order to avoid making an equalization payment.  As such, the court will not grant a preservation or non-depletion order arbitrarily. There must be evidence of a likelihood that the other spouse will deplete his or her assets. In Taus vs Harry, the court stated that each party is entitled, subject to a court order, to deal with his or her property the way he or she sees fit. Nonetheless, since equalization is a major part of divorce proceedings the provisions of section 12 of the Family Law Act serves to ensure that if an equalization payment is found to be owing there are sufficient assets available to satisfy the payment. Before the order is made there must be a real risk that there will not be enough assets to satisfy the equalization claim. In Taus vs Harry, the parties sold their matrimonial home. The husband wanted to buy himself another home from his portion of the proceeds of sale. The wife requested that the husband’s portion of the sale be preserved so that he could fulfill his obligations with regard to an equalization payment. The court refused to grant a preservation order because it found that the proceeds from the sale were not the only assets available and that even if an equalization payment will be due to the wife, the husband’s liquid assets, as well as the equity he would have in the new home, would have been enough to pay the equalization sum.

On the other hand, the court in Both v Both ruled in favour of a preservation order after it was found that the husband had placed a large mortgage on the home after separation and had begun moving assets from his personal name into the name of his corporation.

The key question the court will ask is whether or not the claiming spouse will be owed an equalization payment and whether or not the payment is likely to be defeated unless one spouse is prevented from depleting the assets.

One instance in which the court may be likely to grant a preservation order is when the parties have no real property, but one party has significant savings or investments in the form of RRSPs, stocks or bonds. Further, if there is evidence that the party has cashed an insignificant amount of investments, a preservation order may be needed to ensure that the other party obtains the equalization payment that is due to that party.

Unless there is strong evidence to suggest the likelihood of depletion of assets the court will not grant the order.