What happens if you are concerned that your spouse may sell, transfer, or deplete assets before your property or support claim is resolved?
In certain circumstances, Ontario family law allows a court to make a preservation order to help prevent a spouse from taking steps that could impair or defeat another spouse’s legal claim.
What Is a Preservation Order?
A preservation order is a court order that can restrict the depletion or disposal of property while a family-law matter is being determined.
The Family Law Act provides two relevant forms of protection:
- Section 12 allows the court to restrain the depletion of a spouse’s property where necessary to protect another spouse’s interests under Ontario’s family-property provisions.
- Section 40 allows the court to restrain depletion of a spouse’s property where doing so would impair or defeat a claim for support.
These orders can be interim or final, meaning a court can grant protective relief before the underlying claim has been finally determined.
When Will a Court Grant a Preservation Order?
A preservation order is discretionary. It is not automatically granted simply because one spouse is concerned about the other’s finances.
Ontario courts have applied a three-part test when considering these orders:
- Is there a serious issue to be tried?
The person seeking the order must demonstrate a genuine claim that warrants protection. In an equalization case, courts may require a prima facie showing that the spouse is likely to receive an equalization payment corresponding to the assets sought to be preserved. - Will there be irreparable harm without the order?
The court considers whether there is a real risk that the claim could be impaired if the assets are depleted or disposed of. - Where does the balance of harm lie?
The court weighs the potential harm to the person seeking protection against the inconvenience or prejudice that the preservation order could cause the other spouse.
The evidence is important. Bare allegations or general suspicion may not be enough to justify restricting someone’s ability to deal with their property.
What Are the Limits of a Preservation Order?
Preservation orders are not intended to freeze a person’s entire financial life without justification.
Ontario case law has established several important limitations:
- Specific assets: An order should generally identify the assets that need to be preserved rather than broadly freezing everything a spouse owns.
- Connection to the claim: The person seeking the order must demonstrate a sufficient connection between the assets being preserved and the value of the claim.
- Evidence matters: Courts look for evidence supporting the risk that the claim could be defeated or impaired. Mere suspicion may not be sufficient.
- Proportionality: The scope of the order should reflect the circumstances and the claim being protected.
For example, in Conforti v. Conforti, the court declined to preserve funds where the evidence did not establish a sufficient risk of irreparable harm or provide a reliable basis for determining the appropriate amount to preserve.
What If Assets Have Been Transferred to Someone Else?
A preservation order under the Family Law Act is directed at a spouse’s property. If assets have been transferred to a third party, additional legal remedies may need to be considered.
Depending on the circumstances, a Mareva injunction or other court remedy may be relevant. These remedies involve different legal requirements and can potentially address assets involving non-parties.
This is an area where obtaining legal advice quickly can be important, particularly if there is evidence that assets are being transferred or moved outside Ontario.
Does a Preservation Order Apply to Common-Law Couples?
Section 12 is connected to Ontario’s equalization regime, which generally applies to married spouses.
Section 40, however, may be relevant to support claims involving spouses or former spouses who qualify under the Family Law Act. Whether a particular common-law relationship qualifies for spousal support depends on the applicable statutory requirements and circumstances.
Frequently Asked Questions
Yes. Sections 12 and 40 allow courts to make interim orders, so a preservation order can be sought before the underlying claim is finally determined.
A preservation order may still be relevant to assets that remain available, but additional remedies may be necessary where assets have already been transferred. Depending on the circumstances, a Mareva injunction or other legal remedy may need to be considered.
Not necessarily. Courts generally require the order to be appropriately targeted, and the person seeking it must provide evidence supporting the assets and amount that need to be preserved.
Suspicion alone may not be enough. Courts look for evidence supporting the need for protective relief and the potential harm if the order is not granted.
Key Takeaways
- A preservation order can help protect assets while an equalization or support claim is being determined.
- Section 12 of the Family Law Act addresses property and equalization interests, while section 40 addresses support claims.
- Courts consider whether there is a serious issue, potential irreparable harm, and where the balance of harm lies.
- Preservation orders generally need to be supported by evidence and should be appropriately targeted.
- A preservation order is not automatically granted simply because one spouse is concerned about the other’s assets.
- If assets have already been transferred to third parties or outside Ontario, other legal remedies may need to be considered.
