More on Preservation Orders: When They Will – And Will Not – Be Granted
In a recent Blog titled “What Are Preservation Orders? And When are They Warranted?, we introduced the concept of court-issued preservation orders, which are a mechanism by which one Family Law litigant’s rights to property or the ability to realize on an equalization claim can be protected, essentially placing a security over the money. In that Blog we discussed the case of Conforti v. Conforti, where the court refused to grant a wife’s motion for a preservation order over $1.27 million, representing the balance of the matrimonial home sale proceeds currently being held in trust by their joint lawyer.
In refusing to grant the preservation order, the court noted that the only financial issue remaining between the former spouses was equalization – except for the wife’s suspicions that the husband had a secret side-deal with the buyer and stood to pocket some extra cash. But absent any concrete evidence of that, or evidence that the husband would act in a financially irresponsible manner, there was no credible fear that the wife would not receive the equalization payment to which she was entitled.
The court drew from prior court rulings to illustrate that the decision to grant an order is usually predicated on there being some sort of risk, for example where the paying spouse:
- Had an alleged propensity to gamble (Stokaluk v. Stokaluk)
- Encumbered the matrimonial home and moved assets to a corporation in which the other spouse had no interest (Both v. Both)
- Had seriously failed in his disclosure obligations, and was in substantial default of an order (Barrotti v. Barrotti)
- Produced discrepant tax documents, and there was evidence he had diverted funds from the sale of his business property that put them beyond the reach of the other spouse (Fatahi-Ghadenari v. Wilson)
- Had disrespected prior court orders to make disclosure, had given money to family members, and spent it on unnecessary renovations (Syed v. Syed)
- Structured his affairs improperly or illegally to hide significant amounts of taxable income from the government, threatened bankruptcy, and sold a joint asset without even telling the other spouse (Fraser v. Fraser; and Burke v. Poitras)
As compared to this list, the court in Conforti found none of these elements were in play. The court also rejected the wife’s added argument that a preservation order should be granted simply because the husband was not in need of the funds. To this, the court said, “A preservation cannot be justified based solely on the fact that the party whose money is tied up does not need the money.” While the wife had a right to advance her claims, she was not entitled to security over the funds, while doing so.
For the full text of the decision, see:
Conforti v. Conforti, 2021 ONSC 1767 (CanLII)
Stokaluk v. Stokaluk, [2003] O.J. No. 3097
Both v. Both, [2008] O.J. No. 1358
Barrotti v. Barrotti, 2009 CanLII 64180 (ON SC)
Fatahi-Ghadenari v. Wilson, 2016 ONSC 6863
Syed v. Syed, 2017 ONSC 2588
Fraser v. Fraser, 2017 ONSC 3774
Barbini v. Edwards, 2014 ONSC 6762
Burke v. Poitras, 2020 ONSC 3162
