PRESERVATION ORDERS: MAKING SURE THERE’S SOMETHING WORTH FIGHTING OVER

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PRESERVATION ORDERS: MAKING SURE THERE’S SOMETHING WORTH FIGHTING OVER

John McMullin, Associate Lawyer, LETOURNEAU LLP • May 20, 2020

Protecting Matrimonial or Family Property in Separation Matters

May 20, 2020 -

John McMullin, Associate Lawyer, LETOURNEAU LLP

You’ve been separated or divorced and you suddenly see a “For Sale” sign up on your old matrimonial home. You’re worried about a real estate contract gone wrong. Maybe a parent died, and you’re worried the personal representative is going to sell their property, then fritter away the money. One of the main challenges in litigation is making sure there will still be something worth fighting for once the dust settles. A Preservation Order is one way you can try and address this issue.

A Preservation Order is a Court Order that prevents a party to litigation from disposing of the property that is the subject of the litigation. It does not cover property that is not in dispute. So, while you can put a Preservation Order on a house that you believe you have some right to, you generally can’t put a Preservation Order on the other party’s bank account, unless you have a judgment against them already.

Recent case law illustrates two grounds a Court can use to grant a Preservation Order. In the Alberta Court of Queen’s Bench case of SFM v MRM, 2020 ABQB 302, the Court had to decide whether the proceeds of the sale of a home should be preserved. The mother in the relationship had sold the family home, and used a small portion of the proceeds for her living expenses.

The Court stated that the applicable test involved three elements:

1. A prima facie case (which is where there is a reasonable argument to be made for one side, rather than being frivolous or unfounded);

2. A real and substantial risk that assets will be dissipated without the Order; and

3. An undertaking for damages, so that if the party whose assets are “frozen” experiences loss as a result, the party getting the Preservation Order will pay that loss.

The trial justice did not find that the test was met. However, the judge granted a Preservation Order based on section 9 of the Matrimonial Property Act (now the Family Property Act), to ensure that the husband would be able to collect on any judgment. As there was no evidence that the husband would be entitled to more than half of the matrimonial home, the Court only ordered that half of the sale proceedings should be preserved.

SFM v MRM was heard on an emergency basis despite COVID-19 restrictions. Currently, Court proceedings have slowed due to prevent spreading the novel coronavirus. However, the Courts will still consider hearing applications for a Preservation Order. If you want to ensure that your property will still be there after the court battle is over, contact the lawyers at LETOURNEAU LLP for a free consultation to discuss your legal options.

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