“An order under s. 12 order is a discretionary order. The court may make an order under this section upon balancing the relevant three factors under a contextual approach to the facts. The three factors are succinctly summarized in Bronfman v. Bronfman 2000 CanLII 22710 (ON SC), [2000] O.J. No. 4591 (Ont. S. C.) as follows:
The relative strength of the case made out by the moving party;
The balance of convenience (or inconvenience); and,
Irreparable harm.
Under the first factor, the court assesses the strength of the moving party’s case for financial claims, including claims to interests in property. The primary consideration for the court to weigh on this branch of the test is the likelihood that the moving party will be entitled to receive a judgment at trial. Preservation orders are most often brought prior to the final determination of questions of entitlement and the determination by a court of any amount one party is to pay another. A fact-driven analysis must be made by the court to ascertain whether one party will likely owe funds to the other party under the Family Law Act, or for an equitable claim. This analysis is often limited by the evidentiary record before the court, and allowances must sometimes be made having regard to the stage of the case at which the motion has been brought and any obstacles the moving party has encountered in obtaining disclosure from the other side.
The Applicant has referred the court to the case of Both v. Both, [2008] O.J. No. 1358. In Both v. Both, Backhouse J. found that the wife had raised a prima facie case that she is entitled to a substantial equalization payment. Although the parties’ affairs were “very complex and the record is undeveloped” which made “the quantum of the wife’s equalization payment very difficult to assess even on a preliminary basis”, there was a common understanding that the husband would owe the wife a fairly significant sum of money.
In Bronfman, Sachs J. held that “there are certain cases where the factual record, and the applicable legal principles, make it very clear that a spouse will be entitled to an equalization payment in a particular amount”. In such cases, the first factor will be given heavier weight than perhaps the other two remaining branches of the test. Although the record was not fully developed, Justice Sachs ultimately granted a preservation Order as both sides had not been in a position to obtain their valuations of assets.
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In the second part of the test, the court is required to look at the inconvenience the order would cause to the Respondent, balanced against the effect, or risk, that would be caused to the Applicant if the assets were disposed of before trial.
Justice Kiteley in Adler v. Adler, 2016 ONSC 2414 wrote that the objective of a preservation order is to “[respond] to the need to create a situation where the Applicant’s claims for an equalization payment are protected, and her claims for support are not impaired or defeated”.
In Adler, the court stated that the more complex and the more need the responding spouse has for unfettered flexibility in his financial affairs, the greater the need to make an order pursuant to sections 12 and 40. Kiteley J. explained that, while the court appreciates the responding party’s necessary transactions, such freedom cannot be limited under the guise of ‘convenience’ to the extent where the moving party would be prejudiced. This is particularly highlighted in cases, such as the present one, where there has been a flagrant disregard of court orders.
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For the third and final factor, the court must examine any crucial or negative effect that a preservation order will cause to either party. Under this factor, the court also considers whether either party will suffer significant harm if the order is not made.
The Applicant refers again to the decision of Backhouse J. in Both v. Both that featured a risk analysis to determine irreparable harm. In the case of Both, the husband had encumbered the matrimonial home with a $2M mortgage after separation without the wife’s consent, even though he knew or ought to have known her consent was required. The motions judge found that the husband had orchestrated additional large encumbrances and the movement of property from one corporation, in which the wife held an interest, to a corporation in which she did not. The court held that there “is a real risk that if the requested order is not made, that the wife’s equalization claim could be defeated”.”
Qureshi v. Qureshi, 2021 ONSC 2750 (CanLII) at 46-49, 51-53, 55-56