Preservation Orders and High Income Earners
Plese v Herjavec, 2016 CaswellOnt 10282
In this recent decision penned by Justice Kiteley of the Ontario Superior Court of Justice, the Respondent husband was ordered to pay temporary spousal support of $124,115 per month and temporary child support of $44,992 per month. The parties have not yet agreed on who owes who an equalization payment. However, for the purposes of the motion, Justice Kiteley concluded that it is likely that the husband will be ordered to make an equalization payment of several million dollars to the wife.
In this case, the wife brought a motion because the husband was about to finance his company for more than the company’s net value. The husband maintained that he was trying to grow the business, whereas the wife argued that the husband was attempting to impair his ability to pay any future judgment. As such, the wife brought a motion pursuant to s. 12 and s. 40 of the Family Law Act (FLA) for an order restraining the husband from dealing with any assets in which he had an interest and an order that the husband preserve all of his assets.
Justice Kiteley began with a brief overview of ss. 12 and 40 of the FLA, suggesting that both sections require the court to consider the relative strength of the Applicant wife’s case.
Justice Kiteley then referred to Bonfman v Bronfman (2000), in which Justice Sachs observed that preservation orders involve a balancing act. On one hand, there is the risk that by the time a matter reaches trial, the plaintiff’s rights may be severely prejudiced. On the other hand, the defendant may be unduly restrained from doing something that he or she ultimately has the right to do with his or her assets. This is particularly challenging during the interim stage of the proceedings because the court is required to grant a remedy before the merits of a dispute have been explored.
Justice Kiteley concluded that the convenience to the wife and the inconvenience to the husband was equally balanced in this case.
Justice Kiteley then turned to irreparable harm, which is the risk of the husband dissipating his assets. Generally, orders pursuant to s. 12 and s. 40 of the FLA can be observed when the respondent has specific assets, such as real estate. However, when the primary asset is shares in a private corporation, as in this case, granting such orders is extremely complex. Following a thorough analysis of the husband’s comprehensive materials, Justice Kiteley determined that the order sought by the wife would essentially cripple the husband’s company and interfere with its day-to-day operations. Thus, Justice Kiteley held that an order pursuant to s. 12 and s.40 would cause irreparable harm to the company and dismissed the wife’s motion.