Potential loophole in contempt motions for non-dissipation of assets in FLA claims

Sections 12 and 40 of the Family Law Act, allow for a non-dissipation of assets.

 

Section 12 provides as follows:

 

In an application under section 7 or 10, if the court considers it necessary for the protection of the other spouse’s interests under this Part, the court may make an interim or final order,

 

(a) restraining the depletion of a spouse’s property; and

 

(b) for the possession, delivering up, safekeeping and preservation of the property.

 

Section 40 provides that:

 

The court may, on application, make an interim or final order restraining the depletion of a spouse’s property that would impair or defeat a claim under this part.

 

Note the orders are to restrain depletion that would impair or defeat an equalization claim.

 

In Davydov v. Kondrasheva, 2012 ONCA 488, released this morning, the Court held that payment of a debt which did not impair or defeat an equalization claim would not breach an order restraining depletion.  In this case the husband paid a vast sum to an off-shore individual and said it was to pay a debt existing before the marriage. 

 

The Court did say that, following trial and determination of the validity of the payment, the contempt motion could be renewed.

 

Without such trial, large payments made in breach of non-depletion orders may be improperly disguised as paying off premarriage debts.