Protecting Family Assets: Preservation Orders and Mareva Injunctions
- Rylan Alston
- 19 hours ago
- 4 min read
In family law, it is widely acknowledged that complete financial disclosure can be elusive. When one party maintains control over family assets, the other may be entirely unaware of the full scope of the family property. Even with mutual financial awareness, there remains a significant incentive for a party to conceal or dissipate assets, a task made increasingly complex by technological advancements like blockchain and the global nature of modern finance. While disclosure requirements aim to ensure all assets are traced and identified, parties must also be prepared to address instances where funds are concealed or transferred outside of Alberta’s jurisdiction.
Alberta Jurisdiction
To understand the context, we must look at family law jurisdiction. Under Canada’s division of powers, family law is split between federal and provincial authority. Crucially, the division of family property is governed by Alberta’s Family Property Act. As provincial legislation, it applies specifically to Alberta, while other provinces maintain their own distinct laws for property division.
The fact that Alberta’s legislation is provincial does not mean assets held outside the province are shielded from Alberta court decisions; however, while other provinces generally recognize Alberta orders, particularly those not involving real property or land, moving assets across borders can still complicate, prolong, or frustrate the final allocation of property.
Canadian Jurisdiction
Jurisdictional challenges escalate significantly when assets are moved outside of Canada. There is significantly less certainty regarding the enforcement of Alberta family law orders in foreign jurisdictions. While certain international treaties, such as the Hague Convention, provide a framework for these issues, they are often complex and difficult to execute. Because of this unpredictability, if there are concerns that a party is relocating assets to frustrate an equitable division, it is imperative to take proactive legal steps to restrain the movement of property before it leaves the country.
Frist Remedy: Mareva Injunctions
There are two primary remedies available in Alberta courts to prevent the removal of property from the jurisdiction: Preservation Orders and Mareva Injunctions.
A Mareva injunction is a powerful remedy that freezes a party’s assets, effectively restraining them from dealing with their property in any way. This ensures assets remain within the jurisdiction of the presiding court. The leading authority on these injunctions is the Supreme Court of Canada decision in Aetna Financial Services v. Feigelman, [1985] 1 SCR 2.
Because a Mareva injunction removes assets from a party's control, it is considered a harsh or extraordinary remedy. At best, it can cause personal financial hardship; at worst, it can lead to substantial financial loss. For instance, if a corporation involved in a divorce is subject to such an injunction, it may be unable to meet payroll or maintain operations, potentially leading to business collapse. Consequently, courts grant these orders sparingly and only upon meeting strict requirements.
The complexity of a Mareva injunction is further heightened by the fact that they are typically sought ex parte, meaning the application is made without notice to the other party. While this is necessary to prevent the immediate dissipation of assets once the dissipating party learns of the legal action, it also means the restrained party cannot defend themselves until after the order is in effect. By that time, they may have already suffered significant financial repercussions.
Legal Requirements for Mareva Injunctions
The requirements for a Mareva injunction in Alberta are established in Cho v. Twin Cities Power-Canada, 2012 ABCA 47. This case outlines a tripartite test, which requires showing a real risk that assets will be removed from Alberta or dissipated to avoid the enforcement of a court order.
Furthermore, Henenghaixin Corp v. Deng, 2022 ABCA 271, clarifies that these orders require strong evidence demonstrating a "reasonable likelihood that the applicant’s claim will be established." A mere suspicion of dissipation is insufficient; the applicant must provide compelling evidence that dissipation is likely to occur without the injunction. Notably, the Deng decision establishes that hearsay evidence is insufficient to support such an application.
While the evidentiary burden is high, it is not insurmountable. For example, if an applicant can demonstrate that other assets have already been moved out of the country or dissipated, the court may find a sufficient risk to justify an injunction for the remaining assets. However, in many family law contexts, a Preservation Order may serve as a more appropriate and accessible remedy.
Second Remedy: Preservation Order
While both Marevan Injunctions and Preservation Orders are classified as extraordinary remedies, a Preservation Order is often more accessible. Its relative advantage lies in its specificity; whereas a Mareva Injunction is a broad, overarching freeze on a party’s finances, a Preservation Order targets specific assets.
In family law disputes, a Preservation Order is frequently the more appropriate tool because parties can usually identify specific property at risk. For example, rather than freezing an entire business, a party may move to preserve specific investment accounts they fear will be moved out of the Alberta jurisdiction. In response, the court can freeze only the portion of those assets reasonably expected to be allocated to the applicant, allowing the remainder to remain liquid.
The decision in SFM v MRM, 2020 ABQB 302, illustrates this application. In that case, the court granted a preservation order freezing exactly half of the proceeds from a house sale. The court’s reasoning was based on the liquidity of the funds, the ongoing uncertainty regarding the total value of the family property, and the fact that one party lacked a stable source of income.
Ultimately, while a Preservation Order remains an extraordinary measure, it is a versatile remedy. So long as a party can demonstrate a real risk of dissipation regarding specific assets, the court is likely to grant the order to ensure an equitable distribution of family property.
Conclusion
Deciding whether to pursue a Preservation Order or a Mareva Injunction is a complex strategic choice. While there is often an urgent need to act before assets are dissipated or moved beyond Alberta’s jurisdiction, courts are equally wary of these tools being used tactically. Judges must distinguish between legitimate preservation and malicious attempts to inflict financial hardship on an opposing party. Whether you have serious concerns about the concealment of assets, or you are facing an unjustified order resulting in economic harm, Stokes Law is here to provide expert guidance.
Comments