How to Stop Dissipation of Property?
August 1, 2021
Family
We at Laws & Beyond, often get phone calls from frantic clients asking questions such as:
1. How can I prohibit my husband from withdrawing money from bank accounts?
2. What can I do if my husband/wife is draining the family’s assets?
3. How can I stop my partner from selling household stuff on the internet?
4. How can I prevent my spouse from transferring marriage property to his brother/sister or girlfriend/boyfriend?
The term “Dissipation of Property” refers to the act of squandering or dissipating property with an element of bad faith or carelessness. It can also refer to poor financial decisions, rash or spiteful expenditure, or money squandering (Metz v. Metz (2004), 2004 ABQB 528).
Numerous Alberta cases have addressed such issues, such as in Service v. Service, [1992] A.J. No. 1116 (Q.B.), the wife after separation executed a Quit Claim in favor of her mother with respect to a substantially paid‑for matrimonial home. The Court deemed this to be a deceitful effort designed to divest the husband of his obvious interest in the property. Similarly, in Reid v. Reid [1993] 99 D.L.R. (4th) 722, the husband sold a business that was built during the course of the marriage and put the proceeds in a trust account, out of which he paid his own legal fees, travel, spousal and child support, and golf memberships. The Honorable Justice Virtue held that these expenses should have been paid out of the husband’s own income.
The courts also consider your spouse’s spending habits and lifestyle during the marriage and after the divorce. Certain expenditures will be termed asset dissipation if the family’s resources, debts, and spouses’ income cannot support such a lifestyle.
Furthermore, if your former spouse fails to properly maintain the former matrimonial house, resulting in the necessity for repairs or a drop in the property’s selling value, that behavior can be considered dissipation.
How to Prove Dissipation of Assets?
With the revelation of their spouse’s marital infidelity, spouses frequently notice dissipation of marital assets. Also, the dissipation of assets is sometimes not discovered until after the parties have separated and the Defendants have been ordered by the court to produce financial disclosures.
At times, tracking asset dissipation can require need hiring a forensic accountant, often known as a financial detective, to prove asset dissipation and preserve your claim.
The court generally looks at the following factors before ordering remedies for dissipation of assets:
1) There is reasonable likelihood that the Plaintiff’s claim against the Defendant will be established, that is, the Plaintiff will likely succeed at trial;
2) Show that granting the requested reliefs, such as an ex parte preservation order, will result in irreparable harm, i.e., the Defendant will continue to dissipate or remove the assets, and such actions by the Defendant can hinder the Plaintiff’s future enforcement of the court judgement; and
3) Show that the balance of convenience favors granting the requested reliefs, such as an ex parte preservation order.
Remedies
Once you are successful in proving that your spouse has the “intent” to dissipate the assets, then the court can order several remedies, such as:
1. Injunction against your spouse, also known as preservation order;
2. Unequal distribution of the family assets, whereby the successful party receives a bigger share of the family assets;
3. Freezing bank accounts, so that the dispersing spouse can no longer withdraw funds from the account, or can only withdraw a limited amount of money. This remedy is frequently ordered when a partner spends a significant amount of money on gambling, costly products, or addictions.
4. Closing a line of credit; and
5. Filing of Certificate of Lis Pendens. The Certificate of Lis Pendens puts other third parties on notice that you have a right to the property at issue.
NOTE: If you feel your ex-spouse is squandering the family’s assets, call Laws & Beyond right away. During such a time-sensitive situations, our exceptional family lawyers will act quickly and give you with the best representation possible. Ultimately, it is in the discretion of the trial judge, based on the consideration of all the facts, to determine whether dissipation exists, and we will work arduously to prove this.
— Written by Megha Sharma
