How to Prevent my Spouse from Dissipating Assets During a Divorce?
While it would be ideal for there to have been an uncontested divorce, it is common that divorcing parties end up with acrimonious relationships and a lack of trust between them by the time a divorce is sought.
As such, there may be cases of spouses seeking to dissipate matrimonial assets, such as by spending the money or moving it into another account. Hence, the law has also developed measures to prevent such a situation from arising.
Preventive measures, such as injunctions, prevent the other party from dissipating their assets.
A Mareva injunction restrains the defendant from putting his or her assets out of the plaintiff’s reach before the judgment. Hence, this would prevent any dissipation of assets.
There are two types of Mareva injunctions, namely, a worldwide Mareva injunction and a domestic Mareva injunction.
A worldwide Mareva injunction applies to all the defendant’s assets, including foreign assets. On the other hand, a domestic Mareva injunction applies only to the defendant’s local assets.
However, the Mareva injunction cannot be used to prevent the defendant from using his assets for legitimate purposes, such as to pay off undisputed debts and legitimate expenses.
To obtain a Mareva injunction, the plaintiff must show that there was a real risk that the defendant will dissipate or dispose of the assets, with the intention of preventing the plaintiff from getting hold of it in the judgment.
S 132 Injunction
Alternatively, parties may also apply for an injunction under s 132(ii) of the Women’s Charter. An injunction under this section covers both movable and immovable property, including money. However, for an injunction under s 132 to be awarded, there are a few conditions the applicant must fulfil.
Firstly, the applicant must show that (a) matrimonial proceedings were pending, (b) a financial order has been made but was not complied with, (c) there was an existing order for maintenance or (d) maintenance is payable to a wife, former wife or child under an agreement.
Read more: Determining Child & Spousal Maintenance
Secondly, it must also be shown that the purpose of disposing of the assets was to deprive the applicant of any rights regarding the property. The courts will also consider if the disposition prejudices the applicant, such as whether there will be sufficient matrimonial assets remaining to adequately provide relief for the applicant.
For example, where the couple only had one matrimonial asset of substantial value and the husband wishes to sell it, the wife’s application for an injunction would be allowed as there were no adequate remaining assets.
Where the injunction concerns an interest in registered land, such as a matrimonial home, the asset may also be protected by a caveat. Under s 115(3)(b) of the Land Titles Act, a caveat may also be lodged if the caveator had an injunction concerning an interest in land.
A caveat would act as an “insurance”, that effectively prevents the defendant from selling, gifting, mortgaging, or leasing the concerned property to a third party. Without it, once a third party acquires the interest in the property and registers it, the applicant’s own interest will be subject to the third party.
This is also important in the context of an injunction under s 132 as it does not cover a disposition to a third-party purchaser who was unaware of the purpose of the disposition. Hence, a caveat is important as it ensures that any subsequent registered dealing involving the property is subject to the caveated interest.
Furthermore, a caveated interest would also have priority over non-caveated and unregistered interest.
Consequences of breaching an injunction
Where the defendant intentionally disobeys or breaches an injunction from the court, he or she could be liable for contempt of court under the Administration of Justice (Protection) Act. A person who is found liable for contempt of court could face punishments such as fines up to $100,000, imprisonment for up to 3 years, or both, depending on which court is exercising the power to punish for contempt.
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