In high-net-worth divorce cases, it is not uncommon to conceal or transfer assets. This behavior seriously damages the legitimate rights and interests of the other party and undermines the principle of fair property division. According to the Family Law Act of Ontario, Canada and related judicial practices, the party whose rights and interests are damaged has a variety of legal means to recover the assets that have been concealed or transferred. The following is a detailed introduction to four common and effective legal means of recovery.

I. Apply for a property disclosure order to get a full picture of your assets

When a spouse is suspected of hiding or transferring assets, the injured party can apply to the court for a property disclosure order. According to the law, both spouses are obliged to fully and truthfully disclose their assets and liabilities during the divorce process.

  • The scope of disclosure is wide: including but not limited to all possible forms of assets such as bank accounts, investment accounts, real estate, vehicles, business equity, intellectual property, and various debts.
  • Mandatory cooperation obligation: The court will order the party that conceals or transfers assets to provide detailed asset information and relevant financial documents within a specified time, such as bank statements, asset purchase contracts, corporate financial statements, etc. If the other party refuses to cooperate or provides false information, it will face court sanctions, including fines, detention, etc.

For example, in the case of Doe v. Doe, the wife suspected that her husband had concealed some of his business shares. By applying for a property disclosure order, the court required the husband to provide detailed financial information and share registration information of the business, and finally found out the fact that the husband had transferred the shares.

II. Apply for an asset freezing order to prevent asset loss

In order to prevent the behavior of concealing or transferring assets from further deteriorating, the injured party can apply to the court for an asset freezing order in a timely manner when signs of abnormal asset transfer are discovered.

  • Emergency protection measures: An asset freezing order can quickly restrict the other party’s right to dispose of specific assets, including prohibiting the sale, transfer, and mortgage of assets. The court will decide the scope and duration of the frozen assets based on the specific circumstances.
  • Requirement to provide security: When applying for an asset freezing order, the applicant is usually required to provide a certain amount of security to the court to compensate for the losses that may be caused to the other party due to the erroneous freezing.

For example, in a divorce case, the husband found that his wife was selling the property jointly owned by the couple at a low price, so he immediately applied to the court for an asset freezing order. After reviewing the relevant evidence, the court quickly issued a freezing order to prevent the illegal transfer of the property.

III. Investigate and collect evidence to uncover clues to hidden assets

In addition to relying on court orders, the injured party can also conduct investigations and collect evidence through professional investigation agencies or lawyers to find clues to hidden assets.

  • Professional investigation methods:
    Investigators can track the flow and transfer of assets by checking bank transaction records, real estate registration information, corporate industrial and commercial archives, etc. At the same time, they can also investigate the other party’s social activities, business dealings, etc. to find clues to possible hidden assets.
  • Legality of evidence: During the process of investigation and evidence collection, legal provisions must be strictly followed to ensure that the evidence obtained is legal and valid. Evidence obtained illegally will not be accepted by the court.

In one case, the wife commissioned a professional investigation agency to investigate her husband. The investigators found that the husband frequently had financial transactions with an unfamiliar company before the divorce. After further investigation, it was found that the company was a shell company set up by the husband to hide his assets.

IV. Filing a lawsuit to redivide assets

Once evidence is obtained that the other party has concealed or transferred assets, the injured party can file a lawsuit in court and request a redivision of the couple’s common property.

  • Punitive division principle: When hearing such cases, the court usually follows the punitive division principle, that is, the party who conceals or transfers assets will receive less or no property. The specific division ratio will be determined by the court based on the specific circumstances of the case and the sufficiency of the evidence.
  • Claim for compensation for losses: The injured party may also ask the other party to compensate for the losses caused to itself by concealing or transferring assets, including direct losses of assets and reasonable expenses incurred by investigation and evidence collection.

For example, in Smith v. Smith, the court found that the husband had concealed a large amount of marital property during the divorce and ultimately ruled that the husband only received 20% of the property and compensated the wife for the expenses incurred by the investigation and litigation.

V. Preventive suggestions for concealing/transferring assets

To avoid hiding or transferring assets during a divorce, high net worth individuals can take the following precautions:

  • Pay attention to the status of family assets regularly: The couple should communicate about the status of family assets regularly to understand the dynamics of various assets. At the same time, keep the relevant documents and certificates of important assets.
  • Sign a pre-nuptial or post-nuptial property agreement: clearly stipulate the ownership and division of the property of both spouses to reduce disputes caused by property issues.
  • Establish an asset supervision mechanism: For some important assets, a special supervision mechanism can be established, such as jointly managed accounts and regular audits, to ensure the security and transparency of assets.

Concluding remarks

During the divorce process, concealing or transferring assets is a serious illegal act. When faced with this situation, high net worth individuals should take effective legal measures in a timely manner to safeguard their legitimate rights and interests. By applying for property disclosure orders, asset freezing orders, actively investigating and collecting evidence, and filing lawsuits, the hidden or transferred assets can be recovered to the greatest extent possible, and a fair division of property can be achieved. At the same time, taking preventive measures in advance can help reduce the occurrence of such situations. When dealing with complex divorce property disputes, it is recommended to seek the help of a professional family lawyer to ensure the smooth progress of the legal process and the effective protection of one’s own rights and interests.

JZW Law has an experienced team of high net worth divorce lawyers. They are fluent in both Chinese and English and provide professional legal services. We specialize in handling complex property division, corporate equity, trusts, overseas assets and other related issues. We provide initial consultation services, and you are welcome to contact us for more information or to schedule a consultation.

Disclaimer: This article is for informational purposes only and does not constitute legal advice. If you need legal help, please consult a professional lawyer.