Background

In Shokoufimoghiman v. Bozorgi, the Ontario Superior Court of Justice heard a long motion involving three interrelated disputes arising from an ongoing family law proceeding.

The applicant sought the release of her share of the net proceeds from the sale of a jointly owned investment property in Toronto (the “Donway Property”). She argued that she required immediate access to these funds to close the purchase of a pre-construction condominium (the “Elgin Condo”) and to pay her legal fees for an upcoming ten-day parenting trial and related criminal proceedings.

The respondent husband opposed any release of funds, arguing that the proceeds should remain preserved as security for his equalization claims. He maintained that he would be owed a significant equalization payment and that releasing funds to the applicant risked dissipation before trial.

The husband’s brother, who had been added as a third-party respondent, brought a separate motion seeking security for costs. He argued that the trust claims advanced against him alleging that he held corporate assets and real property in trust for the husband were a nuisance, waste of time, and that the applicant lacked assets in Ontario to satisfy an adverse costs award.

Justice Kraft was required to balance competing claims to property preservation, access to funds, litigation fairness, and the gatekeeping function of the Family Law Rules.

The Law

Under the Family Law Act, jointly owned property presumptively entitles each spouse to their share of the proceeds. However, section 12 of the Act allows courts to make preservation orders where necessary to protect a spouse’s property claims, including equalization.

Courts may also order security for costs under Rule 24(13) of the Family Law Rules, but such orders are not routine. They are a blunt remedy and must only be made where it is just, based on evidence that a claim is frivolous, a nuisance, or that a party lacks assets to satisfy a costs award.

In exercising these discretionary powers, courts must apply the primary objective of the Rules: to deal with cases justly, proportionately, and efficiently.

Analysis

Was a Material Change in Circumstances Required to Release Further Sale Proceeds?

No. The Court rejected the argument that the applicant was required to establish a material change in circumstances in order to vary the prior consent order governing the Donway Property proceeds.

The earlier order merely provided for an initial disbursement and did not contain a substantive determination that no further funds could be released prior to trial. As a result, the Court retained jurisdiction to order a further disbursement without requiring proof of changed circumstances.

Was the Applicant Presumptively Entitled to Her Share of the Donway Property Proceeds?

Yes, but not without limits. As a joint owner, the applicant was presumptively entitled to her half share of the net proceeds. However, that entitlement had to be weighed against the respondent’s unresolved equalization claims and the risk that released funds could be dissipated before trial.

The Court accepted that the applicant required funds to close the Elgin Condo purchase, but found that unrestricted access to her full share was not justified on the record before it.

How Did the Court Balance the Competing Equalization Claims?

The Court found that the parties’ equalization positions were sharply disputed, with a potential swing of hundreds of thousands of dollars depending on valuation and disclosure findings.

While it could not determine the precise equalization outcome on the motion record, the Court was persuaded that the respondent husband was likely to be owed an equalization payment in some amount. This justified the need for property preservation mechanisms to protect his potential entitlement.

How Much Money Did the Applicant Actually Need to Close the Elgin Condo?

The Court closely scrutinized the applicant’s evidence and found it lacking. While she claimed she required over $100,000 to close, she provided no direct evidence from a mortgage broker and failed to respond to challenges to her calculations.

The Court preferred the respondent’s evidence and concluded that the applicant required approximately $67,840, plus documented adjustment and transaction costs, to complete the purchase, not her entire share of the Donway Property proceeds.

Were the Trust Claims Against the Third-Party a “Nuisance” Justifying Security for Costs?

No. Although the third-party raised legitimate concerns, the Court found that the trust claims were not so devoid of merit as to be considered frivolous or a waste of time.

The timing of corporate transactions, the execution of a release, the purchase of real property, and unresolved disclosure issues raised genuine questions that required adjudication. As a result, the Court declined to order full security for costs in the amount sought.

Was Any Security for Costs Warranted?

Yes, but in a limited and proportionate form. In its gatekeeping role, the Court ordered that $25,000 be preserved from the eventual sale proceeds of the Elgin Condo as security for the third-party’s potential costs.

This balanced the third-party’s legitimate concerns without shutting down the applicant’s claims or preventing access to justice.

Conclusion

Shokoufimoghiman v. Bozorgi is a comprehensive illustration of how Ontario courts balance access to funds, property preservation, and litigation fairness in complex family law disputes.

The decision confirms that:

• joint ownership does not guarantee immediate access to all sale proceeds;
• courts will closely scrutinize claims of financial necessity;
• preservation orders must be targeted and proportionate; and
• security for costs is not a tool to defeat potentially legitimate claims.

Above all, the case underscores the court’s gatekeeping function under the Family Law Rules — ensuring that disputes proceed fairly, efficiently, and with appropriate safeguards for all parties involved.