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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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:
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joint ownership does not guarantee immediate access to all
sale proceeds;
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courts will closely scrutinize claims of financial necessity;
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preservation orders must be targeted and proportionate; and
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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.
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