June 12, 2012

Breach of court order not to encumber

June 12, 2012

Watch out for restraining orders on disposition of a family home before registering a mortgage

It is common in family matters for an order to be made that restrains the parties from disposing of or otherwise encumbering family assets. These orders are generally made under s. 67 of the Family Relations Act and cover the family home and other assets that may be considered family assets.

It is also a common practice for lawyers who act for the parties to secure payment of their fees by registering a mortgage against the family home.

However, where there is a restraining order in place, if a mortgage is registered without the consent of the parties or a further order of the court that permits it, the lawyer will facilitate a breach of the order by the client.

In these circumstances, because lawyers are officers of the court and owe a duty to maintain the integrity of the legal system, disciplinary action may result.

In a citation hearing that concluded in January 2012, a lawyer was fined $4,500 (Law Society of BC v. Kirkhope, 2012 LSBC 05), where he had forgotten that an order had been made. Other cases have resulted in conduct reviews.

Lawyers who wish to secure their fees by registering a mortgage against a family home should first carefully review the entire file to ensure that no such restraining order exists. If a restraining order has been made, the lawyer must ensure that the client complies with the order or it is varied or the appropriate consents are obtained in writing.