Section 25(8): An injunction may be granted…by an interlocutory order of the court in all cases in which it shall appear to the court to be just or convenient that such an order should be made; and any such order may be made either unconditionally or upon such terms and conditions as the court thinks just.
A court should not grant an injunction simply because it is ‘convenient’ to do so. Rather, injunctions should be granted for the protection of rights or the prevention of injury according to legal principles . Aslatt v. Corp. of Southampton (1880), 16 Ch. D. 143.
When a statute gives discretion, the courts must not fetter it by rigid rules from which a judge is never at liberty to depart. Considerations may change as public policy changes: this is all part of the evolutionary process. Ward v. James,  2 All E.R. 76.
“ Where a fraudulent disposal has actually been made of a defendant’s property, the Court will intercept the further alienation of that property and keep it in the hands of the grantee until the plaintiff can obtain a declaration of invalidity with respect to the conveyance and recover judgment for the amount claimed.”
“ We are told that an injunction of this kind has never been done before. It has never been the practice of the English Courts to seize assets of a defendant in advance of judgment or to restrain the disposal of them ... It seems to me that the time has come when we should revise our practice .”
“ It seems to me that this is just such a case. There is a strong prima facie case that the hire is owing and unpaid. If an injunction is not granted, these moneys may be removed out of the jurisdiction and the ship-owners will have the greatest difficulty in recovering anything.”
The motion judge thought NYK case was wrong since Denning didn’t mention Lister v. Stubbs , so sent it up to him to reconsider.
Lord Denning said:
“ There is money in a bank in London which stands in the name of these [defendants]. The [defendants] have control of it. They may at any time dispose of it or remove it out of this country. If they do so, the [plaintiffs] may never get their charter hire.”
“ In face of this danger, I think this court ought to grant an injunction to restrain the [defendants] from disposing of these moneys now in the bank in London until the trial or judgment in this action. If the [defendants] have any grievance about it when they hear of it, they can apply to discharge it.”
The asset need not be limited to money and could goods, although the jurisdiction should be exercised with particular care.
Relief should be granted whenever it is just to do so. Precise rules should not be laid down for its exercise.
Where the injunction might compel the defendant to provide security, it might tilt the scales in favor of issuance of the injunction. (The practice of the European courts was to compel foreign defendants to provide security – as per the Rome Treaty, England should follow suit.)
Following Rasu, Mareva injunctions became commonplace and summary in nature.
A plaintiff’s affidavit would simply set out the nature of the claim, state that the defendant was abroad and assert that, if the injunction was refused, a judgment would go unsatisfied. Specific assets were rarely identified.
Courts would hear approximately 20 applications per month, and almost all were granted.
Applications to discharge injunctions were very rare.
Third Chandris Shipping Corp. et al. v. Unimarine S.A.,  Q.B. 645 (C.A.).
At the time the defendant’s bank account was frozen, the account was in overdraft. Defendants sought to lift the injunction since they were precluded from operating their business in the U.K.
The motion judge expressed concern that the were being too freely given but having regard to court’s practice, refused to lift the injunction (the defendants were free to post security to un-freeze the account or prove other assets were available). The defendant appealed to Lord Denning.
Denning J. acknowledged, “ As much as I am in favor of the Mareva injunction, it must not be stretched too far lest it be endangered .”
1. The plaintiff should make full and frank disclosure of all matters in his knowledge which are material for the judge to know
2. The plaintiff should give particulars of his claim against the defendant, stating the ground of his claim and the amount thereof, and fairly stating the points made against it by the defendant.
3. The plaintiff should give some grounds for believing that the defendants have assets within the court’s jurisdiction.
The plaintiff should give some grounds for believing that there is a risk of the assets being removed before the judgment or award is satisfied. The mere fact that a defendant is abroad is not, by itself, sufficient. Relevant considerations include, for example, corporate structure, financial disclosure, reciprocal enforcement of judgments, country of incorporation.
5. Plaintiff must give an undertaking as to damages .
The power of the High Court to grant an interlocutory injunction restraining a party to any proceedings from removing from the jurisdiction of the High Court, or otherwise dealing with, the assets located within that jurisdiction shall be exercisable in cases where that party is, as well as in cases where he is not, domiciled, resident or present within that jurisdiction.
Facts: Sparse facts were given. Defendant was an accountant who was alleged to have stolen $100k from her employer and was facing criminal charges for theft. An interlocutory injunction was brought to restrain her and her husband from selling their jointly-owned house . (*No indication of whether the proceeds of the fraud were paid into the house.*)
Strong prima facie case of theft
House is the defendant’s only asset
Former Justice Patrick T. Galligan Q.C. is a founding member of ADR Chambers. He was appointed to the Supreme Court of Ontario in February 1970 and to the Ontario Court of Appeal in February 1989. In December 1995, he retired from the Bench and commenced his practice in Alternative Dispute Resolution.
“ Equity demands that there be an exception [to the common law rule of no security before judgment] where there is substantial evidence supporting an allegation that the defendant has stolen from the plaintiff .”
Equity permits a person who has been defrauded from or stolen from by a defendant to have some measure of relief that would not be available to a plaintiff in an ordinary action where fraud or theft are not issues.
Does there need to be a connection between the fraud and the asset to be frozen? This is not stated.
Recognizes that the Mareva injunction has become part of Canadian law but expressed concern that Mareva could lead to abuse.
There must be a very strong case and a real danger of the disposition of the only assets which will satisfy judgment.
He refers to Mills. “Perhaps fraud is only an element which will more readily bring about the Mareva injunction.”
“ I should hope that some day the Court of Appeal will be able to determine whether or not the Mareva is part of our law and if so what are its limits.”
Grants a Mareva Injunction. There is a risk amounting to almost a certainty that he will attempt to dispose of his assets because of his dishonesty in stealing the gold bar, as well as his long criminal record.
Galligan J. ( Mills) originally granted an ex parte order restraining the defendant from disposing of his assets.
An order to continue, on notice, was heard by Anderson J.
The plaintiff alleged fraud, but there was no evidence that D intended to transfer or dissipate assets or remove them from the jurisdiction as per the Mareva line of cases. Although the possibility existed, they exist in every case.
Anderson J . felt that Mills was wrongly decided.
“ I can see no reason why the plaintiff with a cause of action for fraud should be given an assurance of recovery on such a judgment and not if the judgment stemmed from some other cause”.
Anderson J. referred the matter to the CA for an authoritative statement on the principles by which a judge should exercise discretion when issuing an interloctutory injunction.
Plaintiff did not make full and fair disclosure of all relevant facts required for obtaining an ex parte order and so was disentitled to order;
Defendant’s wife had a plausible explanation for the transfer of title on the house;
No evidence that the defendant intended to leave his job, leave the country or dissipate his assets;
Plaintiff’s counsel was very obstructive during cross-examination on affidavits and acted improperly;
Plaintiff’s affidavit was clearly deficient and materially misleading in material aspects;
Plaintiff sought and initially secured ex parte Mareva order without identifying assets to which the order would be directed, but it wasn’t stated whether the plaintiff had knowledge of the defendant’s assets.
Plaintiff’s counsel argued that he didn’t need to address the Mareva cases. He relied on Mills and Campbell, arguing that there is an exception to Lister v. Stubbs where there is a strong prima facie case of theft or fraud.
With respect to Campbell, MacKinnon, J., speaking for the Court, stated (para. 24):
24. It would be difficult to conceive of a stronger case for intervention of the court than Campbell… I have no reason to doubt that the court would take the same position today if similar facts were to arise, and to hold that such an order was “just and convenient”. In the instant case of course, there is no admitted fraud and certainly no evidence of further intended alienation of any specific property by a co-conspirator in the fraud.
25. It may well be that Mills …is a case similar to Campbell. Unhappily, the reported facts were not given in detail but it appears that the female defendant, while employed as the firm’s accountant, was charged with stealing $100,000 from it. It also appears that prior to trial, she and her husband were attempting to sell the house which they jointly owned and one can surmise that it was being alleged that some of the money stolen went into the purchase of the home . [* These facts were not actually stated in the Mills decision *]. Apparently this was their only asset.
26. The plaintiff there sought to restrain the sale of the house pending the outcome of the action for return of the moneys allegedly stolen. The learned Motions Court judge said that the evidence of theft was very strong but stated that he did not wish to prejudge the issue which was then pending in the criminal courts. However, later in his reasons, he stated “ It does not appear to me to be an unreasonable extension of the principle…to permit equity to give a person who has been defrauded or stolen from by the defendant some measure of relief that would not be available to a plaintiff in an ordinary action where fraud or theft are not issues ”. In this passage he appears to be making a finding for the purposes of the civil action that a theft had been committed . It may be that the facts justified the order made but, in any event, that is not this case.
I regard the Lister principle as remaining the rule with “the Mareva doctrine as contemplating a limited exception.”
The Court must be careful to ensure that the “new” Mareva injunction is not used as and does not become a weapon in the hands of plaintiffs to force inequitable settlements from defendants who cannot afford to risk ruin by having an asset or assets completely tied up for a lengthy period of time awaiting trial.
Guidelines 3 and 4 are unique to Mareva injunctions.
3. The plaintiff should give some grounds for believing that the defendants have assets within the court’s jurisdiction.
Should establish assets with as much precision as possible. It would be unusual and punitive to tie up all assets - the ramifications could be destructive. If no knowledge of D’s assets, that should be stated.
4. The plaintiff should give some grounds for believing that there is a risk of the assets being removed before the judgment or award is satisfied.
The applicant must persuade the court by his material that the defendant is
a) removing or there is a real risk that he is about to remove his assets from the jurisdiction to avoid the possibility of a judgment; OR
b) otherwise dissipating or disposing of his assets, in a manner clearly distinct from his usual or ordinary course of business or living , so as to render the possibility or future tracing of the assets remote, if not impossible, in fact or in law.
If there is a risk that defendant will move his assets from the jurisdiction, do you need to show intent to avoid the possibility of a judgment?
Is there a different standard with respect to dissipation or disposal of assets within the jurisdiction?
After discussing Mareva Injunctions, the Court of Appeal stated at the second last paragraph that it agreed with Anderson J . that
“ I can see no reason why the plaintiff with a cause of action for fraud should be given assurance of recovery under such a judgment and not if the judgment stemmed from some other cause .”
MacKinnon states: “I agree with this view and I have sought to point out the considerations that must be satisfied before a Mareva injunction can be granted. However I do not have the pessimistic view taken by the motions court that all the former criteria for the granting of interlocutory injunctions are not to be disregarded. I do not believe that to be so. The Mareva Injunction is here to stay and properly so, but it is not the rule –it is the exception to the rule.”
Galligan J. noted that the Court of Appeal approved of Campbell as an exception to Lister v. Stubbs. He then went on to say:
“ In Chitel, reference is also made to a decision of mine in Mills, in which I restrained a defendant against whom I considered to be a strong prima facie case of theft was made out, from disposing of the only asset available to satisfy a possible judgment for recovery of the money alleged to be stolen . Because of the sparsity of the facts recited in my reasons for judgment, the Court of Appeal appears to have avoided saying that on its facts, the case was properly decided .”
However, as I read the reasons of MacKinnon J., he approved the principle upon which I acted, namely, that equity can provide to a person who has been stolen from or defrauded some measure of relief that would not be available to a plaintiff in an action in which fraud or theft are not involved .
When a person is stolen from, I do not think equity should be reticent about helping him recover his loss from the thief, nor particularly solicitous to the thief…It seems to me that it is clearly in the public interest that victims of theft, if possible, be quickly and summarily repaid by the thief. It is hard to understand why the indignity of theft must have added to it the hazards and delay of a lengthy civil action.
Since I have decided the application upon a different exception to the ordinary rule in Lister v. Stubbs, I specifically refrain from passing upon the applicability of the “Mareva” principles to this case.
D argued that the Mareva injunction had no place in Canada because provincial legislation filled the gap with statutory remedies: Federal Bankruptcy legislation to protect creditors, examination of judgment debtors, Absconding Debtors Act, Rule 45.01 which preserve subject-matter of proceedings, Fraudulent Conveyances /Preferences Acts, etc. The courts should not “legislate” by adopting sweeping rules of the Mareva line of cases.
P pointed out that there was no liquidated demand or debt or fraudulent conveyance that would fall within the legislative remedies. The Court agreed that the court’s authority to issue such an injunction would have to be expressly reduced by legislation.
The overriding consideration qualifying the plaintiff to receive such an order as an exception to the Lister rule is that the defendant threatens to so arrange his assets as to defeat his adversary…in any attempt to recover from the defendant on that judgment.
Unless there is a genuine risk of disappearance of the assets, either inside or outside the jurisdiction, the injunction will not issue. “Jurisdiction” must be considered in a Federal setting.
The harshness of the Mareva injunction, usually ex parte, is relieved against by allowing the defendant the opportunity to move against the injunction immediately.
Expressed a concern that plaintiff may, with an apparent claim, without ultimate substance, may, by the Mareva exception to the Lister rule, tie up the assets of the defendant, not for the purpose of the preservation until judgment, but to force, by litigious blackmail, a settlement from a defendant who cannot afford to await the ultimate vindication at trial.
Is removing or a real risk that he is about to remove his assets from the jurisdiction to avoid the possibility of a judgment ; OR
otherwise dissipating or disposing of his assets , in a manner clearly distinct from his usual or ordinary course of business or living, so as to render the possibility or future tracing of the assets remote, if not impossible , in fact or in law.
Aetna ( SCC)
Says that the Ontario CA recognized Lister as the general rule and Mareva as a “limited exception” only where there is a real risk that the defendant will remove his assets from the jurisdiction or dissipate those assets “ to avoid the possibility of a judgment”.
Estey J. seems to qualify both removal outside of the jurisdiction and dissipation as requiring an intent to defeat creditors.
Q: So just what is the proper test? Is a defendant’s subjective intention/improper purpose necessary ?
Fastfrate was charged under the Competition Act. The company started winding up its corporate existence. The Crown wanted to freeze Fastfrate’s assets so that they could be used to pay a fine if Fastfrate was convicted.
Can the Crown obtain a civil injunction for criminal law? Galligan J. says “yes” and cites Stranges with approval.
Q: Must the Crown demonstrate that assets are being disposed of or removed for an improper purpose?
Galligan J. (Majority) – Subjective Test: The intended purpose of the defendant is the decisive question. The purpose must be to make an arrangement of its assets with the intent of defeating potential creditors. He bases this on Estey’s restatement of the Chitel test at paras. 25 & 30, Aetna ).
But he expressly states that he is only commenting on civil injunctions for use in criminal cases, not generally.
Weiler J. (Concurring in result) – Objective Effect: Refers to Estey’s statement at para. 26 of the general rule about the ‘gist’ of the Mareva that “unless there is a genuine risk of disappearance of assets , either inside our outside the jurisdiction, the injunction will not issue. This generally summarizes the position in our country.
Weiler J. explained why improper purpose shouldn’t be necessary:
The Mareva and the Mills injunctions are separate exceptions to the Lister v. Stubbs rule.
Just as the quia timet injunction was expanded by the Mareva cases, the fraud exception was expanded by Mills [an allegation of past dishonest conduct in an action may result in an injunction being obtained even where there is no evidence of any intention to deal with the asset enjoined in any improper purpose.]
The Mareva becomes overly complicated if evidence of improper purpose is required:
Fraud Exception: No improper/fraudulent purpose is required re assets to be frozen, SO….
Mareva Exception: Why should improper/fraudulent purpose must be shown re assets to be frozen?
The real focus for all exceptions should be on the availability of assets to satisfy a judgment which is likely to be obtained because a strong prima facie case has been made out.
NOTE: This view was also adopted in B.C. – See Gateway Village Investments Ltd. v. Feigelman,  1 S.C.R. 2 (B.C.S.C.) as per Southin J.
Policy reasons why improper purpose need not be shown:
1. Broad discretion to grant injunction. Mareva still evolving. Flexibility is required. Improper purpose interferes unduly with court’s discretion. Judge must not become “a prisoner of formula”, but must focus on what is just and equitable.
2. The evolution of the Mareva cases have focused on the effect of the transfer , not the purpose of the transfer.
3. In Aetna, Estey J. said that, but for the jurisdiction issue, he would not have overturned – no mention of no improper purpose.
4. Other cogent evidence can give rise to an inference that a judgment will not be capable of enforcement.
The P used car dealer hired the D to be his comptroller/accountant. D participated in a scheme to defraud Canada Revenue of G.S.T. tax credits for the benefit of P which, when discovered, caused P to get hit with serious tax penalties.
No evidence that D received a personal benefit. D said that he said he was acting on instructions of P.
P sued D for fraud and breach of fiduciary duty.
The court found a prima facie case that D defrauded Government of Canada, but not P.
No evidence that D was contemplating removing assets from jurisdiction nor were there grounds for believing it was so.
Cullity J. notes that Mills was decided shortly after the emergence of Mareva injunctions in the UK and before they had a discernable impact in Canada.
Mills has more affinity with Mareva cases than the fraud cases since ‘risk of dissipation’ was behind the decision. Mills has been dropped into the wrong pigeon hole.
In Chitel, the CA surmised that Mills involved a case where stolen proceeds were paid into the house – the court quoted Anderson J. that there was no reason why a plaintiff with a cause of action in fraud should be treated differently. Thus, it is implicit that the Mareva test applies to fraud cases as well.
Cullity J. concludes that Mills does not widen the “fraud exception” beyond its historical foundations to the extent that it would cover any proceedings where fraud is alleged and nothing more than a strong prima facie case is shown.
Where no allegedly fraudulent disposition has occurred and it is sought to restrain the defendant from disposing of the assets, the requirements for a Mareva order must be satisfied, even where the cause of action is based on fraud.
Even in cases of fraud, an inference must reasonably be drawn on the facts. “I do not think the relative degrees of moral turpitude that might be attributed to the conduct of the defendant on which the cause of action is based are, by themselves, necessarily relevant considerations.
There is no confusion regarding the test for a Mareva injunction.
“ The law in this area is well settled. The proposed appeal does not raise issues that constitute matters of public importance. The issues, as in most motions of this nature, are heavily fact-driven and are thus of importance only to the parties to this litigation. They are not questions of general application.”
The plaintiff must either show a fraudulent conveyance ( Campbell ) or meet the Mareva test. The obligation to demonstrate a real risk of dissipation of assets is required even when an action is based on fraud.
663309 Ontario Inc. v. Bauman,  O.J. no. 2647 (S.C.J.) per Cullity J.
The United States of America et al. v. Yemec et al.,  O.J. No. 3863 (S.C.J.) per Gans J.
Sansone v. D’Addario,  O.J. No. 1434 (S.C.J.) per Mesbur J.
Gateway Internet Solutions Inc. v. Gonsalves,  O.J. No. 2114 (S.C.J.) per Lederer J.
Popack v. Lipszye,  O.J. No. 3380 (S.C.J.) per Pollack J.
Croatian (Toronto) Credit Union Ltd. v. Vinski,  O.J. No. 700 (S.C.J.) per Cameron J.