In family law, a Mareva Injunction is a court order that freezes the defendant’s assets to prevent them from hiding them. Read on to learn more.
What Is a Mareva Injunction in Canada?
A Mareva injunction (often called a “freezing order”) is an exceptionally powerful legal instrument Canada inherited from the United Kingdom. It orders a defendant not to move any assets they own or control, wherever and in whoever’s name they may be, in order to safeguard a plaintiff’s clear and apparent legal claims.
The injunction routinely includes an order that requires the defendant to provide a sworn declaration that attests to the value and location of their assets and submit it to examination. These orders often allow the defendant to live off a specified allowance in order to pay for their personal or family expenses while the injunction is in place and the injunction must be renewed usually every few days, otherwise it expires. Most often, a Mareva injunction is awarded on a ten-day temporary basis and then extended or denied at the actual hearing.
Given the fact that notifying the defendant about the presentation of a Mareva application could cause them to immediately dissipate assets before its adjudication, applications for Mareva injunctions are often heard ex parte, i.e. without the defendant being present.
When Can a Freezing Assets Order Be Granted?
For a Mareva injunction application to be granted, a plaintiff must establish a strong prima facie case that the defendant is involved in fraudulent financial activities that endanger the plaintiff’s right to collect on their claims. It is used in many fields of law, particularly in business-related litigation in instances of commercial fraud.
It also has to be established that the defendant owns assets in the jurisdiction of the court or assets that are situated elsewhere, but the court has legal jurisdiction over those assets. In addition, the existence of real risk assets will be sold before the judgment obtained has to be proven.
In the context of matrimonial law, a Mareva injunction is used to avoid the hiding and dissipation of assets which would inevitably be required to establish the partitionable value of the family patrimony, the matrimonial regime, and any alimentary obligations. It is often used where a spouse has deliberately made assets disappear by placing them in the names of friends, associates, corporate entities, or in extraterritorial jurisdictions in bad-faith transactions designed to frustrate their spouse’s matrimonial claims and make themselves “judgment-proof”.
Given the extraordinary power of a Mareva injunction, any plaintiff seeking one must make full and frank disclosure of all pertinent facts known to them in their application, otherwise, the Court may hold the applicant to pay costs should relevant concealed information that is prejudicial to the defendant come to light.
The Court’s Criteria for Granting Mareva Injunctions
Like any injunction, the plaintiff also has to meet the tests for an interlocutory judgment. The Court’s criteria for granting a Mareva injunction also include:
(1) Appearance of Right – The plaintiff must demonstrate that they have a clear and apparent right on the merits of the case. In matrimonial law, this would be the clear and apparent right a spouse has to a share of the family patrimony or a claim for alimentary support, which would be jeopardized without the defendant divulging and freezing the assets that the Mareva injunction targets;
(2) Irreparable Harm – The plaintiff must demonstrate that was the Mareva injunction to be dismissed by the Court, the Plaintiff would suffer irreparable harm, whether it be the result of not having a representative share of the family patrimony due to the depletion of assets or being unable to execute an alimentary judgment;
(3) Balance of Inconvenience – The plaintiff must demonstrate that the inconvenience caused to them would be less than that which may be caused to the defendant. For example, the order being sought should not be overly broad to the point that it may seriously hamper the defendant’s legitimate business operations or reasonable living expenses;
(4) Urgency – The Court will consider the urgency of the freezing order, such as whether the defendant will dissipate or hide assets should such an injunction not be issued. For example, the plaintiff might want to submit evidence that the defendant has made recent threats to dissipate assets.
How Can Family Lawyers Help?
The Mareva injunction thus provides a powerful remedy for spouses who have reason to fear that their ex will not provide full and complete financial disclosure and is involved in shady transactions designed to harm their rights. It helps ensure that the vulnerable spouse actually benefits from their fair share of the assets accumulated during the marriage, as required by law.
In all cases, the party seeking the Injunction order must be forthcoming and frank about the relevant facts, whether they favor or oppose their legal position.
Ontario courts have found that the Mareva order is limited to circumstances if a real risk of removal or dissipation of assets by the defendant exists to avoid the consequences of a judgment. The court has jurisdiction case to grant an interlocutory injunction to prevent the defendant from disposing of those assets.
If all legal proceedings regarding such an order seem too complicated to understand, family lawyers at the law firm Goldwater, Dubé may be able to help. Contact us today!
Me Shannen Valente-Kent joined our firm in September 2021 as one of our junior associates after successfully completing the École du Barreau du Québec.