Mareva Injunctions

*Interlocutory injunction restraining D from dealing with Ds assets prior to trial *Contrast prior rule *No execution prior to judgment
*Rule from Lister v Stubbs

Mareva Injunction

*Preserves assets so that award in favour of P may be satisfied

*Distinct from interlocutory injunction restraining D from dealing with assets that are the subject of dispute
*Such injunctions were well established prior to The Mareva

Mareva Injunction Form

*The remedy is an order to preserve the assets in question *Does not affect priorities *Enforceable by contempt
*Therefore normally considered in personam *Does not normally permit P to take possession of the assets

*It may and commonly does have effect against third parties *Very commonly served on banks to freeze accounts belonging to D *The defendants, their agents or servants *Where a person claims monetary relief, the court may grant an interlocutory injunction to restrain any person from disposing of, or removing from New Brunswick, assets within New Brunswick of the person against whom the claim is made.
*NB 40.03 *The Mareva

Third Party Effect

Third Party Effect

*Court orders only bind those to whom they are addressed. However, it is a serious contempt of court, punishable as such, for anyone to interfere with or impede the administration of justice. This occurs if someone, knowing of the terms of the court order, assists in the breach of that order by the person to whom it is addressed.
*Derby v Weldon CA

Third Party Effect

*Can seriously impede functioning of Ds legitimate business *In Aetna v Feigelman the SCC indicated that Aetna had adequate assets in Ont and Quebec and that a Manitoba judgment could be enforced there *Why then did Feigelman sue to the SCC on a Mareva injunction? Third Chandris Shipping Corp. v Unimarine S.A. [1979] CA, Lord Denning *(i) The plaintiff should make full and frank disclosure of all matters in his knowledge which are material for the judge to know *Recognizes ex parte nature of application *Injunction will be set aside for failure to make full disclosure *Often with solicitor and client costs *(ii) 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

Danger of Mareva Injunction

Third Chandris Guidelines

Full Disclosure

Particulars

made against it by the defendant. *The order will normally be limited to the amount in dispute
*E.g. freeze assets to the amount of $50,000

*(iii) The plaintiff should give some grounds for believing that the defendants have assets here. *On the principle that equity does not act in vain. *But note trend towards worldwide Mareva injunction, so long as court has jurisdiction over the dispute *Traditionally the courts would not entertain an application for a Mareva injunction unless the court had jurisdiction over the underlying substantive dispute *But there is now some indication of willingness to issue Mareva injunction effective in Canada in aid of a foreign judgment *(iv) 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. *This element is extremely important in safeguarding Ds interests *(iv) 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. *Notwithstanding Aetna v Feigelman, domestic Mareva injunctions are possible *Though difficult to obtain *Note that D need not be non-resident, so long as assets are mobile and serious risk of removal

Assets in the Jurisdiction

Jurisdiction

Risk of Dissipation of Assets

Risk of Dissipation of Assets

Removal from where?

*Aetna v Feigelman does not stand for the proposition that a Mareva injunction will never issue to restrain movement of assets within the jurisdiction (domestic Mareva injunction). *The question is whether there is a serious risk the judgment will go unsatisfied. *Aetna v Feigelman means that heavy weight must be given the fact of reciprocal enforcement of judgments in assessing this risk. *The mere fact of likelihood of removal from one province to another is unlikely to be sufficient *But cf. case granting domestic Mareva because of small amount at stake *Conversely, likelihood of removal to foreign jurisdiction is not always sufficient
*If Canada has reciprocal enforcement agreement with that other country *Esp. when removal is in the ordinary course of business
*Heavy eqpt no longer neeed in UK *Removed to Germany in ordinary course *No injunction

Removal from where?

*Esp. in ordinary course of business

Removal from where?

*See Rasu Maritima 1978 UK CA

*Whether there is a serious risk of dissipation of removal is a question on the facts

*Nature of Ds business is relevant *But there are some foreign companies whose structure invites comment. We often see in this court a corporation which is registered in a country where the company law is so loose that nothing is known about it, where it does no work and has no officers and no assets. Nothing can be found out about the

Risk of Dissipation of Assets Risk of Dissipation of Assets

membership, or its control, or its assets, or the charges on them. Judgment cannot be enforced against it. There is no reciprocal enforcement of judgments.
*Third Chandris, per Lord Denning

*It is nothing more than a name grasped from the air, as elusive as the Cheshire cat. In such cases the very fact of incorporation there gives some ground for believing there is a risk that, if judgment or an award is obtained, it may go unsatisfied. Such registration of such companies may carry many advantages to the individuals who control them, but they may suffer the disadvantage of having a Mareva injunction granted against them. The giving of security for a debt is a small price to pay for the convenience of such a registration.
*Third Chandris, per Lord Denning

Risk of Dissipation of Assets

*Risk of insolvency is not enough

Risk of Dissipation of Assets

*D will not be restrained from acting in the ordinary course of business

*Legitimate payment to creditors outside of the jurisdiction is not sufficient

*P cannot use Mareva injunction to prefer itself over other creditors

*(v) The plaintiffs must, of course, give an undertaking in damages, in case this should be supported by a bond or security: and the injunction only granted on it being given, or undertaken to be given *As will all interlocutory injunctions *Injunction will be lifted if D can provide bank guarantee or other security to ensure that any judgment will be satisfied *Does the option of obtaining a bank guarantee imply that Mareva injunctions should be more readily granted?

Undertaking

Lifting the injunction