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Mareva Injunctions in Alberta

A Mareva Injunction is a form of remedy which allows a plaintiff to stop a Defendant from dissipating assets before trial. The courts are cautious in granting these remedies, but they may be more common as companies shut down within Alberta.

The Alberta Court of Appeal discussed Mareva Injunctions in an employment situation in Cho v. Twin Cities Power-Canada, 2012 ABCA 47. The Court said at paragraph 5:

...The tests for a Mareva injunction are not new. There are a number of procedural requirements, and the usual tripartite test for ordinary injunctions probably also must be satisfied. On the merits, the plaintiff must show a strong prima facie case for his suit, and also that there is a real risk that the respondent will remove assets from the jurisdiction, or dissipate them, in order to avoid execution (enforcement) under a judgment.

There is another remedy that is available, which is often sought together with the Mareva Injunction. The court said at paragraph 16:

Section 17 of the Civil Enforcement Act gives a test somewhat different from that for a Mareva injunction. The first tests are fairly easy: a reasonable likelihood that the plaintiff will establish the claim in a statement of claim which he has issued. But a mere suspicion is not enough: Osman Auction v Belland (#1), 1998 ABQB 964, 235 AR 180 (para 44). [17] The other part of the test is tougher. It requires dealing with (or likely intent to deal with) the defendant’s property in both of two ways. The first requirement is other than meeting reasonable business or living expenses; the second requirement is a manner likely seriously to hinder the plaintiff in enforcing a judgment against the defendant. The appellant plaintiff cannot meet that test because the dealings and intent here plainly conform to the usual course of business. Any spending of money potentially creates some hindrance to later execution; but it is not serious hindrance here, which is what the Act requires. Furthermore, in our view the word “expenses” must be read broadly, not technically. Legitimate investments, dividends, deposits, security, or loans in a sense are not strictly “expenses”, but are typically useful and even necessary in most business.

Mareva Injunctions were discussed extensively by the Ontario Courts in Kingston et al v. GMA Cover Corp. et al, 2012 ONSC 5019 where the court said at paragraph 61:

The availability of a Mareva injunction was first canvassed extensively in Ontario by the Court of Appeal in Chitel, supra. At p. 527, MacKinnon A.C.J.O. referred to the judgment of Lord Denning M.R. in Third Chandris Shipping Corp. et al. v. Unimarine S.A., [1979] 2 All E.R. 972 (C.A.). At p. 528, he reproduced the guidelines articulated by Lord Denning in Third Chandris, as follows:

(i) The plaintiff should make full and frank disclosure of all matters in his knowledge which are material for the judge to know. . . . (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 made against it by the defendant. (iii) The plaintiff should give some grounds for believing that the defendants have assets here. . . . (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. . . . (v) The plaintiffs must . . . give an undertaking in damages.

The Court also looked at the issue of whether the intention of the responding party matters in the analysis, saying at 74:

It is unnecessary for me to come down on one side or the other in view of the conclusion I have reached on the evidence, but I must say I find it difficult to understand why it would be necessary to establish the defendant’s motivation as an overriding consideration.

If you believe you require legal advice in a matter related to this, please feel free to contact us.

The information contained in this article is not legal advice. No solicitor client relationship is formed through this article. The reader is encouraged to retain counsel for advice in these matters.

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