What Is A Mareva Injunction?

A Mareva injunction is a court order that freezes a person’s or company’s assets to prevent them from hiding or moving money before a judgment is made. It’s named after a famous 1975 English court case and is one of the most powerful tools available in civil litigation.

When you’re suing someone and worry they might transfer their property, empty their bank accounts, or move assets out of the country, a Mareva injunction stops them in their tracks. The court essentially locks down their assets until your case is resolved.

Courts don’t grant these orders easily. You must meet strict requirements.

You Have a Strong Case: You need to show there’s a serious issue to be tried and a good chance you’ll win. The court won’t freeze someone’s assets if your lawsuit appears weak or frivolous.

Risk of Asset Dissipation: You must prove there’s a real risk the defendant will move, hide, sell, or otherwise dispose of assets to avoid paying a judgment. You need solid evidence of this risk.

Assets Are Available: The defendant must have assets within the court’s jurisdiction that can actually be frozen. There’s no point freezing assets if the person has nothing or if everything is already beyond the court’s reach.

You’ll Suffer Harm Without It: You need to demonstrate that without the injunction, you won’t be able to collect on your judgment if you win. The potential harm to you must be real and significant.

To prove the risk of asset dissipation, courts consider various factors. Has the defendant moved money recently? Are they transferring property to family members or selling assets quickly? Do they have a history of avoiding creditors or judgments?

Evidence might include bank records showing unusual transfers, property transactions that seem designed to hide assets, threats to move money, or past behavior suggesting the defendant won’t honor a judgment.

A Mareva injunction can freeze bank accounts, real estate, business assets, investment accounts, vehicles, and other valuable property. The order typically freezes assets up to the amount you’re claiming in your lawsuit, plus costs.

The injunction doesn’t give you ownership or control of the assets: it simply prevents the defendant from dealing with them. The assets remain theirs, but they can’t sell, transfer, or hide them.

Courts recognize that people need money to live. Mareva injunctions usually include exceptions allowing the defendant to use frozen funds for reasonable living expenses and legal fees. The court sets limits on these amounts to prevent abuse.

The defendant can typically pay their mortgage, buy groceries, and cover normal household costs. What they can’t do is make lavish purchases or move large sums around.

Here’s an important catch: when you request a Mareva injunction, you must promise to compensate the defendant for any losses they suffer if it turns out the injunction was wrongly granted. This is called an undertaking as to damages.

If you lose your lawsuit, the defendant can claim against your undertaking for losses caused by the frozen assets. This might include lost business opportunities, investment losses, or other damages resulting from the freeze.

This requirement ensures people don’t seek Mareva injunctions frivolously. You’re taking financial risk by asking for this powerful remedy.

The process typically starts with an urgent motion to court. Often, these applications are made without notice to the defendant: you go to court without telling them first. This prevents them from moving assets the moment they learn you’re seeking to freeze them.

When applying without notice, you have an extra duty to be completely honest with the court. You must disclose all relevant facts, even those that hurt your case. Courts take this duty seriously and will dissolve injunctions obtained through incomplete or misleading information.

If the court grants the injunction, the defendant then has the opportunity to challenge it. They can ask the court to set it aside or modify its terms.

Breaking a Mareva injunction is contempt of court, which can result in fines or even jail time. Courts take these violations seriously because they directly undermine the judicial process.

Third parties who help someone violate a Mareva injunction can also face consequences. Banks, lawyers, or anyone else who assists in moving frozen assets can be held in contempt.

Mareva injunctions can sometimes freeze assets in other countries if those countries will recognize and enforce the Canadian court order. This becomes more complex with international assets, but it’s possible in cases involving significant amounts or sophisticated asset-hiding schemes.

Related to Mareva injunctions are other asset-protection orders. Anton Piller orders allow you to enter premises to preserve evidence. Certificates of pending litigation register your claim against specific property. Each serves different purposes in protecting your rights during litigation.

If you’re concerned about collecting a potential judgment, speak with a litigation lawyer about whether a Mareva injunction is appropriate. They can assess the strength of your case, evaluate the risk of asset dissipation, and guide you through the application process. These orders require expertise and careful handling.

Contact us at 416.901.9984 or info@pintoshekib.ca.