Freezing Assets and Searching Premises in Civil Disputes

Mareva and Anton Piller orders are two extraordinary forms of civil injunctive relief that may be granted prior to a full trial. Mareva orders freeze a party’s assets to ensure that the respondent is not able to remove the assets from the jurisdiction or otherwise make themselves judgment proof prior to a determination of the action. Anton Piller orders allow the plaintiff to physically enter a defendant’s premises to secure evidence before it disappears. Often, these orders are obtained without notice. To obtain these types of relief, the threshold to meet is high because the consequences are significant. Notwithstanding the extraordinary nature of these orders, they can be powerful and important tools to ensure your client’s interests are protected.

MAREVA INJUNCTION

What is it?

A Mareva injunction is a type of interim or interlocutory order that may be granted to the moving party to freeze the assets of the responding party, the extent and terms of which can be specified by the court. This type of order originated in England, but is known from the 1975 case of Mareva Compania Naviera SA v. International Bulkcarriers SA.¹ In the Mareva decision, the plaintiffs were shipowners who entered into an agreement with the defendants, who were charterers. The charterers stopped paying the shipowners contrary to the agreement, so the plaintiffs sued for breach of contract. The plaintiffs believed that the defendants were going to expatriate their money from London, so they applied to the court for an injunction against the defendants to stop them from doing so, which was granted. Upon appeal, the Court of Appeal continued the injunction on the basis that the plaintiffs had a strong case, the injunction was needed to preserve the assets to satisfy a potential judgment, and it was just and right to continue it.

The Legal Test for a Mareva Injunction

The test for a Mareva injunction goes beyond the test for granting a regular interlocutory injunction.² The Court of Appeal for Ontario set out the test for obtaining a Mareva injunction in the 1982 leading case of Chitel et al. v. Rothbart et al.³ The recent case of Taylor v. Freeman⁴ reiterated the test, which requires the moving party to establish the following:

1. A strong prima facie case;
2. That the defendant has assets in the jurisdiction;
3. That there is a real risk that the defendant will remove his assets from the jurisdiction or dissipate those assets to avoid judgment;
4. That the moving party will suffer irreparable harm if the injunction is not granted;
5. That the balance of convenience favours granting the injunction; and
6. The moving party gives an undertaking as to damages.⁵

Further, if the motion to obtain the injunction is brought ex-parte (that is, without notice), the moving party is obligated to make full and fair disclosure to the court. Failure to comply with this obligation is enough to set aside the injunction.⁶

The injunction can be wide ranging. It can extend to unnamed affiliates of each named Mareva defendant, as well as all persons with notice of the Mareva order, and to the assets each Mareva defendant “has the power, directly or indirectly, to dispose of or deal with” as if they were their own, whether or not they are in the Mareva defendant’s name.⁷

ANTON PILLER ORDERS

What are they?

Anton Piller orders permit a party to conduct an inspection of the other party’s offices and computers and seize evidence without prior warning (also known as a “civil search order”). These are not akin to criminal warrants, as they do not authorize forcible entry, but expose the target to contempt proceedings unless permission to enter is given.⁸

These civil search orders are known from the leading English case of Anton Piller KG v. Manufacturing Processes Ltd.⁹ In that case, the plaintiffs were concerned that the defendants were intending to dispose of evidence that formed a substantial part of the plaintiffs’ case. The Court of Appeal granted the search order on the basis that the plaintiffs had a strong prima facie case, actual or potential damage to them was very serious, and there was clear evidence that the defendants possessed vital material which they might destroy or dispose of so as to defeat the ends of justice before any application between the parties could be made.¹⁰

The Legal Test for an Anton Piller Order

The leading case in Ontario concerning Anton Piller orders is Celanese Canada Inc. v. Murray Demolition Corp.¹¹ In this decision, the Supreme Court of Canada listed the following four essential requirements in order to obtain an Anton Piller order:

1. The plaintiff must demonstrate a strong prima facie case;
2. The damage to the plaintiff of the defendant’s alleged misconduct, potential or actual, must be very serious;
3. There must be convincing evidence that the defendant has in its possession incriminating documents or things; and
4. It must be shown that there is a real possibility that the defendant may destroy such material before the discovery process can do its work.¹²

These types of orders are also extraordinary in that they are generally granted ex-parte¹³ on the basis of urgency and to avoid giving the respondent an opportunity to destroy the information that the order is intended to protect. However, such orders are time-limited.¹⁴

Courts have crystalized basic protections for the rights of the parties subject to the Anton Piller order. Some notable protections are as follows:

• Anton Piller orders require the appointment of an independent supervising solicitor–that is, an officer of the court–who is charged with ensuring that the execution of the order is undertaken as carefully as possible and with due consideration for the rights and interests of all involved;¹⁵
• The plaintiffs must provide security to pay damages in the event the order is determined to be unwarranted or wrongfully executed;¹⁶
• The scope of the order should be limited to what is necessary and clearly covered by the terms of the order.¹⁷ The order should also contain a limited use clause with regards to the seized items,¹⁸ that the defendant is entitled to return to court on short notice to discharge the order or vary the amount of security,¹⁹ and that the seized items should be returned to the defendants or their lawyers as soon as practicable;²⁰
• The defendants have the right to have the search conducted during normal business hours²¹ and be present (or have a responsible employee of the defendant be present) during the search;²²
• The defendant has the right to consult counsel within a reasonable time prior to permitting entry to the premises.²³

The above-noted guidelines are meant to preserve the rights of both parties while also protecting the responding party from misfeasance as a result of the order.

CONCLUSION

Mareva injunctions and Anton Piller orders are powerful, extraordinary remedies that are available to litigants in Ontario, designed to stop the dissipation of assets and the destruction of evidence before the court adjudicates the substance of the dispute. Because these orders are typically obtained ex-parte and impose serious restrictions on the defendants, courts require a strong evidentiary basis for granting these types of relief. While rare and exceptional, these orders can be critical tools for protecting your opportunity to present your full case in court and ensuring justice is done. Properly obtained and executed, Mareva injunctions and Anton Piller orders can preserve assets and evidence, safeguard your legal position, and prevent irreparable harm in litigation.