Archive for the ‘Mareva’ Category

Ontario Court of Appeal Restores Contempt Finding Against Solicitor Who Breached Mareva Order

September 3, 2013

Here’s an interesting decision of the Court of Appeal for Ontario dealing with a solictor’s breach of what is commonly regarded as a “nuclear weapon” in the trial lawyer’s arsenal: the Mareva injunction order. In this case, the solicitor was unable to avoid the fallout from the blast radius.

Briefly, in Sabourin and Sun Group of Companies v. Laiken, 2013 ONCA 530 (Ont. C.A.), the respondent, Peter Carey, a solicitor, represented Peter Sabourin, a financial advisor who was subject to a Mareva injunction obtained by the appellant, Judith Laiken.  Sabourin sent Carey a cheque for $500,000 without instructions. Carey then deposited the cheque in his trust account. Sabourin later instructed Carey to use the funds to settle with an unrelated group of creditors represented by Bill Brown. Carey refused to follow Sabourin’s instructions which would violate the Mareva injunction.  Sabourin then instructed Carey to attempt to settle with Laiken. Carey’s settlement efforts failed. When Carey advised Sabourin that it was not possible to settle Laiken’s claim, Sabourin then instructed Carey to return the funds to him. Carey deducted $60,000 for his legal fees and returned the remaining funds to his client.  (more…)

The Gloaming of International Human Rights in Canada?

November 1, 2012

I prevously blogged about  Bill C-10 (short title: Safe Streets and Communities Act), an omnibus criminal law statute, which received Royal Assent on March 13, 2012 —which includes the “Justice for Victims of Terrorism Act and to amend the State Immunity Act” [“JVTA”] —creating a specific cause of action for victims of terrorism, enabling them to sue for loss or damage as a result of actions punishable under the Criminal Code. This part also amends the State Immunity Act (“SIA”) lifting state immunity of foreign states that sponsor terrorism or terrorist activity, but does nothing to improve the prospects for access to justice to Canadian victims of torture and war crimes.

Recently, the Quebec Court of Appeal in Islamic Republic of Iran c. Hashemi, 2012 QCCA 1449 (CanLII) upheld state immunity for torture of Canadian citizens abroad. See my previous post here.

Today, the Supreme Court of Canada denied an application for leave to appeal in Association canadienne contre l’impunité v. Anvil Mining Limited (Québec C.A., January 24, 2012) (34733). The Canadian Centre for International Justice (CCIJ) issued a press release describing the Court’s decision denying leave as the “end of any judicial relief in Canada for victims of the Kilwa massacre”. The CCIJ adds: (more…)

Chief Justice Spigelman, “Freezing Orders in International Commercial Litigation”

April 12, 2011
James Spigelman

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The Honourable James Jacob Spigelman, AC (Supreme Court of New South Wales), has published, “Freezing Orders in International Commercial Litigation“, Singapore Academy of Law Journal, Vol. 22, pp. 490-512, 2010.  The abstract reads:

Changes in the economy, in technology and in public policy, notably the easing of exchange controls, have transformed the ease and speed with which assets, particularly liquid assets and records, can be moved and hidden in fulfillment of acts of fraud and corruption. The development of freezing orders (Mareva orders) and search orders (Anton Pillar orders) by common law judges was a practical adaptation to this new challenge, drawing on similar concepts in the civil law.

One application of these orders continues to cause difficulty: the extension of such orders beyond the territorial jurisdiction of the court requested to provide a remedy. This is one of a number of contexts in which cross border issues require new forms of judicial assistance and co-operation. This paper considers the difficulty that has arisen in the making of orders in aid of foreign judicial and arbitral proceedings with respect to assets within the jurisdiction. The paper describes the various ways in which major jurisdictions have addressed this issue, and concludes that an inherent power to make an order in aid of foreign proceedings should be recognised as a common law principle by reason of the significance of reciprocity in the international law of nations. This is one step in reducing the transaction costs that impede mutually beneficial exchange by international trade and investment.

Not an April Fool’s Joke: Bogus Court Order Enforcing Arbitrator’s Mareva Injunction Overturned

April 1, 2011

The Ontario court decision in Farah v. Sauvageau Holdings Inc., 2011 ONSC 1819 (CanLII) per Perell, J. has the makings of a great April Fool’s Day joke. The lesson is don’t believe everything you read,  including what appears to be a court order.

The motion involved an application to set aside a Mareva injunction granted by an arbitrator in arbitral proceedings. The respondents brought a motion to recuse the arbitrator and to set aside a Mareva injunction granted purportedly pursuant to the Arbitration Act, 1991, S.O. 1991, c. A.17.

The problem? Arbitrators do not have the power to grant injunctive relief against non-signatories to the arbitration agreement. As Perell, J. observes

[63]   In my opinion, there is nothing in the Arbitration Act, 1991 that empowers arbitrators to grant Mareva injunctions or for that matter to appoint receivers, grant Anton Pillar orders, or grant Norwich orders. Granting an interlocutory injunction that requires financial institutions to prevent the removal of monies and assets and to disclose and deliver up records and report to a litigant, is not an order in which the arbitrator is ruling on the scope of the arbitration agreement or on the scope of his or her jurisdiction; it is an order in which the arbitrator purports to enjoin or direct the conduct of strangers to the agreement to arbitrate who are not bound by the jurisdiction of the arbitral tribunal.

[73]   None of Sauvageau Holdings’ arguments are adequate to prove that arbitrators have the same jurisdiction as judges of the Superior Court. I conclude that while Mr. Montgomery had the jurisdiction to make an injunctive order or arbitral award against Mr. Farah and Ms. Mosharbash as parties to the agreement to arbitrate, he did not have the jurisdiction to grant a Mareva injunction effecting persons who did not sign the agreement to arbitrate.

Apparently, Sauvageau Holdings filed the interim Mareva injunction in the Superior Court in Newmarket without notice to either Farah and third party affected by the arbitrator’s order and had the court staff issue and enter the order. Justice Perell held that this was “improper” and noted that to enforce an arbitral award (including an interim order), a party must make an application under s. 50 of the Arbitrations Act, 1991 on notice to all affected parties.

On December 5, 2010, Sauvageau Holdings served new statements of claim (alleging fraudulent conspiracy and fraudulent conveyances between Farah and Mosharabash) and a copy of the arbitral-Mareva injunction order.

On December 15, 2010, Farah and Mosharbash brought a motion to have the arbitrator, The Honorable Mr. Montgomery recuse himself and for an order setting aside the Mareva injunction. At the hearing on December 15, 2010, they presented very little evidence to rebut the material filed by Sauvageau Holdings and rather relied on a short affidavit from a law clerk employed by their lawyer. The arbitrator dismissed the motion and continued the Mareva injunction. Sauvageau Holdings then sent copies of what Justice Perell describes as a “bogus Order of the Superior Court” to major banks, other financial institutions, Farah’s employer and his real estate agent, and Mosharbash’s father, further noting:

[43]  For present purposes, I need not go into the details, but the recipients responded to the bogus Mareva injunction order as if the order was a lawful order of the Superior Court. Mr. Farah and Ms. Mosharbash have been unable to deposit cheques, including Mr. Farah’s paycheck and the family’s child tax benefit cheques. Mr. Farah was temporarily dismissed from his employment as a restaurant cook because his employer was disturbed by having to deal with the bogus order.

In the end, the court dismissed the motion to disqualify the arbitrator without costs and the applicant’s motion to enforce the Mareva injunction pursuant to s. 50 of the Arbitrations Act, 1991 without costs. Perell, J. did grant judgment to Sauvageau Holdings in the fraudulent conveyance action without costs and granted a Mareva injunction against Farah without costs, but dismissed the motion for a Mareva injunction Mosharbash with the matter of costs to be determined.

Does any one else think that an arbitrator exceeding his or her jurisdiction should have been argued as an alternative ground for recusal? (h/t Igor Ellyn, Q.C. via Twitter: @EllenLawLLP )

Ontario court upholds World-Wide Mareva Injunction in Obégi v. Kilani

March 31, 2011

The recent decision of the Ontario Superior Court of Justice in Obégi v. Kilani, 2011 ONSC 1636 (CanLII) deals with the issue of an Ontario court’s jurisdiction to continue a worldwide Mareva injunction (also known as a “worldwide freezing order”)  in support of foreign proceedings. (more…)


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