Mareva — more than a cigar!

It may be best known as the most popular Cuban cigar size, but the Mareva (aka Petit Corona) is also a form of injunction that may help to ensure a defendant's assets do not disappear in a puff of smoke when it comes time to collect on a judgment. The Mareva Order is an effective aid to ensure that justice is not thwarted, although it has been has been described, along with the Anton Piller, as "draconian." This common law assistance was first recognized as part of the inherent jurisdiction of the court by Lord Denning in 1975, and takes its name from Mareva Compania Naviera S.A. v. International Bulkcarriers Ltd., [1975] 2 Lloyd's Rep. 509 (C.A.). In the UK, it has recently been renamed as a "freezing injunction."

Marevas were formally endorsed in Canada in Chitel v. V. Rothbart (1982), 39 O.R. (2d) 513 (C.A.). The Supreme Court of Canada blessed them in Aetna Financial Services Ltd. v. Feigelman, [1985] 1 S.C.R. 2, but cautioned that care should be exercised to avoid having them become a form of "litigious blackmail." Interestingly, the Supreme Court of the United States ruled against recognizing such orders, given that they were not part of the law of equity at the time of US Independence (see the 1998 case, Grupo Mexicano de Desarrollo, S.A. v. Alliance Bond Fund, Inc., 527 U.S. 308); however, this rejection has been ameliorated in certain states by legislation.

The object of a Mareva injunction is to prevent assets from being dissipated or concealed within the domestic jurisdiction or to prevent their disappearance outside the jurisdiction. Transfers of assets within Canada, even across provincial boundaries, are not likely to warrant such an order absent unusual circumstances (see Feigelman).

Plaintiffs routinely seek a Mareva ex parte; in these cases, it is necessary to provide in the order that the injunction is only valid for a maximum of 10 days unless thereafter extended (Ontario Rules of Civil Procedure, R. 40.02). Because the defendant has no notice of the proceedings, it is important that the plaintiff make full and frank disclosure of all matters of which the plaintiff has knowledge that are material for the court to know. It is therefore important that counsel at such a hearing canvass everything that can be reasonably and objectively determined to possibly have been advanced by the defendant had notice been given. Failure to be forthcoming may expose the plaintiff to being obligated to pay special or full costs (see C.M.S. v. M.R.J.S. , 2009 YKSC 49 (CanLII)), and to having the injunction dissolved.

As discussed in my analysis of Anton Piller (AP) orders in Volume 2, Issue 1 of this publication, it would seem to me that one of the AP order requirements is equally applicable to a Mareva:

The normal requirement is for the plaintiff to give an undertaking to pay damages in the event the AP Order turns out to be wrongfully executed or unwarranted, keeping in mind the ex parte requirement of full and frank disclosure includes...