June 24, 2014
In some cases it may be necessary for a plaintiff to seek an injunction from the court, in order to prevent another party from disposing of, encumbering or otherwise dealing with any of its assets during the course of litigation. This type of injunction is called a Mareva injunction.
The granting of any injunction by a court is an extraordinary remedy, and one that is not granted lightly. When seeking a Mareva injunction the plaintiff/moving party is required to do the following:
(a) make full and frank disclosure of all material facts within its knowledge;
(b) provide particulars of the claim, stating the grounds of the claim and the amount thereof, and the points that could be fairly made against it by the defendant;
(c) give some grounds for believing there are assets in the jurisdiction;
(d) give some grounds for believing there is a real risk the assets will be removed from the jurisdiction, disposed of within the jurisdiction or otherwise dissipated so the moving party will be unable to satisfy a judgment awarded to him/her; and
(e) provide an undertaking as to damages.
It is important to note that a motion for a Mareva injunction is made without notice to the defendant. Accordingly, it is vital the plaintiff make full and frank disclosure to the court of its claim, as well as any defences available to the defendant. Should a plaintiff be found later to have failed in its duty to provide full and frank disclosure, the court will likely set aside the previously granted Mareva injunction.
In order to succeed, the court will need to be persuaded the defendant has or is removing assets from the jurisdiction, that there is a real risk of the defendant removing assets from the jurisdiction, or that assets are being dissipated in a manner which would render the possibility of future tracing of the assets remote, if not impossible at law. The mere possibility of the removal of assets is not sufficient.
It is a real concern for plaintiffs that a defendant will dispose of assets in an attempt to make itself “judgment proof”, prior to trial. Accordingly, litigants should advise their lawyers if they receive any information that a defendant may be taking steps to dispose of assets, as discussed above, so appropriate steps can be taken to secure those assets in order to satisfy a potential judgment.