Today’s blog discusses a fine point of law regarding the required evidence in cases involving allegations of fraud before a Mareva injunction (or, in common parlance, a freezing order) can be granted.
The legal prerequisites of a Mareva injunction are well-established:
a) The plaintiff must make full and frank disclosure of all material matters within his or her knowledge.
b) The plaintiff must give particulars of the claim against the defendant.
c) The plaintiff must give grounds for believing that the defendant has assets in the jurisdiction.
d) The plaintiff must give grounds for believing that there is a real risk of the assets being removed from the jurisdiction, disposed of within the jurisdiction, or otherwise dealt with so that the plaintiff will be unable to satisfy a judgment awarded.
e) The plaintiff must give an undertaking as to damages.
In the recently published case Sibley & Associates LP v. Ross,* the plaintiff alleged that the defendant, a former employee in the accounting department, had been making periodic unauthorized payments to his mother amounting to at least $310,160.32.
The plaintiff satisfied all criteria above but one. There was no evidence of a real risk that the defendant might dissipate his assets.
The Ontario Superior Court was thus confronted with the question of whether an injunction may be issued in absence of clear evidence that the defendant will likely dissipate his assets where there is allegation of fraud.
Unfortunately, the existing jurisprudence isn’t clear on the point.
One school of jurists takes the position that there should be a “fraud exception.” These jurists believe that if there is allegation of fraud, a Mareva injunction ought to be issued regardless of whether there is a risk that the assets will be dissipated.+
Another school of jurists disagrees, insisting that a Mareva injunction is akin to “execution before judgment” (a matter to be taken very seriously).# Therefore, these jurists hold, such an injunction should not be granted unless all five elements above are satisfied, except under very limited circumstances, regardless of whether fraud is alleged.^
It appeared to the court that both schools have had their own supporters in decisions on this matter. However, at present, there is no definitive answer as to whether a “fraud exception” categorically exists in contemporary Canadian law.
The court declined to carve out an “exception” for fraud. Rather, the judge adopted a programmatic approach, stating that the risk of removal or dissipation can be established not only from direct evidence, but also by inference from surrounding circumstances, including the circumstances of the fraud itself.
In the end, the judge concluded that the evidence of fraud was so strong that, coupled with the surrounding circumstances, it gave rise to an inference of a real risk of dissipation or removal of assets.
*[2011] ONSC 2951; (2011) 106 O.R. (3d) 494
+see e.g. Campbell v. Campbell [1881] O.J. No. 201 (Ct. Ch.); Mills v. Petrovic (1980), 30 O.R. (2d) 238 (H.C.J.)
#Lister & Co. v. Stubbs (1890), 45 Ch. D. 1
^see e.g. Cital v. Rothbart (1982), 39 O.R. (2d) 513
This blog is provided for your reference only and is not a substitute for the law. The law may have changed since the publication of this article. This article is not legal advice and should not be regarded as such.
Annulment of Marriages in Ontario
Annulment of marriage in law is quite rare in Ontario. As opposed to a divorce, which dissolves a valid marriage, an annulment has the same effect as the marriage’s having never taken place.
Annulment of marriages finds its statutory authority from the Annulment of Marriages Act (Ontario).* The statute is short, containing only 3 paragraphs. It merely states that the part of the law of England that pertains to the annulment of marriage on July 15, 1870, is continued in Ontario in so far as it has not been repealed or changed.
Needless to say, the content of the statute doesn’t provide much insight to readers (lawyers and judges alike) who are not historians of the state of British law on July 15, 1870. Rather, lawyers and judges rely on case law to decide whether a particular marriage should be annulled.
In the recent decision Sahibalzubaidi v. Bahjat of the Ontario Superior Court, the judge heard an application brought by the wife seeking to have the marriage annulled. She alleged non-completion of the ceremony, fraud, and non-consummation of marriage.^
The marriage was to take place in Malaysia according to the Islamic tradition. They had a civil ceremony and the marriage was registered with the local authority. However, the wife felt still unmarried until the religious ceremonies were performed and would not engage in sexual intercourse until then.
Shortly after the civil marriage, the wife sponsored the husband for immigration to Canada.
Upon his arrival in Canada, the husband turned out to be abusive and threatening. The religious ceremonies were never performed, and hence the wife never consummated the marriage because, in her mind, she had not been properly married.
In deciding whether to grant the annulment, the presiding judge considered at length the case Torfehnejad v. Salimi, affirmed by the Court of Appeal.+
The judge dismissed the part of the application based on non-completion of ceremony and fraud, citing that there was insufficient evidence to vitiate the marriage.
In particular, the judge noted that to allow a marriage to be annulled based on fraud, the alleged fraud must have induced an operative mistake to the marriage, such as one’s identity.# Mere misrepresentation of one’s character isn’t enough. (I suspect many would rush to apply for annulment if such a ground were available.)
Although the first two bases of the application were dismissed for want of evidence, the judge accepted the wife’s evidence that the marriage was never consummated. Following an Alberta decision of Jomha v. Jomha, the court held that
an annulment may be granted where the marriage is not consummated by reasons of an invincible repugnance or impossibility in the mind of at least one of the parties, akin to a psychological abhorrence, to engage in sexual intercourse with the marriage partner.&
Given that the wife’s strongly held religious beliefs prevented her from consummating the marriage prior to the religious ceremonies that never happened, the court granted the annulment on that basis.
*R.S.C. 1970 c. A-14
^ (2011), 107 O.R. (3d) 53; 2011 ONSC 4075
+[2006] O.J. No. 4633 (Ont. S.C.J.), aff’d [2008] O.J. No. 3165, 2008 ONCA 583
# Iantsis v. Papatheodorou, [1971] 1 O.R. 245, O.J. No. 1642 (C.A.)
& [2010] A.J. No. 219, 2010 ABQB 135
This blog is provided for your reference only and is not a substitute for the law. The law may have changed since the publication of this article. This article is not legal advice and should not be regarded as such.