Mareva orders, also known as freezing orders, may be granted when there is a risk that a defendant might move its assets out of reach of the court’s jurisdiction. Mareva orders can freeze assets owned directly or indirectly by a defendant. Oftentimes a defendant subject to a freezing order has other creditors seeking repayment. Can a creditor enforce its claim against the frozen assets? Yes, but the creditor must come to the court with clean hands and should not make loans to the defendant if it has notice of the order. In Buduchnist Credit Union Limited v 2321197 Ontario Inc, 2024 ONCA 57, t ..read more

In a decision released in 2023, Justice Vermette of the Ontario Superior Court rejected an application to set aside an arbitration award on procedural fairness and jurisdictional grounds. This decision clarified when Ontario’s International Commercial Arbitration Act (the “ICAA“) applies and confirmed that arbitration awards may only be set aside by courts on narrow grounds. Background A group of accredited investors who had invested funds in EDE Capital—an investment company—brought a claim to arbitration on the basis of misrepresentation as to the use of these funds. EDE Capital had initiall ..read more

In Ontario, as a general rule, partial indemnity, which ranges from approximately 40-60% of the actual costs incurred by a party, is awarded to the successful litigant. Full indemnity, which comprises 100% of the costs incurred, is granted only in exceptional and rare circumstances. An order for full indemnity is even more unusual if the action has been discontinued.  However, in 781526 Ontario Inc. et al v Elliott Gerstein et al, 2023 ONSC 4313 the Ontario Superior Court of Justice found that on an ex parte motion without notice (1) the failure to make full and fair disclosure of materia ..read more

Can individuals take steps to make themselves ‘creditor proof’ against future creditors, even when there is no such creditor at the time? If there are sufficient “badges of fraud” present, the answer may be no. Section 2 of the Fraudulent Conveyances Act provides that conveyances of real or personal property made with the intent to defeat, hinder, delay or defraud creditors or others of their lawful action are void as against such persons. In Ontario Securities Commission v. Camerlengo Holdings Inc., 2023 ONCA 93, the Ontario Court of Appeal reaffirmed that “creditors” refers to both present ..read more

In a post last year, we discussed the decision of the British Columbia Court of Appeal in Poonian v. British Columbia (Securities Commission), 2022 BCCA 274 in which the British Columbia Court of Appeal held that an administrative penalty by a securities commission relating to fraud survives bankruptcy. The penalty arose from findings made by the British Columbia Securities Commission that the debtor engaged in conduct to mislead the public about a company in order to influence its share price. The Supreme Court of Canada has now granted leave to appeal. The general rule in bankruptcy is that ..read more

Background In Li et al. v. Barber et al., the Ontario Superior Court of Justice dismissed a motion by two “Freedom Convoy” organizers to release $200,000 of previously frozen funds needed to retain legal counsel to defend a class action lawsuit. Notwithstanding the nuances of this particular case, this decision is important because the court clarified that the defendants needed to meet a high evidentiary threshold to access frozen funds.  The underlying facts of this case are well-known. A putative class proceeding was initiated on behalf of the citizens of Ottawa against the organizers ..read more

In NDrive, Navigation Systems S.A. v. Zhou the Ontario Court of Appeal upheld a partial summary judgment in a fraud case. This is significant because awards of partial summary judgment are rare. This case also matters because the court awarded both punitive damages and full indemnity costs.   Background to Dispute The respondent software company NDrive, Navigation Systems (“NDrive”) engaged the applicant Silas Zhou as a consultant through one of Zhou’s companies. Zhou helped to establish a business relationship between NDrive and LG Electronics, leading to NDrive providing software f ..read more

When a plaintiff suffers a loss due to the misconduct of a defendant, the typical approach is to award damages that reflects the loss. However, this does not always fit the circumstances of the breach. In some cases, a plaintiff may have suffered no damages, but the defendant has gained significantly. For example, a wrongdoer who improperly uses trust funds, profits from that breach of trust, and later returns the monies to the trust account, but seeks to keep the gains. Where a wrongdoer’s profits are so intimately connected with the wrong and these profits would not have been earned but for ..read more

In Thrive Capital Management Ltd. v. Noble 1324, 2021 ONCA 722, the Ontario Court of Appeal reversed a Superior Court’s judgment against Noble 1324 Inc. for contempt of court for the failure to disclose their assets and account for money paid in respect of real estate investments. The Superior Court ordered two alleged fraudsters to repay at least $9 million to investors as a sentence for being found in contempt of court, notwithstanding that the trial on the merits had not been heard. In allowing the appeal, the Ontario Court of Appeal offered important guidance on strategic considerations an ..read more

Business Email Compromise (BEC) also known as email account compromise (EAC) attacks exploit our collective reliance on email to conduct business and personal affairs. While there are many variations on this cyberattack, the most difficult to detect are situations where an attacker gains control over a supplier’s email address and uses it to request a seemingly legitimate business payment. The fraudster will request a payment be sent electronically to a new account that they control. This is what makes it so effective, because to the recipient, the compromised email is authentic since it origi ..read more