CANADA Law and Practice Contributed by: John Pirie, Matthew Latella, Michael Nowina and Bryan Hsu, Baker McKenzie
2. Procedures and Trials 2.1 Disclosure of Defendants’ Assets
rule, which will sometimes limit recovery to the lowest amount the account held after the fraud. If multiple victims are involved, courts may divide the remaining funds proportionally. Wrongful Profits If the fraudulently obtained funds generated profits, the victim may also claim those profits through the doctrine of disgorgement, which refers to judgments/ awards that are calculated by reference to the wrong - doer’s gain, irrespective of whether it corresponds to damage suffered by the victim. 1.6 Rules of Pre-Action Conduct There are no specific rules of pre-action conduct in Canadian fraud law claims. However, a written demand for payment will frequently be made before commencing a claim. 1.7 Prevention of Defendants Dissipating or Secreting Assets A claimant alleging fraud can apply to the court for a Mareva injunction to prevent a wrongdoer from dissi - pating assets before or after judgment. This remedy is in personam, meaning it binds the defendant person - ally rather than attaching to specific property. To obtain a Mareva injunction, the claimant must demonstrate a strong prima facie case, a real risk of asset dissi - pation and that the balance of convenience favours the injunction. The court also requires an undertaking from the party seeking the injunction for any damages that may be caused to the defendant if the injunction is later found to be unjustified. There are minor filing fees associated with seeking an injunction which vary across Canada, but they are not linked to the amount of the claim. Non-compliance with a Mareva order can result in a contempt of court finding, leading to fines or impris - onment. Courts may also issue ancillary terms or orders requiring production of sworn world-wide asset statements by the defendant(s), cross-examination on same, disclosure of asset locations and third-party co-operation requirements for the enforcement of the injunction.
Typically, upon granting an asset freezing or Mareva order, the court will also order the defendant to pro - vide a sworn asset disclosure affidavit. In the affidavit, the defendant is required to describe the full value, nature and location of all assets held, directly or indi - rectly, worldwide. The order often specifies that it applies to assets whether in the defendant’s name or not, and whether solely or jointly owned. The claimant has the right to cross-examine the defendant on the asset affidavit. Failure by the defendant to comply with a Mareva order, including the delivery of the asset disclosure affidavit, will expose the defendant to cost conse - quences or even potential penal sanction through a contempt proceeding. 2.2 Preserving Evidence Canadian courts may issue what is known as an “Anton Piller” order to preserve evidence in circum - stances where there is a real danger that evidence might be destroyed, dispersed or altered. Anton Piller orders direct a defendant to permit the claimant or its lawyers to enter the defendant’s premises to secure such evidence. Anton Piller orders are discretionary and will only be granted when there is no other reasonable alterna - tive. To obtain an Anton Piller order, the claimant must demonstrate: • a strong prima facie case; • that the damage to the claimant arising from the defendant’s alleged misconduct, potential or actual, must be very serious; • that, on convincing evidence, the defendant had in its possession incriminating documents or things; and • that there is a real possibility that the defendant may destroy the material. Absent unusual circumstances, the claimant is gener - ally required to provide an undertaking and/or security to pay damages in the event the order turns out to be unjustified or wrongfully executed. To reduce the risk
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