The Quebec Court of Appeal recognizes the right to publish a Mareva injunction

On March 20, 2019 the Quebec Court of Appeal ruled on the possibility of publishing a Mareva injunction order in the land register¹. This decision is of particular interest as it is the first time Quebec courts have recognized the possibility of publishing a Mareva injunction. 

In a commercial fraud case in which Anton Piller, Mareva, Norwich orders and seizures before judgment had previously been issued, the appellants discovered that one of the respondents subject to the Mareva injunction was the owner of a building unknown to the appellants, and thus was not specifically covered by the previously obtained seizure orders. The appellants alleged that despite the Mareva injunction, the respondent in question was in the process of selling the building. 

As a reminder, it is important to note that, unlike a seizure before judgment, which targets specific assets, a Mareva injunction is an injunction against a defendant ordering him not to dispose of his assets, regardless of their location. It also allows the freezing of the defendant’s assets, whether in the hands of the defendant or a third party, in order to prevent their disappearance. In this sense, the Mareva injunction shares certain similarities with seizures before judgment, although, as the Court of Appeal reiterated, the two are distinguished by the in rem nature of the seizure before judgment, which is not the case with the Mareva injunction². 

At trial, the appellants asked the Superior Court to order any registrar, in any registration division in Quebec, to publish any freezing order on any building owned directly or indirectly by the respondents. The Superior Court dismissed this application, insisting on the in personam nature of the Mareva injunction. The Superior Court held that since the Mareva injunction was purely personal, it could not be subject to publication under Articles 2938 and 2939 of the Civil Code of Quebec (C.C.Q.). 

Based on the decisions in Aetna Financial Services v. Feigelman³ and Empire Life Insurance Company v. Thibault⁴, as well as the Court of Appeal precedents regarding Article 2966 C.C.Q., which allows for advance registration of actions in rem, the trial judge concluded that the Mareva injunction is not subject to publication under Article 2939 C.C.Q., which provides for the publication of other types of orders. 

The appellants referred this matter to the Court of Appeal. 

In its judgment, the Quebec Court of Appeal noted that a Mareva injunction does not create rights in favour of the party who obtains it, but has indirect effects on the property of the person against whom it is directed, and against third parties which are likely to acquire that property⁵. Indeed, the Mareva injunction, like a seizure before judgment, establishes restrictions on the right to dispose of property. 

Article 2939 C.C.Q. states that “restrictions on the right to dispose of property, other than purely personal restrictions […] also shall or may be published.”⁶ 

In analyzing the wording of Article 2939 C.C.Q., the Court of Appeal noted that, contrary to the analysis made by the trial judge, it is not relevant to focus on the nature of the appellants’ recourse in order to ensure that the conditions in Article 2939 C.C.Q. are satisfied. Indeed, only the nature of the restriction matters, and that is that it cannot be purely personal⁷. 

The Court concluded that: 

“The Mareva injunction is not purely personal to the appellants, since it affects not only the respondents named in the order, but also any potential purchaser who is aware of the order, and it therefore indirectly affects the respondents’ property, which is effectively frozen by it.”⁸ 

Thus, in accordance with Article 2939 C.C.Q., the Mareva injunction is not subject to publication, but publication may be allowed⁹. It may therefore be published without prior court approval. Accordingly, the order will become enforceable against third parties and, in this case, against purchasers interested in the property that the respondent seeks to dispose of in violation of the Mareva injunction issued against him. 

Since the Mareva injunction prevents the party subject to it from selling its movable and immovable property, it should also be able to prevent third parties from participating in the sale of property belonging to a party subject to the order. Therefore, it follows that the Court of Appeal’s decision will contribute to increasing the usefulness and effectiveness of this type of order since the party obtaining it will be legally entitled to have it published in the land register.