A-97-89
157079 Canada Inc. (Appellant)
v.
Roderick W. MacDonald, as executor for the
estate of George M. Standal and George Standal's
Patents Ltd. (Respondents)
and
Swecan International Ltd., Swecan Tools Co. Ltd.
and Swecan Equipment Ltd. (Defendants-Appel
lants)
v.
Roderick W. MacDonald, as executor for the
estate of George M. Standal and Standal's Pat
ents Ltd. (Plaintiffs-Respondents)
A-149-89
Swecan International Ltd., Swecan Tools Co. Ltd.
and Swecan Equipment Ltd. (Defendants-Appel
lants)
v.
Roderick W. MacDonald, as executor for the
estate of George M. Standal and Standal's Pat
ents Ltd. (Plaintiffs-Respondents)
A-183-89
Swecan International Ltd., Swecan Tools Co. Ltd.
and Swecan Equipment Ltd. (Defendants-Appel
lants)
v.
Roderick W. MacDonald, as executor for the
estate of George M. Standal and Standal's Pat
ents Ltd. (Plaintiffs-Respondents)
INDEXED AS: STANDAL ESTATE V. SWECAN INTERNATIONAL
LTD. (CA.)
Court of Appeal, Marceau, MacGuigan and Des-
jardins JJ.A.—Montréal, May 17 and 18; Ottawa,
June 23, 1989.
Injunctions — Interlocutory order directed to defendants in
patent infringement action and to third parties requiring return
to Canada and payment to receiver of proceeds of sale of
defendant company — Order purportedly akin to Mareva
injunction — Purpose to give plaintiffs pre-judgment security
— Order not in nature of Mareva injunction — Mareva
injunction used to freeze assets until trial by enjoining future
action, not destroying past action — Mareva order addressed
only to defendants, not third parties as here.
Federal Court jurisdiction — Mareva injunctions recent
judicial development — Federal Court statutory court with no
inherent power when provisions in Rules for limited power of
granting interlocutory injunction, but not to freeze assets —
Power to issue Mareva injunctions incidental to power to
protect process — "Subsequent" orders to be protected
required to be highly probable or strong evidence of prima
fade case — Power to direct defendants or third parties to act
not supported by Quebec Code of Civil Procedure, art. 733.
Federal Court jurisdiction — Trial Division — Jurisdiction
of prothonotary — Prothonotary issuing interim order requir
ing payment of outstanding proceeds of sale of assets of
defendant company in patent infringement action — Outside
jurisdiction according to General Direction issued under R.
336(1)(g).
Criminal justice — Writs of assistance — Based upon
allegations earlier order requiring return to Canada of pro
ceeds of sale of defendant's assets, order issued appointing
receiver with full powers to search and seize evidence and
assets — No foundation for order — Contempt proceedings
proper way to verify validity of allegation — Court should be
loathe to revive writs of assistance and delegate power of
issuance.
These were appeals from a series of interlocutory injunctive
orders that the plaintiffs be given pre-judgment security. This
was a patent infringement action concerning sawmill equip
ment. As the patents at issue had expired, the action was
limited to damages. On January 28, 1988, the defendant,
Swecan International Ltd., sold most of its assets. The purchase
price was paid immediately, except for a balance of $620,000
which was payable in four successive annual instalments and
$200,000 which was held in trust pending completion of collat
eral documents concerning use of the company name. The
entire sum received was transferred to a foreign company,
controlled by the same person who had controlled the defen
dant, for investment in blue chip stocks and in bonds. In August
1988, the purchaser agreed to accelerate the remaining instal
ments and to pay a lump sum of $450,000 in settlement of the
balance of the price. On September 16, 1988 the Prothonotary,
who was unaware of the agreement to accelerate payment,
granted an interim order requiring the payment of the out
standing proceeds from the sale to a receiver. Although the
defendants' solicitors were informed of this order on September
16, the defendant or its controlling mind or the purchaser may
not have been aware of it until September 20. On September 16
the balance of the purchase price was paid. On September 20
the part of the sale price held in trust for the vendors was
released. On March 7, the Prothonotary's interim order was
transformed into an interlocutory order. At the same time, a
second order, directed to the defendants and to third parties
including the purchaser, required the return of all proceeds
from the sale outside the country, and payment of such funds to
a receiver. On April 11, a second Motions Judge issued an
order appointing a receiver with extensive powers to seize assets
and evidence, based upon allegations that the March 7 order
had not been complied with.
Held, the appeals should be allowed.
The Court did not have the power to issue the orders.
The second March 7 order was not in the nature of a Mareva
injunction. The exceptional principle to which the Mareva
jurisdiction gives effect is that a claimant should not be defeat
ed through the disposal by the debtor of all of his assets during
the time required for the Court to give judgment. The aim of a
Mareva injunction is to freeze the defendant's assets pending
trial, and the substance of the order is to enjoin the defendant
from disposing of his possessions. The impugned order does not
enjoin the defendants from doing something in the future; it
orders the defendants to. destroy something already done and to
uproot investments already made. There is a substantial differ
ence between orders aimed at freezing assets and an order
aimed at reconstituting assets: the latter is execution, and
execution prior to judgment is unthinkable.
Secondly, a Mareva injunction can only be addressed to the
defendants and not to third parties. Third parties may be
affected by an injunction issued against a defendant since it
would be contempt of court for them to knowingly aid and abet
a breach of the order. But they cannot be made subject to the
injunction without being impleaded, and mere service of the
application for injunction on them does not make them parties
to the action.
The Federal Court is entitled to issue a Mareva injunction.
The fundamental principle underlying the Mareva doctrine is
that courts should not permit a defendant to take steps
designed to frustrate its subsequent orders. The Federal Court
is incidentally empowered to protect its own process by having
recourse to that type of interlocutory order. In such a perspec
tive, and in contrast to the practice in England, the "subse-
quent" orders to be protected must be more than arguable
possibilities: they must be highly probable, requiring evidence
of a strong prima facie case on the merits. Such a condition
precedent could not be verified on the sole basis of pleadings
respectively alleging and denying patent infringement, as was
the case here. The plaintiffs did not contend that they could
show more than a good arguable case.
A Mareva injunction is addressed to the defendant in perso-
nam, prohibiting that person from doing something. The power
of the Federal Court to compel defendants or third parties to
act could not find support in article 733 of the Code of Civil
Procedure of Quebec, which allows a seizure of the res whether
or not in the hands of third parties, especially where the res is
located outside the jurisdiction of the Court.
The Prothonotary's interim order was made without author
ity. A General Direction issued by the Associate Chief Justice
under Rule 336(1)(g) specifically prohibits prothonotaries from
hearing applications for injunctions, appointment of receivers
and Mareva or Anton Pillar relief. The order transforming it to
an interlocutory order was without object since at the moment
of its issuance there were no outstanding proceeds from the
bulk sale payable.
There was no basis on which the April 11 order could be
issued. The only way for the Court to verify the validity of an
allegation that a Court order had not been complied with was
through contempt proceedings. The Court should not attempt
to revive the ancient writ of assistance, the constitutional status
of which is troubling, and delegate the power of its issuance to
an accountant.
The last two payments from the sale which were made in
September should not be treated differently than the initial
payment. The Prothonotary's order was beyond his jurisdiction.
In any event, an accusation of contempt of court has to be
proved beyond reasonable doubt and in the course of special
proceedings established mainly for the protection of the
accused.
Per MacGuigan J.A.: A Mareva injunction could not issue
on these facts to require the reconstitution of assets. As the
Prothonotary's order was outside his jurisdiction, the avoidance
of it could not be brought into question. That is not to say that
a Mareva injunction could in no circumstances require the
reconstruction of assets. Had the defendant been guilty of
contempt, this might have been a situation where a Mareva
injunction could have been available.
Per Desjardins J.A.: As the Prothonotary's order was outside
his jurisdiction, the defendants were not violating a court order
when they transferred the balance of the sale price outside the
jurisdiction. The Trial Judge erred in holding that the defen
dants had moved assets from the jurisdiction in an attempt to
avoid a potential judgment of this Court.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
Code of Civil Procedure, R.S.Q., c. C-25, art. 733.
Criminal Law Amendment Act, 1985, R.S.C., 1985, c. 27
(1st Supp.), ss. 190, 195(2), 200.
Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, ss.
44, 56(1).
Federal Court Rules, C.R.C., c. 663, RR. 5, 336(1)(g),
355, 464(1), 469(1), 470, 1203(3) (as enacted by
SOR/79-57, s. 20).
CASES JUDICIALLY CONSIDERED:
APPLIED:
Derby & Co. Ltd. v. Weldon (Nos. 3 & 4), [1989] 2
W.L.R. 412 (C.A.); Siskina (Owners of cargo lately
laden on board) v. Distos Compania Naviera S.A.,
[1979] A.C. 210 (H.L.).
DISTINGUISHED:
Baxter Travenol Laboratories of Canada Ltd. et al. v.
Cutter (Canada), Ltd., [1983] 2 S.C.R. 388.
REFERRED TO:
Nippon Yusen Kaisha v Karageorgis, [1975] 3 All E.R.
282 (C.A.); Mareva Compania Naviera SA v Interna
tional Bulkcarriers SA [The Marevaj, [1980] 1 All E.R.
213 (C.A.); Lister & Co. v. Stubbs (1890), 45 Ch. D. 1;
[1886-90] All E.R. Rep. 797 (C.A.); Bank Mellat v.
Kazmi, [1989] 2 W.L.R. 613 (C.A.); Aetna Financial
Services Ltd. v. Feigelman et al., [1985] 1 S.C.R. 2; Re
Gaglardi (1960), 27 D.L.R. (2d) 281 (B.C.C.A.); Glazer
v. Union Contractors Ltd. & Thornton (1960), 129
C.C.C. 150 (B.C.C.A.); Re Bramblevale, Ltd., [1969] 3
All E.R. 1062 (C.A.); Bhatnager v. Canada (Minister of
Employment and Immigration), [1986] 2 F.C. 3 (T.D.);
revd [1988] 1 F.C. 171 (C.A.).
COUNSEL:
Jérôme Gariépy for 157079 Canada Inc.
David French and Anthony Butler for Rode-
rick W. MacDonald, as executor for the
estate of George M. Standal, George Stan-
dal's Patents Ltd. and Standal's Patents Ltd.
Harold W. Ashenmil, Q.C. and Karen A.
Lallouz for Swecan International Ltd.,
Swecan Tools Co. Ltd. and Swecan Equip
ment Ltd.
SOLICITORS:
Boucher, Gariépy, Moreault, Montréal, for
157079 Canada Inc.
Lette McTaggart Blais Martin, Ottawa, for
Roderick W. MacDonald, as executor for the
estate of George M. Standal, George Stan-
dal's Patents Ltd. and Standal's Patents Ltd.
Phillips, Friedman, Kotler, Montréal, for
Swecan International Ltd., Swecan Tools Co.
Ltd. and Swecan Equipment Ltd.
The following are the reasons for judgment
rendered in English by
MARCEAU J.A.: Four notices of appeal, filed by
two different groups of appellants against three
distinct orders of the Trial Division, are here
involved. They have been set down to be heard
together as they are directly related to one
another. The appeals concern a series of interlocu
tory injunctive orders, rendered in succession in
the course of one action, and for the same general
purpose, namely to give the plaintiffs in the action
pre-judgment security. Both the power of the
Court to issue the orders, and, if such power exists,
the justification for making use of it in the circum
stances that prevailed are put in question. As I am
of the view that the appeals are to be disposed of
on the basis that the Court simply did not have the
power to,do as it did, I will be relieved from the
obligation to dwell on the question of justification
which would have required a thorough analysis of
numerous affidavits, discussed in as many cross-
examinations and supported by a multitude of
documents. The review of the factual background
that I will have to make will be much less involved
than it would have been otherwise. Still, even
simplified to the minimum, the facts to be record
ed remain quite complex, there are many actors to
be reckoned with, some identified merely by num
bers, and dates are to be remembered. It is impor
tant to go through these facts in a somewhat
orderly manner.
The Factual Background
1. We must begin with the procedural context.
The action to which the three impugned interlocu
tory orders are incidental was commenced on July
23, 1980, for patent infringement, against a com
pany then manufacturing sawmill equipment in
Quebec under the name Swecan International Ltd.
The two other companies named in the style of
cause as defendants in the Court below, defen-
dants-appellants herein, are no longer active sub
sidiaries of Swecan International Ltd. (I will here-
inafter speak of the "defendants in the action" or
"Swecan", and similarly of the "plaintiffs in the
action", who are the respondents in all four
appeals). The allegations of patent infringement
concern chipping machinery employing bent knives
and intended to remove waste wood from logs in
the form of pulpable wood chips. Since the com
mencement of the action, the two patents involved
have expired, so the plaintiffs' claim in the action
is now limited to damages or an accounting of
profits for past infringement.
The action was in due time met with a defence
and a counter-claim, both filed on June 19, 1981,
but that was all: the suit, from then on, remained
completely dormant. The next proceedings on file
are dated September 7, 1988; these were motions
of which one was ultimately to lead to the orders
here under attack. The explanation given by the
plaintiffs for their protracted inactivity was report
ed in detail in the reasons of one of the two
Motions Judges who issued the impugned orders,
as follows [Standal Estate v. Swecan International
Ltd. (1989), 24 C.P.R. (3d) 509 (F.C.T.D.), at
pages 511-512]:
Concurrent with the commencement of this action, the plain
tiffs' commenced two other parallel patent infringement actions
in Canada; one against British Columbia Forest Products Lim
ited and Bow Valley Resource Services Ltd., and another
against Forano Inc. Parallel proceedings were also commenced
in October 1981, in the United States, with respect to the
corresponding U.S. patents. In that country, a subsidiary of
Bow Valley Resource Services Ltd. (one of the Canadian
defendants referred to above) commenced impeachment pro
ceedings against the plaintiffs seeking to have their U.S. pat
ents declared invalid. Those U.S. patents correspond to the ones
in issue in this and in the other Canadian actions.
The present proceedings against Swecan were allowed to
remain substantially dormant by both parties while the U.S.
action proceeded. The U.S. proceedings were a substantial
burden on the plaintiffs' limited financial resources. The plain
tiffs concentrated their resources on a single case in order to
demonstrate the validity of their patents. The trial proceedings
in the United States action concluded in October, 1985; a
decision issued in favour of the plaintiffs. Following that deci
sion, counsel for the plaintiffs sent a copy of the judgment to
the solicitors for the defendants, the Martineau Walker firm.
This was done under cover of a letter dated October 22, 1985;
that letter also inquired whether the Swecan companies wished
to discuss a possible settlement. A reply was received inviting
the plaintiffs to make a proposal for settlement. By letter dated
January 27, 1986, a proposal was made. A counter-proposal
was delivered under cover of a letter dated of February 20,
1986. As the counter-proposal was unacceptable no further
settlement discussions ensued. An appeal was launched in the
U.S. proceedings and the matter was not finally settled until
June of 1988. On June 20, 1988, counsel for the plaintiffs wrote
to counsel for the defendants advising that the plaintiffs intend-
ed to reactivate the present action, pursuant to Rule 331A. The
plaintiffs sought a discovery date of August 1, 1988 and the
filing of a Rule 447 list of documents. A second letter to this
effect was sent to the law firm in question on July 29, 1988; the
lawyer who had previously had carriage of the file had left the
firm.
I leave it at that for now. It is the picture as to
the current state of the proceedings with which we
are concerned for the moment, and it must first be
completed. This, in any event, can be done quickly.
Since the reactivation of the action in September
1988, discoveries, examinations, inspection of
records, communication of documents and other
proceedings necessary to prepare the case for trial
have been completed. The case is scheduled to be
heard this month, June 1989.
2. Most of the facts on which the impugned
orders are said to be based took place during the
time the action was still dormant. It seems to me
proper to set these out now.
On January 28, 1988, Swecan International
Ltd., which was controlled by a certain Gaston
Pinat, and three other companies, also controlled
by this Gaston Pinat, sold most of their assets,
including the name Swecan, by means of a bulk
sale for a price of approximately $2,700,000. The
purchaser was a company, then known as 157079,
Canada Inc. (which later adopted the name
Swecan International (1988) Ltd., although it is
still designated in the proceedings by its original
name). The purchase price was paid immediately
by 157079 Canada Inc. (to which I will now, for
convenience, refer at times as the "Purchaser"),
except for a balance originally set at $800,000,
subject to adjustments which lowered it to
$620,000, payable in four successive annual instal
ments. Out of the initial payment, a sum of
$200,000 was retained in trust by third parties
pending the completion of certain collateral docu
ments with respect to the abandonment and trans
fer of the name Swecan. The entire sum which the
vendors did receive was immediately transferred,
through banking procedure, to Socoa Internation
al, a company formed and controlled by Gaston
Pinat, in the Cayman Islands, a territory under
British administration in the British West Indies.
Socoa International in turn entrusted the monies
to the branch of the Swiss Bank and Trust Corpo-
ration in the Cayman Islands, with instructions
that about fifty percent of the money be invested
in "blue chip" stocks, the rest in bonds of varying
terms.
On August 5, 1988, the right to the balance of
price outstanding under the bulk sale (the
$620,000 payable in four instalments), was
assigned by the vendors (which had by then aban
doned, as agreed, the name Swecan; Swecan Inter
national Ltd. had become 160088 Canada Inc.) to
another numbered company, 152931 Canada Inc.,
also controlled by Pinat and whose sole director
was an attorney, Moe Ackman, Q.C. On August 8,
1988, notice of this assignment was served upon
the purchaser. About the middle of August 1988,
by oral agreement reached after a certain period of
discussion, the purchaser agreed to accelerate the
remaining instalments and to pay the assignee,
152931 Canada Inc., the lump sum of $450,000 in
full and final settlement of the balance of price.
3. Other significant events took place in Sep-
tember 1988, both in and out of court, concurrent
ly with the reactivation of the action. I will set
them out in the order in which they transpired.
On September 7, 1988, four notices of motion
were filed on behalf of the plaintiffs, returnable
together on September 13 next. Two are alien to
these proceedings, since their purpose was simply
to obtain leave to amend the statement of claim
and to have an examiner appointed for discovery
of the defendants. A third one is of some interest
to us since it sought an order, under Rule 464(1)
of the Federal Court Rules [C.R.C., c. 663],
requiring the purchaser under the bulk sale of
January, 157079 Canada Inc., a stranger to the
infringement action, to produce certain documents,
plans and records it had obtained from the sellers.
More directly, however, it is the fourth motion
which concerns us. In an affidavit filed in support
of it, counsel for the plaintiffs set out events which
had followed his letter of June 20 to the solicitors
on record for the defendants, and explained his
sudden move back to the Court:
17. By a further letter in July, 1988 directed to the firm of
Martineau Walker the defendant's solicitors were again further
advised of the plaintiff's desire to proceed with this action. No
written reply has yet been received to these letters.
18. On August 26th, 1988 I telephoned the firm of Martineau
Walker and was referred to Claude Brunet. I requested that I
receive a response to the two letters referred to above. Mr.
Brunet said he would look into the matter.
19. On August 29th, 1988 I telephoned again to Martineau
Walker and was told that Claude Brunet was unavailable. I left
a message that he was to call me back.
20. On August 31st, 1988 I called again and left a similar
message. To the present I have received no reply.
21. On August 23rd, 1988 1 received a telephone call from Dr.
Lorne Rosenblood [the plaintiffs' U.S. attorney] advising me
that Swecan International Ltd. may have sold its business
operation. On August 31st, 1988 I received a copy of the Bulk
Sale Agreement dated January 29th, 1988. By this agreement
Swecan International Ltd. purported to sell all of its assets to
157979 [sic] Canada Inc.
This fourth motion was:
FOR AN ORDER pursuant to Rule 5 and Articles 733 and 742
of the Quebec Code of Civil Procedure and Sections 17 and 20
of the Federal Court Act that:
(a) the outstanding proceeds from the sale of the assets of
Swecan International Ltd. as payable by 157079 Canada Ltd.
under a Sale Agreement dated January 29th, 1988 be paid as
and when payable, to the Assistant Administrator of the Feder
al Court of Canada, to be held in trust in an interest-bearing
form pending the final resolution of these proceedings, or as the
Court may otherwise direct; and that
(b) the defendants be restrained on an interim basis, until the
disposition of this application, from distributing to its share
holders or otherwise, the proceeds it has received or may
receive from the above referenced sale.
On September 13, 1988, the four motions came
before the Prothonotary where they were con
tinued to September 26. The adjournment had
been requested by the solicitors on record for the
defendants in the action who were no longer famil
iar with nor interested in the litigation, and coun
sel for the plaintiffs had consented; but, the day
before the hearing, he had filed a special motion
for interim relief (in replacement of the fourth
motion), the operative part of which should be
reproduced:
Application on behalf of the Plaintiffs for an Order pursuant
to Rule 5 and Articles 733 and 742 of the Quebec Code of Civil
Procedure and Section 20 of the Federal Court Act directing
that until the disposition of a corresponding interlocutory
application:
(a) the defendants be restrained on an interim basis, from
soliciting the accelerated payment of the proceeds still payable
under the Bulk Sale Agreement, and from distributing to its
shareholders or otherwise, the proceeds it has received or may
receive from the referenced sale; and that
(b) any payments of the outstanding proceeds from the sale
of the assets of Swecan International Ltd., as payable by
157079 Canada Ltd. under a Sale Agreement dated January
29th, 1988, be paid into Court by 157079 Canada Ltd., as and
when payable, to the Receiver General of Canada, pending the
final resolution of these proceedings, or as the Court may
otherwise direct; and that
(c) the Court grant leave for this motion to be heard on
short notice, pursuant to Rule 320(1).
The Prothonotary refused to postpone the con
sideration of this new motion; he heard representa
tions thereon, without being told, however, that
Swecan had already assigned its rights in the
balance of the sale price and that an agreement
had already been reached to accelerate its pay
ment, and he then reserved judgment. On Septem-
ber 16, an order was issued granting the conclu
sions sought in the motion. The solicitors on record
for the defendants were informed of this order at
the end of the afternoon of September 16, but
there is nothing else to show that Mr. Pinat, or
officials of Swecan or of the purchaser, were made
aware of it before September 20.
On September 16, 1988, the sum of $450,000
was paid by the purchaser to 152931 Canada Inc.,
the assignee, pursuant to the arrangement con
cluded during August. On September 20, 1988, as
the collateral documents required to be produced
under the deed of sale had finally been delivered,
the part of the sale price retained from the sellers
and held in trust was released and paid likewise to
152931 Canada Inc. These two sums, just like the
initial proceeds from the bulk sale paid on January
29, 1988, were immediately transferred by means
of inter-bank transfers to Socoa International, in
the Cayman Islands.
After a series of further adjournments of the
other September 13 motions, during which time
the interim order of September 16 remained in
force, two new motions for injunctive relief were
successively presented by the plaintiffs in relation
to the bulk sale and the moneys paid under it,
leading to the orders directly attacked by the four
appeals before us. It is now time to review the
orders themselves. -
The Orders under Attack
On March 7, 1989, Reed J. issued two orders.
The first one transformed the interim order of the
Prothonotary, providing for the payment of the
outstanding proceeds from the bulk sale into the
hands of a receiver, into an interlocutory order to
remain in force until final resolution of the pro
ceedings. The second one gave effect to a fresh
motion by the plaintiffs stemming from the altered
circumstances as they had come to light after the
September 13 hearing, particularly the payments
of September 16 and 20, and the transfer of the
proceeds outside the country. The whole contro
versy revolves around this second order by Reed J.,
the only one, incidentally, in support of which
reasons were given, so I prefer to reproduce it
verbatim:
IT IS HEREBY ORDERED THAT:
(a) The defendants and 152931 Canada Inc. and 151095
Canada Inc., and 157079 Canada Inc., their directors, officers,
servants and agents, and Mr. Gaston Pinat shall cause the
return to Canada of any and all proceeds from the Bulk Sale
Agreement between the defendant Swecan International Ltd.
and 157079 Canada Inc., executed in Montreal, on January 29,
1988, and shall cause such funds to be delivered to the receiver
hereinafter appointed; such return and delivery shall be effect
ed at such time as those funds are released from seizure by the
Cayman Islands Court except to the extent that such proceeds
are not covered by that Court's order of seizure, in which case
the defendants and 152931 Canada Inc. and 151095 Canada
Inc. and 157079 Canada Inc., their directors, officers, servants
and agents and Mr. Gaston Pinat shall cause the return to
Canada of those funds, not covered by the seizure order, within
five days of the date of this order;
(b) the aforementioned proceeds shall be placed under the sole
control of Mr. Paul Bertrand, Chartered Accountant and Trus
tee with the accounting firm of Samson, Belair, in Montreal,
Quebec as Receiver who shall receive and invest such proceeds
in the manner authorized by article 981(o) of the Civil Code of
Lower Canada, pending final judgment on the merits of the
case;
(c) the plaintiffs shall recover their costs of this application on
a solicitor-and-client basis.
The numbered company, 151095 Canada Inc.,
named in the order, was a holding company, con
trolled by Pinat, to which he had transferred his
interest in Swecan shares in 1986 and 1988.
The reference in the order to proceedings in the
Cayman Islands also requires an explanation. On
or about November 29, 1988, Standal's Patents
Ltd., one of the plaintiffs in the action, instituted
legal proceedings (No. 316 of 1988) before the
Grand Court of the Cayman Islands against the
defendants in the action herein, and also against
Gaston Pinat, Socoa International, Swiss Bank
and Trust Corporation, Swecan International
(1988) Ltd. (formerly 157079 Canada Inc.) and
one Bernard Latour, claiming damages in the
amount of $2,000,000 as a result of an alleged
illegal conspiracy to "deprive, prevent and keep"
Standal's Patents Ltd. from "recovering any sums
arising from the proceedings before the Federal
Court of Canada", and also seeking an injunction
restraining Socoa International and Swiss Bank
and Trust Corporation from transferring, remov
ing, disposing of, charging or in any way dealing
with assets in account number 52911 in the name
of Socoa International. The Grand Court issued an
ex parte order on December 1, 1988 restraining
Socoa International and Swiss Bank and Trust
Corporation from dealing with the assets in
account number 52911 and also ordering both of
them to preserve all books, statements, vouchers
and documents relating to all and any accounts
held in the name of Socoa International with Swiss
Bank and Trust Corporation. The Cayman Islands
proceedings, including the attachment before judg
ment of the Socoa account, were, as of the date of
the hearing of these appeals, still ongoing.
I revert to the orders under attack.
On March 29, 1989, in answer - to a request by
Swecan that the second March 7 order be stayed,
Reed J. varied the order to allow Swecan to post
security of two million dollars ($2,000,000) in lieu
of returning the proceeds of the bulk sale to
Canada, but otherwise refused a stay. The pur
chaser also made a request for a stay, which was
likewise refused on March 29.
On April 11, 1989, the plaintiffs returned to the
Trial Division, alleging that the order of March 7
had not been complied with, and requesting fur
ther compelling measures. Joyal J. agreed to the
request and issued a lengthy and most unusual
order. I feel compelled to reproduce it in extenso:
It is Hereby Ordered and Adjudged as follows:
1. Leave is hereby granted for this application to be heard on
short notice.
2. It is hereby declared that the proceeds and funds arising
from the Bulk Sale of January 29, 1988, as referenced in the
Order of this Court of March 7, 1989 extends to and includes
all property substituted or exchanged for the monies originally
paid, and in particular, including
(1) any share or similar rights in Socoa International issued
to 152931 Canada Inc., 151095 Canada Inc., 160088
Canada Inc., Gaston Pinat or others in consideration for such
monies;
(2) any share certificates in other corporations, bonds,
deposit certificates or other property purchased with or
derived from such monies whether in the hands of 152,931
Canada Inc., 151,095 Canada Inc., 160088 Canada Inc.,
Gaston Pinat or Socoa International.
3. Mr. Paul Bertrand, Chartered Accountant and Trustee of
the firm of Samson, Belair in Montreal, Quebec, Canada, is
appointed and confirmed as Receiver of:
(a) the proceeds from the aforesaid Bulk Sale, and
(b) all share or similar rights held by Gaston Pinat in
151095 Canada Inc., 152931 Canada Inc., and Socoa Inter
national, 151095 Canada Inc. and 152931 Canada Inc. [sic],
with full powers to:
(1) take possession of such rights and property by delivery of
a Notice of Seizure, ... along with a copy of the Order, to
the head office of each of the aforesaid corporations, and to
each person or corporation having custody of assets belong
ing to Gaston Pinat;
(2) seize such evidence of share entitlements as may be in
the possession of Gaston Pinat, the companies referenced
above and their servants and agents;
(3) issue one or more Writs of Assistance to a Sheriff or
Bailiff of the Province of Quebec nominated by the Plaintiff
to permit the Receiver to enter the premises of the parties
identified by this Order and the premises of their servants
and agents, (including the offices of Messrs. Moe Ackman
and Guy St. George of the City of Montreal), and search
through all records there and remove all materials relating to
the aforesaid Bulk Sale and share rights; if privilege is
claimed in any such materials, the Receiver shall seal and
deliver such materials to the Registry of the Federal Court
for disposition by Order of the Court;
(4) hold and exercise full rights over the proceeds of the
Bulk Sale and over the aforesaid shares, conserving them in
the manner provided by Article 981(o) of the Civil Code of
Lower Canada, or in the form in which they exist at the time
of seizure, or in such other form as Gaston Pinat may request
and the Receiver considers appropriate. The parties, Gaston
Pinat or the Receiver may apply at any time to seek a
variance in the manner by which such property is to be
conserved, on seeking directions as to their disposition.
(5) To the extent required and in order to put the Receiver
into possession, the aforesaid Bulk Sale proceeds, exercise the
share rights of Gaston Pinat to call meetings of shareholders,
elect new Directors and appoint new Officers for each of the
corporations named, including:
(a) the appointment of himself as the sole Director and
Officer of each such corporation, and
(b) the exercising by him in his capacity as an Officer and
Director of such corporations the share rights held by
those corporations in Socoa International, and
(c) to similarly vote-in new Directors and Officers of
Socoa International and exercise the rights of Socoa Inter
national over such parts of its assets as are derived from
the monies paid pursuant to the Bulk Sale.
4. Once the Receiver has taken possession of the aforesaid
proceeds of the Bulk Sale, he shall reconvey all share rights and
other property seized and surrender his positions to such per
sons as Gaston Pinat may direct.
5. For an Order restraining all persons having notice of such
Order from removing, destroying or disposing of any records,
documents or other property belonging to Gaston Pinat, 151095
Canada Inc., 152931 Canada Inc., and 160088 Canada Inc.
and pertaining to the aforesaid Bulk Sale in their possession,
power or control, or permitting such to be done, pending their
examination and release by the Receiver.
6. For an Order pursuant to Rules 2200 and 2201 directing
Gaston Pinat to attend before Mr. D'Aoust of the Federal
Court Registry in Montreal on an appointment issued by him
to be examined as to his acts in respect to the disposition of the
proceeds from the Bulk Sale and the disposition of such
proceeds.
7. This Order is without prejudice to the right of either party
to apply for further security or such other Order or variance of
this Order as justice may require to acquire control of all such
property held by Socoa, and cause the return of such property
to Canada, to be held in the manner provided by Article 981(o)
of the Civil Code of Lower Canada; or in the form in which
they exist at the time of seizure or in such form as Gaston Pinat
may request and the Receiver considers appropriate. The par
ties, Gaston Pinat or the Receiver may apply at any time to
seek a variance in the matter by which such property is to be
conserved, or seeking directions as to their dispositions.
8. The Orders of Madame Justice Reed of March 7, 1989 shall
remain in force, subject to such variance as this Order requires,
which variance shall apply mutatis mutandis. In particular,
upon consent of the plaintiffs [sic] counsel, the Receiver may
keep such proceeds in the form in which they exist at the time
of seizure, or in such form as Gaston Pinat may request and the
Receiver considers appropriate. Generally, to take all steps he
considers necessary to take possession of the proceeds of the
aforesaid Bulk Sale, including taking proceedings in the
Cayman Islands.
9. There is no order as to costs.
The Proceedings in Appeal
As said at the outset, no less than four different
appeals are before the Court. This must now be
clarified. It will have been noted that the second
March 7, 1989 order of Madam Justice Reed was
addressed not only to the defendants in the action
but also to third parties, one of which being
157079 Canada Inc., the purchaser. The latter
immediately launched an appeal against that
order, and so did the defendants in the action
shortly thereafter. These two appeals were put
together in the same file, no. A-97-89, the second
being referred to as a cross-appeal pursuant to
Rule 1203(3) [as enacted by SOR/79-57, s. 20] of
the Federal Court Rules. The March 29, 1989
order of Madam Justice Reed, dismissing a motion
for stay pending appeal filed by the defendants in
the action, gave rise to a third appeal, filed under
docket no. A-149-89. And finally, the April 11,
1989 order of Joyal J. was the subject of a fourth
appeal, no. A-183-89, by the defendants in the
action.
The picture should now be complete enough to
allow me to explain why I feel that, in the circum
stances that existed, the Court could not make any
of the orders that were issued, so that all the
appeals are to be allowed.
The Invalidity of the Orders
There is not much to say about the order of the
Prothonotary of September 16 or the order of
March 7 which confirmed and transformed the
interim order into an interlocutory one. In fact,
these two orders are not directly, but only inciden
tally, involved in these appeals. I should express
my opinion, however, with respect to the first one,
that the Prothonotary was acting without author
ity (see Rule 336 of the Federal Court Rules',)
and, with respect to the second, that it was without
object since, at the moment of its issuance, there
were no outstanding proceeds from the bulk sale
payable by 157079 Canada Inc. to the defendants
in the action (a situation which had existed since
even before the interim order but, as explained
above, had not been revealed to the Prothonotary).
' It reads in part:
Rule 336. (1) Notwithstanding Rule 326(1), a prothono-
tary shall have power
(Continued on next page)
I do not intend to dwell on the order of April 11,
either. This order being in effect a supplementary
to the second March 7 order of Reed J., what will
be said about the latter will be all the more
applicable to it. Besides, there was simply no basis
on which it could be issued: the sole allegation was
that the March 7 order had not been complied
with, and the only way for the Court to verify the
validity of such an allegation and be in a position
to act upon it was through the proceedings of
contempt. I will add that I simply do not see how,
in times where courts and legislatures 2 have done
so much to put to rest the ancient writ of assist
ance whose constitutional status is troubling to say
the least, this Court could think of reviving it and
delegating the power of its issuance to an account
ant so as to permit him, with the full force of the
state, to repeatedly enter premises, search through
records and remove materials.
So I immediately come to the second March 7
order of Madam Justice Reed which is, as we have
seen, the central one in this whole controversy.
In establishing the proper jurisdictional basis for
her order, Reed J. first considered article 733 of
the Code of Civil Procedure [R.S.Q., c. C-25] of
the Province of Quebec, to which she had been
referred. This article allows for the seizure before
judgment of the property of a defendant, where
(Continued from previous page)
(g) to dispose of any interlocutory application assigned to
him specially or to any prothonotary, by special or general
direction of the Chief Justice or of the Associate Chief
Justice,
Powers of Prothonotaries
General Direction under
Rule 336(1)(g)
Under Rule 336(1)(g) the Senior Prothonotary and the
Associate Senior Prothonotary are empowered to hear and
dispose of any interlocutory application in the Trial Division
other than the following, that is to say:
2. any application for an injunction or for the appointment
of a receiver whether made ex parte or on notice, includ
ing applications for Mareva or Anton Pillar relief; ...
(issued by Jerome A.C.J., October 31, 1985).
2 See: [Criminal Law Amendment Act, 1985] R.S.C., 1985,
c. 27 (1st Supp.), ss. 190, 195(2), 200.
there is reason to fear that the recovery of the debt
claimed in the action may be jeopardized.' She
must have been satisfied that this provision could
lend support, if need be, pursuant to subsection
56(1) of the Federal Court Act [R.S.C., 1985, c.
F-7] or through Rule 5 of the Federal Court
Rules. 4 She was of the view, however, that it was
not necessary to follow that route. The order
sought by the applicants and which she was about,
to make was one for an interlocutory mandatory
injunction allegedly akin to a Mareva order for
which jurisdiction was to be found in section 44 of
the Federal Court Act and Rule 469(1) of the
Federal Court Rules which read:
44. In addition to any other relief that the Court may grant
or award, a mandamus, injunction or order for specific
performance may be granted or a receiver appointed by the
Court in all cases in which it appears to the Court to be just or
convenient to do so, and any such order may be made either
unconditionally or on such terms and conditions as the Court
deems just.
3 The text is the following
733. The plaintiff may, with the authorization of a judge,
seize before judgment the property of the defendant, when
there is reason to fear that without this remedy the recovery
of his debt may be put in jeopardy.
Section 56(1) reads thus:
56. (1) In addition to any writs of execution or other
process that are prescribed by the Rules for enforcement of
its judgments or order, the Court may issue process against
the person or the property of any part, of the same tenor and
effect as those that may be issued out of any of the superior
courts of the province in which any judgment or order is to
be executed, and where, by the law of that province, an oder
of a judge is required for the issue of any process, a judge of
the Court may make a similar order, as regards like process
to issue out of the Court.
As for Rule 5, the so-called "gap rule", it reads:
Rule 5. In any proceeding in the Court where any matter
arises not otherwise provided for by any provision in any Act
of the Parliament of Canada or by any general rule or order
of the Court (except this Rule), the practice and procedure
shall be determined by the Court (either on a preliminary
motion for directions, or after the event if no such motion has
been made) for the particular matter by analogy
(a) to the other provisions of these Rules, or
(b) to the practice and procedure in force for similar
proceedings in the courts of that province to which the
subject matter of the proceedings most particularly relates,
whichever is, in the opinion of the Court, most appropriate in
the circumstances.
Rule 469 (1) An application for an interlocutory injunction
may be made by any party before or after the commencement
of the trial of the action whether or not a claim for an injuction
[sic] was included in that party's statement of claim or declara
tion, counterclaim or cross-demand, or third party notice, as the
case may be; and any such application shall be supported by an
affidavit establishing the facts that render the injunction neces
sary and shall be made by motion upon notice to all other
parties.
The only question, for the learned Judge, was
then merely whether it was appropriate to exercise
the jurisdiction in this case, and, since she was of
the view that the plaintiffs had a very strong prima
facie case on the merits, that the balance of conve
nience was in their favour, that there was a real
risk that their claim would be rendered nugatory,
that the defendants had removed assets from the
jurisdiction in an attempt to avoid a potential
judgment, and in addition that the assets which
had been removed had been specifically located
and identified, the solution was easy to draw. She
writes (at page 13):
All of the elements that are required for the granting of a
Mareva injunction are satisfied save one: the assets which it is
sought to have paid to a receiver are not within the jurisdiction.
of this Court. That factor, however, in my view, does not
prevent the granting of the order sought. The order sought is
not against the assets themselves; the order sought is against
persons both corporate and individual who are within the
jurisdiction .... There is no doubt that the order sought should
be granted.
I respectfully dispute the validity of the learned
Judge's reasoning.
I will first permit myself some minor remarks. If
there is a difficulty as to whether the Court is
entitled to issue a Mareva injunction, it is not that
the order itself would be a remedy beyond its
reach. The power of the Court to pronounce
interim, interlocutory or permanent injunctions is
undoubted. The question is whether the Court is
entitled to pronounce such an injunction, before
judgment, for the sole purpose of giving a claimant
security. It is trite to say that the Mareva injunc
tion, when introduced in 1975 by the English
Court of Appeal in Nippon Yusen Kaisha v Kara-
georgis, [1975] 3 All E.R. 282; and Mareva Com-
pania Naviera SA v International Bulkcarriers
SA [The Mareva], [ 1980] 1 All E.R. 213, sig
nalled a radical departure from traditional legal
principles. The law of injunction was then to the
effect that, except in very limited circumstances
(fraudulent conveyances, preservation of the
subject-matter of the litigation), no injunction
would be granted prior to trial to restrain defen
dants from dealing with their assets (the leading
English case for many years having been Lister &
Co. v. Stubbs (1890), 45 Ch. D. 1; [1886-90] All
E.R. Rep. 797 (C.A.)). Is the Mareva doctrine,
this recent judicial development by the courts in
England, applicable in this Court? There may be
some room for hesitancy when one considers that
this is a purely statutory Court with no inherent
powers and that there are already provisions in the
Federal Court Rules (Rules 469(1) and 470) pro
viding for a limited power of interlocutory injunc
tion (for preservation of property), but no express
power to freeze assets.
On the other hand, article 733 of the Code of
Civil Procedure of Quebec allows for a protective
measure different from that contemplated by a
Mareva order. While the latter is undoubtedly an
order addressed to the defendant in personam,
prohibiting that person from doing something (as
was once again emphatically reiterated by the
English Court of Appeal in Bank Mellat v. Kazmi,
[1989] 2 W.L.R. 613), by contrast, the remedy
allowed by article 733—although likewise an
exceptional measure derogating from a general
principle—is a seizure which affets the res (wheth-
er or not in the hands of third parties) and oper
ates independently of the individual. The power of
this Court to compel defendants or third parties to
act could not find support in this Quebec provision,
especially in situations where the res is located
outside the jurisdiction of the Court.
It is not my intention, nevertheless, to deny here
that this Court is entitled to issue a Mareva order.
If one accepts the rationale, the fundamental prin
ciple underlying the Mareva doctrine as recently
expressed by Lord Donaldson M.R. in Derby &
Co. Ltd. v. Weldon (Nos. 3 & 4), [1989] 2 W.L.R.
412 (C.A.), at page 422 to be that no court should
permit a defendant to take steps designed to frus
trate its subsequent orders, one cannot see why this
Court would not be incidentally empowered to
protect its own process by having recourse to that'
type of interlocutory order. In such a perspective
(and in contrast to what seems to be the current
practice in England), the "subsequent" orders to
be protected would have to be more than arguable
possibilities; they would have to be highly prob
able, requiring evidence of a strong prima facie
case on the merits (see the discussion in the rea
sons of Estey J. in Aetna Financial Services Ltd. v.
Feigelman et al., [1985] 1 S.C.R. 2, the only time
the Supreme Court dealt with a Mareva injunc
tion). Incidentally, such a condition precedent can
hardly be verified on the sole basis of a statement
of claim alleging infringement of a patent and a
defence denying it, as was the case here. Despite
the holding of the Motions Judge, counsel for the
plaintiffs—respondents before us—did not contend
that he could show more than a good arguable
case.
The real basis for my objection to the learned
Judge's reasoning is, however, more substantial. I
simply believe that the impugned order as issued
was not in the nature of a Mareva order.
A Mareva injunction, like any interlocutory
injunction for that matter, can only be addressed
to defendants in an action. It cannot be addressed
to third parties. As was said by Lord Diplock in
Siskina (Owners of cargo lately laden on board) v.
Distos Compania Naviera S.A., [1979] A.C. 210
(H.L.), at page 256:
A right to obtain an interlocutory injunction is not a cause of
action. It cannot stand on its own. It is dependent upon there
being a pre-existing cause of action against the defendant
arising out of an invasion, actual or threatened by him, of a
legal or equitable right of the plaintiff for the enforcement of
which the defendant is amenable to the jurisdiction of the
court. The right to obtain an interlocutory injunction is merely
ancillary and incidental to the pre-existing cause of action.
Of course, third parties may be affected by an
injunction issued against a defendant in an action
since it would be a contempt of court for them to
knowingly aid and abet a breach of the order.' But
they cannot themselves be made subject to the
° See, for instance, Re Gaglardi (1960), 27 D.L.R. (2d) 281
(B.C.C.A.).
injunction without being impleaded, and mere ser
vice of the application for injunction on them does
not make them parties to the action.
One may think of objecting that in our case the
individual Pinat was the real defendant, since he
had complete control over the defendant compa
nies. I fail to see why this alone could allow a
disregard for the distinct personalities involved
but, in any event, that question does not arise with
respect to the purchaser which, apart from a vague
reference to an employment relationship, is com
pletely independent of the defendants as well as of
Mr. Pinat.
There is, however, a much more compelling and
basic reason than the presence of third parties
among those enjoined, to refuse to equate the
order here involved with a Mareva order. That
reason goes to the very substance of the order. The
exceptional principle to which the Mareva jurisdic
tion gives effect is that a claimant in a law suit
should not be defeated through the disposal by the
debtor of all his assets during the time required for
the Court to give judgment. The aim of a Mareva
injunction is accordingly to freeze the defendant's
assets pending trial and the substance of the order
is strictly to enjoin the defendant from dealing
with and disposing of his possessions or from
taking them outside the reach of the Court's writs
of execution. This is obviously not what the
impugned order is about, since far from enjoining
the defendants from doing something in the future,
it orders them to destroy something already done
and to uproot investments already made.
Is the difference fundamental? The Mareva
practice and jurisdiction have known a consider
able development in England these last years; the
English Court of Appeal, in its lastest decision in
Derby, supra, has even made it applicable "world-
wide" to assets outside the jurisdiction: could not
the order as made here be in line with such
development—I think not. There is, in my view,
the widest gap between orders aimed at freezing
assets and an order aimed at reconstituting assets.
In the first case, the clock is stopped, so to speak,
preservation is the result and only the liberty of
the defendant is to suffer; in the second case, the
clock is set back, reconstitution is the result and
third parties are necessarily directly affected. In
the first case, we can still speak of incidental and
conservatory measures, in the second we cannot:
this is execution, and execution prior to judgment
is, to me, unthinkable. 6
Much emphasis has been put on the last two
payments from the proceeds of the bulk sale which
were made in September, but I do not see how, on
the basis of the proceedings as they stood on
March 7, they could be treated differently than the
initial payment of January 1988, and be more
easily made the subject of a "pull back". It is
alleged, of course, that these payments and their
immediate transfer to the Cayman Islands were
made after the hearing before the Prothonotary
and in anticipation of a possible adverse order,
which would amount to a contempt of court. And
the decision of the Supreme Court in Baxter
Travenol Laboratories of Canada Ltd. et al. v.
Cutter (Canada), Ltd., [1983] 2 S.C.R. 388, is
invoked. I will note that there is quite a difference
between the situation that was before the Supreme
Court in this last-mentioned judgment where the
contumacious behaviour of the defendant had
occurred between the deposit on file of the reasons
of the Trial Judge and the signature of the formal
judgment that counsel had been directed to pre
pare. Here, at the close of the September 13
hearing, there was nothing certain about the out
come of the application and, in fact, the order
sought was beyond the jurisdiction of the Pro-
thonotary. But, in any event, an accusation of
contempt of court has to be proved beyond reason
able doubt (see Glazer v. Union Contractors Ltd.
& Thornton (1960), 129 C.C.C. 150 (B.C.C.A.);
Re Bramblevale, Ltd., [ 1969] 3 All E.R. 1062
(C.A.); Bhatnager v. Canada (Minister of
Employment and Immigration), [1986] 2 F.C. 3
(T.D.), at page 13, reversed on appeal [[1988] 1
F.C. 171] but not on this point) and in the course
of special proceedings established mainly for the
6 Incidentally, the Motions Judge in her reasons suggested
that her order was analogous to orders respecting the produc
tion of documents outside the jurisdiction. The crucial differ
ence, it seems to me, is that the production of documents has
nothing to do with execution and, above all, is necessary to the
court's duty to achieve a just resolution of the legal dispute.
Pre-judgment security plays no such role.
protection of the accused (see Rule 355 of the
Federal Court Rules).
These are the reasons why I think that the
second order of March 7 by Madam Justice Reed
was beyond the jurisdiction of the Court, as was by
necessary implication the order of March 29 again
by Madam Justice Reed.
The Court, in my view, must as a result set aside
all of the orders under appeal. This, ironically, will
leave intact the first order of Reed J. of March 7
transforming the interim order of the Prothonotary
into an interlocutory one, since no appeal was
launched against it. But this order, having no
object, remains, it seems to me, without effect.
The appeals should therefore be allowed and the
orders of the Trial Division rendered on March 7,
1989, on March 29, 1989 and on April 11, 1989
should be set aside.
* * *
The following are the reasons for judgment
rendered in English by
MACGUIGAN J.A.: There is no need for me to
restate the facts, which are fully set out by my
brother Marceau J.A. I wish merely to highlight
one fact, as stated by Reed J. (Case on Appeal,
vol. 1, at page 138):
Mr. Pinat was in the courtroom during the whole September
13, 1988 hearing [before the Prothonotary] when his counsel
argued the motion before this Court on the basis of incorrect
facts.
Subsequent to the hearing and after the decision of
the Prothonotary rendered on September 16, and,
allegedly before being informed of the decision,
Pinat accepted early payment of the final amount
owing by the purchaser under the bulk sale agree
ment of the previous January, an amount which he
immediately transferred to Socoa International in
the Cayman Islands.
I believe it was the apparently contumacious
character of these acts of acceptance and transfer,
done as they were with full knowledge of what was
before the Prothonotary, that led the various
judges of the Trial Division to take the view they
did of this case, and indeed, if the Prothonotary's
decision had been within his jurisdiction, their
reaction might have been justified. However, I
agree entirely with Marceau J.A. that because of
the Associate Chief Justice's General Direction
under Rule 336(1)(g), the Prothonotary lacked
jurisdiction to make the order he did. This was not
a matter argued before the Trial Division but, once
it has come to our attention, this Court cannot
ignore it.
Given that the Prothonotary's order of Septem-
ber 16 was illegal, it seems to me that the avoid
ance of it by Pinat and the companies of which he
was a principal shareholder can no longer be
brought into question. I am not, however, prepared
to say that in no circumstances could a Mareva
injunction require the reconstruction of assets. If
the facts had been as the Trial Division perceived
them to be, particularly if, for example, Pinat had
actually been guilty of contempt, in my view this
might have been a situation where a Mareva
injunction could have been available. The law in
this area is very much in development, as is evident
from the recent decision of the English Court of
Appeal in Derby & Co. Ltd. v. Weldon (Nos. 3 &
4), [1989] 2 W.L.R. 412 (leave to appeal refused).
I find it sufficient for the decision of the present
appeal that a Mareva injunction could not issue on
these facts to require the reconstitution of assets.
In other respects I am in accord with the reasons
for decision of Marceau J.A. and I would also
adopt his disposition of the case.
* * *
The following are the reasons for judgment
rendered in English by
DESJARDINS J.A.: I have had the advantage of
reading in draft the reasons for judgment of both
Marceau J.A. and MacGuigan J.A.
The facts were set out in the reasons for judg
ment of Marceau J.A. and I adopt them. Like my
two colleagues, I am satisfied that the Trial Judge
could not issue her second order of March 7, 1989
which is key to this case. The Prothonotary's
interim order of September 16, 1988 being done
without authority, the defendants in the action
could not be considered as attempting to violate a
court order when on September 16 and 20, 1988,
they transferred to the Cayman Islands the bal
ance of the sale price they had just received from
the purchaser. It was therefore not open to the
Trial Judge to conclude that "the defendants have
moved assets from the jurisdiction in an attempt to
avoid a potential judgment of this Court" (Appeal
Book, at page 145). The order of Joyal J. dated
April 11, 1989, being accessory to the order of
Reed J., also falls.
I would dispose of the matter in the way sug
gested by Marceau J.A.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.