The Short Version
- A Mareva injunction freezes a defendant's assets before judgment to prevent dissipation during litigation.
- Four-part test: strong prima facie case, real risk of dissipation, balance of convenience, undertaking as to damages.
- Obtained ex parte (without notice) within 24-72 hours in urgent cases. Defendant has a return date within 7-10 days to challenge.
- Available in support of foreign arbitration under ICAA s.9 — CIETAC, ICC, HKIAC and similar awards.
- We obtained a Mareva over an $835,000 condominium in Cheng v. Qu Fei Cheng, 2022 ONSC 6796.
Why Mareva Matters in Cross-Border Cases
For a Chinese plaintiff suing a defendant in Canada, the most painful outcome is winning the judgment but finding the assets gone. Canadian judgments cannot easily be enforced in mainland China — there is no bilateral judgment enforcement treaty. Once Canadian assets are moved offshore (or to related parties or holding companies), recovery becomes improbable.
The Mareva injunction is the legal tool designed for exactly this risk. It is a court order, issued before judgment, freezing the defendant's assets up to the value of the claim. It is granted ex parte — without warning the defendant — because forewarning would defeat its purpose.
Mareva is the most powerful pre-judgment weapon available to commercial claimants in Ontario. It is also one of the most demanding to obtain. A poorly supported Mareva motion will fail and may expose the plaintiff to significant damages. The motion must be precise, the evidence complete, and the strategy clear from day one.
The Four-Part Test
The Canadian framework was settled by the Supreme Court in Aetna Financial Services v. Feigelman, [1985] 1 S.C.R. 2, and applied in dozens of Ontario decisions including Chitel v. Rothbart, Sibley & Associates LP v. Ross, and Mooney v. Orr.
1. Strong Prima Facie Case
Not a triable issue, but a strong case on the merits. The plaintiff must put the substantive evidence before the court — contracts, invoices, correspondence, payment history. Vague allegations of wrongdoing will not suffice.
2. Real Risk of Dissipation
Concrete evidence that the defendant will move or hide assets if warned. Examples: recent sale of real estate at below market, transfers to family members, sudden corporate restructuring, prior pattern of evasion, a stated intention to leave Canada. The court requires more than a creditor's worry.
3. Balance of Convenience
The harm prevented by the freeze must outweigh the harm to the defendant from being unable to use the assets. The court considers the size of the claim relative to the assets, the existence of carve-outs for living and business expenses, and whether security in lieu is feasible.
4. Undertaking as to Damages
The plaintiff must promise to compensate the defendant for any loss if the order is later set aside. This undertaking can be enforced against the plaintiff personally and is a critical planning issue for foreign plaintiffs whose only Canadian asset may be the litigation itself.
The 8-Step Motion Process
- 1
Verify the four-part Mareva test is met
(1) A strong prima facie case — the plaintiff must show real merit, not just a triable issue. (2) Real risk of dissipation — concrete evidence that the defendant will move or hide assets if warned. (3) Balance of convenience favours the plaintiff. (4) The plaintiff is willing and able to give an undertaking as to damages if the order turns out to be wrong.
- 2
Assemble the supporting evidence on affidavit
Affidavit of a person with personal knowledge: the underlying claim, documentary support, the defendant's prior conduct suggesting dissipation risk (transfers to related parties, sudden corporate restructuring, sale of assets at undervalue, unexplained banking activity, history of non-payment), a list of suspected assets in Ontario, and the proposed scope of the freezing order.
- 3
Prepare the draft order with a specific asset cap
Modern Ontario Mareva orders specify a maximum dollar amount (the claim value plus interest and costs). The order must include a 'reasonable living expenses' carve-out for individual defendants, a 'reasonable business expenses' carve-out for corporate defendants, and the standard Stoyatovic notice provisions for banks and third-party recipients.
- 4
Move ex parte — without notice to the defendant
The motion is heard ex parte (in the absence of the defendant) because giving notice would defeat the purpose. Full and frank disclosure is the plaintiff's obligation: any weaknesses in the case, any facts that might help the defendant, must be disclosed. Failure to make full disclosure is the most common reason for orders being set aside on the return motion.
- 5
Obtain the order and serve immediately
Once granted, the Mareva order is served on the defendant and all known asset-holders (banks, brokerages, land registry where real property is involved). Banks have a positive duty to freeze accounts on receipt and must not warn the customer. The order is also registered at the land registry against any real property identified.
- 6
Defend the return motion (within 7-10 days)
The order will include a return date — typically 7-10 days after issuance — when the defendant can apply to set it aside or vary its terms. The plaintiff must be prepared to defend the order on its merits and on full disclosure, with potentially additional evidence on the dissipation risk.
- 7
Convert into Mareva pending trial
On the return motion the court may continue the Mareva to trial, modify the scope (carve-outs, asset list, security in lieu), or discharge it. Most properly-grounded Mareva orders continue on terms acceptable to both sides — often with the defendant providing security in lieu of the asset freeze, or with carve-outs for legal costs and living expenses.
- 8
Use the order — examinations, third-party disclosure, enforcement
The Mareva is not just a freeze. It supports examinations in aid of the order to identify additional assets, Norwich orders compelling banks and other third parties to disclose information, and ultimately the path to garnishment, seizure and final execution once judgment is obtained.
Case Study
Cheng v. Qu Fei Cheng, 2022 ONSC 6796
Background. Father claimed his daughter had received an $835,000 condominium in breach of a Separation Agreement, then sold the property and was about to distribute the proceeds.
Strategy. The plaintiff moved for a Mareva injunction over the sale proceeds — not the condominium itself, since it had already been transferred away. The dissipation risk was concrete: the sale proceeds were known amounts in identified accounts, with imminent distribution.
Outcome. Justice Koehnen of the Ontario Superior Court granted the Mareva injunction over the sale proceeds in the amount of $835,000 — the value of the disputed condominium. The court also waived the plaintiff's undertaking in damages under Rule 40.03 because the plaintiff's lack of assets was caused by the very breach the injunction addressed.
Strategic lessons. (1) Mareva can freeze proceeds of a disposition even after the underlying asset has been transferred. (2) Rule 40.03 may relieve impecunious plaintiffs from the damages undertaking in exceptional cases. (3) Concrete identification of specific accounts and amounts makes the dissipation risk easier to prove.
Practical Strategy
Move on the same day as the underlying claim
File the Notice of Action or Statement of Claim concurrently with the Mareva motion. The court must have jurisdiction over the substantive claim before it will freeze assets in aid of it.
Investigate assets before, not after
Land Registry searches, PPSA searches, corporate searches, public filings, social media intelligence. The court will want a credible list of assets to freeze — vague claims that the defendant has unspecified assets will not impress the judge.
Disclose adversely — everything
Full and frank disclosure on an ex parte motion includes facts that weaken the case. If the defendant has a colourable defence, say so. If the plaintiff has prior bad conduct, say so. Material non-disclosure is the most common ground for the order being set aside on the return motion — and is expensive in costs and reputation.
Plan the undertaking as to damages
For Chinese plaintiffs without significant Canadian assets, the damages undertaking is a real planning issue. Options: posting security, a parent company guarantee, after-the-event insurance, or seeking a Rule 40.03 waiver in exceptional cases.
Common Mistakes
- Filing before investigating. Without specific asset identification the court cannot frame an effective freezing order — and may decline to issue one at all.
- Overreaching scope. Freezing all assets without a dollar cap signals the plaintiff is trying to punish the defendant rather than secure recovery. Courts increasingly cap Mareva orders at the claim value plus interest and costs.
- Forgetting carve-outs. Without living-expense and business-expense carve-outs the order is vulnerable on the return motion and may be discharged as oppressive.
- Selective disclosure. The most common reason orders are set aside. Disclose adversely — what looks like a weakness in your case is far less harmful than the same fact later being raised by the defendant on the return motion.
- Treating the order as the goal. A Mareva is a means, not an end. Plan for the return motion, the investigation that follows, and ultimately judgment and execution.
Frequently Asked Questions
When is a Mareva injunction available — what is the test in Ontario?
Four cumulative requirements: (1) a strong prima facie case (not merely a triable issue — meaningful merit must be shown); (2) a real risk that the defendant will move, hide or dissipate assets to defeat any future judgment; (3) the balance of convenience favours granting the order; (4) the plaintiff provides an undertaking as to damages. The threshold is intentionally high because a Mareva is a drastic pre-judgment remedy.
How fast can a Mareva be obtained?
From instruction to issued order in 24-72 hours is realistic in urgent matters. Most courts will accommodate urgent ex parte Mareva motions, particularly when supported by tight evidence and an experienced motion judge schedule. We have moved on weekends and after-hours when the dissipation risk was imminent.
What is the 'undertaking as to damages' and why does it matter?
The plaintiff must promise that if the Mareva turns out to have been wrongly granted, the plaintiff will pay damages to the defendant for losses caused by the freeze. This undertaking can be substantial in cases involving large business assets. Chinese plaintiffs without significant Canadian assets sometimes need to post security or obtain a guarantee to support the undertaking — this is a planning point that should be addressed before the motion.
Can a Mareva be obtained against assets located outside Canada?
Yes — a worldwide Mareva injunction is available in appropriate cases. The Ontario court has personal jurisdiction over the defendant once the order is served; the defendant is then obligated to comply with respect to assets globally. Enforcement against foreign-located assets remains the practical challenge, but the order itself can be obtained. Mooney v. Orr, Chitel v. Rothbart, and the more recent Sibley & Associates jurisprudence support worldwide orders where the dissipation risk is global.
What if the defendant claims the Mareva will destroy their business?
The order must include 'reasonable business expenses' and 'reasonable living expenses' carve-outs precisely to avoid this outcome. The Mareva is meant to preserve assets to satisfy an eventual judgment, not to shut down the defendant's operations. Carve-outs are negotiated on the return motion and can include salaries, tax obligations, ordinary-course supplier payments, and litigation costs.
How does a Chinese plaintiff prove 'real risk of dissipation' from outside Canada?
Common evidence: the defendant's prior pattern of moving assets to related entities or family members, sudden corporate restructuring (asset sales, share transfers, new holding companies), banking activity showing rapid withdrawal or transfer offshore, a stated intention to leave Canada, sale of real estate at below market, refusal to communicate or evasion, history of non-payment to other creditors. The court does not require proof of dissipation — only a 'real risk' supported by concrete facts.
Can a Mareva be obtained in support of a CIETAC or other foreign arbitration?
Yes. Section 9 of the International Commercial Arbitration Act, 2017 expressly empowers Ontario courts to grant interim measures in support of foreign arbitration proceedings — including Mareva injunctions. The threshold tests still apply. This is particularly valuable when arbitration is pending or recently issued and the award debtor is moving assets in Canada.
What happens if I obtained the Mareva improperly — what is the downside?
Three risks: (1) the order is set aside on the return motion for non-disclosure or weak evidence; (2) the plaintiff is exposed under the undertaking as to damages — potentially substantial; (3) costs are awarded against the plaintiff, often on substantial-indemnity scale to mark the court's disapproval of an improperly obtained order. The takeaway: the ex parte motion must be flawlessly supported and the disclosure must be complete.
Can the Mareva be combined with other relief?
Yes — and often is. Common companion orders: Norwich orders (third-party disclosure of banking and corporate records), Anton Piller orders (search-and-preservation, in extraordinary cases), CPL registration against real property, and proprietary tracing orders for misappropriated funds. The Mareva is most powerful when paired with investigation tools to identify additional assets.
What if the defendant is in mainland China and has limited Canadian assets?
First, freeze the Canadian assets while they still exist — even modest assets in Ontario are usually more valuable than larger assets in mainland China that Canadian judgments cannot reach. Second, consider a worldwide Mareva and parallel enforcement strategies in any third jurisdictions where the defendant has assets. Third, if assets are exclusively in mainland China, accept the practical limitation and focus enforcement strategy accordingly.
About the Author
Calvin Zhang
Commercial Litigation Lawyer · Starkman & Zhang Lawyers
Acts for plaintiffs and defendants in Ontario commercial disputes — breach of contract, debt recovery, and complex multi-party litigation. Bilingual and at ease in court.
Considering a Mareva Motion?
The window for an effective Mareva is narrow. If you suspect the defendant is preparing to move assets, the time to act is now. We brought the Mareva motion in Cheng v. Qu Fei Cheng. Bring the underlying contract, the defendant's recent transactions, and your evidence of dissipation risk to the first consultation.