Fraud can have devastating consequences for businesses and individuals alike, often resulting in significant financial losses and reputational harm. When fraud is suspected, swift legal action is crucial to prevent further damage. One of the most powerful legal tools available to combat fraud in Ontario is the use of injunctions. These court orders can freeze assets, prevent the dissipation of funds, and preserve crucial evidence before a full trial takes place.

Understanding Injunctions in Fraud Cases

An injunction is a court order that compels a party to do something or refrain from doing something. In fraud litigation, injunctions are an immediate remedy to prevent further harm while the case proceeds through the courts. Because fraudsters often attempt to move or hide assets, injunctions are critical in ensuring that victims can recover what they are owed.

Types of Injunctions Used in Fraud Cases

In Ontario, several types of injunctions can be used in fraud litigation. The most common include:

Mareva Injunction (Freezing Order)

A Mareva injunction is one of the most impactful tools to combat fraud. It freezes a defendant’s assets to prevent them from being moved, hidden, or dissipated before a judgment can be enforced. This is particularly important in fraud cases, where bad actors often attempt to move funds offshore or into untraceable accounts.

To obtain a Mareva injunction, the plaintiff must demonstrate:

1. A strong prima facie case (i.e., there is clear evidence of fraud or wrongdoing);
2. A real risk the defendant will dispose of or hide assets if the order is not granted; and
3. The balance of convenience favours granting the injunction (meaning that the harm to the plaintiff if the injunction is not granted outweighs any inconvenience to the defendant).

Anton Piller Order (Search and Seizure Order)

An Anton Piller order allows the plaintiff to search the defendant’s premises and seize evidence related to the alleged fraud. This extraordinary remedy is granted only in cases where there is a real risk that evidence will be destroyed or hidden if prior notice is given to the defendant.

To obtain an Anton Piller order, the plaintiff must show:

1. A strong case that fraud has occurred;
2. The defendant possesses key evidence that is at risk of being destroyed; and
3. The harm of allowing the defendant to destroy evidence is greater than the harm caused by executing the order.

Interim and Interlocutory Injunctions

These temporary court orders restrain a defendant from engaging in specific actions (such as transferring funds or disposing of assets) until the case is fully resolved. These are often used in fraud cases to maintain the status quo while legal proceedings are ongoing.

Norwich Pharmacal Order (Disclosure Order)

A Norwich Pharmacal order compels third parties (such as banks or financial institutions) to disclose information about suspected fraudsters’ accounts or transactions. This is particularly useful in tracing fraudulent transactions and identifying where funds have been transferred.

Obtaining an Injunction in Ontario

Successfully obtaining an injunction in a fraud case requires careful preparation and compelling evidence. Here are the key steps involved:

Step 1: Gather Strong Evidence

Courts do not grant injunctions lightly. The plaintiff must present clear and convincing evidence of fraud, such as financial records, witness statements, and expert reports. Documentary evidence showing suspicious transactions, falsified records, or fraudulent misrepresentations can strengthen the case.

Step 2: Act Quickly

Time is critical in fraud cases. If assets are moved or evidence is destroyed, recovery becomes more difficult. Injunction applications are often made ex parte (without notice to the defendant) to prevent them from taking action before the order is granted.

Step 3: Provide an Undertaking for Damages

Courts require plaintiffs seeking an injunction to provide an undertaking as to damages—a promise to compensate the defendant if it turns out the injunction was improperly granted. This ensures that defendants are protected from undue harm.

Step 4: File an Application and Attend the Hearing

The plaintiff must file an application with the Ontario Superior Court of Justice and provide sworn affidavits detailing the alleged fraud and necessity of the injunction. If granted, the order is enforceable immediately.

Injunctions are a severe remedy that can significantly impact a defendant’s rights and financial interests. As such, they require meticulous preparation and a knowledge of the law underlying each type of injunction. Retaining an experienced litigation lawyer is critical for avoiding unnecessary delay and expense.

What Happens After an Injunction Is Granted?

Once an injunction is in place, the defendant must comply with its terms. In the case of a Mareva injunction, banks and financial institutions are notified to freeze accounts, preventing further transactions. Failure to comply with an injunction can result in serious consequences, including contempt of court proceedings, fines, and imprisonment.

Additionally, the injunction helps secure assets or evidence for trial. Sometimes, it may lead to an early settlement, as the defendant faces increased legal pressure.

Challenges and Risks in Seeking Injunctions

While injunctions are powerful tools, they come with challenges, including:

• High Evidentiary Threshold: Courts require strong, credible evidence before granting an injunction.
• Risk of Abuse: Injunctions can be misused to apply undue pressure on a defendant. Courts scrutinize applications carefully to prevent wrongful orders.
• Financial Costs: Seeking an injunction involves legal fees and the risk of providing damages if the order is later overturned.

Milosevic & Associates: Taking Swift Action to Prevent Fraud Losses in Toronto

Fraud can be financially and emotionally devastating, but victims are not without recourse. Injunctions offer a critical legal remedy to freeze assets, seize evidence, and prevent fraudsters from escaping justice. Given the complexity of these legal tools, working with experienced fraud litigators is essential to navigating the process effectively.

At Milosevic & Associates, we act quickly and strategically to help businesses and individuals obtain injunctive relief and stop fraud in its tracks. Our extensive experience in civil fraud claims empowers us to create innovative, dynamic fraud solutions and maximize our clients’ chances of recovery. To schedule a confidential consultation with a skilled civil fraud lawyer, please call 416-916-1387 or contact us online.