Summary

Keywords

Civil procedure – Contempt of court – Mareva order – Applicants found to be in contempt of court for breaching terms of Mareva order – Court striking applicants’ pleadings and ordering period of incarceration – Whether Court should review the term of incarceration imposed, to determine whether a 90 day sentence is proportionate and just where propriety of impugned conduct was unclear at material time – Whether proper scope of Mareva injunction requires clarification – Whether Mareva injunction prohibits continued operation of a business, rather than simply preventing defendant from dissipating its assets.

Summary

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Trade Capital Finance Corp. (“Trade Capital”), is in the business of purchasing accounts receivable. It alleges that it was defrauded of approximately $6,500,000 in a sophisticated scheme in which it unknowingly purchased fictitious accounts receivable. It alleges that the majority of its lost funds was eventually deposited in bank accounts owned by the applicant, The Cash House Inc. (“Cash House”). Cash House is owned by 2454904 Ontario Inc., which in turn is owned by Osman Khan. Trade Capital obtained an ex parte Mareva Order freezing the assets of all defendants to its action, including Cash House, and an order for financial disclosure. The applicants’ motion to set aside or vary the Mareva Order was dismissed. Trade Capital made numerous attempts to obtain production of documents and to schedule Mr. Khan for examination but was unsuccessful. Trade Capital then brought a motion, seeking to have the applicants found in contempt and to strike Cash House’s statement of defence and crossclaim.

Lower Court Rulings