Thursday, 24 May 2018

Anton Piller Orders - What Not To Do

Author: Ainslie Fowler and Peter Major, Q.C.

Plaintiffs sometimes determine that the rules and remedies afforded to them to acquire or preserve evidence and assets in the regular course of litigation are inadequate. In certain instances, Plaintiffs can overcome the hurdles that delay these standard remedies through Anton Piller Orders, Mareva Injunctions or Attachment Orders. An Anton Piller Order is a form of civil search warrant that displaces the normal rules on discovery of records. It enables the Applicant to attend at the premises of the Defendant, without notice, and take possession of the records of the Defendant. Mareva Injunctions are court orders temporarily freezing a defendant's assets pending the final resolution from the Court. It is granted pursuant to the court's equitable jurisdiction to grant injunctive relief pursuant to Section 13(2) of the Judicature Act. An Attachment Order is made pursuant to the Civil Enforcement Act, Part 3 and is an order permitting a party to obtain pre-judgment relief where there are reasonable grounds for believing that a defendant is dealing, or is likely to deal, with its exigible property other than for the purpose of meeting its reasonable and ordinary business and living expenses.

Each of these remedies are considered extraordinary because they permit the Court to restrict or impede a defendant's use of certain assets before the Court has rendered a final determination of the issues in dispute. Invariably, applications for these remedies commence with an ex-parte Application supported by Affidavit evidence. Since the Court only hears from one party in that application, it is imperative that the evidence be precise and there is complete candor from the applicant about all of the relevant facts that the Court must consider before granting such remedies.

Recently, the Court of Appeal of Alberta in Secure 2013 Group Inc. v. Tiger Calcium Services Inc., 2017 ABCA 316 confirmed the need for strict compliance with the criteria for each remedy. In that case, Plaintiff’s counsel applied for Anton Piller Orders against the Defendants as well as against the offices of the Defendant’s lawyers and accountants. The Plaintiff’s counsel also applied for Mareva/Attachment Orders.

In a wide and comprehensive overview of what not to do, the Court set aside each of the Anton Piller Orders and Mareva Injunctions excluding one, which remains subject to a pending application to set it aside.

The Anton Piller Orders were set aside against the accounting and law firms for being far too broad based on multiple inadequacies, including the failure to advise the Court that the Orders were against third party accounting and law firms, misstatements going well beyond the Affidavit evidence, failing to properly identify that the accounting and law firms actually possess incriminating evidence or that there was a real possibility that records in their possession would be destroyed, that there was no explanation why alternative remedies were not suitable or that notice was not given to the Defendants about the documents being seized from these third parties. This case sets a high bar for obtaining a third party Anton Piller Order, and confirms that "searching the registered office of a defendant (often a law firm) or its accountant is generally 'unwarranted'."

The Anton Piller Order was also set aside against the Defendants on the grounds that the representations before the Court were far too broad in the circumstances. Most notably, there was an unlimited number of people ordered to produce the records with no mechanism to address confidentiality or commercially sensitive non-privileged information and the Order was granted for a remarkable period of 60 days rather than the customary 10-14 days.

The Mareva/Attachment Orders were likewise set aside. The Court found it was improper to have similar and unlimited financial caps with respect to any of the parties. There was a failure to specify a return date to afford the Defendant an opportunity to oppose the Order and the limits imposed on the individuals for living expenses and legal expenses was unreasonably low.

The Court of Appeal reminds us that extraordinary care and attention to detail is required to properly secure these remedies, and there is much to be lost if a commensurate level of analysis is not an overarching concern to the applicant in this process.

If you or your company have any questions regarding any of the extraordinary remedies raised in this blog please do not hesitate to contact Ainslie Fowler and Peter Major, Q.C. in the commercial litigation practice group.

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