Property Restraining Orders Against Companies

In Warde v. Slatter, the Respondent wife had filed proceedings against her husband and her husband’s mother-in-law, and the mother-in-law’s company (the “Company”).The wife alleges that she has an interest in the Company, that the wife had worked at and served as a director and officer, for approximately 17 years prior to her separation from her husband.

Warde v. Slatter, 2016 BCCA 63, the British Columbia Court of Appeal heard an appeal from a Chamber’s Judge’s ‘interlocutory’ (non-trial) decision.The Chamber’s Judge had found that the Appellant Company had breached a prior without notice restraining order by paying money to service providers (the “Restraining Order”) and that on that basis the Company was ordered to:

1. pay all of its funds into court including funds in its “control” and held in trust on its behalf by others;
2. to account for any 'disposal' of its property in the 20 months prior to the order being made; and
3. to disclose certain of its privileged documents.

When the Chamber’s judge made her decision, the nine day trial in these highly contested family proceedings was then set to commence seven weeks later.

Family Law Act, S.B.C. 2011, c. 25 [“FLA”]. With the new legislation came changes as far as what the courts could do to enjoin non-spouses named in family proceedings, pending trial. Under the former Family Relations Act, R.S.B.C. 1996, c.128 any party could be restrained from disposing of potential family assets pending trial. The FLA changed the landscape, limiting restraining orders under the FLA to only spouses.

Warde v. Slatter, had as its statutory foundation sections 228 [compliance or restraining orders] and 301 [power to dispose of undertaking] of the Business Corporations Act, S.B.C. 2002, c. 57. Rather than interpret the Restraining Order under its statutory foundation, the Chamber’s Judge interpreted the Restraining Order as a stand-alone injunction. That finding formed the basis for the balance of the orders made by the Chambers judge.

The panel hearing the appeal found that the application was 'miscast from the outset' in a number of respects.

mareva type injunction order.Such a draconian order will only be granted upon the applicant establishing:

(1) a strong arguable case;

(2) that the assets sought to be impounded relate to the applicant’s viable claim; and

The Respondent wife had not established the legal basis for such an exceptional order before the Chambers Judge and the appeal was allowed.

For companies named in family law proceedings, this case is important in providing some insight into the higher standard of proof to ground injunctive relief against a non-spouse parties embroiled in family law disputes and further solidifying the sanctity of solicitor client privilege. Fortunately, for allegedly misbehaving litigants everywhere, the Court of Appeal also expressed 'doubt' as to whether breach of a court order could result in a waiver of privilege.