The court found a significant risk of asset dissipation
The Ontario Superior Court of Justice extended a Mareva Injunction in favour of an insurance company, freezing the assets of several defendants involved in a fraudulent mortgage scheme.
The dispute in Chicago Title Insurance v. John Doe, 2024 ONSC 4793, centred around a property in Mississauga. Individuals falsely claimed ownership and obtained a fraudulent mortgage loan from Ryan Mortgage Income Funds Inc.
The plaintiff, an insurance company that provided title insurance for the mortgage, had already compensated Ryan Mortgage for the loss. A prior tribunal hearing declared the mortgage a "fraudulent instrument" and removed it from the property’s title. As a result, the plaintiff paid $620,500 to Ryan Mortgage to cover its obligations under the title insurance policy.
Following an investigation, the plaintiff traced $504,238 of the fraudulent mortgage proceeds to a BMO bank account. These funds were then transferred to several individuals, prompting the plaintiff to seek a Mareva Injunction in July 2023, freezing the accounts of various defendants.
The plaintiff requested that the court extend the Mareva Injunction until the case’s final resolution. The court granted the motion, maintaining the freeze on the defendants’ assets.
In the hearing, one of the defendants opposed the injunction, arguing that it restricted her access to living expenses for her three children. However, the court had previously modified the order in April, allowing the defendant to withdraw $2,000 per month for living expenses. The defendant claimed she had not yet received these funds, and the court clarified the process for her to access them through her bank.
The defendant also asserted her innocence, stating that her aunt, who is not a defendant in the case, had borrowed her BMO account and was unaware of the fraudulent deposits. The plaintiff, hearing this claim for the first time, was not prepared to lift the injunction but allowed the defendant the option to bring a future motion to present evidence.
The Superior Court found the plaintiff had established a strong prima facie case of fraud, supported by evidence showing that significant portions of the fraudulent mortgage proceeds had been transferred to various defendants. The court cited the risk of asset dissipation as a key reason to continue the freeze on the defendants' accounts.
