In fraud cases, one of the most powerful tools in a plaintiff’s toolbox is to seek an asset freezing order (a Mareva injunction) from the courts. But to obtain such an order—which is normally granted without notice (ex parte) to the alleged wrongdoer—the court demands full and frank disclosure of all material facts, especially those unhelpful to the plaintiff’s case. In the rush to obtain a Mareva injunction before assets are lost, there is the risk that a plaintiff inadvertently fails to meet this obligation. When a plaintiff fails to provide full and frank disclosure, courts have set aside previously granted Mareva orders on the basis that the Mareva injunction is extraordinary relief. This is what happened in Saeed Tabrizi, et al. v. Vahid Farjami, et al.,2025 ONSC 1740.
Background to Dispute
The plaintiffs were a group of investors who invested money into a failed business called Trip Support, operated by one of the personal defendants, Vahid Farjami. Trip Support was a “Book Now, Pay Later” business which offered financing for airline ticket purchases. The plaintiffs alleged they were defrauded of over $24 million lent to Trip Support and further alleged that Farjami engaged in a Ponzi scheme using their money.
The plaintiffs sought and obtained a Mareva order to freeze the defendants’ (including Farjami, his spouse and their associated companies) assets and a Norwich order to trace the flow of funds. The defendants moved to set aside the Mareva order arguing that the plaintiffs breached their duty of full and frank disclosure. The court agreed and lifted the Mareva order. The court found the plaintiffs failed to disclose several “material” facts at the ex-parte hearing:
- their role in recruiting investors and receiving commissions for that role;
- evidence of partial repayments to some plaintiffs exceeding $3 million;
- Farjami’s statements about having invested funds in real estate to recover losses which was conceivably exculpatory; and
- that the $24 million in losses was sourced from an online platform, not the plaintiffs’ own records.
However, the defendants were not entirely successful. Farjami and his spouse were found in civil contempt for failing to disclose ownership of a Spanish property while the Mareva order was in effect. In the related contempt sentencing proceeding, the court partially reinstated the Mareva injunction by prohibiting the defendants from dealing with the property until further order.
Leave to Appeal to the Divisional Court Granted
After the Mareva order was set aside, there was no automatic right of appeal. On the plaintiffs’ motion for leave to appeal, in addition to challenging the motion judge’s factual findings that there was material non-disclosure, they argued that in treating all disclosure omissions as automatically fatal, the motion judge erred in not considering whether to exercise his discretion to maintain the Mareva order where it is in the interest of justice to do so—for instance, in the case of a clear fraud.
The plaintiffs argued that the decision risks undermining the effectiveness of Mareva injunctions in civil fraud cases by elevating technical nondisclosures over substantive justice. In support of their position, the plaintiffs relied on the two-part test for Mareva relief from Waters Estate v. Henry, 2022 ONSC 5485:
- whether there was a breach of full and frank disclosure; and
- whether the court should still exercise its residual discretion to maintain the order in the interests of justice.
The plaintiffs argued that the motion judge failed to apply the second part of the test, treating the omissions as automatically fatal. Citing National Bank Trust v. Yurov, [2016] EWHC 1913 (Comm), the plaintiffs emphasized that courts may uphold Mareva orders despite non-disclosure when justice demands it.
The plaintiffs pointed to a strong prima facie case of fraud, including the defendants’ concealment of overseas assets and a large wire transfer to Spain. They noted that the defendants were found in civil contempt for breaching the Mareva order. The plaintiffs further argued that their non-disclosure was not material enough to invalidate the order, referencing Two-Tyme Recycling Inc. v. Woods, 2009 CanLII 64803 (ON SC). The plaintiffs argued that the motion judge failed to apply the court’s residual discretion, as seen in Regalcraft Homes Ltd. v. Salvadori, 2014 ONSC 6990, and Waters Estate, where Mareva injunction was upheld (despite disclosure defects) due to compelling evidence of fraud and asset dissipation. In contrast, the defendants maintained that the motion judge properly applied the rules concerning full and fair disclosure on ex parte motions. The defendants argued that the Mareva order was granted based on incorrect material facts and preserving it would be inconsistent with equitable principles.
Leave to appeal has now been granted and one of the issues the Divisional Court may further consider is when the court should relax its own rules and exercise its discretion to maintain a Mareva order—even with an omission in disclosure—if it is in the interest of justice to do so.
** With thanks to Viesakan Sivaraj for their assistance with this blog post.