Using Rule 45 to Prevent the Disposal of Property

Denis Grigoras

Denis is a lawyer who draws on his background in complex legal disputes and transactions to problem-solve for his clients.

Rule 45 of the Ontario Rules of Civil Procedure deals with the preservation of personal property that is relevant to a litigated issue.  The goal of this rule is to prohibit the party who is currently in possession of the property from selling or otherwise getting rid of it before the matter has been resolved. A preservation order is an extraordinary form of relief that is often issued with little or no prior warning. It is comparable to an Anton Piller order, which enables a party to inspect records and remove them into the custody of an interim receiver, and a Mareva injunction, which prevents a party from dealing with its own assets pending the determination of the proceeding.

Under Rule 45, the temporary preservation of property can be accomplished through one of three different forms of orders. Rule 45.01 enables the court to issue an interim order for the preservation or sale of property, as well as the authority to enter or search any property that is in the possession of a party or a non-party. Rule 45.02 allows for the payment of a specific money into court or the security of the fund “on such terms as are just.” The recovery of personal property that has been held as security is provided for under Rule 45.03.

In order to obtain a preservation order, the moving party must demonstrate that the property in question is relevant to the proceeding or an issue in the proceeding, that there is a serious issue to be tried with regard to the property, that the interim preservation or custody of the property is necessary for a party to either advance or defend its claim, and that the balance of convenience favours granting the relief sought by the applicant. In most cases, a motion for a preservation order is brought on an ex parte basis.

Because preservation orders are, in essence, demands for pre-judgment execution, the courts are notoriously reluctant to grant them. This is an important point to keep in mind. There must be a serious issue to be tried and the balance of convenience must favour granting the relief. Additionally, courts have the inherent authority to control the process of litigation, including the power to require the preservation of electronic records; this includes the ability to order the preservation of electronic documents. When there is a strong likelihood that the defendant will destroy evidence after being informed of the proceedings, it is common practice to file a motion for a preservation order in to ensure that significant evidence, such as documents, information, or other items, will be preserved and made accessible for the trial of the action in question.

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