Executive Summary – Key Legal & Evidentiary Issues

• Scope of Disclosure: Dispute over whether Mr. Friesen needed to prove only a lack of available assets or also the absence of alternative funding sources like credit or third-party support.

• Variation of Mareva Injunction: Core issue centered on whether the variation allowing Friesen access to funds for legal fees, taxes, and living expenses was legally justified.

• Interpretation of Injunction Terms: Debate on the proper interpretation of the Mareva order's disclosure and access provisions, including sealed asset list requirements.

• Discretionary Judicial Authority: Whether the chambers judge acted within her discretion in approving the variation based on the evidence submitted.

• Impact of Prior Asset Transactions: SEC challenged Friesen's credibility due to prior mortgaging and sale of property, suggesting noncompliance with U.S. court orders.

• Cross-Jurisdictional Enforcement: Tension arose from the SEC’s delay in honoring its obligation to support reciprocal enforcement of the variation in U.S. courts.

Facts of the Case

In 2021, the United States Securities and Exchange Commission (SEC) filed a civil claim in the U.S. District Court against Jackson T. Friesen and others, alleging involvement in a stock manipulation scheme, which violated U.S. securities laws. Though there were criminal proceedings related to the scheme, Mr. Friesen was not criminally charged.

To protect potential recoveries, the British Columbia Securities Commission (BCSC) issued preservation orders freezing over $3.7 million CAD in assets owned by Friesen or his companies. Additionally, the SEC obtained a Mareva injunction in British Columbia in 2022, restraining Friesen from dealing with any assets—both locally and abroad—up to $13.39 million USD, aligning with the amount claimed in the U.S. litigation.

Friesen later applied to vary the Mareva injunction to allow him access to funds to cover:

• Legal fees in Canada and the U.S.

• Personal and corporate tax obligations.

• Monthly living expenses.

The variation was granted in December 2024, after Friesen filed a sealed list of assets, as required under the injunction terms. The SEC challenged the variation and applied for leave to appeal and a stay pending appeal, arguing that Friesen had not made full financial disclosure.

Arguments and Court’s Analysis

• Disclosure Obligations under the Mareva Order

The Mareva order had a unique feature: it required sealed disclosure of Friesen’s assets to the court, without SEC access, aiming to avoid self-incrimination concerns in the U.S. proceedings. The SEC argued that Friesen should have disclosed all alternative financial resources, including access to credit, income, or third-party assistance—not just asset holdings.

However, the chambers judge determined that under British Columbia law, Friesen was only required to prove that he had no other available assets—not that he had exhausted all possible funding sources. This distinction differs from stricter disclosure standards followed in Ontario case law, which the judge declined to adopt.

• Evaluation of Friesen’s Credibility

The SEC raised concerns over Friesen’s conduct—specifically, mortgaging and selling a Vancouver property shortly after being served with court proceedings. While the judge scrutinized these actions, she concluded that the sealed asset list sufficiently addressed the question of Friesen’s financial capacity.

• Judicial Discretion and Nature of the Remedy

The Court emphasized that a Mareva injunction is not a proprietary remedy; rather, it serves to preserve the integrity of the judicial process. As such, courts should avoid imposing unnecessary obstacles that could prevent a defendant from meeting basic financial needs or mounting a legal defense.

Outcome

Justice Riley of the Court of Appeal for British Columbia:

• Denied leave to appeal, concluding that the chambers judge had acted within her discretion.

• Found the issues to be highly case-specific, particularly because the evidence (Friesen’s asset list) was sealed and inaccessible to the SEC.

• Declined to stay the variation order, stating that refusing the variation would leave Friesen unable to meet essential living and legal expenses.

The court held that allowing the variation did not undermine the purpose of the original Mareva injunction. The SEC's arguments were found to be largely based on legal principle, not practical consequence, especially since they had already consented to the release of certain funds.