Background: Chicago Title Insurance Company obtained an ex parte Mareva injunction, alleging that Nova Diamonds Inc. and Toronto Reserve Gold Inc. received proceeds from a fraudulent mortgage orchestrated by Mr. Persico. This injunction aimed to freeze their assets to prevent further dissipation.

Legal Issues:

1. Whether Chicago Title made full and frank disclosure when obtaining the Mareva injunction.
2. Whether the injunction should extend to assets not directly in the hands of the alleged fraudsters.

Court’s Decision: The court set aside the Mareva order against Nova Diamonds and Toronto Reserve Gold, finding that Chicago Title failed to make full and frank disclosure of material facts influencing the decision to grant the order. Specifically, Chicago Title did not establish that the funds received by the companies were directly traceable to the fraudulent mortgage proceeds. Additionally, there was no substantial evidence to suggest a risk of asset dissipation by these companies.

Key Points:

• Mareva injunctions require a high standard of disclosure due to their drastic impact on third parties.
• Full and frank disclosure is paramount in ex parte applications to ensure the court is not misled.
• The failure of Chicago Title to conduct a proper tracing exercise or to demonstrate a real risk of asset dissipation by the companies was critical in the decision to set aside the Mareva injunction.

Outcome: The Mareva injunction against Nova Diamonds Inc. and Toronto Reserve Gold Inc. was set aside due to insufficient disclosure and evidence by Chicago Title. The subsequent non-dissipation order was also set aside. Amount of costs or award ordered was not specified.