A Non-Party’s Beneficial Interest in a Frozen Joint Account

The Dispute

A woman held a joint bank account with her former spouse, money she considered hers to support herself and their two children after the couple separated. Her former spouse’s sister later froze his assets in a separate dispute over their mother’s estate, and the freeze caught the joint account too. With almost no income of her own, she was locked out of funds she needed for rent and daily expenses while the estate dispute continued.

The Parties’ Positions

The applicant applied to vary the ex parte Mareva injunction on two footings. She contended that the sister had obtained the freeze without making full and frank disclosure, the standard requiring an ex parte applicant to bring forward every material fact, including any that could assist the party absent from the hearing. She pointed to evidence that the sister’s own affidavit had told the court she had admitted the joint account held estate money, an admission the applicant denied ever making. She also relied on the administrator’s own sworn evidence, given months before the freeze was challenged, acknowledging that the funds in the joint account belonged to her and that he had agreed she could draw on them for spousal and child support.

The sister resisted the variation, arguing that releasing the account was unnecessary since the injunction let the administrator draw against his other assets for expenses, and that her dispute with her brother over the estate had nothing to do with the applicant’s arrangement with him. She denied misrepresenting anything to the court and maintained that she had made no deliberate attempt to mislead the judge who granted the freeze. She also submitted that the applicant had not proven where the money in the joint account came from, and argued that at least part of it originated from the estate, which the administrator had no authority to give away before the estate was properly administered.

The Court’s Decision

The Supreme Court of British Columbia found a material non-disclosure: the sister’s affidavit had told the judge that the applicant admitted the joint account held estate funds, and the court accepted the applicant’s evidence that she never said this. The omission was careless rather than deliberate, though the disclosure standard does not turn on intent. The court also found that the applicant held a genuine beneficial interest in the joint account, without deciding whether estate funds were mixed in. Rather than lifting the freeze entirely, the court varied it, permitting the applicant to draw the account down to a fixed floor that preserved the sister’s protected interest in the estate while freeing enough of the balance to cover her family’s living expenses. It awarded the applicant her costs of the application, forthwith after assessment, declining to elevate them to special costs since the sister’s carelessness did not warrant reproof.

Key Lessons for Joint Account Holders and Ex Parte Applicants

• Corroborate a beneficial-ownership claim over a joint account with the other holder’s own prior sworn evidence. The administrator’s affidavit, made months before the freeze was challenged, acknowledged the applicant’s interest and consented to releasing funds to her; that earlier evidence carried more weight than his later attempt to disavow it.
• Verify what an affidavit attributes to a non-party before filing it on an ex parte application. The disclosure failure here was a misattributed fact, not a withheld one: the sister’s affidavit told the court the applicant admitted something she denied saying, and the court accepted her denial.
• Do not assume a freezing order is an all-or-nothing remedy. A court varying a Mareva injunction may preserve the moving party’s protected interest while carving out relief for a non-party whose funds were caught by the order, rather than setting the injunction aside.
• Do not assume that careless non-disclosure alone will support an award of special costs. Special costs generally require conduct the court considers deserving of reproof, a higher bar than the carelessness that will support a variation of the order itself.

The outcome of this application turned on the sworn evidence of the joint account’s other holder and the scope of the disclosure made at the original ex parte hearing. A similarly framed application may be decided differently.

ATAC LAW acts for parties seeking to vary or defend Mareva injunctions in civil and commercial litigation, including account holders who are not themselves party to the dispute that gave rise to the freeze.

This matter was conducted by James Un, a senior associate lawyer at ATAC LAW, who acted for the applicant on the application.