Executive Summary: Key Legal and Evidentiary Issues

• Scope of the Mareva (freezing) order over present and future assets, including whether post-February 2025 income is caught by its wording.
• Stability of prior interlocutory orders and the limited use of article 657 C.p.c. to “interpret” a judgment without turning it into an appeal or rewriting its substance.
• Evidentiary weight of the defendants’ lack of transparency, prior non-compliance, and lifestyle evidence (notably high living expenses in Dubai) in assessing modification of extraordinary relief.
• Criteria for allowing frozen assets to be used for living expenses and legal fees, and the defendants’ failure to show lack of alternative resources or reasonable budgeting.
• Interaction between Mareva relief and investors’ protection in the context of serious Ponzi-type fraud allegations and alleged dissipation of funds.
• Limits on sealing court documents: balancing privacy and safety concerns against the strong presumption of open court and public access to financial affidavits.

Background and parties

This case arises from a large investor lawsuit in Quebec’s Superior Court (Commercial Division) alleging that multiple defendants, including Michael Alexander Roman Augustus, operated a fraudulent Ponzi-type scheme. Investors claim to have lost millions of dollars, and their capital is said to be “missing” or “untraceable” according to the defendants’ own representations. The plaintiffs are 9356-1306 Québec inc. and related entities and individuals; they have pursued extensive provisional relief to preserve assets while the main fraud action proceeds. The February 27, 2026 judgment focuses on interim procedural and remedial issues, not the final determination of liability for fraud.

Alleged Ponzi scheme and Mareva order

Early in the litigation, on 18 February 2025, the Court issued an ex parte Mareva injunction (a freezing order) against the defendants. That order prohibited them, directly or indirectly, from selling, transferring, dissipating, or otherwise disposing of assets they held personally, indirectly through others, or jointly with others, including a portfolio of immovable properties in Québec. The Mareva was repeatedly renewed and, by September 2025, was extended to remain in force until final judgment on the merits. The underlying factual context is severe: the plaintiffs allege a Ponzi-style fraudulent synopsis orchestrated by the defendants, leading to massive investor losses and a pool of investor capital that the defendants now describe as “lost” or “unavailable.” Prior decisions (including an interlocutory injunction by Justice Michelin authorizing judicial sales of certain properties) have already characterized the plaintiffs’ case as having a strong prima facie basis and have justified extraordinary measures to preserve assets pending trial.

Defendants’ conduct and prior judicial criticisms

Over the year following issuance of the Mareva order, several different judges closely scrutinized the defendants’ conduct. The record shows a repeated pattern of non-cooperation and opacity: failure to comply with disclosure obligations under previous orders, unexplained depletion of bank accounts that had received large inflows, persistent delays of court-ordered examinations, and a general reluctance to provide frank information about their financial situation. At least three judges (Michelin, Bundaru and Legendre, j.c.s.) issued decisions criticizing the defendants’ credibility, transparency and respect for court orders. The defendants were sanctioned for significant procedural defaults, and their attempts to obtain access to frozen assets for legal fees and subsistence had already been rejected at least twice before this 2026 judgment. During this period, some defendants moved to Dubai and continued to maintain a very high standard of living, including claimed monthly “subsistence” expenses of approximately $40,000 for one defendant and around $7,000 for another, a level conspicuously at odds with the asserted disappearance of investor capital.

Application to crystallize or narrow the Mareva order

In early 2026, represented by new counsel, the defendants returned to court with a two-fold application. First, they sought a declaratory ruling that the Mareva order’s asset base was temporally fixed (“crystallized”) as of 18 February 2025, such that assets or income generated after that date would be excluded from its scope. Their theory was that only property existing on the date of issuance forms the “assiette” (asset pool) of the freezing order, and that any subsequently acquired property or earnings would fall outside the Mareva unless plaintiffs came back to court and obtained a specific extension. Second, in the alternative, the defendants asked the Court to vary the Mareva to carve out funds from the frozen estate to pay their living expenses and a substantial retainer and budget for new legal representation. Supporting affidavits proposed a $300,000 retainer and more than $1 million in anticipated legal fees going forward, at a stage where the case was already highly advanced and approaching readiness for trial. The defendants also sought an order sealing the affidavits detailing their personal finances and the law firm’s internal risk-management assessment, invoking privacy and safety concerns, particularly in relation to their children.

Interpretation of the Mareva: no ambiguity and no temporal limitation

The first legal question was whether article 657 C.p.c. could be used to “interpret” the Mareva order so as to exclude post-February 2025 assets. That provision allows the court, after judgment, to issue orders to facilitate execution of its decision in a way that is beneficial and efficient for the parties, but Quebec’s Court of Appeal has repeatedly held that it cannot be used as a backdoor appeal, revision, or modification of what has already been decided. Drawing on recent appellate cases (Air Canada v. P.A. and Miramare Investment Incorporated v. AOD Corporation), the judge emphasized that article 657 permits clarification only where there is a genuine ambiguity in the operative part (dispositif) of a judgment, and any follow-up order must be a “natural extension” of the original decision, not a re-writing of its substance. Applying these principles, the Court found no real ambiguity in paragraph 16 of the Mareva order. That clause broadly prohibited the defendants from disposing of “the assets they hold personally and/or indirectly” wherever located, listing certain Québec immovables only as non-limiting examples. The judge held that this wording is sufficiently wide to cover assets generated after the order’s issuance, not just those existing on 18 February 2025. To read it as frozen only in time would be inconsistent with the very nature and purpose of a Mareva: it is designed to prevent dissipation of both known and unknown assets, present and future, where there is a real risk that a defendant might strip their estate to thwart eventual execution of judgment. The Court further noted that accepting the defendants’ interpretation would create chaotic, piecemeal procedure, forcing plaintiffs to return repeatedly to court to catch each new stream of assets, undermining the utility of the remedy.

No “interpretation” where the true objective is to re-write the order

The judge also looked behind the asserted “ambiguity” and concluded that the defendants’ real goal was to significantly limit the Mareva’s reach to the specific immovables and Canadian bank accounts that have already been seized, effectively aligning the freezing order with traditional pre-judgment seizure. That would amount to neutralizing the broader in personam reach that makes Mareva relief distinctive and effective. Because the original Mareva had not been appealed and had been renewed six times by six different judges, its res judicata effect and stability weighed heavily against the defendants’ attempt to re-open its substance in the guise of a clarificatory order under article 657. The Court therefore rejected the request to declare that the Mareva excluded post-order assets, reaffirming that the existing wording already covers such property and requires no judicial “interpretation” or narrowing.

Request to vary the Mareva for living and legal expenses

On the alternative request, the judge addressed whether the Mareva should be modified to carve out funds for the defendants’ subsistence and legal fees. As a matter of principle, Quebec law recognizes that Mareva orders, though extraordinary, should not normally deprive defendants of a full answer and defence or reduce them to complete financial asphyxiation: courts often allow reasonable living expenses and legal fees in appropriate cases. However, relying on detailed Ontario jurisprudence, especially The Regional Municipality of Peel v. Dualeh and the long-standing Court of Appeal decision in Waxman v. Waxman, the judge adopted a structured approach for when a defendant may tap frozen assets. Under that test, the party seeking a carve-out bears the burden of demonstrating, with frank and comprehensive financial disclosure, that: they have no other assets available to pay expenses except those frozen; there are non-proprietary assets (i.e., not arguably belonging to the plaintiff) among the frozen pool; they have exhausted all other non-proprietary resources; and the claimed living and legal expenses are reasonable in light of the case and proportional to what is at stake. The judge found this framework compatible with Quebec’s civil law and particularly appropriate in the special context of fraud-based freezing orders, which are granted only on compelling evidence of a real risk of dissipation and of conduct that goes beyond mere civil fault.

Failure to meet the burden for a carve-out

Applying these factors, the Court held that the defendants had not discharged their burden to justify modifying the Mareva. First, their own conduct over the previous year showed that they had been able to finance both an enviable standard of living and prior counsel’s fees while the Mareva was in place, indicating that they had been using assets they believed to be outside the order’s scope. There was no satisfactory evidence that they now lacked all non-frozen resources or that they could not continue to meet reasonable needs without recourse to the frozen pool. Second, the application was silent on any concrete efforts to seek financing or support from other sources (including family, friends, or external credit), a key factor in the Ontario case law. Third, the claimed “subsistence” budgets were patently excessive: roughly $40,000 per month in Dubai for one defendant and $7,000 per month for another. The Court stressed that, in the face of serious allegations of Ponzi-scheme fraud and life-savings losses for investors, the defendants were obliged to rationalize their expenditures down to what was genuinely necessary, rather than insisting on maintaining a luxurious lifestyle. They had not made that adjustment. As to legal fees, the Court regarded the proposed $300,000 retainer and more than $1 million projection as eye-watering figures that required robust justification and evidence of having explored more proportionate alternatives, such as other firms offering more modest fee structures. The defendants did not provide such a demonstration, nor did they outline their substantive defences in any detail to explain why such a costly defence budget was warranted. Given that the case was already at an advanced procedural stage, their silence on the nature and strength of their defences made the Court “very uncomfortable” with authorizing such a substantial carve-out.

Good faith, transparency, and prior refusals

The Court also emphasized that defendants seeking exceptional relief from a Mareva must show good faith and full, frank disclosure of their financial reality. Here, multiple previous judgments had harshly criticized the defendants’ opacity and non-compliance. Their pattern of partial disclosure and procedural manoeuvring did not inspire confidence that any funds released would in fact be used for proper purposes. Moreover, two prior judges had already refused similar requests to unlock funds for legal fees and living expenses. Against this background, and with plaintiffs now signalling their intention to pursue contempt proceedings for apparent violations of the Mareva, the judge concluded that modifying the order at this stage would upset the fragile balance between protecting investors’ recovery prospects and preserving the defendants’ ability to defend themselves.

Sealing request and open-court principles

Finally, the Court addressed the defendants’ request to place under seal not only their own affidavits but also the affidavit of the law firm’s risk-management partner. Relying on the Supreme Court of Canada’s decision in Sherman (Succession) v. Donovan, the judge reaffirmed the strong presumption of openness of judicial proceedings and the very high threshold for sealing orders based on privacy concerns. It is not enough that information is personal or embarrassing; there must be a serious threat to a core aspect of the person’s biographical identity or dignity, such that public disclosure would undermine their integrity in a way society would not tolerate even in the name of open justice. The Court acknowledged concerns about family safety and the traceability of movements, particularly involving children, but noted that extensive redactions (caviardage) had already been applied to the affidavits. Those redactions were deemed sufficient to address legitimate safety concerns without resorting to a full sealing order. The remaining information was primarily financial and contextual, not the kind of deeply intimate data that would justify an exception to open court. Accordingly, the request to seal the affidavits was refused.

Ruling and outcome

In the result, the Court dismissed the defendants’ “Application for Declaratory Judgment and Subsidirily to Vary the Mareva Order” in its entirety. The Mareva order remains in full force and effect, covering present and future assets in accordance with its broad original language, and it is not modified to create any carve-out for living expenses or legal fees. The Court also declined to place the parties’ and counsel’s affidavits under seal, relying instead on existing redactions to protect sensitive information. The successful party in this decision is the plaintiff side, 9356-1306 Québec inc. and its co-plaintiffs; the Court ordered costs “avec frais contre les Défendeurs” (against the defendants). However, the judgment does not specify any exact monetary figure for those costs, nor does it award a quantified amount of damages at this interim stage, so the total monetary award in favour of the successful party cannot be determined from this decision.