Hollinger Inc. has lost its bid to extend a temporary freeze imposed on the assets of David Radler and his business interests.
B.C. Supreme Court Justice Catherine Wedge ruled that Hollinger failed to show there was an imminent risk of "dissipation of assets," by Conrad Black's former right-hand man at Hollinger International Inc.
"It is on this part of the test that the application runs aground," said the judge as she read out her ruling in a Vancouver courtroom Tuesday morning.
The judge was critical of a 125-page affidavit filed by Hollinger director Wesley Voorheis last month, in support of the asset freeze, known as a Mareva injunction.
The affidavit was "marred by argument, speculation and invective," concluded Judge Wedge.
Hollinger obtained a temporary asset freeze on October 25, in an ex parte application before B.C. Supreme Court Justice Deborah Satanove.
The injunction placed several restrictions on the personal and business assets of Mr. Radler, who lives in Vancouver. His spending was also limited to $25,000 per month.
The temporary asset freeze was set to expire Nov. 9 and Judge Wedge heard more than three days of arguments last week from lawyers representing Hollinger and Mr. Radler.
Hollinger was asking the court to extend the freeze until the end of a civil action in the Ontario Superior Court.
Mr. Radler, Lord Black and several other former Hollinger International executives are defendants in the Ontario lawsuit which is seeking $750-million in damages.
A Mareva injunction is "sweeping and highly intrusive in its terms," said Judge Wedge.
She noted that very little action has been taken by Hollinger to move forward the Ontario civil action since it was filed earlier this year.
"The obvious question is why Hollinger has waited all this time to bring the injunction application," said Judge Wedge.
Mr. Radler pleaded guilty in Chicago September 2005 to one fraud-related count connected to the improper transfer of more than $7-million in non-compete payments.
Mr. Radler has made restitution on the non-compete payments and his plea agreement includes a 29-month jail sentence, to be served after he is expected to testify against Lord Black next spring in a U.S. court.
"As a result of the plea agreement Mr. Radler is on a tight leash," said Judge Wedge, who suggested that U.S. authorities would be monitoring any inappropriate financial transactions.
A lawyer for Hollinger indicated in court that the company will file an appeal of the ruling as soon as possible.