Sakab Saudi Holding Company v. Al Jabri

Sakab Saudi Holding Company v. Al Jabri Collection Decisions of the Court of Appeal Date 2021-07-27 Neutral citation 2021 ONCA 548 Docket numbers C69620, M52628 Judges Benotto, Mary Lou Subject Civil Decision Content COURT OF APPEAL FOR ONTARIO CITATION: Sakab Saudi Holding Company v. Al Jabri, 2021 ONCA 548 DATE: 20210726 DOCKET: M52628 (C69620) Benotto J.A. (Motion Judge) BETWEEN Sakab Saudi Holding Company, Alpha Star Aviation Services Company, Enma Al Ared Real Estate Investment and Development Company, Kafa’at Business Solutions Company, Security Control Company, Armour Security Industrial Manufacturing Company, Saudi Technology & Security Comprehensive Control Company, Technology Control Company, New Dawn Contracting Company and Sky Prime Investment Company Plaintiffs (Respondents/ Responding Parties) and Saad Khalid S Al Jabri, Dreams International Advisory Services Ltd., 1147848 B.C. Ltd., New East (US) Inc., New East 804 805 LLC, New East Back Bay LLC, New East DC LLC, Jaalik Contracting Ltd., Nadyah Sulaiman A Al Jabbari, Khalid Saad Khalid Al Jabri, Mohammed Saad KH Al Jabri, Naif Saad KH Al Jabri, Sulaiman Saad Khalid Al Jabri, Hissah Saad KH Al Jabri, Saleh Saad Khalid Al Jabri, Canadian Growth Investments Limited, Gryphon Secure Inc., Infosec Global Inc., QFive Global Investment Inc., Golden Valley Management Ltd., New South East Pte. Ltd., Ten Leaves Management Ltd., 276143 Ontario Inc., Nagy Moustafa, HSBC Trustee (C.I.) Limited in its capacity as Trustee of the Black Stallion Trust, HSBC Private Banking Nominee 3 (Jersey) Limited in its capacity as a Nominee Shareholder of Black Stallion Investments Limited, Black Stallion Investments Limited, New East Family Foundation, New East International Limited, New South East Establishment, NCom Inc. and 2701644 Ontario Inc. Defendants (Appellants/ Moving Parties) Harry Underwood and Andrew Max, for the moving parties Munaf Mohamed, Q.C., for the responding parties Heard: July 16, 2021, by video conference ENDORSEMENT [1] The applicants are some of the defendants in this action. They move for a stay of the order of Gilmore J. which determined that Ontario has jurisdiction over an action involving an alleged fraud by former high-ranking government officers in Saudi Arabia. [2] Several orders in the court below set out the extensive history. I summarize only that which frames this motion. FACTS IN BRIEF (1) Background to the action [3] The plaintiffs are a group of ten companies established between 2007 and 2015. They operate in strategic industries, such as aerospace and cybersecurity. They also fund covert operations for counterterrorism operations in Saudi Arabia and operate legitimate businesses to provide plausible public cover for these activities. [4] The plaintiffs allege that billions of dollars have been brazenly stolen through a fraudulent scheme masterminded by a former Saudi cabinet minister, the defendant Saad Khalid Al Jabri (“Al Jabri”). The other defendants allegedly participated in or benefitted from the scheme to defraud the plaintiffs. Al Jabri was the Director of the Department of Officers and Personnel Affairs and Security Advisor to the Ministry of Interior of Saudi Arabia. He is highly educated and worked for decades as a senior civil servant in the security and intelligence agencies of Saudi Arabia. He served as a Minister of State and as a Special Advisor to Muhammed Bin Nayef (“MBN”), the former Crown Prince and Minister of the Interior. [5] In 2015, on King Abdullah’s death, King Salman acceded to the throne and MBN was named Minister of the Interior. King Salman’s son, Mohammed Bin Salman (“MBS”), was appointed Minister of Defence. In April 2015, MBN was named Crown Prince and MBS was named Deputy Crown Prince. MBN was later deposed in a coup. [6] In September 2015, Al Jabri was removed from office at the insistence of MBS. The reason for the removal is in dispute. The plaintiffs say he was removed because of his fraudulent activity. Al Jabri submits that it was because he met with the U.S. Central Intelligence Agency Director and did not report that meeting to MBS. In any event, an investigation into Al Jabri was conducted and he eventually moved to Canada. He lives in Toronto with his wife and family members. (2) The allegations of fraud [7] The plaintiffs allege that Al Jabri organized a fraudulent scheme to misappropriate $3.5B USD from the plaintiffs. He did so, it is alleged, using nominees to hide his control and beneficial ownership of significant assets. He installed family members, including his son, Mohammed Al Jabri (“Mohammed”), as nominee shareholders. He then made significant transfers to the nominees. The misappropriated funds were used to acquire assets around the world. [8] The plaintiffs say they have already traced nearly half a billion US dollars through this scheme. There is also a “gift deed” that Al Jabri made to Mohammed whereby Al Jabri purportedly gifted Mohammed all of his worldwide assets. Mohammed used these assets, in part, to benefit family members including through the purchase of a $13 million home in Toronto for Al Jabri. (3) The Mareva Injunction [9] Gilmore J. has had carriage of all the steps in the litigation. In January 2021, she issued an Mareva injunction over all of Al Jabri’s worldwide assets, restraining him from dissipating his assets. In February 2021, the plaintiffs learned of the gift to Mohammed and returned to Gilmore J. to seek to vary the order to secure the gifted assets. Gilmore J. adjourned the motion so that Mohammed and other corporate defendants could move to challenge the jurisdiction of the Ontario courts. (4) The Jurisdiction Decision [10] The jurisdiction motion was heard on May 19, 2021, with reasons released on June 22, 2021. [11] The motion judge held that to assert jurisdiction over a foreign defendant, a “good arguable case” must be established on the record before her. She concluded on five separate grounds that Ontario had jurisdiction. In particular: 1. A presumptive connecting factor arose from numerous contracts made in Ontario. 2. The deed of gift from Al Jabri to Mohammed was written and signed in Ontario. She also concluded that the gift was a ruse and that Al Jabri continues to direct the management of the assets acquired through a fraudulent scheme, even though Mohammed may be the legal or beneficial owner of the assets. 3. There were assets in Ontario acquired with funds re-gifted by Mohammed to Al Jabri. 4. Acts in furtherance of the alleged tort of conspiracy occurred in Ontario. 5. There is a real and substantial connection between the subject matter of the claim and Ontario which had not been rebutted by the defendants who had not raised forum non conveniens. (5) Further scheduled motion [12] The motion to expand the Mareva to include Mohammad’s assets is now scheduled for August 9, 2021. [13] On July 5, 2021, the Notice of Appeal and this motion were filed. ISSUE [14] The only issue before me is whether to grant a stay of jurisdiction so that the underlying action (including the August 9 motion) awaits the determination of the jurisdiction appeal. DISCUSSION [15] The test for a stay pending appeal is not in dispute so I turn to each component[1]. (1) Serious issue to be determined [16] A preliminary assessment of the merits of the appeal presumes correctness of the decision under appeal. [17] The moving parties submit that the motion judge erred by: · Relying on efficiency and “fairness”, and the convenience of a single trial, as relevant factors for determining jurisdiction simpliciter. · Finding that jurisdiction could be assumed over the claim “as a whole” rather than through the presence of a presumptive connecting factor with respect to each defendant. · Relying on the actions of Al Jabri and his connections to Ontario to ground jurisdiction over the other defendants. · Failing to apply the proper legal test in finding that the presumptive connecting factor of a contract connected with the dispute made in the province connected the defendants and the claim against them with the jurisdiction. · Relying on a document other than a contract, namely a gift deed, and on contracts unconnected to the defendants. · Finding that the use of proceeds of an alleged fraud to acquire property located in Ontario is a presumptive connecting factor. [18] In particular, the moving parties submit that the motion judge erred by concluding that the gift to Mohammed was a connecting factor because the gift was made in Turkey, not in Ontario. [19] The motion judge concluded that there were five independent reasons to find jurisdiction. Any one of them would lead to her order being upheld. The record before the motion judge was extensive. (The moving parties have filed nearly 3,000 pages on this motion.) It was open to the motion judge to conclude on the extensive record before her, that there is a real and substantial connection between Ontario, the subject matter of the litigation and the defendant. [20] The motion judge referred to the gift to Mohammed as particularly “important”. The evidence from Al Jabri himself is that an oral promise was made in Turkey in 2017. The motion judge found that the circumstances of this gift were “undocumented and uncorroborated” and that Al Jabri’s evidence on the gift was contradictory. The gift deed was finally written in Ontario in late 2018. Transfers in accordance with the gift did not happen for months or years after the purported gift was made. Without commenting on the validity of the gift, she concluded that the written gift deed could be used to ground jurisdiction. [21] The motion judge identified other contracts made in Ontario and concluded that funds misappropriated from the plaintiffs flowed to entities that made the agreements. Further, property in Ontario was purchased with these funds. [22] While I cannot say the appeal is frivolous, the merits of the appeal lean to favour the plaintiffs. (2) Irreparable harm [23] The moving parties allege that if they are required to continue responding to the merits of the Mareva injunction they suffer irreparable harm because they may be deemed to have attorned to the jurisdiction. Anticipating this concern, the plaintiffs undertake not to raise the issue of attornment in the appeal and consent to an order in this court directing that the moving parties defence of the Mareva injunction cannot be relied on as attornment in the action. Alternatively, the plaintiffs are prepared to proceed with the Mareva injunction on an ex parte basis, without prejudice to the moving parties’ rights on a comeback motion. The moving parties say this is not enough. [24] The moving parties submit that they would remain at risk of having attorned to the jurisdiction if they respond to the outstanding Mareva motion because there is uncertainty with respect to the law on this issue. I therefore turn to the source of the alleged uncertainty and discuss the implications for this case. [25] In 2004, a chambers decision from this court granted a stay pending appeal of a jurisdiction decision. In M.J. Jones Inc. v. Kingsway General Insurance Co. (2004), 242 D.L.R. (4th) 139 (Ont. C.A.), Lang J.A. considered a motion for a stay of a jurisdiction order affirmed by the Court of Appeal pending an application for leave to appeal to the Supreme Court of Canada. The moving party alleged that if they were ordered to file a statement of defence, compliance with the order would amount to attornment to Ontario’s jurisdiction rendering the application moot and causing irreparable harm. Lang J.A. found that the moving party “might” be found to have attorned, stating at para. 30: On the authorities given to me, there is no clear answer as to whether court-ordered involuntary participation on the merits will be an attornment sufficient to render [the moving party’s] leave application moot. [26] In the 17 years since this decision, this court’s judges have addressed the question of attornment in the face of a challenge to jurisdiction. There is now a body of jurisprudence on this issue. [27] In BTR Global Opportunity Trading Limited v. RBC Dexia Investor Services Trust, 2011 ONCA 620, 283 O.A.C. 321, Laskin J.A. considered a request for a stay of a jurisdiction order pending an application for leave to appeal to the Supreme Court of Canada. The responding party undertook not to argue that delivery of a defence or participation in examinations for discovery constituted acts of attornment. Referring to M.J. Jones, Laskin J.A. stated, at paras. 29-31: [29] …Without commenting on the correctness of that decision, I simply observe that the present case is distinguishable. In M.J. Jones, Lang J.A. dealt with whether a court order requiring a defendant to deliver a statement of defence would amount to attornment. She held that a court order requiring a defendant to participate in an action, even though involuntarily, might amount to attornment. Therefore, she held that despite the plaintiff’s undertaking not to treat the defendant’s participation as attornment, refusing a stay could cause irreparable harm. [30] Here, no court order or involuntary participation is required because [the plaintiff] asks [the defendant] only for a statement of defence to permit it to move ahead with discoveries. Furthermore, Lang J.A. appears to have contemplated and approved of this very scenario. She wrote at para. 52: This disposition does not necessarily preclude all parties to this action cooperating by exchanging documents and answering questions about the merits of the disputes between them. Such exchange, if done outside the formal bounds of these court proceedings, would, in my view, not be considered an attornment to Ontario’s jurisdiction. It would simply be an efficient exchange of information that, with the agreement of the parties, could later be used either in the Ontario proceeding, or in any subsequent Michigan proceeding. [31] As [the documents are requested] outside of the “formal bounds” of the court proceedings, I do not consider that the delivery of a statement of defence or participation in discoveries, would amount to attornment. If there is no attornment, the risk of [the defendant’s] appeal becoming moot is eliminated. [The defendant] therefore, has not made out irreparable harm. [28] In Van Damme v. Gelber, 2013 ONCA 388, 115 O.R. (3d) 470, at paras. 22-23, Doherty J.A., writing for a panel of this court, considered the participation necessary to constitute attornment: Attornment by participation in court proceedings was recently addressed in Wolfe v. Pickar, 2011 ONCA 347, 332 D.L.R. (4th) 157, at para. 44, where Goudge J.A. said: [W]hen a party to an action appears in court and goes beyond challenging the jurisdiction of the court based on jurisdiction simpliciter and forum non conveniens, the party will be regarded as appearing voluntarily, thus giving the court consent-based jurisdiction. There is also authority for the proposition that, if a party appears in a court to challenge jurisdiction or seek a stay on the basis of forum non conveniens, any additional steps taken by the party pursuant to an order of the court will also not amount to attornment: see Gourmet Resources International Inc. (Trustee of) v. Paramount Capital Corp. (1991), 5 C.P.C. (3d) 140 (Ont. C.A.); M.J. Jones Inc. v. Kingsway General Insurance Co. (2004), 72 O.R. (3d) 68 (C.A.), at paras. 18-31 (per Lang J.A., in chambers). Giving these cases their widest reasonable reading, [the defendant’s] motion challenging the jurisdiction of the New York court, his filing of a defence, and his conduct of depositions and discoveries did not amount to attornment. [29] In Yaiguaje v. Chevron Corporation, 2014 ONCA 40, 315 O.A.C. 109, MacPherson J.A. considered the moving parties’ submission that, even in the face of an undertaking not to raise attornment, they will suffer irreparable harm. MacPherson J.A. said, at para. 11: I do not accept this submission. This court has stated that where a court order requires a party to file a defence, compliance with the order, including related conduct of depositions and discoveries, does not constitute attornment in the face of an ongoing jurisdictional challenge: see Van Damme v. Gelber, 2013 ONCA 388, 115 O.R. (3d) 470, at para. 23. Moreover, and importantly, the responding parties have explicitly stated in their factum (para. 28) that if the moving parties simply provide them with their statements of defence (without formally filing them), “the respondents are content to receive the same, without prejudice to the Chevron companies Leave to Appeal Applications and will not claim that by doing so they have attorned to the jurisdiction of the Ontario Superior Court of Justice.” See BTR Global, at para. 31. I see no reason not to accept and respect this undertaking. [30] Later in 2014, Epstein J.A. considered a stay pending the appeal of a jurisdiction motion: Stuart Budd & Sons Ltd. v. IFS Vehicle Distributors ULC, 2014 ONCA 546, 122 O.R. (3d) 472. She referred to “differing views” concerning when a party risks attornment by taking court-ordered steps in the fact of an ongoing jurisdiction challenge. She cited M.J. Jones, BTR Global, Van Damme and Yaiguaje and concluded that the issue was “unresolved”: at para. 36. The stay was granted. [31] I see the case before me differently and – on the facts here – the issue is not unresolved. This case is distinguished from Stuart Budd. I say this for several reasons. [32] First, in Essar Steel Algoma (Re), 2016 ONCA 138, 33 C.B.R. (6th) 172, at paras. 41-45, Brown J.A. referred to and cited the cases to which I have referred and concluded, at para. 52: [52] I need not express a view on the effect of court-ordered participation in a proceeding on a party’s ability to continue to advance a jurisdictional challenge because decisions of this court uniformly have held that where the responding party provides the court with undertakings of the kind given by Essar in this case, the undertakings significantly reduce or remove the risk of irreparable harm. [Emphasis added.] [33] Second, Van Damme was a decision by a panel of this court. As MacPherson J.A. pointed out: (i) compliance with the order, including related conduct of depositions and discoveries, does not constitute attornment in the face of an ongoing jurisdictional challenge; and (ii) there is no reason not to respect counsel’s undertaking. [34] Finally, to attorn to the jurisdiction, a party must take a voluntary step indicating submission to the jurisdiction. Attornment cannot arise is circumstances of duress: Wolfe v. Wyeth, 2011 ONCA 347, 332 D.L.R. (4th) 157, at para. 44. The plaintiffs submit that a response to a worldwide Mareva injunction should not be considered a voluntary step indicating submission to the jurisdiction. Rather they say it is an example of duress. The plaintiffs analogize the situation here to that in Schwarzinger v. Bramwell, 2011 BCSC 283 where the British Columbia court held that the defendants were under duress when they applied to vary a worldwide Mareva injunction. Although their assets were not in the custody of the court, the effect of the order was to prohibit them from dealing with assets and conducting their day-to-day business operations. Consequently, there was no consent-based jurisdiction. [35] I agree with the plaintiffs that a response to the worldwide Mareva injunction would not amount to attornment in these circumstances. The defendants would not be asking the court to engage in an issue, unlike in Wolfe, where the defendants sought to dismiss or stay the action for issue estoppel. Here, there is also the undertaking of the plaintiffs not to assert attornment. [36] I conclude that the moving parties have not demonstrated that they would suffer irreparable harm if a stay pending appeal is not granted. (3) Balance of convenience [37] The balance of convenience favours the plaintiffs. They point to the risk of funds that are the subject matter of the litigation being dissipated. Gilmore J. concluded that, on the record before her, there was an attempt to put the assets beyond the reach of the plaintiffs and that there is evidence to suggest that Al Jabri continues to move money around in furtherance of the alleged conspiracy. [38] The moving parties have offered to provide an undertaking from Mohammed “not to dispose of any assets (subject to certain exceptions including reasonable living expenses, legal fees, and ordinary course business expenses or activities of companies he owns or controls)”. In oral submissions, counsel suggested the appointment of an Arbitrator to oversee this process. I do not accept that this is a reasonable proposal that would tilt the balance of convenience in favour of the moving parties. [39] Considering all of the criteria and the fact that the plaintiffs consent to an order of this court that the moving parties will not attorn to the jurisdiction by defending the Mareva injunction, I conclude that it is not in the interests of justice to grant the stay. [40] The motion is dismissed with costs in the agreed upon amount of $20,000 inclusive of disbursements and HST. “M.L. Benotto J.A.” [1] RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311, at p. 334.