COURT FILE NO.: 573/04
DATE: 20050503
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N:
GHAREEB AWAD
Respondent (Applicant)
- and -
DOVER INVESTMENTS LIMITED and ROBERT SALNA
Appellants (Respondents)
Jan D. Weir, for G. Awad
H. Maltz, for Dover Investments Limited and Robert Salna
HEARD at Toronto: April 29, 2005
O’DRISCOLL J.:
I. Nature of the Proceedings
[1] By Notice of Motion, dated November 9, 2004, counsel for Dr. Ghareeb Awad, geologist, (Dr. Awad) brought a motion, originally returnable on January 11, 2005, for an order that the automatic stay imposed on a judgment for the payment of money upon the filing of a Notice of Appeal, should be lifted and not apply to the judgment of Spence J., dated September 21, 2004. That is, counsel for Dr. Awad seeks an order lifting the automatic stay and making the sums set out in Spence J.’s judgment payable forthwith – namely, USD$725,095.48 and USD $37,500.00.
[2] On consent, the motion was adjourned to January 7, 2005 and then to February 17, 2005 and then to April 29, 2005. Counsel agree that the motion should be further adjourned to July 15, 2005. Counsel are not in agreement about the costs, if any, payable on the consent adjournment.
II. Background
[3] Dr. Awad brought an application for oppression remedies under s. 245(a) and s. 248 of the Business Corporations Act, R.S.O. 1990, c. B. 16 (OBCA) regarding the two (2) separate joint ventures (REU/Oil and EWA) of the parties regarding oil and gas exploration in Egypt. One joint venture (REU/Oil) has resulted in a producing oil field. In summary, the issues between the parties revolve around contra accounts.
[4] The matter came on before Spence J. on June 8 and 9, July 5, 6, 7, 14 and 16, 2004. Judgment was reserved and written reasons were released on September 21, 2004.
[5] In paragraph [151], Spence J. said:
[151] For the above reasons, based on the oppressive conduct of the Respondents as determined above, orders are to go as follows:
(i) there is to be a reference and accounting pursuant to Rules 54 and 55 in respect of the revenues received, the expenses incurred and the payments made under the REU joint venture agreement for the purpose of determining the amounts, if any, owing between Awad and the Respondents, such accounting to be made in accordance with these reasons and any further directions given by the Court.
(ii) the Respondents are to pay to Awad forthwith on account of the amounts that were withheld from his REU Oil Field Joint Venture revenues on account of EWA Concession expenses and on account of CIPC, amounts equal as of the date of judgment to USD $725,095.48 and USD $37,500.00, respectively, without prejudice to the ability of the Respondents to initiate proceedings to establish their claims of Awad’s indebtedness.
(iii) Awad’s interest under the REU Joint Venture agreement is to be valued by means of a reference under Rule 54 on the basis of a base value for that interest of $630,000.00 as at March 1, 2004, with proper adjustments for the oil extractions made after March , 2004 and for the amount determined to be owing pursuant to first order above and the payments made pursuant to the second order above.
[6] On October 21, 2004, the Appellants, Dover Investments Limited and Robert Salna, under the provisions of s. 255 of the OBCA, filed a Notice of Appeal to the Divisional Court from the September 21, 2004 judgment of Spence J. On October 29, 2004, counsel for Dover Investments Limited sent a letter to Dr. Awad enclosing a cheque, signed by Robert Salna and payable to Ghareeb Awad, in the sum of USD $12,500.00. The letter said:
As it appears that the amount of USD $12,500 in connection with CIPC is not in dispute and in accordance with my clients intention to comply with their obligations enclosed please find cheque in the aforesaid amount payable to Dr. G. Awad.
[7] When cross-examined on January 20, 2005 in Vancouver, B.C. on his November 9, 2004 affidavit, Dr. Awad said that he had not cashed the cheque in the amount of USD $12,500.00.
[8] On November 9, 2004, counsel for Dr. Awad filed the motion to lift the automatic stay. In support of the motion was the affidavit of Dr. Awad, sworn November 9, 2004, in which he deposed, in part:
…. I do not have liquid assets with which to fund the conduct of the British Columbia and Cairo proceedings.
On November 1, 2004, my counsel received a cheque for US$12,500 along with a letter from counsel for the Respondents (Appellants). Copies of the cheque and accompanying letter are now shown to me and marked as Exhibit “H” to this my Affidavit. I gather from the letter that the Respondents (Appellants) do not intend to pay me anything further pending the hearing of the appeal in this matter.
[9] In his November 10, 2004 email to counsel for the Appellants, then counsel for Dr. Awad said: “The only factual issues on our motion is hardship to Dr. Awad”.
[10] On December 3, 2004, the parties were back before Spence J. Counsel for the Appellants sought to introduce new evidence as the basis of an order to set aside the judgment that the Appellants were required to pay to Dr. Awad the sum of $725,095.48 (U.S.) on account of the withholdings made in respect of EWA’s expenses. Spence J. reserved his decision.
[11] In his letter of December 9, 2004, counsel for Dr. Awad wrote to counsel for the Appellants and said, in part:
With respect to your request for an adjournment of the motion to lift the stay, … However, we are willing to consider your request further provided we understand the implications of the delay proposed. In this regard, it would be helpful if you would indicate whether your clients are willing to post a letter of credit as security for the sums set out in para. 151(ii) of the Reasons for Decision pending the hearing of our motion.
[12] In his reply on December 14, 2004, counsel for the Appellants wrote:
As Spence J. may vary the judgment in a manner that obviates the need for your motion to lift the stay your motion may be premature.
Ghareeb Awad’s transfered [sic] of his interest in his house to wife for $1.00. In August, 2004 he made the gift of an apartment to his daughter. Ghareeb Awad has arranged his affairs so that he is judgment proof. If the stay is lifted my clients bear the real risk of non recovery. Consequently there is no basis that my clients provide security at this time.
[13] In his December 15, 2004 letter, counsel for Dr. Awad repeated the basis of his consent to adjourn the motion to lift the stay as being the same as that set out in paragraph 17 of Dr. Awad’s affidavit, sworn November 9, 2004: Pay me USD $762,595.18 and “I will undertake to refund that amount with court order interest in the event the Respondent (Appellants) succeed in the appeal”.
[14] Faced with the November 4, 2004 affidavit of Dr. Awad and his demands for his consent to adjourn the motion to lift the automatic stay, counsel for the Appellants decided to “follow the money” and examined under oath all those who had been the recipients of Dr. Awad’s bounty. To that end, counsel for the Appellants arranged for the examination under oath at Vancouver, British Columbia of: Heather Awad, Heba Awad, Nagat Awad, Hanna Awad and Hala Awad.
[15] When Husan Awad, Dr. Awad’s son, refused to attend voluntarily in Egypt (where he resided) for examination, counsel for the Appellants appeared before Pitt J. on December 24, 2004 and obtained an order that the Registrar prepare and issue a Letter of Request to the Arab Republic of Egypt to facilitate the examination of Husan Awad.
[16] On January 20, 2005, counsel for the Appellants attended in Vancouver, British Columbia and examined Dr. Awad under oath on his affidavit, sworn November 9, 2004.
[17] On February 3, 2005, Spence J. released his Supplemental Reasons for Decision and said, in part:
[8] The evidence sought to be introduced shows Awad was engaged in transactions which could render himself judgment-proof. He disposed of virtually all his assets (except his present claim for oppression relief) for no consideration while involved in litigation.
What The Proposed New Evidence Would Show
[9] Based on the title documents, Awad transferred his 50% interest in the family home to his wife (the other 50% owner) by a deed executed on June 15, 2004, submitted for registration June 16, 2004 and registered June 30, 2004.
[10] The applicant’s first submissions during the hearing of the application were made on June 8 and 9. The respondents’ submissions were made starting on July 5 and raised the issue of Awad seeking to make himself judgment-proof. The appellant’s reply submissions were made on July 16. The submissions made for the applicant on the issue of his bank accounts on July 16 were to the effect set out in the second sentence of paragraph 100. The information about the transfer of the residence was not before the court. If it had been, the first two sentences of paragraph 100 would have had to be replaced by different statements.
[11] In his affidavit of November 9, 2004, Awad states that he disposed of the bulk of the US$2.82 million in income which he received over the last five years in the manner set out in paragraph 10 of his affidavit. Most of the money was given to or for the benefit of members of his family. The times at which most of these transactions occurred are not evident.
[12] The assets which Mr. Awad says he now owns are not material in value either in themselves or in comparison to the US$2.82 million amount, which was largely given away to his family.
[13] One of the transactions, the purchase of an apartment for a daughter, occurred in late August 2004, after the hearing was completed, in the period when the judgment in this case was under reserve.
[14] Mr. Awad reduced his US bank account on April 20, 2004 by withdrawing some US$102,000.00 leaving only a balance of $253.00 then and $279.00 more recently.
[15] Mr. Awad made a number of withdrawals from his Canadian dollar account following May 3, 2004, when it had a balance of some $131,000.00, with the result that by November, 2004 the balance was $965.00.
[20] By transferring his interest in the residence to his wife when he did, in the middle of the period of the hearing, Awad disposed of his principal asset and effectively rendered himself largely judgment-proof. Indeed, when the transaction is viewed in the context of the other transfers detailed in Mr. Awad’s affidavit, his actions rendered him totally judgment-proof except for the value of the present application. As a result, if there were to be a costs order against him in this case, he would not be able to meet it (unless, of course, he succeeded on the application). This case is his case, in that he is the applicant and he seeks oppression relief, a remedy which is in the nature of an equitable remedy. In effect, he asked the court to do what is fair, but he was not prepared to take the consequences of invoking the court’s process. Such conduct has the character of an attempt to take unfair advantage.
[18] The parties are due back before Spence J. on May 9, 2005.
III. Submissions made on April 29, 2005
[19] Counsel for the Appellants handed up to me a booklet entitled “Respondents’ Bill of Costs for Motion to Lift the Stay”. With docket entries, it shows:
Total fees, including G.S.T., for 140.15 hrs. $42,738.74
Disbursements and taxes, including $4,990.99 paid to counsel in British Columbia to conduct examinations of Dr. Awad’s family and $10,645.20 paid to counsel in Egypt $20,576.69
$63,255.43
[20] Counsel for the Appellants submits that the total sum of $63,255.43 should be the price Dr. Awad has to pay for the adjournment because he, counsel for the Appellants, has always maintained the adjournment is required so long as the parties have not completed their attendances before Spence J., where they are scheduled to return on May 9, 2005.
[21] Counsel for Dr. Awad submits that the adjournment should be granted without any costs being awarded because:
(a) With all the costs incurred since November 9, 2004, counsel for the Appellants has not learned anything more than he was told by reading Dr. Awad’s affidavit, sworn November 9, 2004.
(b) A title search of Dr. Awad’s property in British Columbia would have divulged the transfer of title.
(c) The appeal is devoid of merit and is being used to “starve” Dr. Awad.
(d) If costs are to be awarded, $5,000.00 would be a reasonable amount.
IV. Result
[22] On consent, the motion of Dr. Awad to lift the stay imposed under rule 63.01(1) of the Rules of Civil Procedure is adjourned to July 15, 2005.
V. Costs
[23] Having considered the contents of the affidavit of Dr. Awad, sworn November 9, 2004, the fact that he initiated this motion, the Supplementary Reasons for Decision of Spence J., dated February 3, 2005, the fact that counsel for Dr. Awad desires an adjournment for the same reasons always put forward by counsel for the Appellants, it is my view that the Appellants should have their costs, to date, attributable to this motion, fixed at $20,000.00 Cdn., all inclusive, payable forthwith by Dr. Awad.
O’Driscoll J.
Released: May 3, 2005
COURT FILE NO.: 573/04
DATE: 20050503
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N:
GHAREEB AWAD
Respondent (Applicant)
- and -
DOVER INVESTMENTS LIMITED and ROBERT SALNA
Appellants (Respondents)
REASONS FOR JUDGMENT
O’Driscoll J.
Released: May 3, 2005