COURT OF APPEAL FOR ONTARIO DATE: 20220627 DOCKET: C69620
Pardu, Roberts and Miller JJ.A.
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)
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., 2767143 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, and New East Family Foundation Defendants (Appellants)
Counsel: Harry Underwood, Andrew Max, Emily Young and Emily Fraser, for the appellants Munaf Mohamed, Douglas Fenton, Amanda McLachlan and Jonathan Bell, for the respondents
Heard: January 19, 2022 by video conference
On appeal from the order of Justice Cory A. Gilmore of the Superior Court of Justice, dated June 22, 2021, with reasons reported at 2021 ONSC 4443.
B.W. Miller J.A.:
A. Introduction
[1] The respondents allege a massive international fraud in which billions of dollars were misappropriated from corporations in Saudi Arabia and dissipated around the world. They sued Toronto resident Saad Khalid Aljabri (“Saad”), the alleged chief architect of that fraud, along with his son and several companies alleged to have conspired with Saad. The appellants, who have no presence in Ontario, contest the Superior Court of Justice’s jurisdiction over them. They moved to have the action permanently stayed or dismissed against them.
[2] The motion judge dismissed the appellants’ motion. The appellants contend that in coming to her decision, the motion judge made palpable and overriding factual errors, as well as multiple errors of mixed fact and law in applying the Van Breda test for jurisdiction. For the reasons set out below, I do not agree that the motion judge made any reviewable error, and would dismiss the appeal.
B. Background
The claim
[3] The respondents are corporations established and funded by the Kingdom of Saudi Arabia to pursue domestic counterterrorism activities. They allege they are victims of a fraud orchestrated by the former Saudi Crown Prince, Mohammed bin Nayef (“MBN”), together with Saad, a former high-ranking government official. The respondents claim that Saad misappropriated $3.5 billion USD from them, using family members – particularly his son, the appellant Mohammed Aljabri (“Mohammed”) – close business associates, and nominee shareholders, to conceal his ultimate control and beneficial ownership of misappropriated assets. The respondents allege that the misappropriated assets have been hidden in jurisdictions throughout the world through a web of corporate structures including the appellant corporations, said to be controlled by Mohammed and other nominees on behalf of Saad.
[4] There are two competing characterizations of the claim. The respondents characterize their claim as an action in conspiracy to defraud, which began with a misappropriation of assets in Saudi Arabia and continues with manipulation of assets from Toronto by Saad, with the assistance and cooperation of others, particularly Mohammed. The appellants argue that the tort alleged is simply fraudulent misappropriation, and the tort would have been completed in Saudi Arabia. The interjurisdictional component is simply the remedy of tracing assets misappropriated elsewhere, and the tort alleged has no connection to Ontario.
The gift
[5] Following events in Saudi Arabia in June 2017, MBN – Saad’s patron – was imprisoned and replaced as Crown Prince. According to the appellants, Saad was in Turkey at the time and feared imminent assassination. Saad stated in a sworn declaration that he gifted substantially all of his worldwide assets to his son Mohammed through a gift deed that he prepared himself in Turkey on June 21, 2017, without legal advice. Later, when pressed to produce a copy of this gift deed, or any other evidence it had been executed, he corrected his evidence to say that although the gift was made orally in Turkey in accordance with customary Islamic law in June 2017, the gift deed itself was not created until he chose to memorialize the gift by typing it out himself in Toronto in December 2018.
[6] On the motion, the respondents marshalled evidence of post-gift transactions and patterns of transactions by Saad and Mohammed that they argued called into question the validity of the gift. The motion judge agreed that the conduct of Saad and Mohammed suggested the gift was a ruse. The motion judge took into consideration the following transactions believed to be suspicious:
(a) Saad’s formation and control of a family trust after the gift deed conveying all his assets to Mohammed, and a transfer of $50 million USD from a company supposedly controlled by Mohammed to establish the trust; (b) Saad’s retention of personal bank accounts despite declaring that he had gifted all his assets to Mohammed; (c) A $40,000 per month allowance from Saad to Mohammed, even though Mohammed was supposedly the owner of the assets; (d) Mohammed’s evidence that managing the assets was his full-time job, even though he could not provide specifics about the investment portfolios, rental incomes, or revenues of various assets; (e) Mohammed’s gift of $13 million to Saad to buy a house on the Bridle Path in Toronto and $8 million to his brother, Khalid Aljabri (“Khalid”); and (f) Mohammed’s ongoing payments to Saad for living and legal expenses.
[7] Although the respondents challenge the validity of the gift deed, the motion judge held that its validity is a matter for trial and did not need to be finally resolved on the jurisdiction motion. Whether the gift deed is valid is immaterial as to whether it can ground jurisdiction: Solloway v. Klondex Mines Ltd., 2014 ONSC 391, at para. 42, aff’d 2014 ONCA 672.
The appellant corporations
[8] The respondents allege that the appellant corporations all played roles in Saad and Mohammed’s scheme and had sufficient connection to Ontario to be included in the action.
[9] According to the respondents, the various “New East” companies own real estate and bank accounts in the United States. They have no assets in Canada. They are owned by New East International Limited: a Guernsey company owned by Mohammed. The respondents allege that Saad purchased the New East companies with misappropriated funds and then transferred them to Mohammed in October 2017, months after the alleged oral gift.
[10] Dreams International Advisory Services (“Dreams”) is a British Virgin Islands company with no assets in Ontario. Saad transferred the company to Mohammed in January 2019. The respondents allege that Dreams received at least $193,570,170 USD of misappropriated funds and is still being controlled by Saad from Ontario.
[11] Ten Leaves Management Ltd. is a Cayman Islands company with no assets in Ontario. It owns property in Malta. Mohammed claims to own 100% of the shares in Ten Leaves.
[12] Golden Valley Management Ltd. is a Cayman Islands company owned by Mohammed. It holds approximately 20 small venture capital investments in the United States and United Kingdom. Golden Valley is the assignee of two loan agreements: the “Gryphon Convertible Loan Agreement” and the “Gryphon Security Agreement”. These loans were originally between Gryphon Secure Inc. and New South East PTE Ltd., a company allegedly controlled by Saad. Both agreements are governed by Ontario law. The respondents allege that the loan agreements were fraudulently conveyed to Golden Valley as part of the scheme.
[13] Saad is entirely responsible for capitalizing Gryphon and also appointed Mohammed as his nominee to act as a director. While a director, Mohammed loaned $1.5 million to Infosec Global Inc., a Canadian company (the “Infosec Loan”). That loan is governed by Ontario law and has also been assigned to Golden Valley. Golden Valley has commenced an action in Ontario for payment on the Gryphon and Infosec loans.
[14] The Black Stallion Trust, according to Mohammed, is a family trust created for estate planning purposes and to protect funds from creditors. Saad deposited $67.725 million USD into the trust in October 2018. The funds came from Dreams, which had allegedly already been gifted to Mohammed. Mohammed receives $40,000 a month from the Black Stallion Trust, for life. If he becomes incapacitated, the distribution will go to his brother Khalid.
Other evidence of fraud
[15] Other evidence of fraud included that Mohammed was a nominee shareholder of both Enma Al Ared Real Estate Investment and New Dawn Contracting, two of the respondent companies. The respondents allege that Mohammed and his father misappropriated $3.68 million USD from those companies. A report from Deloitte and Touche (M.E.) stated that $30.594 million USD was embezzled from Enma.
[16] Mohammed was entitled to receive a 1% profit from the operation of Enma, which was 11,710,233 SAR in 2015. Mohammed never received his share of those profits. He was not aware that this same amount was received by his father in 2015.
[17] Saad transferred his HSBC accounts, containing approximately $15.89 million USD, to Mohammed in August 2019. Mohammed used these funds to purchase a house for his father on the Bridle Path in Toronto for $13 million CAD, and a Toronto house for Khalid in November 2019 for $4.465 million CAD. Mohammed also paid Khalid $2.5 million USD for expenses.
[18] Other transactions that the respondents allege show a continuing conspiracy include a $1.2 million CAD loan from Mohammed to a numbered company to purchase two apartments for his father to live in (a loan which was later forgiven); Mohammed’s $2 million USD donation to the New East Family Foundation, which was founded by Saad; and the fact that Mohammed has been paying all his father’s living expenses and legal fees and that Mohammed rents his residence in London, England.
[19] All these allegations were before the motion judge when the appellants sought to have the action against them stayed or dismissed for lack of jurisdiction. In addition to the lengthy statement of claim, the motion judge also had before her hundreds of pages of documents from both parties including cross-examinations of Saad and Mohammed.
The motion judge’s reasons
[20] The motion turned on whether the respondents were able to establish a real and substantial connection between the subject matter of the action, the foreign moving parties (the appellants), and Ontario. The motion judge followed the analytical structure set out in Club Resorts Ltd. v. Van Breda, 2012 SCC 17, [2012] 1 S.C.R. 572, which is to guide the determination of whether the court has jurisdiction over a tort claim. Van Breda identifies four presumptive connecting factors: a) the defendant is domiciled or resident in Ontario; b) the defendant carries on business in Ontario; c) the tort was committed in Ontario; or d) a contract connected with the dispute was made in Ontario. The motion judge noted that the respondents needed only to establish a single presumptive factor to ground jurisdiction, at which point the burden shifted to the appellants to rebut the presumption of jurisdiction by demonstrating the relationship between the subject matter of the litigation and the forum is weak. As explained more particularly below, the motion judge found connections between the appellants, the subject matter of the litigation, and Ontario, based on contracts made in Ontario, property located in Ontario, and what she termed “jurisdiction over the claim as a whole”, with the tort of conspiracy located at the heart of the claim.
(1) Connection with a contract made in Ontario
[21] The motion judge found multiple contracts formed in Ontario were sufficiently connected to the dispute to constitute a presumptive connecting factor. These included the Gryphon Convertible Loan Agreement, the Gryphon Security Agreement, and the Infosec Loan described above. They also included a share purchase agreement of QFive, an Ontario company. The motion judge concluded there was evidence that, via these contracts, misappropriated funds flowed into the entities at the direction of Saad directly or Saad acting through Mohammed. The motion judge characterized the making of these contracts as part of the fraudulent scheme.
[22] However, the motion judge found the most significant agreement for the purposes of the jurisdiction motion to be the gift deed. The motion judge characterized the gift deed as lying at the core of the litigation. The legal effect of the gift deed is hotly contested in the litigation: the appellants argue it is legally inert, while the respondents argue that although it is a sham, it purports to transfer all of the assets of Saad, including all misappropriated assets, to Mohammed. The motion judge found that were the gift deed found to be legally valid, it would place the transferred assets out of the reach of the respondents. The motion judge found that the assets that are the subject of the alleged fraudulent scheme are all subject to the gift deed. If the gift deed is a sham, as the respondents claim, then the making of the gift deed is a cornerstone of the fraudulent scheme to put the misappropriated assets beyond the reach of the respondents. Whether the gift deed is a sham will be a central question at trial. What was undisputed on the motion is that the gift deed was drafted and signed by Saad in Toronto in December 2018. On that basis, the motion judge had no hesitation in finding that the gift deed was a contract connected with the dispute, and that it was of such centrality to the fraudulent scheme that it grounded jurisdiction over the entirety of the claim.
(2) Property in Ontario
[23] The motion judge, relying on Knowles v. Lindstrom, 2014 ONCA 116, 118 O.R. (3d) 763, at para. 21, found that property located in Ontario can be a presumptive connecting factor if a subject of the claim is real property alleged to be the means of unjust enrichment. The respondents have made claims of constructive trust and tracing over all assets owned by Mohammed and Saad, and allege that Mohammed used funds gifted to him by Saad to purchase assets in Ontario – including real property – for Saad’s and Khalid’s use. The motion judge rejected the argument that the alleged torts arising from the misappropriation of assets by Saad were completed in Saudi Arabia, and that the respondents are in effect arguing that jurisdiction follows the assets worldwide wherever they end up.
[24] The motion judge reasoned that, as she concluded that the gift was a ruse, Saad was controlling and managing the misappropriated funds through Mohammed. The assets in question – real property and the Black Stallion Trust which pays family living expenses – are thus not only present in Ontario but controlled and managed in Ontario by Saad, who lives in Toronto. She also found that management of misappropriated funds by Saad through Mohammed and other nominees is part of the on-going conspiracy alleged by the respondents. The motion judge found therefore that this control of property in Ontario is an additional connecting factor.
(3) Location of the torts
[25] The question posed by the motion judge under this heading is whether jurisdiction should be assumed “over the claim as a whole”, even though not all of the defendants were resident in Ontario. The core of her analysis is at para. 64:
I agree with the Plaintiffs that a tort arises in any jurisdiction where steps are taken in furtherance of the conspiracy … This Court has already found that a strong prima facie case of fraud has been established, that Dr. Saad is adept at moving money around, and that there is still a question as to why Dr. Saad’s spouse, children, relatives, and friends were named as nominee shareholders of the Plaintiff companies. Those findings have not been displaced. Given the questions surrounding the gifting of Dr. Saad’s assets, there is evidence to suggest that Dr. Saad continues to “move money around” in furtherance of the conspiracy.
[26] The motion judge concluded there was an arguable case that Saad, acting in concert with Mohammed and the other non-resident defendants, had committed a tort in Ontario.
(4) Conclusion on Van Breda analysis
[27] The motion judge concluded that presumptive jurisdiction over the objecting defendants had been established according to the Van Breda test “by way of an arguable case with respect to multiple connecting factors including contract, property, and location of the torts in Ontario.” She found that the appellants had not met the burden of negating the presumption, and dismissed the motion.
C. Issues on Appeal
[28] The appellants’ primary argument is that the motion judge’s Van Breda analysis leading to the conclusion that Ontario had jurisdiction “over the claim as a whole” was fundamentally flawed. They also allege that the motion judge made errors of law in other aspects of the Van Breda analysis, misapprehended the record, and made palpable and overriding errors of fact.
[29] The central focus of the appellants’ appeal is that the motion judge did not follow a proper real and substantial connection analysis with respect to them. She did not distinguish among the various defendants in determining whether there were presumptive connecting factors. Instead, the appellants argue, once she found a connection between Saad (who is a defendant but was not a moving party in the jurisdiction motion), Ontario, and the subject matter of the claims, she simply applied that finding to the other defendants without a Van Breda analysis. In effect, the appellants argued, the motion judge found that if Ontario had jurisdiction over one defendant in an action, it had concurrent jurisdiction over all the others as well, wherever situated.
[30] This overarching error is said to have flowed both from errors of fact, and errors of law.
D. Analysis
The factual error
[31] As the appellants argue, the finding that Saad continues to direct – from Ontario and in furtherance of the alleged conspiracy – the use of the funds gifted to Mohammed, is central to the motion judge’s conclusions on each ground for jurisdiction. The motion judge found that a prima facie case had been made that the gift was a ruse, and a key step in the conspiracy to keep the assets out of the reach of the respondents. She found that Saad continues to direct the management of the gifted assets from Ontario.
[32] The appellants argue that the motion judge was led to the erroneous conclusion that the gift was a ruse by misapprehending or simply failing to consider the appellants’ evidence on the motion.
[33] The evidence the motion judge relied on, and her findings of fact in relation to the conclusion that the gift was a ruse, are summarized at para. 6 above. The appellants set out five discrete errors that they say undermine the motion judge’s conclusion that the gift is a ruse:
- The Black Stallion Trust: the appellants argue that the motion judge failed to consider Mohammed’s evidence about the creation of the Black Stallion Trust and accordingly drew the wrong conclusion that the existence of the trust was some evidence of Saad’s continuing control of the funds, giving reason to doubt the veracity of the gift. Mohammed’s evidence was that Saad explicitly carved out the funds from the gift in order to settle a trust for the benefit of the family, and that this had been a long-term plan. The motion judge is said to have erred in finding that the establishment of the trust post-dated the gift deed, when it actually occurred between the making of the oral gift in June 2017 and the execution of the gift deed in December 2018. She is said to have further erred in finding that Saad controlled the trust, when the evidence is that it is controlled by its trustees, over whom Saad has no control.
- Saad retained personal bank accounts: the motion judge stated that it was a concern, casting doubt on the veracity of the gift, that Saad retained control of some personal bank accounts for his own use. The appellants argue it was an error to find that this was in any way inconsistent with the making of the gift, and the motion judge did not explain why it was a matter of concern.
- Mohammed’s receipt of $40,000/month from Black Stallion Trust: the motion judge also flagged as concerning the fact that Mohammed received $40,000 per month from the trust. The appellants object that she did not explain how this undermined the bona fides of the gift.
- Mohammed’s evidence that managing the gifted assets was his full-time job: the motion judge was unimpressed with Mohammed’s level of knowledge of the holdings gifted to him by Saad, leading her to draw the inference that Saad, not Mohammed, was in fact managing the assets. The appellants argued that Mohammed’s evidence showed that he in fact understood the nature and structure of his holdings.
- Mohammed gifted $13M to buy The Bridle Path home for Saad and $8M to his brother: Mohammed’s evidence was that the purpose of the gift was to protect against creditors and to make financial support for all members of the family. The appellants argue that the fact that he used gift funds in this way, and on his evidence without Saad’s direction or approval, was consistent with the reason the gift was made.
- Mohammed makes ongoing payments to Saad for expenses and legal fees: the motion judge did not consider Mohammed’s evidence on cross-examination that he does not pay Saad’s expenses as a matter of course, but only began doing so after a Mareva order froze Saad’s assets. The appellants argue that not referring to this evidence undermined the motion judge’s finding that paying Saad’s expenses raised concerns about the legitimacy of the gift.
[34] The standard of review for this ground of appeal is palpable and overriding error. It is a highly deferential standard of review. As noted by Stratas J.A. in Canada v. South Yukon Forest Corporation, 2012 FCA 165, 431 N.R. 286, at para. 46, leave to appeal refused, [2012] S.C.C.A. No. 349:
“Palpable” means an error that is obvious. “Overriding” means an error that goes to the very core of the outcome of the case. When arguing palpable and overriding error, it is not enough to pull at leaves and branches and leave the tree standing. The entire tree must fall.
[35] This is complex litigation and the record on this particular motion was voluminous. By institutional design, the motion judge – who has had carriage of every step in the proceeding including the motion for a Mareva order – has a familiarity with the record not easily replicated by an appellate panel. Accordingly, the remit of this court is limited to correcting only those errors that go to the core of the case, and are obvious. As I explain below, what the appellants have characterized as errors do not fall into these categories.
[36] This court recently described the remit of a motion judge on a jurisdiction motion as determining “whether the statement of claim asserts the core elements of a cause of action known to law and appears capable of amendment to cure any pleadings deficiencies and whether the claimant has established a good arguable case that the cause of action is sufficiently connected with Ontario to found jurisdiction”: Vahle v. Global Work & Travel Co. Inc., 2020 ONCA 224, at para. 13; see also Ontario v. Rothmans Inc., 2013 ONCA 353, 115 O.R. (3d) 561, at para. 106, leave to appeal refused, [2013] S.C.C.A. No. 327. The court in Vahle further noted that “[i]t is necessary for the purpose of a jurisdiction motion for the court to determine whether there is a ‘real and substantial connection’ between Ontario and the claims, when considered as a whole.”
[37] Whether the above transactions would be a thin basis on which to determine that the gift is a ruse and the appellants (and all of the defendants) are parties to fraud and conspiracy, the transactions nevertheless do not stand on their own as the core of the case on the jurisdiction motion. The inferences that the motion judge drew – including that Mohammed had less apparent involvement in the management of the assets than the motion judge would have expected from someone whose full-time job was managing those assets – were available to the motion judge on the evidence before her, and her failure to expressly mention other evidence that the appellants argue support a contrary inference does not mean that the motion judge ignored or misapprehended that evidence. The motion judge’s reasons, in my view, come within the margin of appreciation owed by an appellate court to a motion judge who is distilling a complex factual record.
[38] The various “concerns” articulated by the motion judge – that Mohammed and Saad acted in a way one would not expect had the gift been bona fide – were of secondary importance in the motion judge’s reasoning. Of primary importance, and left untouched by the appellants, is the finding of Saad’s changing evidence related to the gift: first his evidence was that it was a written deed executed in Turkey, then – in an apparent response to pressure to produce the written deed – was stated to have been a gift made orally in Turkey, and then became a written deed executed in Toronto said to memorialize the gift made orally. The finding at the centre of the jurisdiction decision is that Saad executed a gift deed in Toronto in favour of Mohammed, and did so as a critical step in a conspiracy to injure the respondents. The allegations against Saad are deeply intertwined with the allegations against Mohammed and the other respondents. They are alleged to have acted together to carry out a common unlawful purpose. The respondents may or may not be successful at trial. But the jurisdiction motion does not turn on whether, for example, Mohammed did or did not know that he was receiving $40,000 per month from the Black Stallion Trust, and whether this payment is more consistent with Saad having made a bona fide gift of substantially all of his assets or not.
[39] The motion judge’s line of reasoning is clearly visible through the reasons as a whole: Saad misappropriated assets and then sought to divest himself of formal title while nevertheless maintaining control of them, acting through others. The motion judge doubted the making of the oral gift, which was not witnessed, not corroborated, and not consistent with Saad’s initial claim that he had made the gift in writing. She did not believe that the pattern of transactions in evidence were consistent with a gift having been made to Mohammed, and were more consistent with Mohammed being used as a proxy to shield Saad’s control. She concluded, crucially, that the making of the gift deed in Toronto served the purposes of the conspiracy by purporting to transfer all the assets that are the subject of the action to Mohammed, and thereby allowing Saad to continue to control the assets from Ontario while he simultaneously protected the assets against any legal process brought by the respondents to recover them. Every transaction that happened thereafter, whether through Mohammed or the corporate defendants, that was an implementation of the gift was a furtherance of the conspiracy to defraud.
[40] Again, whether the motion judge was incorrect in some respects, and some of the transactions post-dated the alleged making of the oral gift and pre-dated the gift deed would not, by themselves, be enough to displace the inferences drawn by the motion judge on this record. For example, even if the motion judge erred in finding that the establishment of the Black Stallion Trust occurred after the making of the gift deed, the error would not in itself be so significant that it would foreclose the inference drawn by the motion judge that the gift was a ruse.
[41] I therefore do not agree that the motion judge made any reviewable error.
The legal errors
[42] The appellants also advance several legal errors. Two are overarching errors: the motion judge is said to have (1) lumped all the appellants together in the Van Breda analysis and failed to give any reasons for finding jurisdiction over the corporate appellants; and (2) relied on connections between other defendants (particularly Saad) and Ontario, to find jurisdiction over the appellants (the “claim as a whole” argument). The remaining errors of law are discrete errors related to the analysis for each of the presumptive Van Breda factors found by the motion judge. Each are addressed in turn.
(1) Failure to perform an individualized assessment of each defendant
[43] The appellants argue that the motion judge’s analysis proceeded on the erroneous belief that if she found a single presumptive connecting factor in relation to one defendant, it would be sufficient to ground jurisdiction over all defendants, and for that reason she failed to perform a Van Breda analysis with respect to the claims brought against each defendant.
[44] This ground of appeal is something of a red herring. The question of the scope of a court’s authority to assume jurisdiction over non-resident defendants based on jurisdiction over resident defendants is vexed: see, for example, Stephen G.A. Pitel and Vaughan Black, “Assumed jurisdiction in Canada: identifying and interpreting presumptive connecting factors” (2018) 14 J. Priv. Intl. L. 193. But there is no need to resolve it here. The motion judge found jurisdiction on the basis of a factual matrix proper to each defendant acting in concert with Saad, said to have orchestrated the fraudulent scheme from Ontario, and the alleged role of each in the conspiracy. Implicit in the motion judge’s analysis is that a prima facie case of conspiracy had been made out with respect to each defendant. Saad was the prime mover, and the means he used were the gift deed to Mohammed, and transactions from Mohammed to and from the corporate defendants. There was no need to expressly and mechanically run through the Van Breda factors with respect to each defendant where the defendants are alleged to have acted in an interconnected way and under the direction of a single controlling mind.
(2) Lumping the appellants in with Saad
[45] Similarly, the appellants argue that the motion judge illegitimately moved from a finding that Ontario had jurisdiction over Saad, to a finding that it must therefore have jurisdiction over the other defendants, including the appellants.
[46] Again, the motion judge did not proceed on the basis that a finding of jurisdiction over one defendant will always be sufficient to ground jurisdiction over any others. The finding of jurisdiction over Mohammed and the corporate defendants was tightly connected with the allegation of conspiracy and the parties’ respective roles in carrying out the conspiracy from Ontario.
[47] I am therefore unpersuaded by the appellants’ arguments that the motion judge made the overarching errors alleged. There remains, however, the more granular question of whether she erred in her application of the Van Breda methodology.
(3) Real and substantial connection to Ontario
[48] The motion judge accurately set out the legal principles related to the assumption of jurisdiction against a foreign defendant, citing Rothmans, at para. 54, for the proposition that “an Ontario court will assume jurisdiction against a foreign defendant only where the plaintiff establishes ‘a good arguable case’ for assuming jurisdiction through either the allegations in the statement of claim or a combination of the allegations in the statement of claim and evidence filed on a jurisdiction motion.” The ‘good arguable case’ for assuming jurisdiction is assessed according to criteria set out in Van Breda, particularly “on the basis of objective factors that connect the legal situation or the subject matter of the litigation with the forum”: Van Breda, at para. 82. Van Breda set out a list of objective presumptive connecting factors that, if present, would ground jurisdiction over a tort. The non-exhaustive list includes: (1) the defendant is domiciled or resident in the province; (2) the defendant carries on business in the province; (3) the tort was committed in the province; and (4) a contract connected with the dispute was made in the province. The Van Breda court emphasized that the list is not closed and was not intended to displace the existing categories that had been found to ground jurisdiction.
[49] As the motion judge noted, if a plaintiff is able to establish a single presumptive factor, the burden shifts to the objecting defendants to rebut the presumption by demonstrating that the relationship between the subject matter of the litigation and the forum is nevertheless too weak to ground jurisdiction: Van Breda, at para. 95. The motion judge found connections through four presumptive factors. For the appellants to succeed on the appeal, it would be necessary therefore to find that the motion judge erred with respect to all four. One, two, or even three errors would not be sufficient. As is evident from the analysis below, I am not persuaded that the motion judge erred with respect to any of the four connecting factors she identified.
Situs of the tort
[50] For the purposes of analysis, it is most useful in this case to begin with the presumptive connecting factor of the situs of where the tort was committed. The appellants argue that this question should be analyzed following this court’s holding in Rothmans that “it is well established that a conspiracy occurs in the jurisdiction where the harm is suffered regardless of where the wrongful conduct occurred”: at para. 37. The appellants argue that as no harm has been alleged to have been suffered in Ontario, this presumptive connecting factor fails.
[51] The appellants argue that the motion judge failed to apply or distinguish Rothmans and thereby erred. She instead focused her analysis on steps taken by Saad in Ontario in furtherance of the conspiracy, and sought to use this action to ground jurisdiction against the objecting defendants. The appellants argue that this analysis is not merely contrary to Ontario case law, but wrong in principle: it would mean that Ontario would automatically have jurisdiction over non-resident co-defendants in any conspiracy action where one party to the conspiracy is resident.
[52] I do not agree that the motion judge erred. Although Rothmans holds, as the appellants argue, that conspiracy occurs in a place where harm caused by the conspiracy is suffered, it does not hold that a conspiracy is only committed in the jurisdiction where the harm is suffered. That is, it does not affirm the proposition that acts amounting to civil conspiracy that are committed within a jurisdiction are not actionable within that jurisdiction if the harms caused thereby are only suffered outside that jurisdiction. It is sufficient for the purposes of jurisdiction over the tort of civil conspiracy that the elements of the tort are committed within the jurisdiction, even if the resulting harm occurs elsewhere.
[53] Unlike Boyd v. Cook, 2016 BCCA 424, 62 B.L.R. (5th) 196, on which the appellants rely, the allegations in this claim are not simply that Saad defrauded the respondents and then made unauthorized investments in Ontario. The allegation is that he conspired with Mohammed and others to remove financial assets from Saudi Arabia and maintain control of them while vesting legal ownership in Mohammed and others to better defeat the claims of the respondents.
A contract connected with the dispute was made in Ontario
[54] The case law, including Van Breda, establishes that a contract connected with a tort claim and made within the jurisdiction, can establish jurisdiction. The appellants argue that the contracts identified by the respondents are not connected with the embezzlement said to have occurred in Saudi Arabia, and the claim amounts to nothing more than a tracing of assets. The claim does not flow from the contracts made in Ontario, but from the fraud in Saudi Arabia.
[55] Once again, much depends on the way the claim is characterized. The motion judge did not characterize it as an action for misappropriation, but rather conspiracy to injure the respondents. It was not an error for her to do so. But having understood the claim in this way, it is not a defence to the court’s jurisdiction for the appellants to argue that the initial misappropriation did not flow from the contracts. It is the relationship between the contracts and the fraudulent scheme that must be examined.
[56] The fraudulent scheme includes the co-ordinated efforts of all the defendants to dissipate the misappropriated assets worldwide. The contracts – and most prominently the gift deed – were means by which the misappropriated funds were moved.
[57] With respect to the gift deed, the appellants argue that it is not a contract in the relevant sense, and it was an error to treat it as such. Their position is that the gift deed (1) is not a contract, (2) was legally inert – that it did not change legal relations between anyone in relation to any thing – but simply “memorialized”, for tax purposes, the gift that had already been made in Turkey, and (3) was not the means to committing the fraud in any event.
[58] However, the fact that the gift deed is not in the form of a bilateral contract is not a barrier to it serving as a presumptive connecting factor. It is sufficiently analogous to a contract to serve as a presumptive connecting factor in this factual context. On its face, the gift deed changes the respective legal powers of Saad and Mohammed to control a vast set of assets worth hundreds of millions of dollars. The respondents allege that this is a foundational step in the conspiracy, ostensibly vesting beneficial ownership in Mohammed and providing the basis for the legal transfers of ownership that followed. The appellants do not contest that the gift was made or that Mohammed accepted it. They merely argue that the gift was made earlier and in another place and in accordance with other formalities, and that in any event Mohammed’s title to the various assets was accomplished by individual transfers and not by the gift deed.
[59] The appellants further argue that the motion judge failed to apply the principle articulated in Lapointe Rosenstein Marchand Melançon LLP v. Cassels Brock & Blackwell LLP, 2016 SCC 30, [2016] 1 S.C.R. 851, governing where a contract made within a jurisdiction is sufficiently connected with the dispute to be a presumptive connecting factor. Lapointe held that the events giving rise to the dispute must “flow from the relationship created by the contract.”
[60] On the appellants’ framing of the action, the dispute is whether the respondents’ funds were misappropriated in Saudi Arabia. The gift deed and the various loan-related contracts do not bear on the misappropriation of assets, but are rather a matter of tracing funds that were allegedly misappropriated in Saudi Arabia. The gift deed and contracts did not create the legal relationship from which the events giving rise to the dispute proceeded.
[61] Again, the motion judge did not accept the appellants’ framing of the action and did not err in so doing. She accepted that the respondents had made out an arguable case that the appellants had engaged in conspiracy, that the conspiracy was ongoing and not spent in Saudi Arabia or even with the making of the gift deed. The gift deed in particular, on the motion judge’s factual findings, was not legally inert as argued by the appellants, but at least purported to be the instrument by which significant assets were transferred to Mohammed, who accepted them.
[62] The motion judge, as noted earlier, made no palpable and overriding error in concluding that the making of the gift deed was part of the fraudulent scheme. Neither is there a basis to conclude that the motion judge erred in finding that the gift deed was sufficiently related to the conspiracy and the fraudulent scheme to ground jurisdiction over both Saad and Mohammed, the recipient of the gift.
[63] Neither did the motion judge err in finding that the loan-related agreements, described in paras. 12 and 13 above, also served as presumptive connecting factors for some of the corporate appellants. There was no error in concluding that the loan-related contracts, made in Ontario and subject to Ontario law, created legal relations that fall within the subject matter of the litigation.
Control of property in Ontario
[64] As explained above, Mohammed’s and Saad’s control of property in Ontario, including the residential properties and the Black Stallion Trust, were appropriately considered by the motion judge under the heading of the presumptive connecting factor of the situs of the tort of conspiracy – control of this property is alleged to have been a means of carrying out the conspiracy. However, it was not an error for the motion judge to also find that control of the property situated in Ontario and managed in Ontario constitutes a separate connecting factor in the Van Breda schema in its own right. The property in question is subject to proprietary and constructive trust claims against some of the defendants, and its presence in Ontario and control by either Saad or Mohammed appropriately grounds jurisdiction in Ontario.
[65] Crucially, here as in Knowles v. Lindstrom, “the location of the property clearly links any dispute over ownership to the courts of that jurisdiction”. There is a dispute over the ownership of the property in Ontario held by Saad or Mohammed, and the respondents claim a constructive trust over it. The respondents have asserted proprietary claims against 14 The Bridle Path, 149 Burbank Ave., various apartments purchased by Mohammed and used by Saad, shares in Canadian Growth, interest payable under the Gryphon Convertible Loan Agreement and Gryphon General Security Agreement, and funds held by the New East Family Foundation. They assert constructive trust claims against assets formerly held by Saad in Ontario, which are now subject to the gift deed. The motion judge made no error in finding that the location of this property in Ontario, in the context of the claims made by the respondents, was sufficient to establish a prima facie connection with Ontario.
Conclusion on real and substantial connection test
[66] The motion judge came to the conclusion that there was a real and substantial connection between the defendants, the subject matter of the litigation, and Ontario, by reference to multiple presumptive connecting factors. I have not found that she erred in any material respect in that analysis, and would not disturb it.
[67] The appellants argue that the motion judge failed to require a presumptive connecting factor against each defendant, but instead bootstrapped jurisdiction onto defendants against whom there was no or, at best, a weak connection to Ontario. I do not read the motion judge’s reasons in this way. It is true that much of her analysis is framed in terms of jurisdiction over the “claim as a whole”. However, the motion judge ought not to be read as committing to the doubtful proposition that jurisdiction over one defendant entails jurisdiction over them all. The phrase “claim as a whole”, in context, indicates the broad ranging tort of conspiracy together with all other causes of action grounded in the same acts. Furthermore, given the centrality of the claim of conspiracy within the claim as a whole, the motion judge’s focus of analysis was appropriately not on the actions of individual defendants in isolation, but on their actions – sometimes separate, sometimes together – in working towards a common end.
E. Disposition
[68] I would dismiss the appeal. The respondents are entitled to costs of the appeal. If the parties are unable to agree on quantum, the court will receive written submissions limited to 3 pages, exclusive of bills of costs. The respondents are to provide submissions within 10 days of the release of these reasons, and the appellants within 20 days.
Released: June 27, 2022 “G.P.” “B.W. Miller J.A.” “I agree. G. Pardu J.A.” “I agree. L.B. Roberts J.A.”
