COURT OF APPEAL FOR ONTARIO DATE: 20230721 DOCKET: COA-22-CV-0380

Feldman, Benotto and Roberts JJ.A.

BETWEEN

Kenneth Bunker and Christy O’Donnell as Executors of the Estate of Donald Harry Bunker Applicants (Respondents)

and

Ian and Christine Veall, Attorney General of Canada, and Attorney General of Ontario Respondents (Appellants) [1]

Counsel: Robert Frater, K.C. and Young Park, for the appellants Aaron Kreaden and Hamza Mohamadhossen, for the respondents

Heard: July 5, 2023

On appeal from the order of Justice Cory A. Gilmore of the Superior Court of Justice, dated October 28, 2022, with reasons reported at 2022 ONSC 6087.

By the Court:

[1] The order appealed from is a declaration that a proposed payment, if made by the respondent executors of the estate of Donald Harry Bunker (“the Executors”) to Donald Harry Bunker Legal Consultants (“the Firm”) in connection with a Dubai judgment obtained by Sorinet Aviation Ltd. and Sorinet General Trading LLC (“the Sorinet Entities”) against the Firm, would violate s. 83.03(b) of the Criminal Code, R.S.C. 1985, c. C-46 because the Sorinet Entities have an alleged connection to a terrorist group. The proposed payment by the Executors would be in satisfaction of an agreement with the Firm to pay 50% of the Dubai judgment.

[2] The Executors sought the declaration of illegality by way of application under r. 14.05(3) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 for the opinion, advice, direction or order of the court. The appellants, who now operate the Firm, appeal the declaration of illegality and also seek leave to appeal the costs order against them.

[3] At the opening of the oral argument, counsel were asked to address jurisdiction, and whether the application judge should have exercised her discretion to make the requested declaration. Counsel had also filed written submissions on the issue. Both sides took the position that it was appropriate for the application judge to do so.

[4] After hearing the oral submissions and considering the jurisdiction issue, the court advised the parties that it would not hear submissions on the merits of the illegality issue and that the order below would be set aside. The court’s reasons would follow. These are the reasons.

Background Facts

[5] A detailed summary of the facts of this case is set out in the application judge’s reasons reported at 2022 ONSC 6087. Below is a brief summary.

[6] The respondents, Dr. Bunker’s children, are the Executors of Dr. Bunker’s estate. Dr. Bunker was a lawyer and the founder of the Firm in Dubai, United Arab Emirates. The respondents reside in Canada and all funds belonging to the estate are held in a Scotiabank account in Toronto, Ontario. The appellants practiced law in Dubai with Dr. Bunker prior to his death and continue to operate the Firm in Dubai.

[7] After Dr. Bunker passed away, the Sorinet Entities brought a legal proceeding in Dubai against the Firm. Sorinet Aviation Ltd. had previously retained the Firm to purchase aircraft for travel demands in Iran. After Sorinet Aviation Ltd.’s principal and majority shareholder revealed that he intended to seize and operate the aircraft in Iran, contrary to international sanctions, the Firm terminated their relationship and retained a portion of the funds that had been provided by Sorinet Aviation Ltd. as an indemnity in the event that Sorinet Aviation Ltd. were to make any derogatory statements about the Firm. The Sorinet Entities brought the legal proceeding against the Firm when the Firm forfeited the indemnity amount.

[8] The Dubai Court of First Instance granted judgment to the Sorinet Entities against the Firm for damages exceeding US $1,000,000 for unlawfully retaining the indemnity amount. The judgment was upheld on appeal by the Dubai Court of Appeal and the Dubai Court of Cassation.

[9] The parties disagree on the quantum, extent and basis of the estate’s liability for the Dubai judgment and the jurisdiction of an Ontario court to determine that issue. The application judge held that the validity of any alleged agreement and the jurisdiction of an Ontario court over that issue would be scheduled for a separate hearing. That decision is not at issue on this appeal.

[10] The sole issue decided by the application judge was whether any payment by the Executors towards the Dubai judgment would be contrary to s. 83.03(b) of the Criminal Code due to possible connections between the Sorinet Entities and an alleged terrorist group. The application judge agreed that any such payment by the Executors would be illegal and made that declaration.

Analysis

[11] While procedurally an estate may seek the advice of the court including declarations of right under r. 14.05(3) of the Rules of Civil Procedure, that rule does not give the court jurisdiction. It is a procedural rule only. This court recently discussed these principles at para. 61 of Bryton Capital Corp. GP Ltd. v. CIM Bayview Creek Inc., 2023 ONCA 363:

Rule 14.05 is procedural in nature. It does not create jurisdiction, but assumes it, and provides a means by which to engage that jurisdiction: Grain Farmers of Ontario v. Ontario (Ministry of the Environment and Climate Change), 2016 ONCA 283, 130 O.R. (3d) 675, at paras. 17-18. A court must have jurisdiction independent of r. 14.05 before it can consider the appropriate vehicle for bringing the matter forward, whether by application or action: J.N. v. Durham Regional Police Service, 2012 ONCA 428, 294 O.A.C. 56, at para. 16.

[12] In addition, s. 60(1) of the Trustee Act, R.S.O. 1990, c. T.23 allows a trustee, guardian or personal representative to apply to the Superior Court of Justice “for the opinion, advice or direction of the court on any question respecting the management or administration of the trust property or the assets of a ward or a testator or intestate.”

[13] These types of applications are intended to assist, and in some cases provide legal protection to the trustee against the beneficiaries for actions to be taken by the trustee in the administration of the trust or estate. However, to the extent that such declarations or opinions relate to what steps a prosecutor may take or what findings a court may make in a criminal prosecution against the trustee, they do not provide protection to the trustee from the court or a prosecutor because they do not bind those decision makers.

[14] Because in this context the court on the application cannot make a binding declaration of legality, courts have held that they will not give a declaration that is intended by the parties to interfere with prosecutorial discretion or to provide immunity from prosecution: see e.g., London Health Science Centre v. R.K. (1997), 152 D.L.R. (4th) 724 (Ont. S.C), at paras. 14-16; Bentley v. Maplewood Seniors Care Society, 2014 BCSC 165, at paras. 151-152, aff’’d on other grounds, 2015 BCCA 91. For example, the Superior Court at para. 16 of London Health stated:

[T]he declaration sought either confers immunity upon the applicants, in which case it improperly interferes with the exercise of prosecutorial discretion, or, if the Attorney General is free to disregard it, then it is merely an unenforceable judicial opinion, in which case it ought not to be given.

[15] That is what is being requested in this application. [2] The relevant Criminal Code section is s. 83.03(b), which makes it an offence for any person to “directly or indirectly…provide[s]…or make[s] available property or financial or other related services…(b) knowing that, in whole or part, they will be used by or will benefit a terrorist group.”

[16] The Dubai judgment that is owed by the Firm is to entities that are alleged to have connections to a purported terrorist group. When the respondents began to prepare to pay what they acknowledged was their 50% share of the judgment, they became concerned that by doing so, they may run afoul of s. 83.03(b). The respondents then sought a declaration from the Superior Court that the payment would be illegal and in breach of the section.

[17] The appellants took the position that the payment would not contravene the section and would be legal. The application judge agreed with the respondents. She found, based on the evidence in the record before her, that the payment would contravene the relevant section of the Criminal Code and would therefore be illegal.

[18] One of the main arguments the appellants raise on the appeal is that the evidence on the application was not sufficient to make a finding of illegality, as it consists in large part of newspaper articles and other hearsay regarding the alleged terrorist connections of the judgment creditors. This argument demonstrates another reason why the court will not make the requested declaration: it would be based only on the record before the court. However, a prosecutor would base any prosecution decision on the evidence available to the prosecution which could be entirely different.

[19] Therefore, a declaration, if made, could offer no true protection to the respondents, and would not serve the purpose contemplated by s. 60(1) of the Trustee Act or r. 14.05(3) of the Rules of Civil Procedure.

[20] Although part of the issue sought to be resolved through the application is the interpretation of s. 83.03(b) of the Criminal Code, the other part is findings of fact based on the record and, in particular, whether the money will in fact be used by, or give benefit to, a terrorist group. This is not a situation where an offence can be easily discerned because significant facts are not in dispute, such as where an agreement contains a criminal rate of interest: see Transport North American Express Inc. v. New Solutions Financial Corp., 2004 SCC 7, [2004] 1 S.C.R. 249, at p. 290, per Fish J. (dissenting, but not on this point).

[21] Where the court is asked to assess facts on a contested record and determine whether the facts as found would constitute an offence, what is requested is not an opinion but rather findings of fact based on evidence that may or may not form part of the record at a trial. In this case, where fear of a criminal prosecution under the Criminal Code is at issue, that trial would be a criminal trial based on charges laid.

[22] This court recently discussed and described the discretionary nature of declaratory relief in Bryton Capital Corp. GP Ltd. At para. 64, van Rensburg J.A. quoted with approval a non-exhaustive list of reasons why a court may deny declaratory relief, from Gook Country Estates Ltd. v. Quesnel (City of), 2008 BCCA 407, 73 R.P.R. (4th) 241, at para 10:

[S]tanding, delay, mootness, the availability of more appropriate procedures, the absence of affected parties, the theoretical or hypothetical nature of the issue, the inadequacy of the arguments presented, or the fact that the declaration sought is of merely academic importance and has no utility.

[23] In this case, a declaration would have no utility: it would not be binding on a prosecutor; and, being based on a specific evidentiary record, it could not even have persuasive effect where a prosecutor had different evidence as the basis to indict.

[24] Finally, the parties argue that the legality issue will have to be determined by an Ontario court in a civil proceeding such as an action to enforce the agreement by the estate to pay 50% of the Dubai judgment. Therefore this court should proceed to decide the issue on this appeal. We do not accept that submission, either factually or legally. The issue for the parties is whether there is a procedure, which there may well be, that will allow them to effect payment on the contract without risking the engagement of s. 83.03(b) of the Criminal Code.

Disposition

[25] In the result, the declaration of illegality is set aside. In the circumstances of this case, the court below erred in law by exercising its discretion to decide whether a payment would constitute an offence under the Criminal Code, requiring a determination both of disputed facts, including facts going to mens rea, the interpretation of s. 83.03(b) of the Criminal Code, and the application of the facts in the context of proof beyond a reasonable doubt.

[26] The parties requested the opportunity to provide written submissions regarding the costs of the application and of the appeal. If they cannot agree on the costs, they may provide written submissions, not exceeding three pages each, the appellants within 15 days of the release of these reasons, and the respondents within 10 days thereafter.

Released: July 21, 2023 “K.F.” “K. Feldman J.A.” “M.L. Benotto J.A.” “L.B. Roberts J.A.”

Footnotes:

[1] The Attorneys General of Canada and Ontario were named respondents and were given notice of the proceeding. However, they did not participate in the underlying proceeding or this appeal.

[2] While the applicant sought a declaration that the proposed payment would be illegal, the respondents wanted the court to declare that the payment would be legal.