SUPERIOR COURT OF JUSTICE – ONTARIO
COMMERCIAL LIST
RE: Edward Tracy, by his Litigation Guardian Charles Murphy, Elizabeth Ciccipio-Puleo, estate of Helen Fazio, estate of Domenic Cicippio, David B. Cicippio, Eric R. Cicippio, Richard Dennis Cicippio, Thomas J. Cicippio, estate of Paul V. Cicippio, Allen John Cicippio, estate of Rose Abell Anthony Cicippio, estate of Alexander Cicippio, Nicholas B. Cicippio and estate of Joseph J. Cicippio Jr., Plaintiffs
AND:
The Iranian Ministry of Information and Security, The Islamic Republic of Iran and The Iranian Revolutionary Guard Corp., Respondents
BEFORE: D. M. Brown J.
COUNSEL: G. Adair, for the Plaintiffs
HEARD: January 23, 2014
REASONS FOR DECISION
I. Motion to enforce a judgment against the Islamic Republic of Iran
[1] On September 7, 2012, the federal Justice for Victims of Terrorism Act[^1] came into force. As expressed in section 3 of the JVTA:
- The purpose of this Act is to deter terrorism by establishing a cause of action that allows victims of terrorism to sue perpetrators of terrorism and their supporters.
Section 4(5) of the JVTA provides:
- (5) A court of competent jurisdiction must recognize a judgment of a foreign court that, in addition to meeting the criteria under Canadian law for being recognized in Canada, is in favour of a person that has suffered loss or damage referred to in subsection (1). However, if the judgment is against a foreign state, that state must be set out on the list referred to in subsection 6.1(2) of the State Immunity Act for the judgment to be recognized.
The Islamic Republic of Iran is one of the states set out on that list.[^2]
[2] In 2003 and 2005 the plaintiffs obtained judgments against the defendants, The Iranian Ministry of Information and Security (“MIS”), the Islamic Republic of Iran (“Iran”) and The Iranian Revolutionary Guard Corp. (the “Revolutionary Guards”), in the United States District Court for the District of Columbia (the “US Judgments”). By order made March 22, 2013, Roberston J. of the Nova Scotia Supreme Court recognized the US Judgments and made them an order of the Supreme Court of Nova Scotia pursuant to section 4(5) of the JVTA. On May 22, 2013, Chapnik J. ordered that the Nova Scotia Order be registered as an order of this Court (the “Ontario Recognition Order”) pursuant to the Reciprocal Enforcement of Judgments Act, R.S.O. 1990, c. R.5. The plaintiffs moved for certain declarations and orders in respect of the enforcement of the Ontario Recognition Order.
II. Background Facts
[3] The Tracy Action was one of several enforcement proceedings commenced against Iran after the coming into force of the JVTA.
[4] Recognition proceedings also were started in this Court in 2012 by the Estate of Marla Bennett (CV-12-463434) which resulted in the granting of a Mareva injunction to restrain Iran/MIS from dissipating two properties: 290 Sheppard Avenue West, Toronto and 2 Robinson Avenue, Ottawa.[^3] The Mareva injunction was expanded to include additional property[^4] and to cover the registered owners of the Sheppard Avenue and Robinson properties, Farhangeiran Inc. and The Mobin Foundation.[^5]
[5] Section 12.1 of the State Immunity Act, R.S.C. 1985, c. S-18, provides:
12.1 (1) At the request of any party in whose favour a judgment is rendered against a foreign state in proceedings referred to in section 6.1, the Minister of Finance or the Minister of Foreign Affairs may, within the confines of his or her mandate, assist, to the extent that is reasonably practical, any judgment creditor in identifying and locating the following property, unless the Minister of Foreign Affairs believes that to do so would be injurious to Canada’s international relations or either Minister believes that to do so would be injurious to Canada’s other interests:
(a) in the case of the Minister of Finance, the financial assets of the foreign state that are held within Canadian jurisdiction; and,
(b) in the case of the Minister of Foreign Affairs, the property of the foreign state that is situated in Canada.
On September 4, 2013, the Department of Foreign Affairs, Trade and Development Canada (“Foreign Affairs”) wrote to plaintiffs’ counsel in the Bennett Estate Action providing a list of Iran’s non-diplomatic and diplomatic properties in Canada. By Reasons dated September 9, 2013, I granted an order confirming that the non-diplomatic assets of Iran identified by Foreign Affairs fell within the ambit of the Mareva injunction.[^6]
[6] By further Reasons dated November 5, 2013, I granted an order at the request of the Attorney General of Canada deleting from the reach of the Mareva injunction two diplomatic properties owned by Iran in Ottawa.[^7]
[7] In addition to the Bennett Estate Action, an enforcement proceeding was commenced by the Jacobsen/Steen plaintiffs in respect of similar types of judgments obtained in the United States against Iran (CV-13-10240-00CL). Last fall a British Columbia resident, Dr. Sherri Wise, commenced an original action under the JVTA against Iran in the British Columbia Supreme Court. The Ontario Court of Appeal granted Dr. Wise leave to intervene in the JVTA judgment enforcements proceedings brought by the Bennett Estate and the Jacobsen/Steen plaintiffs in Ontario.
[8] As a result of that decision, counsel for the plaintiffs in the two Ontario actions informed the Court that in light of an agreement reached amongst all four sets of plaintiffs, they wished to defer the hearing of the Bennett Estate and Jacobsen/Steen enforcement proceedings in favour of this motion to enforce the Ontario Recognition Order in the Tracy proceeding. I granted leave that the evidence filed in the Bennett Estate and Jacobsen/Steen proceedings could be used at the hearing of this motion.
III. Analysis
A. The enforcement of the Ontario Recognition Order
[9] The legislative regime dealing with the enforcement of judgments against a foreign state for its support of terrorism or terrorist activity involves a combination of the JVTA, the State Immunity Act and the Ontario Rules of Civil Procedure.
[10] Section 4(5) of the JVTA provides that a court of competent jurisdiction “must recognize” a judgment of a foreign court that, in addition to meeting the criteria under Canadian law for being recognized in Canada, is in favour of a person that has suffered loss or damage referred to in JVTA s. 4(1) provided that, if the judgment is against a foreign state, that state must be set out on the list referred to in subsection 6.1(2) of the State Immunity Act for the judgment to be recognized. Iran is one such state. Section 12(1)(d) of the State Immunity Act provides:
- (1) Subject to subsections (2) and (3), property of a foreign state that is located in Canada is immune from attachment and execution and, in the case of an action in rem, from arrest, detention, seizure and forfeiture except where
(d) the foreign state is set out on the list referred to in subsection 6.1(2) and the attachment or execution relates to a judgment rendered in an action brought against it for its support of terrorism or its terrorist activity and to property other than property that has cultural or historical value.
[11] The foreign judgments obtained by the Tracy applicants met the requirements of the JVTA and State Immunity Act, the result of which was that they obtained the Ontario Recognition Order. That order can be enforced using the various devices available under Rule 60 of the Rules of Civil Procedure against any non-diplomatic property of Iran/MIS “other than property that has cultural or historical value”.
[12] Paragraph 2 of the Ontario Recognition Order required the Tracy applicants, pursuant to section 5 of the Reciprocal Enforcement of Judgments Act, to send a copy of the order to Foreign Affairs within one month after registration for service upon Iran/MIS/Revolutionary Guards through diplomatic channels and stated that pursuant to section 6 of that Act, Iran/MIS/Revolutionary Guards “may apply to set aside this Order, if so advised”.[^8] Section 10 of the State Immunity Act also required the default Ontario Recognition Order to be served on Iran.
[13] An August 21, 2013 Certificate from Foreign Affairs confirmed service of the Ontario Recognition Order and the Nova Scotia Order on Iran on August 19, 2013. That service satisfied the requirements of paragraph 2 of the Ontario Recognition Order and section 10 of the State Immunity Act. None of the respondents moved to set aside the Ontario Recognition Order. Consequently, the Tracy applicants were free to enforce the Ontario Recognition Order in the same fashion as any other order of this Court, subject to the one qualification about property with cultural or historical value contained in section 12(1)(d) of the State Immunity Act.
B. The bank accounts
[14] The Tracy applicants sought declarations that two bank accounts were the property of Iran:
(i) Scotiabank account 40006 04451 18 in the name of the “Embassy of Islamic Republic of Iran Higher Education Advisory”; and,
(ii) Royal Bank of Canada account 864-949-3 in the name of “Embassy of Islamic Republic of Iran”.
Both accounts were identified by Foreign Affairs as “Iran’s Non-Diplomatic Assets in Canada” in its September 4, 2013 letter and, according to the information provided by Foreign Affairs, the Scotiabank account contained $1,651,942 and the RBC account €333,445.23.
[15] The Scotiabank account is in the name of: “Embassy of Islamic Republic of Iran Higher Educ Advisory, 245 Metcalfe Street, Ottawa”. The Tracy applicants filed evidence showing that the signing officer for the Scotiabank account was one Dr. Hamid Moharrami, an Iranian diplomat appointed to Canada as “Counsellor”. The Scotiabank account signing certificate identified Dr. Moharrami as “scientific counsellor”.
[16] The RBC account is in the name of: “Embassy of the I.R. of Iran, 245 Metcalfe Street, Ottawa”. An August 22, 2008 letter from the Iranian Embassy to RBC clearly demonstrated that the RBC account was opened at the request of Iran and that the Higher Education Advisory was a department of the embassy funded by ministries of the Iranian government. The RBC advised that the names and contact information for the account holders were one Jamal Elhusseini of Nepean, Ontario and Reza Shaker of Ottawa, Ontario. Mr. Shaker previously was the Chargé D’Affaires for the Iranian Embassy in Ottawa. Applicants’ counsel contacted Mr. Shaker who advised that the Higher Education Advisory was “just a section of the Embassy”.
[17] This evidence adduced by the Tracy applicants overwhelmingly establishes that the funds in the Scotiabank and RBC accounts are the property of the respondent, Iran, and are non-diplomatic assets of Iran available to satisfy the Ontario Recognition Order, and I so find.
[18] The Tracy applicants requested orders directing Scotiabank and RBD to deliver forthwith the entire contents of both accounts to their counsel. Under the Creditors’ Relief Act, 2010[^9] there is no priority among creditors by execution or garnishment issued by the Superior Court of Justice and monies seized by writ or attached by garnishment are payable to the sheriff who must distribute the monies proportionately amongst all execution creditors whose executions were filed with the sheriff at the time the sheriff received the money.[^10] There was no evidence filed showing what efforts the Tracy applicants had made to enforce the Ontario Recognition Order by way of writ of seizure and sale or garnishment.
[19] The Tracy applicants filed evidence that they had conducted execution searches in some, but not all, of the 51 jurisdictions in Ontario in which such records are maintained – the eight larger urban areas in this province. (One might well query why, in this day and age, the Ontario government has not put in place the IT infrastructure which would enable a creditor to conduct a single, province-wide search of all filed executions; that simply reflects the pervasive lack of commitment by successive Ontario governments to providing an adequate justice information technology infrastructure in this province.) Those searches came up “clear”, showing that no other person had filed a writ against the Iranian defendants in those eight jurisdictions.
[20] Notwithstanding that evidence, foreign judgments recognized under the JVTA enjoy no special status under the Ontario rules of judgment enforcement found in the Rules of Civil Procedure, Execution Act and Creditors’ Relief Act, 2010. Consequently, I see no basis to grant an order requiring Scotiabank or RBC to pay the amounts in their accounts directly to applicants’ counsel. I order Scotiabank and RBC to pay such amounts to the local sheriff, and the Tracy applicants may take the appropriate steps under provincial legislation to secure payment out of those funds from the sheriff.
[21] The September 4, 2013 letter from Foreign Affairs did not guarantee that the list of Iranian non-diplomatic assets was complete. In the present case Iran has ignored all recognition and enforcement proceedings. There is no reason to think that Iran would respond or submit to a request to submit to an examination-in-aid-of-execution. In those circumstances, I think it appropriate to grant the order sought by the Tracy applicants in paragraph (i) of their Notice of Motion, so I order Scotiabank and RBC to advise the applicants, within 30 days of the date of these Reasons, of the existence and balance of any account at any Scotiabank or RBC branch or location that is in the name of the Embassy of the Islamic Republic of Iran or the Higher Education Advisory, other than accounts that have been identified by Canada’s Department of Foreign Affairs, Trade and Development as diplomatic accounts.
C. Real property at 290 Sheppard Avenue, Toronto and 2 Robinson Avenue, Ottawa
[22] Title to 290 Sheppard Avenue, Toronto is in the name of Farhangeiran Inc. Title to 2 Robinson Avenue, Ottawa, is in the name of The Mobin Foundation which acquired title from Fatima Cultural Activities Inc. Allen J. conducted an extensive review of the evidence relating to the ownership and use of both properties in her Reasons dated October 17, 2012 in the Bennett Estate Action. (The Tracy applicants filed that same evidence on this motion.) After reviewing the evidence Allen J. concluded:
I am satisfied based on the information from the Plaintiffs’ sources, combined with the expert opinion of Professor Zandi and evidence of the U.S experience, that the Plaintiffs have established a strong prima facie case that Iran has assets in the two properties that could possibly be used to enforce the U.S Judgment. This conclusion of course can be challenged by the Defendants on the return of the motion.
[23] Notwithstanding the service of the Mareva injunctions in the Bennett Estate Action on Farhangeiran Inc. and The Mobin Foundation on various occasions, neither defendant ever appeared to seek to set aside or vary the orders which restrained them from dealing with the properties.[^11] Indeed, the only response to service was by one Donald James Grant who had been listed as a director of Farhangeiran. On June 26, 2013, Greer J. granted his request for an order that he was not a party to the Bennett Estate Action because he had resigned as a director of Farhangeiran some years before.
[24] The Tracy applicants served the motion record for this motion on Farhangeiran Inc. and The Mobin Foundation; neither appeared on the return of the motion.
[25] The Tracy applicants filed evidence that various building and construction permit applications in respect of the 2 Robinson Avenue property had listed Iran and/or Fatima Cultural Activities Inc. as the applicant. The sole registered director of the current owner, The Mobin Foundation, is Syed Adeli, a former Iranian ambassador to Canada. The 2 Robinson property was identified as a non-diplomatic asset of Iran in the letter from Foreign Affairs dated September 4, 2013.
[26] In light of (i) the evidence about the two properties which was before Allen J. in the Bennett Estate Action, and which was filed again before me, (ii) the findings made by Allen J. in support of the grant of a Mareva injunction in respect of both properties, (iii) the further evidence about the involvement of Iran or its embassy in the building application process for the 2 Robinson Avenue property, and (iv) the failure of Farhangeiran Inc. and The Mobin Foundation to respond to the injunctions against both properties or to this motion, although properly served, I conclude that the evidence overwhelmingly permits me to conclude that both properties are beneficially owned by Iran and constitute non-diplomatic assets of Iran in Canada, and I so find.[^12]
[27] Property of a foreign terrorist state “that has cultural or historical value” is immune from attachment and execution by virtue of section 12(1)(d) of the State Immunity Act. In the case of the 290 Sheppard property, the applicants filed evidence which called into serious question whether that property was operating as a cultural centre, or as a front for Iranian governmental activities in Canada.[^13] Evidence to the same effect was adduced in respect of the 2 Robinson property, including evidence that the Mobin Trust Consortium is used by the Revolutionary Guards as an economic engine to conduct business.[^14] I think it open to this Court to take judicial notice of the fact that the Revolutionary Guards are hardly a cultural or charitable organization.
[28] None of the Iranian respondents, Farhangeiran Inc. or The Mobin Foundation, filed any evidence to the contrary.
[29] Consequently, I find that the properties at 290 Sheppard and 2 Robinson are not properties of Iran which have “cultural or historical value”. The properties therefore are not immune from attachment or execution. I therefore make the following orders:
(i) Iran beneficially owns the property at 290 Sheppard Avenue West, Toronto and that property is exigible property available to satisfy the Ontario Recognition Order;
(ii) The Sheriff of the City of Toronto is directed to enforce the applicant’s writ of seizure and sale against the property at 290 Sheppard Avenue West, Toronto;
(iii) Iran beneficially owns the property at 2 Robinson Avenue, Ottawa, and that property is exigible property available to satisfy the Ontario Recognition Order;
(iv) The Sheriff of the City of Ottawa is directed to enforce the applicant’s writ of seizure and sale against the property at 2 Robinson Avenue, Ottawa; and,
(v) The applicants shall serve a copy of these Reasons on Farhangeiran Inc. and The Mobin Foundation, by the means of service previously authorized by this Court, no later than 10 days after this date.
IV. Costs
[30] The applicants are entitled to their costs of this motion against the Iranian respondents. They may filed brief cost submissions and a Bill of Costs for my consideration.
D. M. Brown J.
Date: March 17, 2014
[^1]: S.C. 2012, c. 1.
[^2]: SOR/2012-170.
[^3]: https://www.canlii.org/en/on/onscdc/doc/2012/2012onsc5866/2012onsc5866.html
[^4]: Order of Lederman J. made October 18, 2012.
[^5]: Order of E. Macdonald J. made October 31, 2012.
[^6]: https://www.minicounsel.ca/scj/2013/5662
[^7]: https://www.minicounsel.ca/scj/2013/6832
[^8]: Sections 5 and 6 of the Reciprocal Enforcement of Judgments Act, R.S.O. 1990, c. R.5.
[^9]: S.O. 2010, c. 16, Sch. 4.
[^10]: See, generally, sections 2, 3 and 4 of the Creditors’ Relief Act, 2010.
[^11]: The details of the attempts at service can be found in the affidavit of Gordon McGuire sworn September 11, 2013 in the Bennett Estate Action.
[^12]: Executions Act, R.S.O. 1990, c. E.24, s. 9; Banglar Progoti Ltd. v. Ranka Enterprises Inc., 2009 16292 (ON SC).
[^13]: Affidavit of Lauren Rakowski sworn October 5, 2012 in the Bennett Estate Action, paras. 19 to 21, and the exhibits referred to therein. Affidavit of Farrokh Zandi sworn October 5, 2012 in the Bennett Estate Action, paras. 14 to 18.
[^14]: Rakowski Affidavit, paras. 22 to 26 and the exhibits referred to therein; Zandi affidavit, supra.