Ahmad v. Rawjee , 2020 ONSC 6279

COURT FILE NO.: CV-19-00622971-0000

DATE: 20201016

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Sohail Sultan Ahmad

Plaintiff/Responding Party

– and –

Aly Rawjee

Defendant/Moving Party

Bobby H. Sachdeva and Madelaine Dusseault for the Plaintiff/Responding Party

Jeffrey Larry and Denise Cooney for the Defendant/Moving Party

HEARD: July 16, 2020

REASONS FOR DECISION

VELLA J.

Introduction

1This motion is brought by the Defendant, Aly Rawjee (“Rawjee”), under Rule 21.01(3)(a) for an order staying or dismissing this Action on the basis that this Court lacks jurisdiction simpliciter, or alternatively, that this Court ought to exercise its discretion to decline jurisdiction on the basis that it is not the convenient forum.

Preliminary Matter

2In his factum, Rawjee raised for the first time a challenge to this Court’s jurisdiction on the basis that the Plaintiff, Sohail Sultan Ahmad (“Ahmad”), allegedly did not comply with the service ex juris requirements and therefore this Court ought to exercise its discretion to stay or dismiss the Action under Rule 17.06.

3Ahmad objected to this matter being raised by way of Rawjee’s factum, less than one week before the hearing of this motion and after the completion of extensive cross-examinations. Ahmad noted that the Notice of Motion makes no reference to the manner of service, nor does it plead R. 17.06 as a basis for relief.

4I agree with Ahmad’s objection, and decline to making a ruling with respect to the service ex juris challenge. Had Rawjee intended to raise this further ground of challenge, he ought to have amended his Notice of Motion so as not to take Ahmad off guard. In any event, Rawjee did not seriously pursue this avenue of challenge during his submissions at the hearing before me.

5However, it is worthy of note that Rawjee has not attorned to the jurisdiction of this Court, nor was he served with the Statement of Claim in Ontario.

Evidentiary Record

6Ahmad and Rawjee each filed affidavits, and extensive cross-examinations on their affidavits were conducted. An affidavit of Rawjee’s sister, Mariam Malik, was filed in Reply and she was also cross examined. As a result of the cross-examinations, undertakings were provided giving rise to further documentary disclosure. There were also refusals and some documents produced were redacted.

Factual Background

7The undisputed factual context underlying Ahmad’s claim is that he and Rawjee entered into a “handshake agreement” which was entirely oral and made as between friends. As a result of this agreement, Ahmad lent funds to Rawjee by way of a personal loan. There is also agreement on the fact that Rawjee owes money to Ahmad, but the quantum owed, and lent, is disputed. Both parties also agreed that no discussion occurred with respect to what forum the contract would be enforced in, should a dispute arise. The parties appear to agree that the discussions leading to the loan occurred in 2009 and 2010 in locations other than Ontario.

8Ahmad is a United Kingdom (“U.K.”) National working in Bahrain. He lived in London, U.K., and Bahrain at the time of the loan agreement. As will be seen, Rawjee’s residency is hotly contested.

9The rest of the material facts are largely disputed, including the location that this contract was made and the governing law of the contract.

Issues

10The motion to stay this Action raises the following issues:

(a) Does the Court have jurisdiction simpliciter?

(b) If so, has the Defendant rebutted the applicable presumptive connecting factors?

(c) If the Defendant did not rebut the presumptive connecting factors, is Ontario the convenient forum?

Discussion and Analysis

Jurisdiction Simpliciter

11The first issue to be determined is whether this Court has jurisdiction, commonly referred to as jurisdiction simpliciter. This is not a matter of the court exercising discretion over whether it ought to assume jurisdiction. Either the court has jurisdiction simpliciter over the subject matter of the litigation and the defendant, or it does not.

12As the Supreme Court of Canada held in Van Breda v. Village Resorts Ltd., 2012 SCC 77 (“Van Breda”), the onus is on Ahmad to establish jurisdiction simpliciter. He may do so by demonstrating he has a “good arguable case” that one of four presumptive connecting factors that give rise to a strong and substantial connection between the subject matter of the litigation and Ontario is supported by the evidence.

13As stated in Van Breda, at para. 100, “To recap, to meet the common law real and substantial connection test, the party arguing that the court should assume jurisdiction has the burden of identifying a presumptive connecting factor that links the subject matter of the litigation to the forum.”

14If Ahmad establishes a reasonable basis in the evidence supporting the existence of a presumptive connecting factor, then Rawjee may rebut that presumption by adducing evidence to demonstrate that the presumptive connecting factor does not establish the requisite real and substantial connection between the loan agreement and Ontario at all, or alternatively that such connection is “weak” at best: Van Breda, at paras. 81 and 100; Shah v. LG Chem Ltd., 2015 ONSC 2628 (“Shah”); and Goldhar v. Haaretz.com, 2016 ONCA 515, at paras. 24-26.

15It is well established that the four recognized presumptive connecting factors are:

(a) the defendant is domiciled or resident in the province;

(b) the defendant carries on business in the province;

(c) the tort was committed in the province; and

(d) a contract connected with the dispute was made in the province: Van Breda, at para. 90.

16The relevant presumptive connecting factors advanced by Ahmad are: (a) Rawjee is domiciled or resident in Ontario; and (b) Rawjee carries on business in Ontario.

17Of significance, Ahmad did not advance that the subject contract was made in Ontario as one of the relevant connecting factors.

18In order to assess the evidentiary record, I must engage, to a limited degree, in an assessment of the respective credibility of Ahmad and Rawjee. Their evidence diverges on critical facts. The absence of a written loan agreement makes this exercise even more challenging. In light of many apparent inconsistencies in Rawjee’s evidence when contrasted with written documents including Rawjee’s own email correspondence, exposed under extensive cross-examination, Ahmad urged the court to accept his evidence over Rawjee’s where in conflict.

19The Supreme Court of Canada was clear, in Van Breda, that the evidentiary threshold imposed on Ahmad to establish a presumptive connecting factor is low. I must determine whether, based on the evidentiary record, he has made out “a good arguable case”: Shah, at paras. 61-64.

20For purposes of this motion, only, the Plaintiff’s version of the facts should be accepted provided there is a reasonable basis for that version in the evidentiary record: Wolfe v. Pickar, 2011 ONCA 347, at para. 46. I am not to make any findings of fact that are determinative of the merits of the Action. Rather I must review the evidentiary record to see whether Ahmad’s assertion of the existence of one or more presumptive connecting factors has a reasonable basis. In this endeavor, mere speculation as to the facts or hypotheticals is insufficient to ground a finding of a presumptive connecting factor: see, for example, Machado v. Catalyst Capital Group Inc., 2015 ONSC 6313, at para. 54; Young v. Tyco International of Canada Ltd., 2008 ONCA 709, at para. 34 (“Tyco”). I have proceeded to review the evidentiary record to determine whether there is a reasonable basis to support Ahmad’s position and, where material evidence is in conflict, I have preferred Ahmad’s evidence over that of Rawjee’s evidence.

Is Rawjee domiciled or resident in Ontario?

21If Ahmad can establish that Rawjee is domiciled or resident in Ontario, then a presumptive connecting factor will be satisfied that will be very difficult, if not impossible, for Rawjee to rebut based on the Supreme Court of Canada’s analysis of this issue in Van Breda, at para. 86, “…a defendant may always be sued in a court of jurisdiction in which he or she is domiciled or resident…”.

22Ahmad advanced a number of facts in support of his argument that Rawjee is domiciled or resident in Ontario. Those facts, which I find have a reasonable basis in the evidentiary record, are:

(a) Rawjee has been a Canadian citizen since 1999;

(b) Rawjee holds a Canadian Passport;

(c) Rawjee has held an Ontario driver’s license since 1996;

(d) Rawjee’s parents and sister are Canadian citizens and all of them hold Canadian Passports;

(e) Rawjee’s family (but not Rawjee himself) owns and operates a business in the Greater Toronto Area (GTA) called Canadian Dawn;

(f) Rawjee helped establish Canadian Dawn and was, until 2000, an officer and director;

(g) Rawjee stays at his parents’ condominium unit when he is in the GTA, and it is the same unit he resided in from the mid to late 1990s;

(h) Rawjee has been a consultant for Canadian Dawn since 2016 and his role is to meet with customers and sell old inventory;

(i) This consultant work with Canadian Dawn is the only work or business activity Rawjee has engaged in worldwide since 2016, and he has had no work in Pakistan (which Rawjee claims to be his current residence) since at least 2015;

(j) The sole shareholder of Canadian Dawn is MAK Investments. MAK Trust owns 2/3rds of the shares of MAK Investments, and Rawjee and his two minor children are beneficiaries of the MAK Trust together with Rawjee’s two sisters and their children;

(k) Rawjee regularly travels to the GTA and stays in the GTA;

(l) Rawjee has been present in Ontario several times between 2016 and 2019 and has used a credit card issued to him by Canadian Dawn during these occasions;

(m) Rawjee’s Pakistani tax filings for 2017-2018 show Rawjee to have an interest valued at roughly $700,000.00 CDN in MAK Investments, though Rawjee purported to refile his 2017-18 tax filings after the commencement of this Action, claiming the MAK Trust declaration was made in error. There is no evidence that this re-filing has been accepted by the Pakistani tax authorities;

(n) Rawjee has been looking for business opportunities in Canada;

(o) Rawjee has been using a Canadian Dawn email address since well before 2016; and

(p) Rawjee has a cell phone with a Toronto area 416 telephone number.

23Initially, Ahmad retained Pakistani counsel to make a demand for payment of the loan from Rawjee. This demand letter, dated March 13, 2019, was sent to Rawjee at an address in Karachi, Pakistan. In this letter, Ahmad’s lawyer advised that if the loan was not paid in full, with costs, he had “clear instructions” to initiate appropriate legal action against Rawjee “in Pakistan and any other legal jurisdiction in which we have legal standing in this matter”. The letter is copied to Rawjee at a corporate address in Karachi and another address in Mississauga, Ontario.

24To date no other legal proceedings have been initiated by Ahmad against Rawjee. Furthermore, Ahmad has not advanced any claim for repayment of the loan against Canadian Dawn.

25As a starting premise, I note that the Supreme Court of Canada phrased the residency-related presumptive connecting factor as the defendant being domiciled or resident in the province. I place the emphasis on “in” because, in my view, this connotes that the nature of the residency in the province must be of some permanency in the sense of being one’s primary or ordinary place of residence. This is to be distinguished from having an intermittent (even if frequent) presence in the province, for example, for purposes of visiting family or for business trips, while maintaining a permanent residence elsewhere.

26Counsel did not submit any jurisprudence relevant to the meaning of residency within the context of a jurisdiction simpliciter analysis at the hearing of this motion. This is, perhaps, not surprising since in the jurisprudence which was submitted, residency was not in dispute as the defendant was clearly living in the province in the plain meaning of that phrase.

27Ahmad relied heavily in his argument on the fact that Rawjee has a current Canadian Passport and Ontario driver’s license in support of his argument that Rawjee is domiciled or resident in Ontario.

28On the admissible evidence, Ahmad has established (for purposes of this motion) that Rawjee is frequently in Ontario for business and visiting family, but he has not established that Rawjee’s primary or ordinary place of residence is in Ontario. There is no evidence to suggest that Rawjee has any ownership, rental or other property interest in his parent’s condominium unit or any other residential property in Ontario (or Canada for that matter). The fact that Rawjee has a Canadian Passport proves that he is a Canadian citizen, but not that he is actually living in Canada as his primary residence at the time of these proceedings. It is now trite law that Canadian citizens have the right to maintain their citizenship irrespective of where they live in the world: see, for example, the Supreme Court of Canada’s decision in Frank v. Canada (Attorney General), 2019 SCC 1, [2019] 1 SCR 3 at para. 35 (“Frank”): “In sum, the world has changed. Canadians are both able and encouraged to live abroad, but they maintain close connections with Canada in doing so. The right to vote is no longer tied to the ownership of property and bestowed only on select members of society. And citizenship, not residence, defines our political community and underpins the right to vote.”

29Similarly, the fact that Rawjee has an Ontario driver’s license (predating his alleged move to Pakistan) does not establish that he is currently living in Ontario.

30On the other hand, Rawjee gave up his Ontario Health Insurance Plan card, a plan which does require the recipient to be living in Ontario. This was confirmed by the Court of Appeal in Frank v. Canada (Attorney General), 2015 ONCA 536, at para. 74 (reversed on other grounds, Frank, supra).

31Furthermore, the fact that Rawjee travels frequently to Ontario to visit family and conduct business similarly does not establish that he is domiciled or resident in Ontario.

32Reviewing all the factors advanced by Ahmad, there is an insufficient basis in the evidentiary record to support the requisite “strong arguable case” under the low evidentiary threshold that this presumptive connecting factor is met for purposes of this motion.

Does Rawjee carry on business in Ontario?

33The Supreme Court of Canada in Van Breda at para. 87 confirms that a foreign defendant must have some form of actual, not only virtual, presence in the province in order to satisfy the carrying on business presumptive connecting factor.

34Rawjee admits his role in providing consultant and customer relations services on an intermittent basis to Canadian Dawn when he is in Ontario, seemingly without remuneration save for a corporate credit card issued by Canadian Dawn to him to be used for business related expenses.

35There is also admissible evidence in the record establishing that:

(a) Rawjee has a physical presence in Ontario from time to time during which he contacts clients of Canadian Dawn to try to move old inventory;

(b) The frequency of his visits is irregular but from 2016-2019 ranged from 2-5 times a year according to Rawjee’s Passport stamps;

(c) Rawjee also used Canadian Dawn’s corporate credit card on several occasions throughout 2016-19 while he was in Ontario. It is a reasonable inference that Rawjee only used this corporate credit card while engaging in Canadian Dawn’s business in Ontario; and

(d) Rawjee continues to hold an indirect interest in this closely held family business as a beneficiary of the MAK Trust that, in turn, owns MAK Investments (which, in turn, owns Canadian Dawn).

36Rawjee urges this Court to place great weight on the following facts supported by the uncontradicted evidence:

(a) He is not being paid for his work by Canadian Dawn;

(b) The work is given to him as a matter of charity by Canadian Dawn to provide him with a reason to get up in the morning;

(c) He transferred his shares in Canadian Dawn in 2000;

(d) He resigned as an officer and director (including as president) of Canadian Dawn in 2000 and thus no longer performs any decision-making role in Canadian Dawn;

(e) He has received no T4 slips from Canadian Dawn;

(f) He does not file Canadian income tax returns; and

(g) While he holds a valid Ontario driver’s license he does not own a car in Ontario and has no automobile insurance.

37While these facts have a basis in the evidentiary record put forth by Rawjee, in my view they are not sufficient to rebut Ahmad’s contention that Rawjee carries on business in Ontario, within the meaning of that phrase as developed in the jurisdiction simpliciter context.

38The fact that a person earns no income is, in my view, not determinative of this issue. The fact that a person holds no decision-making role in the Ontario-based business is also not determinative of whether he or she carries on business in the province. Further, the motive of the company in providing a role to a person within its business is also not determinative.

39It is clear on the evidence that Rawjee is authorized by Canadian Dawn to engage with its customers both in Ontario and abroad, and to conduct business on behalf of Canadian Dawn. Rawjee has done so with some frequency, especially in the last three years. Furthermore, Rawjee has been provided with a corporate credit card to incur business expenses in the course of discharging this, albeit limited, role within the business.

40Canadian Dawn has authorized Rawjee to hold himself out as being a part of its business to its customers in the consultant capacity, and by permitting him to use an email associated with it.

41The frequency with which Rawjee discharges this role while in Ontario is less important to the analysis but is still sufficiently frequent to satisfy the requirement that he have an actual physical presence in Ontario while carrying on Canadian Dawn’s business. Canadian Dawn itself is clearly an Ontario business. Furthermore, the admissible evidence demonstrates that Rawjee also has a virtual presence in the Ontario business though his authorized use of an email account associated with Canadian Dawn.

42Therefore, I find that Ahmad has established the existence of the presumptive connecting factor of carrying on business in Ontario. However, that does not end the analysis. In Van Breda, the Supreme Court cautioned that the existence of any presumptive connecting factor may not conclusively establish jurisdiction simpliciter. Rather, it gives rise to a rebuttable presumption of jurisdiction.

Has the presumptive connecting factor been rebutted?

43The defendant is entitled to seek to rebut the presumption of jurisdiction simpliciter established by the existence of a presumptive connecting factor. In doing so, the defendant bears the onus of convincing the court that the proposed assumption of jurisdiction would be inappropriate in the circumstances before it. If the presumption is rebutted, then the court does not have jurisdiction simpliciter as the evidence has failed to satisfy the common law “real and substantial connection” test, as per Van Breda, para. 81.

44In Freshway Services Inc. v. CdEnviro Ltd, 2017 ONSC 6591, at para. 16, a contract case, the Court framed the issue as whether it was a reasonable expectation of the foreign defendant that, in light of the relationship (or lack thereof) between the subject matter of the dispute and Ontario, he would have to answer for any breach by him before an Ontario court.

45The Supreme Court of Canada offered the following context for assessing the rebuttable presumption in Van Breda, at para. 82: “Jurisdiction must….be established primarily on the basis of objective factors that connect the legal situation or the subject matter of the litigation to the forum….Abstract concerns for order, efficiency or fairness in the system are no substitute for connecting factors that give rise to a “real and substantial” connection for purposes of the law of conflicts.”

46In addressing specifically, the presumptive connecting factor of carrying on business within the province, the Supreme Court of Canada stated in Van Breda, at para. 96, “And where the presumptive factor of the litigation is the fact that the defendant is carrying on business in the province, the presumption can be rebutted by showing that the subject matter of the litigation is unrelated to the defendant’s business activities in the province.” (emphasis added)

47The suggestion by Ahmad that there was some discussion with Rawjee about the possibility of some of the loan monies being used by Rawjee to assist Canadian Dawn, without any evidence that loan monies were, in fact, advanced to Canadian Dawn, is at best a hypothetical proposition. Furthermore, Ahmad admitted that the loan to Rawjee was made between friends, as a personal (not business) loan, and that Rawjee was free to do whatever he wished with the loan monies. Ahmad did not attach any conditions to the purpose for which the loan funds could be used by Rawjee.

48Ahmad is a sophisticated businessman but did not put down in writing the purpose for which the loan monies could be used. If it was important to Ahmad, at the time of the making of the loan agreement, that the loan to be connected to Rawjee’s alleged business interests in Ontario and/or for Canadian Dawn’s use, it is reasonable to infer that Ahmad would have put that requirement in writing.

49In addition, there is no suggestion in the evidence that, at the time the loan was agreed to, the loan agreement was made in Ontario, the governing law would be that of Ontario, or any funds were actually advanced to an Ontario bank account or recipient. The evidence posits potential locations that the loan agreement was made and/or negotiated, including Pakistan, Bahrain, United Arab Emirates and the United Kingdom. The evidence from Ahmad confirms that no funds were advance to an Ontario location, and that no funds were advanced in Canadian dollars.

50Ahmad placed much emphasis in his argument that when Rawjee offered to pay interest (via email communications originating from Ontario and after his failure to repay the loan), it was an amendment to the loan agreement that changed the venue of the contract to Ontario and, by default, Ontario law is presumed to apply. However, I was not presented with any case law authority to support this proposition and I do not accept it as being accurate.

51In any event, there is no suggestion in the evidentiary record that the loan agreement was concluded in Ontario. Even if the alleged amendment occurred, and the offer to pay interest originated in Ontario, there is no evidence that Ahmad accepted the offer in Ontario.

52As well, Ahmad’s affidavit evidence was that he understood the loan monies were to be used by Rawjee to pay back loans he received from family members related in part to his real estate and business interests in Canada and elsewhere, and that he “assumed” that some of these funds comprising the loan were used to support Canadian Dawn. This is insufficient to establish the requisite connection between the subject loan agreement and Rawjee’s business activities on behalf of Canadian Dawn as it is based on a supposition on Ahmad’s part without any other supporting evidence.

53In Muscutt v. Courcelles, 2002 CanLII 44957 (ON CA), 60 O.R. (3d) 20 (C.A.), the Court of Appeal confirmed that the “real and substantial connection” common law test is flexible and supports a broad application guided by the principle that the plaintiff need meet only a minimum standard of suitability under which it must be fair for the court to assume jurisdiction because the forum is a reasonable place for the action to take place.

54Bearing that principle in mind, I find that the evidentiary record rebuts the presumption of jurisdiction created by this connecting factor because there is no real and substantial connection between the subject matter of the litigation and Ontario. More specifically, there is no connection, or at best a weak connection, between the subject loan agreement and Rawjee’s business activities on behalf of Canadian Dawn in Ontario.

55Accordingly, this court does not have jurisdiction simpliciter over the subject matter of this litigation, and this action is therefore stayed.

Forum Non Conveniens

56Once a presumptive connecting factor establishes a real and substantial connection between the subject matter of the litigation and the forum chosen by the plaintiff and is not rebutted, the burden shifts to the defendant to show that the chosen forum is “clearly not appropriate”. The burden on the defendant has been described as very high. The defendant must demonstrate, on the basis of admissible evidence, that another forum is clearly more appropriate: see, for example, Lapointe Rosenstein Marchand Melancon LLP v. Cassels Brock & Blackwell LLP, 2016 SCC 30, at para. 52.

However, as I have found that this court does not have jurisdiction simpliciter, I need not rule on the forum non conveniens argument.

Conclusion and Costs

57The Action is stayed pursuant to section 106 of the Courts of Justice Act and Rule 21.01(3)(a) on the basis that this Court lacks jurisdiction simpliciter.

58If counsel cannot agree on the issue of costs, they may provide me with their respective costs submissions and associated cost outlines by October 29, 2020. The costs submissions should be no more than 3 pages, double spaced in length. The submissions and outlines should be forwarded to my judicial assistant.

The Honourable Justice Vella