Court File and Parties

COURT FILE NO.: CV-23-00696147 DATE: 20240604

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

MEHRZAD ZAREI Applicant – and – ASSOCIATION OF FAMILIES OF FLIGHT PS752 VICTIMS Respondent

Counsel: Mark Arnold, for the Applicant Eric Sherkin, for the Respondent

HEARD: June 4, 2024

PAPAGEORGIOU J.

Overview

[1] The Applicant Mehrzad Zarei’s son (“Mehrzad”) was on Ukraine Airlines Flight PS 752, which flight was shot down by the Islamic Republic of Iran in January 2020.

[2] Mehrzad was the lead plaintiff in Zarei v. Iran et al where the court found that the defendants intentionally destroyed the aircraft by firing two missiles into it. The court awarded damages of $107 million to the five named plaintiffs.

[3] Mehrzad is devasted by what happened to his son. He suffers from post-traumatic stress disorder, can no longer work and has no assets.

[4] He and other surviving family members established the Respondent, the Association of Families of Flight PS752 Victims (the “Association”), whose purpose is:

a. Creating a community for collaboration and support of the families of victims of flight PS752. b. Seeking truth and justice, for the victims. c. Keeping the memories of the victims alive through memorials and related activities.

[5] This Application involves a request for certain relief requested as against the Association including information about how the Association’s funds have been utilized.

[6] The central issue addressed by this endorsement is whether or not this Application should be permitted to proceed, or whether Mehrzad has abandoned it, such that he should permanently be denied the ability to pursue it and/or whether he should be required to start over.

Decision

[7] For the reasons that follow, I am directing that a new date for the hearing of the Application be scheduled as well as a timetable for the exchange of materials and any cross examinations. I order that the costs of this adjournment and issues relating to the withdrawal of the abandonment shall be dealt with when this matter is heard on its merits. I am seized of this matter.

Issues

[8] In arriving at this decision, I have considered the following issues:

• Issue 1: Did Mehrzad abandon this Application?
• Issue 2: Does the withdrawal or abandonment of an Application where there is no expired limitation period require the court’s leave to proceed if the Applicant changes its mind? And if so, should leave be granted in this case?
• Issue 3: What terms, if any, including a costs order should be made?

Analysis

Issue 1: Did Mehrzad abandon this Application?

Background to the Application

[9] Mehrzad was concerned that the Association had embarked on extensive political activity including regime change in the Islamic Republic of Iran and wanted to hold a special meeting to discuss this with the other members. He was also concerned about the way the Association’s funds were being used and feels they should be used to support the members.

[10] Mehrzad says that the Association has created a website and has received donations over the years that range from $250,000 to $1,000,000. He has produced financial statements that show that the Association earns and spends funds and reports a profit which he says is inconsistent with its objects.

[11] In or around January 2023, he began conversations with the Association about these issues. He says there was a lot of back and forth and that he tried to get the Association to dialogue with him and comply with what he thinks its objects are. He says he sought mediation/arbitration, but the Association refused to mediate the issues raised by him. And so, he wanted to hold a meeting and sought the names and contact information of the other members so he could requisition a meeting.

[12] After he commenced these discussions with the Association, it made a successful ex parte Application to the Director under the Canada Not-For-Profit Corporations Act ("the Act') for an exemption which prohibits access to the register of members of the Association. This allowed the Association to refuse to provide Mehrzad sufficient information so that he could requisition or call a meeting of the Association under the Act.

[13] Mehrzad then brought an Application for an oppression remedy where he sought various orders including:

a) an Order requiring the Association to provide financial disclosure. b) an Order requiring the Association to produce Minutes of meetings. c) an Order requiring the Association to provide a list of all members including contact information. d) an Order requiring the Association to hold a meeting of the members to consider whether the Association is operating within its mandate. e) an Order that the decision of the Director that purportedly permits the Association to refuse to allow Mehrzad access to the register of members be set aside.

[14] The Court rejected Mehrzad’s position that this was urgent and scheduled this Application to be heard on June 4, 2024, with a schedule for the exchange of materials to be arranged by the parties.

[15] Afterwards, counsel for the Association made several attempts to arrange a timetable for the exchange of materials without success.

[16] It is Mehrzad’s position that he was pressured by members of the Association’s Board to abandon this proceeding although there is really no evidence of this before me apart from an early email in 2023.

[17] He argues that on March 15, 2024, in order to have a constructive dialogue with the Association, he instructed his lawyer to withdraw the Application. His lawyer wrote a letter that stated:

I have been instructed by my client Mr. Zarei, that he withdraws and no longer intends to proceed with the Application brought as set out in the attached April 11, 2023, Endorsement scheduled to be heard by the court on June 4, 2024.

[18] The Association’s counsel responded saying that it was entitled to its costs and that he was seeking instructions.

[19] On May 10, 2024, the Association then presented a draft Bill of Costs and indicated that this was what it intended to file with the Court if a settlement on costs could not be reached. The Bill of Costs claimed in excess of $26,000 on a partial indemnity basis, or $44,000 on a substantial indemnity basis.

[20] Mehrzad’s counsel then responded on May 13, 2024, as follows:

In light of your client's unreasonable demands with respect to costs Mr. Zarei has instructed me that he now wishes to proceed to a full hearing of his Application scheduled to be heard by the court on June 4, 2024. Consequently, we will not be discontinuing this proceeding as previously advised in our March 12, 2024, email. You may expect to receive our Application Record by May 16, 2024, or possibly sooner.

[21] Mehrzad then filed his Application Record on May 17, 2027, only two weeks before this Application.

[22] Mehrzad’s affidavit says that because the Court would not schedule an early and urgent date for the hearing, he wanted to start a constructive dialogue with the Association regarding all of the issues so as to prevent any misunderstanding of his intentions. He says that he took the exorbitant demand for costs to be attempted extortion, and so he instructed his lawyer to proceed with the previously scheduled Application.

[23] Rule 38.08 of the Rules of Civil Procedure provides that an Application can be abandoned by delivering a notice of abandonment but similar to the rule in respect of abandonment of motions, there is no prescribed form for such abandonment.

[24] Modern Glass & Mirror Ltd. v. Chicanda Ltd., 1999 CarswellOnt 1015 at para 12 involved a motion that was withdrawn without a formal Notice of Abandonment. The court held that there was no necessity to deliver a document called a Notice of Abandonment as long as something in writing is served that unequivocally states an intention to abandon a motion. See also Omega Digital Data Inc. v. Airos Technology Inc., [1997] O.J. No. 3338 at para 16.

[25] I am satisfied that even though there was no formal Notice of Abandonment, Mehrzad did abandon this Application. The letter from his counsel was clear and unequivocal.

Issue 2: Does the withdrawal or abandonment of an Application where there is no expired limitation period require the court’s leave to proceed if the Applicant changes its mind? And if so, should leave be granted in this case?

[26] The Association relies upon caselaw in respect of abandoned motions which holds that where a motion has been abandoned, leave is required for the motion to be brought again: GasTOPS Ltd. v. Forsyth, 1998 CarswellOnt 4370, as well as Roland v. Florence, 2018 ONSC 2754 at paras 12-13. I note that although GasTOPS related to an injunction motion that was abandoned, it cited case law where parties had sought to set aside a discontinuance of an action where a limitation period had expired, Adam v. Insurance Corp of British Columbia (1985), 66 B.C.L.R. 164.

[27] GasTOPS and the other cases cited by the Association set out that the court has the discretion to set aside a notice of discontinuance or abandonment. The caselaw cited sets out that some factors which may be relevant are whether there was inadvertence, mistake or misapprehension relating to the procedural aspects of the matter but there might also be other grounds.

[28] In this case, I agree that Mehrzad’s conduct has resulted in a waste of time and in particular a waste of this particular court date. Court dates are a scarce resource, and this is concerning. I note again that the Association attempted to establish a timetable for the exchange of materials several times without success.

[29] Nevertheless, I exercise my discretion in favour of allowing Mehrzad to withdraw his abandonment of this Application and proceed on a new date for the following reasons:

• While r. 38 does not address whether an abandoned Application may be brought again, r. 23.04(1) specifically provides that a withdrawn or discontinued Statement of Claim can be recommenced as long as no intervening limitation period has expired. Rule 1.04(2) states that where a matter is not provided for in the rules, “the practice shall be determined by analogy to them.” It is unclear why the same principle applicable to withdrawn or discontinued Statements of Claim would not apply to an abandoned Application. Therefore, I conclude by analogy that an abandoned Application may be recommenced as long as there is no intervening limitation period that has expired.
• There is no expired limitation period here. Thus, in my view it is open to Mehrzad to bring another Application. The caselaw cited indicates that the standard for granting leave to withdraw a notice of abandonment may be more relaxed where a limitation period has not gone by and where there is no prejudice. Further, a proper consideration in the exercise of the discretion is the fact that requiring a new proceeding to be commenced would be a waste of time and effort: GasTOPS at para 6.
• As noted, Mehrzad suffers from post-traumatic stress disorder. His victim impact statement filed indicates that he struggles on a daily basis with psychological, emotional, physical and financial issues that have transformed his life into a daily struggle. His counsel advised that he was having trouble seeking instructions from Mehrzad when counsel for the Association was seeking to establish a timetable.
• The Application itself deals with a matter of public importance which is the allegation that the Association, which is a not-for-profit corporation, has not been operating within its objects.
• There was an ex parte Application brought to the Director under the Act and the materials in respect of that Application, have never been disclosed.
• There is evidence before me that the Director’s exemption had a condition requiring the Association to ensure that an alternate method be put in place and maintained to permit members of the Association to exercise their rights. Mehrzad has given evidence that he has no knowledge of any such alternate method being put in place, or that the Association has met this condition. As such, he maintains that he requires the names of the members of the Association so that he can call a Special Meeting.
• As noted, Mehrzad’s request for mediation/arbitration was denied. The Association By-Law before me specifically states that “Disputes or controversies among members, directors, officers, committee members or volunteers of the Corporation are as much as possible to be resolved in accordance with mediation and/or arbitration.”
• As noted, Mehrzad’s intention was to withdraw the Application was on the basis that he could pursue discussions. When he received a Bill of Costs which was quite disproportionate to any costs that the Association could have expended on this matter, he concluded that such discussions would not be possible because he saw this as an attempt at extortion. While I make no findings on this, given his fragile state, I can appreciate the effect that this would have had on him and his conclusion that no meaningful discussions would be possible. Today, there was no submission by the Association that it is willing to have such discussions.
• There is no prejudice to the Association other than wasted time which can ultimately be addressed by a costs order. Today, the Association’s counsel requested costs in the amount of $10,000, which is considerably less than the Bill of Costs that it delivered to Mehrzad before it had even prepared any materials, which it did for this hearing in respect of why this matter has been abandoned. This is at least some evidence that the original Bill of Costs was unreasonable.
• Declining this request would be a highly technical exercise of my discretion which would not be in line with the general principle that the rules should be liberally construed to secure the just, most expeditious and least expensive determination of every proceeding on its merits: r. 1.04(1)
• Declining this request would also be inconsistent with the principle that the court should make orders and directions that are proportionate to the importance and complexity of the issues and amount involved in the proceeding: r. 1.04(1.1). This matter is not a commercial dispute where the issue is money. As noted, this matter involves a request for relief in respect of the operation of a not-for-profit corporation. I make no findings on the merits, but given the issues, and the underlying reason why the Association was created, it is an important matter that should be considered on its merits and not defeated by technical arguments, at least at this stage. If the matter is scheduled and there continue to be problems because Mehrzad does not comply with a court ordered timetable, different considerations may apply.

[30] As such, I grant leave for this Application to proceed on a date that I will schedule together with a timetable that I will impose after further submissions.

Issue 3: What terms, if any, including a costs order should be made?

[31] Where an Application is abandoned, r. 38.08(3) provides that a respondent is entitled to its costs unless the Court orders otherwise.

[32] As noted, the Association requests $10,000 in costs.

[33] I award no costs at this time and instead reserve my decision on the costs to be awarded in respect of the initial abandonment when the matter is ultimately heard and decided on its merits.

[34] Regarding other terms, I will be imposing a timetable which will have to be strictly adhered to.

[35] There are also issues regarding solicitor and client communications in the materials. If the parties cannot resolve these issues, they may arrange a case conference with me to address them.

[36] I note as well that having reviewed the materials, they are not organized in a manner that makes them easily reviewable. There should be hyperlinks to the matters listed in all the Indexes but this can be addressed after today. The parties should also ensure that all other aspects of the practice direction regarding uploading of materials have been adhered to.

Addendum

[37] After I read this endorsement to the parties, counsel for the Association sought some clarification in the Endorsement regarding the materials which are before me. This matter is a high-profile matter, and it is likely that the endorsement will be circulated amongst the members and he is concerned about how it reflects on the Association.

[38] Therefore, I agreed to set out these additional facts that the Association feels are important.

[39] First, the Association has not yet filed materials responding to the merits of this Application. I did note that the Association had only filed materials in respect of the abandonment, but I do wish to clarify, the matters set out in this Endorsement do not take into account the Association’s position on the underlying merits which are not before me.

[40] Second, prior to the Bill of Costs that it sent, there were without prejudice communications between the Association and Mehrzad.

[41] Third, there is no specific explanation as to why Mehrzad did not take any steps for more than a year. I did note this, but I state again that I agree that Mehrzad is responsible for wasted time and expense and that the Association is not at fault for the fact that this Application could not proceed today.

Other Matters

[42] This is the timetable that has been agreed upon:

• The Application shall be heard on September 16, 2024, for half a day.
• The Association shall file its responding materials by July 15, 2024.
• Mehrzad may file reply materials by July 22, 2024.
• Cross examinations and any r. 39 examinations shall be completed by August 19, 2024.

Production of Ex Parte Materials

[43] Mehrzad requested a copy of the ex parte application materials before the Director. The Association shall consider this and if the matter cannot be resolved the parties, they may arrange a case conference before me with five pages of submissions each on this issue and the parties should be aware that as per Miller v. Ledra, 2023 ONSC 4656, I will consider making a decision on this issue at such case conference. This may involve my review of the ex parte materials.

[44] If the parties have any other issues, they may also arrange a case conference with me.

[45] I encourage the parties to be reasonable with respect to all matters so as to avoid a waste of court resources.

[46] If the parties resolve this matter altogether, they shall advise me as soon as possible so that the date may be released.

Papageorgiou J. Released: June 4, 2024