Court File and Parties

COURT FILE NO.: CV-21-00658201-0000 DATE: 20240116 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

TODD AKINS, GEORGE CHRISTOPHER ANTHONY, CHARLES BLANK, ANDREW BLANK, LINDA KAY BLANK, NATHAN BLANK, BARBARA GAYDOS, ELIZABETH GAYDOS, ETHAN GAYDOS, JOHN GAYDOS, ANDREA JO GRIMSON, DEBORAH HOMS, KEVIN JAMES HURST, NANCY KILFOYLE, MARYANNE ADDIS (in her capacity as Personal Representative of the Estate of Nancy Kilfoyle), BRUCE RUSSELL LAWRENCE, KIMI LAWRENCE, ROBIN ELIZABETH LAWRENCE, THOMAS R. LAWRENCE, GREGORY ERIC LEINENBACH LEINENBECH, JOY LEINENBACH, NICHOLAS L. MACKENZIE, DEBORAH MILLRANY, JASON PORTER REMAR, ANGELA ROSE, JERRY TIMOTHY SASSER, JR ., JERRY T. SASSER, SR ., KIMBERLY WATTERS SASSER, FRANK DAVID SILLS III, CHRISTIAN WILLIAM SPICER, CHRISTOPER G. SPICER, EUNHA KIM SPICER-LINDSY, MATTHEW SPICER, ALAN JEFFREY WADE, BONNIE G. WADE, MICHAEL KEVIN WADE, THOMAS H. WADE, RICHARD WILLIAMS, TRACY MATTHEW WINTER, ERIC DALE ZIEGLER Plaintiffs

– and –

THE ISLAMIC REPUBLIC OF IRAN and THE IRANIAN ISLAMIC REVOLUTIONARY GUARD CORPS. Defendants

Counsel: Lucas Lung and Miranda Brar, for the Plaintiffs

Heard: In writing

L. BROWNSTONE J.

Overview

[1] On June 25, 1996, a 5000-pound truck bomb was detonated next to the Khobar Towers. The towers were a residential complex in Dhahran, Saudi Arabia that housed, among others, American service members. Dozens of people, including nineteen American service members, were killed by the blast and hundreds more were injured. The force of the explosion was the equivalent of 20,000 pounds of TNT, which was found to be the largest non-nuclear explosion in history up to that time.

[2] The plaintiffs, survivors of the bombing and their close family members, sued the defendants in the US District of Columbia as a result of harm and injuries they suffered as a result of the bombing. The defendants, although served through diplomatic channels in accordance the US Foreign Sovereign Immunities Act, which is codified in various sections of Title 28 of the U.S. Code that addresses judiciary and judicial procedure, (the “FSIA”) did not defend. As a result, they were noted in default on January 22, 2018, after which the plaintiffs moved for default judgment. On September 10, 2018, Chief Judge Howell of the US District Court for the District of Columbia granted default judgment. She found that the defendants were responsible for the explosion, having planned the operation, recruited individuals to carry it out, assembled the truck bomb, and directed and assisted the bombing. Chief Judge Howell found the defendants jointly and severally liable to pay compensatory damages in the amount of US$104,700,000 to 39 of the 40 claimants. Because the 40th plaintiff was neither present at the bombing nor a member of a victim’s immediate family, his claim was dismissed.

[3] Of those 39 claimants, 35 of them now ask this court to grant default judgment recognizing and enforcing the US judgment in the total amount of US$93,450,000. They rely on the exception to state immunity created by the Justice for Victims of Terrorism Act S.C. 2012 c. 1 (“JVTA”) and the State Immunity Act R.S.C. 1985, c. S-18 (“SIA”) in support of their claim.

[4] For the reasons that follow, I grant the plaintiffs’ request for default judgment recognizing and enforcing the judgment of the US District Court for the District of Columbia.

[5] On March 4, 2021, the plaintiffs commenced this action by way of notice of action, seeking to recognize and enforce the US judgment. The statement of claim was filed on April 6, 2021, after which the plaintiffs obtained orders permitting amendments to the claim and extending the time for service.

[6] All 39 of the plaintiffs originally brought this claim, but four subsequently withdrew. One of the plaintiffs in the US action, Nancy Kilfoyle, died before the action was commenced, so her claim is brought by Maryanne Addis, the personal representative of her estate.

[7] The notice of action and statement of claim were served on Iran in accordance with the requirements of s. 9(2) of the SIA. The Ministry of Global Affairs Canada certified service on Iran effective June 12, 2023. Iran did not deliver a statement of defence, and was noted in default effective August 15, 2023. On September 13, 2023, Associate Justice Jolley made an order validating service of the Notice of Action and Statement of Claim on the Iranian Islamic Revolutionary Guard Corps (the IRGC), effective June 12, 2023 and requiring it to deliver a statement of defence with 60 days of delivery of copies of her order and the supporting motion record through specified means. Service was effected in accordance with that order on September 14, 2023. The IRGC did not deliver a statement of defence and was noted in default on November 15, 2023.

[8] On October 18, 2023, the plaintiffs attended a case conference before Akbarali J., at which she ordered that the plaintiffs serve the defendants with their motion materials by specified means, and that if the defendants did not respond (and assuming the IRGC did not defend the claim) this motion for default judgment could procced.

Issues

[9] Are the plaintiffs entitled to default judgment under Rule 19.05 recognizing and enforcing the judgment of Chief Judge Howell? That is, have the plaintiffs established that there are sufficient deemed admissions of fact and, if necessary, other admissible evidence that entitle it to judgment? This requires the court to determine whether the United States court properly assumed jurisdiction, whether its decision is final and conclusive and whether defences relating to fraud, public policy and/or natural justice are available.

The Test for Default Judgment

[10] On a motion for default judgment the court undertakes the following inquiry: (i) What deemed admissions of fact flow from the facts pleaded in the statement of claim?; (ii) Do those deemed admissions of fact entitled the plaintiffs, as a matter of law, to judgment on the claim?; and (iii) If they do not, has the plaintiff adduced admissible evidence which, when combined with the deemed admissions, entitles it to judgment on the pleaded claim? That is, do the deemed admissions and evidence filed make out the elements of a valid cause of action?: Elekta Ltd. v. Rodkin, 2012 ONSC 2062 at para. 14.

[11] In this case, the court must consider whether the deemed admissions and evidence satisfy the test for recognition and enforcement of a foreign judgment. The court does not weigh the merits of the case, but considers the following:

a. Did the foreign court properly exercise jurisdiction over the claim? b. Was the judgment final and conclusive? c. Are any of the defences available to a domestic defendant, namely fraud, public policy or lack of natural justice, available to the defendant? Dish v. Shava, 2018 ONSC 2867 at para. 11, aff’d, 2019 ONCA 411.

A. Did the Foreign Court Properly Exercise Jurisdiction?

[12] In order to enter default judgment, the US court had to be satisfied (among other things) that it had subject-matter jurisdiction over the claims and personal jurisdiction over the defendants.

[13] In order to have subject-matter jurisdiction over the claim, the US court had to consider whether the defendants are entitled to immunity, or whether an exception to immunity under the FSIA applies. The plaintiffs claimed the exception relating to certain terrorism-related actions applied. In order to fall within that exception, Chief Judge Howell noted that the plaintiffs had to prove that 1) the foreign country was designated a state sponsor of terrorism at the time of the act; 2) the claimants were nationals of the United States at the time; 3) if the act occurred in the foreign state against which the claim has been brought, the claimant must have afforded the foreign state a reasonable opportunity to arbitrate the claim; and 4) the claimant must seek monetary damages “for personal injury or death caused by torture, extrajudicial killing, aircraft sabotage, hostage taking, or the provision of material support or resources for such an act” if “engaged in by an official, employee, or agent” of a foreign country. (Howell decision reported at Akins v. Islamic Republic of Iran, 549 F. Supp. 3d 104 (D.D.C. 2021)).

[14] Chief Judge Howell determined that the plaintiffs had satisfied all four elements. In respect of the first element, she noted that Iran has been designated as a state sponsor of terrorism by the US since 1984, well before the bombing. The IRGC, a military organization and branch of the Iranian government, is included with the FSIA’s definition of a foreign state. On the second element, all plaintiffs had provided sworn evidence that they were US citizens at the time of the bombing. The third element was inapplicable, as the bombing did not occur in the defendant state. The fourth element was satisfied based on findings made by a different court, of which Chief Judge Howell was entitled to take judicial notice, that the claimed damages for personal injury were caused by an extrajudicial killing for which the defendants provided material support or resources. The defendants organized and sponsored the bombing. Their actions “were a substantial factor in the sequence of events that led to the plaintiff[s’] injur[ies]”, which injuries were reasonably foreseeable consequences of the defendants’ actions. (Howell decision, page 44). The killings were manifestly an extra-judicial killing for which the defendants provided material support. Therefore, the defendants did not have the benefit of sovereign immunity and subject-matter jurisdiction was established.

[15] To find personal jurisdiction, Chief Judge Howell considered whether effective service was made in accordance with the requirements governing personal jurisdiction over foreign states. Two forms of service were available to the plaintiffs, who used both of them, establishing proper service and thereby giving the court personal jurisdiction.

[16] There is no question that the US Court carefully considered both aspects of jurisdiction and properly assumed it. This conclusion is supported by the expert evidence of Mr. Thomas Campbell. Nor is there any question that a real and substantial connection exists between the subject-matter of the action, the wrongdoing, the defendants, the damages and the territory in which the action was brought: Morguard Investments Ltd. v. De Savoye, [1990] 3 S.C.R. 1077 at pp. 1104-1109. This portion of the test is satisfied.

B. Was the Judgment Final and Conclusive?

[17] The judgment of the US court was final and conclusive. It ended the litigation on the merits, subject only to appeal. No appeal has been commenced, and the time for commencing one has expired. This is supported by the expert evidence of Mr. Campbell.

[18] This branch of the test is satisfied.

C. Are Any of the Defences Available to a Domestic Defendant, Namely Fraud, Public Policy or Lack of Natural Justice, Available to the Defendant?

[19] There is no suggestion of fraud or a denial of natural justice in this case. Notice was clearly provided of both the US claim and this claim, and there is no suggestion of anything untoward in the circumstances in which the judgment was obtained.

[20] Nor can the decision be found to be against public policy, a test that has a high threshold. As the Court of Appeal for Ontario has noted, “to be declared unenforceable on the ground of public policy, enforcement of the judgment must violate “conceptions of essential justice and morality”…”: Tracy v. Iran (Information and Security), 2017 ONCA 549 (leave to appeal to Supreme Court of Canada denied: ), at para. 89.

[21] Canada, like the United States, has a terrorism exception to state immunity. In 2012, Parliament enacted the JVTA under which victims of terrorism were granted the ability to sue terrorists and foreign states that have materially contributed to terrorism and terrorist-sponsored attacks. As the Court of Appeal noted, the JVTA is substantially similar to the FSIA: Tracy at para. 91.

[22] Subsection 4(1) of the JVTA creates the cause of action. It permits an action to be brought by any person who has suffered loss or damage after January 1, 1985 as a result of an act or omission that would be punishable, had it been committed in Canada, under Part II.1 of the Criminal Code, R.S.C. 1985, c. C-46 (the terrorism offences) to recover damages from foreign states whose immunity is lifted under s. 6.1 of the SIA. In addition, it permits recovery from an entity that, for the benefit of or in relation to the foreign state whose immunity has been lifted, committed an act or omission that would be punishable under Part II.1 of the Code.

[23] Subsection 4(5) of the JVTA specifically provides for an ability to sue on a foreign judgment obtained for loss or damage suffered as a result of terrorist activities. That provision provides as follows:

(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.

[24] Thus, if the conditions are satisfied, a court is required to recognize the foreign judgment.

[25] As I will outline below, the required conditions are satisfied in this case.

i) The Bombing Occurred During the Required Time Period

[26] The bombing occurred in 1996, more than a decade after the January 1, 1985 date provided in the legislation as the date after which the loss or damage must have occurred.

ii) The Damage is Suffered as a Result of Acts that Would Be Punishable Under Part II.1 of the Criminal Code, Had They Occurred in Canada

[27] The loss or damage is suffered as a result of an act that would be punishable, had it been committed in Canada, under Part II.1 of the Criminal Code. The definitions of terrorist activity in s. 83.02 of the Code, the first provision in Part II.1, include the following:

83.01(1) [. . . ] terrorist activity means [. . . ] (b) an act or omission, in or outside Canada, (i) that is committed (A) in whole or in part for a political, religious or ideological purpose, objective or cause, and (B) in whole or in part with the intention of intimidating the public, or a segment of the public, with regard to its security [. . . ], and (ii) that intentionally (A) causes death or serious bodily harm to a person by the use of violence, (B) endangers a person's life, (C) causes a serious risk to the health or safety of the public or any segment of the public [. . . ], and includes a conspiracy, attempt or threat to commit any such act or omission, or being an accessory after the fact or counselling in relation to any such act or omission, but, for greater certainty, does not include an act or omission that is committed during an armed conflict and that, at the time and in the place of its commission, is in accordance with customary international law [. . . in the context of armed conflict or otherwise lawful.

[28] Offences under Part II.1 include participating in or contributing to the activities of a terrorist group (s. 83.18); knowingly instructing another person to carry out a terrorist activity (s. 83.22(1), facilitating a terrorist activity (s. 83.19) and providing financing to be used to carry out terrorist activities (s. 83.02).

[29] The facts in this case, found by virtue of deemed admissions in the amended statement of claim establish that:

a. The Brigadier General of the IRGC was the operational commander of the bombing, by knowingly instructing recruits to carry out the bombing contrary to s. 83.22(1) of the Criminal Code; b. Iran and the IRGC both engaged in facilitating and funding terrorism contrary to sections 83.02 and 83.19 of the Criminal Code, by providing funding, training, sponsorship and travel necessary to carry out the bombing; and c. The Supreme Leader of Iran instructed and authorized the bombing (as a head of state, his actions are the actions of Iran), contrary to section 83.22(1) of the Criminal Code.

[30] Thus this criterion is satisfied.

iii) Both Defendants Are Captured by s. 4(5) of the JVTA

[31] The Islamic Republic of Iran is set out on the list referred to in subsection 6.1(2) of the SIA, as required under s. 4(5) of the JVTA. The IRGC is included in regulation SOR/2022-284 under the Criminal Code, which establishes a list of entities for the purposes of Part II.1 of the Code. The IRGC committed the acts for the benefit of or in relation to Iran.

[32] This conclusion is consistent with that of the Court of Appeal for Ontario in Tracy, in which one of the three default judgments enforced against Iran related to the bombing at issue in this case on behalf of different plaintiffs (Tracy at para. 13; Tracy v. The Iranian Ministry of Information and Security, 2016 ONSC 3759 at paras. 20-22.) As the Court of Appeal stated at para. 92 of Tracy:

The terrorist attacks out of which the respondents’ U.S. judgements arise are repugnant to civilized society. The fact that a foreign government would engage in the sponsorship of such atrocities is chilling. Both the JVTA and the FSIA are designed to use the countries’ respective civil justice systems to fight the state sponsorship of terrorism. There is nothing offensive about using peaceful legislative means to combat terrorism.

Conclusion

[33] The conditions set out in s. 4(5) of the JVTA that require court to recognize and enforce the foreign judgment have been satisfied. The test for recognition and enforcement of the foreign judgment is satisfied. No defences have been raised by the defendants, nor are there any defences available to them on the record before me.

[34] The evidence establishes that there has been no recovery from the defendants to date, such that the full amounts remain due and owing.

Costs

[35] The plaintiffs seek partial indemnity costs of this motion and the action in the amount of $48,199.61, inclusive of taxes and disbursements. They have provided a costs outline. In fixing costs under s. 131 of the Courts of Justice Act, RSO 1990, c. C.43 and Rule 57.01 of the Rules, a discretionary exercise, I may consider a number of factors including the result of the proceeding, the principle of indemnity, the amount the unsuccessful party could reasonably expect to pay, the amount claimed and the amount recovered in the proceeding and the proceeding’s complexity. Ultimately, I must consider what is fair and reasonable for the unsuccessful party to pay.

[36] The time spent and fees claimed in the costs outline are reasonable. Although this was a motion for default judgment enforcing a foreign judgment, it raised technical issues that required careful explanation and expert evidence explaining the technical aspects of the judgment of Chief Judge Howell. The proceedings involved several motions and a case conference, all of which required materials.

[37] Costs of $48,199.61, inclusive of taxes and disbursements shall be ordered.

Disposition

[38] 1. THIS COURT ORDERS AND ADJUDGES that the Order of Chief Judge Beryl A. Howell of the United States District Court of the District of Columbia, dated September 10, 2018, is hereby recognized, and, in particular, this Court orders as follows:

(a) The defendants jointly and severally shall pay to each of Todd Akins, George Christopher Anthony, Charles Blank, John Gaydos, Gregory Eric Leinenbach, Jerry Timothy Sasser, Frank David Sills III and Eric Dale Ziegler, an amount of Canadian currency sufficient to purchase US$5,000,000 at a bank in Ontario listed in Schedule 1 to the Bank Act, SC 1991, c.46, at the close of business on the first day on which the bank quotes a Canadian dollar rate for purchase of the foreign currency before the day payment of the obligation is received by the creditor; (b) The defendants jointly and severally shall pay to each of James Hurst, Nicholas L. MacKenzie, Jason Porter Remar, Matthew G. Spicer, Tracy Matthew Winter, Jerry Timothy Sasser Sr., Deborah Homs and Richard Williams, an amount of Canadian currency sufficient to purchase US$2,500,000 at a bank in Ontario listed in Schedule 1 to the Bank Act, supra, at the close of business on the first day on which the bank quotes a Canadian dollar rate for purchase of the foreign currency before the day payment of the obligation is received by the creditor; (c) The defendants jointly and severally shall pay to each of Thomas R. Lawrence, Nathan Blank, Ethan Gaydos and Elizabeth Gaydos, an amount of Canadian currency sufficient to purchase US$1,500,000 at a bank in Ontario listed in Schedule 1 to the Bank Act, supra, at the close of business on the first day on which the bank quotes a Canadian dollar rate for purchase of the foreign currency before the day payment of the obligation is received by the creditor; (d) The defendants jointly and severally shall pay to each of Linda Kay Blank, Barbara Gaydos, Joy Leinenbach and Maryanne Addis (in her capacity as Personal Representative of the Estate of Nancy Kilfoyle), an amount of Canadian currency sufficient to purchase US$4,000,000 at a bank in Ontario listed in Schedule 1 to the Bank Act, supra, at the close of business on the first day on which the bank quotes a Canadian dollar rate for purchase of the foreign currency before the day payment of the obligation is received by the creditor; (e) The defendants jointly and severally shall pay to Eunha Kim Spicer-Lindsy an amount of Canadian currency sufficient to purchase US$2,000,000 at a bank in Ontario listed in Schedule 1 to the Bank Act, supra, at the close of business on the first day on which the bank quotes a Canadian dollar rate for purchase of the foreign currency before the day payment of the obligation is received by the creditor; (f) The defendants jointly and severally shall pay to each of Angela Rose, Andrew Blank, Deborah Millrany, Kimberly Watters Sasser, an amount of Canadian currency sufficient to purchase US$1,250,000 at a bank in Ontario listed in Schedule 1 to the Bank Act, supra, at the close of business on the first day on which the bank quotes a Canadian dollar rate for purchase of the foreign currency before the day payment of the obligation is received by the creditor; (g) The defendants jointly and severally shall pay to Robin Elizabeth Lawrence an amount of Canadian currency sufficient to purchase US$1,200,000 at a bank in Ontario listed in Schedule 1 to the Bank Act, supra, at the close of business on the first day on which the bank quotes a Canadian dollar rate for purchase of the foreign currency before the day payment of the obligation is received by the creditor; (h) The defendants jointly and severally shall pay to each of Kimi Lawrence, Bruce Russell Lawrence and Christian William Spicer, an amount of Canadian currency sufficient to purchase US$750,000 at a bank in Ontario listed in Schedule 1 to the Bank Act, supra, at the close of business on the first day on which the bank quotes a Canadian dollar rate for purchase of the foreign currency before the day payment of the obligation is received by the creditor; (i) The defendants jointly and severally shall pay to Christopher G. Spicer an amount of Canadian currency sufficient to purchase US$625,000 at a bank in Ontario listed in Schedule 1 to the Bank Act, supra, at the close of business on the first day on which the bank quotes a Canadian dollar rate for purchase of the foreign currency before the day payment of the obligation is received by the creditor; (j) The defendants jointly and severally shall pay to Andrea Jo Grimson an amount of Canadian currency sufficient to purchase US$375,000 at a bank in Ontario listed in Schedule 1 to the Bank Act, supra, at the close of business on the first day on which the bank quotes a Canadian dollar rate for purchase of the foreign currency before the day payment of the obligation is received by the creditor; and (k) The defendants jointly and severally shall pay prejudgment interest on the amounts ordered to be paid above, in accordance with the Courts of Justice Act.

2. THIS COURT ORDERS AND ADJUDGES that defendants jointly and severally shall pay to the plaintiffs their costs of this motion and the action in the amount of $48,199.61 inclusive of taxes and disbursements.

THIS JUDGMENT BEARS INTEREST at the rate of 7.0 % commencing the date of this judgment.

Released: January 16, 2024 L. Brownstone J.