Sekerbank T.A.S. v. Arslan et al., 2016 SKCA 77

• Judge: Lane, Caldwell and Herauf, JJ.A.
• Court: Court of Appeal (Saskatchewan)
• Case Date: January 16, 2016
• Jurisdiction: Saskatchewan
• Citations: 2016 SKCA 77;(2016), 480 Sask.R. 235 (CA)

Sekerbank T.A.S. v. Arslan (2016), 480 Sask.R. 235 (CA);

    669 W.A.C. 235

MLB headnote and full text

Temp. Cite: [2016] Sask.R. TBEd. JL.001

Hüseyin Arslan and Murad Al-Katib (appellants/defendants) v. Sekerbank T.A.S. (respondent/plaintiff)

(CACV2572; 2016 SKCA 77)

Indexed As: Sekerbank T.A.S. v. Arslan et al.

Saskatchewan Court of Appeal

Lane, Caldwell and Herauf, JJ.A.

June 20, 2016.

Summary:

The plaintiff alleged that the defendant Arslan had defaulted on his obligation to pay the plaintiff $13,813,544.88 pursuant to certain guarantees. Arslan denied that the guarantees were binding or enforceable. The plaintiff had pursued various legal actions in Turkey in an attempt to prove and enforce the guarantees. The plaintiff was concerned that it would be unable to realize on any judgment it might obtain in Turkey. The plaintiff wished to ensure that it would be able to enforce that judgment against certain shares that Arslan had transferred to the defendant Murad Al-Katib in trust. Accordingly, it commenced the present action in Saskatchewan, which attacked the transfer as a fraudulent preference or fraudulent conveyance, and, as interim relief, sought a preservation order under s. 5 of the Enforcement of Money Judgments Act (EMJA). A preservation order was granted, by consent. The defendants applied under s. 8 of the EMJA for an order terminating the consent order.

The Saskatchewan Court of Queen's Bench, in a decision reported at (2014), 450 Sask.R. 76, dismissed the application. The defendants appealed.

The Saskatchewan Court of Appeal dismissed the appeal.

Estoppel - Topic 377

Estoppel by record (res judicata) - Res judicata as a bar to subsequent proceedings - When applicable - [See third Practice - Topic 3376 ].

Estoppel - Topic 386

Estoppel by record (res judicata) - Res judicata as a bar to subsequent proceedings - Issues decided in prior proceedings - [See third Practice - Topic 3376 ].

Evidence - Topic 252

Inferences and weight of evidence - Weight - Expert evidence - [See second Evidence - Topic 7017 ].

Evidence - Topic 7000.2

Opinion evidence - Expert evidence - General - Expert witness - Disqualification - Bias - The plaintiff (a Turkish bank) alleged that the defendant Arslan had defaulted on his obligation to pay the plaintiff $13,813,544.88 pursuant to certain guarantees - Arslan denied that the guarantees were binding or enforceable - The plaintiff had pursued various legal actions in Turkey in an attempt to prove and enforce the guarantees - The plaintiff was concerned that it would be unable to realize on any judgment it might obtain in Turkey - The plaintiff wished to ensure that it would be able to enforce that judgment against certain shares that Arslan had transferred to the defendant Murad Al-Katib in trust - Accordingly, it commenced the present action in Saskatchewan, which attacked the transfer as a fraudulent preference or fraudulent conveyance, and, as interim relief, sought a preservation order under s. 5 of the Enforcement of Money Judgments Act (EMJA) - A preservation order was granted, by consent - The defendants applied under s. 8 of the EMJA for an order terminating the consent order - The Saskatchewan Court of Queen's Bench noted that the application called for it to make findings regarding the law of Turkey - These were questions of foreign law, and accordingly, had to be determined as questions of fact pursuant to s. 4 of the Evidence Act (Sask.) - The court held that it was "prepared to admit the affidavits sworn by the lawyers retained in the Turkish litigation, but will use that evidence in a manner that accounts for the danger of relying on the opinion of a foreign lawyer retained by a party as an advocate. Generally, I will not rely on their affidavits to decide the answer to a disputed question of Turkish law. I will rely on their evidence, together with the documents and evidence of other affiants, to determine whether proceedings were commenced in Turkey, what those proceedings relate to, and whether they have been determined or are ongoing. I will also use that evidence to determine whether the outcome of the Turkish proceedings turns on arguable legal questions. Given the nature of the legal test that applies in determining whether a preservation order should be granted ... the issue of whether there are proceedings and issues of that kind is central to this application." - The Saskatchewan Court of Appeal found no error in the chambers judge's decision to admit the impugned evidence and to limit its use to proof of uncontroverted facts about the status of the Turkish proceedings in this case - See paragraphs 40 to 48.

Evidence - Topic 7017

Opinion evidence - Expert evidence - General - Affidavits - [See Evidence - Topic 7000.2 ].

Evidence - Topic 7017

Opinion evidence - Expert evidence - General - Affidavits - Appellants argued that a chambers judge erred in failing to consider the evidence of their expert witness (Dogru) -The Saskatchewan Court of Appeal held that the chambers judge's decision plainly disclosed that he did in fact consider Dogru's evidence - Therefore, the appellants' concern had to be that the chambers judge paid little heed to it - The court stated that "This raises a question as to the weight to be given to that evidence and whether the Chambers judge erred in that regard. In as much as this is a question of fact, this Court, after a trial with viva voce evidence, would normally defer to the judge, absent palpable and overriding error. But, here, Mr. Dogru's evidence-as well as that of the other Turkish legal experts-came in the form of an affidavit only. That is, the Chambers judge did not hear viva voce evidence from or make any assessments of credibility about Mr. Dogru or any other witness. In such circumstances, even though we are dealing with expert evidence, I see no reason to deviate from the standard of reasonableness for findings of fact and inferences of fact ... [T]he reasonableness of the Chambers judge's findings of fact based on affidavit evidence alone is a presumption that the appellants must rebut." - See paragraphs 49 and 50.

Execution - Topic 6

General rules - General - Application of execution legislation - The Saskatchewan Court of Appeal stated that "The EMJA [Enforcement of Money Judgments Act] is certainly an integrated piece of legislation. It is not an extension of common law structures. It completely displaces enforcement measures available under prior law. These conclusions are borne out by the scheme of the EMJA itself, the object of the EMJA, the legislation repealed upon its enactment and, lastly, by the debates in the Legislature regarding its passage ... " - See paragraph 67.

Execution - Topic 6

General rules - General - Application of execution legislation - The Saskatchewan Court of Appeal stated that "... the complete range of remedies available for the enforcement of money judgments and the parameters within which these remedies may be exercised are now found in the EMJA [Enforcement of Money Judgments Act] (along with accompanying amendments to The Land Titles Act, 2000, SS 2000, c L-5.1). They are no longer found in traditional money judgment enforcement law or the inherent jurisdiction of the Court of Queen's Bench acting as a court of equity. In that regard, while the EMJA retains some of the basic features of prior enforcement law, the Legislature has abandoned antiquated common law concepts and obsolete approaches to money judgment enforcement to focus on the effective implementation of its policy choices ... This means the common law and prior statute law are less valuable as extrinsic aids to the interpretation of the EMJA, if they hold any value at all." - See paragraph 74.

Practice - Topic 3371

Interim proceedings - Preservation of property - General - [See Statutes - Topic 2601 ].

Practice - Topic 3376

Interim proceedings - Preservation of property - Preservation order - Termination of - The plaintiff (a Turkish bank) alleged that the defendant Arslan had defaulted on his obligation to pay the plaintiff $13,813,544.88 pursuant to certain guarantees - Arslan denied that the guarantees were binding or enforceable - The plaintiff had pursued various legal actions in Turkey in an attempt to prove and enforce the guarantees - The plaintiff was concerned that it would be unable to realize on any judgment it might obtain in Turkey - The plaintiff wished to ensure that it would be able to enforce that judgment against certain shares that Arslan had transferred to the defendant Murad Al-Katib in trust - Accordingly, it commenced the present action in Saskatchewan, which attacked the transfer as a fraudulent preference or fraudulent conveyance, and, as interim relief, sought a preservation order under s. 5 of the Enforcement of Money Judgments Act (EMJA) - A preservation order was granted, by consent - The defendants applied under s. 8 of the EMJA for an order terminating the consent order - A chambers judge dismissed the application - The defendants appealed - The Saskatchewan Court of Appeal dismissed the appeal - The chambers judge properly exercised his discretion by recognising the principles at play under s. 8 of the EMJA and the importance of certainty and efficacy of consent orders - The court found no error in his approach or in the result - The court held, inter alia, that "the court may extend, modify or terminate a preservation order whenever it appears just to do so on the basis of the material before it." - See paragraphs 2 and 79.

Practice - Topic 3376

Interim proceedings - Preservation of property - Preservation order - Termination of - The plaintiff sought a preservation order under s. 5 of the Enforcement of Money Judgments Act (EMJA) - A preservation order was granted, by consent - The defendants applied under s. 8 of the EMJA for an order terminating the consent order - The Saskatchewan Court of Appeal stated that "Preservation orders are subject to modification or termination. ... [T]he Chambers judge correctly found that s. 8 required the appellants to satisfy him on a balance of probabilities that there had been a change in the facts or the application of the three prerequisite conditions set out in s. 5(5) of the EMJA that justified termination of the existing preservation order." - The court held that a preservation order that arose by consent of the parties had the same effect as an order obtained after a plaintiff had satisfied a judge of the matters set forth in s. 5(5) of the EMJA - The court stated, inter alia, that "There is no magic in the words 'or until further court order' in paragraph 3 of the within consent preservation order. Those words do not have the effect of undermining the agreements of the parties by making them subject to determination afresh by a court at the whim of a party. In fact, they reinforce the requirements and onus under s. 8 of the EMJA." - See paragraphs 91 to 98.

Practice - Topic 3376

Interim proceedings - Preservation of property - Preservation order - Termination of - Defendants applied under s. 8 of the Enforcement of Money Judgments Act (EMJA) to terminate a preservation order that had been granted on consent - A chambers judge held that res judicata, specifically, issue estoppel, applied here - He stated that "It is open to the court to terminate a preservation order granted by consent pursuant to s. 8 of the EMJA if the applicant shows grounds that would vitiate a contract. It is also open to the court to terminate a consent preservation order if the facts or the law on which the consent order was based have changed to the extent that the plaintiff, as a result of those changes, no longer meets the three conditions specified in s. 5 of the EMJA. Failing that, the court should not terminate the order, or revisit the issues which the parties intended to resolve through that order. That is so regardless of whether the order is expressly made 'until further order of the court', unless there is evidence that the parties intended that phrase to mean that the order was not intended to resolve the issues." - The Saskatchewan Court of Appeal endorsed this approach - See paragraphs 99 to 103.

Practice - Topic 3376

Interim proceedings - Preservation of property - Preservation order - Termination of - Defendants applied under s. 8 of the Enforcement of Money Judgments Act (EMJA) to terminate a preservation order that had been granted on consent - Among their grounds, the defendants claimed that the plaintiff did not have clean hands, not only due to the alleged bad faith and misrepresentations to the court, but as it failed to make full disclosure to the court of the defences that might be available to the defendants - A chambers judge dismissed the application - He stated that he was "... not aware of any legal principle that would require full disclosure of matters that might assist the defendants in the context of an application for a preservation order which has been served on the defendants, and in relation to which the defendants have been fully represented." - The Saskatchewan Court of Appeal found no error in this conclusion - See paragraph 113.

Practice - Topic 3377

Interim proceedings - Preservation of property - When order for preservation of property available - The plaintiff sought a preservation order under s. 5 of the Enforcement of Money Judgments Act (EMJA) - A preservation order was granted, by consent - The defendants applied under s. 8 of the EMJA for an order terminating the consent order - The Saskatchewan Court of Appeal held that a defence to a plaintiff's claim, even a potentially meritorious defence, did not present a bar to the issuance of a preservation order - Moreover, the actual merit of such a defence on the facts and the law was, obviously, a matter for the trial court to determine - See paragraphs 51 to 53.

Practice - Topic 3377

Interim proceedings - Preservation of property - When order for preservation of property available - The Saskatchewan Court of Appeal held that "[t]o obtain a preservation order, s. 5(5)(a) [of the Enforcement of Money Judgments Act] requires a plaintiff to, at a minimum, establish it has commenced an action that, if successful, would result in: (a) a judgment in the plaintiff's favour that requires a person to pay money; or (b) an order declaring a gift, conveyance, assignment, transfer, delivery over or payment of property by the defendant void as a fraudulent conveyance or fraudulent preference. By 'if successful', s. 5(5)(a) requires the plaintiff to establish its action rests on a recognised cause of action that is not groundless , in the sense that it offers some possibility the plaintiff will obtain a judgment within the meaning of s. 2(1)(aa) or an order described in s. 5(1)(a)(ii) if the factual allegations set forth in the pleadings, as may be supplemented by affidavit, are realistic and are borne out. The court retains the discretion to require additional support for the application or to refuse to grant a preservation order even where the plaintiff has satisfied the evidentiary requirements of s. 5(5)(a) (and its other clauses) because the language of s. 5(5) is permissive, allowing the court to do what is just in the circumstances. Lastly, a judge's discretion under s. 8(4) is broad by reason that 'the court may make any order that the court considers appropriate in the circumstances.'" - See paragraph 88.

Practice - Topic 5539

Judgments and orders - Consent orders - Setting aside - General - [See first and second Practice - Topic 3376 ].

Practice - Topic 5851

Judgments and orders - Enforcement of judgments - General - [See both Execution - Topic 6 ].

Practice - Topic 8825.2

Appeals - General principles - Duty of appeal court where trial judgment based on affidavit evidence - [See second Evidence - Topic 7017 ].

Statutes - Topic 1601

Interpretation - Extrinsic aids - General - [See Statutes - Topic 2601 ].

Statutes - Topic 2601

Interpretation - Interpretation of words and phrases - Modern rule (incl. interpretation by context) - General principles - The plaintiff sought a preservation order under s. 5 of the Enforcement of Money Judgments Act (EMJA) - A preservation order was granted, by consent - The defendants applied under s. 8 of the EMJA for an order terminating the consent order - The Saskatchewan Court of Appeal interpreted ss. 8 and 5 of the EMJA - The court applied "the modern principle of statutory interpretation as set out in E.A. Driedger, Construction of Statutes, 2d ed (Toronto: Butterworths, 1983) at 87, and as confirmed as the preferred approach to statutory interpretation in Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 SCR 27" - The court stated, inter alia, that "Historically, Canadian courts were distrustful of extrinsic aids to statutory interpretation. However, under the modern principle of statutory interpretation, courts have become accustomed to reading legislative provisions in their broad context, which now includes extrinsic aids that were formerly considered inadmissible. This is so because such aids are often part of the legal context or they provide evidence of external context." - See paragraphs 58 and 63.

Words and Phrases

Until further court order - The Saskatchewan Court of Appeal interpreted the meaning of this phrase as found in a consent preservation order - See paragraph 98.

Counsel:

Kevin C. Mellor, for the appellant, Hüseyin Arslan;

Deron Kuski, Q.C. and James Rose, for the appellant, Murad Al-Katib;

Peter T. Bergbusch, for the respondent.

This appeal was heard on January 16, 2016, by Lane, Caldwell and Herauf, JJ.A., of the Saskatchewan Court of Appeal. Caldwell, J.A., delivered the following decision for the court on June 20, 2016.