



COURT OF APPEAL FOR ONTARIO

CITATION: Sakab Saudi Holding Company v. Al
    Jabri, 2021 ONCA 548

DATE: 20210726

DOCKET: M52628 (C69620)

Benotto
    J.A. (Motion Judge)

BETWEEN

Sakab Saudi Holding Company, Alpha Star Aviation Services Company,
    Enma Al Ared Real Estate Investment and Development Company, Kafaat Business
    Solutions Company, Security Control Company, Armour Security Industrial
    Manufacturing Company, Saudi Technology & Security Comprehensive Control
    Company, Technology Control Company, New Dawn Contracting Company and Sky Prime
    Investment Company

Plaintiffs (Respondents/
Responding Parties)

and

Saad
    Khalid S Al Jabri,
Dreams International Advisory Services Ltd.
, 1147848
    B.C. Ltd.,
New East (US) Inc.
,
New East 804 805 LLC
,
New East Back
    Bay LLC
,
New East DC LLC
, Jaalik Contracting Ltd., Nadyah Sulaiman A
    Al Jabbari, Khalid Saad Khalid Al Jabri,
Mohammed Saad KH Al Jabri
, Naif
    Saad KH Al Jabri, Sulaiman Saad Khalid Al Jabri, Hissah Saad KH Al Jabri, Saleh
    Saad Khalid Al Jabri, Canadian Growth Investments Limited, Gryphon Secure Inc.,
    Infosec Global Inc., QFive Global Investment Inc.,
Golden Valley Management
    Ltd.
, New South East Pte. Ltd.,
Ten Leaves Management Ltd.
, 276143
    Ontario Inc., Nagy Moustafa, HSBC Trustee (C.I.) Limited in its capacity as
    Trustee of the Black Stallion Trust, HSBC Private Banking Nominee 3 (Jersey)
    Limited in its capacity as a Nominee Shareholder of Black Stallion Investments Limited,
    Black Stallion Investments Limited, New East Family Foundation,
New East International
    Limited, New South East Establishment, NCom Inc.
and
2701644 Ontario Inc.

Defendants (Appellants/

Moving Parties
)

Harry Underwood and Andrew Max, for the
    moving parties

Munaf Mohamed, Q.C., for the responding
    parties

Heard: July 16, 2021, by video conference

ENDORSEMENT

[1]

The applicants are some of the defendants in this action. They move for
    a stay of the order of Gilmore J. which determined that Ontario has jurisdiction
    over an action involving an alleged fraud by former high-ranking government
    officers in Saudi Arabia.

[2]

Several orders in the court below set out the extensive history. I
    summarize only that which frames this motion.

FACTS IN BRIEF

(1)

Background to the action

[3]

The plaintiffs are a group of ten companies
    established between 2007 and 2015. They operate in strategic industries, such
    as aerospace and cybersecurity. They also fund covert operations for
    counterterrorism operations in Saudi Arabia and operate legitimate businesses
    to provide plausible public cover for these activities.

[4]

The plaintiffs allege that billions of dollars
    have been brazenly stolen through a fraudulent scheme masterminded by a former
    Saudi cabinet minister, the defendant Saad Khalid Al Jabri (Al Jabri). The
    other defendants allegedly participated in or benefitted from the scheme to
    defraud the plaintiffs. Al Jabri was the Director of the Department of Officers
    and Personnel Affairs and Security Advisor to the Ministry of Interior of Saudi
    Arabia. He is highly educated and worked for decades as a senior civil servant
    in the security and intelligence agencies of Saudi Arabia. He served as a
    Minister of State and as a Special Advisor to Muhammed Bin Nayef (MBN), the
    former Crown Prince and Minister of the Interior.

[5]

In 2015, on King Abdullahs death, King Salman
    acceded to the throne and MBN was named Minister of the Interior. King Salmans
    son, Mohammed Bin Salman (MBS), was appointed Minister of Defence. In April
    2015, MBN was named Crown Prince and MBS was named Deputy Crown Prince. MBN was
    later deposed in a coup.

[6]

In September 2015, Al Jabri was removed
    from office at the insistence of MBS. The reason for the removal is in dispute.
    The plaintiffs say he was removed because of his fraudulent activity. Al Jabri
    submits that it was because he met with the U.S. Central Intelligence Agency
    Director and did not report that meeting to MBS. In any event, an investigation
    into Al Jabri was conducted and he eventually moved to Canada. He lives in
    Toronto with his wife and family members.

(2)

The allegations of fraud

[7]

The plaintiffs allege that Al Jabri organized a
    fraudulent scheme to misappropriate $3.5B USD from the plaintiffs. He did so,
    it is alleged, using nominees to hide his control and beneficial ownership of
    significant assets. He installed family members, including his son, Mohammed Al
    Jabri (Mohammed), as nominee shareholders. He then made significant transfers
    to the nominees. The misappropriated funds were used to acquire assets around
    the world.

[8]

The plaintiffs say they have already traced
    nearly half a billion US dollars through this scheme. There is also a gift
    deed that Al Jabri made to Mohammed whereby Al Jabri purportedly gifted
    Mohammed all of his worldwide assets. Mohammed used these assets, in part, to
    benefit family members including through the purchase of a $13 million home in
    Toronto for Al Jabri.

(3)

The
Mareva
Injunction

[9]

Gilmore J. has had carriage of all the steps in
    the litigation. In January 2021, she issued an
Mareva
injunction over
    all of Al Jabris worldwide assets, restraining him from dissipating his
    assets. In February 2021, the plaintiffs learned of the gift to Mohammed and
    returned to Gilmore J. to seek to vary the order to secure the gifted assets. Gilmore
    J. adjourned the motion so that Mohammed and other corporate defendants could
    move to challenge the jurisdiction of the Ontario courts.

(4)

The Jurisdiction Decision

[10]

The jurisdiction motion was heard on May 19,
    2021, with reasons released on June 22, 2021.

[11]

The motion judge held that to assert
    jurisdiction over a foreign defendant, a good arguable case must be
    established on the record before her. She concluded on five separate grounds
    that Ontario had jurisdiction. In particular:

1.

A presumptive connecting factor arose from
    numerous contracts made in Ontario.

2.

The deed of gift from Al Jabri to Mohammed was
    written and signed in Ontario. She also concluded that the gift was a ruse and that
    Al Jabri continues to direct the management of the assets acquired through a
    fraudulent scheme, even though Mohammed may be the legal or beneficial owner of
    the assets.

3.

There were assets in Ontario acquired with funds
    re-gifted by Mohammed to Al Jabri.

4.

Acts in furtherance of the alleged tort of
    conspiracy occurred in Ontario.

5.

There is a real and substantial connection
    between the subject matter of the claim and Ontario which had not been rebutted
    by the defendants who had not raised
forum non conveniens.

(5)

Further scheduled motion

[12]

The motion to expand the
Mareva
to
    include Mohammads assets is now scheduled for August 9, 2021.

[13]

On July 5, 2021, the Notice of Appeal and this
    motion were filed.

ISSUE

[14]

The only issue before me is whether to grant a
    stay of jurisdiction so that the underlying action (including the August 9
    motion) awaits the determination of the jurisdiction appeal.

DISCUSSION

[15]

The test for a stay pending appeal is not in
    dispute so I turn to each component
[1]
.

(1)

Serious
    issue to be determined

[16]

A preliminary assessment of the merits of the
    appeal presumes correctness of the decision under appeal.

[17]

The moving parties submit that the motion judge
    erred by:

·

Relying on efficiency and fairness, and the
    convenience of a single trial, as relevant factors for determining jurisdiction
simpliciter
.

·

Finding that jurisdiction could be assumed over
    the claim as a whole rather than through the presence of a presumptive
    connecting factor with respect to each defendant.

·

Relying on the actions of Al Jabri and his
    connections to Ontario to ground jurisdiction over the other defendants.

·

Failing to apply the proper legal test in
    finding that the presumptive connecting factor of a contract connected with the
    dispute made in the province connected the defendants and the claim against
    them with the jurisdiction.

·

Relying on a document other than a contract,
    namely a gift deed, and on contracts unconnected to the defendants.

·

Finding that the use of proceeds of an alleged
    fraud to acquire property located in Ontario is a presumptive connecting
    factor.

[18]

In particular, the moving parties submit that
    the motion judge erred by concluding that the gift to Mohammed was a connecting
    factor because the gift was made in Turkey, not in Ontario.

[19]

The motion judge concluded that there were five
    independent reasons to find jurisdiction. Any one of them would lead to her
    order being upheld. The record before the motion judge was extensive. (The
    moving parties have filed nearly 3,000 pages on this motion.) It was open to
    the motion judge to conclude on the extensive record before her, that there is
    a real and substantial connection between Ontario, the subject matter of the
    litigation and the defendant.

[20]

The motion judge referred to the gift to
    Mohammed as particularly important. The evidence from Al Jabri himself is
    that an oral promise was made in Turkey in 2017. The motion judge found that the
    circumstances of this gift were undocumented and uncorroborated and that Al
    Jabris evidence on the gift was contradictory. The gift deed was finally written
    in Ontario in late 2018. Transfers in accordance with the gift did not happen
    for months or years after the purported gift was made. Without commenting on
    the validity of the gift, she concluded that the written gift deed could be
    used to ground jurisdiction.

[21]

The motion judge identified other contracts made
    in Ontario and concluded that funds misappropriated from the plaintiffs flowed
    to entities that made the agreements. Further, property in Ontario was purchased
    with these funds.

[22]

While I cannot say the appeal is frivolous, the
    merits of the appeal lean to favour the plaintiffs.

(2)

Irreparable harm

[23]

The moving parties allege that if they are
    required to continue responding to the merits of the
Mareva
injunction
    they suffer irreparable harm because they may be deemed to have attorned to the
    jurisdiction. Anticipating this concern, the plaintiffs undertake not to raise
    the issue of attornment in the appeal and consent to an order in this court
    directing that the moving parties defence of the
Mareva
injunction
    cannot be relied on as attornment in the action. Alternatively, the plaintiffs
    are prepared to proceed with the
Mareva
injunction on an
ex parte
basis, without prejudice to the moving parties rights on a comeback motion.
    The moving parties say this is not enough.

[24]

The moving parties submit that they would remain
    at risk of having attorned to the jurisdiction if they respond to the
    outstanding
Mareva
motion because there is uncertainty with respect to
    the law on this issue. I therefore turn to the source of the alleged
    uncertainty and discuss the implications for this case.

[25]

In 2004, a chambers decision from this court
    granted a stay pending appeal of a jurisdiction decision. In
M.J. Jones
    Inc. v. Kingsway General Insurance Co.
(2004), 242 D.L.R. (4th) 139 (Ont.
    C.A.), Lang J.A. considered a motion for a stay of a jurisdiction order affirmed
    by the Court of Appeal pending an application for leave to appeal to the
    Supreme Court of Canada. The moving party alleged that if they were ordered to
    file a statement of defence, compliance with the order would amount to
    attornment to Ontarios jurisdiction rendering the application moot and causing
    irreparable harm. Lang J.A. found that the moving party might be found to
    have attorned, stating at para. 30:

On the authorities given to me, there is no clear
    answer as to whether court-ordered involuntary participation on the merits will
    be an attornment sufficient to render [the moving partys] leave application
    moot.

[26]

In the 17 years since this decision, this courts judges have addressed
    the question of attornment in the face of a challenge to jurisdiction. There is
    now a body of jurisprudence on this issue.

[27]

In
BTR Global Opportunity Trading Limited
    v. RBC Dexia Investor Services Trust
, 2011 ONCA
    620
, 283 O.A.C. 321, Laskin J.A. considered a request for
    a stay of a jurisdiction order pending an application for leave to appeal to
    the Supreme Court of Canada. The responding party undertook not to argue that
    delivery of a defence or participation in examinations for discovery
    constituted acts of attornment. Referring to
M.J.
    Jones
, Laskin J.A. stated, at paras. 29-31:

[
29
] Without commenting
    on the correctness of that decision, I simply observe that the present case is
    distinguishable. In
M.J. Jones
, Lang J.A. dealt with whether a court order requiring a defendant to
    deliver a statement of defence would amount to attornment. She held that a
    court order requiring a defendant to participate in an action, even though
    involuntarily, might amount to attornment. Therefore, she held that despite the
    plaintiffs undertaking not to treat the defendants participation as
    attornment, refusing a stay could cause irreparable harm.

[
30
] Here, no court order
    or involuntary participation is required because [the plaintiff] asks [the
    defendant] only for a statement of defence to permit it to move ahead with
    discoveries. Furthermore, Lang J.A. appears to have contemplated and approved
    of this very scenario. She wrote at para. 52:

This disposition does not necessarily preclude
    all parties to this action cooperating by exchanging documents and answering
    questions about the merits of the disputes between them. Such exchange, if done
    outside the formal bounds of these court proceedings, would, in my view, not be
    considered an attornment to Ontarios jurisdiction. It would simply be an
    efficient exchange of information that, with the agreement of the parties,
    could later be used either in the Ontario proceeding, or in any subsequent
    Michigan proceeding.

[
31
] As [the documents are
    requested] outside of the formal bounds of the court proceedings, I do not
    consider that the delivery of a statement of defence or participation in
    discoveries, would amount to attornment. If there is no attornment, the risk of
    [the defendants] appeal becoming moot is eliminated. [The defendant]
    therefore, has not made out irreparable harm.

[28]

In
Van Damme v. Gelber
, 2013 ONCA 388, 115 O.R. (3d) 470, at paras. 22-23, Doherty J.A.,
    writing for a panel of this court, considered the participation necessary to
    constitute attornment:

Attornment by participation in court proceedings
    was recently addressed in
Wolfe v. Pickar
, 2011 ONCA 347, 332 D.L.R. (4th) 157, at para. 44, where Goudge J.A.
    said:

[W]hen a party to
    an action appears in court and goes beyond challenging the jurisdiction of the
    court based on
jurisdiction simpliciter
and
forum non conveniens
, the party will be regarded as appearing voluntarily, thus giving the
    court consent-based jurisdiction.

There is also
    authority for the proposition that, if a party appears in a court to challenge
    jurisdiction or seek a stay on the basis of
forum
    non conveniens
, any additional steps taken by the
    party pursuant to an order of the court will also not amount to
    attornment:  see
Gourmet Resources
    International Inc. (Trustee of) v. Paramount Capital Corp.
(1991), 5 C.P.C. (3d) 140 (Ont. C.A.);
M.J.
    Jones Inc. v. Kingsway General Insurance Co.

(2004), 72 O.R. (3d) 68 (C.A.), at paras.
18-31
    (per Lang J.A., in chambers). Giving these cases their widest reasonable
    reading, [the defendants] motion challenging the jurisdiction of the New York
    court, his filing of a defence, and his conduct of depositions and discoveries
    did not amount to attornment.

[29]

In
Yaiguaje v. Chevron Corporation
, 2014 ONCA 40, 315 O.A.C. 109, MacPherson J.A. considered the moving
    parties submission that, even in the face of an undertaking not to raise
    attornment, they will suffer irreparable harm. MacPherson J.A. said, at para.
    11:

I do not accept this
    submission. This court has stated that where a court order requires a party to
    file a defence, compliance with the order, including related conduct of
    depositions and discoveries, does not constitute attornment in the face of an
    ongoing jurisdictional challenge: see
Van Damme v.
    Gelber
, 2013 ONCA 388, 115 O.R. (3d) 470, at para. 23.
    Moreover, and importantly, the responding parties have explicitly stated in
    their factum (para. 28) that if the moving parties simply provide them with
    their statements of defence (without formally filing them), the respondents
    are content to receive the same, without prejudice to the Chevron companies
    Leave to Appeal Applications and will not claim that by doing so they have
    attorned to the jurisdiction of the Ontario Superior Court of Justice. 
    See
BTR Global
, at para.
    31. I see no reason not to accept and respect this undertaking.

[30]

Later in 2014, Epstein J.A. considered a stay pending the appeal of a
    jurisdiction motion:
Stuart Budd & Sons Ltd. v.
    IFS Vehicle Distributors ULC
, 2014 ONCA 546, 122 O.R.
    (3d) 472. She referred to differing views concerning when a party risks
    attornment by taking court-ordered steps in the fact of an ongoing jurisdiction
    challenge. She cited
M.J. Jones
,
BTR Global
,
Van Damme
and
Yaiguaje
and concluded that the issue was unresolved: at para. 36. The stay
    was granted.

[31]

I see the case before me differently and  on the facts here  the
    issue is not unresolved. This case is distinguished from
Stuart Budd.

I say
    this for several reasons.

[32]

First, in
Essar Steel Algoma (Re)
, 2016 ONCA 138, 33 C.B.R.
    (6th) 172, at paras. 41-45, Brown J.A. referred to and cited the cases to which
    I have referred and concluded, at para. 52:

[
52
]  
       I need not express a view on the effect of court-ordered
    participation in a proceeding on a partys ability to continue to advance a
    jurisdictional challenge because
decisions
    of this court uniformly have held that where the responding party provides the
    court with undertakings of the kind given by Essar in this case, the
    undertakings significantly reduce or remove the risk of irreparable harm.
[Emphasis added.]

[33]

Second,
Van Damme
was a decision by a panel of this court. As MacPherson J.A. pointed out: (i)
    compliance with the order, including related conduct of depositions and
    discoveries, does not constitute attornment in the face of an ongoing jurisdictional
    challenge; and (ii) there is no reason not to respect counsels undertaking.

[34]

Finally, to attorn to the jurisdiction, a party must take a

voluntary
step indicating submission to the jurisdiction. Attornment cannot
    arise is circumstances of duress:
Wolfe v. Wyeth
, 2011 ONCA 347, 332 D.L.R. (4th) 157, at para. 44. The plaintiffs
    submit that a response to a worldwide
Mareva
injunction should not be considered a voluntary step indicating
    submission to the jurisdiction. Rather they say it is an example of duress. The
    plaintiffs analogize the situation here to that in
Schwarzinger
    v. Bramwell
, 2011 BCSC 283 where the British Columbia
    court held that the defendants were under duress when they applied to vary a worldwide
Mareva

injunction. Although their assets were not in the custody of the court,
    the effect of the order was to prohibit them from dealing with assets and conducting
    their day-to-day business operations. Consequently, there was no consent-based
    jurisdiction.

[35]

I agree with the plaintiffs that a response to the worldwide
Mareva
injunction would not amount to
    attornment in these circumstances. The defendants would not be asking the court
    to engage in an issue, unlike in
Wolfe,
where the defendants sought to dismiss or stay the action for issue
    estoppel. Here, there is also the undertaking of the plaintiffs not to assert
    attornment.

[36]

I conclude that the moving parties have not demonstrated that they
    would suffer irreparable harm if a stay pending appeal is not granted.

(3)

Balance of convenience

[37]

The balance of convenience favours the plaintiffs. They point to the
    risk of funds that are the subject matter of the litigation being dissipated.
    Gilmore J. concluded that, on the record before her, there was an attempt to
    put the assets beyond the reach of the plaintiffs and that there is evidence to
    suggest that Al Jabri continues to move money around in furtherance of the alleged
    conspiracy.

[38]

The moving parties have offered to provide an undertaking from Mohammed
    not to dispose of any assets (subject to certain exceptions including
    reasonable living expenses, legal fees, and ordinary course business expenses
    or activities of companies he owns or controls). In oral submissions, counsel
    suggested the appointment of an Arbitrator to oversee this process. I do not
    accept that this is a reasonable proposal that would tilt the balance of
    convenience in favour of the moving parties.

[39]

Considering all of the criteria and the fact that the plaintiffs
    consent to an order of this court that the moving parties will not attorn to
    the jurisdiction by defending the
Mareva
injunction, I conclude that it is not in the interests of justice to
    grant the stay.

[40]

The motion is dismissed with costs in the agreed upon amount of $20,000
    inclusive of disbursements and HST.

M.L.
    Benotto J.A.





[1]

RJR-MacDonald Inc. v. Canada
    (Attorney General)
, [1994] 1 S.C.R. 311, at p. 334.


