September 4, 2019

Ontario may be a safe haven jurisdiction for lawsuits under doctrine of necessity

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In a recent case before the Superior Court of Justice, Justice D.K. Gray found that the plaintiff was entitled to seek relief in Ontario on the basis of forum of necessity doctrine even though the claim had no real and substantial connection to Ontario.

In Mohammad v. Tarraf[1], the plaintiff, Mr. Mohammad, entered into an agreement with the defendant, Mr. Tarraf, in September 1993 to form a limited liability company, whereby Mr. Mohammad and Mr. Tarraf as joint venturers and partners would own and operate a poultry farm.  Mr. Mohammad and Mr. Tarraff held 49% and 51% interest, respectively, in the company.

Under the agreement, Mr. Tarraf gave Mr. Mohammad a personal undertaking that Mr. Tarraf would repay to Mr. Mohammad all the operating expenses that he had incurred as well as management fees once the poultry plan was operational.

Mr. Mohammad contended in his claim that Mr. Tarraf failed to make the payments under the agreement and was thus, unjustly enriched. Mr. Mohammad further stated that Mr. Tarraf used his close association and relationship with the Royal Family of Dubai to intimidate, threaten and coerce Mr. Mohammad and his family. Specifically, Mr. Mohammad stated that electricity and water supply to his residence were cut off, he and his family were wrongfully detained by Mr. Tarraf’s security forces and his children were expelled from school. Finally, Mr. Mohammad and his family immigrated to Canada as refugees.

Mr. Mohammad contended that due to the nature of the government in Dubai, the absolute power within the Royal Family in Dubai and Mr. Tarraf’s association with the Royal Family, Mr. Mohammad felt powerless to seek redress of his claim in the courts of Dubai and that he feared for his life if he returned to Dubai to pursue his claim.

In his affidavit before the Honourable Court, Mr. Mohammad also referred to an article published by Amnesty International Ltd. in 2014 entitled “There Is No Freedom Here” — Silencing Dissent in the United Arab Emirates in support of finding that his fears were reasonable and appeared to have a factual basis.

Justice Gray found that Mr. Mohammad’s claim had no real and substantial connection to Ontario. However, the real issue was whether the Court should exercise its residual discretion to assume jurisdiction on the forum of necessity exception.

Justice Gray cited the Ontario Court of Appeal’s decision in West Van Inc. v. Daisley[2], where Hoy A.C.J.O noted that all jurisdictions in Canada that have recognized the forum of necessity have incorporated a “reasonableness” test, which must be stringently construed. The plaintiff must establish that there is no other forum in which the plaintiff can reasonably seek relief. Referring to the Quebec Court of appeal decision in Lamborghini (Canada) Inc. v. Automobili Lamborghini S.P.A.[3], Hoy A.C.J.O. stated that the breakdown of diplomatic commercial relations with a foreign State, the need to protect a political refugee, or the existence of a serious physical threat if the debate were to be undertaken before the foreign court are some examples of when a proceeding could be reasonably required in a foreign jurisdiction.

Justice Gray found that the present case was very similar to the examples given in the Lamborghini case and as such, was justified to the forum of necessity doctrine. The Court exercised its residual discretion to assume jurisdiction and granted default judgment in favour of plaintiff, Mr. Mohammad.

[1] Mohammad v. Tarraf, [2019] O.J. No. 1366

[2] West Van Inc. v. Daisley, 2014 ONCA 232, 119 O.R. (3d) 481

[3] Lamborghini (Canada) Inc. v. Automobili Lamborghini S.P.A., [1996] J.Q. No. 4175, [1997] R.J.Q. 58 (C.A.)

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