Jaber v. Ammache, 2011 ABQB 504

Court of Queen ’ s Bench of Alberta Citation: Jaber v. Ammache, 2011 ABQB 504 Date: 20110811 Docket: 0803 14674 Registry: Edmonton Between: Salman T. Jaber, Yousra Jaber, Jim J. Moss, Leonard Koenig, Victor Morphy, Salman S. Jaber, Emman Radwan, Rebal Daou, Amal Kamaleddine, and Adnan Kamaleddine Plaintiffs - and - Nageb Ammache, Portia Kevyn Fredericks also known as P.K. (Kevin) Fredericks, Citadel VI Condominium Ltd. and Larry Keith Defendants _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice Brian R.

Burrows _______________________________________________________ [ 1 ] The Plaintiffs originally applied for leave to amend the Statement of Claim in this action. In addition, the Plaintiff Yousra Jaber applied under s. 240 of the Alberta Business Corporations Act for leave to commence a derivative action in the name of Citadel VI Condominium Ltd. The Defendants cross-applied for several forms of relief.

[ 2 ] During the course of his submissions, Mr. Thorlakson withdrew the Plaintiffs ’ application to amend the Statement of Claim and proceeded only on the application for leave to commence a derivative action. [ 3 ] The evidence filed in support of the Plaintiffs ’ application is to the effect that Ms. Jaber is a 51% shareholder of the company. In that regard Ms. Jaber relies on a document entitled “ Declaration of Trust ” dated January 15, 1997, signed by Mr. Ammache, in which he acknowledges that he holds 51% of the common shares of the company in trust for Ms. Jaber. Mr.

Ammache disputes that the document means what it says and commenced other litigation in 2007 for the purpose of securing a declaration to that effect. That litigation is unresolved. [ 4 ] In the circumstances I am satisfied that Ms. Jaber is a “ complainant ” within the meaning of s. 239(b)(iv) of the ABCA ( “ any other person who, in the discretion of the Court, is a proper person to make an application under this Part ” ). [ 5 ] Section 240(2)(

a) requires that before granting leave to a complainant to bring a derivative action, the Court must be satisfied that:

a) the complainant has given reasonable notice to the directors of the corporation of the complainant ’ s intention to bring the action if the directors do not cause the company to do so,

b) the complainant is acting in good faith,

c) it appears to be in the interests of the corporation that the action be brought. [ 6 ] There is no dispute that the first point is satisfied. [ 7 ] There is a long and complicated history of litigation involving these and other parties. It flows out of the company ’ s acquisition of a 36 unit condominium building and the resale of the units. The company secured funds to acquire the units from individuals who agreed to purchase one or more of the units from the company. The intention was that the company would end up owning 6 of the 36 units itself and resell them for a profit.

In addition, the 30 units sold to individuals would be resold when their value had increased and the individual investors and the company would equally split the profit of each sale. [ 8 ] Ms. Jaber alleges that through disclosure she obtained only after obtaining a Court order requiring the company ’ s solicitors to provide it to her, she learned that money received by the company in connection with this plan had been paid out to Mr. Ammache. She alleges that Mr. Ammache had no right to receive the funds, that he attempted to hide the fact that he had done so, and that he made false representations to Ms.

Jaber in relation to the profitability of the plan. She alleges that the information that the Court ordered be disclosed to her indicates that funds were improperly paid to both Mr. Ammache and to P.K. Fredericks. [ 9 ] Mr. Ammache denies these allegations. [ 10 ] I am satisfied that it is in the interests of the corporation that the action be brought. [ 11 ] Mr. Ammache suggests that Ms. Jaber is pursuing a personal vendetta against him and is therefore not acting in good faith. The materials Ms.

Jaber has filed are sufficient to show that there is reason to examine what happened and to determine whether or not recorded payments out of the company were legitimate. Mr. Ammache ’ s apparent reluctance to permit Ms. Jaber to explore these issues informally justifies the conclusion that her present move to explore them through the formal process of a derivative action is done in good faith. The complicated history of the litigation supports the conclusion that there is considerable bad blood between these parties. It does not justify the conclusion that Ms. Jaber is acting in bad faith.

[ 12 ] I conclude that the requirements of s. 240 of the ABCA are met. I grant Ms. Jaber leave to commence a derivative action in the name of the company in the form that was filed in her materials on the application. It shall, however, be a condition of the leave so granted that Ms. Jaber file an undertaking to personally pay any costs awarded against the company in the action. [ 13 ] On the application Mr. Ammache argued that any claim that might be brought by the company would be barred by the Limitations Act . In my view whether or not there is merit to this position should be determined in the action itself, not in this application.

Section 240 does not suggest that the Court should determine the merits of a possible defence to the action when determining whether to grant leave. The condition I have imposed concerning costs will ensure that the interests of the company, which s. 240 does require me to assess, will not be prejudiced by permitting the action to be brought though it might be statute barred.

The Cross-Application [ 14 ] On the cross-application the Defendants seek first to have the claim in the action struck on the basis that it is champertous. [ 15 ] The action in which both applications have been made names 10 individuals as Plaintiffs. They were each investors in the plan described above. They claim that obligations owed to them by Mr. Ammache, Mr. Fredericks and the company were breached and that they suffered damages as a result. [ 16 ] Mr. Ammache claims that several of the Plaintiffs did not instruct that the action be brought on their behalf and do not wish it to continue as Plaintiffs.

He claims that the claims are therefore champertous. [ 17 ] The amendment application which Mr. Thorlakson withdrew contemplated removal of several of the Plaintiffs from the action. Mr. Thorlakson agreed that it would be preferable to have those Plaintiffs discontinue their claims so that the Defendants ’ right to costs would not be prejudiced. I understood that Mr.

Thorlakson will ensure that the parties to this action are adjusted to conform to the instructions of the individuals in question. [ 18 ] In light of that, and in light of the fact that there is no indication anywhere in the materials before me that any benefit that any individual Plaintiff in the action would realize would be received by anyone other than that individual Plaintiff, I conclude that the application to strike on the basis that the claim is champertous must fail. [ 19 ] The Defendants also applied to strike claims on the basis that they were limitation barred. I dismiss that application as well.

The Defendants have filed a Statement of Defence which does not plead the Limitations Act . To strike out a claim on the basis of a defence not plead would be inappropriate. [ 20 ] The Defendants also applied to strike the claims on the basis that they were without merit. The materials filed by the Defendants in support of that aspect of the application do not meet the standard for

summary dismissal. They show there are two sides to the issue, not that the Plaintiffs cannot possibly succeed. [ 21 ] The Defendants seek leave to amend the Statement of Defence. I do not perceive that this is opposed. Leave is granted. [ 22 ] In the cross-application the Defendants also sought leave to add a counterclaim to the defence. The merits of this aspect of the application were not adequately addressed in the submissions. If the Defendants continue to seek leave to add a counterclaim, they may reapply. Heard on the 25 th day of May 2011.

Dated at the City of Edmonton, Alberta this 11 th day of August 2011. Brian R. Burrows J.C.Q.B.A. Appearances: G. James Thorlakson for the Plaintiffs Michele A. Wolowidnyk for the Defendants