Nourifard v. Emadzadeh, 2024 BCCA 49

COURT OF APPEAL FOR BRITISH COLUMBIA Citation: Nourifard v. Emadzadeh, 2024 BCCA 49 Date: 20240202 Docket: CA49462 Between: Saeid Nourifard Appellant (Plaintiff) And Navid Emadzadeh and Novarc Technologies Inc. Respondents (Defendants) Before: The Honourable Mr. Justice Hunter (In Chambers) On appeal from: An order of the Supreme Court of British Columbia, dated November 3, 2023 ( Nourifard v. Emadzadeh , 2023 BCSC 1940 , Vancouver Docket S201132). Oral Reasons for Judgment Counsel for the Appellant: A. Soliman A. Johal, Articled Student Counsel for the Respondent, Navid Emadzadeh: A.M. Beddoes S.R.

Gomez Counsel for the Respondent, Novarc Technologies Inc.: K.A. Maw T. Latowsky Place and Date of Hearing: Vancouver, British Columbia January 29, 2024 Place and Date of Judgment: Vancouver, British Columbia February 2, 2024

Summary: The respondents apply for security for appeal and trial costs. The appellant applies for a stay of the costs order and an injunction preventing the sale of the disputed shares or an order that any proceeds of disposition be paid into court. Held: The respondents’ application for security for appeal costs is granted. The application for security for trial costs is adjourned pending assessment of those costs.

The application for a stay of the costs order and an injunction in relation to the sale of the disputed shares are dismissed on conditions. [ 1 ] HUNTER J.A. : Both the respondents and appellant have filed applications relating to this appeal. [ 2 ] The respondents, Mr. Emadzadeh and Novarc Technologies Inc., apply for orders granting security for costs of the appeal and security for costs in the trial court. [ 3 ] The appellant, Mr. Nourifard, applies for two orders. The first is a stay of execution of the award of costs made by the trial judge.

The second is described as extending a preservation order made in the trial court, or alternatively placing restrictions on the ability of the respondents to deal with the shares in Novarc which were the subject of the underlying claim. Background [ 4 ] The appellant, Saeid Nourifard, is an Iranian national who moved to British Columbia in 2017. The individual respondent,

Navid Emadzadeh, is a resident of British Columbia. The corporate respondent, Novarc Technologies Inc. (“Novarc”) is a Canadian- based company. [ 5 ] On February 3, 2020, Mr. Nourifard filed a petition in the trial court claiming entitlement to 90,000 shares in Novarc that had been issued to Mr. Emadzadeh. The basis for the claim was the allegation that Mr. Emadzadeh held the shares in trust for Mr. Nourifard. The respondents took the position, inter alia , that the dispute should be resolved in an action, not a

summary proceeding. On August 13, 2021, Justice Tucker ordered that the petition be converted into a notice of civil claim. [ 6 ] On August 17, 2021, Mr. Nourifard filed a notice of civil claim alleging breach of contract, breach of trust and breach of fiduciary duty and seeking a declaration that he is entitled to 90,000 shares in Novarc that were issued to Mr. Emadzadeh on December 8, 2016. The basis for the claim was an alleged oral proxy shareholding agreement formed between the parties in 2016. The key pleaded facts were as follows: 9. In November 2016, Mr.

Emadzadeh explained to the Plaintiff that, given the Plaintiff’s status in Canada, the Plaintiff cannot own shares in a Canadian company and suggested that he holds the Plaintiff’s shares in trust. Both the Plaintiff and Mr. Emadzadeh agreed to this arrangement. 10. On or about December 8, 2016, Novarc received $250,000 from Mr. Emadzadeh and the Plaintiff representing $225,000 for the Plaintiff’s 90,000 shares (the “Shares") and $25,000 for Mr. Emadzadeh’s shares. 11. On or about December 8, 2016, Novarc issued 100,000 Common shares to Mr. Emadzadeh with a share certificate number 22. 12.

The price of each share was $2.50 CAD. 13. At all material times, Novarc knew that the Shares were held by Mr. Emadzadeh in trust for the Plaintiff. 14. Between December 2019 and January 2020 the Plaintiff demanded that Mr. Emadzadeh and Novarc transfer the Shares to the Plaintiff; however, Novarc and Mr. Emadzadeh refused. Novarc also demanded the consent of Mr. Emadzadeh and Mr. Emadzadeh withheld his consent. … 17. The parties had an agreement that Novarc would sell 90,000 shares to the Plaintiff, Mr. Emadzadeh would hold these shares in trust for the Plaintiff, and that Novarc and Mr.

Emadzadeh would transfer the Shares to Mr. Emadzadeh upon the Plaintiff’s request. Novarc and Mr. Emadzadeh breached their agreement with the plaintiff [by] refusing to transfer the Shares to the Plaintiff. 18. By agreeing to hold the Shares in trust for the Plaintiff, Mr. Emadzadeh agreed to act as trustee and by refusing to transfer the Shares, Mr. Emadzadeh breached his trust obligations, including fiduciary duties and duty of loyalty, to the Plaintiff. 19. By marketing and selling the Shares to the Plaintiff, Novarc undertook fiduciary duties toward the Plaintiff as well as duty of loyalty.

By refusing to transfer the Shares to the Plaintiff, Novarc breached its fiduciary duties to the Plaintiff. [ 7 ] In response to a request for particulars with respect to para. 17 of the notice of civil claim, the appellant provided (in part): The agreement was that Navid Emadzadeh would hold the shares in his name until the Plaintiff came to Canada permanently, at which time, the shares would be placed in the Plaintiff[‘s] name. There is not [a] written agreement.

Navid Emadzadeh told the Plaintiff that this was the best and easiest option for the Plaintiff since he was a non-resident of Canada and his visa may expire. Navid Emadzadeh later informed the Plaintiff this also allowed for some sort of discount or credit, but the particulars of the credit were not fully understood by the Plaintiff. The agreement was with Navid Emadzadeh, for the benefit of Novarc, and it was known and understood by Novarc. [ 8 ] On July 27, 2023, a chambers judge granted the appellant’s application for preservation orders pursuant to Rule 10-1 of the Supreme Court Civil Rules , B.C.

Reg. 168/2009 , restraining Mr. Emadzadeh from transferring any shares he held in Novarc and restraining Novarc from paying dividends to Mr. Emadzadeh for any shares he held until September 25, 2023: 2023 BCSC 1627 . A new order was made on September 28, 2023, requiring Mr. Emadzadeh to provide notice of any intention to transfer, sell or dispose of any Novarc shares and to secure the proceeds. The September 28, 2023 order expired with the trial judgment dismissing the action on November 3, 2023. [ 9 ] On September 27, 2023 and October 3, 2023, Novarc and Mr.

Emadzadeh filed respective notices of application seeking an order dismissing the appellant’s claim relying on Rules 9-6, 9-7, or 9-8 of the Supreme Court Civil Rules . [ 10 ] A two-day hearing was held on October 18–19, 2023. On November 3, 2023, the chambers judge dismissed the appellant’s claim pursuant to Rule 9-6 of the Supreme Court Civil Rules on the basis that it was time-barred by s. 6(1) of the Limitation Act , S.B.C. 2012, c. 13 . [ 11 ] The chambers judge’s order turned on his findings concerning the date of discovery of the claim.

After reviewing the pleadings and a transcript from the appellant’s examination for discovery, the chambers judge stated his conclusions as follows: [27] In sum, on November 21, 2017, the following had occurred:

a) the plaintiff had come to Canada with the intention to stay permanently;

b) the plaintiff had requested that the shares be transferred to him;

c) the plaintiff knew that the personal defendant had refused to do so; and

d) the plaintiff knew the personal defendant claimed that he had an entitlement in relation to the shares. [28] The plaintiff was also a businessperson without a written contract for a transaction involving significant funds. He was also “surprised”, “very worried”, and had “lost my trust” in the personal defendant. … [30] The particulars set forth above at paragraph 21 show that a material term of the pleaded oral agreement was that when the plaintiff “came to Canada permanently”, the 90,000 shares would be placed in the plaintiff’s name. However, this did not occur on or shortly after November 21, 2017.

I adopt Ms. Maw’s submission that November 21, 2017 is an objective measure of the date of discovery. [31] With respect to a breach of trust, on November 21, 2017, according to the plaintiff, the personal defendant had expressed to the plaintiff an entitlement in relation to the shares. [32] If one loses one’s trust in his or her trustee, one does not accept what the trustee may say or wait for matters to unfold.

I find the plaintiff’s explanations in his October 10, 2023 affidavit filed in response to the current applications are not credible in the context of his July 24, 2023 examination for discovery. [33] I find that November 21, 2017 was the date of discovery for either a claim for a breach of contract or a breach of trust (or the doctrines of express trust, implied trust, resulting trust, and constructive trust listed under

Part 3: Legal Basis in the notice of civil claim). [34] In sum, the date of discovery was November 21, 2017. The plaintiff commenced proceedings on February 3, 2020, which is more than two years after the date of discovery.

Accordingly, the plaintiff’s claims must be, and are, dismissed. [ 12 ] The chambers judge dismissed the appellant’s action and awarded the respondents costs of the proceeding at Scale B. [ 13 ] On November 8, 2023, the appellant filed his notice of appeal. [ 14 ] On December 11, 2023, the appellant brought an application in the Supreme Court seeking orders: (1) extending the preservation order previously granted, or alternatively, granting a new preservation order; and (2) staying the costs award.

On January 12, 2024, the parties appeared before a chambers judge who refused to hear the appellant’s application and directed, inter alia , that the appellant seek relief in this Court. Application for Security for Costs [ 15 ] The jurisdiction to order security for costs is found in s. 34 of the Court of Appeal Act , S.B.C. 2021, c. 6 : 34

(1) A justice may order an appellant to pay into court security for one or more of the following: (

a) costs of the appeal; (

b) costs of proceedings in the court appealed from, in relation to the order being appealed; (

c) an amount under the order being appealed.

(2) A payment under subsection (1) must be in the amount and form determined by the justice.

(3) This

section does not apply to an appeal brought by or on behalf of the government. [ 16 ] Security for costs is more readily granted for appeal costs yet to be incurred than for trial costs. An appellant facing an application for security for costs of the appeal bears the onus of showing why security should not be granted: England Securities Ltd. v. Ulmer , 2023 BCCA 11 (Chambers) [ England Securities ] at para. 20 . [ 17 ] For trial costs, the onus is reversed.

The respondent seeking security for trial costs has the onus of establishing that security for costs already incurred should be ordered: England Securities at para. 33 . [ 18 ] The relevant considerations in an application for security for costs of an appeal were set out in Lu v. Mao , 2006 BCCA 560 (Chambers) at para. 6 : (

a) appellant’s financial means; (

b) the merits of the appeal; (

c) the timeliness of the application; and (

d) whether the costs will be readily recoverable. [ 19 ] The ultimate question is whether the order would be in the interests of justice : Lu at para. 6 . [ 20 ] These principles were recently confirmed in relation to the new Rules by Justice Frankel in Ashraf v. Jazz Aviation LP , 2023 BCCA 284 (Chambers) at para. 15 . [ 21 ] In this case, timeliness is not a factor, as the application has been brought early in the appeal process.

[ 22 ] The critical issues are whether the appeal costs of the respondents will be readily recoverable in light of the appellant’s financial means and whether an order requiring security for costs would prevent an appellant without means from pursuing a meritorious appeal. [ 23 ] The first issue requires a consideration of the evidence of the appellant’s ability to pay costs if the appeal is dismissed. Unfortunately, the appellant has not filed evidence addressing this issue, so I have nothing before me to assess his financial means.

There is evidence from the respondents that the appellant has no exigible assets in this jurisdiction with which to pay a costs order. On the limited evidence before me, I am satisfied that the respondents are at risk of being unable to recover their appeal costs if an order securing at least some of those costs is not made. [ 24 ] This takes me to the question of the merits of the appeal. If the appeal appears to be meritorious and a security order might prevent an appellant without means from pursuing it, security for costs will generally not be ordered: Gardezi v.

Canadian Union of Public Employees, Local 3495 , 2016 BCCA 462 at para. 10 . [ 25 ] The appellant has alleged nine errors in the trial judgment, which generally fall into two categories. The appellant alleges palpable and overriding errors of fact in the judge’s consideration of the evidence, and also submits that the judge failed to apply the proper test to the discoverability of the claim for breach of trust under s. 12(2) (

d) of the Limitation Act .

For purposes of this application, it is sufficient to note that while the appeal will be challenging on the factual allegations of error, it is not bound to fail. [ 26 ] Because the appellant has not provided any information about his financial means, I cannot determine whether an order for security for costs would prevent the appellant from pursuing the claim, meritorious or not. [ 27 ] In these circumstances, the appellant has not met his burden of showing why security for costs for the appeal should not be ordered. [ 28 ] The respondents have each submitted draft bills of costs for the appeal.

The draft bills are identical, and claim security in the amount of $19,835.20 for costs of the appeal. Both parties have claimed maximum allowances for most items on what does not appear to be a complicated appeal.

I am not prepared to order security for costs in the amounts requested, but I will make an order that the appellant post security for the appeal costs in the amount of $10,000 for each of the respondents. [ 29 ] I turn to the application for security for trial costs. [ 30 ] Both respondents were awarded costs by the trial judge, but the amount of costs to which they are entitled has not yet been assessed. Mr. Emadzadeh has provided a draft bill of costs in the amount of $11,668.13.

Novarc has provided a bill of costs in the amount of $30,001.77. [ 31 ] While it is open to a chambers judge to order security for trial costs before they have been assessed, recent chambers judgments in this Court have stated a preference for adjourning such applications until the amount of the appellant’s obligation is known: see Eisler Estate v. GWR Resources Inc. , 2020 BCCA 111 (Chambers) at para. 44 ; E.B. v. British Columbia (Child, Family and Community Services) , 2020 BCCA 263 (Chambers) at paras. 27–28 ; Gonzales Hill Preservation Society v.

Victoria (City) Board of Variance , 2022 BCCA 384 (Chambers) at paras. 44–45 . [ 32 ] The principal justification for ordering security for trial costs as a condition for pursuing an appeal is undue prejudice to the respondents arising from the delay in recovering their costs.

Although the rules of this Court relating to security for costs have recently been reframed, Justice Saunders has opined that prejudice remains an important consideration in determining whether the interests of justice require that trial costs should be secured: England Securities at para. 33 . [ 33 ] In this case, the respondents seek security for trial costs on the basis that the appeal is weak and they run the risk of non- recoverability of their trial costs if those costs are not secured because of the appellant’s apparent lack of assets in this jurisdiction. [ 34 ] In E.B. , I addressed this assertion of prejudice in this way: [29] In this case, the principal prejudice asserted by the respondents is the anticipated difficulty in recovering the costs once they have been determined.

If that alone were sufficient prejudice to support an order for trial costs, there would be very little difference between ordering security for trial and appeal costs. It is, however, well settled that security for the costs of the appeal are ordered more readily than security for trial costs: Siekham v. Hiebert , 2008 BCCA 299 (Chambers) at para. 13 .

In my view, the reason for that is that the focus of an order to secure appeal costs is to provide some degree of protection for costs yet to be incurred, whereas the focus of an order to secure trial costs is to prevent prejudice in respect of the ability to recover costs already incurred while the appeal is continuing. [ 35 ] See England Securities at para. 33 to similar effect: “[t]he countervailing feature on an application for security for costs of the appeal that supports shifting the onus onto the appellant — namely that the application’s purpose is to provide security for further expenditures of the respondent, who was successful at trial — does not pertain in the case of securing costs already incurred at the trial level”. [ 36 ] For these reasons, I order that security for costs of the appeal in the aggregate amount of $20,000 be posted in a manner satisfactory to the Registrar within 30 days of this judgment.

The appeal will be stayed until the security has been posted. If the appellant fails to post the required security within the 30-day period, the respondents will be at liberty to apply to have the appeal dismissed. [ 37 ] The application for security for trial costs is adjourned, with liberty to reset the application once the trial costs have been assessed. Application for a Stay of the Costs Order [ 38 ] At the conclusion of his reasons for judgment, having dismissed the appellant’s action, the trial judge made a costs order in these

terms: [40] The applicants will have their respective costs for the entire proceeding at Scale B. [39] The respondents have not had their costs assessed, nor have they taken any steps to execute on the costs award. [40] On the application before me, the appellant applies for a stay of the trial judge’s costs order until the final determination of thisappeal, or if the appeal is successful, until a final determination of the civil action. [41] The authority to order a stay of the costs award is found in ss. 30(

c) and 33(1) of the Court of Appeal Act. [42] The three-part test for a stay was set out in British Columbia (Milk Marketing Board) v. Grisnich (1996), (BCCA), 70 B.C.A.C. 142 (Chambers) at para. 7. The appellant is required to establish:

a) that there is some merit to the appeal in the sense that there is a serious question to be determined;

b) that irreparable harm would be occasioned to the applicant if the stay was refused; and

c) that, on balance, the inconvenience to the applicant if the stay was refused would be greater than the inconvenience to therespondent if the stay was granted. [43] The principal argument of the appellant for a stay of the costs order is the concern that if the appellant pays the costs award, itmay not be recoverable from Mr. Emadzadeh, which would constitute irreparable harm to the appellant. But the costs award has not beenassessed and Mr.

Emadzadeh’s application for security for trial costs is not consistent with an intention to seek to collect the costs duringthe pendency of the appeal. [44] The order sought by the appellant can properly be characterized as a quia timet order. A quia timet injunction may be grantedwhen wrongful acts have not yet occurred, but are imminent or have been threatened. To obtain such an injunction, an applicant mustdemonstrate that there is a high degree of probability the alleged harm will in fact occur imminently or in the near future: BritishColumbia (Attorney General) v.

Reece, 2023 BCCA 257 at para. 93. [45] At this stage of the proceeding, there is not a high probability that Mr. Emadzadeh will seek to execute on the costs award beforethe appeal is determined. If that occurs, the appellant can reset this application on the basis of acts that are imminent or threatened, notmerely a future possibility. The appellant’s application is dismissed, with liberty to reapply if the costs have been assessed andMr. Emadzadeh takes steps to execute on them.

At that time there may be better financial information from both parties to enable thejudge to assess the financial implications of the order sought. Application for an Injunction [46] The appellant seeks an order preserving the shares in Novarc, either by prohibiting their transfer by Mr. Emadzadeh, or byrequiring that any funds realized by the transfer of the shares be placed in court pending determination of this appeal. [47] This application has elements of a quia timet application as well, but the prospects for concern for the appellant are somewhatmore imminent in that Mr.

Emadzadeh has control over the shares and has in the recent past sold some of the shares that are the subjectof the appeal. [48] The test for granting injunctive relief is similar to that for granting a stay pending appeal. There must be a serious issue to betried, the applicant must risk irreparable harm if the application is refused, and the balance of convenience must favour the applicant:Berthin v.

British Columbia (Registrar of Land Titles), 2016 BCCA 255 (Chambers) at para. 36. [49] In my view, the appeal meets the low merits standard for an application of this kind. [50] As with the costs issue, the appellant focuses on the irreparable harm that would arise if the shares were sold and the funds couldnot be recovered if his appeal is successful. The evidence is that Mr. Emadzadeh does not own any property in British Columbia. Theappellant relies on this to assert that there is a real risk that he would not be able to recover damages if his appeal is successful but theshares have been sold. [51] Mr.

Emadzadeh opposes any restriction on his ability to sell the shares, primarily on the basis that irreparable harm refers to aloss that cannot be compensated in damages, whereas if the shares are converted to cash, the cash value of the shares would be availablefor a damage award. [52] It is true that typically, irreparable harm is harm that cannot be quantified in monetary terms. Where the harm is purelymonetary, it will generally only be considered irreparable if the applicant will not be able to cure it by collecting damages against theother party: lululemon athletica canada inc. v.

Industrial Color Productions Inc., 2021 BCCA 108 (Chambers) at para. 40. [53] In Bancroft-Wilson v.

Murphy, 2008 BCCA 498 (Chambers) Justice Smith described the applicant’s burden as requiring theapplicant to establish a “real risk” that the respondent would be unable to pay back a large portion of the award, a risk that couldestablish irreparable harm: at para. 12. [54] The risk required to be shown must rise to “a sufficient level of materiality to warrant granting a stay, thereby depriving thesuccessful plaintiffs of the fruits of the judgment, in circumstances where the trial judgment is presumed to be correct”: AccionaInfrastructure Canada Inc. v.

Allianz Global Risks US Insurance Company, 2015 BCCA 6 (Chambers) at para. 8.

[ 55 ] The financial position of a respondent is a relevant consideration in showing that there is a serious risk of harm that cannot be remedied in damages: Dhillon v. Robertson , 2021 BCCA 77 (Chambers) at para. 27 . As a practical matter, where an applicant establishes a real risk of non-recoverability, it is incumbent on the respondent to lead some evidence to overcome the inference that an injunction is required to prevent prejudice. [ 56 ] In this case, Mr. Emadzadeh has led no evidence of his financial ability to repay monies derived from the sale of shares.

The failure to lead evidence solely within his own control is a factor favouring a protective order in some form. [ 57 ] In my view, the balance of convenience favours an order providing a degree of protection for the appellant while acknowledging the principle that a successful party is generally entitled to the fruits of the judgment until overturned. I am not prepared to order that any proceeds from the sale of shares be paid into court, but I will order that Mr.

Emadzadeh must advise the appellant seven days before transferring any shares and must keep records of the disposition of any shares and the location of funds derived from the disposition of any shares . If there is material change of risk, the appellant has liberty to reapply for a further protective order. Disposition [ 58 ] On the respondents’ application: 1. The appellant must post security for costs of the appeal in the aggregate amount of $20,000 in a manner satisfactory to the Registrar within 30 days of this judgment. 2. The appeal will be stayed until the security has been posted. 3.

If the appellant fails to post the required security within the 30-day period, the respondents will be at liberty to apply to have the appeal dismissed. 4. The application for security for trial costs is adjourned, with liberty to reapply once the trial costs have been assessed. [ 59 ] And, on the appellant’s application: 1. The appellant’s application for a stay of the trial costs order is dismissed, with liberty to reapply once the costs have been assessed and Mr. Emadzadeh takes steps to execute on the costs order. 2.

The appellant’s application for an injunction requiring any proceeds from the sale of Novarc shares to be held in court pending determination of the appeal is dismissed, subject to the following conditions: i. Mr. Emadzadeh must advise the appellant seven days before transferring any shares and must keep records of the disposition of any shares and the location of funds derived from the disposition of any shares; and ii. The appellant has liberty to reapply for a further protective order if there is material change of risk. [ 60 ] Costs of these applications will be costs in the appeal. “The Honourable Mr.

Justice Hunter”