Arslan v Şekerbank T.A. Ş, 2018 SKCA 77

Court of Appeal for Saskatchewan Docket: CACV3104 Citation: Arslan v Şekerbank T.A. Ş , 2018 SKCA 77 Date: 2018-09-24 Between: Hüseyin Arslan and Murad Al-Katib Appellants (Defendants) And Şekerbank T.A.Ş. Respondent (Plaintiff) Before: Richards C.J.S., Herauf and Ryan-Froslie JJ.A. Disposition: Appeal dismissed Written reasons by: The Honourable Chief Justice Richards In concurrence: The Honourable Mr.

Justice Herauf The Honourable Madam Justice Ryan-Froslie On Appeal From: 2017 SKQB 205 , Regina Appeal Heard: February 6, 2018 Counsel: Deron Kuski, Q.C., and James Rose for the Appellant, Murad Al-Katib Kevin Mellor and Sharon Fox for the Appellant, Hüseyin Arslan Peter Bergbusch for the Respondent Richards C.J.S. I. Introduction [ 1 ] The appellant, Hüseyin Arslan, guaranteed loans owing to the respondent, Şekerbank T.A.Ş. [Şekerbank], in the Republic of Turkey.

Sometime later, he transferred shares of a Canadian corporation into a trust of which the appellant, Murad Al-Katib, is the sole trustee. [ 2 ] The Turkish debtors defaulted on their loans and Şekerbank commenced proceedings against Mr. Arslan in Turkey. In reliance on the Turkish litigation, Şekerbank obtained a preservation order under The Enforcement of Money Judgments Act , SS 2010, c E-9.22 [ EMJA ], restraining Messrs.

Arslan and Al-Katib from disposing of the shares held in the trust. Şekerbank next commenced an action in Saskatchewan alleging that the transfer of the shares into the trust had been a fraudulent conveyance. They sought a preservation order in connection with that action as well. This led to a consent order prohibiting Messrs. Arslan and Al-Katib from disposing of some 850,000 shares transferred by Mr. Arslan to the trust. [ 3 ] Time passed and Messrs.

Arslan and Al-Katib applied in Queen’s Bench Chambers for an order terminating the preservation order because Şekerbank had not prosecuted its fraudulent conveyance action without delay. Alternatively, they sought an order reducing the number of shares subject to the preservation order. At the same time, Şekerbank and Alternatifbank [ABank], another Turkish bank with claims against Mr. Arslan, applied to have ABank added as a plaintiff in Şekerbank’s fraudulent conveyance action. [ 4 ] The Chambers judge declined to terminate the preservation order or to reduce the number of shares to which it applied.

He ordered that ABank be added as a plaintiff and allowed consequential amendments to the statement of claim. Messrs. Arslan and Al- Katib appeal both aspects of the Chambers judge’s decision, arguing that he made various legal errors and errors in his treatment or appreciation of the facts. [ 5 ] I conclude, as explained below, that this appeal must be dismissed. The Chambers judge made no reviewable error either in denying the relief sought by Messrs. Arslan and Al-Katib or in adding ABank as a plaintiff in the fraudulent conveyance action.

II. the enforcement of money judgments act [ 6 ] This appeal is grounded largely in the EMJA . Accordingly, it may be helpful to explain its operation at the outset. [ 7 ] As is relevant here, the EMJA allows a plaintiff to apply for a preservation order either in the context of a fraudulent conveyance action or when an action commenced in another jurisdiction would, if successful, result in a judgment enforceable in Saskatchewan.

In broad terms, preservation orders are aimed at preventing situations where the enforcement of a judgment would be frustrated because the defendant disposed of or dissipated assets during the course of the litigation.

Section 5 of the EMJA reads as follows: 5(1) In this Part: (a) “action” means a legal action that would, if successful, result in: (

i) a judgment; or (ii) 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; (b) “transferee” means a person who has received an interest in property from the defendant pursuant to a transaction mentioned in subclause (a)(ii).

(2) An application for a preservation order may be made to the court by any of the following persons: (

a) a plaintiff in an action commenced in Saskatchewan; (

b) a plaintiff in an action commenced in another jurisdiction, if the action would, if successful, result in a judgment that is enforceable as a judgment of the court. …

(5) The court may grant a preservation order if the court is satisfied that: (

a) the action would, if successful, result in: (

i) a judgment in favour of the plaintiff; or (ii) an order described in subclause (1)(a)(ii); (

b) if the preservation order is not granted, the enforcement of a judgment or order against the defendant or transferee is likely to be partially or totally ineffective as a result of the disposition of, damage to, dissipation of, destruction of, concealment of or any dealing with property…; and (

c) the action will be prosecuted without delay, other than delay caused by the defendant or transferee.

(6) A preservation order may do one or more of the following: (

a) prohibit the disposition of property other than for a purpose mentioned in subclause (5)(b)(i), (ii) or (iii); (

b) prohibit the damage to, dissipation of, destruction of or concealment of property; …

(9) The court may grant a preservation order against any of the following persons: (

a) the defendant, with respect to property of the defendant and property acquired by the defendant after the date of the preservation order; (

b) a transferee, with respect to property received from the defendant; … [ 8 ] The decision of the Chambers judge at issue in this appeal was made pursuant to s. 8 of the EMJA .

Section 8 allows a defendant to apply for the amendment or termination of a preservation order and provides that s. 5 applies, with any necessary modifications, to such applications. It says this: 8(1) A plaintiff, judgment creditor, defendant, judgment debtor or any other person affected by a preservation order may apply to the court to have the preservation order extended, renewed, modified or terminated.

(2) Section 5 applies, with any necessary modification, to an application made pursuant to this section.

(3) In an application to extend, renew, modify or terminate a preservation order, the onus is on the applicant to establish that the preservation order should be extended, renewed, modified or terminated.

(4) On application made pursuant to this section, the court may make any order that the court considers appropriate in the circumstances, including: (

a) an order doing one or more of the things mentioned in subsection 5(6); and (

b) an order extending, renewing, modifying or terminating a preservation order. III. background A. The Parties [ 9 ] Şekerbank and ABank are banks operating in Turkey. [ 10 ] Mr. Arslan is a citizen of Turkey. He founded Alliance Pulse Processors Inc. and co-founded Saskcan Pulse Trading Inc., both of which are Saskatchewan-headquartered business corporations. He is a Director of Alliance Pulse Processors Inc. From September 2009, he was the Executive Chairman of the Board of Directors of Alliance Grain Traders Inc. [AGTI], an Ontario business corporation

with a head office and business activities in Saskatchewan. AGTI was rebranded as AGT Food and Ingredients Inc. [AGT]. [ 11 ] Mr. Al-Katib resides in Regina and is the Chief Executive Officer of AGT. [ 12 ] On May 31, 2013, Mr. Arslan and Mr. Al-Katib executed a trust indenture known as the “Carme Trust”. On or before June 3, 2013, the Carme Trust acquired from Mr. Arslan and certain of his family members 5,182,601 common shares in AGTI, representing approximately 26 percent of the shares of AGTI. [ 13 ] Mr. Arslan is the settlor of the Carme Trust and the sole trustee is Mr. Al-Katib.

The beneficiaries of the trust include the children of Mr. Arslan, the children of Mr. Arslan’s brother and the children of Mr. Al-Katib. As of January 9, 2014, the Carme Trust held 3,312,601 shares of AGTI. B. Şekerbank’s Proceedings in Turkey [ 14 ] Mr. Arslan is one of several guarantors under seven credit agreements between Şekerbank and two Turkish companies. [ 15 ] The Turkish companies defaulted on their obligations under the credit agreements by failing to make payments when due.

As of July 26, 2013, the total outstanding principal plus interest owed was 25.872.906,68 Turkish lira [TL] or approximately $13,800,000 CAD as of July 1, 2013. [ 16 ] On or about February 4, 2013, Şekerbank sent a demand for payment to the principal debtors and the joint guarantors, including Mr. Arslan. [ 17 ] On February 13, 2013, as an interim remedy, Şekerbank obtained provisional attachment orders in Turkey against Mr. Arslan, as well as against the debtors and the other joint guarantors, in order to preserve assets owned by Mr. Arslan to a maximum value of approximately $12,368,000 CAD.

Next, Şekerbank initiated debt enforcement proceedings in Turkey against Mr. Arslan and the other joint guarantors. [ 18 ] The joint guarantors objected to the attachment orders, but the Turkish Commercial Court decided in Şekerbank’s favour, dismissing their objections.

One of those decisions was appealed, but the appeal was dismissed on February 2, 2014. [ 19 ] Şekerbank also obtained “payment orders” against the debtors and joint guarantors. Şekerbank applied to dismiss the debtors’ objections to the orders by initiating a claim in the Execution Court, but this claim was dismissed due to the Execution Court’s limited jurisdiction. [ 20 ] Şekerbank then initiated proceedings to deal with the objections in the Commercial Court of Turkey on April 11, 2013. On July 11, 2014, Mr.

Arslan applied to have the judge disqualified in those proceedings, alleging unfairness and lack of independence. These petitions were rejected and the Turkish Supreme Court ultimately dismissed Mr. Arslan’s appeals from those decisions. Further, all objections raised by the defendants, including Mr. Arslan, regarding ancillary attachment orders were dismissed on November 12, 2014. These judgments were approved by the Supreme Court on May 12, 2015. [ 21 ] Meanwhile, the main actions in the Commercial Court against Mr. Arslan were proceeding.

On March 26, 2015, a director and senior official of the principal debtors acknowledged the debts on their behalf and on behalf of numerous company guarantors. The same senior official accepted the debts at hearings which took place on April 20, 2015. The proceedings were adjourned to October 1, 2015. [ 22 ] A separate bankruptcy proceeding involving numerous related Turkish companies was concluded on July 13, 2015. Most of the companies were determined to be insolvent and the Commercial Court of Bankruptcy rendered a bankruptcy judgment.

As a result of the bankruptcy decision, when the enforcement proceedings commenced by Şekerbank resumed on October 1, 2015, the Commercial Court suspended the proceedings until after a creditors’ meeting. Şekerbank objected to this decision by petitions dated October 10, 2015, and February 2, 2016. In light of Şekerbank’s objections, the Court ordered the preparation of an expert report. [ 23 ] In the hearing before the Chambers judge (March 15, 2016), Şekerbank relied upon an Affidavit of Dr. Özgün Öztunç, its Turkish counsel, to explain the steps in the Turkish proceedings.

Dr. Öztunç advised that, once the commission of experts had rendered its report, the Court would issue a decision, most likely adopting the conclusions of the commission of experts. This was expected to result in a final decision against the objecting guarantors, including Mr. Arslan. [ 24 ] Dr. Öztunç expected the Commercial Court to consider the commission of experts’ report at its next hearings for both enforcement files, which were scheduled for June 30, 2016. Dr. Öztunç anticipated that, at that time, the Court would likely render a final judgment at first instance against Mr.

Arslan and the other individual guarantors in both proceedings. [ 25 ] According to Dr. Öztunç, Mr. Arslan and the other guarantors would be entitled to appeal if the Commercial Court rendered a decision favourable to Şekerbank. However, at that stage they would not be able to suspend enforcement proceedings of the final judgment without posting a substantial performance bond. C. ABank’s Proceedings in Turkey [ 26 ] ABank entered into three loan agreements guaranteed by Mr.

Arslan, and others. [ 27 ] These loans became overdue and ABank sent the equivalent of demand letters, through Turkish public notaries, to the debtors. [ 28 ] On May 7, 2013, ABank initiated a request for proceedings with the 6th Enforcement Office in Mersin, Turkey. The

enforcement office then issued two payment orders in the total amount of some 21,114,000 TL. [29] Under Turkish law, each debtor was required to object to the payment orders within seven days. Mr. Arslan did not object tothe orders and they therefore became final against him on May 18, 2013. ABank’s efforts to enforce the payment orders wereunsuccessful. D. The Proceedings in Saskatchewan [30] Şekerbank initiated two actions in Saskatchewan. The first, Q.B.G. No. 1673 of 2013, was commenced by application withoutnotice on September 6, 2013 [First Action]. It asked for a preservation order against Mr.

Arslan as debtor and against Mr. Al-Katib assole trustee of the Carme Trust. Şekerbank sought the order pursuant to s. 5(5)(

a) of the EMJA, based on the fact that, in respect ofMr. Arslan’s guarantee, it was pursuing judgment against him in the Turkish courts. Şekerbank asked that the order be in place for 21days to allow time for it to serve Messrs. Arslan and Al-Katib and to have the matter set down for hearing. [31] On September 11, 2013, Gerein J. granted an ex parte preservation order against various assets located in Saskatchewan.Those assets included shares in a number of companies, including AGTI. The order was extended several times while Şekerbankattempted to effect service on Messrs.

Arslan and Al-Katib so the application could be heard with notice. [32] On November 28, 2013, Dawson J. adjourned the application, which had by then been served, to December 12, 2013, andclarified the terms of that order by consent. [33] On December 12, 2013, Şekerbank commenced a second action, Q.B.G. No. 2314 of 2013 [Second Action], by statement ofclaim. The statement of claim alleged that the transfer of shares by Mr. Arslan to Mr. Al-Katib, as trustee of the Carme Trust, was afraudulent conveyance and sought a declaration that the transfer was null and void.

The Chambers judge adjourned the proceedings andextended what he called the “interim preservation order” to January 9, 2014. [34] On December 23, 2013, Şekerbank filed a notice of application for a preservation order in connection with the Second Action. [35] On the return date of January 9, 2014, the Chambers judge granted a preservation order with the consent of the parties[Consent Order]. The terms of the Consent Order were as follows: 1. Pursuant to

section 5 of The Enforcement of Money Judgments Act, the Respondents Hüseyin Arslan and Murad Al-Katib, as trustee ofThe Carme Trust, are prohibited from disposing of, transferring or undertaking any transaction with respect to 850,000 shares (the“Shares”) of Alliance Grain Traders Inc. transferred by Hüseyin Arslan to Murad Al-Katib, as trustee of The Carme Trust, on or aboutJune 3, 2013. 2. In the event of any subdivision of the Shares into a greater number of shares, or a consolidation of the Shares into a lesser number ofshares, this preservation order shall apply to the shares resulting from such subdivision or consolidation of the Shares. 3. Pursuant to section 7(1)(

c) and section 7(2) of The Enforcement of Money Judgments Act, this preservation order shall remain in effectuntil the Turkish Court has rendered a final decision on the merits of the Applicant’s claim against Hüseyin Arslan and until such time asthe within action is concluded, or until further court order. 4. The costs of this application shall be costs in the cause. [36] On May 1, 2014, Messrs. Arslan and Al-Katib brought an application pursuant to s. 8 of the EMJA to terminate the ConsentOrder on the basis that Şekerbank had not diligently pursued its claim in Turkey.

The Chambers judge dismissed the application becausehe was not satisfied there had been a sufficient change in the facts or the law in relation to any of the conditions prescribed in s. 5(5) ofthe EMJA to warrant the termination of the order: Şekerbank T.A.Ş. v Arslan, 2014 SKQB 215, 450 Sask R 76 [Şekerbank #1]. Thatdecision was upheld by this Court on June 20, 2016: Arslan v Şekerbank T.A.Ş., 2016 SKCA 77, 400 DLR (4th) 193 [Şekerbank-CA],leave to appeal to SCC refused (February 9, 2017), . [37] During the course of their appeal of Şekerbank #1, Messrs.

Arslan and Al-Katib made an application to this Court to terminatethe Consent Order on the basis of Şekerbank’s delay in the prosecution of the Turkish proceedings. That application was dismissed fromthe bench because the Court had no jurisdiction to entertain it and because it was an inappropriate attempt to circumvent The Court ofAppeal Rules. IV. the decision under appeal [38] On January 20, 2016, while the decision of this Court on the appeal from Şekerbank #1 was under reserve, Messrs. Arslan andAl-Katib again applied pursuant to s. 8 of the EMJA to terminate the Consent Order.

They did so on the ground that Şekerbank had failedto prosecute the Second Action – its fraudulent conveyance claim – without delay. In the alternative, Messrs. Arslan and Al-Katib soughtto amend the Consent Order so as to reduce the number of shares it covered. In addition, on March 8, 2016, Şekerbank and ABankapplied for an order that ABank be added as a plaintiff to the Second Action, i.e., the fraudulent conveyance action, and, as well, forleave to make the necessary consequential amendments to the statement of claim.

The Chambers judge dealt with both applications in hisjudgment of July 7, 2017 (2017 SKQB 205) [Şekerbank #2]. [39] The Chambers judge turned first to the application to add ABank as a plaintiff and to consequentially amend the statement ofclaim in the Second Action. The application itself had referred to Rules 3-72 and 3-84 of The Queen’s Bench Rules, dealing with theamendment of pleadings and the addition of parties. However, the Chambers judge found the appropriate foundation for the applicationwas s. 20 of The Limitations Act, SS 2004, c L-16.1.

It allows a party to be added to a claim after the expiration of a limitation period ifthe claim asserted by the new party arises out of the same transaction or occurrence as the original claim and if no party will suffer actual

prejudice as a result of the amendment. The Chambers judge concluded both of these requirements had been satisfied and granted theapplication. [40] This took the Chambers judge to the application to terminate the Consent Order. The argument of Messrs. Arslan and Al-Katib was that Şekerbank had done nothing to move the Second Action forward since the Consent Order had been issued and thatŞekerbank was therefore in breach of the obligation found in s. 5(5)(

c) of the EMJA to prosecute its claim without delay. The Chambersjudge noted Şekerbank’s explanation for the delay, which was to the effect that it had been awaiting the outcome of the proceedings inTurkey because it could not succeed on its Saskatchewan claim unless it was able to prove Mr. Arslan was indebted to it and obliged topay under the relevant guarantees. The Chambers judge concluded no exception could be taken to Şekerbank’s decision to take thisapproach. He observed, as well, that the delays in moving matters forward in Turkey had been the result of Mr.

Arslan’s vigorousdefence, not any lack of diligence on Şekerbank’s part. He denied the application to terminate the Consent Order. [41] The final part of the Chambers judge’s decision concerned the question of whether the number of shares subject to theConsent Order should be reduced. In this regard, Messrs. Arslan and Al-Katib argued that Şekerbank’s claim at the time the Order hadbeen made was for $13,813,544 CAD, but that the value of the shares in question had risen to over $30,000,000 CAD. The Chambersjudge found this was not a sufficient change in circumstance to warrant an amendment to the Consent Order.

He noted there was noevidence as to why the share price had increased or the likelihood it would stay at an elevated level. He also observed that all parties hadrecognized, when agreeing to the Consent Order, that the price of the shares was bound to fluctuate and, with this in mind, had agreed onthe number of shares to be made subject to the Order. [42] In the end, the Chambers judge denied the relief sought by Messrs. Arslan and Al-Katib and granted the applications to addABank as a plaintiff and to make consequential amendments to the statement of claim. V. standard of review [43] The Chambers judge’s

interpretation of the EMJA and The Limitations Act must, of course, be correct. However, his exerciseof discretion under those statutes attracts a deferential standard of review. Justice Cameron explained this point as follows in Rimmer vAdshead, 2002 SKCA 12, [2002] 4 WWR 119: [58] In turning to this issue, it is necessary to bear in mind that the powers in issue are discretionary and therefore fall to be exercisedas the judge vested with them thinks fit, having regard for such criteria as bear upon their proper exercise. The discretion is that of thejudge of first instance, not ours.

Hence, our function, at least at the outset, is one of review only: review to determine if, in light of suchcriteria, the judge abused his or her discretion. Did the judge err in principle, disregard a material matter of fact, or fail to act judicially?Only if some such failing is present are we free to override the decision of the judge and do as we think fit. Either that, or the result mustbe so plainly wrong as to amount to an injustice and invite intervention on that basis. (See, for example, McKinnon Industries Ltd. v.Walker, (UK JCPC), [1951] 3 D.L.R. 577, at 579 (P.C.) and Saskatchewan Power Corporation v.

John Doe, (SK CA), [1988] 6 W.W.R. 634 (Sask.C.A.)). VI. aNALYSIS [44] I will deal in turn with each of the three elements of this appeal: (

a) the termination of the Consent Order; (

b) the reduction inthe number of shares covered by the Consent Order; and (

c) the addition of ABank as a party to the Second Action. A. Should the Consent Order have been terminated? [45] Messrs. Arslan and Al-Katib seek to overturn the Chambers judge’s refusal to terminate the Consent Order by pointing towhat they say are a number of flaws in his reasoning and analysis. Before turning to the specifics of those arguments, it will be useful tosquare away some basic principles. [46] Messrs. Arslan and Al-Katib’s application to terminate the Consent Order was brought pursuant to s. 8 of the EMJA.

Section 8reflects the reality that the need for a preservation order, or perhaps the justice of maintaining such an order, will sometimes change overtime.

As a result, it confers a broad discretion on a judge to amend or terminate a preservation order after it has been made. [47] In Şekerbank-CA, this Court endorsed the approach taken in Şekerbank #1 for determining whether to terminate a preservationorder, obtained by consent, pursuant to s. 8: [103] For these reasons, I endorse the following approach set forth by the Chambers judge for addressing applications arising under s. 8of the EMJA to set aside a preservation order obtained by consent: [55] In my view, this is the correct approach.

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 preservationorder 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 thosechanges, no longer meets the three conditions specified in s. 5 of the EMJA. Failing that, the court should not terminate the order, orrevisit 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 toresolve the issues. As noted by Binnie J. in Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, [2001] 2 S.C.R. 460, para. 24: [24] … the estoppel extends to the material facts and the conclusions of law or of mixed fact and law (“the questions”) that werenecessarily (even if not explicitly) determined in the earlier proceedings.

[ 48 ] As this test contemplates, a plaintiff’s failure to diligently advance litigation will be a factor informing a judge’s determination of how to exercise his or her authority under s. 8 when faced with an application to terminate a preservation order obtained by consent. But, that said, a preservation order is not ended automatically because of a failure to move the underlying action forward with sufficient dispatch. In this regard, the Chambers judge correctly rejected the submission of Messrs.

Arslan and Al-Katib that, as a matter of legal principle, he somehow was necessarily required to terminate the Consent Order if he found Şekerbank had failed to prosecute the Second Action without delay. The EMJA must be read so as to preserve the discretion conferred by s. 8 on a judge. Section 5(5) (

c) anticipates proceedings being advanced without delay should a preservation order be granted. However, the consequences of failing to satisfy this expectation must be resolved in the context of s. 8 . [ 49 ] I also agree with the Chambers judge that, in considering whether proceedings have been advanced without delay as contemplated by s. 5(5) (c), it is necessary to consider the whole of the relevant circumstances. In other words, the meaning of “without delay” is very contextual. See: Şekerbank #1 at para 69 .

I endorse the Chambers judge’s caution against adopting an overly literal view of the concept: [34] However, I do not read the requirement that the action “be prosecuted without delay…” to mean that the plaintiff must litigate as if speed is the only consideration. Rather, the plaintiff must proceed expeditiously, in a manner intended to conclude the action as soon as is reasonably possible.

Further, while the plaintiff must be held to a high standard, its actions should not be measured against a standard of perfection, with the benefit of hindsight. [ 50 ] Against this background, I turn now to the particulars of the arguments advanced by Messrs. Arslan and Al-Katib. Most centrally, they contend the Chambers judge erred by proceeding on the basis that the claims in Turkey and the Second Action could not be prosecuted simultaneously.

In other words, they contend the Chambers judge erroneously believed the Second Action could not be pursued until matters in Turkey were resolved. [ 51 ] In my respectful view, this line of argument misapprehends the reasoning of the Chambers judge. He did not find, or hold, that Şekerbank could not have done anything to advance the Second Action until the litigation in Turkey had concluded. Rather, he noted there appeared to have been a consensus among the parties that progress on the Second Action should await the outcome of the proceedings in Turkey. He went on, noting counsel for Messrs.

Arslan and Al-Katib’s submission that there had been no such consensus, to nonetheless say it was understandable why Şekerbank had thought otherwise. It was in light of this finding that the Chambers judge decided it would not be appropriate to terminate the preservation order. I see no error in his reasoning on this front. [ 52 ] A key consideration supporting the Chambers judge’s conclusion is that in Mr. Arslan and Mr.

Al-Katib’s first application to terminate the Consent Order – the application underpinning Şekerbank #1 – they had alleged Şekerbank had failed to proceed expeditiously with the Turkish proceedings, not with the Second Action. Messrs. Arslan and Al-Katib now suggest they took this position because, at the time the application was made, there had been no failure on Şekerbank’s part to move the Second Action forward. However, this is somewhat difficult to accept given that Şekerbank had commenced the Second Action on December 12, 2013, and had done nothing on the file by May 1, 2014, when Messrs.

Arslan and Al-Katib brought the first application to terminate the Consent Order. [ 53 ] The Chambers judge also took note of a memorandum of law filed by Messrs. Arslan and Al-Katib with this Court in the appeal from Şekerbank #1 . It was used in their failed attempt to have the Court entertain an application to terminate the Consent Order. In the memorandum, Messrs. Arslan and Al-Katib stated as follows: 48. Following registration, Şekerbank will need to enforce its judgment.

Enforcement, however, can only occur if Şekerbank is successful in the fraudulent preference action in Saskatchewan , which cannot start in earnest until the outcome of the Turkish proceedings is known. As this court knows, proving the fraudulence or bona fides of Mr. Arslan’s gift to the Trust could take well over a year, assuming no appeals. (Emphasis added) [ 54 ] Messrs.

Arslan and Al-Katib submit the Chambers judge erred in referring to this memorandum, now saying its contents are simply wrong and, further, that it cannot be taken as evidence of any “agreement” among the parties about how matters should have proceeded. In my view, these objections have no merit. The Chambers judge did not refer to the memorandum in support of some idea that, as a matter of law, the Second Action had to await the outcome of the Turkish litigation. Nor did he consider it as evidencing an “agreement” among the parties.

Rather, he referred to the memorandum to demonstrate, in part, why Şekerbank had reasonably believed it was appropriate to hold off on advancing the Second Action. [ 55 ] In

summary, therefore, the Chambers judge did not base his decision on a misconceived notion that Şekerbank could not have done anything to move the Second Action forward until the Turkish litigation had concluded. He based his decision, quite appropriately, on the notion that the conduct and positions of Messrs. Arslan and Al-Katib in the Şekerbank #1 proceedings had led Şekerbank to understand it was appropriate to keep the Second Action in a holding pattern. There was no reviewable error in any of that. [ 56 ] Messrs.

Arslan and Al-Katib also submit that, even if it was more convenient or practical to await the outcome of the Turkish litigation before proceeding with the Second Action, the value of the shares subject to the Consent Order required Şekerbank to push forward with the Second Action. They emphasize what they say was Mr. Arslan’s right to have Şekerbank’s claims decided one way or another. They submit, in effect, that with some $20 or $30 million at stake, it was unconscionable not to advance the Second Action as soon and as much as possible. [ 57 ] Again, in my respectful view, this argument is misplaced.

The decision of the Chambers judge turned on the idea that, even if there had been no formal consensus among the parties about holding back on the prosecution of the Second Action, Şekerbank had reasonably or justifiably believed otherwise. Messrs. Arslan and Al-Katib’s sense of the importance of the litigation, even if well- founded, cannot defeat this conclusion. Şekerbank obviously knew the value of the shares subject to the Consent Order and it no doubt had a good sense of the importance of the litigation to Mr. Arslan.

Nonetheless, it had been led to understand that it was acceptable to let the Second Action sit until the proceedings in Turkey were resolved. That, at the end of the day, is the essence of the Chambers judge’s

decision on this point and there is no ground on which this Court can or should take issue with it. B. Should the number of shares have been reduced? [ 58 ] The Consent Order prohibits Mr. Arslan and Mr. Al-Katib, as trustee of the Carme Trust, from disposing of, transferring or undertaking any transaction with respect to 850,000 shares of AGTI transferred by Mr. Arslan to Mr. Al-Katib as trustee. Messrs. Arslan and Al-Katib contend the Chambers judge erred in declining to reduce the number of shares subject to the Consent Order. [ 59 ] Messrs. Arslan and Al-Katib, relying on an affidavit sworn by Mr.

Al-Katib, point out that the shares in question were trading at $16.80 when the Consent Order was agreed to but that, as of January 16, 2016, they were trading at a 52-week low of $25.07. Messrs. Arslan and Al-Katib say this means the value of the shares, as of January 15, 2016, was $30,761,500 CAD or $18,435,647 CAD more than the value of Şekerbank’s claim against Mr. Arslan. They also underline that Mr. Arslan is but one of seven guarantors and that the liquidation of the principal debtors’ assets by Şekerbank in Turkey is also likely to reduce Mr. Al-Katib’s alleged liability.

In their view, the Consent Order should be “right-sized” by reducing the number of shares it applies to from 850,000 to 100,000. [ 60 ] While there is some merit in the position taken by Messrs. Arslan and Al-Katib, I see no basis on which to interfere with the decision of the Chambers judge to reject this aspect of their application. He made no error of principle or fact in his analysis and his conclusions were not plainly wrong or of a nature that gives rise to an injustice. [ 61 ] Şekerbank, Mr. Arslan and Mr.

Al-Katib agreed to the number of shares to be held subject to the Consent Order and did so knowing that both sides thereby assumed some risk – Messrs. Arslan and Al-Katib that the value of the shares might increase; Şekerbank that their value might decrease. Those risks remain. Further, as the Chambers judge pointed out, the evidence as to the value of the shares does not disclose why their price increased, how their price changed over time or the likelihood of their price remaining at or above its January 15, 2016, level.

In short, the Chambers judge quite reasonably concluded that the evidentiary record was simply too thin to justify an amendment of the Consent Order. [ 62 ] All of this said, the Chambers judge did err in saying that, even if he had concluded the number of shares should be reduced in light of their value relative to the value of Şekerbank’s claim, it would still have been appropriate to deny the application because of the size of ABank’s claim. Messrs.

Arslan and Al-Katib correctly point out that the Consent Order concerns only Şekerbank and that ABank has no preservation order against the shares held in the Carme Trust. However, the Chambers judge’s misstep in this regard does not affect the integrity of the bottom line of his analysis.

This is because, as noted, his comment about ABank was offered only as an alternative basis for denying the application to vary the number of shares covered by the Consent Order. [ 63 ] I conclude the Chambers judge made no error of any ultimate consequence in deciding not to vary the number of shares subject to the Consent Order. C. Should ABank have been added as a plaintiff? [ 64 ] As indicated, Şekerbank and ABank applied to have ABank added as a plaintiff to the Second Action and did so in purported reliance on Rules 3-72 and 3-84 of The Queen’s Bench Rules .

Both rules allow the addition of parties to proceedings. [ 65 ] Messrs. Arslan and Al-Katib responded to the application by taking the position that ABank’s claim was being brought outside the applicable limitation period and by referring to s. 20 of The Limitations Act .

Section 20 allows a court to add a plaintiff after the expiration of a limitation period if the new plaintiff’s claim arises out of the same transaction or occurrence as the original claim and no prejudice will be caused by the addition of the new plaintiff. It says this: 20 Notwithstanding the expiry of a limitation period after the commencement of a proceeding, a judge may allow an amendment to the pleadings that asserts a new claim or adds or substitutes parties if: (

a) the claim asserted by the amendment, or by or against the new party, arises out of the same transaction or occurrence as the original claim; and (

b) the judge is satisfied that no party will suffer actual prejudice as a result of the amendment. [ 66 ] In considering whether to add ABank as a plaintiff and to allow related amendments to the statement of claim, the Chambers judge dealt only with s. 20 of The Limitations Act . Finding both s. 20(

a) and (

b) to be satisfied, he decided that ABank could be added as a plaintiff and the Second Action amended as a consequence. The Chambers judge proceeded on the presumption that ABank’s claim was, in fact, out of time and, accordingly, I will do the same. [ 67 ] Messrs. Arslan and Al-Katib submit the Chambers judge made three errors in coming to his conclusion about the inclusion of ABank in the Second Action. First, they argue he erred in his application of s. 20 (

a) of The Limitations Act because, in their view, ABank’s claim does not arise out of the same transaction or occurrence as Şekerbank’s claim. Second, Messrs. Arslan and Al-Katib contend the Chambers judge did not deal properly with s. 20(

b) of The Limitations Act . They say the addition of ABank as a plaintiff would cause actual prejudice to them. Third, Messrs. Arslan and Al-Katib contend that, in addition to considering s. 20 of The Limitations Act , the Chambers judge was obliged to determine whether the proposed addition of ABank as a plaintiff was authorized by The Queen’s Bench Rules . [ 68 ] Let me begin with the question of whether the Chambers judge committed a reviewable error in dealing with s. 20 (

a) of The Limitations Act , i.e., in dealing with the issue of whether ABank’s claim arises out of the same transaction or occurrence as Şekerbank’s claim. It is true that Mr. Arslan does not have the same debtor–creditor relationship with ABank as he does with Şekerbank. More particularly, Şekerbank alleges Mr. Arslan is indebted to it by virtue of being a party to seven general credit agreements in Turkey. The principal debtors under those agreements are two Turkish companies. Mr. Arslan is said to be a party to those agreements as a joint

debtor or joint guarantor and liable to Şekerbank because of defaults by the principal debtors under the agreements. For its part, ABank alleges Mr. Arslan is indebted to it because he is a party to three Turkish general credit agreements (different agreements than those concerning Şekerbank) where the principal debtors are one of the companies that is a principal debtor in the Şekerbank proceedings and two other Turkish companies. ABank claims Mr.

Arslan is a party to these three latter agreements as a joint debtor or joint guarantor and is liable to it because the principal debtors defaulted under those agreements. Thus, although the alleged debts involving Şekerbank and ABank both concern guarantees of Turkish credit agreements in which there is some commonality in principal debtors, they are not the same debts. It should be underlined, however, that Şekerbank and ABank do not seek to obtain judgments against the parties to the Turkish credit agreements in the Second Action.

That indebtedness is not the centre of their proceedings. [ 69 ] As recognized by the Chambers judge, the most important point for the purpose of applying s. 20 (

a) of The Limitations Act is that the claims advanced by Şekerbank and ABank in the Second Action have precisely the same gravamen or legal core. That gravamen or core is The Fraudulent Preferences Act , RSS 1978, c F-21, and the alleged transfer of property to defeat creditors. Both Şekerbank and ABank say the fraudulent tranfer occurred when Mr. Arslan moved shares into the Carme Trust on or before June 3, 2013, at a time when he had ceased paying his debts or was unable to pay his debts in full. Moreover, both Şekerbank and ABank seek the same relief, i.e., most centrally a declaration that Mr.

Arslan’s transfer of the shares into the Carme Trust was null and void. As a result, in my view, it was open to the Chambers judge to find that ABank’s claim arose out of the same transaction or occurrence as Şekerbank’s claim. [ 70 ] Messrs. Arslan and Al-Katib attempt to respond to these root facts by arguing that the addition of ABank as a plaintiff in the circumstances here simply falls outside the “range of problems” that s. 20 of The Limitations Act was intended to address.

In this regard, they rely on Cameco Corporation v The Insurance Company of the State of Pennsylvania , 2008 SKCA 54 , [2008] 6 WWR 626 [ Cameco ], where, speaking for the majority, I wrote as follows: [30] It is unnecessary to attempt to identify the full range of problems which s. 20 might properly be used to solve. However, without in any way trying to be exhaustive, the most obvious circumstances where the

section might be expected to come into play are likely those where a party has been misnamed or misidentified and the error is not discovered until after a limitation period has expired, where the specific identity of parties is not known before the expiration of the limitation period, where the involvement or existence of a potential defendant comes to light only after the claim is launched and the limitation period has expired and also where, having commenced a claim against a defendant, a plaintiff realizes after the expiration of a limitation period that he or she should have pleaded an additional cause or causes of action. [ 71 ] These comments cannot drive a conclusion that the Chambers judge erred in this case.

To begin, they were expressly stated to offer something less than an exhaustive description of the sorts of circumstances where s. 20 might be engaged. Further, the concerns expressed in Cameco about the proper scope of s. 20 were made against a very different factual and procedural background than the one at play here. Simply put, this appeal is nothing like Cameco .

In that case, the s. 20 application sought to “completely reinvent the statement of claim” by adding a new plaintiff and a new cause of action and by also eliminating the original plaintiff and original cause of action and abandoning all claims against one defendant. [ 72 ] In the end, and by way of

summary on this issue, I am unable to see any reviewable error in the Chambers judge’s conclusion that, as per s. 20 (

a) of The Limitations Act , ABank asserts a claim arising out of the same transaction or occurrence as Şekerbank’s claim. [ 73 ] This brings me to s. 20 (

b) of The Limitations Act and the issue of whether either Mr. Arslan or Mr. Al-Katib would suffer “actual prejudice” as the result of ABank being added as a plaintiff to the Second Action. On this front, the Chambers judge said he was prepared to assume memories had faded to some extent during the approximately three years of ABank’s delay in stepping forward with its claim but noted there was no evidence of any witness or documentary evidence no longer being available.

In light of all of this, the Chambers judge concluded that adding ABank as a plaintiff would not cause “actual prejudice” within the meaning of s. 20(b). [ 74 ] Messrs. Arslan and Al-Katib contend the approach taken by the Chambers judge involved an error of law. Relying on Wellwood v Ontario Provincial Police , 2010 ONCA 386 , 319 DLR (4th) 412 [ Wellwood ], and R v Jordan , 2016 SCC 27 , [2016] 1 SCR 631, they submit there is a rebuttable presumption that delay is prejudicial.

As a result, they say they had no obligation to present evidence showing ABank’s delay had caused them any particular kind or amount of prejudice. [ 75 ] In my respectful view, Messrs. Arslan and Al-Katib rely on a flawed approach to the application of s. 20 (b). [ 76 ] A court can infer that the passage of time will normally have some negative effect on the memories of witnesses. See: International Capital Corporation v Robinson Twigg & Ketilson , 2010 SKCA 48 at para 45 , 319 DLR (4th) 155.

Further, I accept that the authorities suggest the expiry of a limitation period can give rise to a presumption of prejudice, the strength of which increases with the passage of time. See: Wellwood at para 60 . [ 77 ] However, given that s. 20 (

b) refers to “actual” prejudice, presumptions do not take Messrs. Arslan and Al-Katib very far.

Section 20 (

b) cannot be read as meaning a court must reject an application to add a plaintiff to an action if adding that plaintiff would involve even the slightest amount of difficulty or prejudice for the defendant. After all, the reality is that some amount of delay, and hence some amount of prejudice, will characterize every application to add a plaintiff pursuant to s. 20 . This is so because every application under that

section will, by definition, be brought after a significant lapse of time, i.e., after the expiration of the applicable limitation period. As a result, the reference to actual prejudice in s. 20 (

b) must surely be understood as contemplating prejudice of some meaningful consequence. It is easy enough to understand why the Chambers judge did not see this hurdle as having been cleared when Messrs.

Arslan and Al-Katib did no more than rely on whatever prejudice might be generally inferred from the fact that the application to add ABank as a plaintiff had been made three years after the alleged fraudulent share transfer. [ 78 ] Information as to the kind, amount and particulars of the prejudice a defendant will suffer because of the addition of a plaintiff to a claim will, of course, normally be within the exclusive knowledge of that defendant.

It would be unreasonable to suggest the party wishing to have a plaintiff added to a claim must have its application dismissed if it does not bring forward evidence proving a negative, i.e., proving the defendant will not suffer actual prejudice if the proposed plaintiff comes on board. In the result, therefore, parties in the position of Messrs. Arslan and Al-Katib will be at obvious risk of being unable to resist an application to add a plaintiff if they fail to

help the court understand the nature and significance of the prejudice they will suffer if a new plaintiff is added. Accordingly, it was quite appropriate for the Chambers judge to note that he had been presented with no evidence about witnesses or documentary evidence not being available to Messrs. Arslan and Al-Katib because of ABank’s three-year delay in stepping forward. [ 79 ] I should note that the soundness of the Chambers judge’s bottom-line conclusion about s. 20 (

b) is reinforced by the fact that Şekerbank filed its statement of claim in December of 2013, only about six months after the alleged fraudulent conveyance. Presumably, this caused Messrs. Arslan and Al-Katib to then confirm and document their recollections of what had happened when the shares were transferred to the Carme Trust and no doubt it also caused them and their counsel to collect and preserve records and documents relevant to Şekerbank’s allegations.

This is significant because ABank now adopts precisely the same line of argument with respect to the alleged fraudulent conveyance as did Şekerbank back in 2013. Thus, on the facts here, it is difficult to see how the delay in adding ABank as a plaintiff could cause prejudice. It can be safely assumed that the steps necessary to preserve Mr. Arslan and Mr. Al-Katib’s evidence were taken some years ago. [ 80 ] The final submission advanced by Messrs.

Arslan and Al-Katib about s. 20 of The Limitations Act is that the Chambers judge erred by considering it alone when deciding whether to add ABank as a party to the Second Action. In their view, the Chambers judge was required to determine whether the addition of ABank as a plaintiff was authorized by Rule 3-84 before he turned to s. 20. [ 81 ] In order to put this argument in context, it is necessary to begin by noting there are three Rules of potential relevance to the issue at hand. They are Rules 3-72, 3-78 and 3-84.

The exact nature of the relationships between them is not particularly clear and their interplay is the subject of ongoing consideration in the Court of Queen’s Bench. See, for example: Pavement Scientific International Inc. v Nilson , 2016 SKQB 209 , and Sun Country Health Region v Mamchur , 2016 CarswellSask 865 (WL) , leave to appeal refused, 2017 SKCA 6 . That said, sorting out these interconnections is something that can wait for another day.

For present purposes, I simply note the relevant content of these three Rules: 3-72(1) A party may amend the party’s pleading, including an amendment to add, remove, substitute or correct the name of a party, as follows: … (

c) after a statement of defence is filed: (

i) by agreement of the parties filed with the Court; or (ii) with the Court’s prior permission, in any manner and on any terms that the Court considers just. … 3-78(1) Persons may be joined as plaintiffs, petitioners or originating applicants in a proceeding if: (

a) they claim a remedy, whether jointly or severally or in the alternative, with respect to or arising out of the same transaction, occurrence or series of transactions or occurrences; (

b) a common question of law or fact may arise in the proceeding; or (

c) their presence in the proceeding may promote the convenient administration of justice. … 3-84(1) At any stage of the action, the Court may order that any person be added as a party if: (

a) that person ought to have been joined as a party; or (

b) the person’s presence as a party is necessary to enable the Court to adjudicate effectively and completely on the issues in the action.

(2) At any stage of the action, the Court may grant leave to add, delete or substitute a party, or to correct the name of a party, and that leave shall be given, on any terms that the Court considers just, unless prejudice will result that cannot be compensated for by costs or an adjournment. … [ 82 ] As noted, Messrs. Arslan and Al-Katib suggest the Chambers judge was obliged to consider whether the proposed addition of ABank as a plaintiff was authorized by Rule 3-84 before he turned to s. 20 of The Limitations Act .

They then go on to say adding ABank is not something contemplated by Rule 3-84 and, therefore, that the Chambers judge should have denied the application to add ABank. The particulars of this argument were not fully developed by Messrs. Arslan and Al-Katib.

Nonetheless, I understand them to submit the Chambers judge could not have added ABank as a plaintiff pursuant to Rule 3-84 because, as per Rule 3-84(1)(a), ABank was not a person that ought to have been joined as a party and, as per Rule 3-84(1)(b), ABank was not a person that had to be a party in order to permit the effective and complete adjudication of the issues in the action. [ 83 ] In my view, this argument must fail.

I am prepared to accept, solely for the sake of argument and not deciding the point one way or the other, that the Chambers judge should have considered both The Queen’s Bench Rules and s. 20 in deciding whether to add ABank as a plaintiff. But, even taking this bridge as having been crossed, there is a central problem with the submission of Messrs. Arslan and Al-Katib. They focus on Rule 3-84(1) but that Rule, by its terms, operates in situations where the court, on its own initiative, wishes to add a party to an action.

An application of the sort in issue here, an application to add a plaintiff brought by a party (Şekerbank) and a person outside of the litigation (ABank) would fall under Rule 3-84(2), assuming it comes under Rule 3-84. Rule 3- 84(2) speaks to the addition of a party either at the initiative of an existing party or the initiative of the person who wishes to become a

party. In other words, to the extent Rule 3-84 is engaged here, it is Rule 3-84(2) that is of interest, not Rule 3-84(1). [ 84 ] Messrs. Arslan and Al-Katib have not explained how the addition of ABank as a plaintiff would fall outside the broad terms of Rule 3-84(2) and, hence, they have not shown how the Chambers judge’s election not to consider The Queen’s Bench Rules had any effect on the bottom line of his decision. Nor, I should add, have Messrs.

Arslan and Al-Katib attempted to explain how the application to add ABank as a plaintiff would not come under Rule 3-72(1)(c)(ii), the other feature of The Queen’s Bench Rules relied on by Şekerbank and ABank in bringing their application. In short, Messrs. Arslan and Al-Katib have simply failed to develop their arguments to the point where they might be compelling. They have not explained how, even if the Chambers judge had considered The Queen’s Bench Rules , his decision to add ABank as a plaintiff would or could have been any different than the one he reached. [ 85 ] I conclude Messrs.

Arslan and Al-Katib have not established any basis on which this Court could take issue with the decision to add ABank as a plaintiff in the Second Action. VII. conclusion [ 86 ] As explained above, this appeal must be dismissed. Şekerbank is entitled to costs in the usual way. Şekerbank is also entitled to costs in relation to the application to adduce fresh evidence brought by Messrs. Arslan and Al-Katib. That application was dismissed at the outset of oral argument. “Richards C.J.S.” Richards C.J.S. I concur. “Herauf J.A.” Herauf J.A. I concur. “Ryan-Froslie J.A.” Ryan-Froslie J.A.