Hüseyin Arslan v. Murad Al-Katib, 2020 SKCA 104

Court of Appeal for Saskatchewan Docket: CACV3521 Citation: Arslan v Şekerbank T.A.Ş. , 2020 SKCA 104 Date: 2020-08-19 Between: Hüseyin Arslan and Murad Al-Katib Appellants (Defendants) And Şekerbank T.A.Ş. Respondent (Plaintiff) Before: Caldwell, Schwann and Tholl JJ.A. Disposition: Appeal dismissed Written reasons by: The Honourable Mr. Justice Tholl In concurrence: The Honourable Mr.

Justice Caldwell The Honourable Madam Justice Schwann On appeal from: 2019 SKQB 283 , Regina Appeal heard: June 3, 2020 Counsel: Deron Kuski, Q.C., and James Rose for Murad Al-Katib Kevin Mellor for Hüseyin Arslan Peter Bergbusch, Q.C., and Rachel Haack for the Respondent Tholl J.A. I. Introduction [ 1 ] In 2014, the parties consented to a preservation order under The Enforcement of Money Judgments Act , SS 2010, c E-9.22 [ EMJA ]. The order prohibits the appellants from disposing, transferring or otherwise transacting with respect to certain shares in a corporation.

The appellants have applied to have the preservation order set aside on five separate occasions. On October 31, 2019, a Chambers judge denied the appellants’ most recent application and directed that a case management conference be held: Şekerbank T.A. Ş. v Arslan , 2019 SKQB 283 [ QB Decision #4 ]. [ 2 ] The appellants assert the Chambers judge erred in two ways. First, they submit the Chambers judge failed to follow the standards for timely prosecution of the action set by the judge in the immediately prior application.

Second, they assert the Chambers judge erred by applying provisions of The Queen’s Bench Rule s [ Rules ] in a manner that negated the statutory obligation that requires a plaintiff to prosecute its action without delay. Şekerbank T.A.Ş. [Şekerbank] responds by asserting there were no timelines imposed in the prior decision. They further submit the Chambers judge correctly interpreted the applicable statute and his discretionary decision to not terminate the preservation order should stand. [ 3 ] For the reasons that follow, the appeal must be dismissed. II.

Background [ 4 ] The facts and extensive background of this matter have been comprehensively recounted in several previous decisions, so I will provide only an abbreviated background and a portion of the procedural history for context. [ 5 ] Şekerbank is a bank that operates in the Republic of Turkey. Hüseyin Arslan is a Turkish citizen. Mr. Arslan founded, or co- founded, two Saskatchewan corporations, Alliance Pulse Processors Inc. and Saskcan Pulse Trading Inc. He was also the chair of the board of directors of an Ontario corporation, Alliance Grain Traders Inc. [AGTI], that had its head office in Regina.

Murad Al-Katib is the chief executive officer of AGTI and resides in Regina. [ 6 ] In 2013, Şekerbank commenced debt enforcement proceedings against Mr. Arslan in Turkey. Subsequent to the commencement of the Turkish proceedings, Mr. Arslan executed a trust indenture, as settlor of the trust, and transferred a large number of AGTI common shares into a trust called the Carme Trust. Mr. Al-Katib is the sole trustee of that trust. The beneficiaries of the Carme Trust include Mr. Arslan’s children, his brother’s children and Mr. Al-Katib’s children.

While there are numerous other facts regarding various corporate entities, their shares and the trust that are relevant to the litigation as a whole, those details are unnecessary for the purposes of this decision. [ 7 ] Şekerbank commenced two actions in the Saskatchewan Court of Queen’s Bench against Mr. Arslan and Mr. Al-Katib. The second action, QBG No 2314 of 2013, was commenced on December 12, 2013. In that action, Şekerbank claims the transfer of shares to the Carme Trust was a conveyance within the meaning of The Fraudulent Preferences Act , RSS 1978, c F-21 .

It seeks an order declaring the transfer of the shares to be null and void to the extent of Mr. Arslan’s indebtedness in Turkey and a judgment against both appellants. The statement of claim also sought a preservation order under the EMJA . [ 8 ] On January 9, 2014, the Court of Queen’s Bench granted a consent preservation order [Preservation Order]. That order, as

subsequently amended, contains the following two paragraphs that are relevant to the appeal at hand: 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 about June3, 2013. … 3. Pursuant to section 7(1)(

c) of The Enforcement of Money Judgments Act, this preservation order shall remain in effect until the TurkishCourt has rendered a final decision on the merits of the Applicant’s claim against Hüseyin Arslan and until such time as the within actionis concluded, or until further court order. [9] From 2014 to 2019, the appellants have applied unsuccessfully on five occasions to have the Preservation Order terminated: Action Date Particulars1. 14 July 2014 Şekerbank T.A.Ş. v Arslan, 2014 SKQB 215 [QB Decision #1],aff’d Arslan v Şekerbank T.A.Ş., 2016 SKCA 77 [CA Decision #1](leave to appeal to the SCC dismissed, )2. 20 June 2016 The appellants had brought an application directly to the Court ofAppeal and it was summarily dismissed (CA Decision #1 atparas 35–36)3. 7 July 2017 Şekerbank T.A.Ş. v Arslan, 2017 SKQB 205 [QB Decision #2],aff’d Arslan v Şekerbank T.A.Ş., 2018 SKCA 77 [CA Decision #2]4. 3 May 2019 Şekerbank T.A.Ş. v Arslan, 2019 SKQB 119 [QB Decision #3],application for leave to appeal to this Court withdrawn(CACV3426)5. 31 October 2019 Şekerbank T.A.Ş. v Arslan, 2019 SKQB 283 (QB Decision #4),which is the subject of this appeal [10] The current status of the litigation in Turkey remains uncertain, but it is uncontroverted that it has been actively pursued byŞekerbank and vigorously defended by Mr.

Arslan. As of the date of the application in QB Decision #4, in addition to the applicationsrelated to the Preservation Order, the following procedural steps had occurred in the fraudulent conveyance action in Saskatchewan: (

a) pleadings had been filed and served; (

b) a Queen’s Bench case management judge had been appointed at Şekerbank’s request; (c) Şekerbank had posted security of $1,000,000 and security for costs of a further $40,000; (

d) Alternatifbank T.A.Ş. had been added as a plaintiff; (

e) the parties had exchanged affidavits of documents; (

f) mandatory mediation had occurred; and (g) Şekerbank had filed an application for

summary judgment, asserting that is the appropriate mechanism to decide the matteronce the Turkish proceedings are completed. [11] Alternatifbank T.A.Ş. does not have a preservation order in relation to the appellants and did not participate in this appeal. III. QB Decision #4 [12] The Chambers judge comprehensively reviewed the background and procedural history of the matter. He set out the issues asfollows, stating that an affirmative answer to either question would result in a termination of the Preservation Order: (

a) Have the Turkish courts rendered a final decision respecting Şekerbank’s claim against Mr. Arslan as a guarantor of certaincorporate debts? (

b) Have the plaintiffs failed to prosecute the fraudulent conveyance action without unreasonable delay? [13] With regard to the first issue, the appellants asserted the action in Turkey had concluded with a finding that Mr. Arslan had noliability and so the Preservation Order should be terminated. The Chambers judge reviewed the extensive affidavit evidence filed by eachparty. It was uncontroverted that the Turkish proceedings were being actively pursued and defended.

However, the affidavit evidence washighly controverted, conflictual and even confrontational with regard to the current status of the Turkish proceedings. After reviewing thatevidence in detail, the Chambers judge found he could not conclude that “the Turkish Court has rendered a final decision” as described inparagraph 3 of the Preservation Order. Because he did not accept that the Turkish courts had finished their deliberations, he declined toterminate the order on that basis.

That determination is not being challenged on appeal. [14] Turning to the second question, the Chambers judge examined whether Şekerbank had diligently prosecuted its action inSaskatchewan, as required by s. 5(5)(

c) of the EMJA. As a preliminary question, he determined that the phrase “until further court order”found in paragraph 3 of the Preservation Order was an independent clause. As a result, he decided he could freely consider matters otherthan the status of the Turkish proceedings and the conclusion of the Saskatchewan fraudulent conveyance action to determine whether thePreservation Order should be terminated. None of the parties have questioned that

interpretation in this appeal.

[ 15 ] The Chambers judge comprehensively reviewed the previous Court of Queen’s Bench and Court of Appeal decisions where the appellants had sought to terminate the Preservation Order. He examined the circumstances of the matter, and the test to be applied, and concluded the appellants had not met the burden imposed on them under s. 8(3) of the EMJA to establish that the Preservation Order should be terminated. He found the assertion that Şekerbank was not prosecuting the action without delay “gains more traction” but concluded it was an insufficient reason to terminate the order (at para 65) .

The Chambers judge declined to terminate the Preservation Order. Instead, he dismissed the application and directed the local Registrar to convene a case management conference with instructions on the issues to be discussed at the conference. He directed each party to provide an update on the status of the Turkish action. He also instructed each party to provide a report of the steps that should be taken in the Saskatchewan action, with proposed dates and proposed consequences for non-completion of those steps. IV.

Issues and standard of review [ 16 ] The appellants have stated their two grounds of appeal as follows: (

a) The Learned Judge erred by failing to follow the standard set by Judge Barrington-Foote regarding the amount of time Şekerbank had in order to comply with its section 5(5) (

c) EMJA obligations in this case; and (

b) The Learned Judge erred in applying The Queen’s Bench Rules in a manner that negated the unambiguous expression of the legislature in section 5(5) (

c) of the EMJA that a party benefitting from a preservation order has a statutory obligation to prosecute its action without delay. [ 17 ] The

interpretation of the EMJA and the Rules is subject to review on a standard of correctness: Housen v Nikolaisen , 2002 SCC 33 , [2002] 2 SCR 235, and CA Decision # 2 at para 43 . The Chambers judge’s decision is otherwise a discretionary decision – where the applicable standard of review is highly deferential – with appellate intervention permitted only if a Chambers judge erred in principle, disregarded a material fact, failed to act judicially, or rendered a decision that was so plainly wrong as to amount to an injustice: see CA Decision #2 at para 43 and Rimmer v Adshead , 2002 SKCA 12 at para 58 , [2002] 4 WWR 119. V. Analysis A.

Interpretation of ss. 5 and 8 of the EMJA [ 18 ] The Preservation Order was granted under s. 5 of the EMJA . For purposes of this appeal, the relevant portions of that

section are as follows: Preservation order 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). …

(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. [ 19 ] The appellants applied under s. 8 of the EMJA to have the Preservation Order terminated. That

section is as follows: Extension, renewal and modification of preservation order 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. [ 20 ] The key issues raised by this appeal involve the extent of Şekerbank’s obligation under s. 5(5) (

c) of the EMJA to prosecute the Saskatchewan action without delay and the exercise of the Chambers judge’s discretion under s. 8 of the EMJA . The interplay between a plaintiff’s obligation to diligently pursue litigation and a discretionary decision to terminate a preservation order was thoroughly canvassed in CA Decision #2 : [46] …

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

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 [2016 SKCA 77 ( CA Decision #1 )], this Court endorsed the approach taken in Şekerbank #1 [2014 SKQB 215 ( QB Decision #1 )] for determining whether to terminate a preservation order, 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. 8 of 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 preservation order 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 those changes, no longer meets the three conditions specified in s. 5 of the EMJA . Failing that, the court should not terminate the order, or revisit 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 to resolve 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 were necessarily (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. [ 21 ] The decision to terminate a preservation order under s. 8 of the EMJA is a discretionary decision in which a failure to advance the litigation without delay is one factor, albeit an important one, that must be considered in the context of the whole of the circumstances. B.

Previously set time standards [ 22 ] The appellants assert that Barrington-Foote J. (as he then was), in QB Decision #2 and QB Decision #3 , set out a standard, and to some extent a timeline, for determining what prosecution without delay would consist of in this case going forward. They contend the Chambers judge ignored this standard. The appellants specifically argue that a portion of paragraph 29 of QB Decision #3 established a benchmark for prosecution of the fraudulent conveyance action in Saskatchewan.

They rely on the following portion of that paragraph: “I am also satisfied there was sufficient time to conduct questioning before the predicted September 2018 conclusion of the Turkish proceedings”. [ 23 ] The appellants had placed great emphasis on paragraph 29 of QB Decision #3 in front of the Chambers judge. When the application was argued on September 27, 2019, they pointed out that questioning had not even been scheduled, despite Barrington-Foote J.’s comment that there was sufficient time to conduct questioning before September 2018.

They renew this argument on appeal and assert the Chambers judge erred by not treating Barrington-Foote J.’s statement, regarding the completion of questioning by September 2018, as a deadline that should have been met. They categorize paragraph 29 of QB Decision #3 as a direction from the court regarding what constitutes proceeding without delay. I disagree with their argument for the reasons that follow. [ 24 ] The decisions in QB Decision #2 and QB Decision #3 both addressed the need to proceed expeditiously but did not set any

timelines. The Chambers judge was well aware of Barrington-Foote J.’s comments in QB Decision #2 and QB Decision #3 . He took note of the following passages from these two prior decisions and explicitly set out them out in his decision: [from QB Decision #2 ] [34] However, I do not read the requirement that the action “be prosecuted without delay, other than delay caused by the defendant or transferee” 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. … [38] The defendants also submit that I must terminate the Order if I find that the plaintiff has failed to prosecute the action without delay. With respect, I do not agree. Section 5(5) (

c) is forward looking. It is open to me to continue or modify the Order, provided that I am satisfied – as stated in s. 5(5) (c) – that the action will be prosecuted without delay. A past failure to prosecute without delay is relevant, but not conclusive. … [45] In these circumstances, it is my opinion that the plaintiff has not failed to prosecute the action without delay. Further, the evidence does not support the conclusion that either Şekerbank or ABank will fail to do so in the future. They state that they are now prepared to proceed with this action.

Further, Şekerbank and ABank jointly applied in March 2016 for the appointment of a case management judge, and I have been appointed for that purpose. That appointment will enable the parties to seek directions to assist in the expeditious resolution of this action. [from QB Decision #3 ] [29] In my view, Şekerbank was not entitled to simply await the final outcome of the Turkish action.

It was not necessary, and, given that a preservation order is an extraordinary remedy, would not be reasonable to delay document discovery and oral questioning pending the final outcome of the Turkish action. Şekerbank was obliged to deliver its affidavit of documents and conduct questioning in a manner intended to enable this action to be concluded as soon as reasonably possible. In my view, the evidence supports the conclusion that Şekerbank achieved that goal in relation to the affidavit of documents by serving it when it did.

I am also satisfied there was sufficient time to conduct questioning before the predicted September 2018 conclusion of the Turkish proceedings. (Emphasis in original) [ 25 ] Pointing to paragraph 29 of QB Decision #3 , the appellants assert the September 2018 statement by Barrington-Foote J “laid out a clear roadmap of what prosecuting without delay looks like; i.e. completing questioning on or before September 2018” and describe this as a finding that the Chambers judge was not entitled to ignore.

In my view, it is hard to understand how such a statement in a decision could lay out a roadmap as to what should have occurred months earlier and thereby bind the parties and fetter the discretion of a subsequent Chambers judge. Read in its broader context, it is obvious Barrington-Foote J. was not imposing a September 2018 deadline for the questioning because he did not release his reasons in QB Decision #3 until May 3, 2019. [ 26 ] As of the date of the hearing of the application in QB Decision #3 , the appellants had not yet provided their affidavits of documents.

Those affidavits were served in May 2018 and July 2018. Mandatory mediation did not occur until October 19, 2018. This all occurred after the hearing of the application in April 2018. Most importantly, Barrington-Foote J. premised his September 2018 expectation upon the predicted conclusion of the Turkish action by September 2018. This was a prospect that, as the Chambers judge observed, has still not come to pass.

There were no explicit scheduling directions issued in QB Decision #3 , nor was there an order to that effect. [ 27 ] The Chambers judge’s assessment of whether the appellants had met their onus under s. 8(3) of the EMJA involved a fresh assessment of the whole of the circumstances and a fresh exercise of discretion, based on the evidence before him, unfettered by suggestions or assumptions made by a judge in a prior application. The Chambers judge was entitled to attribute no significance to Barrington-Foote J.’s brief comment regarding the completion of questioning by September 2018. C.

Interpretation of the EMJA and the Rules [ 28 ] The appellants submit the Chambers judge erred by applying case management rules in a manner that displaced the statutory obligations imposed on Şekerbank under 5(5)(

c) of the EMJA . They agree that the Rules place a general duty on all parties to move a matter forward and concede they have not utilized the case management process to do so. However, they assert the obligation imposed on Şekerbank by s. 5(5) (

c) of the EMJA “places the ball squarely in Şekerbank’s court to make use of the Case Management Judge”. The appellants correctly point out that the onus is on Şekerbank to prosecute its action without delay. They contend the Chambers judge changed that onus through his application and over-emphasis on the case management rules and improperly shifted a portion of the prosecutorial onus on the appellants, contrary to the specific wording in s. 5(5) (

c) of the EMJA . [ 29 ] Additionally, the appellants rely on the body of case law that has developed in the area of Mareva injunctions, other pre- judgment injunctions and applications for dismissal for want of prosecution as supportive of their argument that the Chambers judge permitted the Rules to overwhelm his analysis of whether Şekerbank was in breach of its statutory obligation to diligently prosecute its action. [ 30 ] Şekerbank responds by asserting the Chambers judge correctly interpreted and properly applied ss. 5(5) (

c) and 8 of the EMJA . They submit the appellants’ arguments with regard to onus and the improper application of the Rules are without merit. [ 31 ] It is uncontroversial that specific statutory provisions prevail over general provisions in the Rules , if there is a conflict or

inconsistency between the two on substantive issues. With regard to procedural issues, section 27(2) of The Queen’s Bench Act, 1998 , SS c Q-1.01, empowers the Court of Queen’s Bench to make rules for the procedure to be followed that supersede procedural rules set out in

an Act, unless that power is expressly excluded by the Act. However, on substantive issues, general rules in the Rules are subordinate to specific legislative enactments and the legislative “enactment prevails to the extent of any conflict or inconsistency” (Rule 1- 8 ): also see Plantana v Saskatoon (City) , 2006 SKCA 10 at 62–65 and 101–102, 263 DLR (4th) 603, and Menke Holdings Ltd. v Bayardo Aguirre , 2017 SKQB 72 at paras 13–15 , 263 DLR (4th) 603. [ 32 ] Seen from the perspective of the appeal at hand, the case management rules – Rules 4-1 to 4-9 – are procedural in nature. But, in any event, there is not any inconsistency or conflict between those rules and s. 5(5) (

c) of the EMJA on their face or in their application by the Chambers judge. The case management rules do not remove or modify a plaintiff’s obligation under s. 5(5)(

c) to prosecute its action without delay. They provide a mechanism for either party to obtain court assistance in efficiently moving a matter forward. The presence of these rules provides a part of the context from which to evaluate whether a plaintiff is fulfilling its obligations under s. 5(5)(c), but those rules do not supersede a statutory obligation. [ 33 ] In my view, the Chambers judge did not apply the Rules in a manner that was inconsistent with the obligation imposed on Şekerbank under s. 5(5) (

c) of the EMJA . Section 8(4) of the EMJA provided him with broad discretion to make any order he considered appropriate. An order dismissing the application to terminate the Preservation Order and requiring the parties to attend a case management conference was an option open to the Chambers judge under s. 8(4) . [ 34 ] Although the Chambers judge examined the role of case management as part of the entire set of circumstances that faced him in the application, he did not permit it to override or displace the statutory requirement that Şekerbank prosecute its action without delay.

With regard to this issue, he stated the following: [66] I have also considered the role of a case management judge, as appointed by order under The Queen’s Bench Rules , an order Justice Barrington-Foote acknowledged would “enable the parties to seek directions in the expeditious resolution of this matter” ( Şekerbank QB #2 [2017 SKQB 205 ( QB Decision #2) ] at para 29, emphasis added [by the Chambers judge]). Implicit in this statement was an invitation to either party – plaintiff or defendants – to seek direction to move forward the fraudulent conveyance action.

Inherent in the rule respecting appointment of a case management judge is the obligation under Rule 4-1 that all “parties are responsible for managing their dispute and for planning its resolution in a timely and cost effective way”.

Rule 4-2 elaborates on that responsibility, including “when the complexity or the nature of an action requires it, to apply to the Court for direction or request case management pursuant to [R]ule 4-5”. … [71] I find that the parties, both the plaintiff and the defendants, have not made ample use of the powers of a case management judge, powers that clearly and specifically address the defendants’ concerns: “set … dates by which … a step in the action is expected to be complete and order the parties to comply with the dates”, or “make an order to facilitate a pre-trial proceeding”, or “make any procedural order that the judge considers necessary”. [72] I am not saying that the appointment of a case management judge denies the defendants the right to seek a termination of the preservation order under s. 8 of the EMJA .

But in the constellation of factors that give this Court the discretion to terminate a preservation order, the prior appointment of a case management judge and the apparent lack of any guidance the defendants have sought from the case management judge is a relevant consideration. Section 8(4) of the EMJA gives credence to this assessment. It states that upon an application to terminate a preservation order, “the court may make any order that the court considers appropriate in the circumstances …”.

The circumstances here are apparent: a case management judge has been appointed with broad authority to move an action forward. However, I see no record of a case-management conference ever being held. [ 35 ] In my view, the Chambers judge was not using the Rules to supersede the statutory obligation found in s. 5(5) (

c) of the EMJA . He recognized the role that could be played by the case management process in moving the matter forward but did not lose sight of the statutory provisions of the EMJA . This is evident from paragraph 72, set out above, and from an examination of further portions of QB Decision #4 that followed shortly after the Chambers judge’s initial discussion of the case management rules: [74] I can understand the reluctance of Şekerbank to forge forward with the fraudulent conveyance action.

Without a final ruling of the Turkish courts, would Şekerbank have to prove that Hüseyin Arslan was insolvent by assuming the guarantees were invalid, and he owed no debt, or would Şekerbank have to prove Hüseyin Arslan was insolvent by assuming the guarantees were enforceable and he owed the debt?

And if Hüseyin Arslan was proven to be insolvent at the time of the transfer (irrespective of his obligations under the guarantee), but the Turkish courts ultimately found that the guarantees were invalid, a lot of time and judicial resources would be expended for no reason: Hüseyin Arslan would owe no debt to Şekerbank. [75] The order Şekerbank seeks in Saskatchewan is practically dependent upon the ultimate resolution of the case in Turkey. Albeit, Şekerbank could undertake questioning that might further its allegation of Hüseyin Arslan’s insolvency with or without knowing whether the guarantees were valid.

However, would a Saskatchewan court grant an order that the transfer of shares to Carme Trust is void as a fraudulent conveyance without knowing whether Şekerbank was owed a debt? Undoubtedly not. One must ask, then, what steps do the defendants wish Şekerbank to take pending the final decision from the Turkish courts? This question seems an appropriate question to be canvased through a case management conference. [76] Nor is the inexorable link between the Turkish action and the fraudulent conveyance action an unanticipated misfortune visited upon the defendants.

Lack of progress in the fraudulent conveyance action is a result of the court proceedings in Turkey where Hüseyin Arslan has been an active player. Quite understandably, Hüseyin Arslan has availed himself of every strategy to avoid liability under the guarantees and now, with the latest rulings in Turkey, Şekerbank is doing the same. Putting sticks in the spokes of the Turkish litigation, although understandable, necessarily puts sticks in the spokes of the Saskatchewan litigation.

Justice Barrington-Foote observed this reality, when at para. 33 of Şekerbank QB #2 [2017 SKQB 205 ( QB Decision #2 )], he stated that the delay in the Turkish proceedings was attributable to the “vigorous defence” and “bankruptcy proceedings” that Hüseyin Arslan initiated. [ 36 ] The Chambers judge was entitled to consider the previous appointment of a case management judge, the nature and purpose of

the case management rules, and the absence of either party making use of those rules to move the matter forward as appropriate factors in his contextual analysis. He also considered the overall passage of time, the steps that had been taken to date, Şekerbank’s active pursuit and Mr. Arslan’s vigorous defence of the Turkish proceedings, the pivotal importance of the Turkish proceedings to the Saskatchewan proceedings, and the practicalities of the effect of a final decision in Turkey on the continuation of the Saskatchewan proceedings.

Having found that the appellants had not satisfied their onus under s. 8(3) of the EMJA , the Chambers judge took the practical step of determining what should happen next. Much of his decision can be seen in this context. He ordered the parties to

schedule a case management conference and gave directions about what should occur at that conference in order to move the litigation forward to the extent possible. This was an order that was within his discretion to make. Given that he was also the case management judge, it is not surprising that he would include directions regarding case management in his decision. [ 37 ] The appellants further assert the Chambers judge failed to analyze the relevant factors because of his focus on the case management rules. I do not agree.

The appellants bore the onus, under s. 8(3) of the EMJA , to establish that the Preservation Order should be terminated. They had the onus to establish that a change of circumstances justified termination of the Preservation Order: CA Decision #1 at para 94 . The analysis of whether they had done so was conducted by the Chambers judge in paragraphs 48 to 61, where he set out the principles to be applied to his determination, as gleaned from the previous decisions in this matter, and at paragraphs 62 to 76, where he applied those principles.

This analysis demonstrated that he examined all of the relevant circumstances in the context of s. 5(5) (

c) and s. 8 of the EMJA . He applied the guidance from CA Decision #1 and CA Decision #2 and, on the basis of his contextual assessment, properly exercised his discretion in deciding that the appellants had not met the onus under s. 8 of the EMJA . He found that, after examining the entirety of the circumstances, he was not persuaded that he should terminate the Preservation Order on the basis that Şekerbank was not prosecuting the action without delay.

He determined the assertion that Şekerbank was not doing so “gains more traction” but found the extent of any such delay to be insufficient to terminate the order. [ 38 ] With regard to the appellants’ assertions that the Chambers judge ignored the body of caselaw related to Mareva injunctions and pre-judgment injunctions, I note that Caldwell J.A. considered jurisprudence applicable to injunctions when he interpreted ss. 5 and 8 of the EMJA in CA Decision #1 .

He concluded the following with regard to the applicability of pre- EMJA caselaw to a decision to terminate a preservation order that had been granted under the EMJA : [73] What all of this confirms is that the Legislature intended that the EMJA completely displace prior law. Therefore, the matter of the conditions for a preservation order must be determined afresh by the courts. But, this does not mean existing judicial authorities are wholly irrelevant to that inquiry as extrinsic aids.

They may assist in the formulation of the correct approach to ss. 5 and 8 of the EMJA by reason of the old policy considerations they reflect under pre- EMJA enforcement remedies as compared to and displaced by the new policy choices the Legislature has made through the EMJA . … [102] … although it is not a Mareva injunction, as Gabrielson J. concluded in Jorgensen [2013 SKQB 250], a preservation order operates in a similar way, but with the added protection against abuse set out in ss. 7 and 8 of the EMJA .

The Legislature has indicated in s. 8(3) that the applicant who seeks to have a preservation order terminated bears the onus of establishing that the order ought to be terminated. From this policy choice (contrast s. 4 of the draft legislation in [Tamara M. Buckwold & Ronald C.C.

Cuming, Modernization of Saskatchewan Money Judgment Enforcement Law (Final Report) , (Saskatoon: College of Law, 2005)] at page 27 with the language of s. 8(3) of the EMJA ), I infer the Legislature intended to require applicants to prove to the satisfaction of a Chambers judge – which must be on a balance of probabilities – that there had been some relevant change in circumstances sufficient to warrant termination of a preservation order. (Emphasis in original) [ 39 ] The Chambers judge did not need to rely on pre- EMJA caselaw or other caselaw related to injunctions as an interpretive aid because he had sufficient guidance from the body of law that has developed through the various applications in the matter at hand.

The Chambers judge had specific judicial direction from CA Decision #1 and CA Decision #2 that was directly on point and which had considered the relevant sections of the EMJA extensively in the context of the same parties and the same order.

He did not need to venture into the extrinsic territory of Mareva injunctions or other pre-judgment injunctions. [ 40 ] In oral argument, the appellants pointed to the fact actions have frequently been dismissed in Saskatchewan for want of prosecution in circumstances where significantly less time had passed or where the plaintiff had been more diligent in pursuing the litigation.

This argument was presented for the purposes of contrasting the anomaly of cases with lengthy delays being dismissed for want of prosecution with the current matter where the appellants have been unable to have a preservation order, which is an extraordinary remedy, terminated. This argument is of little relevance to the unique circumstances of the matter at hand. The simple passage of time is not determinative on its own. Here, there is a consent preservation order and an underlying and highly relevant action that is being actively prosecuted in another jurisdiction.

These factors are a crucial part of the context of this matter. [ 41 ] In conclusion, it is my view that the Chambers judge did not err in law in his

interpretation of the EMJA or the Rules . As set out by Caldwell J.A. in CA Decision #1 (at paras 79 and 88 ), his remaining determinations represent highly discretionary decisions. The appellants have not demonstrated that, in the exercise of his discretion, the Chambers judge erred in principle, disregarded a material fact, failed to act judicially, or rendered a decision that was so plainly wrong as to amount to an injustice.

Allowing this appeal would simply require this Court to substitute its discretion for that of the Chambers judge, which is something that cannot be done. [ 42 ] As a final comment, I return to the appellants’ argument that paragraph 29 of QB Decision #3 set out a benchmark for the measurement of proceeding without delay. As noted above, that decision did not set any such timeline.

However, a case management conference, as ordered by the Chambers judge, will likely do so, given that the Chambers judge will be the management judge and he directed each party to set out the steps that should be taken in the Saskatchewan action with the proposed dates for the completion of those steps. VI. Conclusion

[ 43 ] The appeal is dismissed with costs payable by the appellants on Column 4 for the appeal and for the application for leave to appeal. [ 44 ] The Chambers judge had ordered the case management conference to take place in December 2019. The parties should promptly contact the local Registrar at the Court of Queen’s Bench, Judicial Centre of Regina, to

schedule that conference. “Tholl J.A.” Tholl J.A. I concur. “Caldwell J.A.” Caldwell J.A. I concur. “Schwann J.A.” Schwann J.A.