Civil Procedure – Limitation Period
Civil Procedure – Pleadings – Statement of Claim – Application to Strike
Statutes – Interpretation – Limitations Act, Section 6(1)
The defendants applied to strike the plaintffs’ claims on the basis that they were statute-barred. The plaintiffs, Turkish financial institutions, brought actions against the defendants, the Arslan family, Turkish citizens residing in Turkey, and Murad Al-Katib, who resides in Saskatchewan. Each of the plaintiffs had initiated legal proceedings in Turkey in May 2013, claiming amounts owing to them after the defendants had defaulted on loans. The plaintiffs had been unable to locate assets for any of the Arslans in Turkey in order to satisfy the debts. The Arslan family owned a Turkish corporation called Arbel. They were also substantial shareholders in a Canadian corporation known as AGT, of which Al-Katib is the CEO. During the same period, another Turkish financial institution, Sekerbank, which was not involved in this application, also brought legal proceedings against Huseyin Arslan in Turkey for defaulting on debt obligations. Sekerbank’s lawyer reviewed the Turkish Registry Gazette to ascertain the status of Arbel and learned in January 2013 that the members of the Arslan family were no longer shareholders. The shares were completely owned by AGT and other Saskatchewan companies. He contacted a Saskatchewan lawyer and learned from him that on May 31, 2013, Huseyin Arslan, as settlor, and Al-Katib, as trustee, established an irrevocable trust, the Carme Trust, in favour of their respective children. In June 2013, the trust acquired almost all of the Arslans’ holdings in AGT. Sekerbank then filed a claim against Huseyin Arslan and Al-Katib alleging that the transfer of Huseyin’s share holdings in AGT to that trust was a fraudulent conveyance. Sekerbank’s lawyer advised each of the three plaintiffs in this application about Sekerbank’s claims in Canada in June 2015, February 2016 and May 2016 respectively. The plaintiffs then filed claims in Saskatchewan on December 21, 2016 and February 15, 2017 alleging fraudulent conveyance on the part of the defendants.
HELD: The application was granted and the plaintiffs’ claims struck as statute-barred. The court found that the claim of each plaintiff would be statute-barred if its claim were discovered or ought to have been discovered before December 21, 2014 and February 15, 2015 based upon the filing dates of their statements of claim. It determined that under s. 6(1)(a) to (d) of The Limitations Act, all four elements of discovery that related to the plaintiffs’ claims would have crystallized with the discovery of the transfer of the Arslan brothers’ shares in AGT to the Carme Trust on June 3, 2013 as, before that occurred, they would not have had a claim against the defendants for fraudulent conveyance. Although the plaintiffs rebutted the presumption in s. 6(2) of the Act that they were not aware of the transfer of the shares until they were informed of same by Sekerbank’s lawyer, the court determined that, pursuant to s. 6(1) of the Act, they ought to have discovered their claims in mid-2013 as Sekerbank had done. The plaintiffs, sophisticated creditors who had loaned large amounts of money to the defendants, had failed to discover their claims through reasonable diligence by taking steps to investigate the defendants’ holdings in Arbel after the defaults occurred.