Jurisdiction in personam

Jurisdiction simpliciter — non-resident defendant — attornment

Note. In Dash 224 LLC v Vector Aerospace Engine Services Atlantic Inc, ^{Footnote 1} although the issue was state immunity for the National Police of Colombia, the court considered whether certain steps taken by the state agency could be considered steps in the proceeding so as to waive the immunity. They could not. The actions taken were limited to challenging the jurisdiction and, even if they could otherwise be considered a step in the proceeding, they were taken under duress in order to prevent the defendant’s property, aircraft engines, from being indefinitely immobilized.

Jurisdiction simpliciter — non-resident defendant — agreement to submit to jurisdiction

Note. A clause in an escrow agreement — that Ontario law applied and that the parties attorned to the courts of Ontario — was held to found jurisdiction simpliciter and to preclude an argument of forum non conveniens in Terracap Investments Inc v Credit Capital Immobiliari SA. ^{Footnote 2} This was so, although the transactions to which the escrow agreement related were sales of property in Andorra.

Jurisdiction simpliciter — non-resident defendant — claim for financial loss — jurisdiction found to exist

Lapointe Rosenstein Marchand Melançon LLP v Cassels Brock & Blackwell LLP, 2016 SCC 30, [2016] 1 SCR 851, 400 DLR (4th) 1

The proceedings in this case arose out of the restructuring of the North American automobile industry after the 2008 financial crisis. In fulfilment of a condition for obtaining government support, General Motors of Canada (GM) closed more than 200 dealerships across the country, pursuant to a standard wind-down agreement (WDA) reached with each dealer. Two hundred seven dealers subsequently brought a class action against GM, alleging that it had forced them into the WDAs, and against Cassels Brock, an Ontario law firm, on the basis that it had given the dealers negligent legal advice with respect to the WDAs. Cassels Brock brought third party claims against 150 law firms across the country that had provided independent legal advice to each of the dealers, as the WDAs contemplated. Cassels Brock sought contribution and indemnity from the law firms. Eighty-three law firms from outside Ontario challenged the court’s jurisdiction to entertain the third party claims against them. The motion judge held the court had jurisdiction. Thirty-two law firms from Quebec appealed this decision; the other non-Ontario law firms did not. The Ontario Court of Appeal dismissed the appeal.

The Supreme Court of Canada dismissed the Quebec law firms’ further appeal. It applied the methodology of presumptive connecting factors, which it had adopted in Club Resorts Ltd v Van Breda. ^{Footnote 3} These were judicially defined factors that reflected the principle that jurisdiction simpliciter must rest on a real and substantial connection between the province and the defendant or the facts giving rise to the claim. There was a presumptive connecting factor between the claims against the non-Ontario law firms and Ontario — namely, that the legal advice provided by each law firm related to the WDAs, which were contracts made in Ontario. Van Breda itself had decided that jurisdiction simpliciter in a tort claim could be based on the fact that a contract connected with the dispute was made in the province. The place of contracting was an objective fact that responded to the need, in jurisdictional rules, to balance certainty and flexibility. Further certainty was offered by the fact that the parties could control how and when a given contract will be formed.

Although the contract must be connected to the claim, this did not necessarily require that an alleged tortfeasor must be a party to the contract. Flexibility argued for a broader approach. This was not jurisdictional overreach. Quebec, for instance, had a conflicts rule that if a court has jurisdiction to rule on the principal demand, it also has jurisdiction to rule on an incidental demand. ^{Footnote 4} This rule could bring a third party claim like the one in this case, brought against non-Quebec lawyers, within the Quebec court’s jurisdiction as an incidental demand, if the principal demand in the case was on a contract made in Quebec and governed by the laws of Quebec. ^{Footnote 5}

For the presumptive connecting factor to apply, the dispute must be “connected” to a contract made in the province. The dispute here concerned professional negligence, both in the claim against Cassels Brock and in that firm’s third party claims against the individual dealers’ lawyers. The WDAs, on the pleaded facts, were made in Ontario because the last act essential to contract formation occurred at GM’s office in Ontario, where an executive of the company accepted and signed the WDAs that had been signed and returned by the dealers. The WDAs were “connected” to the dispute for the purpose of the presumptive connecting factor, if the defendant’s conduct brings him or her within the scope of the contractual relationship and the events that give rise to the claim flow from the relationship created by the contract. The local lawyers’ provision of legal advice brought them within the scope of the contractual relationship between GM and the dealers. Cassels Brock had therefore demonstrated a real and substantial connection between a contract made in the province, the WDA, and the dispute (the third party claim). The strength of this connection was not rebutted by the Quebec law firms.

Having held that there was jurisdiction simpliciter in respect of the third party claims, the court went on to affirm the refusal of the courts below to decline jurisdiction on the basis of forum non conveniens. It could not be said that Quebec was a clearly more appropriate forum for the claims against the thirty-two Quebec law firms, when the third party claims against the 118 other local law firms were all being heard in Ontario. While the third party claims were not class claims, they would have much in common.

Note 1. The decision in this case took an already dubious presumptive connecting factor — the place of making of a contract is a technical, rather than a substantial, connection with the province — and stretched it arguably beyond its reasonable limit. The result was to hold that law firms in Quebec, consulted by clients in Quebec about a proposed course of action relating to their Quebec business, were liable to be sued in Ontario for professional negligence — not by their clients but by an Ontario law firm that the local law firm’s clients were suing there. This was said to be legitimately within an Ontario court’s jurisdiction because the issues on which the Quebec law firms had advised their clients related to a contract, the WDA, that was made in Ontario. That conclusion turned on a minute analysis of whether the WDAs were concluded by virtue of the GM executive having signed them in Ontario or GM’s having given the dealer in Quebec written notice, as the WDA required, of the acceptance. The court opted for the former, based on an interpretation of the contract that giving written notice of acceptance was not actually itself an act of acceptance but merely an act of confirming an acceptance already concluded. ^{Footnote 6} The professional negligence claim was “connected” to this contract because the law firms had, by giving the dealers legal advice on the WDA, brought themselves “within the scope” of the dealers’ contractual relationship with GM, as constituted by the WDA. ^{Footnote 7} One tenuous connection is piled on top of another. It is hard to disagree with the dissenting judge’s criticisms of this approach.

It is also hard to avoid the impression that the overriding desire of the court was to promote the efficiency of the litigation in Ontario by not having to carve out the third party claims against the Quebec law firms, even if an almost vestigial form of “real and substantial connection” had to be relied upon to justify this. The real and substantial connection test is supposedly rooted in a concept of territoriality. In Van Breda, ^{Footnote 8} the court insisted on framing the law of jurisdiction in terms of presumptive connecting factors in order, among other things, to maintain a clear distinction between jurisdiction simpliciter, which is based on objective territorial factors, and forum non conveniens, which is based on considerations of efficiency and fairness. The Lapointe decision arguably slides back away from Van Breda by reducing the objective territorial elements — at least with this presumptive connecting factor — to a very low threshold in order to engineer a desirable result in terms of judicial administration. (On this aspect, see also Stuart Budd & Sons Ltd v IFS Vehicle Distributors ULC, noted below in this section.)

Note 2. Another case in which a foreign tort was linked to a contract made in the jurisdiction was Toews v Grand Palladium Vallarta Resort & Spa, noted below under Jurisdiction simpliciter — non-resident defendant — claim for injury to person or damage to property — jurisdiction found to exist. A case in which negligence claims against an out of province law firm were held subject to the court’s jurisdiction, based on the subject matter of the legal advice being a trust holding property in the province, was Frank and Ellen Remai Foundation Inc v Bennett Jones LLP. ^{Footnote 9} No jurisdiction was found to exist in Shaxon v Kipping, ^{Footnote 10} in which two Ontario stock promoters sued a BC promoter for breach of an agreement under which they were to promote one of his stocks; there was no presumptive connecting factor with Ontario, and, in particular, the contract had not been made in Ontario.

Stuart Budd & Sons Ltd v IFS Vehicle Distributors ULC, 2016 ONCA 977

Eight Saab automobile dealers brought an action for a declaration that they had validly terminated their dealership agreements with IFS Vehicle Distributors, a company based in British Columbia. Three of the eight carried on business in Ontario; the other five had dealerships in four other provinces. Other defendants included California residents and California corporations associated with IFS. The defendants brought a motion that the claims by the non-Ontario plaintiffs should be dismissed or stayed on the basis that the Ontario court lacked jurisdiction simpliciter or that the court was forum non conveniens. The Court of Appeal affirmed the motion judge’s decision that the court had jurisdiction with respect to the claims against all of the defendants and should not stay the proceeding on the grounds of forum non conveniens.

There was no question that jurisdiction existed with respect to the Ontario dealers’ claims because the relevant contracts were negotiated and signed in Ontario. As for the dealers in other provinces, the presumptive connecting factor with Ontario was that IFS carried on business in Ontario by, inter alia, making franchise arrangements with Ontario dealers. Once the action was properly constituted from the perspective of jurisdiction simpliciter, then the issue of efficiency of litigation becomes relevant with respect to the joinder of the other parties. Litigation efficiency is not by itself a presumptive connecting factor, but the motion judge was entitled to find that jurisdiction simpliciter extended to the California defendants because of the connection that the claims against them had with the claims against IFS. There was no reason to interfere with the exercise of the judge’s discretion on the forum non conveniens point.

Note. See also Parque Industrial Avante Monterrey, SA de CV v 1147048 Ontario Ltd, ^{Footnote 11} in which jurisdiction over counterclaims was independently assessed on a presumptive connecting factor basis. A presumed real and substantial connection in the form of a tort committed in the province was held the basis for territorial competence under the British Columbia Court Jurisdiction and Proceedings Transfer Act (CJPTA) ^{Footnote 12} in Ewart v Nippon Yusen Kabushiki Kaisha. ^{Footnote 13} The BC court held it had jurisdiction in a class action based on a tort having been committed in the province through a conspiracy to fix shipping costs on various ocean routes, with the result of increased prices for motor vehicles sold in the province.

Geophysical Service Inc v Jebco Seismic UK Ltd, 2016 ABQB 402, 90 CPC (7th) 185 (Master)

Geophysical (GSI) brought separate actions against numerous defendants located in Canada and elsewhere for infringement of GSI’s copyright and other rights in certain seismic data. In this proceeding, the defendants were four related Jebco companies based respectively in the United Kingdom, Delaware, Texas, and Nova Scotia. They applied to have service ex juris on them set aside on the basis that the court lacked jurisdiction. The Master held that GSI’s claims met the “arguable case test” and satisfied the jurisdictional requirement of a real and substantial connection with Alberta. It was not enough that GSI suffered damage in Alberta because the location of damage had been disapproved as a presumptive connecting factor in Van Breda. ^{Footnote 14} However, a claim based on Canadian copyright could hardly be heard in a court outside Canada. Nor was there anything artificial about the selected forum and its connection to Alberta. There were about twenty-five actions in Alberta pertaining to GSI and its various claims. Jurisdiction simpliciter in the Jebco proceeding rested on the court’s statutory jurisdiction in copyright matters and on the “necessary and proper party” connection between Jebco-Canada, which was properly served in Alberta, and its related entities. Indeed, the defendant’s being a necessary or proper party to an action against a resident defendant has been held in Alberta to be a presumptive connecting factor in and of itself. ^{Footnote 15}

Note. Other cases involving jurisdiction simpliciter relating to intellectual property or similar claims were Canadian Olympic Committee v VF Outdoor Canada Co ^{Footnote 16} (passing off and unlawful interference with economic relations); Cardinal v Cleveland Indians Baseball Co Ltd ^{Footnote 17} (use of baseball team name and mascot that were said to constitute discrimination); and Transform Pack Inc v Flavorseal LLC ^{Footnote 18} (claim involving US patent rights and possibly rights in other jurisdictions).

Jurisdiction simpliciter — non-resident defendant — claim for financial loss — jurisdiction found to exist but jurisdiction declined

3289444 Nova Scotia Ltd v RW Armstrong & Associates Inc, 2016 NSSC 330, 43 CBR (6th) 59

The plaintiff, as assignee, pursued claims for unpaid fees of a sub-consultant, HPES, that had worked for the Armstrong consulting firm (RWA) on an energy project for Masdar, a renewable energy firm located in the United Arab Emirates (UAE). The action was brought against both RWA and Masdar because they were alleged to have conspired with HPES’s project manager to deprive HPES of the benefits of its sub-consulting contract. The contract between HPES and RWA was expressly governed by UAE law and contained a forum selection clause that, under some but not all circumstances, gave jurisdiction to the courts of the UAE. RWA’s own contract with Masdar included an exclusive forum selection clause requiring arbitration in the UAE. Masdar and RWA applied to have the action dismissed because the plaintiff was bound by the forum selection clause in its contract with RWA to litigate in the UAE or because the Nova Scotia court lacked territorial competence in the action under the Nova Scotia Court Jurisdiction and Proceedings Transfer Act ^{Footnote 19} or because the court should decline jurisdiction on the basis of forum non conveniens.

The court held that the forum selection clause should be interpreted as non-exclusive. It was drafted to require good faith attempts to settle in the first instance, and, if these were unsuccessful, the parties were bound to engage in mediation. If that failed to resolve the dispute, the parties were free to agree to a dispute resolution of their choice, or either party could seek to have the dispute resolved by a court in the UAE. There was no evidence that the parties had engaged in good faith attempts to settle or in mediation. Nor had they agreed to another form of dispute resolution. The ultimate provision, permitting either party to take the case to a court in the UAE, might be read as permitting litigation elsewhere because that alternative was not expressly ruled out. Even if that was so, the court described the clause as “a non-exclusive forum selection clause that falls towards the exclusive end of the spectrum.” ^{Footnote 20} Because it was non-exclusive, however, its effect was to be determined as part of the forum non conveniens analysis.

On the issue of territorial competence, the court held that HPES’s claims had a presumed real and substantial connection with Nova Scotia ^{Footnote 21} because, given that HPES was based there, it could be inferred that its obligations under the sub-consulting contract “to a substantial extent, were to be performed in the Province.” ^{Footnote 22} Although the court therefore had jurisdiction simpliciter, the judge held the court should decline jurisdiction under the statute’s forum non conveniens provision. ^{Footnote 23} The comparative convenience and expense for the parties pointed towards having the matter heard in the UAE. The law of the UAE applied to the agreement. The choice of the UAE in the forum selection clause, albeit non-exclusive, was also a significant factor. Aside from the weight it added on the side of proceeding in the UAE, the clause imposed obligations on HPES and, therefore, on the plaintiff as its assignee. HPES had bound itself to follow a certain path if there was a dispute under the agreement (attempt to settle, mediate, and so on) and the plaintiff, as HPES’s assignee, was bound by the entirety of this process as described in the sub-consulting agreement.

Note. Jurisdiction also existed, but was declined, in Key Pile Camp (2008) Ltd v Donaghy, ^{Footnote 24} where the main issue was not the charges owing for use of the plaintiff’s camp in British Columbia, but the validity of a guarantee of payment that the defendant’s employee had signed in Alberta. That issue was more appropriately dealt with in an Alberta court.

Jurisdiction simpliciter — non-resident defendant — claim for financial loss — jurisdiction found not to exist

Boyd v Cook, 2016 BCCA 424

The plaintiffs were investors in a mortgage investment corporation based in Alberta. They alleged that they had been induced to invest by misrepresentations by the defendant, an Alberta resident, who had also caused the corporation to direct funds without authorization into a resort development project on Salt Spring Island in British Columbia. The plaintiffs’ civil fraud claim was first brought in Alberta but dismissed as statute barred. The plaintiffs then brought a materially identical claim in British Columbia. The defendant argued that the court should dismiss the action because it lacked territorial competence under the CJPTA ^{Footnote 25} or should decline jurisdiction. The defendant further argued that the Alberta court’s dismissal of the action brought there was res judicata and precluded the plaintiffs from re-litigating the matter in British Columbia. The chambers judge held that there was territorial competence because of a real and substantial connection with British Columbia and that the Alberta decision was not res judicata as it was not on the merits of the plaintiffs’ claim.

The Court of Appeal reversed the chambers judge’s decision. It had considerable doubt whether a real and substantial connection with British Columbia was established. The case was pleaded solely as civil fraud, and all the elements of the fraud had taken place in Alberta. The sole connection with British Columbia was the use of the investors’ funds on a project in the province. However, that did not mean that the investors’ claim concerned a business carried on in British Columbia. ^{Footnote 26} The case did not “concern” the Salt Spring Island development; that was merely a tangential aspect of the case.

The court expressed no concluded opinion on the jurisdiction simpliciter issue because the claim failed in any event. The Alberta court’s decision that the Alberta limitation period applied to the plaintiffs’ claim, although based on a provision that operates even if the substance of the claim is not governed by Alberta law, ^{Footnote 27} created an issue estoppel if the plaintiffs’ claims were in fact governed by Alberta law. The limitation period is an issue to be decided by the substantive law that governs the claim. The plaintiffs argued that the court should not determine the choice-of-law question at this stage. However, the Court of Appeal thought there was no genuine possibility that further evidence or argument could show that the substantive law of Alberta was not the applicable law in the case. It was plain and obvious that Alberta law did apply because the locus of the tort was in Alberta, all the relevant events having occurred there. The Alberta court’s decision therefore made the limitations issue res judicata.

Jurisdiction simpliciter — non-resident defendant — claim for injury to person or damage to property — jurisdiction found to exist

Toews v Grand Palladium Vallarta Resort & Spa, 2016 ABCA 408

The plaintiff was seriously injured at the Palladium Hotel in Mexico when she drank out of an unmarked bottle in her room that contained what looked like water but was in fact a cleaning chemical. She brought an action in negligence in Alberta against Desarrollos, the Mexican company that operated the Palladium; Dominican, which sold blocks of rooms at the hotel to tour operators; and First Choice, a Canadian reseller from whom the plaintiff had purchased her holiday package online. (Both Desarrollos and Dominican were subsidiaries of a Netherlands corporation.) First Choice, the Canadian defendant, settled. Desarrollos and Dominican contended that the court lacked jurisdiction over the claims against them. The Court of Appeal rejected this argument, applying the presumptive connecting factor that a contract, with which the plaintiff’s tort claim is connected, was made in the province. But for the chain of related contracts from Desarrollos through Dominican and First Choice to the plaintiff, she would not have stayed at that hotel and the tort could never have occurred. It was not necessary that Desarrollos have the direct contract with the plaintiff in Alberta for the presumptive connecting factor to apply.

Note. Compare the result in Cook v 1293037 Alberta Ltd, noted immediately below. Another case in which defendants both in and outside the province were held within a BC court’s jurisdiction in an aircraft accident lawsuit, based both on the CJPTA presumed real and substantial connection relating to a tort in the province and the one relating to a business carried on in the province, was Bier v Continental Motors Inc. ^{Footnote 28} The crash itself was in Yukon.

Jurisdiction simpliciter — non-resident defendant — claim for injury to person or damage to property — jurisdiction found not to exist

Cook v 1293037 Alberta Ltd, 2016 ONCA 836

The plaintiff brought an action in Ontario for injuries he suffered in an accident at the defendant’s hotel in Alberta, where he was staying while working temporarily in that province. The Court of Appeal affirmed the motion judge’s decision that no presumptive connecting factor with Ontario was established and the court therefore lacked jurisdiction simpliciter. There was no basis to pierce the corporate veil in this case, or to create a new presumptive connecting factor, simply because there was evidence that one of the defendant corporation’s directors resided in Ontario for a period of time. There was no evidence as to whether the defendant’s business was directed at Ontario clients so that it could be said to be conducting its business in Ontario.

The plaintiff argued that Ontario was a forum of necessity because no action could be brought in Alberta owing to the expiry of the limitation period in that province. The court held that this was not an appropriate case to apply the doctrine. The forum of necessity is an exception to the real and substantial connection test and operates only in extraordinary and exceptional circumstances, which were not present here. The plaintiff made a tactical decision not to sue in Alberta, and it would not be appropriate to relieve him of the consequences of that decision.

Note. Best v Palacios, ^{Footnote 29} noted last year, was affirmed on appeal. ^{Footnote 30} It was an unsuccessful attempt to establish jurisdiction by saying that an accident at a Massachusetts airport caused indivisible damage in combination with a wholly separate accident in New Brunswick, and so it had a sufficient connection with the province to support jurisdiction simpliciter.

Jurisdiction simpliciter — non-resident defendant — claim for defamation — jurisdiction found to exist

Goldhar v Haaretz.com, 2016 ONCA 515, 401 DLR (4th) 634 ^{Footnote 31}

The plaintiff, a resident of Ontario, brought an action there against an Israeli media company for allegedly defamatory material about him that it published on its English language website. The story was about his ownership of an Israeli soccer club. The defendant applied for dismissal or a stay of the action on the ground that the court lacked jurisdiction simpliciter or should decline jurisdiction on forum non conveniens grounds. The trial judge held that the pleaded publication of the libel in Ontario supplied a presumptive connecting factor — namely, a tort committed in Ontario. The judge also held that Israel had not been shown to be a clearly more appropriate forum. ^{Footnote 32} The judge’s order was that if the action proceeded in Ontario, the plaintiff’s claim was limited to damages for reputational harm suffered in Canada, and the plaintiff was to pay for travel and accommodation expenses for the defendant’s witnesses. The Court of Appeal disagreed with some of the judge’s forum non conveniens analysis, but the majority upheld the decision. The dissenting judge would have stayed the action.

On jurisdiction simpliciter, the judge had not erred in failing to find that the defendant had rebutted the presumptive connecting factor. The subject matter of the article and the action had a significant connection to Ontario. The alleged sting of the article had to do with how the plaintiff conducted his business in Canada. The article made the plaintiff’s management style, and its Canadian origin, an integral part of the story.

On forum non conveniens, the motion judge was wrong to assume that witnesses outside Canada could be compelled to testify in Ontario by means of letters rogatory, but this assumption did not make his overall assessment of the convenience and expense of litigating in Ontario, as compared with Israel, unreasonable. Reluctant witnesses could be compelled to give evidence in Israel by letters of request, and video-conferencing was one way to obtain the evidence of a witness that did not want to come to Ontario. As for applicable law, the judge was right to conclude that Ontario law applied, whether one applied the lex loci delicti principle based on the particular place of publication or a broader principle based upon where, overall, the most substantial harm to reputation occurred. ^{Footnote 33} The latter could be Ontario, as the judge found it to be, even if the scale of publication in Israel was greater than that in Ontario. The plaintiff’s undertaking not to seek damages for reputational harm outside Canada did not demonstrate that he was forum shopping but, rather, confirmed the significance to him of his reputation in Ontario. The judge was also entitled to find that fairness to the parties favoured a trial in Ontario. The dissenting judge disagreed with the forum non conveniens analysis of the majority — in particular, the assumption that Ontario was the place where the greatest harm to reputation was suffered and the majority’s overall assessment of fairness to the parties.

Note. A similar conclusion was reached in a corporation’s defamation action based on Internet publication to persons in Ontario: Sciquest Inc v Hansen. ^{Footnote 34}

Declining jurisdiction in personam

Forum selection clause — interpretation

Note. See the note on 3289444 Nova Scotia Ltd v RW Armstrong & Associates Inc, above under Jurisdiction in personam; Jurisdiction simpliciter — non-resident defendant — claim for financial loss — jurisdiction found to exist but jurisdiction declined. The interpretation of a forum selection clause was also at issue in McMillan McGee Corp v Northrop Grumman Canada. ^{Footnote 35} The clause appeared in the first of three related agreements but not in the other two. A similar issue, whether a claim arose out of one or other of two related agreements that had different forum selection clauses, was decided in Nalcor Energy — Oil and Gas Inc. v Husky Oil Operations Ltd. ^{Footnote 36} In Naturex Inc. v United Naturals Inc., ^{Footnote 37} the court held that the defendant could not rely on the clause after already attorning, and, even if it could, it did not genuinely want an Ontario trial. Jurisdiction was declined, based on the clause in Bull Run Productions Inc. v Wild TV Inc. ^{Footnote 38} In Emkay Fleet Service Corp. v Imperial Oil, ^{Footnote 39} the clause first appeared in the relevant written contract after the claims arose, and, in any event, there was strong cause not to enforce it — namely, that it would separate the proceeding against one defendant from closely related proceedings against the other five.

By contrast, the strong cause test was held not to be met in Manjos v Fridgant. ^{Footnote 40} The forum selection clause was in an investment brokerage agreement, which the clients argued should be treated like a consumer contract and the clause disregarded under the circumstances. The court held that the clients were sophisticated business people, and there was no reason why they should not be bound by the clause. The view of an exclusive choice of forum clause as defeating any argument of forum non conveniens is shown by Benefact Consulting Group Inc. v Endura Manufacturing Co Ltd, ^{Footnote 41} and the court said it would have declined jurisdiction had it not been for the clause.

Forum selection clause — rectification

Note. See the note below of 2106701 Ontario Inc v 2288450 Ontario Ltd, under Choice of Law; Common Law and Federal; Contract; Proper law — agreed choice — bona fides of choice.

Forum selection clause — arbitration — whether the stay extends to defendants who are not party to the clause

Novatrax International Inc. v Hägele Landtechnik GmbH, 2016 ONCA 771, 132 OR (3d) 481

Novatrax had an exclusive sales agreement with Hägele, a German manufacturer of reversible fans. Hägele gave notice that it was terminating the agreement immediately for cause. Novatrax brought an action against Hägele claiming breaches of contract; the tort of interfering with Novatrax’s relationship with its employees, customers, and bank; and the tort of unfair competition by setting up Clearfix, a Canadian company that sold directly into the Canadian market. Novatrax also made claims against two individuals who were principals of the Hägele company who had been involved in the relationship with Novatrax, and against Clearfix. The sales agreement contained a forum selection clause requiring the parties “to settle any disputes by a binding arbitration” in Frankfurt. The motion judge stayed the whole of the action. On appeal, Novatrax argued that the clause should not be interpreted as covering contract claims not contemplated when the original agreement was made nor as covering the tort claims. It also argued that the stay should not have extended to the claims against the two individual defendants and against Clearfix since they were not parties to the arbitration clause.

The Court of Appeal, by a majority, upheld the motion judge’s stay. The clause had properly been interpreted to cover claims relating to any stage of the agreements life-cycle, including the wrongful termination and breach of good faith claims pleaded by Novatrax. Likewise, the broad language “any disputes” was correctly interpreted as encompassing tort claims that arise from the contractual relationship. As for the defendants who were not parties to the sales agreement and so were not bound by the arbitration clause, the claims against them all arose out of the same transactions and occurrences as the claims against the Hägele company and raised common questions of fact and law. The factually intertwined nature of the claims pleaded by Novatrax against all of the respondents required, at this stage of the litigation, that the forum selection clause drive the stay analysis.

The majority disagreed with the dissenting judge’s view that this was tantamount to requiring non-parties to an arbitration clause to engage in arbitration. The court lacked the jurisdiction to compel non-parties to an arbitration agreement to submit their claims to arbitration. However, to include the non-parties in the stay was to recognize that the forum selection clause, in these circumstances, pervades the forum non conveniens analysis as against the non-parties to the arbitration clause. The practical effect of the motion judge’s exercise of his discretion was to require the issue of whether Hägele wrongfully terminated the sales agreement to be decided first in an arbitration. There was no reason to interfere with that decision.

Forum non conveniens — claim for financial loss

Note. A dispute about the management of a business, brought in the province where the individuals involved resided, was not stayed in Cupola Investments Inc. v Remai. ^{Footnote 42} Although the claims related in part to the operation of retirement homes in other provinces, those provinces were not clearly more appropriate forums. Indeed, a court in one of those provinces subsequently held that the claim had no real and substantial connection with that province: Cathedrale Retirement Genpar Inc. v Krivoshen. ^{Footnote 43}

Forum non conveniens — claim for injury to person or damage to property

Araya v Nevsun Resources Ltd, 2016 BCSC 1856

The plaintiffs, refugees from Eritrea who did not live in Canada, brought an action against Nevsun, a British Columbia mining company, claiming that the plaintiffs had been subject to forced labour and other human rights abuses while working at the Bisha gold mine developed in Eritrea by Nevsun under a commercial venture with the Eritrean state. Some of the claims were based on BC law relating to torts, including conversion, battery, unlawful confinement, negligence, conspiracy, and negligent infliction of mental distress. Other claims were pleaded in terms of breaches of jus cogens or peremptory norms of customary international law such as forced labour and torture. These raised the issue whether such claims could form the basis of a civil action. Some claims also raised issues of corporate immunity and whether the act of state doctrine raised a complete defence to the plaintiffs’ claims.

Nevsun’s liability was pleaded in terms of its active participation in the development of the mine; its condonation of human rights abuses by contractors and by the Eritrean military, who were involved with the contractors; its aiding and abetting the conduct of the contractors; its liability for the conduct of its Eritrean subsidiary, the Bisha Mining Share Company; vicarious liability for the conduct of the contractors and the Eritrean military that furthered Nevsun’s commercial objectives; participation in a civil conspiracy with the Eritrean parties; and negligence for breach of a duty of care owed to the plaintiffs.

Nevsun applied to have the court decline jurisdiction under the forum non conveniens provision of the CJPTA (the forum non conveniens application). ^{Footnote 44} It also sought orders to strike the plaintiffs’ claims on the basis that they were not justiciable, either because they were barred by the act of state doctrine (the act of state application) or because they were based on alleged breaches of customary international law (CIL) — the CIL application. There was also an application to deny process of this proceeding as a representative action, given that the plaintiffs were non-residents of British Columbia. ^{Footnote 45} The putative class represented consisted of over a thousand Eritrean nationals, “all conscripts in the Eritrean National Service Program who worked at the Bisha mine from 2008 to the present.”

The forum non conveniens application failed. In support of its application, Nevsun stressed that the evidence, much of it the subject of controversy, would be largely located in Eritrea, and Eritrean law applied to the action. The plaintiffs’ position was that Eritrea was not shown to be a clearly more appropriate forum in light of the political and judicial culture in that country. They said there was a real risk that justice would not be obtained for them in Eritrea. In this connection, the plaintiffs raised a point of interpretation of section 11 of the CJPTA. The factors listed in that section as relevant to the exercise of the discretion to decline jurisdiction did not include the circumstances where the foreign court was not available to plaintiffs because of a fear of persecution or lack of judicial independence. The plaintiffs argued that this should therefore be treated as a threshold issue, separate from the overall forum non conveniens assessment. The court disagreed with this argument. Section 11 says the court “must consider the circumstances relevant to the proceeding,” including, but not limited to, the listed factors (comparative convenience and expense, the law to be applied, avoiding multiplicity of proceedings, avoiding conflicting decisions in different courts, the ability to enforce an eventual judgment, and the fair and efficient working of the Canadian legal system as a whole). Hence, there could not be two classes of factors; there was only the one comprehensive assessment of the circumstances. Section 11 was a “complete codification of the common law test for forum non conveniens” and admitted of “no exceptions.” ^{Footnote 46}

On the factor of comparative convenience and expense, the court found that Nevsun had not shown that this favoured Eritrea as the appropriate forum. In particular, it had not satisfied the court that there was a system in place in Eritrea whereby proper documentary disclosure could occur, and it also did not demonstrate how the evidence would be made available in a court proceeding in that country. There was, on the extensive evidence presented in this jurisdictional proceeding, a real risk of an unfair trial occurring in Eritrea because the plaintiffs had fled the country and might be regarded as traitors if they attempted to return. The court said that this last point — the risk of an unfair trial — was an issue on which the plaintiffs had met the onus of adducing sufficient evidence, whereas on the general question of comparative convenience and expense it was for Nevsun to satisfy the court that this factor favoured Eritrea, which Nevsun had not done.

The factor of the applicable law was held to be equivocal on the facts because the content and manner of application of Eritrean law, on which there was contradictory evidence before the court, could not be clearly assessed at this stage. Avoiding multiplicity of proceedings, avoiding conflicting decisions, and the enforceability of an eventual judgment were all equivocal on the facts here. Regardless of whether the substantive proceeding occurred in British Columbia or Eritrea, there were serious allegations made as to the integrity of the Eritrean judicial system, Nevsun’s principal asset was the Bisha mine in Eritrea, and there would undoubtedly be various proceedings in any event with enforcement of any judgment likely to be problematic. The court attached weight to the factor of whether assuming jurisdiction would promote the fair and efficient working of the Canadian judicial system. The court thought that it would. The plaintiffs had two choices: British Columbia or Eritrea. They had selected British Columbia because that was where Nevsun was located and where the plaintiffs alleged certain corporate decisions were made that adversely affected them.

Nevsun’s act of state application was also dismissed. Nevsun’s principal argument was that the act of state doctrine applied because the proceeding in effect was aimed at affecting the property, rights, interests, or activities of the state of Eritrea. No Canadian authority on the doctrine existed. English authority centred on the question whether the court was being asked to pass judgment on the legislative or other governmental acts of a foreign state within the limits of its own territory. The court held that it was bound by a BC Court of Appeal decision that said that the act of state doctrine was part of the common law of the province, although the doctrine did not apply on the facts of the case before it. ^{Footnote 47} The existence of the doctrine was, moreover, well established in such jurisdictions as England and Australia. However, its content was uncertain and the court was not prepared to strike out the plaintiffs’ claim based on the doctrine at this stage of the proceeding. It was also arguable that one of the several established limitations on the doctrine applied here — that it did not apply to foreign acts of state that were in breach of clearly established rules of international law or contrary to the public policy of the forum; that the acts in question had a commercial, rather than a sovereign, character; and that although it precluded an examination of whether an act of a foreign state should be regarded as legally effective, it did not preclude an inquiry into whether the act took place as a matter of fact. ^{Footnote 48}

The customary international law application was also dismissed because the law on whether breaches of customary international law could be the subject of civil claims was unsettled, and Nevsun had not established that the claims based on customary international law in this case had no reasonable likelihood of success. The claims should not be struck out on a preliminary application like this. A contextual analysis would be required before the court can provide a decision as to whether the common law, and, in particular, the law of tort, should evolve in the manner sought by the plaintiffs. That manner was not just with respect to the CIL claims generally but also with potential corporate liability in particular.

Nevsun did succeed in obtaining an order that the plaintiffs could not continue the proceeding on a representative basis. The plaintiffs, and those they claimed to represent, were all non-residents. The representative action rule did not broaden the traditional limited class of plaintiffs for such an action (those who allege a common statutory or collective right and those who seek a common statutory declaration or remedy) to include those who do not meet the residency requirement under the Class Proceedings Act ^{Footnote 49} and to provide them with essentially the same benefits as if they did qualify under that statute.

Note. The court distinguished Garcia v Tahoe Resources Inc., ^{Footnote 50} in which another chambers judge had stayed a claim by Guatemalan workers for injuries suffered at a mine in that country that was operated by a subsidiary of the defendant BC corporation. Garcia was subsequently reversed in a decision to be noted in next year’s volume of the Yearbook. ^{Footnote 51}

Forum non conveniens — parallel proceeding in the other forum

Note. In Safeway Holdings (Alberta) Ltd. v Cactus Ridge Estates Inc., ^{Footnote 52} actions had been brought in British Columbia and Alberta against the same defendants on the same contracts of guarantee. The Alberta action was stayed on the basis that the BC action was substantially further advanced and had been set down for trial. To let a proceeding continue in Alberta would not show proper deference to the existing ruling of the BC court.

Class actions

Jurisdiction simpliciter found to exist in respect of class action claim

Excalibur Special Opportunities LP v Schwartz Levitsky Feldman LLP, 2016 ONCA 916 ^{Footnote 53}

The plaintiff class included fifty-seven investors who together put $7.6 million into an American corporation that set up a hog farm venture in China. The business in China failed. A class proceeding was brought in Ontario against the accounting firm whose report was included in the memorandum issued to investors under US law. The firm was based in Ontario and Quebec and specialized in valuing Chinese businesses. One of the investors was resident in Ontario; the rest of the plaintiffs were resident in the United States or elsewhere. The defendant contended that the Ontario Superior Court lacked jurisdiction simpliciter with respect to the claims of the fifty-six non-residents of Ontario. The motion judge granted the motion to dismiss the action. The investors, with one exception, were non-residents of Ontario making investments in American dollars in an American corporation in a transaction that was governed by American corporate and securities law.

The Court of Appeal reversed the motion judge and held there was jurisdiction simpliciter. This was a negligence action against a defendant that resided in Ontario, carried on business in Ontario and did the audit report, the subject of the dispute, in Toronto. The motion judge had focused incorrectly on the private placement transaction in the United States rather than on the defendant’s preparation of the audit report in Toronto.

Jurisdiction simpliciter found to exist in respect of class action claim — jurisdiction initially declined but stay later lifted

Kaynes v BP plc, 2016 ONCA 601, 133 OR (3d) 29

A class action was brought in Ontario on behalf of the purchasers of certain of British Petroleum’s (BP) securities on the secondary market, claiming that BP was liable under Ontario securities legislation for misrepresentations concerning its business. In 2014, the Ontario Court of Appeal held that the motion judge should have excluded from the plaintiff class, on the ground of forum non conveniens, those who had bought their BP shares on exchanges in New York or London. Both the United States and the United Kingdom asserted jurisdiction over secondary market misrepresentation claims, based on the exchange where the securities in question were traded.

In the present proceeding, the Court of Appeal affirmed a decision to lift the stay against including the purchasers on the foreign exchanges in the Ontario proceeding. The plaintiffs wished to claim relief under Ontario securities legislation for misrepresentations that BP made to investors before the April 2010 Deep Water Horizon explosion and oil spill in the Gulf of Mexico. It transpired that a claim based on Ontario law for these misrepresentations had been excluded by the United States District Court from the American class action because those who sought to bring the claim were bound by the decision of the lead plaintiffs in the proceeding not to advance it.

BP had contended in the 2014 Ontario proceedings for a stay that, as far as a US court was concerned, Ontario law did not apply with respect to the pre-explosion claims because the tort was not committed in Ontario. BP contended it was, rather, a claim under US law over which the United States court would regard itself as having exclusive jurisdiction. However, when it subsequently argued before the District Court that the pre-explosion claim should not be included in the US proceeding, BP had accepted the opposite view that the claim was based upon Ontario law and, therefore, was not one over which US law claimed exclusive jurisdiction.

These developments left the moving party in the position that if the stay was not lifted he would be deprived of his right to have his claim asserted as part of a class action in the United States District Court and could only proceed with an individual claim in that court because of choices made by the US lead plaintiffs. If, as BP argued before the American court, the moving party’s claim was based upon Ontario law, it was not a claim that was or could be advanced in the US class action and did not fall within the exclusive jurisdiction of the US courts. On the facts as presented by BP before the US court, it was difficult to see why the stay should not be lifted to allow the moving party to proceed in Ontario. The lifting of the stay should extend to claims by plaintiffs who purchased shares on other foreign exchanges; the number of securities involved was small.

Matrimonial causes

Divorce — forum non conveniens — parallel proceeding in Portugal

Note. In LGV v LAP, ^{Footnote 54} the Court of Appeal reversed a stay of a wife’s divorce proceedings in New Brunswick, where her husband and son still lived although she had moved to Portugal some time before for health reasons. The motion judge had held that a court in Portugal was better placed to deal with the issues. However, the Court of Appeal held that the judge failed to consider whether a Portuguese court would decide issues of custody, support, and division of property in accordance with Canadian principles and whether its order would be recognized and enforced in Canada.

Support claims — jurisdiction simpliciter

Note. See the note below of Parker v Mitchell, under Matrimonial property — jurisdiction simpliciter. See also Jung v Jung, ^{Footnote 55} in which jurisdiction to order child support against a father resident in Fiji was based on the residence in Ontario of the mother and the child.

Matrimonial property — jurisdiction simpliciter

Parker v Mitchell, 2016 BCSC 723, 86 BCLR (4th) 427

A couple who lived in California separated in 2015 after living together for nineteen years. They regularly spent all or part of their summers in British Columbia, where the respondent owned eight real estate properties at various places on Vancouver Island, including a resort, rental properties, and a beach house. After the separation, the claimant stayed in British Columbia and now sought spousal support and division of property under the Family Law Act (FLA). ^{Footnote 56} The respondent also owned six properties in California and one in Arizona. Based on evidence presented to the court, neither support nor matrimonial property claims could be made under California law because the claimant was neither married to, nor in a registered domestic partnership with, the respondent.

The jurisdictional questions had to be addressed separately for the spousal support claim, which was governed by the general provisions of the CJPTA, ^{Footnote 57} and the matrimonial property claim, which was subject to special jurisdictional rules in the FLA. There was admittedly jurisdiction under the FLA, based on the fact that “property that is the subject of the proceeding is located in British Columbia,” ^{Footnote 58} which is presumed to constitute a real and substantial connection with the province. The real and substantial connection test is one of the grounds for jurisdiction to make an order respecting property division; ^{Footnote 59} another is that either spouse is habitually resident in the province when the proceeding is started. ^{Footnote 60}

As for spousal support, jurisdiction was established on two grounds. One was that the respondent was ordinarily resident in the province when the proceeding was commenced. ^{Footnote 61} Ordinary residence should be given a broad and liberal interpretation. A person could be ordinarily resident in more than one jurisdiction and determination of ordinary residence was not a matter of counting of days. The respondent had regularly spent a substantial portion of each summer and/or fall on Vancouver Island, with or without the claimant. This met the “settled routine of life” test for ordinary residence. The respondent was more than a casual or intermittent visitor.

The other ground for jurisdiction for the support claim was a real and substantial connection with the province. ^{Footnote 62} Whether or not there was a presumed connection because “the proceeding” could be said to be related to an interest in property in the province, ^{Footnote 63} the judge thought a real and substantial connection existed on the facts apart from any of the listed presumptions. A claim for spousal support was being advanced by a claimant now resident in British Columbia, and part of the income from which the respondent would pay any support was derived from property in British Columbia.

The law to be applied to the matrimonial property claim was relevant to, inter alia, the question of forum non conveniens. The FLA includes choice-of-law rules. If the spouses’ first common habitual residence is in a jurisdiction in which a regime of community of property ^{Footnote 64} applies, property owned or acquired during the relationship between the spouses must be divided according to that regime. ^{Footnote 65} Absent an agreement between the parties on the division of property, or the application of a community of property regime of the first common habitual residence, the choice-of-law rule is to apply “the proper law of the relationship.” ^{Footnote 66} That is defined to be the internal law of the jurisdiction in which the spouses had their most recent common habitual residence, ^{Footnote 67} unless that jurisdiction is outside Canada, and some other jurisdiction’s law is more closely associated with the relationship between the spouses. ^{Footnote 68} If the spouses did not have a common habitual residence, the applicable law is the internal law of the jurisdiction in which the applicant spouse was most recently habitually resident. ^{Footnote 69}

Since there was no agreement between the parties, and the California regime of matrimonial property did not apply to them since they had not married or registered their partnership, the proper law of the relationship applied to the division of matrimonial assets. That was the jurisdiction in which the parties had their most recent common habitual residence. It was implicit in this test that if the parties had multiple common habitual residences, only one of them could be the most recent. It was the manifest intention of the provisions to identify a single system of law. Based on the facts here, that system of law was California, where the parties had lived together from the fall of 2015 until their separation sometime in the next year.

The court dismissed the respondent’s application to decline jurisdiction. California law would apply to the parties’ rights, but the concepts of that law, including the possibility of a trust action, which could be used between unmarried couples, were broadly familiar to the courts in British Columbia. The support claim would be determined according to the law of British Columbia.

Note. The statutory provisions on jurisdiction to divide matrimonial property were also extensively considered in Carlson v Phelan Estate. ^{Footnote 70} In Ma v Li, ^{Footnote 71} the provisions were applied to hold that the court had jurisdiction to divide matrimonial property in British Columbia but should decline to exercise it because the applicant former husband was seeking to re-litigate a division decided upon by a court in China as part of the parties’ divorce proceedings.

Infants and children

Custody and access — statutory jurisdiction rules — children not habitually resident in the province

Note. In Salame v Massoud, ^{Footnote 72} an Ontario court held that it could not take jurisdiction in the mother’s custody application because the children were habitually resident in Lebanon. In such a case, the court can take jurisdiction only if, among other requirements, there is no application for custody pending in the country where the child is habitually resident. ^{Footnote 73} Here, on the facts, the father had initiated a custody proceeding in Lebanon.

Custody and access — mobility application

Note. See SK v MK, ^{Footnote 74} in which an Alberta court refused to transfer a mobility application proceeding to a court in Ontario, where the applicant and her child had already lived for two-and-a-half years; the father, who lived in Alberta, had not acquiesced in a permanent move to Ontario and a hearing date for the application had been set in Alberta.

Child abduction — Hague Convention

Balev v Baggott, 2016 ONCA 680

The father and mother were Canadian citizens who married in Canada in 2000 and became permanent residents of Germany, where the father worked, in 2001. The two children were born in Germany in 2002 and 2005. The family home was a house in Germany that the parties had purchased in 2008. The parents separated in 2011 but resumed cohabitation in 2012. The children were having difficulty in school, and the parties agreed in April 2013 that the mother would take the children temporarily to Canada so they could attend school there. The father accordingly signed a consent letter confirming the children could visit Canada from July 2013 to August 2014, and he signed a notarized letter transferring physical custody to the mother for that period because the mother insisted this was necessary to enrol the children in a Canadian school.

The father purported to revoke his consent to the Canadian stay in March 2014. The mother refused to return the children after the consent period expired in August 2014. In June 2014, the father had already filed a Hague Convention on the Civil Aspects of International Child Abduction (Hague Convention) ^{Footnote 75} application in Ontario but did not pursue it while he tried to obtain relief in the German courts. Neither a custody application nor a Hague Convention application was successful in Germany. The courts apparently took the view that the children were now habitually resident in Canada, although they made no final decision to that effect. The father retracted his German application and proceeded with the application he had commenced in Ontario.

It was clear that the father had rights of custody that he was exercising at the time of the mother’s wrongful retention of the children as of August 2014. The sole issue on which the decision under the Hague Convention turned was whether the children’s habitual residence had changed to Ontario during the year that they were attending school there. The application judge held that it had not. The Divisional Court held that it had and so refused to order the return of the children. The Court of Appeal held that it had not and ordered the children returned.

The Divisional Court had been wrong to distinguish between a unilateral move of the children by a parent, which clearly could not alter their habitual residence, and a move pursuant to a time-limited consent, which that court thought could alter habitual residence. The Ontario courts uniformly held that a parent’s consent to a time-limited stay did not shift the child’s habitual residence. If it were otherwise, time-limited consent would have no meaning because the consenting parent could lose the ability to reassert his or her custody rights at the expiry of the period. It was true that the legislation provides that where the parties are living separate and apart, a child is habitually resident in the place where he or she resides with one parent with the consent of the other. ^{Footnote 76} This should not be read, however, as supporting the proposition that a time-limited consent to the child living in another jurisdiction could change the child’s habitual residence to that jurisdiction. The court did not foreclose the possibility that there might be cases where a consensual time-limited stay is so long that it becomes time-limited in name only and the child’s habitual residence has changed, but this was not such a case.

The Divisional Court had also erred in taking account of the children’s having “settled in” their new environment. That factor could be considered, as stipulated by Article 12 of the convention, only if the application were brought more than twelve months after the wrongful removal or retention.

Note. Compare Mehta v Gandhi, ^{Footnote 77} in which the child’s habitual residence had been changed to India because the father’s inaction, after the mother told him she was staying in India with the son, amounted to consent or acquiescence in the change of habitual residence. The “settled in” exception was applied in SMB v AJM. ^{Footnote 78} See also Sweeney v Thewlis, ^{Footnote 79} in which the court held it would order the return of the child to Oregon, where it was habitually resident, if the Oregon court granted custody to the father.

Title to property

Immovable property outside the jurisdiction — in personam exception

KB v JB, 2016 BCSC 1904

The husband and wife were born in India and were married there in 2001. They immigrated to Canada in 2003 and had two children. When their marriage broke up, one issue that arose in the matrimonial property proceeding in British Columbia was the wife’s claim that she had an interest in a property that her husband’s mother owned in India. The wife was registered as a one-third owner of the property, which she said reflected the fact that her father had lent or given money to the mother-in-law. The court rejected this claim on the merits. The only basis put forward by the wife for an interest in various properties, including the Indian property, was BC matrimonial property law and that law did not support her claim to a share of the Indian property. The court held that it had jurisdiction to make an order that the wife take steps to remove her name from the title to the property in India. This fell within the “in personam exception” to the rule that a court could not make an order altering title to foreign immovable property. The court was exercising its in personam jurisdiction over the wife to compel compliance with, or adherence to, orders that were made at trial.

Succession and administration

Jurisdiction — wills variation application

Note. Jurisdiction to vary a will made by a person who died domiciled in Fiji was held in Sharma v Sharma Estate ^{Footnote 80} only to extend to immovables in British Columbia. The court could not include in its order the properties located in Fiji, and their value was too uncertain to take them into account in making the order with respect to the BC property.

Bankruptcy and insolvency

Jurisdiction to grant relief under Companies’ Creditors Arrangement Act

Note. The presumptive connecting factor approach to jurisdiction was applied to determine jurisdiction under the Companies’ Creditors Arrangements Act ^{Footnote 81} in Re Essar Steel Algoma Inc. ^{Footnote 82} The factors were that the company’s iron ore supply contracts were made in Ontario and that its suppliers carried on business in Ontario. The court refused to decline jurisdiction in favour of a court in Ohio.

Jurisdiction of regulatory tribunal

Securities regulator — location of the conduct being regulated

Note. The BC securities regulator was held to have jurisdiction to discipline an unlicensed person who, from his home in that province, promoted a Nevada company to US investors. It was the location of the conduct that provided the real and substantial connection with British Columbia: McCabe v British Columbia Securities Commission. ^{Footnote 83}

Actions personnelles à caractère extrapatrimonial et familial

Enfants — garde — domicile de l’enfant — pension alimentaire

Droit de la famille — 16908, 2016 QCCS 1817

Les parties, non mariées, ont un enfant de deux ans. La mère présente une demande pour garde et pension alimentaire, autorisation de voyage et ordonnance de sauvegarde. Elle et l’enfant résident et sont domiciliés en Côte d’Ivoire, le pays d’origine de la mère, où elle est retournée avec l’enfant trois mois après la naissance de ce dernier au Canada. Le père réside au Québec. Le père soulève l’absence de compétence des tribunaux québécois en ce qui a trait non seulement à la détermination de la garde de l’enfant, mais aussi au sujet des questions accessoires et notamment la pension alimentaire. La mère s’oppose à ces moyens déclinatoires en invoquant que le père a déjà accepté la compétence du tribunal québécois et que ses prétentions sont en conséquence tardives. Elle ajoute que même si la question de la garde peut relever d’une autre juridiction, la Cour supérieure doit déterminer en l’espèce l’obligation alimentaire.

Les règles d’attribution de la compétence dans le Code civil du Québec (CcQ) montrent que le législateur fait la distinction entre les actions personnelles à caractère patrimonial et celles à caractère personnel et familial. Dans le second cas, le législateur n’envisage pas que l’on puisse accepter la compétence d’un tribunal, puisqu’il s’agit d’une question d’ordre public. Selon l’article 3142 CcQ la Cour a compétence pour statuer sur la garde d’un enfant pourvu que l’enfant soit domicilié au Québec. La garde de l’enfant est régie par la loi de son domicile (article 3093 CcQ). Or, l’enfant des parties étant domicilié en Côte d’Ivoire, seuls les tribunaux ivoiriens peuvent statuer sur la garde.

Quant à la pension alimentaire, l’article 3143 CcQ prévoit explicitement la compétence du tribunal québécois dans la mesure où le père est domicilié au Québec. Le législateur a donc explicitement prévu la situation où la garde et la pension alimentaire ne sont pas soumises au même tribunal. Cependant, le père soutient que les aliments sont l’accessoire de la garde et que la résolution de cette question doit suivre celle de la garde. Traiter les aliments comme un accessoire de la garde, sauf cas exceptionnel, semble être en contradiction avec l’intention du législateur pourtant clairement exprimée aux articles 3142 et 3143 CcQ. Ainsi, le tribunal est compétent pour entendre le litige concernant la pension alimentaire.

Le père soutient aussi que les tribunaux québécois doivent décliner leur compétence en matière de la pension alimentaire en appliquant la doctrine du forum non conveniens (article 3135 CcQ). Le tribunal souligne que les témoins se retrouvent en Côte d’Ivoire ainsi qu’au Québec pas moins que les éléments de preuve. Le père a une maison au Québec. Il n’est pas manifeste que la loi ivoirienne s’applique et cette question reste à déterminer, car l’article 3094 CcQ envisage une alternative au niveau de la législation applicable. Aussi, en considérant le caractère d’ordre public du soutien alimentaire, l’intérêt de la justice, l’intérêt des parties, ainsi que les bénéfices dont jouit l’enfant devant le tribunal québécois, le père ne convainc pas que le tribunal ivoirien soit le plus approprié. Bien au contraire, la créance alimentaire vise à couvrir les besoins immédiats de l’enfant et il est tout à fait avantageux que cette créance continue d’être acquittée par le père en application d’un jugement exécutoire.

Droit de la famille — 16774, 2016 QCCA 565

The parties lived together in British Columbia for approximately fifteen years. Two children were born of their union. In February 2015, the father became disorganized and uttered death threats against several people, including the mother. BC child services had to intervene to ensure the children’s safety. They ordered the father to leave the mother with the children or they would be removed from the family home. With the help of the father’s brother, the mother first took refuge in Ontario with the children. The father followed her there, and the police had to intervene so that she could continue on her way. In March 2015, she made it to Baie-Comeau, Québec, where her sister lived. She obtained a grant of custody of the children, as a safeguard order, from the Québec Superior Court.

In August 2015, the father instituted his own action before the British Columbia Supreme Court to obtain custody. In the meantime, he had presented a declinatory exception before the Québec court on the basis that the children were not domiciled in Québec. The British Columbia court suspended the proceeding before it pending the Court of Appeal’s judgment on the competence of the Québec Superior Court. The Superior Court had dismissed the exception. The issue on which the question of domicile turned was whether the intervention of the BC court in February 2015 to protect the children from their father made lawful the mother’s move to Québec and, hence, her alteration of the domicile of the children. The Court of Appeal held it did not. The specific legislative framework under which the BC authorities were able to act was not before the court, but it was probably pursuant to a provision for preventive removal of a child in order to ensure its protection. The effects of such orders are inevitably temporary. The mother could not rely on the fact that BC child services ordered her to leave the family home to travel over 5,000 kilometres and move to Québec permanently with the children. This move was clearly unlawful. The general rule therefore applied that the children’s “usual residence” could not be changed unilaterally by the mother. The court referred the matter to the Supreme Court of British Columbia for a ruling on the custody of the children.

Enfants — garde — domicile de l’enfant — pension alimentaire — litispendance

Droit de la famille — 16440, 2016 QCCS 843

Les parties se sont mariées en 2000 en France. Elles s’installent dans un premier temps au Royaume-Uni puis, en 2007, elles et leurs deux enfants s’établissent au Nouveau-Brunswick. Leur troisième enfant est né au Canada. Les parties y acquièrent un immeuble dont ils sont encore propriétaires. Entre 2007 et 2011, les relations entre les parents se détériorent. En 2011, ils prennent la décision de retourner en France, ce que fait la mère en avril 2012 avec les trois enfants. Le père croit que c’est pour une période temporaire, le temps que le couple fasse le point sur la situation. Il demeure au Nouveau-Brunswick afin de “sécuriser” la maison durant leur séjour en France. En mai 2012 le père va rejoindre la famille. À son arrivée, la mère l’avise qu’elle désire mettre fin à leur union. Elle établit alors son domicile en France dans la résidence de ses parents.

En octobre 2012, la mère présente une requête en divorce devant le tribunal français et les parties y sont éventuellement convoquées. Au cours de cette période, la mère entreprend des études supérieures en éducation à une université au Québec, et ce, jusqu’en 2014. En 2015, elle signe un contrat de travail à durée indéterminée avec une garderie au Québec. En décembre 2015 le père signifie à la mère une requête en fixation de garde partagée et modification de pension alimentaire concernant les trois enfants. La mère présente un moyen déclinatoire fondé sur la litispendance internationale en vertu de l’article 3137 CcQ, demandant à la Cour supérieure de surseoir à statuer sur la requête du père considérant que le tribunal français est déjà saisi d’une demande de divorce présentée par la mère et que cette demande est fondée sur les mêmes faits et a le même objet que celle introduite en France.

Le père allègue que la mère est venue habiter au Québec sans son autorisation et il s’oppose au moyen déclinatoire en invoquant que le pouvoir prévu à l’article 3137 CcQ est discrétionnaire et qu’en vertu de l’article 3142 CcQ, les autorités québécoises sont compétentes pour statuer sur la garde des enfants qui sont désormais domiciliés au Québec.

La Cour rejette le moyen déclinatoire de la mère. Dans les circonstances, elle ne peut contester la compétence de la Cour supérieure alors que c’est elle qui décide de s’installer au Québec et qui force le père à quitter la France pour venir au Québec afin de voir ses enfants. Même s’il est établi que les autorités françaises doivent décider en tenant compte de l’intérêt des enfants, les procédures intentées par la mère devant le tribunal français ne font aucunement référence à son déménagement au Québec avec les trois enfants au cours de l’été 2015.

Actions personnelles à caractère patrimonial

Compétence — préjudice subi au Québec — article 3148, alinéa 3 CcQ

9245-4859 Québec inc c Martel Events SAS, 2016 QCCS 4550

La demanderesse, dont le siège social est au Québec, agit à titre d’entreprise productrice du Salon Art Monaco qui est un salon d’art contemporain de la Côte d’Azur. En vue de ce salon, qui devait se tenir en juillet 2015 à Monte-Carlo, Monaco, la demanderesse a des discussions avec les défenderesses pour le montage de chapiteaux et leur aménagement. Le siège social des défenderesses est situé dans le sud de la France. À la suite d’une réunion en juin 2015 à Monaco, les services des défenderesses sont retenus par la demanderesse. Il n’existe aucun contrat écrit entre les parties, si ce n’est la signature de devis préparés par les défenderesses, qui ont été contresignés par la demanderesse. Ces devis ne comportent aucune indication quant au droit applicable.

La demanderesse allègue que les défenderesses ont fait défaut d’exécuter la prestation de services requise d’elles. Elle leur reproche divers problèmes liés aux installation fournies. Plusieurs exposants insatisfaits auraient présenté des demandes d’indemnisation pour lesquelles la demanderesse réclame compensation. La demanderesse présente une réclamation de 839 177 $.

Les défenderesses demandent le rejet de la demande au motif que la Cour n’aurait pas compétence pour entendre cette affaire. La demanderesse soutient qu’un préjudice a été subi au Québec, ce qui satisfait au règle de compétence dans l’article 3148(3) CcQ. Selon la demanderesse, c’est le cas puisque son patrimoine s’est appauvri au Québec du fait qu’elle a dû débourser des sommes pour payer les manquements des défenderesses au moment du salon et qu’elle devra indemniser les réclamants. Elle ajoute que sa réputation est aussi affectée, ce qui implique qu’elle subit un préjudice au Québec. Pour leur part, les défenderesses plaident que même si le patrimoine de la demanderesse est affecté au Québec, il demeure que le préjudice a réellement été subi à l’extérieur du Québec.

La Cour accueille la demande en exception déclinatoire. Les réclamations auxquelles fait face la demanderesse découlent des installations des défenderesses montées à Monaco. Les pertes financières que la demanderesse aurait subies résultent également des événements survenus à Monaco durant l’été 2015. Le simple fait que ces réclamations aient un impact sur le patrimoine de la demanderesse au Québec ne suffit pas pour conclure que le préjudice y a été subi. La comptabilisation de ce préjudice au Québec n’est pas suffisante. Quant à la question de l’atteinte à la réputation, il est vrai qu’il est possible que celle-ci survienne en partie au Québec, mais il ressort que les plaintes proviennent d’exposants situés un peu partout dans le monde. Cette atteinte n’est pas limitée au Québec. De plus, il serait déraisonnable que les tribunaux québécois se saisissent de cette affaire pour statuer sur le préjudice subi en raison de l’atteinte à la réputation, alors que cette atteinte est indissociable des autres préjudices qui ont pris naissance à Monaco et pour lesquels les tribunaux québécois ne sont pas compétents.

Compétence — article 3148 CcQ — action en recours collectif — groupe national

Charbonneau c Apple Canada inc, 2016 QCCS 5770

One of the issues in this motion to authorize a class action was whether a national class could be ordered. The claim was on behalf of the purchasers of certain 2011 models of Apple laptops who, it was alleged, had suffered loss because of defects in the graphics capability of the computers. The court authorized the class action but confined the class to all persons in Québec who purchased such a computer, wherever they purchased it, and all persons, wherever resident, who purchased one in Québec. Not only the representative plaintiff’s claim, but the claim of each member of the class, must meet the requirements of article 3148 of the CcQ with respect to the jurisdiction of the court. Québec, unlike most other provinces, has not legislated to give its courts jurisdiction over class actions where the representative plaintiff has a personal cause of action within the court’s jurisdiction, and the other non-jurisdictional requirements for a class action are met.

Here, none of the heads of jurisdiction in Article 3148 were met in the case of non-residents of Québec who had not purchased a computer in Québec. Neither Apple Canada nor Apple Incorporated had its domicile or residence in Québec (Article 3148(1)), which under Articles 307 and 308 of the CcQ means its head office. Nor were they legal persons who had an establishment in Québec, and the dispute relates to its activities in Québec (Article 3148(2)). The object of the litigation must be connected in one way or another with the respondent’s activity in Québec; here, the claim of a non-resident who purchased outside Québec had no relation to the respondents’ Québec operations. Nor did such a claim meet any of the grounds in Article 3148(3) (fault committed in Québec, injury suffered there, injurious act or omission occurred there, and one of the obligations of a contract was to be performed there).

Commencement of proceedings

Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (Hague Service Convention)

Xela Enterprises Ltd v Castillo, 2016 ONCA 437, 401 DLR (4th) 607 ^{Footnote 84}

The plaintiffs, Ontario-resident individuals and Ontario companies along with two Panamanian companies, brought an action in Ontario against individuals residing in Guatemala and companies carrying on business there, for various torts alleged to have caused damage to the plaintiffs in Ontario. The question on this appeal was whether the defendants had been validly served in accordance with Ontario Rule 17.05(2). ^{Footnote 85} It applies where service takes place in a state that is not a contracting state under the Hague Service Convention. ^{Footnote 86} It provides that the document “may be served in the manner provided by these rules for service in Ontario, or in the manner provided by the law of the jurisdiction where service is made, if service made in that manner could reasonably be expected to come to the notice of the person to be served.” The corporate defendants had been served in Guatemala by leaving a copy of the claim at the defendant’s place of business with a person who appeared to be in control of management of the business. Service on the individual defendants was unsuccessful, but copies of the pleadings were left at the residence of each individual and sent by courier, and a further copy was sent to their Canadian counsel. The motion judge found that service on the corporate defendants complied with the Ontario rules, and she made an order validating service on the individual defendants on the basis that she was satisfied that the claim came to the notice of these defendants.

The defendants argued that these methods of service were contrary to Guatemalan law and that the Ontario rule should not be interpreted to permit them because to do so was to ignore Canada’s international obligations towards Guatemala. The Court of Appeal, like the motion judge and the Divisional Court, rejected this argument. No conventional international law applied because Guatemala was not a party to the Hague Service Convention. To permit service in a manner that did not comply with Guatemalan law did not violate any customary international legal standard. The Ontario rules do not purport to legalize service that would be illegal in Guatemala, nor do they purport to declare that Ontario is the proper forum for an action. They provide an option as to how service may be effected in a non-convention state for the purposes of an Ontario action. They establish a means of satisfying an Ontario court that foreign defendants have received notice of an Ontario action. The defendants retained their right to challenge the Ontario courts’ jurisdiction over the subject matter of the action.

The significant consequence of unauthorized service is that it may be considered a nullity, and a Guatemalan court may not recognize or enforce an Ontario judgment as a result. The court added that, even if Rule 17.05(2) offended against international law, it would still have to be given effect. It is only a presumption that legislation is intended to comply with Canada’s international obligations. In the case of this rule, the presumption is rebutted because the intent to give the plaintiffs the option of serving according to Ontario law is clear. Nor was there a violation of comity if the rule was applied. The Ontario rules governing service in an Ontario action do not impact on Guatemalan sovereignty. Service is merely a procedural step.

Proof of foreign law

Evidence of marriage — sufficiency

Best v Best, 2016 NLCA 68

In 1997, a man and woman then living in Saudi Arabia went through a “blessing ceremony” conducted by a Buddhist lama when they were on a trekking trip in Nepal. Six years later, they and their two children took up residence in the province of Newfoundland and Labrador. They separated in 2008–09. In proceedings to determine spousal support, the judge held the parties were not validly married. This was affirmed by the Court of Appeal. As found by the judge, the certificate from the blessing ceremony “lacks the most basic indicia of authority that only the most naïve of persons would accept as valid.” The marriage certificate was found to be a fabrication for the sole purpose of obtaining married couples’ housing in Saudi Arabia. In any event, the marriage law in Nepal was not proved, and the purported marriage did not comply with Newfoundland and Labrador law.

Evidence obtained locally for foreign proceeding

Letters rogatory — breadth of examination permitted

Monster Energy Co v Craig, 2016 BCCA 290, 402 DLR (4th) 286

The petitioner sought to examine a BC journalist, Craig, who had written an article about the settlement of California wrongful death litigation in which she said that the plaintiffs’ lawyer in that action had said that Monster had paid substantial dollars. Monster was suing the lawyer in California for breach of a confidentiality agreement. The petitioner’s examination of Craig was for the purposes of that suit. The chambers judge had allowed the petitioner only to ask Craig whether her affidavit evidence as to what the lawyer had said was true. The Court of Appeal held this was unduly restrictive and the petitioner was allowed to ask general questions as to what the lawyer said. The California court would be concerned with whether what Craig said was a reliable account, and so counsel for the petitioner might want to ask questions relating, for example, to Craig’s opportunity to hear and remember the words she said were spoken by the lawyer. The concern that Craig was a journalist and issues of privilege might be engaged was adequately addressed by the chambers judge’s order that he remain seized of matters arising on Craig’s deposition. The Court of Appeal also noted that a witness being examined under a commission issued by a foreign court has the same right to refuse to answer any questions that the witness would be entitled to refuse in a cause pending in the Supreme Court of British Columbia. ^{Footnote 87}

Conditions for recognition or enforcement

Nature of judgment — decision by cleric

Mroue v Mroue, 2016 ONSC 2992, aff’d 2017 ONCA 517

Two brothers, Hussein and Issam Mroue, jointly owned land in Lebanon and agreed to sell it. In January 2010, it was sold for US $900,000. All documents were executed in Lebanon in accordance with the laws of that country. Hussein, who lived in Ivory Coast, gave a power of attorney to Issam, who was in Lebanon, so that he could conclude the sale of the property. Issam distributed the proceeds to Hussein and to two other members of the family. The distribution addressed outstanding moneys owed to the family members by Hussein in their family-owned business. Hussein objected to his share of the proceeds being diverted to the other family members. Hussein and Issam became convinced they should have their dispute settled under Sharia law because they were brothers, and resort to the civil courts would bring shame on the family.

With the assistance of other family members, an arbitrator was chosen who was a learned scholar and Imam in the city of Qom, Iran. He was known to the family because a brother of Hussein and Issam, Sheikh Yeyah, had studied with him, and Imad, Hussein’s son, had asked him for advice on a number of occasions. The brothers’ arguments were formulated in writing and conveyed to the arbitrator by their sister. The arbitrator rendered a decision in May 2010. The judgment showed that the arbitrator was responding to the specific question whether Issam was allowed to seize Hussein’s share of the proceeds because he, Issam, believed that Hussein was taking control of Issam’s funds and the funds of other partners in a different business that belonged to the two partners along with other partners. Hussein’s position, that Issam had no right to seize the money, was clearly stated. So was Issam’s position, which was that Hussein defaulted on his obligations to his partners in the family-owned business and that the right of set-off should prevail with respect to Hussein’s share of the proceeds.

In a brief letter, the arbitrator confirmed that Issam had had the right to distribute Hussein’s share of the funds so as to settle Hussein’s obligations to the other participants in the family business. The arbitrator declared that Sheikh Yeyah was his representative to determine the losses and damages and that his decision for settling the dispute should be binding, as he would consult with the experts. Sheikh Yeyah subsequently did decide that Hussein should pay damages of 10 percent to the affected partners.

Hussein and his son, Imad, who lived in Ottawa, were dissatisfied with this outcome and brought the present proceedings in Ontario against Issam for payment of half the proceeds of the Lebanon property. Issam asked the court to declare that the arbitrator’s decision should be recognized as final and binding, with the result that Hussein’s claim (Imad was held to have no standing to make a claim) was res judicata, and issue estoppel applied. Hussein argued the arbitrator had given only an advisory opinion.

The Ontario judge held that issue estoppel applied. The judgment of the Sharia court was between the same parties and dealt with the same issues and facts that were the subject of the current proceeding. The documents signed by Hussein clearly established that he sought out a process by which his dispute with Issam would be determined by Sharia law and that he was prepared to accept the judgment of the arbitrator as binding upon him. Expert evidence on Sharia law showed that an arbitrator who is a learned and respected cleric has jurisdiction to rule on property disputes deriving from the payment of money. The court held that the arbitrator in this case had been given such jurisdiction, was qualified to exercise it, and had decided a question that the parties had both put to him, which satisfied the essential elements for a valid arbitration in accordance with Sharia law. It was a “judicial decision,” just as an administrative tribunal’s decision would have the status of a judicial decision. It was true that the arbitrator gave no reasons for his decision that would meet Canadian standards requiring reasons, but to impose such a requirement would offend the notion of comity. The parties sought a decision in accordance with Sharia law and received one, and they could not now complain. The final nature of the judgment was confirmed by the language of the arbitrator and the acknowledgment of the parties that they agreed to abide by the “Sharia based judgment.”

Nature of judgment — order to pay costs of enforcing judgment in this proceeding

Note. In MGM Grand Hotel v Chiu, ^{Footnote 88} the Ontario judge enforcing a Nevada judgment refused to include the Nevada court’s order that the debtor pay the costs of the Ontario proceeding. The Nevada court had no jurisdiction to make such an order, and the amount was also excessive and unreasonable.

Jurisdiction of the originating court — debtor’s attornment to the jurisdiction

LLS America LLC (Trustee of) v Bjarnason, 2016 BCSC 909

The plaintiff was the trustee of the estate of a corporation, LLS, now in bankruptcy protection in the United States, which had engaged in an extensive Ponzi scheme constructed by a Ms Nelson. The plaintiff filed an adversary complaint in the bankruptcy proceedings, claiming that a list of named defendants had received fraudulent transfers from LLS — namely, payouts to them as investors in the Ponzi scheme. The trustee sued to recover these funds for LLS’s estate. The plaintiff obtained judgment in the United States District Court for the Eastern District of Washington against, inter alia, the Bjarnasons, a couple living in British Columbia. The plaintiff registered the judgment under Part 2, Reciprocal Enforcement of Court Orders, of the Court Order Enforcement Act. ^{Footnote 89} Washington is a reciprocating state for the purpose of Part 2. The amount of the judgment, in Canadian currency, was stated as $228,900 plus interest and costs.

The court held that the Bjarnasons had no grounds for having the registration against them set aside. They attorned to the jurisdiction of the District Court and had the opportunity, which they did not take, to show that the funds that they advanced to LLS, and which essentially they were getting back, were advanced in good faith (based on the test of a reasonable person in their position). If they had satisfied the District Court that the funds they contributed were advanced in good faith, the Washington judgment would not have resulted.

The Bjarnasons’ attornment took the form of their participation, with other defendants, in several steps in the Washington proceeding, including applying to transfer the matter from Bankruptcy Court to the District Court, filing an answer to the adversary complaint, filing answers to two sets of interrogatories by the plaintiff, filing an exhibit and witness list, and cross-examining the court-appointed examiner. By the time of the trial, the law firm that had represented the Bjarnasons and other defendants had ceased to correspond with them and had informed the court it no longer had the authority to represent them. The Bjarnasons submitted no evidence on how or when they terminated their relationship with that law firm or on what they did to ensure that other counsel or they themselves had carriage of the defence. They were bound by their previous acts of attornment over the two years that the law firm had represented them.

The Bjarnasons’ argument that the registration of the Washington judgment in British Columbia should be set aside rested on the Washington court’s lack of jurisdiction, ^{Footnote 90} in that it had no real and substantial connection with the Canadian activities of LLS. The answer was that the Bjarnasons’ attornment to the jurisdiction made the presence or absence of another jurisdictional ground irrelevant. They also invoked another defence under the act, which was that the foreign court acted without authority under its own law to adjudicate the matter. ^{Footnote 91} The BC judge held that the requirements for jurisdiction under Washington law, as stated in the case law, were met, based on the considerable contacts between the litigation and the State of Washington. The judge went on to consider all the other possible defences under the act and held that none of them applied. In particular, the defence of public policy was not triggered by the fact that the Bjarnasons had, as they claimed, lost rather than made money with LLS. ^{Footnote 92} It was not repugnant to the fundamental morality of the Canadian legal system that the gains an innocent person enjoys from a Ponzi scheme are returned so that all harmed may share the purported “gains” or “winnings” generated by the scheme. Nor was it contrary to public policy for all amounts received by the investors to be clawed back and recovered, subject to the good faith defence that applied under US law. Nor was there a failure of natural justice. ^{Footnote 93} The defendants’ failure to drive their case after the law firm ceased to act for them could not be visited on the law firm, the District Court, or the plaintiff in the form of re-litigating matters at this stage. The defendants had the opportunity to be heard, which by their actions they did not take.

Note. Two other cases involving the same Washington judgment were LLS America LLC (Trustee of) v Dill, 2016 MBQB 20, 325 Man R (2d) 147 (registration also not set aside), and Kriegman v Wilson, below. See also Nextgen Energy Watervliet Twp, LLP v Bremner, ^{Footnote 94} in which the defendant withdrew after having attorned to the Michigan court’s jurisdiction, but did not apply in Michigan to have the resulting default judgment set aside, which on the evidence presented it could have done.

Defences to recognition or enforcement

Natural justice

Note. A failure of the defendant to receive notice of the proceedings so as to enable him or her to defend was found in Salehi v Tawoosi ^{Footnote 95} (Iranian court orders against the husband to fulfil obligations to his wife) and Alternatifbank AS v Arslan ^{Footnote 96} (payment orders of a Turkish court). See also Britton v Simon Estate, noted below under Statutory enforcement; Uniform Enforcement of Foreign Judgments Act — statutory power to reduce damages.

Statutory enforcement

Uniform Reciprocal Enforcement of Judgments Act — late application to set aside registration

Kriegman v Wilson, 2016 BCCA 122

The Wilsons were another BC couple who had invested in the LLS Ponzi scheme described above in the note of LLS America LLC (Trustee of) v Bjarnason. Ms Wilson (her husband had died in 2010) was liable under the Washington judgment for $347,045. The BC registration order was made by a Master of the Supreme Court on 10 April 2013, and Ms Wilson received notice of the order in April 2013. She filed a notice of application to set aside the registration on 9 September 2014. The Court Order Enforcement Act requires that an application to set aside registration must be made within one month after the judgment debtor has received notice of the registration. ^{Footnote 97} The Court of Appeal held that a court had no power to relieve against this time requirement. Nor could the statute be read as making null and void a registration of a foreign judgment whenever the judgment debtor would have had a good ground for setting the registration aside. An order of a superior court of record is binding and conclusive unless set aside on appeal. Ms Wilson had not applied in a timely way to set aside the registration. She was therefore bound by the Washington judgment as registered.

Uniform Enforcement of Foreign Judgments Act — statutory power to reduce damages

Britton v Simon Estate, 2016 SKQB 30, 395 DLR (4th) 139

Saskatchewan is so far the only province to have enacted the uniform Enforcement of Foreign Judgments Act. ^{Footnote 98} The plaintiffs in this case, the parents and estate of a young man who had died in 2010 after an altercation outside a bar in Wisconsin, had obtained a civil judgment in Wisconsin state court against another man involved in the fight who had earlier been charged with murder but acquitted. The amount of the judgment was US $573,804. The plaintiffs registered the judgment under the Act because the judgment debtor, Britton, was a Saskatchewan resident. He applied to have the registration set aside. His grounds were that the trial did not meet the standards of natural justice; ^{Footnote 99} that the judgment was manifestly contrary to public policy in Saskatchewan; ^{Footnote 100} that the $100,000 punitive damages in the award were a “monetary fine or penalty” and so unenforceable under the Act; ^{Footnote 101} and that the Saskatchewan court should reduce the punitive damage award and parts of the compensatory damage award on the basis that the punitive award was higher than could have been awarded in Saskatchewan and that the compensatory items were excessive in the circumstances. These alterations to the damages are possible under provisions of the act that allow a court in certain cases to limit enforcement of an award to an amount less than the foreign court awarded. ^{Footnote 102}

The natural justice argument was essentially that the jury in Wisconsin were biased against Britton as a result of the extensive press publicity given to the case and Britton’s role in it. The court held that there was no specific evidence of any bias. Britton had not established that the jury’s verdict was any more likely to have resulted from bias than from proper application of the law to the facts in accordance with their oath as jurors. The public policy argument also failed. It was focused on the plaintiffs’ claim for medical costs, which in Canada could not be claimed because they were borne by the government. The incident occurred in a jurisdiction where the medical system was different and the plaintiffs had incurred significant expenses.

The “monetary fine or penalty” that is excluded from the meaning of “judgment” under the Act referred to the well-established bar against enforcing foreign penal laws. ^{Footnote 103} This meant violations of criminal or quasi-criminal statutes or proceedings in the nature of a suit in favour of the state whose law has been infringed. A civil punitive damages award is not the result of the enforcement of a penal statute. It is enforced only through civil enforcement mechanisms in which the state has no role. In effect, the award of punitive damages becomes part of the private debt owing to the plaintiffs. Moreover, the express power under the act to limit the amount of punitive damages ^{Footnote 104} necessarily implied that such damages were not excluded from the enforcement regime.

None of the five elements of the damage award that were sought to be changed was such as to require that enforcement be limited to a lower amount. One was the punitive damage award, which the court can limit if the amount is higher than could have been awarded in Saskatchewan. ^{Footnote 105} The $100,000 awarded to the victim’s estate was one that a Saskatchewan court might not have made, but there was no basis for finding that it could not have made it.

The other four components of the damage award were compensatory damages, where the statutory test is that the amount must be excessive in the circumstances. ^{Footnote 106} This test was not met for any of them. First, the $191,375 medical, hospital, and funeral expenses awarded to the estate were not excessive on any ground. Second, damages of $25,000 for emotional distress, pain, and suffering prior to death would not be recoverable in Saskatchewan but could not be said to be excessive, given that they were recoverable under Wisconsin law.

Third, the $250,000 awarded to the victim’s parents for loss of the society and companionship of their son significantly exceeded what the parents could receive if the cause of action had arisen in Saskatchewan, but it was not so excessive as to be unconscionable or to offend the concept of what was reasonable in the province. The intention of the statutory power to limit enforcement was not to provide a safe haven to which judgment debtors could escape in order to avoid payment of a damage award just because it was greater than what it would be in Saskatchewan. This was especially so where the foreign judgment was the product of a court acting properly, within the applicable laws of its jurisdiction, in a legal system similar to Saskatchewan’s and observing similar standards of fairness and due process. And, fourth, the Wisconsin costs award of $7,429 covered the amounts that a Saskatchewan court could also have awarded and could not be seen as excessive under the circumstances.

Justice for the Victims of Terrorism Act — enforcement of another province’s order for enforcement of United States District Court judgment against Iran

Tracy (Litigation Guardian of) v Iranian Ministry of Information and Security, 2016 ONSC 3759, 400 DLR (4th) 670

The plaintiffs had obtained judgments against the Islamic Republic of Iran, as well as against agencies of that state, in the US courts. Their claims were for injuries suffered in terrorist attacks that were found to have been sponsored by Iran. In 2012, Canada enacted the Justice for the Victims of Terrorism Act (JVTA), ^{Footnote 107} which gave victims of terrorism a cause of action against foreign states that support terrorism. The State Immunity Act ^{Footnote 108} was amended to remove state immunity in such actions if the foreign state was set out on a list of states reasonably believed to be supporters of terrorism; Iran was on the list. Once these amendments took effect, the plaintiffs brought actions in Nova Scotia to enforce the US judgments against Iran. The JVTA says that Canadian courts must recognize an otherwise enforceable foreign judgment granted in favour of a person who has suffered loss or damage within the scope of the right of recovery under the Act. ^{Footnote 109} The Nova Scotia court gave judgment against Iran and its agencies in favour of the plaintiffs. The plaintiffs then registered the Nova Scotia judgment in Ontario. ^{Footnote 110}

Iran, which had not participated in any of the proceedings in the United States or Canada, brought the present motions to set aside, vary, or stay the Ontario judgments on various grounds. The motions were dismissed on the basis that Iran failed to provide a reasonable explanation for its failure to defend the proceedings. The plaintiffs’ actions were not statute barred because their right to enforce their US judgments in Canada was not discoverable until the law changed to make it possible. The properties in question, against which enforcement was sought, were not subject to diplomatic immunity because the property was not on the minister of foreign affairs’ certificate identifying all of Iran’s property in Canada that was recognized as having diplomatic status. The certificate was conclusive.

Conditions nécessaires à la reconnaissance d’une décision étrangère

Compétence des autorités étrangères — preuve — article 3168 CcQ

Zimmermann inc c Barer, 2016 QCCA 260

The appellants sought the recognition and enforcement of a default judgment from the United States District Court for the District of Vermont against Barer Engineering (BEC) and Barer personally, as alter ego of the corporation, for US $961,390. BEC was a Vermont corporation, but Barer was a resident of Québec. Neither BEC nor Barer appeared before the District Court. The plaintiffs were a Michigan corporation and its German parent, who claimed to be owed money by BEC under a contract under which the plaintiffs manufactured equipment for BEC to be supplied to the US military. The trial judge held that the plaintiffs had not proved that the District Court’s jurisdiction satisfied any of the grounds in Article 3168 of the CcQ and dismissed the motion for recognition and enforcement. She held that there was no evidence in the record that would allow her to conclude that the District Court had jurisdiction over the respondent Barer under Article 3168 of the CcQ based on the doctrine of alter ego and the piercing of the corporate veil. She made no overriding error in so finding. The District Court gave no reasons or findings of facts to support its award against Barer, so the Superior Court judge was unaware of what evidence might have been adduced or its content.

Connecting factors

Domicile — abandonment of domicile of choice and revival of domicile of origin

Scott v Vanston, 2016 SKCA 75, [2016] 9 WWR 256

The deceased, James Scott, was born in Alberta but had had no connection with that province for the last decades of his life when he died at the age of fifty-eight. He practised as a radiologist in British Columbia, but his hospital privileges were rescinded in 1991. In 1999, he started working with a new radiology group in Saskatchewan. His first marriage had ended by then. There were two children of that marriage. Eventually, he married a BC resident after a protracted long-distance relationship. In March 2012, the Saskatchewan group fired him. In the summer of that year, he and his second wife decided to move to Kelowna, British Columbia, and listed the condominium they owned in Saskatchewan for sale. They moved into a leased house in British Columbia. He almost immediately left again to look for job opportunities in Mexico and Costa Rica. He died a week after he returned to Kelowna in September 2012. His wife returned to Saskatchewan a few months later.

Dr Scott had made a will three months before he died in which he left everything to his second wife except for $5,000 to each of her two adult daughters. The will specified that his own children were to receive nothing, as his son had dishonestly taken money and his daughter had disowned him. This proceeding was brought in Saskatchewan by the wife against Scott’s son to determine the distribution of Scott’s estate. The parties agreed that which province’s law applied to the distribution depended on where Scott was domiciled when he died, but they disagreed on where that was. The son argued it was British Columbia. The wife submitted that it was Saskatchewan. The trial judge held it was Alberta because Scott had abandoned the domicile of choice he had had in Saskatchewan and not acquired a new domicile of choice in British Columbia.

The Court of Appeal held that the trial judge had made no overriding error in holding that Scott had not acquired a domicile of choice in British Columbia after he left Saskatchewan. The judge concluded that Kelowna was nothing more than a stopover until Scott could find a job in Central America. The Court of Appeal likewise affirmed the judge’s decision that Scott had abandoned Saskatchewan as his domicile of choice. He had left the province in fact, and his wife’s own evidence was that he did not intend to return to Saskatchewan because he was planning to move to Central America and had put the Saskatoon condominium up for sale to fund living there.

A domicile of choice could be abandoned even if no new domicile of choice was acquired. That was the circumstance in which the domicile of origin revived. The trial judge had erred, however, in refusing to re-open the trial to let the parties adduce further evidence on what the domicile of origin was. The mere fact that Scott was born in Alberta did not determine the matter. His domicile of origin depended on where his parents were domiciled when he was born. The case was remitted to the trial judge for a new trial on the specific issue of the domicile of origin only.

Procedure and substance

Limitations statute — ultimate limitation period

Note. A US statute imposing an eighteen-year final limitation period on claims against aircraft manufacturers was held not to apply to claims arising out of an airplane crash in New York state because the claims were based on misrepresentations in the manufacturer’s service bulletins and overhaul manual, which the court held were tort claims governed by Ontario law: Thorne v Hudson. ^{Footnote 111}

Apology legislation

Coles v Takata Corp, 2016 ONSC 4885

TK Holdings manufactured automobile airbags in Japan. Five product liability class actions were brought in Ontario against TK Holdings and against the car manufacturers that installed its airbags in their vehicles. The air bags had been the subject of recalls for defects. The plaintiffs were all those who owned or leased a car containing a TK airbag at the date of these recalls. TK Holdings brought a motion to strike six paragraphs from the statement of claim. The ground was that the six paragraphs contained statements that were apologies, and reference to them as supporting the claim contravened the Apology Act, 2009. ^{Footnote 112} The statements had been made in Japan and the District of Columbia. The court held that under the pleading rules, a party had to plead facts but not the evidence to be adduced in support of these facts. The apologies in question were evidence, not essential facts. However, they could be the subject of discovery since the application of the Act required the finder of fact to determine whether the statement was indeed an apology or a non-apologetic admission.

The court also concluded that the Apology Act is a statute about the law of evidence and that the law of evidence is procedural law. Hence, the Ontario act would apply to an Ontario proceeding. The court agreed obiter with TK Holdings’ alternative argument that even if the Apology Act is substantive law, it would apply to the claims by all the plaintiffs except those from Quebec, because all the provinces other than Quebec had a similar statute and the plaintiffs’ claims would be governed by the law of the province in which the tort took place.

Production of records from abroad — banking records — production barred by foreign law

Note. In TD Bank NA v Lloyd’s Underwriters, ^{Footnote 113} a bank suing its liability insurers in relation to a claim arising out of a subsidiary’s activities in Florida was held to be entitled to refuse production, and, indeed, the disclosure of the existence of certain classes of documents as was laid down by US banking law. The bank was ordered to provide reasonable cooperation in seeking consent from the American authorities, where that was possible.

Contract

Proper law — agreed choice — bona fides of choice

2106701 Ontario Inc v 2288450 Ontario Ltd, 2016 ONSC 2673

The defendant, 228, leased a business jet to the plaintiff, NovaJet. The parties subsequently entered into an aircraft management and operating agreement whereby 228 engaged NovaJet’s expertise in managing the operation of airplanes. NovaJet brought this action in Ontario for unpaid invoices under the management agreement and asserted liens in respect of the debts owing. In the same month, 228 commenced an action against NovaJet in Nova Scotia for economic losses that resulted from NovaJet’s alleged breach of contract and negligence in performing the agreement. One of the issues in the present stage of the proceeding was whether the proper law of the management agreement was that of Ontario or that of Nova Scotia.

The lease agreement for the airplane was expressly governed by Ontario law. The aircraft was based in Toronto, and NovaJet, like 228, was an Ontario company with its head office in Toronto. The management agreement, however, stipulated that Nova Scotia law applied to the contract and that Nova Scotia courts had exclusive jurisdiction with respect to any actions commenced with respect to it. The court in Nova Scotia had stayed 228’s action there on the basis that Ontario was the proper forum. ^{Footnote 114} Part of the reason was the court’s conclusion that the forum and law clause in the management agreement referenced Nova Scotia rather than Ontario law as a result of a mistake in drafting, and it would be unconscientious for 228 to rely on this mistake. The court rectified the clause so that it referred to Ontario rather than Nova Scotia. The Nova Scotia court held that even without rectifying the clause, the court lacked jurisdiction over the matter because the action had absolutely no connection with Nova Scotia and a very strong connection with Ontario and no other jurisdiction.

The Ontario judge held that the Nova Scotia court’s decision on the applicable law was final and gave rise to an issue estoppel. In any event, the Ontario judge adopted the Nova Scotia court’s reasons in respect of the rectification of the forum and law clause in the management agreement, with the result that the law of Ontario governed the agreement. Alternatively, the contractual choice of Nova Scotia law was held not to be bona fide. There was no connection whatever between the agreement and Nova Scotia. All the connections were with Ontario. The parties never discussed, nor intended, that the law of Nova Scotia govern the agreement. The defendant 228 had not denied that they never intended for the law of Nova Scotia to apply. Nor had 228 suggested any reason for wishing the law of Nova Scotia to apply. A further reason for holding that Ontario law was the proper law was that the defendant 228 had already invoked the law of Ontario to seek relief from the asserted lien and to defend the action on the merits. Under such circumstances, it was deemed to have adopted the law of Ontario as the proper law.

Matrimonial causes

Marriage — foreign ceremony

Note. In Patel v Patel, ^{Footnote 115} where there was proof of a civil ceremony, but none of the usual, much larger, religious ceremony, the court applied the presumption that the civil ceremony was legally sufficient. See also Best v Best, noted above under Procedure; Common Law and Federal; Proof of foreign law; Evidence of marriage — sufficiency.

Divorce — foreign divorce

Wilson v Kovalev, 2016 ONSC 163, 72 RFL (7th) 362

The husband and wife were born and raised in Peru and married there in 2006. In 2008, they moved to Canada to live there permanently but separated six months later. They proceeded to obtain a notarial divorce in Peru in June 2009. It was electronically registered in the public records of Lima, Peru. They remained in Canada, however, where both became permanent residents and eventually Canadian citizens. The wife remarried in 2011 on the basis of a legal opinion that the Peruvian divorce was considered valid in Canada. This opinion was based in part on incorrect facts. The husband and his new partier decided to marry in 2013. To apply for a licence he, too, sought a legal opinion as to the divorce. When he encountered difficulties in obtaining such an opinion, he commenced proceedings in Ontario for a divorce. The wife sought to have the application for a divorce dismissed on the basis that the Peruvian divorce was valid.

The parties agreed that neither of the statutory grounds for recognition of a foreign divorce applied under the circumstances. Neither of them was ordinarily resident in Peru for one year immediately preceding commencement of the divorce proceeding there, and the wife was not domiciled there at that time either. ^{Footnote 116} However, the Divorce Act expressly preserves common law grounds of recognition. ^{Footnote 117} The judge held that the Peruvian divorce met the common law test of a real and substantial connection between either party and the country where the divorce was granted. A minimal connection could be sufficient provided that it was not superficial in nature.

Here, both parties consented to, and participated in, the proceedings, and there was no fraud that could affect the jurisdiction of the notary to grant the divorce. Both parties had a real and substantial connection with Peru. They had lived in Canada only six months before they separated, and they retained many personal and family connections with Peru at the time of the divorce. Although their connections to Canada had deepened since, the real and substantial connection was not restricted to current connections to a country. The relevant links were those that existed when the divorce proceedings were commenced and when the divorce was granted. At that time, the parties were still more closely connected to Peru than to Canada.

Matrimonial property and support claims

Note. See Parker v Mitchell, noted above under Jurisdiction; Common Law and Federal; Matrimonial causes; Matrimonial property — jurisdiction simpliciter.

Classification juridique

Présomption qu’un absent est vivant durant les sept années qui suivent sa disparition, à moins que son décès ne soit prouvé avant l’expiration de ce délai — article 85 CcQ — effet

Carleton University v Threlfall, 2016 QCCS 406 ^{Footnote 118}

Carleton University brought an action against the life partner of a professor who retired in 1996. It claimed repayment of pension benefits that were paid to the professor after he had died but before his body was found. The professor suffered from Alzheimer’s disease and disappeared from his home in Gatineau, Québec, in 2007, when he was seventy-seven years old. Searches were unsuccessful. In early 2008, his partner was appointed tutor for the absentee. Carleton was not notified of his disappearance and learned about it in the newspaper in 2009. At that time, they notified the partner that they would cease paying the benefits ($7,122 a month) and would reclaim all sums paid since the start of 2008. She responded by having a notary draw to the university’s attention that under Article 85 of the CcQ, a person whose death has not been established is presumed to be alive for seven years following his disappearance, unless proof of his death was made earlier. This provision applied because the professor was a Québec resident. The university continued paying the benefits. In July 2013, the professor’s remains were found on his neighbour’s property. A coroner determined that he had died in 2007, and an act of death was issued stating the date as 11 September 2007. Carleton then claimed reimbursement of all amounts paid to the deceased since the start of 2008, a total of $497,333.

The court held that unless Carleton could provide proof of the professor’s death, it was bound by Article 85 of the CcQ and had to wait seven years before his death could be declared. It was unfortunate for the partner that her neighbour’s dog found the remains about fifty-five days before the expiry of the seven-year period, but once they were found, Carleton could show that its payments were made “in error” within the meaning of Article 1491 of the CcQ. The presumption of life did not change the initial obligation stipulated in the pension plan. The pension benefits end when the beneficiary dies. When the beneficiary is an absentee, the time of his or her death can remain uncertain for up to seven years. However, once the date of death is established, either at the end of the seven-year period or before it if the death can be proven, the provisions of the contract apply and the benefits end. Carleton was entitled to recover retroactively the overpayment.

Responsabilité délictuelle

Écrasement d’un avion en Ontario — vol de l’Alberta au Québec — les parties ont un lien plus étroit avec le système juridique québécois — article 3082 CcQ

Giesbrecht c Nadeau (Succession de), 2016 QCCS 4929

Le Tribunal est saisi de la question relative à la loi applicable au litige opposant les parties. En octobre 2012, un aéronef amphibie s’écrase à Pickle Lake, en Ontario. L’écrasement survient lors des manœuvres d’atterrissage. Jean Fournier, le nouveau propriétaire de l’aéronef, accompagné de trois personnes, était allé en prendre possession la veille en Alberta et le groupe devait effectuer une escale à l’aéroport de Pickle Lake avant de reprendre le vol en vue du retour vers Trois-Rivières, où tous les occupants étaient domiciliés. Trois des quatre occupants meurent lors de l’écrasement. Seul le propriétaire de l’appareil survit. Par leur requête introductive d’instance, les demandeurs recherchent la condamnation des défendeurs au paiement de dommages-intérêts totalisant 3 217 767 $, et ce, en raison du décès de feu Yannick Fournier. Huit des douze demandeurs, dont principalement la veuve et les deux orphelins mineurs de feu Fournier, sont domiciliés au Québec. Les quatre autres demandeurs, membres de la belle-famille par alliance de feu Fournier, sont domiciliés en Colombie-Britannique. Quant aux deux défenderesses, elles sont domiciliées ou ont leur siège au Québec. Les demandeurs soutiennent que l’évaluation des dommages subis doit être régie par la loi ontarienne puisque l’accident et le décès ont eu lieu dans cette province ^{Footnote 119} et que toutes les parties n’ont pas leur domicile ou leur résidence au Québec. ^{Footnote 120} Les défendeurs allèguent que seul le droit du Québec est applicable puisque l’auteur de la faute alléguée ainsi que les principales victimes résidaient au Québec et étaient domiciliés à Trois-Rivières. Ils soutiennent aussi que la situation en litige n’a qu’un lien éloigné avec la loi ontarienne et que sa relation avec la loi québécoise est beaucoup plus étroite.

La Cour décide que la loi québécoise s’applique en vertu de l’article 3082 CcQ. ^{Footnote 121} En l’espèce les liens de rattachement entre l’événement tragique et la loi ontarienne sont le fait que l’écrasement a eu lieu dans cette juridiction et que feu Fournier y est décédé. Dans les faits, la “loi du centre de gravité réel de la situation” juridique est la loi québécoise. Le propriétaire de l’aéronef, domicilié au Québec, avait retenu les services de la co-défenderesse NAS, dont le siège est au Québec, afin d’effectuer le vol de retour. Les victimes étaient domiciliées au Québec. Par ailleurs, près de 95 pour cent de la valeur totale de la réclamation est représentée par la réclamation pécuniaire et non pécuniaire de la veuve et des deux orphelins de feu Fournier, lesquels sont domiciliés au Québec. Globalement, il est manifeste que les questions en litige et les relations entre les parties ont un lien plus étroit avec le système juridique québécois qu’avec le système juridique ontarien.