COURT FILE NO.: 335/07

DATE: 2008/10/07

SUPERIOR COURT OF JUSTICE - ONTARIO

(Divisional Court)

RE: Apotex Inc. v. Bausch & Stroebel Maschinenfabrik Ilshofen GMBH & Co. KG, Alphacos SA and Mordhorst Automation Inc.

BEFORE: Justice D. Bellamy

COUNSEL: Kevin A. Johnson, for the Defendant/Appellant, Alphacos SA

Mervyn D. Abramowitz and L. Viet Nguyen, for the Plaintiff/Respondent

HEARD: Tuesday, October 7, 2008

ENDORSEMENT

[1] This appeal arises out of an alleged breach of contract on the part of four companies, including the appellant Alphacos SA (“Alphacos”), as a result of a failure to produce an IV bag-filling machine (“the Machine”) capable of functioning according to the agreed-upon performance requirements.

[2] Alphacos, a manufacturing company incorporated and carrying on business in Switzerland, appeals from the Order of Master J. Haberman dated June 4, 2007 dismissing its motion to stay the action for breach of contract on the basis that Switzerland, and not Ontario, was forum conveniens for the proceeding. It also appeals from the Master’s award of costs.

[3] Alphacos asks that the Order be set aside and the action stayed in favour of the courts of Switzerland, and lists fifty-six grounds on which it says the Master erred.

Background

[4] The respondent Apotex Inc. (“Apotex”) brought an action for breach of contract in the Ontario Superior Court of Justice against what it claims is a “team” of companies involved in the production and sale of machines made for use in the pharmaceutical industry. Alphacos arranged for production of the Machine through Mordhorst Automation Inc. (“MAI”), an Ontario-based company that distributes European-produced pharmaceutical equipment in Canada, and the exclusive representative in Canada of Bausch & Stroebel Machinenefabrik Ilshofen GMBH & Co. (“BSG”), a company incorporated and carrying on business in Germany. BSG manufactures machines for the pharmaceutical industry for sale internationally. In addition to its manufacturing operations, Alphacos distributes BSG machines and is owned by the holding company Bausch Holding SA.

[5] Together with BSUS, the American distributor and aftermarket service provider for BSG equipment sold in the US, BSG and Alphacos form a group called the “B & S Network,” which co-operates in advertising – including by maintaining a common website and publishing a common brochure – and providing services for BSG.

[6] The three companies in the B&S Network maintain that they are independent corporate entities, and are not legally accountable for one another’s actions. Apotex alleges that they were given the impression that BSG was associated with Alphacos and therefore party to the contract. The extent to which the defendants in this action are interconnected, and in particular the manner in which these companies represented Alphacos’ association with BSG, was an important issue in Alphacos’ motion before Master Haberman. The Master considered the location of the parties’ business operations, along with Apotex’s perception of the respective companies’ involvement in the completion of the contract, relevant to a determination of the appropriate jurisdiction for the trial of the action.

Standard of Review

[7] Appeals from masters’ decisions to the Divisional Court are to be reviewed on the same standard as judges’ decisions: Zeitoun v. Economical Insurance Group, [2008] O.J. No. 1771, 292 D.L.R. (4th) 313.

[8] Housen v. Nikolaisen (2002), 2002 SCC 33, 211 D.L.R. (4th) 577 is the Supreme Court of Canada’s most recent decision with respect to the standard of review from a judge’s decision. There, the Court held that the standard of review of a judge’s findings on a question of law is correctness, while a judge’s findings of fact can be reversed only if the judge’s decision evidences a “palpable and overriding error.” This statement has been interpreted as requiring a decision to be “clearly wrong” in the sense of being “not reasonably supported by the evidence”: H.L. v. Canada (Attorney General), 2005 SCC 25, [2005] 1 S.C.R. 401 at para. 110.

[9] Under the doctrine of forum non conveniens, a court’s power to decline to exercise jurisdiction where a case is more appropriately dealt with in another jurisdiction is discretionary, and based on consideration of factors that will ensure an action is tried in the jurisdiction with the closest connection to the action and the parties, and in which no one litigant secures a juridical advantage at the expense of others: Amchem Products Inc. v. British Columbia (Workers' Compensation Board), [1993] 1 S.C.R. 897, at para. 21.

[10] In its recent decision in Visram v. Chandarana (2008), 291 D.L.R. (4th) 412 (Ont.Div.Ct.), this Court addressed the standard of review of a master’s decision on a forum conveniens motion. The Court concluded that where a master is engaged in the exercise of discretion involving the weighing of relevant factors, it is not appropriate for a reviewing court to second guess the weight assigned to those factors and to substitute its discretion for that of the master.

[11] For the reasons that follow, I am satisfied that Master Haberman’s decision does not contain any error of law rendering it unreasonable based on the evidence, and that this Court should not interfere with the Master’s decision.

Master Haberman’s Decision

[12] Master Haberman found that a proper assessment of Alphacos’ motion required a two-stage analysis. The Master stated that it was not enough to determine whether the Court could exercise jurisdiction over Alphacos as a foreign party. If she concluded that the Court had jurisdiction, a further stage of analysis was required in order to determine whether Ontario was forum conveniens for the action.

[13] In the first stage of this analysis, Master Haberman found that the Court had neither presence- nor consent-based jurisdiction over Alphacos. It did not have any manufacturing, sales or service presence in Ontario, and it had a limited relationship with MAI, the only Ontario-based company involved in the action. Master Haberman found that the only basis on which the Court could assert its jurisdiction over Alphacos was if there was a real and substantial connection between the subject matter of the action or Alphacos itself and Ontario.

[14] Master Haberman then proceeded to apply the well-known and established test in Muscutt v. Courcelles (2002), 13 C.C.L.T. (3d) 161 at paras. 77-110 for determining whether a proceeding has a real and substantial connection to a particular jurisdiction. The parties are in agreement that this is the proper test for determining if the Ontario Court can assume jurisdiction over Alphacos. The test involves consideration of seven factors relevant to determining whether or not a real and substantial connection exists. Upon weighing these factors, the Master concluded that they supported a connection with Ontario, and that the action should remain in this jurisdiction. Master Haberman correctly found that in determining that the Court could assert jurisdiction, it need not be established that Ontario was the most appropriate jurisdiction – only that it was an appropriate jurisdiction.

[15] Master Haberman then considered whether Switzerland could be said to have a closer connection to the action and to the parties than Ontario, in other words, whether Ontario was forum non conveniens. Informed by the legal principles governing a determination of forum conveniens as set out in Frymer v. Brettschneider, [1994] O.J. No. 1411 (C.A.), the Master assessed each factor relevant to this determination as set out in Eastern Power v. Azienda Comunale Energie & Ambiente (1999), 178 D.L.R. (4th) 409 in light of the available evidence. Based on her weighting of the factors, the Master concluded that she was not satisfied that Switzerland was clearly a more convenient forum for the action than Ontario, as most of the factors were neutral, with two factors weighing heavily in favour of Ontario as the appropriate jurisdiction, and two factors in favour of Switzerland, although not to a significant degree.

Analysis

[16] Counsel for Alphacos submits that the Master incorrectly interpreted and applied the legal test for determining forum conveniens set out in Frymer, supra by failing to place the onus entirely on Apotex to show that Ontario is the appropriate forum. I disagree with counsel’s interpretation of the Court of Appeal’s reasoning in Frymer. That case stands for the proposition that although technically the onus should be on the plaintiff to justify its choice of jurisdiction, the burden of proof will rarely be determinative in establishing forum conveniens, as “the choice of the appropriate forum will generally resolve itself on the basis of the relative strength of the relevant factors, rather than on the determination of who will bear the burden of proof.” (para. 61) This reading of Frymer is consistent with the Supreme Court’s statement in Amchem, supra that the choice of the appropriate forum is made on the basis of factors relevant to establishing whether one forum is “clearly more appropriate” than another (para. 33).

[17] It is evident from Master Haberman’s reasons that she gave careful consideration to the evidence presented by the parties. She grasped the complex factual scenario and discerned those factors relevant to the determination of each of the three lengthy motions before her (only one motion is the subject of this appeal, but this motion also incorporates decisions and conclusions reached in at least one of the other motions). The Master identified and commented on the lack of clear evidence presented regarding the alleged connections between the defendant companies – an issue she determined to be of particular relevance to her consideration of the required factors on the issue of forum conveniens.

[18] In her detailed analysis, Master Haberman identified the applicable law and applied the relevant legal tests to the facts. She considered each of the eight factors set out in Eastern Power, supra in great detail before determining whether the proceeding had a real and substantial connection to Ontario. This Court has previously held that this degree of detailed analysis of the relevant factors is not necessarily required on a forum non conveniens motion. Rather, it is sufficient that the decision-maker knew what the legal requirements were on such a motion, and that there was evidence upon which he or she could reasonably have concluded that Ontario had a real and substantial connection to the claim in issue: Visram v. Chandarana (2008), 291 D.L.R. (4th) 412, at paras. 39-42. I find that Master Haberman’s decision satisfied both of these requirements.

[19] In the recent decision of Precious Metal Capital Corp. v. Smith, 2008 ONCA 577 at para. 30, Justice Doherty said “On appeal, the [appellant] must show that the motion judge erred in principle, misapprehended material evidence, or reached an unreasonable result”: B.N.P. Paribas (Canada) v. B.C.E. Inc., 2007 ONCA 559, [2007] 227 O.A.C. 102 at para. 4 (C.A.). Master Haberman was wrong in seeming to conclude that counsel were to refer only to those matters that were in the agreed statement of facts. It was acknowledged before me that counsel were free to put other matters to the court. She may also have been wrong in her conclusion with respect to some of the minor facts. However, in my view, none of her factual errors were significant and none translate into legal errors warranting the reversal of her decision.

Conclusion

[20] Master Haberman applied the legal tests established by the relevant jurisprudence on the issue to an extensive and complex body of evidence. Her conclusions were reasonably supported by that evidence. She made no error in principle and did not significantly misapprehend material evidence. Accordingly, there was no error in law warranting intervention by this Court on the exercise of her discretion.

Appeal of the Costs Award

[21] Master Haberman ordered Alphacos to pay costs to Apotex in the amount of $44,000.00 by March 15, 2008. Alphacos submits that the Master erred by:

a. failing to consider duplication of work;

b. allowing for reimbursement for work not generally assessable;

c. not taking into consideration the utility of the examinations in the event the action is to continue in Ontario;

d. ordering payment by a certain date if the appeal was not heard by an earlier date; and

e. ordering costs to Apotex instead of in the cause.

[22] In deciding that decisions of masters should be reviewed on the same standard as decisions of judges (Zeitoun, supra) this Court referred to the “the expansion of the role of the Master within Ontario’s civil justice system.” The evolution of appellate courts’ approach to masters’ decisions points to increasing recognition of their competence and expertise. The Supreme Court of Canada’s statement in Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, [2003] S.C.J. No. 72, at para. 27 is apposite: a costs award should be set aside on appeal “only if the trial judge has made an error in principle or if the costs award is plainly wrong.” Master Haberman was entitled to exercise her discretion by awarding costs to the successful party. I see nothing “plainly wrong” in her award of costs.

[23] The appeal, therefore, is dismissed. If the parties are unable to agree on the issue of costs, they will make brief written submissions to be delivered to my office by October 31, 2008.

Bellamy J.

Date heard: October 7, 2008

Date released: October 14, 2008