COURT FILE NO.: CV-15-537934 DATE: 20160427

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

2106701 ONTARIO INC. o/a NOVAJET Plaintiff – and – 2288450 ONTARIO LIMITED, DARLENE LITMAN and BARRY S. ALLAN Defendants

Robert J. Fenn and Ashleigh L. Tomlinson for the Plaintiff Bruce O’Toole and Clarke Tedesco, for the Defendants

HEARD: March 23, 2016

FAIETA, j

reasons for decision

INTRODUCTION

1The Defendant 2288450 Ontario Limited (“228”) owns a business jet. 228 leased this jet to the Plaintiff, 2106701 Ontario Inc. o/a NovaJet (“NovaJet”). Subsequently, 228 and NovaJet entered into an Aircraft Management and Operating Agreement dated July 31, 2012 (“Management Agreement”) whereby 228 engaged NovaJet’s expertise in the business of managing the operation of airplanes. Both parties allege that the other party breached the Management Agreement. NovaJet asserted two liens for unpaid invoices and in October 2015, NovaJet issued a Statement of Claim in the Ontario Superior Court of Justice in respect of these unpaid invoices (“NovaJet’s Claim”). 228 commenced an action against NovaJet in the Nova Scotia Supreme Court in October 2015 for economic losses that resulted from NovaJet’s alleged breach of contract and negligence (“228’s Claim”).

2228 and its corporate principals, the Defendants Barry S. Allan and Darlene Litman, bring this motion to strike 228’s Claim on the basis that it discloses no reasonable cause of action and also on the basis that the Nova Scotia Supreme Court is the proper forum for this action. At the hearing of this motion, the Defendants conceded that the Ontario Superior Court of Justice is the proper forum for 228’s Claim; however, they now seek a declaration that the law of Nova Scotia governs the interpretation, performance and enforcement of the Management Agreement.

3For the reasons described below, I have granted 228’s motion to strike NovaJet’s Claim in part. I have also determined that the law of Ontario is the proper law of the Management Agreement.

BACKGROUND

4228 owns a Gulfstream G200 airplane. The airplane is based at the Pearson International Airport in Toronto. NovaJet is a commercial air carrier. Both NovaJet and 228 are corporations incorporated under the laws of Ontario and have their head offices in the Greater Toronto Area.

5228 entered into two agreements with NovaJet on July 12, 2012 in respect of the airplane – a lease agreement and an aircraft management and operating agreement.

Lease Agreement

6228 leased the airplane to NovaJet for one dollar. NovaJet agreed to assume full legal custody and control of the airplane and responsibility for its operation, airworthiness and maintenance. NovaJet also agreed to operate the airplane with duly licensed pilots and to operate and maintain the airplane in accordance with the law. This lease expired February 28, 2013. However, this lease arrangement was extended on the same terms until February 28, 2015 as a result of two further leases dated March 1, 2013 and March 1, 2014. Each of the Lease Agreements provides that the Lease “shall be governed by the laws of the Province of Ontario”.

Aircraft Management and Operating Agreement

7228 and NovaJet entered into the Management Agreement to engage NovaJet’s expertise in the business of managing the operation of airplanes and chartering airplanes to third parties. The agreement was for a one year term that would be automatically extended for an additional one year period unless either party provided written notice of termination sixty days prior to the expiry of the term. NovaJet agreed to provide turnkey service to 228 for a management fee and payment of expenses. This agreement could be terminated on sixty days’ notice by either party. The parties entered into a second Aircraft Management and Operating Agreement dated May 23, 2014.

8The Management Agreement [1] contains the following forum selection and choice of law clause (“Forum and Law Clause”):

The validity of this Agreement and the interpretation and performance of all its terms shall be considered and enforced in accordance with the laws of the Province of Nova Scotia and the applicable federal laws of Canada. The appropriate courts of the Province of Nova Scotia shall have exclusive jurisdiction with respect to any actions commenced with respect to this Agreement and any matter arising out of it. [Emphasis added.]

NovaJet’s Lien under the Repair and Storage Lien Act

9NovaJet issued several invoices pursuant to the Management Agreement that 228 did not pay. NovaJet asserted a lien in the amount of CAD $256,098.60 and USD $48,813.32 under the Repair and Storage Liens Act, R.S.O. 1990, c. R. 25, as amended (the “Act”) over the maintenance logs and other records that were required to fly the airplane.

NovaJet’s Action in Ontario

10228 filed an Initial Certificate dated July 30, 2015 under section 24 of the Act with this Court (thereby commencing a proceeding with Court File No. CV-15-533406). 228 paid the amounts asserted by the liens to the Ontario Superior Court of Justice. As a result, the liens were released by NovaJet.

11NovaJet delivered a Statement of Claim pursuant to section 24 of the Act on October 7, 2015 in order to have this Court determine the issues related to the lien. Upon filing of the claim, the Court assigned a new file number to this proceeding (Court File No. CV-15-537934).

12In the Ontario action, NovaJet alleges, amongst other things, that 228 breached the Management Agreement by failing to pay invoices issued for its services. NovaJet also claims against the Defendants Barry S. Allan (“Allan”) and Darlene Litman (“Litman”), amongst other things, for interference with contractual relations, business relations, intentional breach of contract and inducing intentional breach of contract between the corporate parties.

228’s Action in Nova Scotia

13228 commenced an action against NovaJet in the Nova Scotia Supreme Court on October 6, 2015. In that action 228 alleges that NovaJet breached the Management Agreement and failed to provide an accurate budget for the maintenance and operation of the aircraft. It also alleges that NovaJet negligently operated the aircraft, negligently misrepresented the budget reflected in the Management Agreement and is also liable in conversion. 228 seeks damages reflecting the economic losses that resulted from the alleged breaches of contract and tortious conduct.

14228’s action in Nova Scotia was stayed by the Nova Scotia Supreme Court on March 3, 2016, for reasons issued March 23, 2016, on the basis that Ontario is the proper forum for 228’s action. The Nova Scotia Supreme Court came to this conclusion for the following reasons:

• NovaJet did not realize that the Forum and Law Clause referenced the law of Nova Scotia rather than the law of Ontario and as a result of its unilateral mistake it would be unconscientious for 228 to rely on this mistake. As a result, the court rectified the jurisdiction clause so that it refers to Ontario rather than Nova Scotia;
• Even without rectification of the Forum and Law Clause, the Nova Scotia Supreme Court found that it did not have jurisdiction over the matter because “…the action has absolutely no connection with Nova Scotia, and a very strong connection with Ontario and no other jurisdiction”.

See 2288450 Ontario Ltd. v. NovaJet, 2016 NSSC 77, at paras. 31-36.

ISSUES

15This motion raises the following issues:

Issue #1: Is the law of Nova Scotia the proper law of the Management Agreement? Issue #2: Should the Claim be struck out on the ground that it discloses no reasonable cause of action?

Issue #1: Is The Law Of Nova Scotia The Proper Law Of The Management Agreement?

16The Defendants seek a declaration, pursuant to Rule 21.01(1)(a) of the Rules of Civil Procedure, that the law of Nova Scotia is the proper law of the Management Agreement.

17Rule 21.01(1)(a) of the Rules of Civil Procedure states that a party may move before a judge for the determination, before trial, of a question of law raised by a pleading in an action where the determination of the question may dispose of all or part of the action, substantially shorten the trial or result in a substantial saving of costs. No evidence is admissible on a motion under Rule 21.01(1)(a) except with leave of a judge or on consent of the parties. With leave of this court, the parties have filed affidavit evidence in relation to the question of whether the law of Nova Scotia is the proper law of the Management Agreement.

18The test to determine the governing law of a contract was described by the Privy Council in Vita Food Products Inc. v. Unus Shipping Co., [1939] UKPC 7, [1939] 2 D.L.R. 1, at para. 12, [2] as follows:

It is now well settled that by English law (and the law of Nova Scotia is the same) the proper law of the contract “is the law which the parties intended to apply.” That intention is objectively ascertained and if not expressed will be presumed from the terms of the contract and the relevant surrounding circumstances. But as Lord Atkin, dealing with cases where the intention of the parties is expressed, said at p. 520 in Rex v. Int. Trustee for Protection of Bondholders Aktiengesellschaft, [1937] A.C. 500, 106 L.J.K.B. 236 (a case which contains the latest enunciation of this principle) “their intention will be ascertained by the intention expressed in the contract, if any, which will be conclusive.” It is objected that this is too broadly stated and that some qualifications are necessary. It is true that in questions relating to the conflict of laws rules cannot generally be stated in absolute terms but rather as prima facie presumptions. But where the English rule that intention is the test applies and where there is an express statement by the parties of their intention to select the law of the contract, it is difficult to see what qualifications are possible, provided the intention expressed is bona fide and legal, and provided there is no reason for avoiding the choice on the ground of public policy. [Emphasis added.]

19As noted earlier, the Jurisdiction Clause of the Management Agreement provides that the laws of Nova Scotia govern.

20NovaJet submits that the proper law of the Management Agreement is Ontario rather than Nova Scotia for the following reasons: (1) the Nova Scotia Supreme Court’s decision in the Defendant’s action issued March 23, 2016 ruled that the Forum and Law Clause was governed by the law and jurisdiction of Ontario rather than Nova Scotia and accordingly, the Defendants are estopped from re-litigating this same issue in this action; (2) alternatively, the Forum and Law Clause mistakenly states that the law of Nova Scotia governs the Management Agreement and as a result it should be rectified to state that the law of Ontario governs the Management Agreement; (3) alternatively, that Nova Scotia has no connection to the Management Agreement and it is should be replaced with the law of Ontario which has the closest and most substantial connection with the contract; (4) alternatively, the Defendants have relied on the law of Ontario in responding to NovaJet’s lien claim and in bringing this motion to strike NovaJet’s Claim, and thus, the Defendants are precluded from taking the inconsistent position that the law of Ontario does not apply to the merits of this dispute.

Issue Estoppel

21NovaJet submits the Defendants are precluded from re-litigating the Nova Scotia Supreme Court’s decision which, amongst other things, ruled that the proper law of the Management Agreement was the law of Ontario.

22According to College of Traditional Chinese Medicine Practitioners and Acupuncturists of Ontario v. Federation of Ontario Traditional Chinese Medicine Assn., 2015 ONCA 481, [2015] O.J. No. 6452, at para. 4, the following three conditions must be satisfied in order to establish issue estoppel:

1. the issue must be the same as the one decided in the prior decision;
2. the prior judicial decision must have been final; and
3. the parties to both proceedings must be the same or their privies.

23The Defendants submit that the doctrine of issue estoppel is inapplicable because it intends to appeal the decision of the Nova Scotia Supreme Court that was issued more than one month ago. A decision is final unless an appeal is exercised. The Defendants submit that they intend to appeal that decision; however, no evidence has been provided that the decision has been appealed. I am satisfied that the Nova Scotia Supreme Court’s decision is final.

Rectification of the Mistake in the Jurisdiction Clause

24The circumstances surrounding the 2012 Management Agreement were described by NovaJet’s sales manager, Robert Mackenzie, as follows:

I am familiar with the negotiations that took place between NovaJet and 2288450 Ontario and, to the best of my recollection there were no discussions whatsoever regarding the applicable law/jurisdiction clause contained in the 2012 Agreement.

Based on my involvement in the negotiations between NovaJet and 2288450 Ontario and Allan, I state as follows:

(a) In drafting the 2012 Agreement, a Nova Scotia agreement was used as a template and included reference to the Province of Nova Scotia which, through inadvertence, was not deleted from the template for the purposes of the 2012 Agreement. (m) NovaJet entered into an agreement with 3257133 Nova Scotia Limited … to manage another aircraft that was to be based and operated in the Province of Nova Scotia before entering into the 2012 Agreement with 2288450 Ontario; (n) The agreement between NovaJet and 3257133 Nova Scotia contained, in the General Provisions, the applicable law and jurisdiction as the Province of Nova Scotia, because 3257133 Nova Scotia was a Nova Scotia company and the aircraft was to be based and operated from the Halifax International Airport in the Province of Nova Scotia; (p) Almost immediately after completing the Nova Scotia agreement, NovaJet continued with its negotiations and ultimately entered into the 2012 Agreement, which inadvertently and in error included the provision relating to the applicable law and jurisdiction as the Province of Nova Scotia, which was not specifically discussed nor contemplated by NovaJet or, for that matter, to the best of my knowledge, 2288450 Ontario or its principal, Allan; (q) Neither of the parties to the 2012 Agreement specifically addressed the applicable law and jurisdiction clause contained in the General Provisions of the 2012 Agreement and, as stated, there was no discussion between myself or Allan in that regard. It is my belief that reference to the Province of Nova Scotia in the applicable law and jurisdiction clause was included in the 2012 Agreement in error and that it was simply and oversight and mistake, as it was always intended that the Aircraft would be based, maintained and operated from the NovaJet facilities in the Province of Ontario at the Toronto Pearson International Airport and where all the parties reside and carry on business. [3]

[Emphasis added.]

25Mr. Mackenzie further states that the parties intended that the law of Ontario would apply to the Management Agreement as it did to Lease Agreement. [4]

26I adopt the Nova Scotia Supreme Court’s reasons in 2288450 Ontario Ltd. v. NovaJet, 2016 NSSC 77, at paras. 25-36, in respect of the rectification of the Management Agreement with the result that the law of Ontario governs the Management Agreement rather than the law of Nova Scotia.

Bona Fide Choice of Law

27Alternatively, NovaJet submits that there was no bona fide intention for the laws of Nova Scotia to apply to any of the issues that arose between the parties. NovaJet submits that the Defendants have not cited any applicable law and/or statutes in the Statement of Claim that it filed in the Nova Scotia Supreme Court. Furthermore, the only statute referenced in the Nova Scotia action is Ontario’s Repair and Storage Liens Act.

28The “bona fide” limitation was explained in Stephen G.A. Pitel and Nicholas S. Rafferty, Conflict of Laws, (Toronto: Irwin Law, 2010), at 272, as follows:

If the parties randomly selected a country and inserted it into a choice of law clause, this would likely not be a good faith choice of that country’s law. The same could be true where the parties somewhat mischievously choose the law of a country with no connections to the transaction. Of course, it is not in itself improper to pick such a law, since it is common for parties to select New York or English law in contracts with no connection to those jurisdictions. They do so because the contract law of those countries is stable, developed and well understood. But where there is no connection, there is a concern that the choice is not bona fide. This limitation is in part motivated by a concern that the parties not be allowed to choose a law with no connection to the transaction solely to avoid the application of the law that would otherwise apply. The lack of connection can be evidence of intent to so evade. [Emphasis added]

29It is my view that the choice of the law of Nova Scotia as governing the Management Agreements is not bona fide for the following reasons.

30First, there is no connection whatsoever between the Management Agreement and Nova Scotia. The Defendants have not suggested that there is any such connection. To the contrary, the Defendants admit that Ontario has the closest and most substantial connection to the Management Agreement. According to Lilydale Cooperative Ltd. v. Meyn Canada Inc., 2015 ONCA 281, [2015] O.J. No. 2049, at paras. 10-11, the applicable criteria in assessing whether such connection exists are the nature and subject matter of the contract, the place of performance of the contract; the place of contracting, and the domicile and residence of the parties. In light of these criteria, the evidence shows that Ontario has the sole connection to the Management Agreement and that Nova Scotia has no connection. Adopting NovaJet’s submissions, the evidence shows that:

• Both parties, their head offices, and their principals are resident and domiciled in the Province of Ontario;
• The claim arose in the Province of Ontario, the place where the contract was formed and the alleged breaches occurred.
• The contract was to be performed in the Province of Ontario, and was in fact performed in the Province of Ontario; and
• The contract was drafted, formed and signed in the Province of Ontario. [5]

31Second, the parties never discussed nor intended for the law of Nova Scotia to govern the Management Agreement. Further, had the Defendants intended that the law of Nova Scotia apply to the Management Agreement, then I would have expected that it would not have agreed to have the law of Ontario apply to the Lease Agreement.

32Third, the Defendants have not denied that they never intended for the law of Nova Scotia to apply. As noted, Robert Mackenzie’s evidence that the parties intended for the law of Ontario to apply has not been challenged.

33Fourth, the Defendants have not explained why they believe that the law of Nova Scotia should govern the Management Agreement aside from the fact that the Management Agreement provides for the law of Nova Scotia to apply. This is not a situation where the parties have explained that they chose to have the law of Nova Scotia apply to the Management Agreement because it is stable, developed and well understood even though the Management Agreement has no connection to Nova Scotia. In the absence of such explanation, and the lack of any connection whatsoever between Nova Scotia and the Management Agreement, I find that the selection of Nova Scotia as the proper law of the Management Agreement is not bona fide.

Public Policy

34NovaJet submits that the Defendants have attorned to the law of Ontario because the moving parties proceeded with an application under section 24 of the Act to obtain an Initial Certificate and thus a release of the airplane. NovaJet submits that the Defendants could have brought an application on an urgent basis in Ontario for a determination of the rights of the parties, particularly the jurisdiction of the Courts of Ontario, under section 23 of the Act. NovaJet also submits that the Defendants have engaged the laws of Ontario by bringing this motion to strike the Statement of Claim on the basis that it discloses no reasonable cause of action and thus they have attorned to the laws of Ontario.

35In Sauer v. Canada (Attorney General), [2006] O.J. No. 26, para. 87, the court held that a party cannot bring a motion under Rule 21.01(1)(b) of the Rules of Civil Procedure contending that there is no reasonable cause of action without attorning to the jurisdiction of the courts in Ontario. R.S.J. Winkler, as he then was, explained at para. 88 that “…a defendant is precluded from contemporaneously disputing jurisdiction while at the same engaging jurisdiction by seeking a ruling in its favour on the merits.”

36In my view, the same principle applies when a defendant disputes that Ontario law is the proper law of a contract but at the same time it seeks to use the law of Ontario to seek relief from a lien or to dismiss the action against it on its merits. To do otherwise, would allow the defendant to have it both ways – to use the law of Ontario on the merits, and presumably if not successful to maintain its position that the law of another jurisdiction is the proper law. As noted in Sauer, this would result in unnecessary litigation costs and, as result, is contrary to public policy. Accordingly, a defendant is deemed to have adopted the law of Ontario as the proper law of a contract if in respect of an action regarding that contract the defendant relies on the law of Ontario to advance its position on the merits.

Conclusions

37For the above reasons, I conclude that the proper law of the Management Agreement is the law of Ontario rather than the law of Nova Scotia.

Issue #2: Should The Claim Be Struck Out On The Ground That It Discloses No Reasonable Cause Of Action Under Rule 21.01(1)(B) Of The Rules Of Civil Procedure?

38The Defendants seek an order striking out NovaJet’s claim pursuant to Rule 21.01(1)(b) of the Rules of Civil Procedure.

39Rule 21.01(1)(b) of the Rules of Civil Procedure states that a party may move before a judge to strike out a pleading on the ground that it discloses no reasonable cause of action, and the judge may make an order or grant judgment accordingly. No evidence is admissible on a motion under Rule 21.01(1)(b) of the Rules of Civil Procedure. [6]

40In Trillium Wind Power Corp. v. Ontario (Ministry of Natural Resources), 2013 ONCA 683, [2013] O.J. No. 5117, at paras. 30-31, the Ontario Court of Appeal stated:

The following principles apply to a Rule 21 motion to strike a pleading for failing to disclose a reasonable cause of action or defence: (a) the material facts pleaded must be deemed to be proven or true, except to the extent that the alleged facts are patently ridiculous or incapable of proof; (b) the claim incorporates by reference any document pleaded and the court is entitled to read and rely on the terms of such documents as if they were fully quoted in the pleadings; (c) novelty of the cause of action is of no concern at this stage of the proceeding; (d) the statement of claim must be read generously to allow for drafting deficiencies; and (e) if the claim has some chance of success, it must be permitted to proceed.

The test is not in dispute: the claim will only be dismissed where it is "plain and obvious" that it has no reasonable prospect of success…While the court must accept as true the material facts as pleaded, this obligation does not extend to bald conclusory statements of fact, unsupported by material facts.

41If a claim is found to disclose no reasonable cause of action, then it should not be struck without leave to amend except in the clearest of cases, for instance, when the deficiencies in the pleading cannot be cured by an appropriate amendment.

42I agree with Paul M. Perell and John W. Morden in The Law of Civil Procedure in Ontario, 2nd ed. (Markham, Ont.: LexisNexis, 2014), at 531: "The failure to establish a cause of action usually arises in one of two ways: (1) the allegations in the statement of claim do not come within a recognized cause of action; or (2) the allegations in the statement of claim do not plead all the elements necessary for a recognized cause of action."

Declaration

43NovaJet seeks a declaration that “the Plaintiff had, at all material times, a possessory lien over the airplane." [7] The Defendants submit that whether NovaJet had a possessory lien over the airplane is moot because the lien was discharged by its payment of $319,199.71, along with its Application for an Initial Certificate, dated July 29, 2015, which was filed with the Ontario Superior Court of Justice pursuant to section 24 of the Act.

44However, in its Application, the Defendants allege that NovaJet had no right to a possessory lien under the Act even though it had paid $319,199.71 into court. In my view, the question of whether NovaJet had a possessory lien is not moot given the Defendants’ position and given that an action was commenced by NovaJet pursuant to section 24(14) of the Act in order to recover the amount paid into Court. Accordingly, I dismiss the motion to strike in the declaratory relief.

Regulatory Complaint

45The Claim alleges that the Defendants improperly filed a complaint with Transport Canada for the purpose of causing a regulatory investigation to be conducted against the Plaintiff for the purpose of damaging the reputation of the Plaintiff and to use the authority of Transport Canada to obtain the maintenance records for the airplane in spite of the fact that the Defendants allegedly knew or ought to have known of NovaJet’s lien rights with respect to the airplane.

46In my view, the Claim does not articulate a recognized cause of action. It is plain and obvious that the tort of negligent investigation would not succeed given that the law does not recognize a duty of care on citizens who report matters to a regulatory body for investigation: see Ebagua v. National Rent A Car, 2015 ONSC 979, at paras. 12-14. It is also plain and obvious that the tort of malicious prosecution would not succeed given that the proceedings, if any, were initiated by Transport Canada rather than by the Defendants: see Ebagua v. National Rent A Car, 2015 ONSC 979, at paras. 15-19. Finally, it is plain and obvious that a claim in defamation would not succeed as the Defendants’ complaint to Transport Canada is protected by absolute privilege: see Singh-Boutilier v. Ontario College of Social Workers and Social Service Workers, 2015 ONSC 5297, at para. 39. Accordingly, paragraphs 33 and 34 of the Statement of Claim are struck without leave to amend the Claim.

Tort of Unlawful Means

47The test for tort of intentional interference with economic relations, which is now known simply as the tort of unlawful means, was clarified and narrowed by the Supreme Court of Canada in A.I. Enterprises v. Bram Enterprises, 2014 SCC 12, [2014] 1 S.C.R. 177. At para. 5, the Court stated that the tort is “…available in three-party situations in which the defendant commits an unlawful act against a third party and that act intentionally causes economic harm to the plaintiff.”

48At para. 95, the Supreme Court decided that the tort of unlawful means requires there to be an intention to cause economic harm to the claimant: (1) as an end in itself; or (2) because it is a necessary means of achieving an end that serves some ulterior motive. It is not sufficient that the harm to the plaintiff is an incidental or inevitable consequence of the Defendants' conduct.

49NovaJet has not pleaded an unlawful act by the Defendants against a third party nor has it pleaded that the Defendants intended to harm NovaJet by such unlawful action.

50Further, NovaJet’s Statement of Claim does not plead a cause of action against Litman and Allan. In Montreal Trust Co. of Canada v. ScotiaMcLeod Inc. (1995), 26 O.R. (3d) 481, at para. 25, the Court of Appeal stated:

The decided cases in which employees and officers and companies have been found personally liable for actions ostensibly carried out under a corporate name are fact specific. In the absence of findings of fraud, deceit, dishonesty or wanton authority on the part of the employees or officers, they are also rare. Those cases in which the corporate veil has been pierced usually involve transactions where the use of the corporate structure was a sham from the outset or was an afterthought to a deal which had gone sour. There is also a considerable body of case law wherein injured parties to actions for breach of contract have attempted to extend liability to the principals of the company by pleading that the principals were privy to the tort of inducing breach of contract between the company and the plaintiff...additionally there have been attempts by injured parties to attach liability to the principals of failed businesses through insolvency litigation. In every case, however, the facts giving rise to personal liability were specifically pleaded. Absent allegations which fit within the categories described above, officers or employees of limited companies are protected from personal liability unless it can be shown that their actions are themselves tortious or exhibit a separate identity or interest from that of the company so as to make the act or conduct complained of their own. [Emphasis added.]

51Accordingly, paragraphs 19-21 and 28-31 of NovaJet’s Statement of Claim are struck with leave to amend.

Tort of Inducing Breach of Contract

52The Defendant 228 cannot be held liable in tort for inducing the breach of its own contract. Accordingly, paragraph 21 of NovaJet’s Statement of Claim is struck without leave to amend in respect of pleading a claim for inducing breach of contract against 228.

Oppression Remedy – Business Corporations Act, s, 248

53Section 248 of the Business Corporations Act states that a court may rectify the matters complained about by an applicant where it is satisfied that in respect of a corporation or any of its affiliates,

(a) any act or omission of the corporation or any of its affiliates effects or threatens to effect a result; (b) the business or affairs of the corporation or any of its affiliates are, have been or are threatened to be carried on or conducted in a manner; or (c) the powers of the directors of the corporation or any of its affiliates are, have been or are threatened to be exercised in a manner that is oppressive or unfairly prejudicial to or that unfairly disregards the interests of any security holder, creditor, director or officer of the corporation, the court may make an order to rectify the matters complained of. [Emphasis added.]

54NovaJet is not a “creditor” of the Defendants. Such designation is speculative until NovaJet’s action against the Defendants has been finally determined. I agree with this Court’s comments in Awad v. Dover Investments Ltd., [2004] O.J. No. 3847, at para. 46. As a result, NovaJet is not a “complainant” under section 248 of the BCA. Paragraphs 35 to 42 of the Claim are struck without leave to amend.

Charter Revenue

55Paragraph 45 of the Claim pleads that the terms of the agreement provided that the Plaintiff would be entitled to charter the airplane in order to generate revenue and, at all material times, the Defendants were aware of the requirements for charter revenue. It goes on to state that the Defendants refused to permit or allow the airplane to be chartered to third parties for the purposes of generating aircraft revenue.

56The Defendants submit that the above referenced term of the agreement has not been pleaded. I agree. Paragraph 45 of the Statement of Claim is struck with leave granted to NovaJet to amend this paragraph.

CONCLUSIONS

57I have granted 228’s motion to strike NovaJet’s Claim in part. I have also determined that the law of Ontario is the proper law of the Management Agreement.

58I encourage the parties to resolve the issue of costs especially given their divided success. The parties may provide the court with their written costs submissions, three pages maximum, exclusive of a costs outline, within two weeks of today’s date. The parties may also provide reply costs submissions, two pages maximum, within three weeks of today’s date.

Mr. Justice M. D. Faieta

Released: April 27, 2016

COURT FILE NO.: CV-15-537934 DATE: 20160427

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

2106701 ONTARIO INC. o/a NOVAJET Plaintiff – and – 2288450 ONTARIO LIMITED, DARLENE LITMAN and BARRY S. ALLAN Defendants

REASONS FOR DECISION Mr. Justice M. D. Faieta Released: April 27, 2016

1This term refers to the Aircraft Management and Operating Agreement dated July 31, 2012 and a second Aircraft Management and Operating Agreement dated May 23, 2014.

2Vita Food remains good law in Canada. See Castel & Walker, Canadian Conflict of Laws, Sixth Edition, LexisNexis Canada Inc. 2005, paragraph 31.3,

3Affidavit of Robert Mackenzie, sworn January 5, 2016, paras. 32-33.

4Affidavit of Robert Mackenzie, sworn January 5, 2016, para. 17.

5Supplemental Submissions of NovaJet, paragraph 6.

6Rule 21.01(2)(b).

7See paragraph 1 of the Statement of Claim.