COURT FILE NO.: CV-14-513316 DATE: 2018 1113 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Sol Neger and Sidney Neger Plaintiffs – and – Isaac Neger and Gitty Neger and Carl Neger Defendants
COUNSEL: Barry Nussbaum, for the Plaintiffs Marshall Swadron, for the Defendants
HEARD: August 13, 2018
REASONS FOR DECISION
NISHIKAWA J.
1The Plaintiffs commenced this action against the Defendants for misrepresentation and breach of fiduciary duty in relation to the proceeds of a life insurance policy in the name of the deceased, Anna Neger. The Plaintiffs, Sol and Sidney Neger, and the Defendant, Isaac Neger, are Anna’s sons. The Defendant, Gitty Neger, is Isaac’s spouse. The Defendant, Carl Neger, is Isaac’s son.
2The Defendants bring this motion to stay the proceeding on the basis that the Ontario courts lack jurisdiction simpliciter over the parties’ dispute. In the alternative, the Defendants submit that Ontario is forum non conveniens. For the reasons that follow, the Defendants’ motion is dismissed.
Factual Background
The Parties
3The parties will all be referred to by their first names. The Plaintiffs, Sol and Sidney, reside in Toronto, Ontario.
4The Defendants, Isaac and Gitty, reside in Baltimore, Maryland, where they have lived for over 50 years. Carl resides in Lakewood, New Jersey. Carl was noted in default in this action in September 2017.
5The deceased, Anna, passed away on October 2, 2012. Until her death, Anna resided in Toronto, Ontario.
6On October 1, 2014 Joseph Fried and Ronald Rutman, the executors and trustees of Anna Neger’s estate (together, the “Estate Trustees”), commenced this action against the Defendants. In March 2015 Ronald Rutman was permitted to resign as executor and trustee by order of McEwen J. In June 2017 Joseph Fried assigned the estate’s claim in this proceeding to Sol and Sidney and the title of proceedings was amended accordingly.
The Anna Neger Family Trust
7The subject matter of the dispute is the Anna Neger Family Trust (the “Trust”). The Trust was created pursuant to a Trust Agreement, executed by Anna as Grantor and Carl as Trustee on September 2, 2007 (the “Trust Agreement”). According to the Trust Agreement, the beneficiaries of the Trust are Isaac and Gitty. The Trust Agreement was executed in New Jersey, but states that New York law governs.
8The Trust arrangement was conceived by Carl, who was an insurance agent at the time. The Trust Agreement states that “it is not anticipated that this trust will have assets other than insurance on the Grantor’s life.” According to the Defendants, the Trust was created to purchase an insurance policy insuring Anna’s life. The Policy was then to be sold on the open market to an arms’ length third party for a profit. Isaac claims that Sol, Sidney, and he were to share in the profit from the sale of the life insurance policy equally. The Statement of Claim alleges that the proceeds of the sale of the Policy were to revert to Anna or to her estate. The Trust Agreement is silent on the issue of a sale of any policy or the distribution of the profit of any sale. The Plaintiffs rely on an unsigned, draft Declaration of Trust document relating to the “Anna Neger Family Insurance Trust” as reflecting Anna’s true intentions.
9Carl purchased a life insurance policy from ING in New York in August 2007 (the “Policy”). In the end, Carl did not sell the Policy, allegedly due to unfavourable market conditions after the financial crisis in 2008. Isaac states that Carl suggested that he purchase the Policy for a $90,000 “profit”. On March 5, 2008 Isaac paid Sol and Sidney their share of the profit, or $60,000. Isaac claims that Anna consented to this payment. Isaac then continued to pay the premiums, which he states totaled $922,845.95 U.S. dollars. In response to an undertaking, Isaac has provided documents reflecting the payment of approximately one-third of this amount in premiums.
10On October 31, 2010 the Trust Agreement was amended to add Gitty as a co-trustee and to move the situs of the Trust from New Jersey to New York (the “Amendment”). Anna, Isaac, Gitty, and Carl executed the Amendment in New Jersey. The Plaintiffs, relying on the absence of stamps in Anna’s passport showing entry into the United States at the relevant time, dispute that she executed the Amendment in New Jersey.
The Parties’ Dispute
11The parties’ dispute relates to the proceeds of the Policy, which the Plaintiffs estimate at $5-6 million U.S. dollars. The Plaintiffs, who were assigned the estate’s claims, allege causes of action for misrepresentation and breach of fiduciary duty based on Carl’s failure to sell the Policy to an arms’ length third party as originally contemplated. The Plaintiffs seek an accounting for their share of the proceeds. The Statement of Claim also alleges that commissions of $250,000 U.S. dollars on the Policy were paid back to the Defendants.
12Isaac and Gitty claim that they, and not the estate, are entitled to the insurance proceeds because they are the beneficiaries of the Trust. They also rely on the fact that Isaac purchased the Policy and continued to pay the premiums.
13The parties are also engaged in litigation over Anna’s estate in the Ontario courts. The Estate Trustees commenced an action against Isaac for an accounting for a loan that he received from Anna (Court File No. CV-14-513317, the “Loan Action”). In the Loan Action, Isaac has counterclaimed against the Estate Trustees and made Third Party Claims against Sol and Sidney. Carl and Gitty are not parties. Isaac admits that the Loan Action was properly brought in Ontario, since it involves Anna’s will and codicil, both of which were executed in Ontario, and distributions to bank accounts in Ontario. Anna’s estate brought a proceeding against the estate trustee, Ronald Rutman (Court File No. CV-14-513252, the “Phoenix Action”), in relation to another life insurance policy, the proceeds of which were distributed to Sol and Sidney by the Estate Trustees. While the details were not provided, it appears that the Phoenix Action has been resolved. Isaac also commenced a separate action (Court File No. 01-2605/13) on the Estates List against Ronald Rutman seeking distribution of his portion of the Phoenix Policy and reimbursement of premiums. In February 2015 Isaac commenced an action in the rabbinical court, the Beis Din of the Vaad Harabonim of Toronto.
14In this motion, the Defendants argue that the Ontario courts lack jurisdiction simpliciter because there is no presumptive connecting factor. They further argue that Ontario is forum non conveniens.
Preliminary Matters
15At the outset of the hearing, Plaintiffs’ counsel requested an adjournment because of an alleged late receipt of responses to undertakings given by Isaac at his cross-examination and the need to further cross-examine Isaac on the documents received. The documents related to the premiums paid on the Policy. In oral reasons given at the hearing, I dismissed the Plaintiffs’ motion to adjourn. The payment of the premiums was not relevant to the jurisdiction issue and further cross-examination was not necessary to determine the issues on the motion.
16In addition, the Plaintiffs sought leave to admit the transcript from Isaac’s examination for discovery in one of the other proceedings as evidence on this motion. The request for leave was denied with oral reasons given at the hearing. The transcript is subject to the deemed undertaking in the other proceeding. Moreover, since the transcript evidence was not put to Isaac at his cross-examination, it would not be fair to permit the Plaintiffs to rely upon this evidence.
Issues
17The Defendants’ motion to stay the proceeding raises the following issues:
(i) Does the Ontario court have jurisdiction simpliciter over the dispute? (ii) Can the Defendants rebut the presumption of jurisdiction? (iii) Is Ontario forum non conveniens?
Analysis
(i) Does the Ontario Court Have Jurisdiction Simpliciter Over the Dispute?
18Pursuant to Courts of Justice Act, R.S.O. 1990, c. C.43, s. 106, this court may stay a proceeding on such terms as are considered just. Rule 21.01(3)(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, provides that a defendant may move before a judge to have an action stayed or dismissed on grounds that the court has no jurisdiction over the subject matter of the action.
19This Court has jurisdiction simpliciter over a dispute where there is a “real and substantial connection” between the dispute and the jurisdiction where the claim is brought. In Van Breda v. Village Resorts Ltd., 2012 SCC 17, [2012] 1 S.C.R. 572, at paras. 80-81, 94-95, the Supreme Court of Canada outlined a two-step approach for determining whether a domestic court should assume jurisdiction over a foreign Defendant:
(i) First, the Plaintiff must demonstrate that a “presumptive connecting factor” connects the litigation to the jurisdiction. (ii) Second, if the Plaintiff succeeds in establishing a presumptive connecting factor, the Defendant may rebut the presumption of jurisdiction by showing that, on the facts of the particular case, the connecting factor is insufficient to establish a real and substantial connection.
Is there a Presumptive Connecting Factor?
20In Van Breda, the Supreme Court outlined a non-exhaustive list of presumptive connecting factors that would enable a court to assume jurisdiction simpliciter over a dispute. The Plaintiffs claim that the third or fourth Van Breda factors could apply to the circumstances of this case, that is, either a tort committed in Ontario or a contract connected to the dispute that was made in the province: Van Breda, at para. 90.
21In Lapointe Rosenstein Marchand Melancon LLP v. Cassels Brock & Blackwell LLP, 2016 SCC 30, [2016] 1 S.C.R. 851, at para. 28, Abella J. for the majority states that the objective of all presumptive connecting factors is to “pacify the tension between predictability and flexibility” when applying jurisdiction tests.
22To establish jurisdiction simpliciter, a Plaintiff need only demonstrate “a good, arguable case”, which means no more than a serious question to be tried or a genuine issue. The threshold is not high: Inukshuk Wireless Partnership v. 425311 Canada Inc., 2013 ONSC 5631, 117 O.R. (2d) 206, at para. 19, citing Ontario v. Rothmans Inc., 2013 ONCA 353, 115 O.R. (3d) 561, at paras. 54, 110, 118-19.
23The tort of misrepresentation occurs where the misrepresentation is received and acted upon: Central Sun Mining Inc. v. Vector Engineering Inc., 2013 ONCA 601, 117 O.R. (3d) 313, at para. 30. In Central Sun Mining, the defendants transmitted studies containing the alleged misrepresentations to the plaintiffs’ technical staff in Vancouver which were relied upon by the plaintiffs’ head office in Toronto. The Court of Appeal held that the misrepresentations were made in Ontario where the decisions were made.
24The Statement of Claim alleges that the Defendants misrepresented that the Policy would be sold to an arms’ length purchaser and would not be held until maturity, with the profit of the sale to inure to the benefit of Anna or her estate. There is also a dispute as to whether Anna knew that the Policy was not sold to a third party and that Isaac had purchased it. Although the Statement of Claim lacks specificity in respect of the misrepresentations, the Plaintiffs clearly allege that Isaac and Carl made misrepresentations to Anna in connection with the Policy. As the Court of Appeal has stated, “whatever may be said about any deficiencies in the negligent misrepresentation pleadings in this case, they do not prevent a proper assessment of the connection of that claim to Ontario”: 2249659 Ontario Ltd. v. Sparkasse Siegen, 2013 ONCA 354, 115 O.R. (3d) 241, at para. 28.
25Since Anna resided in Toronto until her death, it is likely that the alleged misrepresentations were received and acted upon in Ontario, where she made the decision to enter into the Trust Agreement. The fact that Anna signed the Trust Agreement and Amendment in New Jersey does not mean that she only relied upon the misrepresentations in New Jersey. Moreover, the Trust continued to exist over a period of time and there is an issue as to what Carl and Isaac told Anna in respect of the Policy’s sale. Their interactions were not limited to signing the Trust Agreement and Amendment in New Jersey. In making this finding, I note that I place no reliance upon the affidavit of Shannon Kuepfer, a law clerk for Plaintiffs’ counsel, which contains hearsay evidence from Sidney about his observations of Anna and her purported conversations with Carl. This evidence could have been provided in Sidney’s affidavit but was not.
26The Plaintiffs also allege breach of fiduciary duty. The Defendants argue that Isaac owed no fiduciary duties because he was never a trustee. They further argue that no fiduciary duties were owed to the Estate because it was not a beneficiary of the Trust. It would be premature at this stage to find that the Estate has no claim for breach of fiduciary duty against the Defendants. At the very least, as trustees, Carl and Gitty owed fiduciary duties to Anna, as well as the beneficiaries. There is a genuine issue as to whether, by failing to sell the Policy to a third party as planned and by permitting Isaac to purchase it, Carl and Gitty breached their fiduciary duties.
27The Plaintiffs have demonstrated a presumptive connecting factor to Ontario. Since I have found a presumptive connecting factor based on a tort committed in Ontario, it is unnecessary for me to consider whether the dispute relates to a contract made in Ontario. In the event I am mistaken, I find that the Plaintiffs have not established that a contract was entered into in Ontario. Anna signed both the Trust Agreement and Amendment in New Jersey. While the Plaintiffs rely upon the absence of a stamp in Anna’s passport verifying that she entered the U.S. at the relevant time, there is no evidence that a person’s passport is stamped every time they enter the U.S. Based on the evidence before me, there is insufficient basis to find that the Trust Agreement and Amendment were executed outside of New Jersey.
(ii) Have the Defendants Rebutted the Presumption of Jurisdiction?
28Once the Plaintiffs have established a presumptive connecting factor for jurisdiction simpliciter, the burden shifts to the Defendants to rebut the presumption of jurisdiction. The presumption is rebutted where the Defendants can demonstrate that the presumptive connecting factor does not point to any real relationship, or only a very weak relationship, between the subject matter of the litigation and Ontario: Inukshuk Wireless, at para. 53.
29In Van Breda, at para. 96, the Supreme Court of Canada highlighted the difficulty of discharging the burden of rebutting the presumption in a tort case:
[O]n the other hand, where the presumptive connecting factor is the commission of a tort in the province, rebutting the presumption of jurisdiction would appear to be difficult, although it may be possible to do so in a case involving a multi-jurisdictional tort where only a relatively minor element of the tort has occurred in the province.
30In this case, Anna resided in Toronto until her death. Also, the alleged misrepresentation was received or acted upon in Ontario, even if Anna executed the Trust documents in New Jersey. The Defendants cannot demonstrate only a weak connection to Ontario. Anna, the Grantor of the Trust and the subject of the Policy, was in Ontario, as were the Plaintiffs, who were to receive the proceeds of the Policy’s sale. The Defendants have not rebutted the presumption of jurisdiction.
(iii) Is Ontario Forum Non Conveniens?
31Once the test for jurisdiction simpliciter is met, the court must consider whether to exercise its discretion to decline jurisdiction on the basis of forum non conveniens.
32Generally, at this stage of the analysis, the party moving for the stay must “identify another forum that has an appropriate connection under the conflicts rules and that should be allowed to dispose of the action.” Van Breda, at para. 103. The burden is on the moving party to show that the alternative forum is “clearly more appropriate.” Van Breda, at para. 108. In this case, the Plaintiffs argue that New York is a more appropriate forum.
Application of the Forum Non Conveniens Factors
33In determining whether jurisdiction should be declined for forum non conveniens, the court considers the following factors:
(a) The location of the parties, witnesses, and evidence; (b) The applicable law and its weight in comparison to the factual questions to be decided; (c) The location where the bulk of the evidence will come from; (d) Avoiding a multiplicity of proceedings; (e) Geographical factors suggesting the natural forum; (f) Whether declining jurisdiction would deprive the plaintiff of a legitimate juridical advantage; (g) The cost of transferring the case to another jurisdiction or of declining the stay; (h) The impact of a transfer on the conduct of litigation or on related or parallel proceedings; (i) The possibility of conflicting judgments; (j) Problems related to the recognition and enforcement of judgments; and (k) The relative strength of the connection of the two parties.
Van Breda, at paras. 110-111; Re Essar Steel Algoma Inc., 2016 ONSC 595, 33 C.B.R. (6th) 313, at paras. 61-62, 74, 76; Van Breda v. Village Resorts Ltd., 2010 ONCA 84, 98 O.R. (3d) 721, at para. 49.
34The Plaintiffs are located in Toronto. The Defendants reside in Baltimore and New Jersey. The other potential witnesses are the Estate Trustees, who are located in Toronto. None of the parties or witnesses reside in New York. The Defendants argue that Sol and Sidney have business in New York, as well as children and grandchildren who live in New Jersey and New York. I find that since none of the parties or witnesses reside in New York, this factor favours jurisdiction in Ontario.
35The Trust Agreement states that the governing law is the law of New York. The Defendants have provided an opinion from a lawyer, Malik Martin, who is employed at Rueters LLP and is admitted to the bars of New York State and Ontario. Mr. Martin states that there is no reason why claims could not be pursued in New York state or federal court applying New York law.
36Moreover, the courts have held that Ontario courts can and do often apply foreign law, and that this is not a strong factor in favour of the alternative forum: Essar Steel, at para. 80. While the law of New York would apply to the Trust Agreement, the law to be applied in tort is the law of the place where the activity occurred: Abramovitz v. Lee, 2018 ONSC 3684, 48 C.C.L.T. (4th) 154, at para. 10. To the extent that the Plaintiffs allege misrepresentation and breach of fiduciary duty that took place in Ontario, Ontario law is likely to apply, and the choice of law clause in the Trust Agreement is less relevant. An Ontario court would be as able if not more able to apply Ontario law relating to misrepresentation and breach of fiduciary duty. I find that this factor favours jurisdiction in Ontario.
37The parties are already involved in various litigation proceedings in Ontario concerning Anna’s estate, and another insurance policy on Anna’s life. Isaac has defended those proceedings and has brought a Counterclaim and Third Party Claim. The Defendants argue that the Ontario litigation is distinct from this proceeding, however, the Plaintiffs disagree. It is clear that all of the proceedings relate to the distribution of the estate, assets, and life insurance policies resulting from Anna’s death. The underlying facts, documents, and evidence are highly related. It would more make sense that the proceedings be conducted and determined in the same jurisdiction. The avoidance of a multiplicity of proceedings and the possibility of conflicting decisions favours jurisdiction in Ontario.
38The Defendants’ main challenge to the jurisdiction of the Ontario courts is based on Isaac’s immigration status in the United States and the possibility that he may not be able to return to the United States if he is required to attend court in Ontario. According to Isaac’s U.S. lawyer, Mr. Richard Gershberg, “due to Mr. Neger’s current immigration status in the United States, he could face an unnecessary challenge upon reentry if he left the United States at this time.” No further details are provided as to Isaac’s immigration status, other than that he is a U.S. resident, but not a U.S. citizen.
39Isaac’s legal problems relate to his conviction for counterfeiting a deed in the land records’ office in Baltimore. His conviction was reversed on appeal, but was subsequently reinstated. A further appeal is scheduled to be heard by the Court of Special Appeals in Maryland in February 2019. The Defendants rely upon Bouzari v. Bahremani, 2015 ONCA 275, 126 O.R. (3d) 223, in which the Court of Appeal held that Ontario was forum non conveniens because the defendant could not travel from Iran to Ontario. In that case, however, the defendant had been denied visas to enter Canada to participate in the proceeding on two previous occasions. In this case, the difficulty is not that Isaac, who is a Canadian citizen, cannot come to Ontario but that he may not be able to return to the United States if he leaves.
40This proceeding, despite having been commenced in 2014, remains at an early stage. Isaac will not necessarily be required to travel to Ontario in the near future and his criminal proceeding in Maryland may be resolved by that time. It would also be possible for the parties to make alternative arrangements while Isaac’s appeal is pending. For the purposes of this motion, Isaac’s cross-examination was held in Buffalo, New York. In addition, Isaac has availed himself of proceedings in Ontario without raising potential immigration problems. In my view, the claim that Isaac cannot participate in a proceeding in Ontario because of unspecified “immigration difficulties” that may result is insufficient to find that Ontario is forum non conveniens.
41Turning to the remaining factors, neither party presented evidence to suggest that an eventual judgment in either forum could not be equally enforceable in the other forum. The Defendants have not identified a juridical advantage that would be lost if the parties are required to proceed in Ontario.
42The final consideration is whether there is any overarching unfairness if the dispute were to be litigated in Ontario. As detailed above, any potential unfairness to Isaac based on his “immigration difficulties” is insufficient to find that Ontario is not a convenient forum.
43Based on the application of the relevant factors, the Defendants have failed to demonstrate that New York is a clearly more appropriate forum.
Conclusion
44For the foregoing reasons, I find that this court has jurisdiction simpliciter. Moreover, Ontario is a convenient forum for the adjudication of the parties’ dispute. The Defendants’ motion is dismissed.
Costs
45The parties submitted costs outlines after the motion hearing. The Plaintiffs’ partial indemnity costs total $15,619.83 including HST and disbursements. The Defendants’ costs were significantly higher.
46Pursuant to the Courts of Justice Act, R.S.O. 1990, c. C.43, s. 131(1), the court has broad discretion when determining the issue of costs. The overall objective of fixing costs is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the circumstances, rather than an amount fixed by actual costs incurred by the successful litigant: Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.). Rule 57.01(1) of the Rules of Civil Procedure sets out the factors to be considered by the court when determining the costs issue.
47I have considered these factors, as well as the proportionality principle in r. 1.04(1.1) of the Rules of Civil Procedure, while keeping in mind that the court should seek to balance the indemnity principle with the fundamental objective of access to justice. The issues on this motion were not particularly complex. The Defendants brought the motion promptly. By contrast, the Plaintiffs sought to adjourn the motion at the last minute on more than one occasion and brought motions seeking to compel Isaac to be cross-examined in Ontario and for Gitty to serve an affidavit. The Plaintiffs also sought to file additional affidavit evidence after Isaac’s cross-examination.
48Given the foregoing, I fix costs of the motion and the proceeding at $12,000.00, inclusive of disbursements and HST, payable by the Defendants to the Plaintiffs within 30 days of the date of this order.
NISHIKAWA J. Date: November 13, 2018