Court File and Parties

Court File No.: CV-20-2727 Date: 2022-03-01 Ontario Superior Court of Justice

Between: Savanta Inc., Plaintiff And: Thomas Hilditch and Teresa Hilditch, Defendants

Counsel: D. Langley, for the Plaintiff, Defendant by Counterclaim J. Wigle, for the Defendants, Plaintiffs by Counterclaim

Heard: January 4, 2022

Justice Mills

Endorsement

[1] The plaintiff, having commenced this lawsuit in Ontario, now challenges the jurisdiction of this Court to adjudicate certain of the matters in dispute. Savanta, together with its co-defendant to the Counterclaim GEI Consultants, Inc. (“GEI”), brought this motion to stay paragraphs 56-58 and 61-62 of the Counterclaim, and Savanta seeks leave to discontinue paragraphs 1(d) and 50-52 of the Statement of Claim on the basis the underlying contract contains a binding forum selection clause requiring the Courts of the Commonwealth of Massachusetts to adjudicate any disputes regarding those issues. The defendants take the position that Savanta has attorned to the jurisdiction of the Ontario Superior Court.

[2] Having commenced proceedings in this Court, Savanta has attorned to this jurisdiction. GEI has not done so. Following the filing of this motion, GEI commenced a legal proceeding in Massachusetts.

[3] It is important to understand the corporate structure of the parties. Mr. Hildrich started Savanta in 2006 as a privately held Ontario corporation. It provided environmental consulting services to private and public sector clients in Canada and abroad, and to First Nations clients in Canada. By 2019, Savanta had 35 full-time employees, including Mr. and Mrs. Hildrich, with the company’s head office located at their home. The employees worked in the field or from their home offices.

[4] GEI is a privately held corporation, incorporated pursuant to the laws of Massachusetts with its head office located in Woburn, Massachusetts. It provides environmental consulting to private and public sector clients in the United States. It had a small presence in Ontario prior to January 2019 in the land development industry and sought to expand its presence with the acquisition of Savanta.

[5] GEI Consultants Corporation (“GEI ON”) was incorporated to purchase the shares of Savanta in accordance with a Share Purchase Agreement (“SPA”) dated January 26, 2019. GEI ON was a wholly owned subsidiary of GEI and following the acquisition of Savanta, GEI ON amalgamated with and continues as GEI. Therefore, GEI now is the sole shareholder of Savanta.

[6] Section 10.3 of the SPA provides that any dispute in relation to the SPA must be brought in any state or federal court of competent jurisdiction in the Commonwealth of Massachusetts. The parties irrevocably attorned to the “non-exclusive jurisdiction of such court” and unconditionally waived any objection to the venue or the forum of that court. Certain ancillary agreements which have their own choice of forum clauses were excluded from this provision. That includes Mr. Hilditch’s Employment Contract and Non-Competition Agreement (the “Hilditch Contracts”), both of which provide that the parties irrevocably and unconditionally attorn to the exclusive jurisdiction of the Ontario courts for resolution of any disputes.

Is the jurisdiction clause in the SPA “non-exclusive” such that the Ontario Superior Court may adjudicate disputes related to the SPA?

[7] Absent strong cause, choice of jurisdiction or forum selection clauses in contracts should be respected and enforced. [1] There are very limited and exceptional circumstances to warrant overriding a forum selection clause. [2] There is a difference however between “exclusive” and “non-exclusive” clauses where the former confers sole jurisdiction on the named forum while the latter simply requires a party to attorn to the named jurisdiction if an action is commenced in that jurisdiction. [3] A non-exclusive clause is more limited in scope. It does not rule out other forums or jurisdictions from adjudicating disputes. [4] It is simply a factor to consider in a forum non conveniens analysis as to the most appropriate jurisdiction. [5]

[8] Clause 10.3 of the SPA provides as follows:

If any controversy, action, proceeding or dispute (a "Dispute") arises with respect to this Agreement, the Ancillary Agreements (to the extent no choice of law is specified therein) or any transactions contemplated by this Agreement, the Dispute must be brought in any state or federal court of competent jurisdiction in the Commonwealth of Massachusetts, and each Party irrevocably submits and agrees to attorn to the non-exclusive jurisdiction of such court. The Parties irrevocably and unconditionally waive any objections to the venue of any Dispute in that court and irrevocably waive and agree not to plead or claim in that court that such Dispute has been brought in an inconvenient forum. The Parties agree that this section will not apply to a dispute arising under Section 2.5 (Final Closing Date Balance Sheet).

[9] Savanta and GEI submit this is an exclusive jurisdiction clause as any dispute “must be brought in any state or federal court of competent jurisdiction in the Commonwealth of Massachusetts” and that the subsequent use of the word “non-exclusive” is intended to refer narrowly to only the state or federal court in the Commonwealth of Massachusetts. The Hilditch defendants submit this is a non-exclusive jurisdiction clause requiring them to attorn to Massachusetts if an action is commenced in that jurisdiction, whether before the state or federal court, but not to the exclusion of any other court having jurisdiction.

[10] I agree with the interpretation that the clause is “non-exclusive”. If the intention was to have an exclusive jurisdiction clause, the parties ought to have been more precise in their language by simply using the word “exclusive”. “Clear and express language” is required to confer exclusive jurisdiction. [6] The reference to “non-exclusive jurisdiction” creates ambiguity as to the intention of the parties and does give rise to an inherent contradiction that is capable of different interpretations. It is not at all clear that the word “non-exclusive” was intended to refer only to the state or federal courts in Massachusetts despite the mandatory language of the clause. In the circumstances, the commercially reasonable interpretation is that the parties agreed to attorn to the jurisdiction of the state or federal courts of Massachusetts if an action was commenced in either court. The clause is not sufficiently clear to oust the jurisdiction of any other court as an appropriate forum for the resolution of a dispute. Ontario may adjudicate the disputes related to the SPA, in addition to those arising from the Hilditch Contracts.

Is Ontario or Massachusetts the most convenient forum?

[11] Having determined the clause is not an exclusive jurisdiction clause, I must assess whether Ontario or Massachusetts is the most convenient forum. As noted above, Savanta has attorned to the jurisdiction of Ontario by filing the Statement of Claim. This includes attorning, even if only by inadvertence, for a determination of the claims asserted in the Statement of Claim which reference the SPA. Savanta accepts there is a connection between the SPA claims and Ontario. Savanta and GEI have not attorned with respect to the SPA claims advanced in the Counterclaim.

[12] Attornment to the jurisdiction is not determinative. It is only relevant to the question of jurisdiction, not whether the jurisdiction ought to be exercised. [7] It is still open for a party who has attorned to argue that the jurisdiction is not the most convenient forum.

[13] In Muscutt et al. v. Courcelles, the Ontario Court of Appeal set out the factors to be considered when determining the most convenient forum. The following non-exhaustive list of factors are to be considered when determining the jurisdiction with the most “real and substantial connection” to the matters in dispute: (i) the location of the majority of the parties; (ii) the location of key witnesses and evidence; (iii) contractual provisions that specify the applicable law or accord jurisdiction; (iv) the avoidance of a multiplicity of proceedings; (v) the applicable law and its weight in comparison to the factual questions to be decided; (vi) geographical factors suggesting the natural forum; and (vii) whether declining jurisdiction would deprive the plaintiff of a legitimate juridical advantage available in the domestic court.

[14] In exercising my discretion, I must be guided by three factors: [9]

a. The threshold for displacing the plaintiff's choice of jurisdiction is "high", and the existence of a more appropriate forum "must be clearly demonstrated". b. The court should consider and balance the efficiency and convenience of a particular forum against the fairness and justice of that choice. c. The judge hearing the stay motion should adopt a cautious approach to making findings of fact.

[15] This is an unusual motion as it is the plaintiff who now seeks to displace its own choice of jurisdiction. In the circumstances therefore, the plaintiff must bear the burden of clearly demonstrating that Massachusetts is a more appropriate forum. The defendants accept Ontario as the appropriate jurisdiction for the adjudication of all matters in dispute.

[16] The plaintiff submits the inclusion in the Statement of Claim of the SPA issues was a drafting error by counsel and that commencing the action in Ontario respecting these issues was inadvertent and done by mistake. The plaintiff concedes that the Hilditch Contracts are properly before this Court and submits that to the extent there are references to the SPA in the Statement of Claim and the Reply and Defence to Counterclaim beyond those paragraphs which are the subject of this motion, the references are just to give context for a better understanding of the agreements and the overall transaction between the parties. The plaintiff asserts that all claims related to the SPA must be determined by the Courts of Massachusetts as the most convenient forum, having regard to the choice of forum clause agreed to by the parties in the SPA. There are no exceptional circumstances to depart from enforcing the clause. [10]

[17] The parties agree the applicable law for interpretation of the SPA is Massachusetts and the applicable law for the Hilditch Contracts is Ontario. I agree that based on the evidence before me, none of the exceptional circumstances noted in Expedition Helicopters Inc. v. Honeywell Inc., 2010 ONCA 351 appear to exist to presumptively justify overriding the forum selection clause. However, the jurisdiction clause in the SPA, having been found to be non-exclusive, is just one factor to consider. The exclusive jurisdiction clauses in the Hilditch Contracts provides for Ontario as the exclusive jurisdiction for dispute resolution and the plaintiff and GEI accept that these matters must proceed before this Court. Three of the four parties are in Ontario. The witnesses will be from Ontario and Massachusetts. On the whole, these factors collectively do not materially favour one party over the other and none of the factors is independently determinative.

[18] The risk of a multiplicity of proceedings is real, as evidenced by the fact the plaintiff and GEI have already commenced parallel litigation in Massachusetts seeking much of the same relief identified in this proceeding. This will inevitably require witnesses to testify and present the same evidence in both proceedings. With a multiplicity of proceedings comes the risk of conflicting decisions on material issues. Some of the claims made in respect of the SPA are dependent on a finding of whether Mr. Hilditch’s employment was terminated for cause. That is a decision that is within the exclusive jurisdiction of this Court. There is a substantial risk of conflicting decisions on the fundamental issue of whether Mr. Hildrich’s employment was properly terminated for cause. The multiplicity of proceedings and the risk of conflicting decisions on material issues where Ontario has exclusive jurisdiction, favours Ontario in the analysis of the most convenient forum. There is a real and substantial connection between Ontario and the matters in dispute.

[19] Certain claims respecting the SPA are reliant upon a final decision or resolution of a proceeding currently pending before the Ontario Superior Court of Justice. This is not a particularly compelling reason, but it does add some weight to the suggestion that Ontario is the more convenient forum for the determination of all disputes between the parties.

[20] Having considered the Muscutt factors, I am satisfied that Ontario is the most convenient forum for the determination of all issues raised between the parties. The plaintiff and GEI have not demonstrated that Massachusetts is clearly the more appropriate forum for the SPA issues raised in the Statement of Claim and the Counterclaim. There is a much stronger connection with Ontario.

[21] Although it may have been an error by counsel to include the SPA claims in the Statement of Claim, the defendants have accepted the jurisdiction of this Court respecting these issues and have filed a Counterclaim seeking relief of their own. The proceedings have not progressed beyond the pleadings stage, but this alone is not determinative as to whether the Court should exercise its discretion to permit the plaintiff to discontinue only the SPA claims on a without prejudice basis. [11] The defendants will suffer significant prejudice if, having accepted the plaintiff’s choice of forum, they are now forced to start over with parts of their Statement of Defence and Counterclaim severed from the main action. This will require the defendants to engage in parallel litigation in Ontario and Massachusetts with the risk of inconsistent findings respecting contracts and agreements that are clearly interconnected. [12] This is not a prejudice that could be compensated for through an order for costs or neutralized with the imposition of terms.

Order

[22] Based on all the circumstances, I am of the view that Ontario is the most convenient forum for the adjudication of all issues in dispute between the parties, and that fairness and the interests of justice dictate that the motion for leave to stay or discontinue those portions of the Statement of Claim and the Counterclaim addressing the SPA issues be denied.

[23] The issue raised in paragraph 57(3) of the Statement of Defence and Counterclaim has been settled between the parties. It is therefore stayed for the purposes of the ongoing litigation.

[24] The plaintiff and GEI shall deliver their Defence to the Counterclaim within 30 days.

Costs

[25] Having been successful on this motion, the defendants are entitled to their costs. Counsel submitted Cost Outlines which are comparable in terms of the amounts sought to be recovered in the event of success. They both agree the issues to be determined are important and that significant amounts are in dispute. There is no indication that an Offer to Settle was served by the defendants which may have invited costs on a higher scale. Therefore, on a partial indemnity basis, the plaintiff and GEI shall forthwith pay $18,390 to the defendants, inclusive of fees, disbursements and HST for the costs incurred in relation to this motion. In my view, this amount is fair and proportionate, having regard to the factors listed in Rule 57.01 of the Rules of Civil Procedure.

J.E. Mills Electronic signature of Justice J. E. Mills Released: March 1, 2022