Date: 2004-03-17 Docket: C40053
Court of Appeal for Ontario
Laskin, Armstrong and Blair JJ.A.
Between:
M.J. Jones Inc. and Melvin Jones Plaintiffs (Respondents)
- and -
Kingsway General Insurance Company, Donald Fish, D.E. Fish & Associates Ltd., Garan, Lucow, Miller, P.C. and Thomas Emery Defendants (Appellants)
Counsel: Eleni Maroudas for the respondents M.J. Jones Inc. and Melvin Jones Victor T. Bulger for the respondent Kingsway General Insurance Company John G. Webster for the respondents Donald Fish and D.E. Fish & Associates Ltd. Peter R. Greene for the appellants Garan, Lucow, Miller, P.C. and Thomas Emery
Heard: December 5, 2003
On appeal from the decision of Justice Gertrude F. Speigel of the Superior Court of Justice dated April 28, 2003.
R. A. Blair J.A.:
[1] On this appeal, a Michigan law firm and one of its members seek to set aside the order of Madam Justice G. Speigel holding that the Ontario Superior Court of Justice has jurisdiction over the claim against them in this action and, further, that Ontario is the forum conveniens for the dispute.
Background
[2] M.J. Jones Inc. is an Ontario transportation company. It was sued in Michigan for loss of value, consequential damages and punitive damages, after a piece of equipment it was carrying from Quebec to a purchaser in Michigan was damaged in transit. Melvin Jones, the president of the company, was sued as well. I shall refer to Mr. Jones and M.J. Jones Inc., together, as "Jones" in these reasons.
[3] The Michigan law firm, Garan, Lucow, Miller, P.C. was retained by Jones' insurer, Kingsway General Insurance Company, to defend the Michigan action. A member of that firm, Thomas Emery, was the attorney who handled the case. He did not contest the Michigan court's jurisdiction over the Ontario defendants, nor did he contest the Michigan plaintiff's motion for summary judgment. He did contest the subsequent reference regarding damages. Ultimately, the Michigan plaintiff was successful in obtaining judgment for $246,445(U.S.) to replace the damaged equipment and for $247,319(U.S.) for loss of use of the equipment. No punitive damages were awarded.
[4] Although it never supplied him with a copy of its insurance policy, Kingsway informed Emery on several occasions that there could be an issue regarding coverage, particularly, with respect to punitive and consequential damages. Emery claimed that his duty was to defend the insureds, however, and that under Michigan law he could not get involved in coverage issues. He never warned Jones in writing to appoint a lawyer to represent their interests beyond the Kingsway coverage. Nor did Kingsway ever contact Jones to inform them that there were coverage issues and that they may have been uninsured for levels of exposure in excess of their coverage.
[5] Donald Fish and D.E. Fish & Associates Ltd. (together, "Fish") were the brokers who placed the insurance with Kingsway, on behalf of Jones.
The Present Action
[6] Following the Michigan judgment, Jones commenced the present action in the Superior Court of Justice in Ontario. It claims damages,
a) against Kingsway for breach of contract, negligence, breach of duty of good faith, and breach of fiduciary duty;
b) against Emery and the Michigan law firm for negligence and breach of fiduciary duty; and,
c) against Fish in negligence for not securing better insurance coverage from Kingsway.
[7] Kingsway and Fish have cross-claimed against all of their co-defendants, including the appellants, for contribution and indemnity. Central to each of these cross-claims is the allegation that Emery and the Michigan law firm were negligent in their representation of Jones in the Michigan action and, particularly, that they were negligent in not advising Jones about the limitations in coverage.
[8] Emery and the Michigan law firm moved to dismiss or stay the claim and the cross-claims against them on the grounds that:
a) there is no real and substantial connection between Ontario and the claim and cross-claims against them and, therefore, that an Ontario court does not have jurisdiction to deal with them; and,
b) even if an Ontario court has jurisdiction, it should decline to exercise that jurisdiction because Ontario is not the forum conveniens for the resolution of the issues involving the appellants.
[9] Justice Speigel dismissed the motion. For the reasons that follow I would dismiss the appeal from that decision.
Analysis
[10] Section 106 of the Courts of Justice Act R.S.O.1990, c.C.43 permits the court to stay any proceeding on such terms as are considered just. Rule 17.02 of the Rules of Civil Procedure sets out the circumstances in which an originating process may be served outside of Ontario without leave, and rule 17.06 empowers a party who has been served with such a process to move to set aside the service or to stay the proceeding. The Ontario jurisprudence regarding the court's powers to impose a stay on jurisdictional and forum conveniens grounds has developed under the rubric of this statutory and regulatory framework. Although the appellants originally attacked the service of the statement of claim outside of Ontario under rule 17.02, that argument was abandoned before the motions judge. The motion proceeded on the basis of the court's powers under section 106.
Jurisdiction
[11] Building upon principles earlier enunciated by the Supreme Court of Canada in Morguard Investments Ltd. v. De Savoye, [1990] 3 S.C.R. 1077, and Hunt v. T & N plc., [1993] 4 S.C.R. 289, this court, in a series of decisions authored by Sharpe J.A., has recently developed a number of criteria to be applied when considering whether an Ontario court should assume jurisdiction over a foreign defendant: see Muscutt v. Courcelles (2002), 60 O.R. (3d) 20; Lemmex v Bernard (2002), 60 O.R. (3d) 54; Gajraj v. DeBernardo (2002), 60 O.R. (3d) 68; Sinclair v. Cracker Barrel Old Country Store, Inc. (2002), 60 O.R. (3d) 76; and Leufkens v. Alba Tours International Inc. (2002), 60 O.R. (3d) 84. Muscutt is the leading decision, and I shall refer to the jurisdictional principles expressed in those cases as the Muscutt principles or criteria.
[12] Although the list is not intended to be exhaustive, the factors to be taken into account by a court when deciding whether there is a sufficiently real and substantial connection to Ontario to warrant the assumption of jurisdiction over a foreign defendant are the following:
(a) the connection between the plaintiff's claim and Ontario;
(b) the connection between the forum and the defendant;
(c) unfairness to the defendant in the Ontario court assuming jurisdiction;
(d) unfairness to the plaintiff in the Ontario court assuming jurisdiction;
(e) the involvement of other parties to the suit;
(f) the Ontario court's willingness to recognize and enforce an extra-provincial judgment rendered on the same jurisdictional basis;
(g) whether the case is inter-provincial or international in nature; and
(h) comity and the standards of jurisdiction, recognition and enforcement prevailing elsewhere.
[13] As Sharpe J.A. noted in Muscutt, supra, at paragraphs 75 and 76, no single factor is determinative and all relevant factors should be considered and weighed together:
It is apparent from Morguard, Hunt and subsequent case law that it is not possible to reduce the real and substantial connection test to a fixed formula. A considerable measure of judgment is required in assessing whether the real and substantial connection test has been met on the facts of a given case. Flexibility is therefore important.
[14] In very thorough and careful reasons, the motions judge canvassed each of the foregoing factors in light of the evidence in the record before her. Although recognizing that the matter was "admittedly not clear-cut" and that some of the criteria worked in favour of the appellants, she concluded that the majority of the factors favoured the Ontario court assuming jurisdiction and, in particular, that "the multiplicity of parties in this case [tipped] the scales in favour" of that result. Coupled with all of these considerations, the motions judge was of the view that "the underlying principles of order and fairness [were] best suited if the entire case is tried in Ontario, eliminating the risk of inconsistent findings".
[15] With one minor caveat – which relates more to how she arrived at her conclusion respecting one of the factors to be considered, rather than to the conclusion itself – I agree with the analysis of the motions judge regarding the application of the Muscutt principles in the circumstances of this case
[16] The caveat is the following. In considering the connection between the plaintiffs and Ontario as the forum for the litigation, the motions judge expressed the view that the plaintiffs had suffered damages in Ontario as a result of the alleged negligence of Emery because the Michigan judgment would be enforced in Ontario. She held that "while Emery's negligence might have injured Jones in Michigan and outside of Ontario, that injury will result in damage inside Ontario when the adverse judgment, the result of that negligence, is enforced in Ontario". She relied upon Jaffe v. Dearing (1988), 65 O.R. (2d) 113 (H.C.J.) for the proposition that "the damage was sustained – in the sense that it was felt or it hit home and was endured – in Ontario".
[17] With respect, I have some doubt about the logic of this approach. It appears to me to confuse damages with enforcement of the judgment. The plaintiffs' "damages" were incurred in Michigan, where they failed to prevail in the lawsuit. In my opinion, the mere fact the Michigan judgment may be enforced against Jones' assets in Ontario – and thus be "felt or hit home and [be] endured" in Ontario – does not constitute "damage sustained in Ontario" for purposes of an action in Ontario against an ex juris defendant.
[18] Jaffe, supra, is distinguishable. There, the monies which had been posted as an appearance bond in Florida proceedings, and which were forfeited to the state when Mr. Jaffe failed to attend for his trial, had come from Ontario. It made sense to conclude that the loss of those monies "hit home" in Ontario. But such is not the case with the enforcement of a foreign judgment in Ontario. Damages sustained and payment of those damages, are not the same thing.
[19] It does not follow, however, that the potential enforcement of the Michigan judgment in Ontario is an irrelevant consideration regarding the connection between the plaintiffs and Ontario as the forum for determination of the plaintiffs' claims. The judgment is at the heart of the claim against the appellants, who assert that they would not be exposed to payment of it, were it not for the negligence of the defendants, including the appellants. In the context of this litigation, then, the potential enforcement of the judgment is a connecting factor between the plaintiffs and the Ontario forum, and one properly taken into account in assessing the assumption of jurisdiction issue.
[20] In any event, while an Ontario court is more likely to assert jurisdiction over a claim where the plaintiff has suffered damages in Ontario, such damages are only one of a myriad of factors that may signal a connection between the forum and the plaintiffs' claims. Here, other factors tending to show such a connection include the following: all parties except the appellants are resident in Ontario; all relevant contracts between the parties, including the appellant's retainer agreement, were concluded in Ontario; the appellants knew they were representing clients whose business was carried on from Ontario; and Emery dealt with Jones by telephone in Ontario and even met with Jones on one occasion to obtain instructions in Welland.
[21] Moreover, the connection between the forum and the plaintiffs' claims is only one of the several Muscutt criteria to be considered. The motions judge balanced all of the relevant factors. In particular, she focused on the numerous parties involved in the lawsuit – all of whom, save for the appellants, are located in Ontario – and the need to avoid multiplicity of proceedings and the potential for inconsistent decisions in the courts of two jurisdiction. In my view, the motions judge was right to emphasize these factors, in the circumstances of this case, and to conclude that they tipped the balance in favour of assuming jurisdiction. The appellants' conduct in defending the Michigan action and the scope of its retainer, including whether that retainer encompassed the obligation to advise the plaintiffs of potential coverage problems, are central issues in the lawsuit, and are inextricably linked to all of the claims and cross-claims.
[22] In an action with multiple defendants and multiple claims, some of which have an extra-territorial dimension, the claims must be assessed as a whole, for purposes of the jurisdictional analysis, without treating the claim against the foreign defendant as a separate action: McNichol Estate v. Woldnik (2001), 13 C.P.C. (5th) 61 (Ont. C.A.); Muscutt, supra, at paras. 67-68; Incorporated Broadcasters Ltd. v. Canwest Global Communications Corp. (2003), 63 O.R. (3d) 431 at para. 38 (Ont. C.A.).
[23] In McNichol Estate Goudge J.A. stated, at pp. 64-65:
Rather, I think that the approach prescribed by Morguard and Hunt requires the court to evaluate the connection with Ontario of the subject matter of the litigation framed as it is to include both the claim against the foreign defendant and the claims against the domestic defendants. In doing so, the courts must be guided by these requirements of order and fairness. If it serves these requirements to try the foreign claim together with the claims that are clearly rooted in Ontario, then the foreign claim meets the "real and substantial connection" test. This is so even if that claim would fail the test if it were constituted as a separate action. This approach goes beyond showing that the foreign defendant is a proper party to the litigation. It rests on those values, namely order and fairness, that properly inform the real and substantial connection test and allows the court the flexibility to balance the globalization of litigation against the problems for a defendant who is sued in a foreign jurisdiction.
[24] That is precisely the approach taken by the motions judge in this case. There is ample support in the record for her conclusion that Ontario has jurisdiction over the plaintiffs' claims against the appellants, and I would not interfere with that decision.
Forum Non Conveniens
[25] Having concluded that the Ontario court has jurisdiction to hear the claim against the appellants, the motions judge turned her mind to the question whether the Ontario court should do so, i.e., to whether the court should decline to exercise that jurisdiction on the basis of the principle of forum non conveniens. She held that the court should exercise its jurisdiction over the dispute.
[26] The jurisprudence establishes, as Sharpe J.A. noted in Muscutt, supra, at para. 40, that "[w]here more than one forum is capable of assuming jurisdiction, the most appropriate forum is determined through the forum non conveniens doctrine, which allows a court to decline to exercise its jurisdiction on the ground that there is another forum more appropriate to entertain the action." In the context of this case, it must be shown that Michigan is clearly the more appropriate forum, in order to displace the forum selected by the plaintiffs: Amchem Products Inc. v. British Columbia (Workers' Compensation Board), [1993] 1 S.C.R. 897 at 923; Frymer v. Brettschneider (1994), 19 O.R. (3d) 60 at 79 (C.A.). The order is discretionary.
[27] The appellants argue that the motions judge erred in placing the onus on them to establish that Michigan is clearly the more appropriate forum, rather than Ontario, for the resolution of the dispute. With respect to the motions judge, I agree that she erred in this regard. She proceeded on the basis that it was the defendant appellants who had the onus of showing that Michigan was the more appropriate forum and concluded that Emery had failed to do so. In Ontario, however, the onus is on the plaintiff who has brought the foreigner into the jurisdiction to establish that this province is the appropriate forum when the choice of forum is challenged: Frymer, supra, at pp. 84-85.
[28] Nevertheless, as Arbour J.A. pointed out in Frymer, at p. 81:
. . . the question of burden of proof will rarely matter. 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 is to bear the burden of proof.
See also Amchem, supra, per Sopinka J. at p. 921.
[29] That is true in the present case, in my opinion.
[30] As she was obliged to do, the motions judge considered all of the relevant factors in assessing the forum non conveniens argument, namely, (1) the location of the majority of the parties, (2) the location of key witnesses and evidence, (3) contractual provisions that specify applicable law or accord jurisdiction (there are no such provisions here), (4) the avoidance of multiplicity of proceedings, (5) the applicable law and its weight in comparison to the factual questions to be decided, (6) geographical factors suggesting the natural forum, and (7) whether declining jurisdiction would deprive the plaintiff of a legitimate juridical advantage available in the domestic court: see Muscutt, supra, at para. 41.
[31] The motions judge weighed and balanced all of these factors. At para. 55 of her decision she said:
Factor 1 clearly favours Ontario since all parties except Emery are in this province. Since most parties are in Ontario, most of the witnesses and evidence are likely in Ontario as well. I appreciate that any experts on Michigan law will likely come from Michigan. Factor 2 is thus either neutral or slightly favours Ontario. Factor 3 is neutral since no such contractual provisions exist. Factor 4 clearly favours Ontario for the reasons discussed above. Since the case deals with both Ontario and Michigan law, factor 5 is neutral. While factor 6 may favour Michigan, the distance between the jurisdictions is small enough to cause little concern about hearing the case in Ontario. Finally, as to the final factor, Jones would not lose a juridical advantage if the case were heard in Michigan, aside from the concerns surrounding the multiplicity of parties discussed earlier.
[32] In the end, the motions judge concluded that only two of the factors favoured Michigan, and then only slightly. I agree. In my view, this is not a case that turns on who has the onus of establishing whether Michigan is clearly the more appropriate forum.
[33] I would therefore not interfere with the exercise of the motion judge's discretion on the forum non conveniens argument.
Disposition
[34] I would accordingly dismiss the appeal.
[35] At the conclusion of argument counsel indicated that if the appellants were unsuccessful costs should be awarded against them in the following amounts: $4,500 in favour of the plaintiffs; $4,000 in favour of Kingsway; and $3,500 in favour of Fish, such amounts to be all inclusive. The court requested written submissions respecting costs in the event that the appellants should be successful. We have received such submissions, during the course of which some differences emerged over whether counsel had agreed unconditionally to the foregoing amounts, if the appellants failed, or whether the agreement was conditional upon agreement being made concerning the appellant's costs if successful. It is not necessary for us to resolve this dispute. We are satisfied that the foregoing amounts are reasonable and the costs of the appeal are therefore fixed in those amounts.
"R.A. Blair J.A."
"I agree J.I. Laskin J.A."
"I agree R. P. Armstrong J.A."
Released: March 17, 2004