DATE: 20060530

DOCKET: C42029

COURT OF APPEAL FOR ONTARIO

RE:

KERSASP SHEKHDAR (Plaintiff/Appellant) –and- K&M ENGINEERING AND CONSULTING CORPORATION, FREEWILLS, INC., FREEWILLS.COM(U.S.), INC., WILLIAM KAPPAZ, REGINA GUERIN, FREEWILLS.COM (BERMUDA) LIMITED also known as FREEWILLS.COM(BERMUDA) LTD., FREEWILLS.COM (CANADA) INC. and 3693759 CANADA INC. (Defendants/Respondents)

BEFORE:

CATZMAN, LASKIN AND MACPHERSON JJ.A.

COUNSEL:

Robert C. Harason

for the appellant

Matthew Moloci

for the respondent

HEARD & RELEASED ORALLY:

May 24, 2006

On appeal from the order of Justice P. Theodore Matlow of the Superior Court of Justice, dated May 26, 2004 made in Toronto, Ontario.

E N D O R S E M E N T

[1] There are three ways in which jurisdiction may be asserted against an out-of-province defendant. They are described as: 1. presence-based jurisdiction; 2. consent-based jurisdiction; and 3. assumed jurisdiction: Muscutt v. Courcelles (2002), 60 O.R. (3d) 20 (C.A.) at para. 19; Incorporated Broadcasters Ltd. v. CanWest Global Communications Corp. (2003), 63 O.R. (3d) 431, at para. 29.

[2] The defendants, respondents to this appeal, concede that, if their attornment to the courts of Ontario is sufficient to constitute consent, the appeal must succeed. In our view, it is incontrovertible that the defendants did attorn to the Ontario jurisdiction and thus consented to it. Without in any way questioning jurisdiction, they responded to the plaintiff’s pleadings in Ontario; they attended for examinations for discovery in Ontario, their counsel appeared before a master and three Superior Court judges in Ontario, and they participated in almost three days of the trial of this action before Matlow J. who, on his own motion, raised the question of jurisdiction and instructed counsel to research the stay provision in s. 106 of the Courts of Justice Act. It was then, for the first time, that the defendants took the position that Ontario did not have jurisdiction to entertain this action. Matlow J. adopted that position. He rejected consent as a separate basis of jurisdiction and focused on assumed jurisdiction. He concluded that his hands were tied because, on his analysis of the eight factors appearing in Muscutt, the action had no real and substantial connection with Ontario and the Superior Court therefore had no jurisdiction to entertain it. While he undoubtedly had the authority that he purported to exercise under s. 106, having regard to the costs the parties had already incurred in this litigation, it was inappropriate for him to exercise his discretion in the way he did. Moreover, for the reasons set out above, his decision was wrong in law.

[3] The appeal is allowed, the stay of proceeding is lifted and a new trial is ordered before a different judge. The plaintiff is entitled to counsel fee for the proceedings before Matlow J. on a partial indemnity basis, which costs we fix in the amount of $13,000, all inclusive, and which are to be paid forthwith. The remaining costs of the trial sought by the plaintiff, and any costs associated with a future trial, are reserved to the judge presiding at that trial. The appellant is entitled to his costs of the appeal, on a partial indemnity basis, which we fix in the amount of $15,000, all inclusive, and which are also to be paid forthwith. The firm of Beard Winter LLP is released from the obligation to hold the money currently held in its trust account pursuant to the direction of Labrosse J.A.