Court File and Parties

CITATION: Cannon v. Funds for Canada Foundation, 2011 ONCA 185

DATE: 20110309

DOCKET: C52674

COURT OF APPEAL FOR ONTARIO

Doherty, Cronk and Epstein JJ.A.

BETWEEN

Michael Cannon

Plaintiff (Respondent)

and

Funds for Canada Foundation, Donations Canada Financial Trust, Parklane Financial Group Limited, Trafalgar Associates Limited, Trafalgar Trading Limited, Bermuda Long Tail Trust, Edwin C. Harris Q.C., Patterson Palmer also known as Patterson Palmer Law, Patterson Kitz (Halifax), Patterson Kitz (Truro), McInnes Cooper, Sam Albanese, Ken Ford, Riyad Mohammed, David Raby and Greg Wade, Gleeson Management Associates Inc., Mary-Lou Gleeson, Matt Gleeson and Martin P. Gleeson

Defendants (Appellants)

Proceedings commenced under the Class Proceedings Act

Bradley E. Berg and Charles Dobson, for the appellant Appleby Services (Bermuda) Ltd.

Margaret Waddell and Samuel S. Marr, for the respondent

Heard: March 7, 2011

On appeal from the order of Justice G. Strathy of the Superior Court of Justice, dated August 18, 2010.

ENDORSEMENT

[1] This appeal concerns the issue whether Ontario courts should assume jurisdiction over the appellant, Appleby Services (Bermuda) Ltd., the Bermuda-based corporate trustee of the defendant, Bermuda Long Tail Trust (the "Trust").

[2] The parties agree that the recent decision of this court in Van Breda v. Village Resorts Ltd., 2010 ONCA 84, leave to appeal granted, [2010] S.C.C.A. No. 174, is the applicable controlling authority. Van Breda holds, at para. 84, that Ontario courts will assume jurisdiction over a foreign defendant where there is a "real and substantial connection" between Ontario, the plaintiff's claim and the defendant.

[3] In this case, the appellant does not challenge the connection between the respondent's claim and Ontario. The matter in dispute is the sufficiency of the alleged connection between Ontario and the appellant.

(1) Connection Between the Appellant and Ontario

[4] The first stage of the jurisdictional inquiry mandated by Van Breda requires the determination of whether the case falls within one of the categories of connection listed in rule 17.02 of the Rules of Civil Procedure, with the exception of subrules 17.02 (h) and (o). If so, a real and substantial connection for the purpose of assuming jurisdiction is presumed to exist, subject to rebuttal on proper evidence.

[5] The motion judge held:

The evidence before me … establishes a good arguable case that [the appellant], in its capacity as trustee of the Trust, participated in the commission of torts in Ontario by knowingly using the Trust's funds, or permitting those funds to be used by the defendants, in furtherance of the [gifting program at issue].

He therefore concluded that the respondent's claim fell within subrule 17.02(g) (a tort committed in Ontario), with the result that the appellant bore the onus of establishing that a real and substantial connection to Ontario did not exist.

[6] We agree with the motion judge's conclusions on this issue. There was evidence before the motion judge which, if proven at trial, was capable of establishing the appellant's participation in tortious conduct in Ontario, as pleaded by the respondent. This was all that was required to bring the respondent's tort-based claims against the appellant within subrule 17.02(g).

[7] The motion judge went on to consider, under the second stage of the Van Breda jurisdictional inquiry, whether there was a connection between Ontario and the appellant sufficient to ground the assumption of jurisdiction over the appellant.

[8] Van Breda holds, at para. 89, that when assessing the connection between the local forum and the defendant, "the primary focus is on things done by the defendant within the jurisdiction." The court elaborated, at para. 92: "As stated in [Beals v. Saldhana, 2003 SCC 72, [2003] 3 S.C.R. 416], at para. 32, "a defendant can reasonably be brought within the embrace of a foreign jurisdiction's law where he or she has participated in something of significance or was actively involved in that foreign jurisdiction."

[9] The motion judge concluded that the evidence of "the nature and frequency" of the appellant's activity regarding the use of the Trust's funds in Ontario "[spoke] both to the 'real' and the 'substantial' quality of [the appellant's] connection to Ontario in this matter".

[10] Again, we agree. There was evidence before the motion judge indicating that: (1) between October 2005 and January 2009, the appellant transferred or caused to be transferred $417 million from the Trust to or for the benefit of the gift program in question to a Toronto law firm or another Bermuda trust company, with knowledge that the transferred funds were to be used in the gift program in Canada; (2) these payments were made over a period of more than four years; (3) in making these payments, the appellant acted in accordance with instructions from an agent of the settlor of the Trust; (4) each advance was repaid to the Trust within a matter of a few days, at a profit to the Trust; and (5) the accumulated profit to the Trust eventually reached approximately $22 million.

[11] As the motion judge said:

There is a reasonable evidentiary basis to conclude that, on a regular basis over a period of more than four years, [the appellant] used the Trust's funds in the province of Ontario for the purpose of making a profit in connection with a business venture undertaken by the settlor and beneficiary of the Trust and that in so doing [the appellant] acted in concert with the settlor and with other corporations and trusts owned or controlled by the settlor.

[12] Regardless of how this evidence might be characterized for the purpose of the respondent's conspiracy claim – a matter vigorously contested by the appellant – it was more than adequate to establish a real and substantial connection between the appellant and Ontario.

[13] It follows that the appellant failed to rebut the presumptive connection between it and Ontario. In any event, it was open to the motion judge on the evidence to hold that the Van Breda test was satisfied and that the requisite connection between the appellant and Ontario had been made out.

(2) Other Issues

[14] Relying particularly on Tridon Ltd. v. Otto Bihlier K.G. (1978), 1978 CanLII 1398 (ON SC), 21 O.R. (2d) 569 (H.C.), the appellant contends that the validation of the service ex juris of the respondent's statement of claim on the appellant cannot stand if some of the causes of action asserted by the respondent against the appellant fall outside rule 17.02.

[15] We do not consider it necessary to decide whether Tridon remains good law in light of the current Rules. As we read his reasons, the motion judge ruled that service of the respondent's pleading should be validated in any event based on his holding that there was a reasonable and sufficient basis for the respondent's claims against the appellant "in tort as well as in unjust enrichment, quantum meruit, waiver of tort, constructive trust and restitution."

[16] We see no basis on which to interfere with this ruling. As the appellant appears to have accepted during oral argument, on the record in this case, once the Van Breda test for the assumption by Ontario courts of jurisdiction over the appellant was satisfied, it was unobjectionable for the validation of service ex juris to follow in respect of those claims that survived the appellant's dismissal motion.

[17] Nor do we accept the appellant's contention that in making the findings that he did, the motion judge exceeded his authority on the jurisdiction motion. We do not regard the impugned findings as binding on the parties to the motion, or on those defendants who were not participants in the motion, for the purpose of trial. On the contrary, we agree with the respondent's submission that the findings in question are not final factual determinations. Rather, they were made for the limited purpose of assessing whether there were sufficient grounds on the evidence for the assumption of jurisdiction over the appellant. The significance and effect of the findings at issue must be understood in that context.

(3) Disposition

[18] At the conclusion of oral argument by the appellant, we dismissed the appeal with reasons to follow. These are those reasons.

[19] The respondent is entitled to his costs of the appeal, fixed in the amount of $25,000, inclusive of disbursements and all applicable taxes.

"Doherty J.A."

"E.A. Cronk J.A."

"Gloria Epstein J.A."