BTR Global Opportunity Trading Limited v. RBC Dexia Investor Services Trust, 2011 ONCA 518

DATE: 20110714

DOCKET: C53335

COURT OF APPEAL FOR ONTARIO

Weiler, Moldaver and Epstein JJ.A.

BETWEEN

BTR Global Opportunity Trading Limited, BTR Global Growth Trading Limited, BTR Global Arbitrage Trading Limited, and BTR Global Prospector Trading Limited

Plaintiffs (Respondents)

and

RBC Dexia Investor Services Trust and Lehman Brothers International (Europe)

Defendants (Appellant)

Christopher D. Bredt, Douglas O. Smith and Heather K. Pessione, for the appellant

Jeffrey S. Leon, for the respondents

Heard and released orally: July 8, 2011

On appeal from the order of Justice Colin L. Campbell of the Superior Court of Justice dated January 25, 2011, with reasons reported at 2011 ONSC 316.

ENDORSEMENT

[1] The appellant, Lehman Brothers International (Europe) ("LBIE"), appeals from the order dismissing its motion to enforce an exclusive forum selection clause in Customer Account Agreements and Margin Lending Agreements (the "Agreements") with the respondents (collectively referred to herein as "BTR"[^1]) by staying or dismissing BTR's "Publics Action". The exclusive forum selection clause selected New York State as the forum for resolution of all disputes "relating to" the Agreements.

[2] The "Publics Action" is the term used by the parties to refer to BTR's action in relation to certain publicly traded securities of Canadian companies located in Ontario and is Court File No. CV-10-8671-00CL. The term "Privates Application", used later in these reasons, refers to BTR's actions in relation to private securities of Canadian companies in Ontario and is Court File No. CV-10-7807-00CL. RBC Dexia Investors Services Trust, the agent of LBIE and the actual custodian of the securities on its behalf, took no position on this appeal.

[3] The remedy available under s. 106 of the Courts of Justice Act, R.S.O. 1990, c. C.43, which provides that a court may stay any proceeding on such terms as are just, is discretionary. The motions judge's decision will only be set aside if the exercise of his or her discretion is based upon a wrong principle, a failure to consider a relevant principle or a misapprehension of the evidence: Mobile Mini Inc. v. Centreline Equipment Rentals Ltd. (2004), 2004 CanLII 22309 (ON CA), 190 O.A.C. 149 (C.A.), at para. 2. Particular deference is owed to this order given the motions judge's experience not only in overseeing more than two years of litigation regarding the ownership of the securities in issue, but also as a senior commercial list judge.

[4] In the main, the motions judge dismissed LBIE's application on the following bases:

1. LBIE did not discharge its onus of showing that the Agreements and the exclusive jurisdiction clause contained therein applied to the factual matrix of this case; and
2. Even if the Agreements applied, BTR had demonstrated strong cause to not enforce the jurisdiction selection clause because, among other factors, the position taken by LBIE amounted to a collateral attack on orders made by the Superior Court in 2008 and 2009 pursuant to an application and motions of which it was aware prior to their being argued, but chose not to challenge the jurisdiction of the Canadian court at that time or since.

[5] LBIE submits that the motions judge was plainly wrong when he held that there was an issue as to whether the litigation relates to the Agreements. LBIE further submits that the motions judge, in the exercise of his discretion, took into account irrelevant and improper factors in deciding that BTR had demonstrated strong cause. Finally, LBIE submits that the motions judge erred in holding that LBIE's motion was a collateral attack on previous orders of the court.

[6] Assuming, without deciding, that the forum selection clause does apply and that it must be enforced in the absence of exceptional circumstances, we are satisfied nonetheless that the appeal must fail. In our opinion, BTR has shown "strong cause", within the meaning of Z.I. Pompey Industrie v. ECU-Line N.V., 2003 SCC 27, [2003] 1 S.C.R. 450, and subsequent decisions of this court, not to give effect to the forum selection clause.

[7] In Z.I. Pompey, Bastarache J. stated at para. 39:

[T]he court must grant the stay unless the plaintiff can show sufficiently strong reasons to support the conclusion that it would not be reasonable or just in the circumstances to require the plaintiff to adhere to the terms of the clause.

[8] As interpreted by this court, a strong reason includes inordinate delay in raising the jurisdictional issue: Mobile Mini Inc., at paras. 7-9; Momentous.Ca Corp. v. Canadian American Assn. of Professional Baseball Ltd. (2010), 2010 ONCA 722, 103 O.R. (3d) 467 (C.A.), at paras. 41-42. It follows that we do not read the decision in Expedition Helicopters Inc. v. Honeywell Inc. (2010), 2010 ONCA 351, 100 O.R. (3d) 241 (C.A.), as foreclosing consideration of factors other than those listed therein at para. 24. Factors pertaining to justice or reasonableness may be considered in deciding whether the forum selection clause should be enforced.

[9] While the motions judge may have been in error in referring to the motion before him as being a collateral attack on prior decisions of the court, he did not err in taking LBIE's conduct into consideration in concluding that the respondent had established strong cause. Although the Publics Action is a different action than the Privates Application, the argument as to jurisdiction selection now being made is the same argument that could and should have been raised by LBIE as an affected party in the Privates Application in 2008. The fact that these are separate proceedings is really a distinction without a difference as it is conceded that the same exclusive forum selection clause is at issue in both proceedings. This factor in our view is very significant and weighs heavily in favour of BTR's position.

[10] Moreover, LBIE has made itself a moving target throughout and this has prejudiced BTR, both in terms of the way BTR has argued the motions before the motions judge and in determining BTR's future course of conduct. For example:

• Before the motions judge, LBIE was not prepared to give up on its argument that the Agreements, which contain the exclusive jurisdiction clause, may be invalid as creating a preference. It was only at the outset of argument before this court that LBIE advised that it would not be raising the preference issue, and thus the validity of the Agreements.
• LBIE did not appeal the order of the motions judge dismissing its motion for a dismissal of BTR's request for directions concerning the Privates Application.
• By its conduct, LBIE has created the risk of inconsistent verdicts between Canada and the United States between the Publics Action and the Privates Application.

[11] For these reasons, which differ somewhat from the reasons of the motions judge, we would not interfere with the order refusing the stay.

[12] Accordingly, the appeal is dismissed. BTR is entitled to its costs, which we fix at $20,000 inclusive of all taxes and disbursements.

"Karen M. Weiler J.A."

"M. Moldaver J.A."

"G.J. Epstein J.A."

[^1]: "BTR" consists of BTR Global Opportunity Trading Limited, BTR Global Growth Trading Limited, BTR Global Arbitrage Trading Limited and BTR Global Prospector Trading Limited.