Central Sun Mining Inc. v. Vector Engineering Inc. et al.

[Indexed as: Central Sun Mining Inc. v. Vector Engineering Inc.]

Ontario Reports

Court of Appeal for Ontario,

Goudge, Gillese and Pepall JJ.A.

October 2, 2013

117 O.R. (3d) 313 | 2013 ONCA 601

Case Summary

Conflict of laws — Jurisdiction — Real and substantial connection — Ontario company with head office in Toronto suing American engineering consultants for negligent misrepresentation, negligence and breach of contract in providing services to plaintiff in respect of plaintiff's Costa Rican gold mine — Ontario having jurisdiction to hear action — Defendants' studies performed largely in Costa Rica and United States but reports being forwarded to plaintiff's head office in Toronto and relied on and acted on there — Presumptive connecting factor existing as tort of negligent misrepresentation took place in Ontario — Defendants not rebutting presumption of jurisdiction.

The plaintiff, an Ontario company with its head office in Toronto, retained the defendants, American engineering consultants who worked for the mining industry, to conduct certain studies relating to the siting, design and operation of the [page314] plaintiff's gold mine in Costa Rica. The plaintiff alleged that it relied on those studies in building and operating the mine, and that the studies turned out to be badly flawed. It sued the defendants in Ontario for damages for negligent misrepresentation, negligence and breach of contract. The defendants moved for an order that the Ontario court should not assume jurisdiction over them. The motion judge granted the motion, holding that the action lacked a real and substantial connection with Ontario and that therefore the Ontario court had no jurisdiction. The plaintiff appealed.

Held, the appeal should be allowed.

A presumptive connecting factor existed as the tort of negligent misrepresentation took place in Ontario. The defendants' studies were forwarded to the plaintiff's head office in Toronto, where they were relied on and acted on. The defendants had not rebutted the presumption of jurisdiction. The Ontario court had jurisdiction simpliciter.

Club Resorts Ltd. v. Van Breda, [2012] 1 S.C.R. 572, [2012] S.C.J. No. 17, 2012 SCC 17, 291 O.A.C. 201, 2012EXP-1452, J.E. 2012-788, EYB 2012-205198, 429 N.R. 217, 343 D.L.R. (4th) 577, 91 C.C.L.T. (3d) 1, 10 R.F.L. (7th) 1, 17 C.P.C. (7th) 223, 212 A.C.W.S. (3d) 712, apld

Other cases referred to

2249659 Ontario Ltd. v. Siegen (2013), 115 O.R. (3d) 241, [2013] O.J. No. 2496, 2013 ONCA 354, 306 O.A.C. 288

APPEAL from the order of Stinson J., [2012] O.J. No. 6137, 2012 ONSC 7331 (S.C.J.) staying or dismissing an action.

David Hamer, William D. Black and Christopher M. Hubbard, for appellant.

Tim Alexander and Alva Orlando, for respondents Steffen Robertson Kirsten/SRK Consulting, Steffen Robertson Kirsten (U.S.) Inc., SRK Field Services LLC., Richard Frechette, Dave S. Hallman, Charles J. Khoury, Rob Dorey and Allan Breitenbach.

John Lloyd and Anthony Cole, for respondents XVEI Inc., Vector Costa Rica, S.A., Vector Ingeniera Costa Rica, S.A., Mark Smith, Marc Leduc and Sean Currie.

The judgment of the court was delivered by

[1] GOUDGE J.A.: — The appellant, Central Sun Mining Inc. ("Central Sun"), is an Ontario company with its head office in Toronto.

[2] The respondents, Steffen Robertson Kirsten/SRK Consulting, Steffen Robertson Kirsten (U.S.) Inc., SRK Field Services LLC, Richard Frechette, Dave S. Hallman, Charles J. Khoury, Rob Dorey and Allan Breitenbach (collectively "SRK"), and Vector Costa Rica S.A., Vector Ingeniera Costa Rica, S.A., Mark Smith, Marc Leduc, Sean Currie and XVEI Inc. (collectively "Vector") [page315] are American engineering consultants who work for the mining industry.

[3] In this action, the appellant, Central Sun, is suing the respondents SRK and Vector for negligent misrepresentation, negligence and breach of contract in providing services to Central Sun.

[4] The respondents moved for an order that the Ontario court should not assume jurisdiction over them. The motion judge found that the action lacked a real and substantial connection with Ontario and that therefore the Ontario court has no jurisdiction over the respondents. His order stayed or dismissed the action as against them.

[5] For the reasons that follow, I conclude that the motion judge erred and that the Ontario court can assume jurisdiction. I would therefore allow the appeal and refer the respondents' motion back to the motion court for consideration of the further issue of whether the court should exercise its jurisdiction.

A. The Facts

[6] The appellant owns a gold mine in Costa Rica. It was constructed and began operating in the mid-1990s. Through the pre-feasibility, feasibility, construction and operations stages, the appellant retained the respondents to provide studies relating to the siting, design and operation of the mine. These studies included an overall assessment of the stability of the proposed mine site and design. The appellant says that it relied on these studies in building and operating the mine, and that the studies turned out to be badly flawed.

[7] In 2007, a major landslide occurred at the mine. It forced the mine to cease operating and to shut down. The appellant lost its investment, and has since incurred substantial remediation costs. It has commenced this action to recover its losses.

[8] While the appellant is headquartered in Toronto, it has technical staff working in its Vancouver office. However, its senior executives were located in Toronto, where the strategic decisions concerning the Costa Rica mine, the financial control of its mining operations, the negotiation of related contracts and the significant control over mining activities were all taken.

[9] Both respondents are based in the United States. The work for their studies was performed largely at the mine site in Costa Rica or at their American offices. In the case of SRK, these studies were all sent to the appellant's Vancouver office for the appellant's technical people to review and then make recommendations to the head office in Toronto. The appellant maintains that the studies were also sent on to Toronto for review by senior executives. [page316] Vector followed the same practice, although some of their documentation was sent directly to the appellant's head office.

B. The Decision Appealed From

[10] Based on these facts, SRK and Vector moved to challenge the jurisdiction of the Ontario court over the action against them.

[11] In his analysis, the motion judge followed the framework provided by the Supreme Court of Canada in Club Resorts Ltd. v. Van Breda, [2012] 1 S.C.R. 572, [2012] S.C.J. No. 17, 2012 SCC 17.

[12] He began by considering whether the Ontario court has jurisdiction over the action. This requires that there be a real and substantial connection between Ontario and the subject matter of the litigation. He examined whether any of the presumptive connecting factors described for tort cases in Van Breda exists here so that a real and substantial connection with Ontario can be presumed.

[13] The first of these is whether the action concerns a claim in respect of a tort committed in Ontario. The motion judge found that the appellant had not shown Ontario as the situs of either its negligent misrepresentation claim or its negligence claim.

[14] For the negligent misrepresentation claim, in his view the major factors were that the respondents' work was all done in the United States and Costa Rica, that the studies were submitted by the respondents to the appellant in Vancouver (with the exception of some documentation from Vector that went directly to Toronto) and that the physical damage all occurred in Costa Rica. He characterized [at para. 47] the connection between the action against the respondents and Ontario to be "relatively minor, when compared to the connections between the dispute and other jurisdictions".

[15] The motion judge then considered whether, assuming the appellant established Ontario as the situs for the negligent misrepresentation it alleged, the respondents had rebutted the presumptive connection with Ontario. His analysis, at para. 48 of his reasons, is as follows:

I would therefore hold that, assuming the plaintiff has established the existence of a tort in Ontario based on the reliance by its senior managers here on some aspects of the foreign-generated advice, given the relative weakness of the Ontario connection of the complaint against the moving defendants, they have successfully rebutted the presumption that Ontario has a real and substantial connection with this dispute. [page317]

[16] Next, the motion judge addressed whether the appellant had established that the negligence it claimed was committed in Ontario. For this connection, the appellant relied on the existence of damages suffered in Ontario, and the motion judge held that this was not sufficient. Even assuming that it was sufficient, the respondents had successfully rebutted the presumption for the same reasons as they had rebutted the presumption with respect to negligent misrepresentation.

[17] The appellant also argued three additional bases for the court's jurisdiction. It said that its action concerned a claim against persons carrying on business in Ontario, that the claim is in respect of property in Ontario and that it is also in respect of a breach of contract in Ontario, any of which would be sufficient to create a presumptive connection with Ontario. The motion judge disagreed with the appellant on all three. While the appellant raises these again in its factum on appeal, none was pressed in oral argument. Given that I would allow the appeal on the grounds set out below, I need not deal further with these arguments or with the motion judge's reasons for dismissing them.

[18] In the end, the motion judge concluded that the appellant advanced no presumptive factors to support the Ontario court having jurisdiction. In the alternative, he found that the respondents had successfully rebutted any such connection. Having so concluded, he found it unnecessary to go on to determine whether, if there were jurisdiction, Ontario is a convenient forum or whether there is a more appropriate forum to hear the action.

C. The Arguments on Appeal

[19] In this court, the primary issue was whether the motion judge correctly concluded that neither the appellant's claims for negligent misrepresentation nor its claim for negligence was committed in Ontario. The second issue was whether, in the alternative, the respondents have successfully rebutted the presumption.

[20] On the first issue, the appellant argues that the situs of both torts is Ontario. For negligent misrepresentation, the connection to Ontario flows from the appellant's assertion that the respondents' studies were sent on from Vancouver to Toronto, where they were relied on by the appellant in making the business decisions about the mine. For negligence, the appellant relies on the fact that its damages were financial and were therefore predominantly suffered in Ontario.

[21] For their part, the respondents point to the fact that, in most cases, they sent their studies to the appellant's Vancouver office and that their representations did not therefore take place [page318] in Ontario. They also say that most of the damage suffered by the appellant took place in Costa Rica, and, in any event, damages alone cannot provide a presumptive connection with Ontario.

[22] On the second issue, the parties join issue on whether the motion judge correctly characterized the presumptive connecting factors as pointing only to a weak relationship between the dispute and Ontario, and, in doing so, whether he incorrectly engaged in a comparison of the relative strength of the connection of the action with Ontario and other possible forums.

D. Analysis

[23] It is helpful to begin with an outline of the guidance provided by Van Breda relevant to this case.

[24] The Supreme Court of Canada, at para. 80, makes clear that if a challenge arises to the jurisdiction of the Ontario court, it is up to the plaintiff (in this case, the appellant) to show a real and substantial connection between the dispute and Ontario. The plaintiff must establish the existence of one or more of the factors described in Van Breda as presumptively connecting the action with Ontario.

[25] Van Breda also says, at para. 99, that where an action involves several claims, it is enough that one of those claims is presumptively connected with Ontario. This gives the Ontario court jurisdiction over all the claims in the action, subject to a rebuttal of the presumption. Anything else, the Supreme Court says, would be incompatible with fairness and efficiency.

[26] The Supreme Court describes a number of factors, each of which is sufficient to presumptively connect a tort case with Ontario, so that the court has jurisdiction unless that presumption is rebutted. The factor of particular relevance here is that the action includes a claim for a tort committed in Ontario.

[27] Finally, Van Breda provides that the party challenging the presumption of jurisdiction bears the burden of rebutting that presumption (in this case, the respondents). At para. 96, Van Breda says this about the difficulty of discharging that burden in a tort case:

On the other hand, where the presumptive connecting factor is the commission of a tort in the province, rebutting the presumption of jurisdiction would appear to be difficult, although it may be possible to do so in a case involving a multi-jurisdictional tort where only a relatively minor element of the tort has occurred in the province.

[28] In light of these considerations, the first issue here is whether the appellant has established that one or other of the torts in its claim was committed in Ontario. The motion judge found that the appellant had not established that the respondents [page319] had committed either negligent misrepresentation or negligence in Ontario.

[29] I do not agree. I conclude that the negligent misrepresentation claimed took place in Ontario. The appellant advances the argument that the misrepresentation consists of the studies provided by the respondents.

[30] The core of the tort of negligent misrepresentation is that the misrepresentation is received and acted upon. There is no dispute that the appellant did indeed receive these studies from the respondents and that the recommendations made by the appellant's Vancouver office to the appellant's Toronto office were based on those studies. The motion judge did not address whether the respondents' studies were forwarded from the appellant's Vancouver office to the appellant's Toronto office. However, there is evidence that would support such a finding. It is fair to conclude that the studies were therefore received by the appellant, not only in Vancouver but also in Toronto where they were relied on.

[31] There can be no question that the appellant acted on these studies in Ontario. That is where it relied on the studies to take the decisions about where to locate the mine and how to build and operate it.

[32] The inevitable conclusion is that the misrepresentations were received and relied on in Ontario. The respondents do not contest that if that were so, Ontario is the situs of the tort of negligent misrepresentation. This constitutes a presumptive connection between the action against the respondents and Ontario.

[33] I am inclined to think that even if the respondents' studies had been received only in Vancouver and only the recommendations based on those studies were transmitted to Toronto, the negligent misrepresentation would still have been committed in Ontario. The respondents foresaw that their studies would be received by the appellant and acted on in Toronto. They should have expected to be called to account in Ontario. In the modern world where corporations have various offices in various locations, corporate defendants should not escape liability simply because they send their studies to an office of the plaintiff outside Ontario with the clear understanding that it will be acted on in Ontario.

[34] Indeed, in 2249659 Ontario Ltd. v. Siegen (2013), 115 O.R. (3d) 241, [2013] O.J. No. 2496, 2013 ONCA 354, at para. 31, this court reflected such an approach by saying that the tort of negligent misrepresentation occurs where the misinformation is received or acted upon. [page320]

[35] Having concluded that the negligent misrepresentation was committed in Ontario, it is unnecessary to consider whether the situs of the negligence claim is Ontario as well. Given that the negligent misrepresentation was committed in Ontario, Ontario courts are required to take jurisdiction over the entire action, unless the respondents can rebut the presumptive connection with Ontario.

[36] The second issue, then, is whether the respondents have successfully rebutted that presumption. The motion judge found that they had done so by showing the relative weakness of the Ontario connection.

[37] If this finding suggests that jurisdiction depends on a comparison of the relative strength of the connection of the dispute with Ontario on the one hand and other jurisdictions on the other, that is an erroneous approach in my view. It is at the forum conveniens stage that comparison becomes important. At the jurisdiction stage of the analysis, the respondents' task is to show no real relationship or, at most, a weak relationship between the subject matter of the action and the forum.

[38] However, my more important reason for differing with the motion judge on this issue draws on the proposition in Van Breda that where a tort is committed in Ontario, rebutting the presumption of jurisdiction would appear to be difficult but may be possible if only a relatively minor element of the tort has occurred in the province. In this case, that simply cannot be shown. As noted above, the core of the tort of negligent misrepresentation is that the misrepresentation is received and acted upon. In this case, the misrepresentation was received and acted upon in Ontario. It cannot be said that only a relatively minor element of the tort occurred in this province. The respondents simply cannot show that only a relatively minor element of the tort occurred in the province, and they cannot therefore rebut the presumed jurisdiction of the Ontario court over this action.

[39] I conclude that the appeal must be allowed and that the Ontario court can take jurisdiction over the respondents. The respondents' motion must be returned to the motion court for a determination of the forum conveniens issue.

[40] Costs of the appeal to the appellant fixed at $25,000 in total, payable by the respondents jointly and severally. Costs at first instance are to be determined by the motion judge hearing the forum conveniens issue.

Appeal allowed.

End of Document