SUPERIOR COURT OF JUSTICE – ONTARIO

COURT FILE NO.: C-295-11
DATE: 2012-02-21

RE: Amtim Capital Inc., Plaintiff

and

Appliance Recycling Centers of America, Defendant

BEFORE: The Honourable Mr. Justice D.J. Gordon

COUNSEL:
R. Craigen, for the Plaintiff
T. McRae, for the Defendant

HEARD: January 23 & 26, 2012

ENDORSEMENT

[ 1 ] The defendant seeks an order setting aside service of the statement of claim and staying the action. The focus of this motion is the application of the doctrine “forum non conveniens”.

Background

[ 2 ] The parties entered into two agreements in 2007. A dispute arose in 2011 or, more appropriately, crystallized that year following debate regarding interpretation of the provisions pertaining to the calculation of compensation.

[ 3 ] Appliance Recycling Centers of America (“ARCA”) is a corporation organized and existing under the laws of the State of Minnesota, one of the United States of America. Part of its business operation involves collecting, disposing and recycling of major appliances. ARCA’s corporate offices are located in St. Louis Park, Minnesota.

[ 4 ] Amtim Capital Inc. (“AMTIM”) is an Ontario corporation. Its corporate offices are located in Toronto, Ontario.

[ 5 ] ARCA incorporated a Canadian subsidiary in 2006, Arca Canada Inc. In 2007, this entity began recycling appliances in Ontario under an existing contract between ARCA and Ontario Power Authority. ARCA then entered into the agreements with AMTIM. Arca Canada Inc. is not a party to those agreements.

[ 6 ] In essence, AMTIM manages ARCA’s Canadian operations. The services provided by AMTIM are primarily in Ontario.

[ 7 ] The compensation paid by ARCA to AMTIM is determined by reference to the net profit of the Canadian operations of ARCA. Calculations are to be in accordance with generally accepted accounting principles of the United States of America. ARCA says the accounting records are located in Minnesota. However, under the agreements AMTIM has the right to review all relevant records of ARCA.

[ 8 ] The agreements also specify the governing law as that of Ontario but do not indicate a forum for dispute resolution or litigation.

The Dispute

[ 9 ] A dispute arose between the parties regarding the compensation calculations pursuant to their agreements, commencing December 31, 2008.

[ 10 ] It appears the focus of this dispute is the allocation by ARCA of certain overhead to its Canadian operations.

[ 11 ] Although AMTIM asserts a significant contract dispute, it appears the disagreement is with the accounting method utilized by ARCA. Of some interest, the parties continue working under their agreements. There is no suggestion of complaint regarding the delivery of services or any matters other than the accounting.

Litigation

[ 12 ] Although the information provided by the parties is incomplete, it appears attempts were made to engage in a dispute resolution process. Reference was made to mediation taking place in Ontario in July 2010. Mediation was unsuccessful.

[ 13 ] Subsequently, there were discussions as to arbitration. AMTIM proposed arbitration in Canada. ARCA wanted such to occur in Minnesota. For some reason, the discussions were not pursued.

[ 14 ] ARCA commenced an action in Minnesota on March 14, 2011. AMTIM issued its statement of claim in Ontario on March 29, 2011.

Minnesota Action

[ 15 ] In its complaint, filed in the United States District Court, ARCA sought a declaratory judgment essentially that the compensation was correctly computed under the terms of the contracts.

[ 16 ] AMTIM served a motion seeking a dismissal for lack of jurisdiction, alternatively on the basis of “forum non conveniens”. Argument was heard on June 3, 2011. On August 20, 2011, this motion was dismissed.

[ 17 ] In his ruling, Davis C.J. reviewed the factors pertaining to forum non conveniens. Their factors are somewhat different than in Canadian jurisprudence. Nevertheless, the ruling concluded the factors did not strongly weigh in favour of a Canadian forum.

[ 18 ] AMTIM did not appeal the ruling. It did not file an Answer in that proceeding. In result, on December 9, 2011, default judgment was granted as requested by ARCA.

Ontario Action

[ 19 ] The statement of claim was issued several weeks after the commencement of the Minnesota action. AMTIM seeks payment of $1,600,000, being the balance of compensation it says is owing under the agreements.

[ 20 ] Upon receipt of the statement of claim, ARCA served the within motion, dated May 30, 2011. The motion was initially adjourned but not rescheduled, for some unexplained reason, until January 2012.

Issue

[ 21 ] There is no issue regarding jurisdiction. ARCA conceded, at the outset, that Ontario courts have jurisdiction simpliciter.

[ 22 ] The sole issue requiring determination is the forum for the parties’ dispute. In this regard, the focus is on the “forum non conveniens” doctrine.

Relevant Principles

[ 23 ] As hereinafter discussed, neither Minnesota nor Ontario is “clearly” the most appropriate forum.

[ 24 ] Both counsel referred to Muscutt v. Courcelles (2002), 2002 (ON CA) , 60 O.R. (3d) 20 (Ont. C.A.), with respect to the principles involved in a discussion as to “forum non conveniens”.

[ 25 ] At para. 41 in Muscutt , Sharpe J.A. summarized the relevant factors, namely:

a) the location of the majority of the parties;

b) the location of key witnesses and documents;

c) contractual provisions that specify applicable law or accord jurisdiction;

d) the avoidance of multiplicity of proceedings;

e) the applicable law and its weight in comparison to the factual questions to be decided;

f) geographical factors suggesting the natural forum; and

g) whether declining jurisdiction would deprive the plaintiff of a legitimate juridical advantage available in the domestic court.

[ 26 ] “Forum non conveniens” is a discretionary test. The Muscutt factors are to be considered in their totality.

Analysis

[ 27 ] Given the limited nature of the dispute, and the ongoing business relationship of the parties, arbitration is the logical method that ought be employed. Nevertheless, the parties chose to litigate and are now involved in multiple proceedings.

[ 28 ] AMTIM says that ARCA initiated the Minnesota proceeding for inappropriate tactical reasons and that ARCA has delayed the Ontario action. Declaratory relief is not uncommon. Further, it appears neither party diligently pursued this motion for a number of months, thus allowing the Minnesota action to be completed.

i) Location of Parties

[ 29 ] The plaintiff is an Ontario company. The defendant is a Minnesota company. This is neutral.

ii) Location of Witnesses and Evidence

[ 30 ] Witnesses and evidence are located in both jurisdictions. The limited information suggests that the primary witnesses for ARCA, along with its documents, are in Minnesota. The business activity was primarily in Ontario and, hence, witnesses and documents are here as well. Further, AMTIM would have reviewed ARCA’s records pursuant to the agreements. This is neutral.

iii) Contract

[ 31 ] The contract identifies the governing law as that of Ontario. No forum was identified, suggesting the parties considered disputes being addressed in either jurisdiction. The documents were prepared by AMTIM and, hence, it cannot say the limited provision is a clear indication of forum. This is neutral.

iv) Multiple Proceedings

[ 32 ] Eight months pass by following failed mediation. ARCA commences an action in Minnesota, followed by AMTIM in Ontario. The companion motion in Minnesota is decided in August 2011.

[ 33 ] AMTIM relies on Molson Coors Brewing Co. v. Miller Brewing Co. (2006), 2006 (ON SC) , 83 O.R. (3d) 331 (Ont. S.C.J.) for the proposition comity and judicial efficiency favours Minnesota if neither forum is more appropriate than the other.

[ 34 ] Multiple or parallel proceedings is but one factor in the analysis. It cannot be considered in isolation. However, if no other factors are decisive, it may assist in the determination.

[ 35 ] First to issue cannot be conclusive. Speed alone cannot replace logic. Nevertheless, judgment has now been granted in Minnesota. In result, there is a slight advantage favouring Minnesota.

v) Applicable Law

[ 36 ] The contest between the parties appears to be evidentiary, particularly regarding the application and interpretation of accounting principles. No mention was made as to a dispute involving law. Presumably, contract law is the same in both jurisdictions. This is neutral.

vi) Geography

[ 37 ] The contracts were negotiated and prepared in Ontario. The business activity is primarily in Ontario, involving ARCA’s Canadian operations. Witnesses and documents may be in Minnesota, and, perhaps, to a lesser extent in Ontario. Representatives of both parties travel back and forth. Geography favours Ontario.

vii) Juridical Advantage

[ 38 ] No juridical advantage of any consequence was identified. This is neutral.

viii) Summary

[ 39 ] As previously stated, the Muscutt factors do not lead to a conclusion favouring Minnesota or Ontario in a decisive manner. Both forums have jurisdiction and both could complete the task.

[ 40 ] I have considered, but reject, the advantage gained by the parallel proceeding. First to issue, coupled with delay in the second action, ought not be decisive if there are other more compelling factors.

[ 41 ] In this case, I find that Ontario has the closest, but far from absolute, connection. The compelling factor, in my view, is the business activity. In this regard, ARCA came to Canada to engage in business. Disputes arising from that business operation ought be decided here. Further, the nature of the competing claims favours the action focusing on the merits or dispute.

[ 42 ] In result, I am not persuaded that ARCA has established Minnesota as being the more appropriate forum. Accordingly, the motion is dismissed.

[ 43 ] If the parties are unable to agree on the issue of costs, brief written submissions are to be delivered within 30 days.

D.J. Gordon J.

Released: February 21, 2012