Court File and Parties

Court File No.: CV-09-387984 Date: 2012-01-04 Superior Court of Justice - Ontario

Re: Her Majesty the Queen in Right of Ontario And: Rothmans Inc., Rothmans, Benson & Hedges Inc., Carreras Rothmans Limited, Altria Group, Inc., Philip Morris U.S.A. Inc., Philip Morris International, Inc., JTI-Macdonald Corp., R.J. Reynolds Tobacco Company, R.J. Reynolds Tobacco International Inc., Imperial Tobacco Canada Limited, British American Tobacco p.l.c., B.A.T Industries p.l.c., British American Tobacco (Investments) Limited, and Canadian Tobacco Manufacturers’ Council

Before: Conway J.

Counsel: Craig P. Dennis and Richard Fernyhough, for British American Tobacco (Investments) Limited (“Investments”) Charles F. Scott and Shaun Laubman, for B.A.T. Industries p.l.c. (“Industries”) David R. Byers, Adrian C. Lang and Lesley Mercer, for British American Tobacco p.l.c. (“PLC”) Christopher M. Rusnak and Rob Frank, for Carreras Rothmans Limited (“Carreras”) Guy J. Pratte, Ira Nishisato and Cindy Clarke, for R.J. Reynolds Tobacco Company (“RJR Company”) and R.J. Reynolds Tobacco International Inc. (“RJR International”) (collectively, the “RJR Defendants”) William Manuel, Lise Favreau, Ronald Carr, John Kelly, Edmund Huang and Kevin Hille, for Her Majesty the Queen in Right of Ontario (the “Crown”)

Heard: November 23-25 and 28-30, and December 1-2, 2011

Endorsement re: jurisdiction motions

Conway J.

[1] These are jurisdiction motions.

[2] Investments, Industries, PLC, Carreras and the RJR Defendants (the “Jurisdiction Challenging Defendants” or “JCDs”) move to set aside service ex juris of the Crown’s Amended Amended Statement of Claim (the “Claim”) and to stay or dismiss the action against them on the basis that this court does not have jurisdiction simpliciter over the JCDs.[^1] The motions are brought under Rule 17 of the Rules of Civil Procedure and s. 106 of the Courts of Justice Act.[^2]

[3] For the reasons that follow, I conclude that the Claim was properly served under rule 17.02 of the Rules of Civil Procedure. There is a real and substantial connection between the Province of Ontario, the subject matter of the Claim, and the JCDs. This court has jurisdiction simpliciter over the JCDs. The motions are dismissed.

BRIEF HISTORY OF THIS JURISDICTIONAL CHALLENGE

[4] The Claim was issued on September 29, 2009. The JCDs brought their motions challenging the court’s jurisdiction in January 2010. Each JCD filed affidavit evidence in support of its motion.

[5] I was appointed case management judge for this proceeding in May 2010.

[6] The Crown filed its responding record in August 2010. It contains an affidavit of Fabian Esprit, a law clerk in the Crown law office, and attaches voluminous documents as Exhibits.

[7] The Crown cross-examined the JCDs’ witnesses on their affidavits in December 2010. In the winter/spring of 2011, the Crown brought a refusals motion before a Master who ordered that the refused questions be answered. The JCDs appealed. Perell J. reversed the Master’s decision. The Divisional Court denied leave to appeal Perell J.’s decision.

[8] The jurisdiction motions were originally scheduled for April 2011. They were rescheduled to August 2011. At a case conference in July 2011, I decided that the August hearing would be used to argue preliminary issues on the admissibility of evidence on the jurisdiction motions and that the substance of the motions would be argued in November 2011. The parties agreed that my rulings on admissibility would form part of the jurisdiction motions and would not be appealed until the conclusion of these motions.

[9] I released my decision on the evidentiary issues on September 20, 2011.[^3] I ruled on the admissibility of each document attached to the Esprit affidavit that the Crown sought to use on the jurisdiction motions.[^4] I also ruled on whether or not the admissible documents could be used for the truth of their contents.

[10] The Crown filed a revised factum after my ruling. The JCDs brought a motion to strike the factum as not being in compliance with my September 20 ruling and as an abuse of process. I gave my decision at the conclusion of the motion to strike on November 16 and released my reasons the next day.[^5] I refused to strike the Crown’s entire factum, but did strike some paragraphs that I found were an attempt to revisit my September 20 rulings.

[11] The jurisdiction motions started on November 23, 2011 and were argued for eight days.

OVERVIEW OF STATUTE AND CAUSE OF ACTION

[12] The Claim is brought pursuant to the Tobacco Damages and Health Care Costs Recovery Act, S.O. 2009, c. 13 (the “Act”). In order to understand the Claim, I will first give an overview of the Act, as it creates the Crown’s cause of action.

[13] Section 2(1) of the Act gives the Crown a “direct and distinct action” against a “manufacturer” to recover the “cost of health care benefits” caused or contributed to by a “tobacco related wrong”. The Crown’s action is brought in its own right and not as a subrogated claim.

[14] The Crown’s cause of action is a statutorily created one. It is sui generis. It could not have been brought at common law.

[15] There are several key definitions in the Act.

[16] A “manufacturer” is broadly defined as a person who “manufactures or has manufactured a tobacco product” and includes a person who currently or in the past: “causes, directly or indirectly…the manufacture of a tobacco product”; or for any fiscal year “derives at least 10 per cent of revenues…from the manufacture or promotion of tobacco products”; or “engages in, or causes… other persons to engage in the promotion of a tobacco product”.

[17] The terms “promote” and “promotion” include the marketing, distribution or sale of, and research with respect to, a tobacco product.

[18] A “tobacco related wrong” is defined, in an action under s. 2(1), as a “breach of a common law, equitable or statutory duty or obligation owed by a manufacturer to persons in Ontario who have been exposed or might become exposed to a tobacco product”.[^6]

[19] The Act contains joint liability provisions in s. 4. Two or more defendants are jointly and severally liable if those defendants “jointly breached” a duty or obligation described in the definition of “tobacco related wrong” and at least one of them is held liable under s. 2(1) for the cost of health care benefits.

[20] Two or more manufacturers are deemed to have “jointly breached” a duty or obligation if (a) one or more of them are held to have breached the duty or obligation; and (b) at common law, in equity or under an enactment, those manufacturers would be held to have “conspired or acted in concert” with respect to the breach.

[21] The Act removes any limitation period that applies to the Crown’s action. The Act also has retroactive effect to apply to tobacco related wrongs, whenever they occurred.

OVERVIEW OF THE CLAIM

[22] The Crown claims $50 billion for the cost of health care benefits resulting from tobacco related disease or the risk of tobacco related disease that have or will be paid by the Crown for insured persons. The claim is against 14 defendants, both domestic and foreign (the “Defendants”).

[23] The JCDs are six of the foreign Defendants.[^7] Investments, Industries, PLC and Carreras are companies incorporated in the United Kingdom. RJR Company and RJR International are companies incorporated in North Carolina and Delaware, respectively.

[24] The Claim tracks the framework of the Act and includes the following allegations:

• the Claim alleges that each of the Defendants, including the JCDs, is a “manufacturer” under the Act;
• the Claim alleges that there are four multinational tobacco enterprises (“Groups”): the Rothmans Group, the Philip Morris Group, the RJR Group, and the BAT Group. The Claim alleges that members of each Group manufactured and promoted cigarettes sold in Ontario;
• the Claim alleges that the manufacturers within each Group have had common policies relating to smoking and health and that these common policies were directed or coordinated by “Lead Companies” within each Group. Each of the JCDs is alleged to have been a Lead Company. The Canadian Defendants[^8] are alleged to be members of one of the four Groups;
• the Claim alleges that the Defendants, including the JCDs, committed “tobacco related wrongs”. The Claim states that by 1950, the Defendants knew or ought to have known that nicotine was addictive and that smoking cigarettes can cause or contribute to disease and that by 1970 this knowledge extended to exposure to second hand smoke;
• the Claim alleges that the Defendants, with this knowledge, committed breaches of duties to persons in Ontario, namely the duty to design and manufacture a reasonably safe product; the duty to warn the public of the risks of smoking; the duty not to misrepresent the risks of smoking; and the duty of care to children and adolescents to prevent them from starting or continuing to smoke;
• the Claim alleges that the Defendants breached those duties by, among other things: i. manipulating the level and bio-availability of nicotine in their cigarettes; ii. suppressing information and scientific and medical data about the risks of smoking and exposure to second hand smoke; iii. misrepresenting to the public that filters reduce the risk of smoking and that “filter", "mild", "low tar" and “light" cigarettes were safer than other cigarettes; iv. misrepresenting the risks of smoking and exposure to second hand smoke by, for example, misrepresenting that the Defendants were aware of no research or no credible research establishing a link between smoking or exposure to second hand smoke and disease; v. failing to adequately warn the public that cigarettes are addictive and cause disease, and engaging in promotional activities to neutralize the effectiveness of the warnings on cigarette packaging; and vi. targeting children and adolescents in advertising, promotional and marketing activities for the purpose of inducing them to start or continue to smoke;
• the Claim alleges that as a result of these tobacco related wrongs, persons in Ontario started or continued to smoke cigarettes manufactured and promoted by the Defendants and suffered tobacco related disease and an increased risk thereof.

[25] The Claim alleges that the Defendants conspired and acted in concert in committing these tobacco related wrongs. The Claim alleges that there was a conspiracy within the international tobacco industry – that after 1953 some or all of the Lead Companies (or their predecessors) and other Defendants conspired and acted in concert to prevent the Crown and persons in Ontario and other jurisdictions from acquiring knowledge of the harmful and addictive properties of cigarettes.

[26] The Claim alleges that the Defendants agreed to disseminate false and misleading information, suppress research and information on the risks of smoking, and orchestrate a public relations program on smoking and health issues. The Claim alleges that the Defendants later formed various research organizations and conspired to distort the research and publicize misleading information about the link between smoking and disease. The Claim alleges that the Defendants collectively agreed to make no statement or admission that smoking caused disease and not to issue product warnings unless forced to do so by government action. The Claim alleges that in the early 1970s the Defendants began to coordinate their activities with respect to second hand smoke issues.

[27] The Claim alleges that the Lead Companies agreed to ensure that their Group members (including the Canadian members) would act in accordance with the industry position on smoking and health. The Claim alleges that the Lead Companies directed or coordinated their Group’s common policies on smoking and health through: (i) committees, conferences and meetings attended by senior personnel of Group members; (ii) written and oral directives and communications among Group members; and (iii) direction and advice to Canadian members on how they should vote in committees of the Canadian manufacturers and at meetings of the Canadian Tobacco Manufacturers’ Council (“CTMC”).

OTHER JUDICIAL PROCEEDINGS IN CANADA

[28] The Province of Ontario is not the first province to bring cost recovery proceedings against the Defendants. Similar proceedings have been brought in the Provinces of British Columbia (“B.C.”) and New Brunswick (“N.B.”) under similar legislation.

[29] The first cost recovery statute, in B.C.,[^9] met with a constitutional challenge. The case ultimately went to the Supreme Court of Canada, which held that the legislation was constitutionally valid.[^10]

[30] The foreign defendants in the B.C. action[^11] also challenged the jurisdiction of the B.C. courts. Holmes J. dismissed the jurisdictional challenge.[^12]

[31] The foreign defendants in the N.B. proceeding[^13] challenged the jurisdiction of the N.B. courts. Cyr J. dismissed the jurisdictional challenge.[^14]

[32] The JCDs submit that the B.C. and N.B. jurisdiction decisions are distinguishable and should play no part in my analysis. They submit that the evidentiary records and legal tests in those provinces are different than those before me.

[33] I agree with the JCDs that I must conduct my jurisdictional analysis based on the Claim and the evidentiary record before me, and applying the laws of the Province of Ontario. The B.C. and N.B. jurisdiction decisions are not binding on me. However, I see no reason to disregard any analysis in those decisions on the cost recovery legislation and the statutory cause of action created by the legislation.

LAW ON SERVICE EX JURIS AND JURISDICTION SIMPLICITER

[34] A defendant may be served outside Ontario with an originating process, without leave, if the claim against the defendant falls within any of the categories listed in rule 17.02 of the Rules of Civil Procedure. Under rule 17.06, the defendant may move for an order setting aside the service or for an order staying the proceeding. The defendant may also move under Rule 17 and s. 106 of the Courts of Justice Act for an order to stay the proceeding on the basis that the court does not have jurisdiction simpliciter over the defendant.

[35] In this case, the JCDs are not present in Ontario and have not attorned to the jurisdiction of the Ontario courts. The issue is whether the Ontario courts will assume jurisdiction over the JCDs.

General Principles

[36] The following are the general legal principles that apply with respect to the assumption of jurisdiction by the Ontario courts:

• The test for assumed jurisdiction is whether a “real and substantial connection” exists between the action and the province: Morguard Investments Ltd. v. De Savoye, [1990] 3 S.C.R. 1077; Muscutt v. Courcelles (2002), 60 O.R. (3d) 20 (C.A.); Van Breda v. Village Resorts Ltd., 2010 ONCA 84, 98 O.R. (3d) 721, leave to appeal to S.C.C. granted, [2010] S.C.C.A. No. 174, heard and reserved March 21, 2011.
• The determination of whether a real and substantial connection exists and whether the court has jurisdiction is not a discretionary exercise: Van Breda, at para. 48, citing Muscutt, at paras. 42-43; Plant Technology International, Inc. v. Peter Kiewet Sons Co., [2002] O.J. No. 2305, at para. 64.
• There is no single rigid test to be applied in order to determine whether a real and substantial connection exists. However, underlying the determination are principles of order and fairness to the defendant that mandate that “the judgment be issued by a court acting through fair process and with properly restrained jurisdiction”: Morguard, at p. 1103.
• The assumption of jurisdiction is more easily justified in interprovincial cases than in international cases: Van Breda, at para. 104, citing Muscutt, at paras. 95-99.
• The onus is on the plaintiff to establish that a real and substantial connection exists: Van Breda, at para. 109.
• The starting point on a jurisdiction motion is the pleading, as it contains the material facts from which the cause of action arose. Any allegation of fact that is not put into issue by the defendant is presumed to be true for purposes of the motion. The plaintiff is under no obligation to call evidence for any allegation that has not been challenged by the defendant: BCSC Decision, at paras. 132-34; BCCA Decision, at para. 25; Ontario New Home Warranty Program v. General Electric Co., [1998] O.J. No. 173, at paras. 31-36 (Gen. Div.); AG Armeno Mines and Minerals Inc. v. PT Pukuafu Indah, 2000 BCCA 405, [2000] B.C.J. No. 1335, at para. 26; Stanway v. Wyeth Pharmaceuticals Inc., 2009 BCCA 592, [2009] B.C.J. No. 2538, at para. 70; Furlan v. Shell Oil Co., 2000 BCCA 404, [2000] B.C.J. No. 1334, at paras. 13-14.
• If the foreign defendant files affidavit evidence challenging the allegations in the statement of claim that are essential to jurisdiction, the threshold for the plaintiff to meet is that it has a “good arguable case” on those allegations: Furlan; Vitapharm Canada Ltd. v. F. Hoffmann-La Roche Ltd., [2002] O.J. No. 298 (S.C.), at para. 64; Ecolab Ltd. v. Greenspace Services Ltd. (1998), 38 O.R. (3d) 145 (Div. Ct.); Wilson v. Servier Canada Inc. (2002), 58 O.R. (3d) 753 (S.C.); Schreiber v. Mulroney (2007), 88 O.R. (3d) 605 (S.C.).
• A “good arguable case” has been compared to a “serious issue to be tried” or a “genuine issue” or “with some chance of success”. The threshold test is low: Ecolab, at p. 153; Furlan, at para. 23.

[37] I recognize that on these jurisdiction motions my role is to determine whether there is a real and substantial connection between the subject matter of the Claim, the JCDs and the Province of Ontario.

[38] However, I also recognize that my fact-finding role is a limited one. Where the JCDs have challenged any allegations in the Claim that would establish a connection to the Province of Ontario and support the assumption of jurisdiction, I must only determine whether the Crown has established a good arguable case on those allegations. I am not conducting a trial of the merits of the action. Any further analysis is to occur in the context of a trial: Vitapharm, at paras. 97-98.[^15]

Real and Substantial Connection Test in Ontario

[39] In Van Breda, at para. 109, Sharpe J.A. set out the test for determining whether a real and substantial connection exists with the province. The framework is as follows:

• The court should first determine whether the claim falls under rule 17.02 (except subrules (h) and (o)) to determine whether a real and substantial connection with Ontario is presumed to exist.
• At the second stage, the core of the analysis rests upon the connection between Ontario and the plaintiff’s claim and the defendant, respectively.
• The remaining considerations are not to be treated as independent factors having more or less equal weight when determining whether there is a real and substantial connection, but as general legal principles that bear upon the analysis.
• Fairness is a necessary tool in assessing the strengths of the connections but is not a free-standing factor capable of trumping weak connections, subject only to the forum of necessity exception.
• Whether the case is interprovincial or international in nature, and comity and the standards of jurisdiction, recognition and enforcement prevailing elsewhere are relevant considerations, not as independent factors, but as general principles of private international law that bear upon the real and substantial connection test.
• Where there is no other forum in which the plaintiff can reasonably seek relief, there is a residual discretion to assume jurisdiction.

HAS THE CROWN ESTABLISHED A GOOD ARGUABLE CASE?

JCDs’ Preliminary Arguments

[40] The JCDs make two preliminary arguments that the Crown cannot establish a good arguable case against them. They submit that in the absence of a good arguable case, the court cannot assume jurisdiction over the JCDs.

Preliminary Argument #1:“Meaningful Connection”

[41] The JCDs argue that the Claim is based on conduct that is alleged to have occurred outside the jurisdiction and decades before the Act existed. They argue that the Crown has no ability to pursue the Claim without relying on the retroactivity sections of the Act. The JCDs argue that for present legislation (the Act) to apply to any past, extra-territorial conduct of the JCDs, the Crown must establish that there is a “meaningful connection” between the JCDs and the province.[^16]

[42] I reject this submission.

[43] The Supreme Court of Canada has already decided that the B.C. cost recovery legislation is constitutionally valid. In so doing, the court recognized that the legislation could apply to defendants located outside the jurisdiction, stating:[^17]

[T]hough the cause of action that is its pith and substance may capture, to some extent, activities occurring outside of British Columbia, no territory could possibly assert a stronger relationship to that cause of action than British Columbia….

Thus, the breaches of duty to which the Act refers are of subsidiary significance to the cause of action created by it, and the locations where those breaches might occur have little or no bearing on the strength of the relationship between the cause of action and the enacting jurisdiction. [Emphasis added.]

[44] In subsequent proceedings, the foreign defendants argued that the B.C. legislation, while constitutionally valid, was constitutionally inapplicable to them. They advanced essentially the same arguments with respect to the retroactive feature of the statute.[^18] The B.C. Court of Appeal rejected these submissions in dismissing the argument that the legislation was constitutionally inapplicable to the defendants. Leave to appeal that decision to the Supreme Court of Canada was denied.[^19]

[45] In my view, the JCDs’ submissions on meaningful connection are nothing more than another attempt to argue that the legislation does not apply to them. That is inconsistent with the analysis of both the Supreme Court of Canada and the B.C. Court of Appeal. I give no effect to this submission.

Preliminary Argument #2: Deficient Pleading

[46] One of the JCDs’ principal arguments is that the Claim is a deficient pleading and cannot be relied on, either to establish a good arguable case or to support a connection to Ontario.

[47] Specifically, they submit that the Crown has not properly pled the allegations of conspiracy.[^20] They argue that the Crown has not pled with particularity and precision the specific overt acts alleged to have been taken by each JCD in furtherance of the conspiracy.[^21]

[48] I reject these submissions.

[49] The courts have refused jurisdiction based on the insufficiency of a pleading where the pleading was so deficient that it could not support a connection to the jurisdiction. In Wall Estate v. Glaxosmithkline Inc., 2010 SKQB 351, 367 Sask. R. 21, at para. 43, the court stated:

The claim fails to make any plausible causal connection between the foreign defendants and Avandia’s existence in Saskatchewan.

[50] In Schreiber, at para. 32, the court stated:

I am satisfied that this is the kind of case referred to by the court in Furlan where the connecting factors are inadequately particularised in the statement of claim. The bald general assertions that the vaguely-described services were to be performed in Ontario and elsewhere cannot be allowed to conclude the matter. Jurisdiction is not determined solely by the words chosen by the lawyer who drafted the pleading…

[51] Those cases are distinguishable in that the pleadings could not support the necessary link to the jurisdiction. In this case, and for the purposes of these motions only, I am satisfied that the Claim pleads the essential elements of the Crown’s cause of action under s. 2(1).[^22] It “connects the dots” between the JCDs and the Province of Ontario through the allegations that the JCDs, either directly or by conspiring or acting in concert with others, breached duties to persons in Ontario. The Claim describes the acts that constitute the alleged breaches of duty and the means by which the JCDs allegedly conspired and acted in concert with others. The Claim itemizes the Groups, the Lead Companies and the Canadian members of each Group, and the acts alleged to have been taken by each of the JCDs as a Lead Company within its corporate Group.

[52] The pleading is sufficient for jurisdictional purposes. If there are any other pleading issues with the Claim, they can be addressed at subsequent motions.

Good Arguable Case: Investments, Industries and PLC (the “BAT Defendants”)

[53] According to the JCDs’ evidence, each of the BAT Defendants was the ultimate parent company of the “BAT Group”:[^23] (a) Investments, from 1902 to 1976; (b) Industries, from 1976 to 1998; and (c) PLC, from 1998 to the present.

[54] Imasco Limited, now Imperial Tobacco Canada Limited (“Imasco” or “Imperial”) is the Canadian member of the BAT Group. Investments and then Industries was a shareholder of Imasco. In a going private transaction in 2000, Imperial became a wholly-owned indirect subsidiary of PLC and was converted from a multi-business conglomerate to a tobacco-only company.

[55] The Crown’s position is that the BAT Group has always presented itself as a worldwide manufacturer of cigarettes that has been in existence since 1902. It submits that while the corporate entity at the top of the Group may have changed from time to time, each one simply took over from where the previous one stood, assumed the same role as ultimate parent of the Group and continued to issue policies for the Group on smoking and health.[^24]

[56] The BAT Defendants have filed affidavit evidence in which they deny any connection with Ontario and challenge certain factual allegations in the Claim. The Crown, in response, has filed the affidavit of Mr. Esprit and the attached documentary evidence to rebut those challenges.[^25]

[57] I will consider the evidence separately for each BAT Defendant.

Good Arguable Case: Investments

[58] Mr. Cordeschi swore an affidavit in support of Investments’ jurisdiction challenge and was cross-examined on his affidavit. He is the company secretary of Investments and has been with the company since 2008. He based his evidence on his personal knowledge and inquiries he made and searches of company records.

[59] Mr. Cordeschi states, among other things, that Investments has never manufactured, marketed, conducted research for, or distributed tobacco products in Ontario; holds no assets in Ontario; conducts no business in Ontario; has no office or employees in Ontario; has never paid taxes in Ontario; has no agents in Ontario; and has no bank accounts in Ontario. He states that Investments and Imasco have always operated as separate corporate entities and maintained all formalities. He states that Investments has never participated in the day-to-day management and control of Imasco or directed Imasco how to vote at CTMC meetings.

[60] In my view, this evidence does not put into issue many of the key allegations in the Claim that connect Investments to the Province of Ontario.

[61] Mr. Cordeschi does not deny any of the conspiracy allegations in the Claim. While he denies that Investments participated in the day-to-day management and control of Imasco, he does not deny the allegation that Investments directed and coordinated common policies on smoking and health to be followed by members of the BAT Group, including Imasco. He does not deny the allegations that Investments: (i) knew of the harmful effects of cigarette smoking and exposure to second hand smoke; (ii) used conferences and committees attended by Imasco representatives as a means of directing and coordinating Group policies; and (iii) issued written directives and communications to the Group, including Imasco.

[62] Further, to the extent that Mr. Cordeschi challenges certain allegations, the Crown’s evidence rebuts his evidence sufficiently to establish a good arguable case. For example, Mr. Cordeschi states that Investments was not involved in research on tobacco products in Ontario, but the Crown’s evidence establishes a good arguable case that Investments was so involved.[^26]

[63] I am satisfied, based on the undenied allegations in the Claim and considering the evidence before me, that the Crown has established a good arguable case that Investments:

• is a “manufacturer” within the broad definition of the Act – by, for example, consolidating Group revenues in its financial statements and by its involvement in research into smoking and tobacco products;
• had knowledge of the addictive quality of cigarettes and the health risks of smoking and exposure to second hand smoke; and
• conspired and acted in concert with members of the BAT Group, including Imasco, in committing tobacco related wrongs – by, for example, developing policies on smoking and health for the Group;[^27] conducting advisory conferences attended by Group members dealing with smoking and health issues;[^28] preparing guidelines and directives on smoking to be followed by Group members;[^29] distributing pamphlets and materials to Group members about smoking and health issues;[^30] meeting with research scientists in Ontario;[^31] and visiting tobacco farms in Ontario.[^32]

Good Arguable Case: Industries

[64] Ms. Snook swore an affidavit in support of Industries’ jurisdiction challenge and was cross-examined on her affidavit. She is the company secretary of Industries and has been with the company since 2006. She based her evidence on her personal knowledge and information in the company records.

[65] Ms. Snook states, among other things, that Industries is a holding company. Like Mr. Cordeschi, she states that Industries has never manufactured, marketed, conducted research for, or distributed tobacco products in Ontario; holds no assets in Ontario; conducts no business in Ontario; has no office or employees in Ontario; and has never paid taxes in Ontario. She states that Industries and Imasco operated as separate entities. She states that Industries never designated any director to be on the Imasco board and never participated in, directed, controlled or managed the operations or policies of Imasco. She states that Industries derives all of its income from dividends and financial payments and not from the manufacture or sale of tobacco products.

[66] Ms. Snook denies that Industries exercised any direction or control of the day-to-day operations of its subsidiaries and states that it would not have had the human resources to do so.

[67] Ms. Snook states that many of the committees referred to in the Claim were not Industries committees. She acknowledges that the Tobacco Strategy Review Team (“TSRT”) included representatives from Industries and the principal tobacco operating companies. However, she states that the purpose of the TSRT was “to facilitate information exchange amongst Group companies to improve efficiencies and encourage co-operation” and was not a forum through which Industries exercised any direction, control or management of day-to-day operational activities or policies of its subsidiaries or associates.

[68] Ms. Snook states that the Chairman’s Advisory Conference (“CAC”) was a yearly or biennial conference at which the Chairman of Industries and executives from the major operating companies gathered to discuss issues of relevance to business sectors of the Group as a whole. However, she states that it was not a forum through which Industries exercised any direction, control or management of day-to-day operational activities or policies of its subsidiaries or associates, and that it was “informational and advisory rather than a decision-making meeting”.

[69] In my view, this evidence does not put into issue many of the key allegations in the Claim that connect Industries to the Province of Ontario.

[70] Ms. Snook does not deny any of the conspiracy allegations in the Claim. She does not deny the allegation that Industries knew of the harmful effects of cigarette smoking and exposure to second hand smoke. While Ms. Snook states that Industries did not use the TSRT and CAC meetings to direct or control day-to-day operational activities or policies of its subsidiaries, she does not deny the allegation that Industries used these meetings to direct and co-ordinate Group common policies on smoking and health. Moreover, Ms. Snook’s statements that these meetings were not forums through which Industries exercised direction or control are her own conclusions. Whether or not these meetings were used for that purpose will be a matter for the court to decide at trial.

[71] Where Ms. Snook did challenge certain allegations, the Crown’s responding evidence rebuts her evidence sufficiently to establish a good arguable case. For example, her statement that Industries never participated in, directed, controlled or managed the policies of Imasco is rebutted by the Crown’s evidence that Industries had Group policies on smoking and health and that it circulated those policies to Group members.[^33]

[72] I am satisfied, based on the undenied allegations in the Claim and considering the evidence before me, that the Crown has established a good arguable case that Industries, once it became the ultimate parent of the BAT Group:

• became a “manufacturer” within the broad definition of the Act – by, for example, consolidating Group revenues in its financial statements;
• had knowledge of the addictive quality of cigarettes and the health risks of smoking and exposure to second hand smoke;
• conspired or acted in concert with members of the BAT Group, including Imasco, in committing tobacco related wrongs – by, for example, developing objectives/strategies and policies for “key areas” of the Group, including smoking and health;[^34] maintaining a Group position on smoking and health;[^35] and through its involvement with Imasco on proposed research projects.[^36]

Good Arguable Case: PLC

[73] Ms. Snook swore an affidavit in support of PLC’s jurisdiction challenge and was cross-examined on her affidavit. She has been the company secretary of PLC since 2006. She based her evidence on her personal knowledge and on information in the company records.

[74] The main focus of Ms. Snook’s affidavit is that PLC was only incorporated in 1997. As with Industries, she states that PLC is a holding company and derives all of its income from dividends and financial payments and not revenues from the manufacture or sale of tobacco products. She states that PLC has never manufactured, marketed, conducted research for, or distributed tobacco products in Ontario; holds no assets in Ontario; conducts no business in Ontario; has no office or employees in Ontario; and has never paid taxes in Ontario. She states that PLC has always operated separately from Imasco/Imperial and has not participated in the day-to-day management and control of Imasco/Imperial. She also states that PLC has never been a member of any of the organizations, committees or conferences listed in the Claim, many of which ceased to exist before PLC was incorporated.

[75] In my view, this evidence does not put into issue many of the key allegations in the Claim that connect PLC to the Province of Ontario.

[76] The Claim alleges that the conspiracy has been a continuing one. Ms. Snook does not deny the allegation that PLC was part of the conspiracy once it became the ultimate parent of the BAT Group in 1998. Ms. Snook does not deny the allegation that PLC knew of the harmful effects of cigarette smoking and exposure to second hand smoke. She does not deny the allegation that PLC directed and coordinated common policies for the Group on smoking and health once it became the ultimate parent of the Group.

[77] Further, to the extent that Ms. Snook suggests that PLC was simply a holding company, uninvolved in Group policies and strategies and uninvolved in the business of Imasco/Imperial, the Crown’s responding evidence rebuts her evidence sufficiently to establish a good arguable case that PLC did have Group policies[^37] and was involved in determining the strategic direction of Imasco/Imperial’s business.[^38]

[78] I am satisfied, based on the undenied allegations in the Claim and considering the evidence before me, that the Crown has established a good arguable case that PLC, once it became the ultimate parent of the BAT Group:[^39]

• became a “manufacturer” within the broad definition of the Act – by, for example, consolidating Group revenues in its financial statements;
• had knowledge of the addictive quality of cigarettes and the health risks of smoking and exposure to second hand smoke; and
• conspired or acted in concert with members of the BAT Group, including Imasco/Imperial, in committing tobacco related wrongs – by, for example, setting global strategies to be implemented by Group members;[^40] developing Group policies on advertising of tobacco products and public smoking bans;[^41] and setting marketing standards for the Group.[^42]

Good Arguable Case: Carreras

[79] Mr. Cordeschi swore an affidavit in support of Carreras’ jurisdiction challenge, as one of two directors of Carreras. He was cross-examined on his affidavit. He based his evidence on his personal knowledge and information from post-1984 annual reports and accounts.

[80] His evidence is simply that Carreras is a non-trading, non-operating company that has been dormant since 1984.

[81] In my view, this evidence does not put into issue the key allegations in the Claim that connect Carreras to the Province of Ontario.

[82] Mr. Corsdeschi does not deny the allegation that Carreras participated in a conspiracy in the pre-1984 period. He does not deny the allegations that Carreras: (i) knew of the harmful effects of cigarette smoking and exposure to second hand smoke; (ii) directed and coordinated common policies on smoking and health for the Rothmans Group, including Rothmans Limited and Rothmans, Benson & Hedges Inc.; and (iii) influenced or advised how the Canadian companies in the Group should vote at CTMC meetings on smoking and health issues.

[83] The Crown has no admissible evidence to respond to Mr. Cordeschi’s affidavit. It relies on the undenied allegations in the Claim to establish the requisite connection between Carreras and the Province of Ontario.

[84] Given that the pre-1984 allegations have not been put into issue, the Crown was under no obligation to call evidence in support of the undenied allegations and they are presumed to be true. The jurisdiction analysis for Carreras can therefore be conducted on the basis of the pre-1984 allegations in the Claim, namely that Carreras:

• is a “manufacturer” under the Act;
• had knowledge of the addictive quality of cigarettes and the health risks of smoking and exposure to second hand smoke; and
• conspired or acted in concert with members of the Rothmans Group, including Rothmans Limited and Rothmans, Benson & Hedges Inc., in committing tobacco related wrongs.

Good Arguable Case: RJR Defendants

[85] Mr. Adams swore two affidavits in support of the RJR Defendants’ jurisdiction challenge and was cross-examined on his affidavits. He is the executive vice president and chief financial officer of Reynolds American Inc., the successor of RJR Company, and has been with the company since 1999. He based his evidence on his personal knowledge, his review of company records and/or information provided to him by employees or attorneys of RJR Company or related entities.

[86] Mr. Adams states, among other things, that at least since 1977, the RJR Defendants have not: been registered in Ontario; had an office or agent in Ontario; maintained places of business in Ontario; possessed property in Ontario; or been managed from Ontario. Mr. Adams states that between 1974 and 1999, the RJR Defendants and the RJR former Canadian subsidiaries (he refers to Macdonald Tobacco Inc., RJR-Macdonald Inc. and RJR-Macdonald Corp.)[^43] have always operated as separate corporate entities and maintained corporate formalities (subject to engaging in normal intra-group communications).[^44] He also states that the RJR Defendants have never been members of the CTMC.

[87] In my view, this evidence does not put into issue many of the key allegations that connect the RJR Defendants to the Province of Ontario.

[88] Mr. Adams does not deny any of the conspiracy allegations in the Claim.[^45] He does not deny the allegation that the RJR Defendants directed and coordinated common policies on smoking and health to be followed by members of the RJR Group, including Macdonald Tobacco Inc. and JTI-Macdonald Corp. He does not deny the allegations that the RJR Defendants: (i) knew of the harmful effects of cigarette smoking and exposure to second hand smoke; (ii) used conferences and committees attended by RJR Group representatives as a means of directing and coordinating Group policies; (iii) had the system of reporting described in para. 131 of the Claim; (iv) issued written directives and communications to the Group, including Macdonald Tobacco Inc. and JTI-Macdonald Corp.; and (v) directed or advised how Macdonald Tobacco Inc. and JTI-Macdonald Corp. should vote in committees of the Canadian manufacturers and at meetings of the CTMC.

[89] The Crown relies on the undenied allegations in the Claim (as well as the evidence on sales into Ontario, discussed below) to establish the requisite connection between the RJR Defendants and the Province of Ontario. The Crown was under no obligation to call evidence in support of the undenied allegations and they are presumed to be true.[^46] However, the Crown nonetheless provided some evidence in support of its allegations.[^47]

[90] I am satisfied, based on the undenied allegations in the Claim and considering the evidence before me, that the Crown has established a good arguable case that each of the RJR Defendants:

• is a “manufacturer” within the broad definition of the Act – by, for example, its involvement in the manufacture and/or distribution of tobacco products;
• had knowledge of the addictive quality of cigarettes and the health risks of smoking and exposure to second hand smoke; and
• conspired and acted in concert with members of the RJR Group, including Macdonald Tobacco Inc. and JTI-Macdonald Corp., in committing tobacco related wrongs – by, for example, directing or coordinating the RJR Group’s common policies on smoking and health; providing strategic direction to RJR Group members; and communicating with RJR Group members on CTMC grant requests.

[91] In addition, Mr. Adams’ evidence is that RJR Company sold U.S. blend cigarettes in Canada between 1974 and 1999 through RJR Macdonald Inc.[^48] While there is no evidence as to the exact amount of sales into Ontario, Mr. Adams’ evidence is that some of those U.S. blend cigarettes were sold into the Province of Ontario.[^49] RJR Company argues that the Canadian market share of the RJR brand cigarettes was at most only 0.6% between 1977 and 1999 and that this is insufficient to ground a connection.[^50] I disagree – according to the evidence, 0.6% represents millions of dollars of sales and millions of cigarettes sold.[^51]

[92] The sales of RJR product establish a connection between RJR Company and the Province of Ontario. With respect to RJR International, the evidence suggests that sales of RJR blend product into Canada flowed through RJR International but is not conclusive enough to support a connection on this basis.

APPLICATION OF THE REAL AND SUBSTANTIAL CONNECTION TEST

Stage 1: Does the Claim fall within Rule 17.02? Is there a Presumed Connection?

[93] The Crown relied on rules 17.02(g), (h), (o) and (p) in serving the Claim outside Ontario without leave.

[94] The JCDs argue that the Crown cannot rely on service under rule 17.02(g) – a claim “in respect of a tort committed in Ontario”. The Crown had originally pleaded both branches of the definition of tobacco related wrongs – that the Defendants’ acts were breaches of common law, equitable or statutory duties or obligations and, in the alternative, that the material facts constituted torts.[^52] It amended the Claim to delete this latter allegation, relying only on breaches of duties or obligations. The JCDs argue that the Crown is now precluded from taking the position that its claim is in respect of a tort for purposes of rule 17.02(g).

[95] I reject this submission.

[96] The Crown’s cause of action under s. 2(1) is based on breaches of a common law, equitable or statutory duty or obligation owed by a manufacturer to persons in Ontario. The Claim alleges breaches of the duty to design and manufacture a reasonably safe product; the duty to warn the public of the risks of smoking; the duty not to misrepresent the risks of smoking; and the duty of care to children and adolescents to prevent them from starting or continuing to smoke. I see no reason why a claim that is premised on this type of wrongful conduct cannot fall within rule 17.02(g).

[97] In that regard, I agree with the analysis of Holmes J. in the BCSC Decision on the nature of the Crown’s cause of action when he accepted that service ex juris was permitted under the equivalent rule in B.C. and stated, at paras. 215, 217-18:

The cause of action here is pursuant to the Act however the tobacco related wrongs pleaded by the Government are founded on torts and tortuous conduct.… The torts and tortuous conduct on which the Government action is founded all occurred in British Columbia…. The torts and tortuous conduct which from [form] the subject matter of conspiracy….

[98] This was reinforced by the Court of Appeal in the BCCA Decision, at para. 68:

In my view, that description of the cause of action is correct. This is a cause of action created by statute but it is founded on common law torts, as may be seen from the definition of “tobacco related wrongs”…

[99] I also agree with the analysis of Cyr J. in the NB Decision when he accepted that the claim could be served ex juris under the equivalent rule in N.B. and stated, at para. 36:

Even though the Act is not dealing specifically with a common law tort, the statutory tort thereby created is, however, analogous. The direct and distinct action created by the Act for the recovery of health care benefits caused or contributed to by tobacco related wrongs as defined under the Act are, in my view, in conformity with the use of the word tort found in Rule 19.01 (h) and (i).

[100] I find that the Claim was properly served under rule 17.02(g). According to Van Breda, a real and substantial connection with the Province of Ontario is now presumed to exist. However, even in the absence of a presumption, the Crown has established that a real and substantial connection exists.

[101] I also find that the claim was properly served under rule 17.02(h) – a claim “in respect of damage sustained in Ontario arising from a tort…wherever committed”, although without presumptive effect: Van Breda, at paras. 72, 78. I agree with the analysis of Cyr J. in the NB Decision in considering the equivalent rule in N.B., at para. 37:

Moreover, the action is to recover the costs of health care benefits caused or contributed by a tobacco related wrong. There is no question that the claim is in respect of damages sustained in New Brunswick, in keeping with the wording of Rule 19.01(i).

[102] In addition, based on the evidence of sales of RJR product by RJR Company into Ontario, I also find that the claim was properly served on RJR Company under rule 17.02(p) – carrying on business in Ontario. A real and substantial connection is presumed to exist on this basis: Van Breda, at para. 72.

[103] The Crown did not argue the remaining grounds of rule 17.02 at the hearing. In light of my conclusion that the Claim was properly served under rule 17.02 as set out above, I do not find it necessary to address further service issues under that rule.

Stage 2: Core of the Test

Connection between the Province of Ontario and the Crown’s Claim

[104] In analyzing the B.C. cost recovery legislation, the Supreme Court of Canada concluded that “…no territory could possibly assert a stronger relationship to that cause of action than British Columbia”.[^53]

[105] There is no question that the subject matter of the Claim is strongly connected to the Province of Ontario.

Connection between the Province of Ontario and the JCDs

[106] In Van Breda, Sharpe J.A. stated, at paras. 89 and 92:

When assessing the connection between the forum and the defendant, the primary focus is on things done by the defendant in the jurisdiction. Where the defendant confines its activities to its home jurisdiction, it will not ordinarily be subject to the jurisdiction of the forum… However, as was held in Moran, physical presence or activity within the jurisdiction is not always required…

On the other hand, acts or conduct short of residence or carrying on business will often support a real and substantial connection. As stated in Beals, 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.”[^54]

[107] A conspiracy is considered to have been committed where the damage occurs: Vitapharm, at para. 70; BCCA Decision, at para. 117 and Nutreco Canada Inc. v. F. Hoffman-La Roche Ltd., 2001 BCSC 1146, [2001] B.C.J. No. 1581, at para. 40. In those cases, the courts have assumed jurisdiction over parties to a conspiracy where the activities of the parties took place outside the jurisdiction. The Court of Appeal in the BCCA Decision stated, at para. 41:

A conspiracy occurs in British Columbia if the harm is suffered here, regardless of where the “wrongful conduct” occurred. On that basis, the court has jurisdiction over the ex juris defendants who are alleged to be parties to the conspiracy.

[108] As set out above, the Crown has established a good arguable case that the JCDs conspired and acted in concert in committing tobacco related wrongs. The damage is alleged to have occurred in Ontario. This is sufficient to establish a connection between the JCDs and the province. Moreover, this conspiracy, if proven, relates to matters of significance in Ontario – allegedly misleading the public and the government about the harmful effects of cigarettes and exposure to second hand smoke.

[109] The allegations of conspiracy and concert of action establish a real and substantial connection between each of the JCDs and the Province of Ontario.

[110] In addition, and while it is not necessary to go further, the Crown’s evidence on Investments’ involvement in Canadian research matters and in Imasco’s tobacco operations reinforces its connection to Ontario. Likewise, the evidence of RJR Company’s sales of RJR blended products referred to above reinforces the connection between RJR Company and Ontario.

Other Considerations

Fairness

[111] I am not persuaded by either side that fairness affects the strength of the connections. I consider fairness to be a neutral factor.

Enforceability of Judgment in Other Jurisdictions

[112] The JCDs argue that in assessing the strength of the connection between them and the province, I should accept their expert evidence that any judgment rendered in this case would be unenforceable in England and the U.S. and I should reject the Crown’s expert evidence to the contrary. While the JCDs were unable to point to any cases in which a judge on a jurisdiction motion has weighed conflicting opinions on enforceability, they invited me to conduct this exercise – and to accept their experts’ opinions.

[113] I have reviewed the expert evidence of the JCDs and the Crown and considered the parties’ submissions. The experts are highly qualified, disagree on numerous grounds, provide detailed opinions and come to opposite conclusions.

[114] The U.K. experts, Lord Grabiner, Q.C. (for the U.K. defendants) and Professor Briggs (for the Crown), for example, disagree on whether the Act would be considered a penal, revenue or other public law of a foreign state and whether the Claim would be viewed as the exercise of a sovereign right. They disagree on whether the common law exclusionary rule (Dicey & Morris Rule 3) applies or has been supplanted by Foreign Judgments (Reciprocal Enforcement) Act 1933 (U.K), 23 & 24 Geo V, c. 13.

[115] The U.S. experts, Professor Reimann (for the RJR Defendants) and Professor Silberman (for the Crown), for example, differ on whether the retroactivity and aggregation provisions of the Act would be seen to violate U.S. standards of due process and public policy. They also disagree on whether a U.S. court would refuse to enforce a judgment on the basis that the Act is a penal or revenue law.

[116] In my view, it is far from clear that an Ontario judgment would be unenforceable in England and the U.S. With this degree of uncertainty I am not prepared to say that the issue of enforceability should weigh in favour of the JCDs and weaken the strength of the connection to the Province of Ontario.

Forum of Necessity

[117] Finally, “forum of necessity” only applies where a real and substantial connection does not exist. Since I have found that the connection does exist, I do not propose to consider the Crown’s forum of necessity argument.

DECISION

[118] The motions of the JCDs are dismissed.

[119] The costs of these motions include the costs of the prior proceedings leading up to these motions: the refusals motions; the appeal to Perell J.; the motion for leave to the Divisional Court; the preliminary motion before me on admissibility of evidence; and the motion to strike the Crown’s factum.

[120] I encourage the parties to agree on costs.

[121] If they are unable to come to an agreement, I will receive costs submissions according to the following schedule: the Crown’s submissions shall be delivered within 30 days; the JCDs’ submissions within 21 days thereafter; and the Crown’s reply submissions within a further 10 days.

[122] Costs submissions are to be no longer than five pages per party, double spaced, exclusive of bill of costs. I direct that the JCDs coordinate their responding submissions to the greatest extent possible.

Conway J.

Date: January 4, 2012

[^1]: The JCDs argue only that the court does not have jurisdiction simpliciter. They make no arguments with respect to forum non conveniens. [^2]: Rules of Civil Procedure, R.R.O. 1990, Reg. 194; Courts of Justice Act, R.S.O. 1990, c. C.43. [^3]: Ontario v. Rothmans et al., 2011 ONSC 5356, [2011] O.J. No. 4163. [^4]: The Crown was only seeking to rely on a reduced number of documents from those originally attached to the Esprit affidavit. [^5]: Ontario v. Rothmans et al., 2011 ONSC 6715, [2011] O.J. No. 5119. [^6]: The Act also defines “tobacco related wrong” as a tort committed in Ontario by a manufacturer which causes or contributes to tobacco related disease. As noted later in these reasons, the Claim is no longer based on that branch of the definition. [^7]: The three other foreign Defendants have not contested the court’s jurisdiction: Altria Group, Inc., Philip Morris U.S.A. Inc. and Philip Morris International, Inc. [^8]: Other than the Canadian Tobacco Manufacturers’ Council. [^9]: Tobacco Damages and Health Care Costs Recovery Act, S.B.C. 2000, c. 30. [^10]: British Columbia v. Imperial Tobacco Canada Ltd., 2005 SCC 49, [2005] 2 S.C.R. 473 (the “Constitutional Challenge”). [^11]: PLC was not a defendant in the B.C. action. [^12]: British Columbia v. Imperial Tobacco Canada Ltd., 2005 BCSC 946, 44 B.C.L.R. (4th) 125 (the “BCSC Decision”), aff’d 2006 BCCA 398, 273 D.L.R. (4th) 711 (the “BCCA Decision”), leave to appeal to SCC refused, [2006] S.C.C.A. No. 446. [^13]: While the RJR Defendants were defendants in the N.B. proceeding, they did not challenge jurisdiction. They attorned to the jurisdiction of the N.B. courts. [^14]: New Brunswick v. Rothmans Inc., 2010 NBQB 381, 373 N.B.R. (2d) 157 (the “NB Decision”). Leave to appeal to the New Brunswick Court of Appeal was denied. Leave to appeal the NBCA decision to the Supreme Court of Canada was denied: British American Tobacco (Investments) Ltd. v. New Brunswick, [2011] S.C.C.A. No. 218; B.A.T. Industries P.L.C. v. New Brunswick, [2011] S.C.C.A. No. 219; Carreras Rothmans Ltd. v. New Brunswick, [2011] S.C.C.A. No. 221; and British American Tobacco P.L.C. v. New Brunswick, [2011] S.C.C.A. No. 222. [^15]: In determining whether the Crown has established a good arguable case, I have reviewed carefully all of the admissible evidence (subject to my September 20 ruling – see footnote 25). However, given my limited role, I have provided in these reasons examples of documents that support a good arguable case, rather than conducting a detailed analysis of all of the documentary evidence. [^16]: The JCDs submit that a “meaningful connection” is a higher threshold than a “real and substantial connection”. [^17]: See Constitutional Challenge, at paras. 38, 40. [^18]: The JCDs rely on Castillo v. Castillo, 2005 SCC 83, [2005] 3 S.C.R. 870 in support of their argument on meaningful connection. The B.C.C.A. considered Castillo in rejecting the defendants’ arguments on constitutional inapplicability. [^19]: Counsel advised at the hearing that the same argument was made in N.B. Cyr J. did not refer to it in the NB Decision. Counsel advised that the same argument was made on the leave application to the N.B. Court of Appeal; leave was denied. [^20]: The JCDs rely on Normart Management Ltd. v. West Hill Redevelopment Co. (1998), 37 O.R. (3d) 97 (C.A), at p. 104 for the requirements of a conspiracy claim. I note that Normart was an appeal from a Rule 21 motion and was not a jurisdiction motion. [^21]: PLC further submits that the Claim does not identify any overt acts taken by it after its incorporation in 1997. As noted later in these reasons, the allegations of conspiracy are continuing and apply to PLC after its incorporation. [^22]: The Crown’s cause of action is the statutory one. The Crown pleads conspiracy and concert of action pursuant to s. 4 of the Act to support its claim that the Defendants jointly breached duties to persons in Ontario. [^23]: According to Ms. Snook, the BAT Group is a collective phrase that historically has been used to describe the collection of companies including the parent company and all of the companies that were its subsidiaries and associates. [^24]: The Crown relies on the financial reports and statements of each parent company in which the parent portrays itself as having been in operation since 1902, regardless of when it actually came into existence. [^25]: In determining whether the Crown has established a good arguable case on these jurisdiction motions, I have relied on admitted documents strictly in accordance with my September 20 ruling. I have only relied on documents for the truth of their contents where I have made that ruling. For any other documents in possession, I have relied on them only as circumstantial evidence of knowledge of, or connection or complicity with the subject matter of the document: see Phipson on Evidence (London: Thomson Reuters, 2010) at para. 37-10. In my September 20 endorsement, I had ruled that a letter dated February 22, 1971 from Mr. Felton to Mr. Laporte of Imasco (but sent to him in his capacity at the CTMC) was inadmissible. Counsel advised at the hearing that there had been a mix-up and that this letter had been found in Investments’ files. I therefore change my ruling to admit the February 22, 1971 letter as a document in possession (DIP(i)) and for the truth of its contents as an admission. [^26]: See, for example, Visit Report – Visit to Dr. C. Knott, Royal Ottawa Hospital by Dr. R.E. Thornton, July 14, 1982; see also British American Tobacco (Investments) Limited Directors’ Report and Accounts for the year ended 31 December 2000, at p.2. [^27]: See, for example, Report and Accounts 1973, at p. 00365; see also letter dated June 12, 1970 from G.C. Hargrove on Smoking and Health, at p. 3. [^28]: See, for example, minutes of the Chairman’s Advisory Conferences in Mexico (May 1980) and Austria (May 1981). [^29]: See, for example, letter dated June 26, 1974 from G.C. Hargrove to All No. 1s of Associated Companies. [^30]: See, for example, document entitled Consumer Helplines (a DIP document only). [^31]: See, for example, notes of visit by R.G. Hook with Professor Beckmans, December 2, 1966. [^32]: See, for example, notes of visit to Imperial Tobacco Farm, 1974. As noted later in these reasons, the last two alleged activities (meeting with research scientists in Ontario and visiting tobacco farms in Ontario) also establish a connection between Investments and the Province of Ontario apart from the alleged conspiracy/acting in concert. [^33]: See, for example, the document entitled “Legal Considerations in Smoking and Health Issues” dated March 26, 1984 that sets out on the reverse side “Legal Considerations on Smoking & Health Policy”. Ms. Snook acknowledges this document in her affidavit but states that it was not a means to direct, control or manage the day-to-day operational activities or policies of Imasco. Again, that is her own conclusion. Whether or not the document was used for that purpose will be a matter for the court to decide at trial. See also the documents referred to in footnotes 34 and 36. [^34]: See, for example, Group Planning document dated September 12, 1977. [^35]: See Legal Considerations in Smoking and Health Issues document referred to in footnote 33. See also documents referred to in footnotes 34 and 36. [^36]: See, for example, letter from P. Sheehy to P. Crawford dated December 29, 1986. [^37]: See, for example, Listing Particulars for PLC, at p. 32. [^38]: See, for example, News Release dated August 3, 1999. [^39]: In view of my conclusion, I do not propose to address allegations of successor liability for either Industries or PLC. Further, the Crown conceded at the hearing that it was not advancing any arguments on piercing the corporate veil or alter ego. [^40]: See, for example, Listing Particulars for PLC, at p. 13. [^41]: Ibid, at p. 32. [^42]: Annual Report 2008, at p. 10. [^43]: The Claim alleges that RJR-Macdonald Inc. was sold to Japan Tobacco Inc. in 1999 and changed its name to JTI-Macdonald Corp. The Claim includes both Macdonald Tobacco Inc. and JTI-Macdonald Corp. as Defendants and as members of the RJR Group. [^44]: On cross-examination Mr. Adams was asked if RJR Company had direction or control over its Canadian subsidiary. He only responded that he never “observed any control” (at p. 146). [^45]: The RJR Defendants argue that they could not have responded to the conspiracy and other allegations since the allegations were insufficiently particularized in the Claim. I reject this argument – there was sufficient specificity in the Claim for the RJR Defendants to have responded to the allegations for purposes of this motion. [^46]: The RJR Defendants argue that the Crown was required to put any evidence it had to support these undenied allegations to Mr. Adams on cross-examination. I reject this argument – the case law cited above makes it clear that the plaintiff only needs to tender evidence on allegations that the defendant has put into issue. [^47]: For example, evidence of communications between RJR Company and RJR Macdonald Inc. on CTMC grant matters (see letter dated May 13, 1988 from A. Wallace Hayes to Derrick A. Crawford) and evidence that RJR International oversaw and provided strategic direction to the international business (see cross-examination of Mr. Adams dated December 14, 2010, at p. 145). [^48]: RJR-Macdonald Inc. also manufactured and sold RJR brand cigarettes in Canada in addition to distributing RJR blend cigarettes manufactured in the U.S. My focus is on the sale of the U.S. blend cigarettes into Canada. [^49]: See para. 18 of Mr. Adams’ affidavit of November 1, 2010. [^50]: Mr. Adams states in his affidavit that the volume of sales in Ontario is likely to have constituted a significantly smaller proportion of the entire Canadian market. There is no evidentiary support for this statement. [^51]: In the BCSC Decision, at paras. 64, 125, 135-36, Philip Morris argued that its market share from 1981-1988 represented about 1/8 of 1% of the Canadian domestic market and was a de minimus and insignificant market share that should not ground a connection. Holmes J. rejected this argument. [^52]: Those pleaded torts were negligence, negligent misrepresentation, fraudulent misrepresentation, and conspiracy. [^53]: Constitutional Challenge, at para. 38. [^54]: In para. 92, Sharpe. J.A. refers to Beals v. Saldanha, 2003 SCC 72, [2003] 3 S.C.R. 416.