ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-12-450067
DATE: 20120727
BETWEEN:
Avanti Management and Consulting Limited and Michael Dehn
Plaintiffs
– and –
Argex Mining Inc.
Defendant
Lawrence E. Thacker and Ian MacLeod, for the Plaintiffs
Samuel M. Robinson, for the Defendants
HEARD: July 17, 2012
goldstein J.
[ 1 ] On March 30, 2012, the plaintiffs Avanti Management and Consulting Limited (“ Avanti ”) and Michael Dehn served a Statement of Claim issued in the Superior Court of Ontario on the defendant Argex Mining Inc. (“ Argex ”) at its head office in Montreal. Argex, which has not filed a Statement of Defence or served a Notice of Intent to Defend, brings a motion to stay the action on the grounds that the Superior Court of Ontario lacks jurisdiction; and that Ontario is not the forum conveniens. Since Argex carries on business in Ontario, the Superior Court has jurisdiction. The forum conveniens aspect of this case is a close call. Given that the standard to displace a plaintiff’s choice of jurisdiction is high, it follows that the motion must be dismissed.
BACKGROUND
[ 2 ] Argex is a mineral exploration company. It owns three mineral properties in Quebec. The properties are located on traditional Innu First Nations territory and Argex has signed an agreement with the Innu band council granting Argex the exclusive right to exploit and develop the properties within a radius of 100 kilometers. The properties contain titanium ore. In order to extract and purify titanium dioxide from titanium ore Argex uses a process developed by a company called Process Research Ortech Inc. (“ PRO ”) through a patent owned by Canadian Titanium Ltd. (“ CTL ”).
[ 3 ] Dehn was president of Argex from January 2010 to June of 2011. As president of Argex, Mr. Dehn claims that he developed the relationship between Argex and PRO. In June, 2011 he resigned as president and instead became “Head of Technology and Business Development” of Argex. His relationship with Argex as Head of Technology and Business Development was governed by a Services Agreement. The Services Agreement provided that Avanti, a company which Mr. Dehn is 50% owner, would provide his services to Argex. His contract as president was governed by a similar arrangement. Mr. Dehn claims that the Services Agreement contemplated that he would continue to develop that relationship, including the development and commercialization of the technology, on behalf of Argex. Argex, for its part, claims that the purpose of the Services Agreement was merely to make use of Mr. Dehn’s assistance in marketing Argex’s product to customers. The parties also disagree about the proper characterization of Argex’s relationship with PRO and the titanium extraction technology. Mr. Dehn argues that Argex “carries on business” in Ontario through its “mini-plant” and points to a statement to that effect on the Argex website; Argex argues that the “mini-plant” fits on a lab counter and is, in any event, owned by another company.
[ 4 ] The Services Agreement was terminated by Argex when it learned that Mr. Dehn was to become the president of a rival mining company. That rival had properties less than 100 kilometers from Argex’s properties. There is some evidence to suggest that the rival company has had discussions with same Innu band council that Argex dealt with.
[ 5 ] In September, 2011, Argex announced that it had signed a share purchase agreement to acquire 50.1% of the shares of CTL, the holder of the patent for the titanium dioxide extraction process. It was shortly after that acquisition that Mr. Dehn became president of the rival mining company and Argex terminated the Service Agreement.
ANALYSIS
[ 6 ] The test for jurisdiction is whether there is a real and substantial connection to the legal situation or the subject matter of the litigation within the forum. Jurisdiction is established on the basis of a set of objective factors. The factors are set out by the Supreme Court of Canada in Club Resorts Ltd. v. Van Breda, 2012 SCC 17 at paras. 86 to 90. The Court, at para. 90, summarized the factors:
90 To recap, in a case concerning a tort, the following factors are presumptive connecting factors that, prima facie, entitle a court to assume jurisdiction over a dispute:
(a) the defendant is domiciled or resident in the province;
(b) the defendant carries on business in the province;
(c) the tort was committed in the province; and
(d) a contract connected with the dispute was made in the province.
[ 7 ] Any one of these presumptive connecting factors will be enough to give the courts of this province jurisdiction over tort litigation. Although the Supreme Court was careful to restrict the list of presumptive connecting factors to tort litigation, the parties before me are ad idem that the factors should be applied to this litigation, and I agree.
[ 8 ] The Court in Van Breda cautioned that courts should be careful to avoid “creating what would amount to forms of universal jurisdiction.” A virtual presence, through mere advertising or a Website is not enough. A party requires some form of actual presence, such as an office or regular visits: Van Breda, supra, at para. 87.
[ 9 ] I am persuaded that in this case Argex carries on business within Ontario. Although Argex is domiciled in Quebec, and its resource properties are all located in Quebec, the process by which titanium dioxide is extracted from titanium ore was developed in Ontario, by an Ontario company. Argex takes the position that the “mini-plant” is really just a small box on a desk in a lab and that it licences the technology. Argex did, however, become sufficiently invested in the technology that it purchased 50.1% of the outstanding shares of CTL, the holder of the patent. Argex has also been involved in efforts to develop and market the technology, notwithstanding that those efforts could be viewed as an adjunct to its titanium ore extraction business. Argex has also referred to the mini-plant as “its pilot plant in Mississauga” in its press releases and on its website. Argex promotes itself to investors and customers as more than a mere end-user of this important Ontario-based technology. In my view, Argex’s interest is beyond that of a mere licensee. It is not necessary for me to decide the full nature of Argex’s business interests, but even assuming that Argex is factually correct about the mini-plant it does not detract from the fundamental nature of the process to Argex’s business. Furthermore, the litigation is intimately bound up in Mr. Dehn’s work with the PRO process. There are differing accounts of his actual role, but that is something for a trier of fact to deal with. For the purposes of this motion it is enough for me to find that Services Agreement contemplated his involvement in the development and commercialization of the titanium dioxide extraction process, a development that is taking place in Ontario. The “mini-plant” amounts to an actual presence in Ontario, especially after the acquisition of the CTL shares; but even if it did not, it is clear that the principles of Argex make regular and frequent visits to it and conduct business in Ontario.
[ 10 ] Furthermore, although Argex has its headquarters in Quebec it is a federally incorporated company. It is listed on the TSX Venture Exchange, its primary securities regulator is the Ontario Securities Commission, and it has raised money from Ontario investors. Mr. Robinson, for Argex, argues that this factor would carry more weight if the litigation involved, for example, a shareholder class action. Although the point is well-taken, the fact that Argex has chosen Ontario for the purposes of securities regulation is not inconsequential.
[ 11 ] It would be open to Argex to rebut the presumption of jurisdiction, but I find that the evidence is not sufficient for it to do so.
[ 12 ] Having found that Argex carries on business within Ontario, it is not necessary for me to evaluate the other factors. In any event, I am not persuaded that the other factors would support Ontario having jurisdiction. Accordingly, I find that the Superior Court of Ontario has jurisdiction to try this matter. There is no question that the courts of Quebec have jurisdiction over the litigation. As the Supreme Court pointed out at para. 86 of Van Breda, a defendant may always be sued in a court of the jurisdiction in which he or she is domiciled or resident, or, in the case of a corporation, the location of the head office. This brings me to the next issue, namely whether the action should be stayed for forum non conveniens.
[ 13 ] The parties agree that the factors a court should consider in determining the most convenient forum are set out in Young v. Tyco International of Canada Ltd. (2008), 2008 ONCA 709 at para. 26:
[26] Decisions on forum non conveniens motions are exercises of judicial discretion. Typically, in exercising their discretion, motion judges consider a list of factors now well established in the case law. These factors are used to assess the connections to each forum. They include:
the location where the contract in dispute was signed;
the applicable law of the contract;
the location of witnesses, especially key witnesses;
the location where the bulk of the evidence will come from;
the jurisdiction in which the factual matters arose;
the residence or place of business of the parties; and
the loss of a legitimate juridical advantage.
[ 14 ] As Laskin J.A. for a majority of the court stated, the exercise is not mathematical. Judges must weigh each of the factors according the weight they consider appropriate. Laskin J.A. further identified three principles which should guide a judge’s exercise of discretion on a forum non conveniens motion. I would summarize them as follows:
That standard to displace the plaintiff’s choice of jurisdiction is high, and a more appropriate forum must be clearly established.
Balancing of the factors should aim at achieving the twin goals of efficiency and justice.
The motion judge should not make findings of fact that are more properly made at trial. As Laskin J.A. stated, a motions judge should adopt “a prudential, not an aggressive approach to fact finding.”
[ 15 ] With those principles in mind I turn to an evaluation of the factors.
The location where the contract in dispute was signed
[ 16 ] The Services Agreement stipulated that it was entered into “in the City of Montreal” and would be governed by the laws of the Province of Quebec. Mr. Dehn signed the agreement at his residence in Ontario and emailed a scanned copy of the agreement to Argex. As part of his compensation, Argex also offered Mr. Dehn stock options. Mr. Dehn, emailing from Ontario, indicated that he intended to exercise the options, although it appears that he did not exercise them prior to the termination of the Services Agreement. The Stock Option Agreement also stated that it would be construed in accordance with the law of Quebec. Overall, I find that this factor is neutral, or slightly favours Quebec.
The applicable law of the contract
[ 17 ] The Services Agreement states that it is to be governed by the law of Quebec. The tort of intentional interference with economic relations is also pleaded in relation to the Stock Option Agreement. The parties strongly disagree as to whether the tort occurred (as alleged) in Ontario or Quebec, and, therefore, which law applies. This is manifestly a decision that should be made at trial, but I note that the Stock Option Agreement, like the Services Agreement, states that it is to be governed by the law of Quebec. I find that this factor slightly favours Quebec, since the key decisions to be made at trial will likely be made in relation to the interpretation of the Services Agreement.
The location of witnesses, especially key witnesses
[ 18 ] The parties differ as to which witnesses are key, and, therefore, where the key witnesses are located. The key witnesses relating to the interpretation of the services agreement and the nature of Mr. Dehn’s involvement with the titanium dioxide extraction process are mostly located in Ontario. The key witnesses relating to the alleged conflict of interest by reason of Mr. Dehn’s involvement with a rival mining company are mostly in Quebec. Given that significant witnesses will have to travel no matter where the trial is held, I find that this factor is neutral.
The location where the bulk of the evidence will come from
[ 19 ] The evidence before me indicates that documentary and physical evidence will come from both Ontario and Quebec. It is difficult to state definitively, prior to the exchange of affidavits of documents, where the bulk of the evidence will come from, although it is obvious that evidence will come from both provinces. Accordingly, I find that this factor is neutral.
The jurisdiction in which the factual matters arose
[ 20 ] The nature of Mr. Dehn’s activities with the rival mining company will require a court to review facts that indisputably arose in Quebec, since the defendant, the mining properties, the Innu band counsel, and the rival mining company itself are located in Quebec. At the same time, the nature of the PRO process, Argex’s relationship with PRO and CTL, and Mr. Dehn’s efforts to commercialize and promote the PRO process arose in Ontario. The factual matters can, therefore, be said to have arisen in both places. Accordingly, I find that this factor is neutral.
The residence or place of business of the parties
[ 21 ] The plaintiff Dehn resides and does business in Ontario, although it appears he also does (or at least did) business in Quebec. The defendant is domiciled in Quebec, but as I have already determined, Argex carries on business in Ontario. It has no employees but only consultants. The reality appears to be that these consultants (including the plaintiff) are peregrinating business people who are frequently found in either jurisdiction (and others, no doubt). This factor is neutral.
The loss of a legitimate juridical advantage
[ 22 ] Argex argues that since the law of Quebec must apply regardless of where the case is heard, the plaintiffs will not suffer a loss of juridical advantage. This is a factor, but, as noted, it is premature to decide whether the law of Quebec or Ontario applies to the tort claim. The plaintiffs, for their part, argue that if forced to litigate in Quebec, they will be forced to post security for costs and will lose an entitlement to substantial indemnity costs. In Young v. Tyco Industries Laskin J.A. found in the circumstances of that case that certain damages would be available in Ontario, but not Ohio. That was a real and legitimate juridical advantage to the plaintiff. I would interpret “legitimate juridical advantage” to be something which impacts upon the substance of the case, rather than mere procedure. Posting security for costs might be inconvenient, but it does not impact on the substance of the case. Regarding costs, no litigant should assume that substantial indemnity costs will be available as a matter of routine; in any event, there is no evidence regarding the law of costs in Quebec, other than an averment in the factum. Overall, this factor is neutral.
[ 23 ] As Laskin J.A. noted, the determination of which forum is more convenient is not a mathematical exercise. Judges must assign the weight that they consider appropriate to each factor. Two factors slightly favour Quebec. The rest are neutral. In my view the fact that Argex carries on business in both Ontario is significant, especially given that the litigation is tied in at least one important respect to Ontario. Quebec is not automatically more convenient, notwithstanding that the two agreements are to be considered under Quebec law. The application of the law of one province in another province is not necessarily onerous, even where the civil law of Quebec is different in some respects from the common law of Ontario. Realistically, as I noted at the beginning of these reasons, this is a close call – a solid case can be made for either jurisdiction. As set out in Young v. Tyco Industries, the standard to displace the plaintiff’s chosen jurisdiction is high. In Van Breda the Supreme Court agreed that the burden is on the defendant to displace the forum chosen by the plaintiff. The Court stated:
Finally, the party asking for a stay on the basis of forum non conveniens must demonstrate why the proposed alternative forum should be preferred and considered to be more appropriate. (Van Breda, supra, at para. 103.)
[ 24 ] At this early stage of the proceedings, where the efficiency and fairness considerations are tied to the factual dispute, I find that it would not be unfair to try this matter in Ontario. On balance I find that Argex has not displaced the choice of Ontario as the forum chosen by the plaintiff, and has not demonstrated that Quebec is clearly more appropriate.
DISPOSITION
[ 25 ] The motion is dismissed.
[ 26 ] If the parties are unable to agree on costs, I would be pleased to receive a brief costs submission from the plaintiffs within 14 days, and a brief responding costs submission from Argex within 10 days thereafter.
[ 27 ] I thank counsel for their helpful presentations.
Goldstein J.
Released: July 27, 2012
COURT FILE NO.: CV-12-450067
DATE: 20120727
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Avanti Management and Consulting Limited and Michael Dehn
Plaintiffs
– and –
Argex Mining Inc.
Defendant
REASONS FOR JUDGMENT
Goldstein J.
Released: July 27, 2012