CITATION: Greta Inc. v. Robert De Lange et al., 2013 ONSC 3086

COURT FILE NO.: CV-12-457816

DATE: 2013/05/28

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Greta Inc.

Plaintiff

v.

Robert De Lange, Level UP SA and Michael Frank Burgess

Defendants

BEFORE: Moore J.

COUNSEL: Thomas J. Dunne, Q.C. and Mark Crane, for the Plaintiff/Respondent

Lawrence A. Pick and Karen L. Dawson, for the Defendant/Applicant, Robert de Lange

E N D O R S E M E N T

[1] This is an application by the defendant, Robert de Lange (“de Lange”), for an order staying the action or, in the alternative, striking the statement of claim and setting aside its service upon de Lange.

[2] The principal complaint raised by de Lange is that this court lacks jurisdiction over the subject matter of the action, as there is no real and substantial connection between said subject matter and Ontario. De Lange resides in South Africa and has few, if any, connections with Ontario, apart from those alleged in this action.

[3] As for the pleading, de Lange asserts that it discloses no reasonable cause of action against him and, in any event, it was served on him outside of Ontario but does not set out the facts and specifically refer to the provision of Rule 17.02 relied on in support of such service, contrary to Rule 17.04.

[4] The facts of this case are complicated as they describe commercial and banking transactions encompassing several people and countries and allegations of deceit and criminal conduct on the part of some of the actors involved. At its essence, however, this is a pleadings motion brought at a time early on in the development of the facts available to support the allegations pleaded.

Background

[5] Many of the known facts are not greatly contested. The parties involved in this action and in a recently settled action brought in this court, were involved in a wind power generation project (“the project”) in Estonia, the financing for which was assembled in Euros through banks in Europe and Dubai.

[6] Greta Inc. (“Greta”) is an Ontario corporation[^1] that contracted to finance a portion of the project by assembling an initial deposit of money and moving it from its bank account to an account in the name of Innovatis Asset Management SA (“Innovatis”). The financing contract was required by its terms to be governed by the laws of Ontario.

[7] Greta asserts that it agreed to transfer this initial deposit upon being induced to do so by the defendant, Michael Burgess (“Burgess”), as part of a conspiracy, during meetings in Toronto in June 2009 involving Greta representatives and Burgess.

[8] Ultimately, Burgess was investigated and convicted in the United States for his involvement in the financing of the project. He is incarcerated in Florida and is not actively defending this case currently.

[9] A portion of the money initially advanced by Greta was transferred to Innovatis and therefrom to de Lange’s personal bank account. The parties disagree upon the business and legal implications flowing from transfers to de Lange’s bank account but the fact that funds did flow is supported through banking information generated during the course of the related litigation in which Greta sued other people and companies related to de Lange and Innovatis.

[10] This court issued a tracing order in September of 2010 requiring the defendants in that action to account, report and advise as to the whereabouts of Greta’s initial deposit. This generated information put to de Lange in his cross examination in aide of this motion. In the result, he admitted to receiving, in his personal capacity, 423,763 Euros. He further allowed that he directed certain additional Greta funds be transferred to individuals.

[11] Information generated from the tracing order also states that the additional Greta funds were also disbursed at the direction of Burgess.

[12] Greta asserts in this litigation that de Lange and Burgess participated in a conspiracy to defraud Greta of money that includes the portions of the initial deposit referred to above and that they are liable for conspiracy, breach of trust and knowing receipt.

[13] De Lange submits that he was not aware of Greta and its involvement in financing a portion of the project or of receiving transfers of money that originated with Greta. He asserts that he had no involvement with Burgess in connection with the project.

[14] In all respects, de Lange submits that he is a stranger to Ontario, to Greta, to the project and to agreements relating to the project. He seeks to have this court apply the common law real and substantial connection test to determine subject matter jurisdiction.

[15] He refers to and relies upon Club Resorts, [^2] where LeBel J. described the test, stating:

In Morguard, the Court held that the courts of a province must recognize and enforce a judgment of a court of another province if a real and substantial connection exists between that court and the subject matter of the litigation. Another purpose of the test was to prevent improper assumptions of jurisdiction by the courts of the province. Thus, the test was designed to ensure that claims are not prosecuted in a jurisdiction that has little or no connection with either the transactions or the parties, and it requires that a judgment rendered by a court which has properly assumed jurisdiction in a given case be recognized and enforced. La Forest J. did not seek to determine the precise content of this real and substantial connection test, nor did he elaborate on the strength of the connection. Rather, he held that the connections between the matters or the parties, on the one hand, and the court, on the other, must be of some significance in order to promote order and fairness. They must not be "tenuous".

[16] The Court added that: [^3]

From this perspective, a clear distinction must be maintained between, on the one hand, the factors or factual situations that link the subject matter of the litigation and the defendant to the forum and, on the other hand, the principles and analytical tools, such as the values of fairness and efficiency or the principle of comity. These principles and analytical tools will inform their assessment in order to determine whether the real and substantial connection test is met.

[17] And, by way of short summary relied on by de Lange in this motion, the Court stated:[^4]

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.

[18] De Lange submits that the evidence on this motion does not support the court finding that any of the presumptive factors has been established. To the extent that Greta supports its position upon price fixing conspiracy[^5] or cases arising from consumer product safety legislation[^6] there may be good public policy reasons upon which to accept jurisdiction, but de Lange insists that they do not apply to a case like this one, a private dispute grounded in an allegation of civil conspiracy, one with no underlying statute to refer to.

[19] To the extent that the court may be moved by a concern that damages are sustained in Ontario, de Lange raises the red flag of concern addressed by the Court in Club Resorts[^7] in stating:

The problem in accepting unreservedly that if damage is sustained at a particular place, the claim presumptively falls within the jurisdiction of the courts of the place, is that risks sweeping into that jurisdiction claims that have only a limited relationship with the forum. An injury may happen in one place, but the pain and inconvenience resulting from it might be felt in another country and later in a third one. As a result, presumptive effect cannot be accorded to this connecting factor.

[20] De Lange submits that the focus should rather be placed on where the constituent elements of the tort occur and difficulties may arise in determining that issue where the tort presents, as here, with transnational activities. De Lange relies on Tolofson[^8] in support of the proposition that:

There are situations, of course, notably where an act occurs in one place but the consequences are directly felt elsewhere, when the issue of where the tort takes place itself raises thorny issues. In such a case, it may well be that the consequences would be held to constitute the wrong. Difficulties may also arise where the wrong directly arises out of some transnational or interprovincial activity. There territorial considerations may become muted; they may conflict and other considerations may play a determining role.

[21] De Lange submits that no tort was committed in Ontario and, as such, this court cannot assume jurisdiction. There is no clear evidence of a contract entered into in Ontario that de Lange was a party to and the contracts requiring construction according to the laws of Ontario do not, de Lange insists, cloak Ontario with exclusive jurisdiction.

[22] In any event, de Lange submits that the statement of claim is deficient in that it fails to detail any false or deceitful statement and it is therefore impossible for de Lange to know the case he is called upon to meet.

[23] He asserts that the information produced regarding the constituent elements to the offences that Burgess was found guilty of is incomplete and therefore entirely unhelpful in any attempt to understand Burgess’ conduct and its ramifications to the tortious involvement of de Lange in this case, if any.

[24] My difficulty with accepting de Lange’s argument that this court lacks jurisdiction over the subject of the action as there is no real and substantial connection between said subject matter and Ontario is that it leaves open the question of if not Ontario then where? Greta alleges an international conspiracy involving many jurisdictions including Canada, the United States, Austria, the Bahamas, Hong Kong, Panama, Switzerland, South Africa, Jersey and the United Arab Emirates. There is no basis upon which to presume that any one or more of the other jurisdictions has any closer connection to this dispute than Canada does.

[25] Greta is an Ontario company and it asserts that as the result of the tortious conduct of de Lange and assertions allegedly involving him that Burgess made in Toronto, Greta suffered financial losses in Ontario.

[26] This is not a case where damages were suffered in multiple jurisdictions as the result of pain or inconvenience, as is referenced in Club Resorts. This case has more than a limited or casual connection to Ontario, in my view.

[27] Greta alleges that it was the victim of a conspiracy and that the tort of conspiracy necessarily involves deceitful conduct alleged against defendants in an action before the court. Such conduct can be difficult to prove. Here, de Lange denies any involvement in such conduct. Accordingly, Greta has had to marshal evidence from a variety of sources aided by the terms of the tracing order issued in the companion action and has obtained and produced evidence that de Lange received, directly or indirectly, 522,665 Euros of Greta’s money, without Greta’s knowledge or consent.

[28] Greta had no knowledge that these transfers occurred until the tracing order brought this information to light.

[29] Greta has produced evidence connecting de Lange and Burgess as business associates, of Burgess actively involved in assembling Greta funds for the project, that he both corporately and personally guaranteed the safety of and in transferring two million Euros, of what Greta asserts was its money, into de Lange’s personal account. Greta insists that the transfer of money into de Lange’s account confirms misuse of funds according to the initial deposit funding contract and completes the conspiracy alleged involving de Lange and Burgess and damages sustained is a necessary component to complete the cause of action for conspiracy.

[30] De Lange has an explanation for his receipt of the money but the validity of that is not a matter for the court to determine on this motion. That the alleged connections exist between de Lange, Burgess, Greta and the damages Greta asserts it sustained in Ontario is, however, important to the question of whether there exists sufficient connection between the subject matter of the case and Ontario, such that this court should accept jurisdiction.

[31] Greta submits that by coming to Toronto and making statements about ramping up funding, Burgess breached the initial funding contract and breached a trust and committed an act in furtherance of the conspiracy alleged in this case.

[32] Greta relies on the Club Resorts factors (c) the tort was committed in the province; and, (d) a contract connected with the dispute was made in the province.[^9] It argues that Burgess’ actions caused Greta’s money to be sent for initial funding to Dubai and that is a tort and a breach of contract connected to Ontario as well. It adds that there is no court better positioned to interpret the contract than an Ontario court. I agree.

[33] I also accept the proposition advanced by Greta and supported by the court in Fairhurst[^10] where Newbury J.A. stated that:

As for the defendants’ argument in Vitapharm, that the plaintiffs had not sufficiently particularized the role of each defendant in the alleged conspiracies, the Court observed that by their nature, conspiracies and conspirators are secretive and that it was “far too early to put the plaintiffs to the task of unraveling the apparently complex corporate arrangements and of proving their case against specific entities”, citing Nutreco Canada Inc. v. Hoffman 2001 BCSC 1146.

In my view, it is too early in this case to put the plaintiff to the task of “unraveling” the defendants’ roles, if any, in the alleged conspiracy. I would not accede to the defendants’ objections regarding the pleadings generally.

[34] As regards the adequacy of Greta’s pleading, I will not accede to de Lange’s objections, both because it is too early in a still emerging stage of the development of the evidentiary picture in this case to put Greta to the task of unraveling factual matters further but also because Greta has made reasonable efforts to help de Lange to know the case he is called on to meet, both in the statement of claim and in responses made to his demand for particulars.

[35] Further, Greta has provided affidavit evidence in support of its case and de Lange has availed himself of the opportunity to cross examine upon it. In my view, Greta has met its threshold to establish a good arguable case for assumption of jurisdiction, a low threshold.[^11] The serendipitous effect for de Lange is that Greta’s efforts to establish a good arguable case for jurisdiction has introduced him to a substantial fund of information on the case he is called upon to meet.

[36] Even if the statement of claim is considered to be technically deficient, de Lange has, since its service upon him, received much more information and documentation and likely more, through this motion process, than he would otherwise have been entitled to under the Rules relating to pleadings.

[37] I am not moved to strike the statement of claim but even if I were, in the circumstances of this case, I would direct that Greta be at liberty to deliver a fresh pleading.

[38] As I am of the view that Greta’s action is one properly brought to recover damages sustained in Ontario arising from an alleged tort and breach of contract and for breach of fiduciary duty and breach of confidence, even if committed elsewhere, Greta’s claims trigger the service out of the jurisdiction provisions of Rule 17.02(h) and the statement of claim can be properly served without leave.

[39] The fact that the statement of claim is technically deficient for failure to reference Rule 17.04 requirements is not a basis to derail the action in the circumstances of this case. Rule 1.04 provides that the rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits. I direct that service of the statement of claim on de Lange is effective.

Disposition

[40] De Lange has not persuaded me that this case must be stayed, that the statement of claim needs be struck or that an order should issue setting aside the service of the statement of claim.

[41] De Lange’s motion is dismissed.

[42] Greta shall recover costs of this motion in amounts to be agreed on or fixed by me. The parties having exchanged costs demands, as directed by the court at the hearing of the motion, are well positioned to resolve costs issues and to have formed reasonable expectations of their potential jeopardy as paying party. If, however, the parties cannot resolve costs issues, they may deliver brief written submissions of no more than three pages each to my attention care of the Motions Office within thirty days.

Moore J.

DATE: May 28, 2013

[^1]: Greta’s January 2012 amalgamation with Greta Energy Inc., effective before the statement of claim issued in July 2012 may need to be addressed in this case but is not a factor for purposes of this motion.

[^2]: Club Resorts Ltd. v. Van Breda, 2012 SCC 17, 2012 S.C.C. 17, at para. 26

[^3]: Supra, at para 79

[^4]: Supra, at para 90

[^5]: For example Fairhurst v. Anglo American PLC, [2012] BCCA 257 or Vitapharm Canada Ltd. v. F. Hoffman-La Roche Ltd., 2002 62429 (ON SC), [2002] O.J. No. 50 (S.C.C.)

[^6]: British Columbia v. Imperial Tobacco Canada Ltd., 2006 BCCA 398, [2006] B.C.J. No. 2080 (CA) and Ontario v. Rothmans Inc., 2012 ONSC 22, [2012] O.J. No. 19 (S.C.J.)

[^7]: Supra, at para 89

[^8]: Tolofson v. Jensen, , 1994 44 (SCC), 1994 CarswellBC 1, 3 S.C.R. 1022 (S.C.C.), at para 43

[^9]: Supra, at para 90

[^10]: Supra, at paras.33 and 34

[^11]: Yaiguaje v. Chevron Corporation, 2013 ONSC 2527, at para 76