COURT FILE NO.: CV-12-0550-00
DATE: 2013 06 26
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Century Indemnity Co.
Mr. T. Donnelly, for the Plaintiff
Plaintiff
- and -
Viridian Inc.
Mr. R. Gillis, for the Defendant
Defendant
HEARD: May 30, 2013,
at Thunder Bay, Ontario
Regional Senior Justice H.M. Pierce
Reasons on Motion for Declaration of Forum Non Conveniens
[1] The defendant, Viridian, moves for a declaration that Winnipeg, Manitoba is the proper venue and most convenient forum for this action and seeks an order transferring this action to the Court of Queen’s Bench in Winnipeg, or in the alternative, for an order staying the proceedings.
[2] Viridian is a fertilizer producer and a successor owner to Sherritt Gordon Mines in respect of three Manitoba mine sites that are the subject of this action: the Sherridon Mine, operated from 1931 – 1951; Farley Mine, operated from 1954-1976; and Fox Lake Mine, operated from 1970 – 1985.
[3] Under Manitoba environmental regulations, Viridian was ordered to clean up pollution dating from the historical operation of its Manitoba mines. Viridian says that it has spent tens of millions of dollars in remediation ordered by the Manitoba regulator.
[4] Century is an American insurance company with its head office located in Philadelphia, Pennsylvania. As a result of certain corporate transactions, it assumed the obligations of Insurance Company of North America (“INA”) for certain insurance policies issued by INA.
[5] Viridian claims that INA issued various excess insurance policies to Sherritt for the Manitoba mines. It is noteworthy that Viridian alleges that other liability insurers also provided coverage for the mines from 1931 to the present.
[6] In this litigation, the threshold issue is whether Century has any obligation to Viridian pursuant to policies of excess coverage issued to Sherritt. Neither Century nor Viridian can produce copies of the alleged policies of insurance. In order to succeed in its case against Century, Veridian must first prove the existence and terms of the alleged policies. Century denies that such policies exist, or even if they do exist, that their terms can be proven. Viridian alleges there is documentary evidence that points to the existence of the policies.
[7] Secondly, Century submits that it could have no liability under the historical policies until the primary obligations of the underlying coverages are paid.
The Litigation Landscape
[8] In order to understand the argument, it is important to understand the nature of the litigation extant.
[9] On January 3, 2012, Royal Sun Alliance (“RSA”) commenced an action in the Superior Court of Justice at Thunder Bay, Ontario against Viridian and numerous other insurers. The action has since been transferred to Toronto on consent, including the consent of Viridian. For convenience, I will refer to the RSA action as the “Toronto action.”
[10] The Toronto action seeks declarations that RSA is not liable to Viridian for remediation or legal defence costs on liability policies for the same Manitoba mines in the same time frames listed above. In the alternative, RSA claims contribution and indemnity from a number of insurers, including from any INA excess insurance policy. Century claims that naming INA is an error as Century is the proper defendant with respect to INA policies.
[11] Viridian attorned to the Ontario jurisdiction and filed a statement of defence in the Toronto action. As well, it counterclaimed for $250 million in insurance coverage for mine site remediation. Viridian admitted in its defence to the Toronto action that Sherritt maintained its head office in Toronto.
[12] Since the Toronto action was launched, RSA has discontinued its action against INA and some other defendants. The remaining defendants have served their statements of defence. Two of the defending insurers have pleaded the principle of exhaustion: that unless and until the underlying layers of coverage have been exhausted, there can be no coverage under their policies of excess coverage. RSA has now served its affidavit of documents. Discussions about the structure of examinations for discovery are on-going.
[13] Next, in October, 2012, Viridian commenced a claim against INA in Manitoba. Upon being advised that Century was the proper party to be served, Viridian launched a new claim in Manitoba (“the Manitoba action”), naming Century as the defendant. Century was served with this statement of claim in late November, 2012. The Manitoba action seeks a declaration that Century is obliged to investigate and defend Veridian in remediating the mine sites and indemnify Veridian for those costs, including for future third party claims for remediation costs.
[14] Century immediately objected to Manitoba’s jurisdiction. It served a motion on January 10, 2013, returnable in Winnipeg on March 7, 2013, seeking dismissal of the Manitoba proceeding on the grounds that Ontario is the proper forum. A date has not yet been assigned for hearing that motion. Century has not yet filed a statement of defence in the Manitoba action.
[15] Finally, Century commenced the action which is the subject of this motion at Thunder Bay (“the Thunder Bay action”), and served Viridian on January 3, 2013. In the Thunder Bay action, Century pleaded that the historical policies do not exist and seeks a declaration that Century has no obligation to Viridian, either in respect of a duty to defend Viridian or to pay for costs of mine site remediation. Century proposes to transfer the Thunder Bay action to Toronto to have it tried at the same time as the Toronto action.
Discussion
[16] I am of the view that the motion to transfer this action to Winnipeg or stay the proceedings should be dismissed for the reasons that follow. In reaching this conclusion, I have proceeded on the basis of counsel for Century’s submission that he will seek a transfer of this action to Toronto, so that it can be heard at the same time or immediately following the Toronto action. In response to questions from the court as to why this action was started in Thunder Bay, he replied that Century intended to keep this litigation aligned with the RSA litigation, which was first launched in Thunder Bay; however it was subsequently transferred to Toronto.
[17] The seminal case dealing with the principles of forum non conveniens is Club Resorts Ltd. v. Van Breda, 2012 SCC 17, 1 S.C.R. 572. Both parties rely on this case as authority for their respective conflicting positions. Like the tale of the blind men examining the elephant, each party sees different principles in the case that it says support its position.
[18] Club Resorts was a case in which vacationers suffered injury or death in Cuba. Thereafter, civil suits for breach of contract and negligence were launched in Ontario. The company managing the resorts where the accidents happened was incorporated in the Cayman Islands. One of the injured parties booked the vacation through an Ontario travel agent. The jurisdiction of the Ontario court was challenged on motion; the Supreme Court of Canada dismissed the challenge, finding that the Ontario court had jurisdiction. In making its ruling, the court also commented on the question of forum conveniens.
[19] In the case at bar, the defendant conceded that jurisdiction of the Ontario court is not in issue; both Manitoba and Ontario courts have jurisdiction over the subject matter. Once jurisdiction is established, the question becomes: what is the most convenient forum to deal with this litigation? The court cannot decline to exercise its jurisdiction unless the defendant invokes forum non conveniens.
[20] The burden is on the defendant to show why the forum should be displaced in favour of another forum. At para. 103 of Club Resorts, the court held:
…. The defendant must identify another forum that has an appropriate connection under the conflicts rules and that should be allowed to dispose of the action. The defendant must show, using the same analytical approach the court followed to establish the existence of a real and substantial connection with the local forum, what connections this alternative forum has with the subject matter of the litigation. 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.
[21] At para. 109 of Club Resorts, the court held that when hearing an application for a stay of proceedings, the court must determine the jurisdiction which may better dispose of the litigation fairly and efficiently. At para. 110, the court set out factors that might be considered, depending upon the context. These include:
• locations of the parties and witnesses;
• the cost of transferring the case to another jurisdiction or of declining the stay;
• the impact of a transfer on the conduct of the litigation or on related or
parallel proceedings;
• the possibility of conflicting judgments; problems related to the recognition
and enforcement of judgments; and the relative strengths of the connections
of the two parties.
[22] The Ontario Court of Appeal previously considered forum conveniens factors in Muscutt v. Courcelles (2002), 2002 CanLII 44957 (ON CA), 60 O.R. (3d) 20 at para. 41. The factors in Muscutt that are relevant to this case include:
• the avoidance of a multiplicity of proceedings;
• geographical factors suggesting the natural forum; and
• any juridical advantage to the plaintiffs or juridical disadvantage to the defendant.
[23] In considering the forum conveniens analysis in the context of a contractual dispute, the Court of Appeal suggested the following additional factors in Incorporated Broadcasters Limited v. Canwest Global Communications Corp. (2003), 2003 CanLII 52135 (ON CA), 63 O.R. (3d) 431 at para. 61:
• the location where the contract in dispute was signed;
• the applicable law of the contract;
• the jurisdiction in which the factual matters arose; and
• the residence or place of business of the parties.
[24] The defendant relies on Whirlpool Canada Co. v. National Union Fire Insurance Co. of Pittsburgh, PA, 2005 MBQB 205 as persuasive authority for this case. In Whirlpool, an American insurer challenged the jurisdiction of the Manitoba court to hear an insurance claim for damage sustained in Manitoba. The court held that it had jurisdiction as the policy was issued to a Canadian insured, and, if the loss were adjusted in Manitoba, the insurer was deemed to be carrying on business in Manitoba pursuant to the terms of the Manitoba Insurance Act. The court also held that there was a real and substantial connection to Manitoba and there was no other forum that was clearly more appropriate.
[25] In my view, the facts in Whirlpool distinguish it from the case at bar. In Whirlpool, there is no other competing forum where litigation involving the same claims is already underway. There was no risk of multiplicity of proceedings, conflicting judgments, or duplication of court resources. Rather, there is a flavour of an American insurer that is forum shopping.
[26] The defendant submits that the factors identified in the jurisprudence are either neutral or favour Manitoba. In particular, Viridian argues that the evidence giving rise to this action, the key witnesses and the evidence of environmental damage all favour the Manitoba forum.
[27] I do not agree. Assuming that Viridian can prove a contract of insurance with the plaintiff, the coverage alleged is historic and secondary to policies issued for the Manitoba mines by other insurers who are named in the Toronto action.
[28] Neither Viridian nor Century is a Manitoba-based corporation. Viridian’s predecessor, Sherritt Gordon, had its head office in Toronto. There is no evidence as to where any contract of insurance was signed or the applicable law under any contract. There is no evidence of any juridical advantage or disadvantage in the selection of the forum.
[29] As Viridian has already attorned to the Ontario jurisdiction in the Toronto action, it cannot be heard to complain about Ontario’s jurisdiction in this litigation, and it does not do so.
[30] Viridian has not identified any witnesses, let alone key witnesses, located in Manitoba. Given that the claims sought to be litigated reach back over many decades, there is no assurance that the witnesses, if they are alive, continue to reside in Manitoba. Furthermore, Viridian has counterclaimed in the Toronto action for damages from different insurers relating to the same claims. There is no evidence that the witnesses for the Toronto action will be different than those in the case at bar.
[31] In order to prove its counterclaim, Viridian will have to locate its witnesses and produce them in Toronto for the trial. Having elected to counterclaim in the Toronto action, Viridian cannot now be said to complain about the cost of bringing witnesses to Toronto to prove its counterclaim. Indeed, there is no evidence about the cost of transferring the case to another jurisdiction.
[32] As to the impact of a transfer on the conduct of the litigation or on related or parallel proceedings, there is a positive disadvantage to transferring this case to Manitoba. The Toronto action involves four potential primary insurers and eleven potential excess or umbrella insurers. If the Thunder Bay case is transferred to Manitoba, the Court of Queen’s Bench would have only one of the alleged excess insurers before it, leading to a real risk of inconsistent verdicts compared to the Toronto action. The threshold issue in this cluster of litigation is coverage. Damages are a secondary issue.
[33] As Century has demonstrated, there are a multitude of issues common to the Toronto, Winnipeg and Thunder Bay actions. These include a consideration of proof of the policies issued; how the policies interact; whether the regulator’s action is covered by the terms of the relevant policies; the extent of damages; the extent of future liability; whether any exclusions apply; whether disposal of mine tailings was intentional and therefore not covered by insurance; when coverage started and stopped; whether there was timely notice of claims; whether damages have been mitigated; whether Viridian is entitled to coverage available to Sherritt; the application of any limitation periods; and the allocation of findings of liability, if any, among other issues.
[34] If RSA is found to be liable to Viridian, Century will only be called on to pay if RSA’s limits are exhausted. Thus, recognition and enforcement of the judgment favours having one comprehensive place for trial.
[35] In my view, a multiplicity of proceedings and the risk of inconsistent verdicts could be avoided by the Ontario court taking carriage of the action, rather than having litigation about the same issue split between the courts of two provinces. Consider, for example, if the Manitoba court determined that the environmental damage was caused intentionally by Viridian or its predecessor, but the Ontario court found that it was unintentional. Consider if the Manitoba court awarded Viridian damages of five million dollars, but the Ontario court awarded damages of two hundred million dollars on the same claims. The contradictions would be exacerbated by any duplication of appeals heard by the courts of appeal in two provinces.
[36] Section 138 of the Courts of Justice Act, R.S.O. 1990, c. C43 requires the courts to avoid a multiplicity of proceedings as far as possible. There are real economies in keeping the potential insurers for the same claims together in the same litigation. If the cases are kept together, common production and discoveries could be arranged; interlocutory rulings would govern all parties; common pretrials could be conducted; and settlement negotiations would have all relevant parties at the table. On the other hand, if the motion to transfer the Thunder Bay action to Manitoba is granted, the Court of Queen’s Bench will not have all of the relevant insurers before it.
[37] The existence of the Toronto litigation cannot be ignored when discussing the most convenient forum. The Toronto action creates a centre of gravity for the entire cluster of litigation. From the perspective of the court, there are efficiencies in keeping all relevant parties together. For example, there will be one pretrial judge and one trial judge instead of two. The matter could be case-managed to keep it moving forward and make best use of court time.
[38] For all of these reasons, the motion is dismissed. If the parties cannot agree on costs, an appointment may be obtained from the trial coordinator within thirty days to argue costs, failing which costs will be deemed to be settled. Costs submissions are not to exceed five pages. Counsel have leave to appear to argue costs by teleconference if so advised, upon filing the appropriate request with the trial coordinator.
Regional Senior Justice H.M. Pierce
Released: June 26, 2013
COURT FILE NO.: CV-12-0550-00
DATE: 2013 06 26
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Century Indemnity Co.
Plaintiff
- and –
Viridian Inc.
Defendant
REASONS ON MOTION FOR DECLARATION OF FORUM NON CONVENIENS
Pierce, RSJ
Released: June 26, 2013
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