ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO: CV-12-443270
DATE: 20130726

B E T W E E N:

Lixo Investments Ltd.
Plaintiff

• and -

Gowling, Lafleur, Henderson and Guy Poitras
Defendants

Charles Wagman,
for the Plaintiff

Angus T. McKinnon,
for the Defendants

HEARD: June 4, 2013

FIRESTONE J.

[1] The defendants bring this motion pursuant to Rules 17.06, 21.01 (3) and 37 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 and Section 106 of the Courts of Justice Act, R.S.O. 1990 c. C. 43 for an order dismissing or, in the alternative, staying this action on the grounds that this Court lacks jurisdiction simpliciter, or, in the alternative, is not the convenient forum (forum non conveniens) for this action to proceed.

The Parties

[2] The plaintiff, Lixo Investments Ltd. (“Lixo”), is a privately owned Ontario company established in 1978 and owned by the Girotti family. It carries on business investing in real estate in Canada, both through direct ownership of real estate and through investment in other real estate companies.

[3] The defendant, Gowling Lafleur Henderson, (“Gowlings”), is a law firm with offices in Montreal and Toronto. The defendant, Guy Poitras, (“Poitras”), is a Quebec lawyer practicing in Montreal. At all material times he was a partner at Gowlings’ Montreal office.

The Action

[4] Lixo is suing Gowlings and Poitras for $5,000,000. Lixo had retained the Gowlings Montreal office to take over carriage of a commercial litigation matter (the “Acmon action”) and alleges negligence and breach of contract in the provision of their legal services to them. Lixo claims that it entered into a settlement of certain complex litigation being conducted in the province of Quebec based upon erroneous legal tax advice, provided by Gowlings through its legal counsel, one of whom worked out of their Toronto office. The Toronto lawyer is not a named defendant in this action.

[5] Lixo alleges that it would never have agreed to the settlement of the matter had it known that taxes were required to be paid on the settlement funds.

[6] Lixo subsequently litigated in Quebec the issue of whether the Quebec settlement was binding based on the allegedly erroneous tax advice provided by Gowlings. That case was lost. Following the Quebec court’s decision enforcing the settlement and before this action was commenced, Gowlings began legal proceedings against Lixo in Quebec seeking payment of its legal fees. Lixo entered an unconditional appearance before the Québec court. That action is ongoing.

Position of the Parties

[7] The defendants argue that the subject matter of this action is almost wholly concerned with and connected to the activities of the plaintiff and defendants in the province of Québec regarding a contract made in the province of Quebec, governed by the laws of Quebec.

[8] They highlight the fact that with only one exception, all of the Gowlings lawyers who were involved in the activities giving rise to this action are resident in Quebec and were employed with the Gowlings Montreal office with which the retainer agreement was entered into. The one lawyer at Gowlings’ Toronto office who had some minimal involvement in this matter is not a named defendant in this lawsuit. They argue that all the advice given by the only named Quebec lawyer was given through Gowlings’ Montreal office. The relationship between the parties was initiated and conducted entirely through Gowlings’ Montreal office. The litigation to which the retainer related was pursued in Quebec.

[9] The plaintiff argues that the commission of the tort in this matter took place, in part, in Ontario by an Ontario lawyer connected with Gowlings’ Toronto office. The involvement of the Toronto lawyer as it relates to Ontario plaintiff was not, as the defendant suggests, brief and incidental.

[10] They state that this action does not concern the services obtained in general, but rather is based upon the particular advice regarding one particular issue, namely, Gowlings’ advice concerning the tax consequences of the proposed settlement. Such advice, they argue, was given by both a Montreal and the Ontario lawyer through Gowlings’ Montreal and Toronto offices. They state that the fact that the retainer agreement was with the Montreal office of Gowlings does not mean that the advice given by the Toronto lawyer is unimportant or incidental. They argue that because the plaintiff is an Ontario corporation it specifically requested that the tax advice given by the Montreal lawyer be confirmed by an Ontario lawyer.

The Law

[11] In Club Resorts Ltd. v. Van Breda, 2012 SCC 17, the Supreme Court Canada outlined the approach taken in determining whether a domestic court should assume jurisdiction over a foreign defendant. The Court reaffirmed the two-part test be applied; namely, (1) jurisdiction simpliciter and (2) forum non conveniens. Jurisdiction is a legal issue. Forum non conveniens is discretionary.

[12] The approach to be taken on a motion such as this is as follows:

(a) The court is to inquire whether presumptive connecting factors exist between the litigation and the forum. The plaintiff bears the onus of establishing that a presumptive connecting factor exists.

(b) The court is to then decide whether the presumption of jurisdiction resulting from the connecting factors can be rebutted. The defendant bears the onus of rebutting any presumptive connecting factor.

(c) If a presumptive connecting factor exists and has not been rebutted, the court is to assume jurisdiction subject to the application of forum non conveniens.

(d) If a presumptive connecting factor does not exist or where it has been rebutted the court shall stay or dismiss the action.

[13] In Van Breda the Court stated the desired goal in adopting this approach is to bring greater clarity and predictability to the jurisdictional analysis.

Jurisdiction Simpliciter - The “Real and Substantial Connection” Test

[14] The first part of the analysis is to determine whether any one of the four “presumptive connecting factors” exists which would prima facie entitle the court to assume jurisdiction over the dispute. These factors are as follows:

(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.

[15] The plaintiff argues that two of the presumptive connecting factors exist in this case, namely:

1. the defendant, Gowlings, carries on business in Ontario, and

2. the tort (negligent tax advice) was given in Ontario by an Ontario lawyer employed by the Gowlings Toronto office.

Does the Defendant, Gowlings, Carry on Business in Ontario?

[16] In analyzing this issue, the following comment by the Supreme Court of Canada in Van Breda at para. 87 is instructive:

Carrying on business in the jurisdiction may also be considered an appropriate connecting factor. But considering it to be one may raise more difficult issues. Resolving those issues may require some caution in order to avoid creating what would amount to forms of universal jurisdiction in respect of the tort claims arising out of certain categories of business or commercial activity. Active advertising in the jurisdiction or, for example, the fact that a Web site can be accessed from the jurisdiction would not suffice to establish that the defendant is carrying on business there. The notion of carrying on business requires some form of actual, not only virtual, presence in the jurisdiction, such as maintaining an office there or regularly visiting the territory of the particular jurisdiction. [Emphasis added]

[17] It is clear that Gowlings carries on business in Ontario. Gowlings has an actual presence in Ontario through their Toronto office. I, therefore, find that a rebuttable presumption of jurisdiction exists. The burden of rebutting this presumption rests with the moving party.

Was the Tort Committed in Ontario?

[18] The evidence before me is that the Gowlings’ Montreal lawyer consulted with a lawyer from Gowlings’ Toronto office. There was also a telephone call in which the Montreal and Toronto lawyers with a representative of the plaintiff participated to discuss the tax consequences of settlement. The plaintiff argues that the negligent services which forms the subject matter of this litigation (situs of the tort) was, therefore, partly committed by a Toronto lawyer at Gowlings. While the degree of involvement of the Toronto lawyer is unclear the defendants do not deny some involvement. I find that the tort alleged as against the Toronto lawyer for which the plaintiff alleges Gowlings is responsible was committed in Ontario. I therefore find that a presumption of jurisdiction exists. This, as well, is a rebuttable presumption.

Has the Presumption of Jurisdiction Been Rebutted by the Defendants?

[19] The burden of rebutting the presumption of jurisdiction rests with the defendants. They must establish facts demonstrating that the presumptive connecting factor(s) do not point to any real relationship between the subject matter of the litigation and the forum, or points only to a weak relationship between them. (Van Breda at para. 95.)

[20] In Van Breda at para. 96 The Supreme Court of Canada stated in part as follows:

And where the presumptive connecting factor is the fact that the defendant is carrying on business in the province, the presumption can be rebutted by showing that the subject matter of the litigation is unrelated to the defendant’s business activities in the province. On the other hand, where the presumptive connecting factor is the commission of a tort in the province, rebutting the presumption of jurisdiction would appear to be difficult, although it may be possible to do so in a case involving a multi-jurisdictional tort where only a relatively minor element of the tort has occurred in the province.

[21] In this case I find the presumptive connecting factor of carrying on business in the province has not been rebutted. This is because the subject matter of this litigation, namely, the alleged negligent tax advice which it alleged was given, in part, by lawyers from Gowlings’ Toronto office is directly related to the defendants’ business activities in Ontario. Such alleged tax advice has been specifically pleaded at para. 13 of the statement of claim.

[22] Regarding the presumptive connecting factor of the commission of the tort in Ontario, I find that this presumption has not been rebutted. I say this because I do not believe that only a minor element of the tort occurred in Ontario. One of the issues in this law suit is whether, as pleaded, the tax advice given specifically by a lawyer from the Toronto office of Gowlings was correct.

[23] Based on the above I find that this court has jurisdiction simpliciter over this action.

Forum Non Conveniens

[24] Where jurisdiction is established this court may stay the proceedings on the basis of forum non conveniens. A clear distinction is to be drawn between the existence and the exercise of jurisdiction. The obligation is on the defendant to invoke forum non conveniens and demonstrate why the court should decline to exercise its jurisdiction. The court is to ensure that the parties are treated fairly and that the process for resolving their litigation is efficient. The defendants must show that the alternative forum is clearly more appropriate. The factors that a court may consider in deciding whether to apply forum non conveniens may vary depending on the context. (Van Breda, paras. 100-110.)

[25] In Young v. Tyco International of Canada (2008), 2008 ONCA 709, 92 O.R. (3d) 161 (Ont. C.A.) para. 26, the court set out the list of factors the court is to consider in exercising their discretion. Laskin J.A. stated as follows:

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:

(1) the location where the contract in dispute was signed;

(2) the applicable law of the contract;

(3) the location of witnesses, especially key witnesses;

(4) the location where the bulk of the evidence will come from;

(5) the jurisdiction in which the factual matters arose;

(6) the residence or place of business of the parties;

(7) the laws of legitimate juridical advantage.

[26] Laskin J.A. in Young stated at para. 27 that these factors are not exhaustive, although in practice they are the ones typically considered. Some of these factors may not be relevant to a given case. As well, the exercise is not mathematical. Motion judges assign each factor the weight they consider appropriate to the case. The overall balancing of these factors reflects the discretionary nature of the decision regarding forum non conveniens.

[27] Laskin J.A. in the Young decision highlighted three other principles which should guide a motion judge’s exercise of discretion in the forum non conveniens analysis. These can be summarized as follows.

1. The standard to displace the plaintiff’s chosen jurisdiction is high. Before Ontario motion judges decline jurisdiction, the existence of a more appropriate forum must be clearly established to displace the forum selected by the plaintiff (para. 28).

2. The balancing of the relevant factors should aim to achieve the twin goals of efficiency and justice (para. 29).

3. Because the forum non-conveniens motion is typically brought early in the proceedings, a prudential, not an aggressive, approach to fact-finding should be adopted (para. 31).

[28] Based on the facts in this case, I am satisfied for the reasons set forth below that this court should decline to exercise its jurisdiction. In my view, Quebec has the closest connection with the action and is clearly the more appropriate forum to hear this case. I have come to this conclusion for the following reasons:

The Retainer Agreement - The Location Where the Contract in Dispute was Signed

[29] The relationship and contract between the parties was created by way of a retainer agreement. The terms of the retainer agreement were reduced to writing in the form of a letter dated September 14, 2009 from Gowlings’ Montreal office and signed by Poitras, a Montreal lawyer and partner with that office. This retainer agreement followed various telephone calls between Poitras and Ms. Girotti on behalf of Lixo. At all relevant times, Poitras was in Montreal and Ms. Girotti was in Spain. Neither Gowlings’ Toronto office nor any lawyer from that office had any part in the formation of the retainer between the parties.

[30] The Plaintiff retained Gowlings’ Montreal office (not Toronto) to take over an existing Quebec action. The Plaintiff in paragraph 1 of the statement of claim, seeks damages for negligence and breach of contract for alleged negligent tax advice regarding settlement of that Quebec (not Ontario) action. The statement of claim issued in this matter named Gowlings as well as one Gowlings Montreal lawyer, Poitras, who signed the retainer letter dated September 14, 2009 and had carriage of the file. The Toronto lawyer who allegedly gave incorrect tax advice is not a defendant. The other Montreal lawyer who Mr Poitras consulted for tax advice is also not a defendant.

[31] It is clear that Gowlings’ Montreal office had carriage of this matter. Further, most of the communications regarding tax payable on the Québec settlement took place between Gowlings’ Montreal office, their lawyers and the plaintiff. The Toronto lawyer from Gowlings did have some involvement regarding the specific issue of tax advice but not to the same degree as Montreal office. Further, it is important to note that the plaintiff is not limiting his Ontario negligence action to work done by Gowlings’ Toronto office or its lawyer but rather is alleging negligence against Gowlings’ Montreal and Toronto office. The retainer agreement is not, as the plaintiff contends, irrelevant to the determination of the issues in this action.

[32] At para. 27 of the statement of claim the plaintiff specifically pleads as follows:

The Plaintiff states that an implied term of the Retainer Agreement with the Defendants was that all legal advice given to the plaintiff would not be negligent advice.

[33] It was in the context of and pursuant to the retainer agreement that the Montreal office of Gowlings arranged for tax advice to be given by both a Montreal and an Ontario lawyer. The plaintiff is suing for breach of contract and the only contract pled is the retainer agreement. The location where the contract in dispute was signed strongly favours Quebec.

The Applicable Law of the Contract

[34] The plaintiff retained Gowlings’ Montreal office to represent them in a Quebec dispute. The plaintiff pursuant to the retainer requested tax advice. The Montreal counsel consulted with a tax lawyer from the Montreal office and, at the plaintiff’s request, consulted with a Toronto lawyer from his firm who gave tax advice.

[35] The plaintiff’s statement of claim pleads as follows at para. 13:

The Defendants subsequently advised that they had confirmed the tax advice they had given the plaintiff with another lawyer at the Toronto office of the Defendant firm. The Defendants advised both orally and in writing that the tax advice they had given the plaintiff was correct.

[36] This action is framed in both contract and tort. In claims based on the provision of professional services, liability may be concurrent in tort and contract (see Consumers Glass Co. Limited v. Foundation Co. of Canada, 1985 159 (ON CA), [1985] O.J. No.2586 (C.A.) para. 30).

[37] The claims against Gowlings and its lawyers would be governed by Quebec law given that the allegations in tort arising from the contractual breach of the retainer agreement are governed by the same law as that of the contract (see Eastern Power Limited v. Azienda Communale Energia and Ambiente (1999), 1999 3785 (ON CA), 178 D.L.R. (4th) 409 Ont. C.A. and Shinoff v. BMO Nesbitt Burns Inc., [2010] ONSC 926).

[38] The applicable law of the contract the retainer agreement strongly favours Quebec.

Location of Witness, Especially Key Witness

[39] While the plaintiff is an Ontario Corporation, its representatives involved in the retainer and the Quebec action and who made the decisions on behalf of the plaintiff reside in Italy and Spain. They do not, based on the evidence before, me reside primarily in Toronto.

[40] All of the lawyers involved in this matter pursuant to the retainer and in addition, who either arranged for or gave alleged negligent tax advice reside in the Montreal. Only one lawyer from Gowlings’ Toronto office resides in Toronto.

[41] The Plaintiff intends to call an Ontario tax expert regarding liability as well as an Ontario accountant on the damages. They submit that none of Acmon’s lawyers will be called as their evidence is not relevant. As well, they argue that Lixo will not be calling anyone from the Montreal office of Price Waterhouse Coopers or Deloitte Touche as expert witnesses on damages as the defendants contend, but rather will call their tax expert from Davies Ward Phillips & Vineberg who is in Toronto.

[42] The defendants submit that Acmon’s representatives who participated in the Acmon action and the settlement discussions, are located Quebec. They argue that their testimony will be necessary for the plaintiff to establish the likelihood of any loss. It is unclear whether the defendants will call any expert witnesses.

[43] The location of witnesses, especially key witnesses, appears to marginally favour Quebec.

The Location Where the Bulk of the Evidence Will Come From

[44] The plaintiff argues that all of Lixo’s relevant documents are located at Lixo’s office in Toronto. I note, however, that Gowlings’ file is in Montreal. The factor is evenly divided between the parties.

The Jurisdiction in Which the Factual Matters Arose

[45] It is clear, as indicated above, that the solicitor-client relationship at issue in this matter originated in Quebec and was conducted entirely through the Gowlings Montreal office. All of the material events surrounding the retainer, save and except the tax advice of one Toronto lawyer originated from Gowlings’ Montreal office. As well, all tax advice given was in relation to the settlement of a Quebec action. The plaintiff’s representatives were never in Ontario when such tax advice was received by them. I note that greater importance is to be placed on the location of the dispute and the jurisdiction in which the factual matters arose (Incorporated Broadcasters Ltd. v. Canwest Global Communications Corp., 2003 52135 (ON CA), [2003] O.J. No.560 Ont.C.A). The jurisdiction in which the factual matters arose strongly favours Quebec.

The Residence and Place of Business of the Parties

[46] The plaintiff corporation is in Toronto. At all material times its business decisions were made from Italy or Spain and not from Toronto. The defendant, Gowlings, has offices in Toronto and Montreal. The defendant, Poitras, is in Montreal. No other lawyers are defendants in this action. Therefore, the residence or place of business of the parties in this lawsuit favours Quebec.

The Laws of a Legitimate Juridical Advantage

[47] The defendants advised the court during oral argument that the limitation period for the plaintiff to advance a claim in Quebec for the same relief sought in this action has not expired. The plaintiff has not provided any evidence to the contrary. I do not believe plaintiff will suffer a loss of juridical advantage.

Other factors – The Desirability of Avoiding a Multiplicity of Legal Proceedings

[48] There is already an ongoing civil action in Quebec by Gowlings for unpaid legal fees regarding services provided pursuant to the retainer agreement at issue in this action. This is in my view a relevant additional factor to consider. This action could be brought as a counterclaim in the ongoing Quebec proceeding.

Conclusion

[49] In my view, Quebec has the clearest connection to the matters at issue in this action.

[50] Based on the principles of fairness and justice, Quebec is clearly the most appropriate forum for resolving this claim. For the above reasons I exercise my discretion to stay the action.

[51] If the parties cannot agree on costs, written submissions with a costs outline totaling no more than three pages may be submitted by the defendants within 15 days, and the plaintiff 10 days thereafter.

FIRESTONE, J.

DATE: July 26, 2013

JUDGMENT

FIRESTONE J.

Released: July 26, 2013