Inukshuk Wireless Partnership v. 4253311 Canada Inc. et al.

[Indexed as: Inukshuk Wireless Partnership v. 4253311 Canada Inc.]

Ontario Reports

Ontario Superior Court of Justice,

Newbould J.

September 6, 2013

117 O.R. (3d) 206 | 2013 ONSC 5631

Case Summary

Conflict of laws — Forum conveniens — Plaintiff being Ontario company with offices in Toronto and Montreal — Defendants being Delaware company and its Canadian-incorporated subsidiary which was managed from San Diego — Plaintiff bringing action in Ontario for declaration that letter entered into by parties constituted binding agreement for transfer to plaintiff of wireless spectrum licences — Fact that one defendant had commenced proceedings in California for declaration that letter did not create binding contractual obligations seven days before Ontario action was commenced not significant for purpose of forum non conveniens analysis in circumstances of this case — Trial likely to be held much more quickly in Ontario than in California — Most other factors neutral — Defendants failing to establish that California was clearly more convenient forum.

Conflict of laws — Jurisdiction — Real and substantial connection — Plaintiff being Ontario company with offices in Toronto and Montreal — Defendants being Delaware company and its Canadian-incorporated subsidiary which was managed from San Diego — Plaintiff bringing action in Ontario for declaration that letter entered into by parties constituted binding agreement for transfer to plaintiff of wireless spectrum licences — Defendants' acceptance of terms of letter e-mailed simultaneously to Toronto and Montreal — Plaintiff establishing presumptive factors to ground jurisdiction in Ontario court as it had good arguable case that action was in relation to contract made in Ontario and in relation to licences that were personal property in Ontario — Defendants not rebutting presumptive connecting factors — Ontario court having jurisdiction simpliciter.

The plaintiff was an Ontario corporation with offices in Toronto and Montreal. The defendant NextWave was a Delaware company based in San Diego, and the defendant 425, its wholly owned subsidiary, was a Canadian company that was managed by NextWave personnel from California. The plaintiff brought an action in Ontario for a declaration that a letter entered into by the parties was a binding agreement for the transfer of wireless spectrum licences from 425 to the plaintiff. Seven days earlier, on the day that the definitive agreement was to be signed, NextWave had commenced a proceeding in California for a declaration that it was not bound by the letter. The defendants brought an application to stay or dismiss the Ontario action on the grounds that the Ontario court lacked jurisdiction and that Ontario was forum non conveniens.

Held, the application should be dismissed.

The defendants' acceptance of the terms of the letter was e-mailed simultaneously to the plaintiffs' representatives in Toronto and Montreal. The general rule of contract law is that a contract is made in the place the acceptance is received. There was a good arguable case that the contract was made in Ontario. Thus, the plaintiff had established a presumptive connecting factor under rule 17.02(f)(i) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 to ground jurisdiction in Ontario. The plaintiff had also established a presumptive connecting factor under rule 17.02(a), as there was a good arguable case that the action was in relation to licences that were personal property in Ontario. The defendants had not rebutted the presumptive connecting factors. The Ontario court had jurisdiction simpliciter.

A trial would likely be held much more quickly in Toronto than in California. In the circumstances of this case, where the timing prevented the plaintiff from commencing the Ontario action before the California proceeding was commenced, the fact that the first action was commenced in California was not very significant in the forum non conveniens analysis. It was doubtful that an Ontario court would enforce a California order directing 425 to fulfill its obligations under the letter. The other factors relevant to the forum non conveniens analysis were neutral. The defendants had not met the burden of establishing that California was clearly the more appropriate forum.

Van Breda v. Village Resorts Ltd., [2012] 1 S.C.R. 572, [2012] S.C.J. No. 17, 2012 SCC 17, 291 O.A.C. 201, 2012EXP-1452, J.E. 2012-788, EYB 2012-205198, 429 N.R. 217, 343 D.L.R. (4th) 577, 91 C.C.L.T. (3d) 1, 10 R.F.L. (7th) 1, 17 C.P.C. (7th) 223, 212 A.C.W.S. (3d) 712, apld

Apple Corps Ltd. v. Apple Computer Inc., [2004] EWHC 768 (Ch. Div.); Central Sun Mining Inc. v. Vector Engineering Inc., [2012] O.J. No. 6137, 2012 ONSC 7331, 98 C.C.L.T. (3d) 291, 18 C.L.R. (4th) 189, 224 A.C.W.S. (3d) 308 (S.C.J.); Eastern Power Ltd. v. Azienda Communale Energia and Ambiente, 1999 3785 (ON CA), [1999] O.J. No. 3275, 178 D.L.R. (4th) 409, 125 O.A.C. 54, 50 B.L.R. (2d) 33, 39 C.P.C. (4th) 160, 90 A.C.W.S. (3d) 862 (C.A.); Saulnier v. Royal Bank of Canada, [2008] 3 S.C.R. 166, [2008] S.C.J. No. 60, 2008 SCC 58, 13 P.P.S.A.C. (3d) 117, 271 N.S.R. (2d) 1, 298 D.L.R. (4th) 193, J.E. 2008-2021, EYB 2008-149205, 381 N.R. 1, 48 C.B.R. (5th) 159, 50 B.L.R. (4th) 1, 169 A.C.W.S. (3d) 704; Tucows.com Co. v. Lojas Renner S.A. (2011), 106 O.R. (3d) 561, [2011] O.J. No. 3576, 2011 ONCA 548, 18 P.P.S.A.C. (3d) 296, 7 C.P.C. (7th) 35, 281 O.A.C. 379, 87 B.L.R. (4th) 42, 336 D.L.R. (4th) 443, 95 C.P.R. (4th) 49; UBS Wireless Services, Inc. v. Inukshuk Wireless Partnership, [2008] O.J. No. 1704, 167 A.C.W.S. (3d) 223 (S.C.J.), consd

Other cases referred to

Breeden v. Black, [2012] 1 S.C.R. 666, [2012] S.C.J. No. 19, 2012 SCC 19, 291 O.A.C. 311, 2012EXP-1450, J.E. 2012-786, 429 N.R. 192, EYB 2012-205200, 17 C.P.C. (7th) 1, 343 D.L.R. (4th) 629, 91 C.C.L.T. (3d) 153, 212 A.C.W.S. (3d) 713; Brinkibon Ltd. v. Stahag Stahl G.m.b.H., [1983] 2 A.C. 34 (H.L.); Ghana Gold Corp. (Re), [2013] O.J. No. 2660, 2013 ONSC 3284, 3 C.B.R. (6th) 220, 229 A.C.W.S. (3d) 328 (S.C.J.); Malo v. Clement, 1943 357 (ON SC), [1943] O.J. No. 237, [1943] 4 D.L.R. 773, [1943] O.W.N. 555 (H.C.J.); Molson Coors Brewing Co. v. Miller Brewing Co. (2006), 2006 35628 (ON SC), 83 O.R. (3d) 331, [2006] O.J. No. 4236, 37 C.P.C. (6th) 394, 152 A.C.W.S. (3d) 418 (S.C.J.); Ontario (Attorney General) v. Rothmans Inc. (2013), 115 O.R. (3d) 561, [2013] O.J. No. 2367, 2013 ONCA 353, 305 O.A.C. 261; Teck Cominco Metals Ltd. v. Lloyd's Underwriters, [2009] 1 S.C.R. 321, [2009] S.C.J. No. 11, 2009 SCC 11, 303 D.L.R. (4th) 385, 88 B.C.L.R. (4th) 1, 384 N.R. 126, 40 C.E.L.R. (3d) 159, [2009] 3 W.W.R. 191, EYB 2009-154787, J.E. 2009-395, 70 C.C.L.I. (4th) 1, 65 C.P.C. (6th) 199, [2009] I.L.R. I-4811, 266 B.C.A.C. 32; Van Damme v. Gelber, [2012] O.J. No. 5394, 2012 ONSC 6277 (S.C.J.)

Statutes referred to

Broadcasting Act, S.C. 1991, c. 11, s. 3(1)(b)

Canada Business Corporations Act, R.S.C. 1985, c. C-44 [as am.], ss. 2 [as am.], 18 [as am.], 238, 241 [as am.]

Court Jurisdiction and Proceedings Transfer Act, S.B.C. 2003, c. 28, s. 11

Partnerships Act, R.S.O. 1990, c. P.5 [as am.]

Radiocommunication Act, R.S.C. 1985, c. R-2, s. 5(1)(a)(i.1)

Rules and regulations referred to

Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 17.02, (f), (ii), (iv)

Authorities referred to

Sharpe, Robert J., Injunctions and Specific Performance, looseleaf (Toronto: Canada Law Book, 2012)

Walker, Janet, Canadian Conflict of Laws, looseleaf, 6th ed. (Markham, Ont.: LexisNexis, 2005- )

APPLICATION to stay or dismiss an action.

J. Thomas Curry and Brian Kolenda, for defendants, applicants.

Samuel R. Rickett, Robin P. Roddey and Kimberly Potter, for plaintiff, respondent.

[1] Endorsement of NEWBOULD J.: — The defendants, NextWave Holdco LLC ("NextWave") and 4253311 Canada Inc. ("425"), seek to stay or dismiss this action brought by Inukshuk Wireless Partnership ("IWP") on the grounds of want of jurisdiction and forum non conveniens.

[2] The dispute between the parties is whether a letter¹ signed on November 30, 2012 formed a binding agreement to compel the transfer of wireless spectrum licences from 425 to IWP. NextWave began an action in California seeking a declaration that is not bound by the Letter. IWP has not yet responded to the California action. It has begun this action in Ontario in which it seeks a declaration that the Letter is binding, damages, relief from an alleged oppression and other consequential relief.

[3] For the following reasons, I hold that this court has jurisdiction to deal with the IWP action and that it should not be stayed on the basis of forum non conveniens.

Relevant Facts

[4] IWP is a partnership between Bell Canada and Rogers Communications Inc., each partner holding a 50 per cent interest. IWP was formed under the Partnerships Act, R.S.O. 1990, c. P.5 of Ontario. IWP's registered principal place of business is in Toronto. It maintains offices in Montreal.

[5] IWP's business focuses on acquiring spectrum licences in Canada used in conjunction with wireless data networks in Canada and designing and planning those networks. IWP does not operate telecommunications services for consumers. It acts as a wholesaler of spectrum to third parties, including its own partners, Bell and Rogers. The evidence indicates that IWP carries on its business in Ontario and elsewhere across Canada. IWP does not carry on business anywhere outside of Canada.

[6] NextWave is a Delaware limited liability company. The base of its operations is in San Diego, California. Its primary business is the holding of wireless broadband spectrum licences around the world. It is a holding company for those licences, through various subsidiaries, for geographic areas in many countries, including the United States, Canada, Chile, Argentina and a number of European countries. It holds these spectrum assets through various holding companies.

[7] 425 is a corporation incorporated under the Canada Business Corporations Act, R.S.C. 1985, c. C-44 ("CBCA"). 425's registered office is in care of Davis LLP, a law firm in Vancouver, British Columbia. 425 is the indirect holding company of NextWave's spectrum for Canada, which itself is owned through another holding company, 4399773 Canada Inc. 425 is, therefore, an indirect, wholly owned subsidiary of NextWave. While 425 and 439 have their registered headquarters at the Vancouver, British Columbia offices of Davis LLP, they do not carry on any business from that location. Instead, they are managed by NextWave personnel from California.

[8] Radio wave spectrum is the medium used to provide certain services, including such things as cellphone service, satellite TV and communication services, aircraft and marine communication, "over the air" TV broadcasting, defence communications and a multitude of other wireless applications.

[9] In both Canada and the United States, the federal communications regulators have established licensing regimes to grant exclusive use for designated frequencies within specified geographic areas. In Canada, the Radiocommunication Act, R.S.C. 1985, c. R-2 (the "Act") grants to the Minister of Industry the authority to apportion and allocate the spectrum band in a manner that does not cause interference between different frequencies being used for various purposes. Pursuant to s. 5(1)(a)(i.1) of the Act, the minister issues spectrum licences for the use of specific radio frequencies within a specific geographic territory subject to specific terms and conditions of licence.

[10] Through 439 and 425, NextWave holds licences issued by Industry Canada for the use of 2.3 gigahertz ("GHz") wireless spectrum related to territory all across Canada. Some 38 per cent of the licences relate to geographic areas in Ontario. The rest relate to territories in other provinces. According to IWP, the 2.3 GHz radio wave spectrum has the appropriate technical characteristics for the provision of wireless network services using "long-term evolution" technology, the next major advance in wireless communication of high-speed data for mobile phones and data terminals.

[11] NextWave, 425 and IWP entered into the Letter on November 30, 2012, under which 425 agreed on certain terms to transfer its licences for 2.3 GHz radio wave spectrum to IWP. NextWave guaranteed the obligations of 425. The Letter was an offer by IWP to purchase the spectrum for approximately $85.9 million. The Letter stated, amongst other things:

(i) Its acceptance will create legally binding obligations on IWP and NextWave relating to exclusivity, the obligation to negotiate a definitive agreement and the purchase and sale of the licences (para. 3).

(ii) IWP and NextWave will use their reasonable best efforts to negotiate and execute a definitive agreement between NextWave and IWP relating to the transaction (the "Agreement") (para. 7).

(iii) If the Agreement is not executed by 5:00 p.m. (Eastern) on December 7, 2012, the offer will evidence the legally binding obligations of IWP and NextWave with respect to the transaction (para. 9).

(iv) NextWave and IWP agree to use their reasonable best efforts to submit an application to Industry Canada as soon as possible to transfer all of the 2300 MHz licences to IWP in a form and substance reasonably acceptable to NextWave and IWP (para. 10).

[12] The parties were unable to conclude a definitive agreement. They differ as to whether under the Letter 425 is legally required to transfer the licences to IWP.

[13] On February 28, 2013, NextWave filed a complaint for declaratory relief in the Superior Court of the State of California in San Diego and served a demand for a jury trial. NextWave provided IWP with a courtesy copy of the complaint on that date and IWP was formally served with it on March 8, 2013. In that action, NextWave seeks a declaration that the Letter does not impose any binding contractual obligation requiring it to sell the spectrum licences. 425 is not named as a party.

[14] IWP commenced its action in Ontario on March 7, 2013. It seeks a declaration that 425 is under a contractual obligation to convey the spectrum licences and an order for specific performance directing such conveyance. In addition to asserting a cause of action for breach of contract, IWP seeks relief under the oppression provisions in s. 241 of the CBCA.

... (decision continues exactly as above through paragraphs [15]–[88], unchanged)

Application dismissed.

Notes

1 IWP refers to the letter as a "Letter Agreement". NextWave and 425 refer to it a "letter of intent". I will refer to it using the neutral word "Letter".

2 See my comments in Ghana Gold Corp. (Re), 2013 ONSC 3284 (S.C.J.), at paras. 87-88.

End of Document