ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-12-0703-00
DATE: 2014-07-31
B E T W E E N:
Shane Kavanagh
Ernest Coetzee, for the Plaintiff
Plaintiff
- and -
Magna Exteriors and Interiors Corporation O/A Servicios Decoplas, S.A. de C.V.
David Bannon, for the Defendants
Defendants
HEARD: February 5, 2014
ENDORSEMENT
Barnes, J.
INTRODUCTION
[1] This dispute stems from an employment contract. This is an application by the Defendants: Magna Exteriors and Interiors Corporation (“MEI”) O/A Servicios Decoplas, S.A. de C.V. (“Decoplas”) for an order dismissing the Plaintiff’s (“Shane Kavanagh”) action; in alternative staying the action; in the further alternative an order striking the statement of claim without leave to amend and the costs of this action.
[2] The Plaintiff filed no written materials in response; however, counsel appeared and made oral submissions on his behalf.
[3] Upon reading the materials filed and after considering the submissions of counsel, the Plaintiff’s action is stayed. There is another proceeding involving, the same subject matter, pending in another jurisdiction – Mexico.
[4] Pursuant to the provisions of an employment contract the parties agreed that any dispute arising from that contract shall be resolved in only one jurisdiction – Mexico.
BACKGROUND FACTS
[5] The Plaintiff filed no materials. The only sworn evidence before this court is the affidavit of Kelly James Harbridge which is unchallenged. The Statement of Claim was also filed.
[6] The Plaintiff was employed by Magna Group of Companies (“MGC”) in 1995. This continued until January 1, 2006, when he was hired by Decoplas. At that time, the Plaintiff signed an employment contract dated July 1, 2006. This contract included a “Sole Employer Clause” and a “Sole Jurisdiction Clause”. These provisions form the basis of the Defendants’ motion.
[7] MEI is a company based in Ontario and a subsidiary of Magna International Inc. Decoplas is a subsidiary of Magna Exteriors and Interiors Holding Inc. (“MEIH”) and Carmor, S.A. de C.V. (“Carmor”). Decoplas is incorporated pursuant to the laws of Mexico; MEIH is incorporated in the State of Delaware and Carmor is a Mexican Corporation.
[8] On or about February 22, 2010, the Defendants are alleged to have terminated the Plaintiff’s employment. On or about March 22, 2010, the Plaintiff commenced an action against the Defendants alleging wrongful dismissal and breach of contract. This action was commenced in Mexico (“the Mexico action”).
[9] The Mexico action was commenced before the Local Board of Conciliation and Arbitration of Cuautitian – Texcco Valley (“the Local Board”).
[10] On November 29, 2010, the local board determined that it lacked jurisdiction and referred the matter to the Federal Conciliation and Arbitration Board (“the Federal Board”). The Federal Board has accepted jurisdiction and the matter is currently before it.
[11] On February 21, 2012, the Plaintiff commenced this action in Ontario (“the Ontario action”). The Defendants have filed a statement of defence and counter claim.
ISSUES
(a) Should this action be dismissed or stayed because this court lacks jurisdiction over its subject matter?
(b) Should this action be dismissed or stayed because another proceeding involving the same subject matter is pending?
(c) Should this action be stayed or dismissed because it is an abuse of process?
POSITION OF THE PARTIES
[12] The Defendants submit that due to the Sole Employer and Sole Jurisdiction provisions of the July 1, 2006, employment contract, this court has no jurisdiction to hear this case and therefore the action should be dismissed. The Defendants argue that the Plaintiff has accepted the terms of the employment contract by commencing an action in Mexico in accordance with the terms of the contract.
[13] The Plaintiff submits that the action before this court is different from the proceeding in Mexico. The Plaintiff explains that the Statement of Claim covers a period commencing in 1995, when he was employed by the MGC. The Plaintiff argues that the Mexico action only covers the period from 2006 to 2010. The action commenced in Ontario is intended to pierce the corporate veil.
[14] The Plaintiff argues that because the Ontario action is a different action this court has jurisdiction to deal with this matter. This court is urged to grant a temporary stay until the Mexico proceedings are completed.
[15] Defendants argue that the provisions of the employment contract terminated any previous relationship between the MGC and the Plaintiff. Decoplas became the Plaintiff’s sole employer and the parties agreed that Mexico shall be the sole forum for resolving any disputes thus this court has no jurisdiction to even entertain the Plaintiff’s request for a temporary stay.
[16] The Defendants further submit that the Plaintiff’s attempt to classify the Ontario action as a different action is untenable because the employment contract terminated any employment relationship between MGC and the Plaintiff.
APPLICABLE RULE
[17] The Defendants’ motion for dismissal or stay of the Plaintiff’s action is brought pursuant to rule 21.01(3) of the Rules of Civil Procedure:
21.01(3) A Defendant may move before a judge to have an action stayed or dismissed on the ground that:
(a) the court has no jurisdiciton over the subject matter of the action.
(c) another proceeding is pending in Ontario or another jurisdiction between the same parties in respect of the same subject matter;
(d) the action is frivolous or vexatious or is otherwise an abuse of the process of the court, and the judge may make an order or grant judgment accordingly.
EMPLOYMENT CONTRACT
[18] The Defendants rely on Clauses 21 and 22 of the employment contract in support of the remedy sought:
Clause 21: Sole Employer Clause
The Employee acknowledged that any communication that he may generally have with representatives or employees of Decoplas, Carmoc, Teanik, Decoma International Corp. or any other member of the Magna Group, shall not imply, in any manner whatsoever, the existence of a labor relationship between the Employee and any of the aforesaid companies, since the Employee shall render subordinated services solely to Servicios Decoplas, S.A. de C.V. which the Employee hereby acknowledges as his sole employer and the only entity from which he is entitled to receive slaray and labor benefits as provided herein.
Clause 22: Sole Jurisdiction Clause
Both parties agree that any matters not provided for herein shall be governed by the provisions of the Federal Labor Law of Mexico, the Social Security Law and their regulations, and the Internal Work Regulations established to govern the work to be performed for the Employer, and that in any case of conflict they submitt to the Local Board of Conciliation and Arbitration of the Cuautitlan – Texcoco Valley.
DOES THIS COURT HAVE JURISDICTION?
[19] This court has jurisdiction and therefore this matter cannot be stayed or dismissed on the basis of a lack of jurisdiction.
[20] This court will have jurisdiction over this action if the facts underlying this action have a “real and substantial connection” to Ontario: Club Resorts Ltd. v. Van Breda, 2012 SCC 17, 2012 S.C.C. 17 at para 26; Greco v. Flemming (2003), 33 CPC (5th) 238 at paras 15-17 (OSCJ).
[21] The employment contract was executed in Mexico, the Plaintiff preformed his employment duties in Mexico; the alleged termination of the Plaintiff’s employment occurred in Mexico. Therefore, there is no “real and sustantial” connection to Ontario.
[22] Clause 22 of the contract creates a sole jurisdiction for the resolution of all employment contract related disputes. Thus the parties agreed that any dispute between the parties would be resolved only in accordance with the Laws of Mexico and in effect by the courts of Mexico.
[23] Despite the existence of the choice of forum clause, the Defendants choose to file a statement of defence and counterclaim in Ontario; by this action the Defendants attoned to the jurisdiction of the Ontario Courts: See Momentus.ca Corp.v. Canadian American Asso. of Professional Baseball Ltd. 2010 ONCA 722 at para 35. Therefore, this court has jurisdiction over this matter. The question is whether this court should assume its jurisdiction in the face of a choice of forum clause.
SHOULD THIS COURT ASSUME IT’S JURISDICTION?
[24] This Court should not assume its jurisdiction in this matter because the the employment contract includes a choice of forum clause i.e. Clause 22. The parties agreed that there will be only one jurisdiction for the resolution of disputes arising out of the employment contract that jurisdiction is Mexico.
[25] None of the parties challenges the validity of the employment contract. It is clear that both parties are bound by the terms of the employment contract. The Plaintiff has already commenced this action in Mexico. The Defendants are defending the action in Mexico. Both parties have attoned to the jurisdiction of Mexico to stettle disputes stemming from the employment contract.
[26] The Supreme Court of Canada in Z.I. Pompey Industries v. E C V - Line N. V. 2003 SCC 27, [2003] S.C.J. No. 23 has held that these choice of forum selection clauses should be enforced unless there is “strong cause” not to enforce it.
[27] The effect of Z.I. Pompey is that the Plaintiff bears the burden of showing why a stay should not be granted: see Momentus.ca Corp. v. Canadian American Asso. of Professional Baseball Ltd. 2010 ONCA 722 at para 32.
[28] In this case the Plaintiff conceeds that the choice of forum clause should be enforced and a stay granted pending the resolution of the Mexican Action. With the Plaintiff’s concession the Defendants have effectively abandoned the earlier request for a stay of this action; effectively characterising the relief sought solely as a dismissal of the action on the basis of absence of jurisdiction of the Courts of Ontario over the subject matter. I have concluded that this court has jurisdiction over this matter.
[29] With the Plaintiff’s concession that a stay should be granted and my conclusion that this action cannot be stayed or dimissed on the basis of an absence of jurisdiction, the next question to be answered is whether this action should be dismissed on the basis of an abuse of process.
SHOULD THIS ACTION BE DISMISSED DUE TO AN ABUSE OF PROCESS?
[30] This is not a case where the action should be dismissed on the basis of an abuse of process. In this case a stay of proceedings is the appropriate remedy.
[31] The court has an inherent jurisdiction to stay or dismiss an action where it concludes that it will be unfair to continue the litigation or where continuing the litigation will bring the administration of justice into disrepute: Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, [2003] S.C.J. No.64.
[32] In circumstances where parties have agreed to a choice of forum for resolution of disputes, relitigation of an action captured by such a clause, will create uncertainty in relationships governed by such agreements; will be unfair to parties relying on such agreements and will bring the administration of justice into disrepute. Under such circumstances, a stay or dismissal of actions intended to relitigate the issue will be warranted with a dismissal of the action the preferable route.
[33] Each case turns on it’s own facts. There may be circumstances where relitigation is appropriate for example, the first proceeding maybe tainted with fraud or dishonesty; there may be new evidence that makes the previous outcome untenable or there maybe a change in circumstances such that it will be unfair for the previous outcome to stand: Hanna v. Abbott, [2006] 82 O.R.. (3d) para. 29-32 (Ont. C.A.). There may be a legislative framework that makes the choice of forum clause illegal etc.
[34] In this case, the Plaintiff argues that the Mexico action focuses on the period from 2006 to the date of termination and the Ontario action focuses on the period from 1995 to the date of termination. Thus the Ontario action is a different action from the Mexico action.
[35] The Defendants submit that this argument is untenable because Clause 21 of the contract explicitily states that all previous employment relationships between the Plaintiff and MGC was terminated and a new employment relationship commenced with Decoplas.
[36] The Defendants, by its actions, has attoned to the jurisdiction of the Ontario Court. The Plaintiff argues that the Ontario action is intended to demonstrate that Decoplas, MEI and the MGC are related companies and liability can be expanded to include MEI and Decoplas on that basis. The Plaintiff explains that this argument is different from that advanced in the Mexico action. This argument is not properly before this court for resolution.
[37] Any prejuidce to the Defendants, arising from an order granting a stay of the Ontario action, can be adequately addressed by a cost award. Therefore the Ontario action is stayed.
[38] By ordering a stay of proceedings instead of an outright dismissal, I am not concluding that should either party be dissatisfied with the results of the Mexico action this action must be automatically relitigated in Ontario. Any party seeking to revive this action must satisfy an Ontario Court that there is a proper basis for the Ontario Court to excercise its jurisdiction in the face of the choice of forum clause.
[39] If the parties are unable to agree on costs each party shall submit a cost outline, no more than two pages in length, within 20 days from the date of this Order.
Barnes, J.
Released: July 31, 2014
COURT FILE NO.: CV-12-0703-00
DATE: 2014-07-31
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Shane Kavanagh
Ernest Coetzee, for the Plaintiff
- and –
Magna Exteriors and Interiors Corporation O/A Servicios Decoplas, S.A. de C.V.
David Bannon, for the Defendants
ENDORSEMENT
Barnes, J.
Released: July 31, 2014