SUPERIOR COURT OF JUSTICE – ONTARIO

COURT FILE NO.: CV-13-476402

CITATION: Silveira v. FY International Auditing & Consulting Corp., 2015 ONSC 338

DATE: 2015/01/19

RE: Filomena Silveira v. FY International Auditing & Consulting Corp., FYI Canada Corp., Jim Fernandez and Renan Cabrera

BEFORE: MASTER GRAHAM
HEARD: January 14, 2015

COUNSEL: J. Sereda for the plaintiff

A. Zeilikman for the defendants (moving parties)

REASONS FOR DECISION

(Defendants’ motion to stay the plaintiff’s action based on forum non conveniens)

[1] The plaintiff Filomena Silveira is a licenced Certified General Accountant and a licenced Public Accountant and resides in Mississauga, Ontario. The defendant FY International provides accounting, auditing, tax and legal consulting services; its head office is in Vancouver, British Columbia and it maintains regional offices around the world. FYI Canada was formed to provide similar services in Canada. The defendants Fernandez and Cabrera both reside in Vancouver and are directing minds of both of the corporate defendants.

[2] Silveira and defendants began a business relationship in late 2010 or early 2011. On April 7, 2011, the plaintiff, through her professional corporation F. Silveira, CGA Professional Corporation, entered into a Services and Exclusivity Agreement (“the Agreement”) with the defendant FYI Canada Corp.. Pursuant to the Agreement, the defendants were to provide training to and assist Silveira in setting up a branch of FYI in Toronto, including providing her with introductions to potential clients in Ontario. In exchange, Silveira was to complete the training, enter into the agreement to create FYI Toronto and make an agreed payment of $100,000.00 to FYI Canada.

[3] Silveira’s claim is for damages for breach of contract and misrepresentation, which she characterizes as the tort of deceit. She alleges in the statement of claim that the defendants Fernandez and Cabrera made misrepresentations to her on which she relied in entering into the contract referred to above. She alleges that she came to realize that the defendants had no clients or contacts in Toronto and that she had paid the $100,000.00 fee for nothing.

[4] The plaintiff pleads particulars of the defendants’ breach of contract and the various representations, which she alleges were made “negligently, recklessly and/or fraudulently” that induced her to enter into the agreement. She claims damages of $400,000.00 consisting of the $100,000.00 fee, $200,000.00 that she spent to promote the defendants’ business interests in Toronto and $100,000.00 paid to employees to assist in setting up and marketing the defendants’ business in Toronto.

[5] Silveira’s statement of claim was issued in Ontario on March 18, 2013. On April 15, 2013, FYI Canada Corp. commenced an action in British Columbia against Filomena Silveira and F. Silveira, CGA Professional Corporation alleging that Silveira breached the Agreement by failing to enter into a contract with respect to a company called FY International Professional Corporation, failing to assist in the expansion of FY Canada into Ontario, making poor business and financial decisions and abandoning her duties. FYI Canada’s claims are based on breach of contract, inducing of breach of contract and intentional interference with contractual relations all in relation to the Agreement.

[6] The defendants now move to stay Silveira’s Ontario action under s. 106 of the Courts of Justice Act, R.S.O. 1990, c. C.43, on the basis that Ontario is forum non conveniens and that the action should proceed in British Columbia. The section is as follows:

106 A court, on its own initiative or on motion by any person, whether or not a party, may stay any proceeding in the court on such terms as are considered just.

[7] The court, in ruling on such a motion, must first determine whether it has jurisdiction simpliciter over the case and, assuming that it does, it must then consider whether the action should be stayed on the basis of the forum non conveniens doctrine (See Club Resorts Ltd. v. Van Breda, 2012 SCC 17, [2012] 1 S.C.R. 572). The defendants in this case acknowledge that the Ontario court has jurisdiction simpliciter, i.e. that there is a basis on which the Ontario courts could assume jurisdiction over the action. The issue on the motion is therefore whether the action should be stayed on the basis that Ontario is forum non conveniens.

[8] The doctrine of forum non conveniens focusses on the context of the individual case and is based on the recognition that a common law court retains a residual power to decline to exercise its jurisdiction in appropriate but limited circumstances in order to assure fairness to the parties and the efficient resolution of the dispute. The burden is on the defendant raising the issue to show why the court should decline to exercise its jurisdiction and displace the forum chosen by the plaintiff. 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 also demonstrate why the proposed alternative forum should be preferred and that that forum is “clearly more appropriate”. (See Van Breda, paragraphs 103-108)

[9] In Van Breda, paragraph 110, the court proposes the following non-exhaustive list of factors to be considered in deciding whether the plaintiff’s initial choice of jurisdiction is forum non conveniens:

1. The locations of parties and witnesses;

2. The cost of transferring the case to another jurisdiction or of declining the stay;

3. The impact of a transfer on the conduct of the litigation or on related or parallel proceedings;

4. The possibility of conflicting judgments;

5. Problems related to the recognition and enforcement of judgments;

6. The relative strengths of the connections of the two parties.

[10] The defendants submit that the appropriate forum for this action is British Columbia and rely on the following terms of the Agreement of April 7, 2011:

18.1 This Agreement is subject to and shall be construed in accordance with the laws of British Columbia.

18.2 Each of the parties consents to the non-exclusive jurisdiction of the courts of British Columbia with respect to all disputes arising under this Agreement.

[11] The defendants do not argue that this forum selection clause is in itself determinative of the jurisdiction issue but submit that it is a key factor to be considered in determining whether Ontario is forum non conveniens.

[12] My review of the factors enumerated in Van Breda and of the effect of the forum selection clause is as follows:

The location of parties and witnesses

[13] The plaintiff resides in Mississauga, Ontario. Her evidence is that she intends to call at trial at least seven witnesses from the Toronto area, whom she identifies, and believes that they will corroborate the false representations made by the defendants used to induce CGAs to join them and to pay fees to do so. She also intends to call one witness from each of the Toronto Stock Exchange and the Venture Exchange to corroborate her position that the defendants are unknown to those bodies. She also intends to call as a witness her son who produced a promotional video for FY International.

[14] The defendant FY International has its head office in Vancouver. The defendant FYI Canada has a registered office in Vancouver and all of its records, staff and business documents have always been located at the Vancouver premises. The defendants Fernandez and Cabrera reside in Vancouver. The defendants’ evidence is that in addition to Fernandez and Cabrera, at least six of their Vancouver staff have interacted with the plaintiff and would be necessary witnesses at trial.

[15] Silveira deposes that she had no meaningful interaction with any of the defendant’s proposed witnesses and expresses the belief that the defendants are trying to pad their witness list. The defendant Fernandez, in a reply affidavit, deposes that Silveira did interact with the defendants’ British Columbia witnesses all of whom either trained or assisted her with respect to computer software required for her use in Toronto. The reply evidence provides details as to the contact that the plaintiff had with each of the defendants’ proposed witnesses, including emails between the plaintiff and some of these witnesses. The defendants also name a seventh witness from the Vancouver office.

[16] For the purpose of this motion, I can only conclude that the plaintiff is in Ontario, the defendants are in British Columbia and they each have similar numbers of possible witnesses in their provinces of residence.

The cost of transferring the case to another jurisdiction or of declining the stay

[17] Despite the wording of this part of the test in Van Breda, this court cannot transfer this action to British Columbia and can only make a finding that that province would be a more appropriate forum for the action than Ontario. I can only assume that an order staying this action will lead to the plaintiff seeking the same relief in British Columbia, either by way of a counterclaim in FYI Canada’s action or a separate action. Based on that assumption, a finding that Ontario is forum non conveniens will increase the plaintiff’s costs because she will then be required to litigate in British Columbia and pay the cost of travel and accommodation for herself and her witnesses. Similarly, if the stay is not granted, the defendants will incur similar costs in relation to travel from British Columbia and accommodation in Ontario. Either possible disposition of the motion will significantly increase the costs of one of the parties.

[18] A mitigating factor is that regardless of whether or not the action before me is stayed, for reasons set out below, Silveira will still have to defend the British Columbia action. Accordingly, the additional cost to Silveira of litigating her own claim in British Columbia will overlap with the costs that she will incur to defend the action against her in that province.

The impact of a transfer on the conduct of the litigation or on related or parallel proceedings

[19] Once again, this court can only order a stay of the action, not a transfer to another province. As stated above, in April 2013, the defendant FYI Canada in this action commenced an action in British Columbia against Silveira and her professional corporation. If the action before me were ordered stayed in Ontario, the plaintiff would have the option of starting an action in British Columbia or advancing her claims as counterclaims in the action commenced by FYI Canada in that province. Although there would be some delay in the litigation while Silveira retained British Columbia counsel and pleadings were prepared, Silveira already has a pleading in Ontario that can be redrafted to comply with British Columbia procedure so any such delay should be minimal. Accordingly, the principal impact on the litigation would be the costs consequences referred to under the previous heading.

[20] Silveira submits that the pending action in British Columbia should not be a consideration on this motion because that action is “tactical”, meaning that it is intended not to advance a claim on the merits but only to dissuade her from litigating against the defendants in Ontario. I do not accept this argument.

[21] First, I cannot conclude on the evidence on this motion that FYI Canada’s action is not a bona fide action to recover damages. Second, the fact that Silveira started her Ontario action before FYI Canada sued her in British Columbia is not an accepted basis for determining which of two possible forums is the most appropriate for litigation of a dispute. In Teck Cominco Metals Ltd. v. Lloyd’s Underwriters, 2009 SCC 11, [2009] S.C.J. No. 11 at paragraph 29 the court stated as follows:

29 Finally, policy considerations do not support making a foreign court's prior assertion of jurisdiction an overriding and determinative factor in the forum non conveniens analysis. To adopt this approach would be to encourage a first-to-file system, where each party would rush to commence proceedings in the jurisdiction which it thinks will be most favourable to it and try to delay the proceedings in the other jurisdiction in order to secure a prior assertion in their preferred jurisdiction. Technicalities, such as how long it takes a particular judge to assert jurisdiction, might be determinative of the outcome. In short, considerations that have little or nothing to do with where an action is most conveniently or appropriately heard, would carry the day. Such a result is undesirable and inconsistent with the language and purpose of s. 11, discussed above.

The possibility of conflicting judgments

[22] The issues in both Silveira’s action in Ontario and FYI Canada’s action in British Columbia are virtually identical and can be summarized as follows: What representations were made leading to the formation of the April 7, 2011 Agreement and what did the parties do or fail to do in relation to their obligations under that agreement? The adjudication of these issues will require the testimony of the same witnesses and review of the same documents. The two actions cannot be tried separately without creating a significant and unacceptable risk of inconsistent judgments. In addition, two separate actions to resolve identical issues would result in an unacceptable waste of legal and judicial resources.

Problems related to the recognition and enforcement of judgments

[23] The parties acknowledge that recognition and enforcement of judgments are not significant factors for the purpose of this motion.

The relative strengths of the connections of the two parties

[24] The parties appear to have similar connections to their respective jurisdictions of residence. As indicated above, Silveira lives in Ontario and the defendants reside in or have their registered offices in British Columbia.

The forum selection clause in the parties’ Agreement

[25] The list of factors proposed in Van Breda to be considered on a forum non conveniens motion is not exhaustive and the existence and content of the forum selection clause in the Agreement of April 7, 2011 is another significant factor for this court to consider.

[26] The importance of a forum selection clause in resolving a forum non conveniens issue was considered in Loat v. Howarth, 2011 ONCA 509, [2011] O.J. No. 3166 (C.A.). First, the Court states at paragraph 29 that a clause in an agreement that confers non-exclusive jurisdiction on a particular forum, as does the clause in the parties’ Agreement, while not precluding an action in another forum, does have the effect of foreclosing objection by either of the parties to the agreement to an action commenced in the forum consented to.

[27] Second, the Court in Loat makes the following statement with respect to forum selection clauses generally (at paragraph 31):

31 . . .Canadian law favours the enforcement of forum selection clauses negotiated, as here, by sophisticated business people. This court, for example, has affirmed that “[a] forum selection clause in a commercial contract should be given effect” and that the factors “that may justify departure from that general principle are few”: ": Expedition Helicopters Inc. v. Honeywell Inc. (2010), 2010 ONCA 351, 100 O.R. (3d) 241 (C.A.), at para. 24; see also Momentous.ca Corporation v. Canadian American Association of Professional Baseball Ltd. (2010), 2010 ONCA 722, 103 O.R. (3d) 467 (C.A.), at para. 39; Stubbs v. ATS International BV (2010), 2010 ONCA 879, 272 O.A.C. 386 (C.A.), at para. 43.

[28] The significance of a forum selection clause was also addressed by Low J. in Mackie Research Capital Corp. v. Mackie, 2012 ONSC 3890, [2012] O.J. No. 3057 (S.C.J.), at paragraph 43:

43 The English jurisprudence as to non-exclusive forum selection clauses as reflected in Ace Insurance SA-NV v. Zurich Insurance Company, [2001] 1 All E.R. (Comm.) 802 (C.A.) indicates that parties should be held to their bargain where the suing party complies with the clause and commences action in the jurisdiction agreed to.

[29] The British Columbia action was commenced by FYI Canada in accordance with section 18.2 of the Agreement, whereby FYI Canada and Silveira consented to the non-exclusive jurisdiction of the British Columbia court. On the authority of Loat and Mackie, there would be no basis on which Silveira could object to FYI Canada’s action proceeding in British Columbia, particularly given the unchallenged evidence on the motion that she had the benefit of legal advice when negotiating and signing the Agreement containing the forum selection clause.

[30] The plaintiff’s claims in Ontario for breach of contract against FYI Canada and for negligent and fraudulent representation against Fernandez, Cabrera and FY International, are inextricably connected and all relate to the formation of and the performance of the Services and Exclusivity Agreement of April 7, 2011. Silveira consented to the jurisdiction of the British Columbia court with respect to “disputes arising under this Agreement”. In defending the B.C. action based on the Agreement, Silveira will almost certainly rely on the same allegations of misrepresentation that she is using to advance her claim in Ontario. Although the Ontario action does include defendants who are not parties to the Agreement and contains claims for misrepresentation in addition to breach of contract, the viva voce and documentary evidence required to resolve those claims will be the same as that required to resolve the disputes arising under the Agreement both in Ontario and in British Columbia. A common resolution of the two sets of claims would require that the Ontario action be stayed so that all of the parties’ claims can be resolved together in British Columbia.

[31] Silveira relies on 2249659 Ontario Ltd. v. Sparkasse Siegen, 2013 ONCA 354, in which the defendants sought a stay of the action based on forum selection clauses contained in a confidentiality agreement and various purchase orders and which conferred jurisdiction on Germany. The motion judge’s decision granting the stay was overturned because the plaintiff’s claims were found not to be for relief in relation to obligations arising under either the confidentiality agreement or the purchase orders. However, the case before me can be distinguished from Sparkasse. First, unlike in Sparkasse, the defendant FYI Canada in the Ontario action has commenced a parallel proceeding against Silveira in British Columbia for damages for breach of the Agreement that contains the agreed upon clause granting non-exclusive jurisdiction to the courts of that province. Second, the resolution of Silveira’s Ontario action, which also includes a claim for damages for breach of the Agreement, will require a court to consider the same issues as in the British Columbia action.

Summary and conclusion

[32] Silveira and the FYI parties have commenced actions against each other in Ontario and British Columbia arising out of the same events and transactions, being the negotiations and representations leading to the signing of the Agreement and the performance of or failure to perform their respective obligations under that Agreement. The litigation and trial of the two actions will require production of the same documents, evidence from the same parties and witnesses and identical findings of fact where evidence conflicts so the court’s decision on this motion must enable the two actions to proceed together. Silveira and the witnesses on whose evidence she intends to rely and the FYI defendants and their witnesses appear to have equally strong connections to Ontario and British Columbia respectively.

[33] FYI Canada sued Silveira in British Columbia pursuant to the forum selection clause in the Agreement whereby the parties consented to “the non-exclusive jurisdiction of the courts of British Columbia with respect to all disputes arising under this agreement”; that action is clearly based on the Agreement. Silveira consented to the jurisdiction of the courts of British Columbia with respect to disputes under the Agreement so it is highly unlikely that she could successfully challenge their jurisdiction over FYI Canada’s action. The possibility of conflicting judgments on identical issues and the efficient use of legal and judicial resources dictate that all issues be litigated in a single proceeding and decided by the same court. In the face of the forum selection clause that governs FYI’s action in British Columbia, that court must be a British Columbia court. Accordingly, this is a case where, as contemplated by Van Breda (at paragraph 104) the court should exercise its power to decline jurisdiction “in order to assure fairness to the parties and the efficient resolution of the dispute” [emphasis added].

[34] For these reasons, the forum non conveniens issue must be resolved in favour of British Columbia and Silviera’s action in Ontario is hereby stayed.

Costs

[35] At the conclusion of the hearing, I received the parties’ costs outlines and gave them the opportunity to make submissions on costs. There is no reason to depart from the usual practice that costs follow the event. The defendants’ costs outline sets out total partial indemnity costs including HST and disbursements of $3,304.51, which is extremely modest, particularly in comparison with the plaintiff’s proposed partial indemnity costs of $20,225.53. The plaintiff shall pay the costs of the motion fixed at $3,304.51, payable within 60 days.

Master Graham

DATE: January 19, 2015