Veritas Investment Research Corporation et al. v. Indiabulls Real Estate Limited et al.

CITATION: Veritas Investment Research Corporation et al. v. Indiabulls Real Estate Limited et al., 2015 ONSC 6040

COURT FILE NO.: CV-14-509707

DATE: 20151002

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Veritas Investment Research Corporation and Neeraj Monga, Plaintiffs and Moving Parties

AND:

Indiabulls Real Estate Limited and Indiabulls Housing Finance Limited, Defendants and Responding Parties

BEFORE: Sean F. Dunphy J.

COUNSEL: H. Scott Fairley and John Archibald, for the Plaintiffs/Moving Parties

Lindsay Lorimer and Stephen Brown-Okruhlik, for the Defendants and Responding Parties

HEARD: September 29, 2015

ENDORSEMENT

[1] This is an anti-suit injunction brought on an urgent basis and on very short notice to the defendants who are its objects. I have had to assimilate a large amount of material in a short period of time in order to find the factors which appear to be relevant on this application.

[2] These parties have been sparring in and out of court for the past three years. When the underbrush is stripped away, the core of the litigation and thus the backdrop of this motion is this: the plaintiffs published a very negative piece of investment research about the defendants in early August, 2012. The defendants, prominent public companies in India, saw their reputations and security prices both take a serious hit (at least initially). They responded with a public relations campaign of their own, undertaken they claim in India alone, attacking the bona fides and accuracy of the plaintiffs’ reports.

[3] The defendants’ stock prices recovered quite smartly after a short while and even proceeded to appreciate significantly beyond where they were before the plaintiffs wrote in such allegedly disparaging terms about them. The market would appear to have digested the plaintiffs’ negative judgment of the defendants and nevertheless maintained its enthusiasm for the defendants’ stock. The plaintiffs claim that they lost subscribers to their research services. They attribute this to the negative public statements about the quality of their research made by the defendants and not to the fact that this advice was objectively unprofitable if the recovery of stock prices is any judge.

[4] Have the defendants’ alleged defamatory statements in response to the plaintiffs’ research report managed to beguile the market and propel their stock prices higher or was the original research flawed? That thorny question remains to be determined. The parties, however, have been at each other in India and in Canada ever since.

[5] The plaintiffs claim their report was fair and accurate and based on public information. Truth is their shield. They allege the defendant’s public relations counter-offensive defamed them and caused their business to suffer. They have filed a claim in Ontario seeking substantial damages from the defendants.

[6] The defendants, not surprisingly, find themselves in the mirror position. They claim their own public statements were true and that the plaintiffs’ false and reckless statements greatly damaged them. They have brought a claim in India seeking to make good on the damages they say were caused to them. It is this latter action that the plaintiffs in the Canadian action ask this court to block by ordering the defendants (plaintiffs in India) not to proceed with it.

[7] The plaintiffs used employed an Indian resident to co-author the report and had authored a number of other reports in relation to the Indian markets in the prior months. The defendants allege that the plaintiffs were targeting the Indian market in 2011 and cannot deny India is a logical forum for the settling of disputes engendered by the plaintiffs’ foray into that market. The defendants, on the other hand, are Indian-based companies with no operations in Canada. The plaintiffs say they are Ontario-based, have clients and a reputation to defend in Ontario and are entitled to move here. They claim to fear appearing in or defending Indian proceedings, although how much of this is due to their failure to appear in prior proceedings and how much to alleged deficiencies in the Indian system of justice remains to be seen. Each side claims juridical advantages justifying them moving in their home jurisdictions which they claim to be the only jurisdiction qualified to decide the questions that separate them. Neither side shows much evidence of wearying of the battle after four years and the objectives that originally spurred them into battle appear obscured by the fog of war.

[8] The facts are, of course, more complex than this. I shall endeavour to do them justice without getting lost in the weeds in what is, after all, an interlocutory motion. The parties have been launching allegations and counter-allegations at each other like so many shells flying over the trenches at the Somme for some time. However, not every shell crater is equally worthy of exploration for the limited purposes of this interlocutory motion.

[9] I am not in any position to begin to guess who will be found to be wearing the white hats and who the black as and when a court of competent jurisdiction ultimately comes to grips with the issues. The merits will be for another day. It would be singularly foolish for either side to attempt to read in the tea leaves of this decision any breath of support for their respective positions on the merits. I have seldom seen as little common ground on facts and as much noise and distraction designed to throw one off the scent of germane facts as are exhibited in the voluminous material presented to me for review. The parties may eventually be able to agree what day it is, but that small step of progress looks to be a while off.

[10] Having considered the matter as carefully and in as much detail as the restricted time would allow, I have concluded that the motion must be dismissed based on a straightforward and dispassionate application of the principles applicable to interlocutory injunctions. While I have found that on balance there does appear to be at least a serious issue to be tried as to whether the plaintiffs can establish the foundation of a case for an anti-suit injunction, I am not persuaded the plaintiffs would suffer any irreparable harm if the relief is not granted. Finally, I find the delay of the plaintiffs in seeking urgent relief today in respect of an Indian proceeding first brought to their attention more than three months ago weighs heavily in the balance against granting relief. Delay in seeking equitable relief in a case such as this is fatal. More detailed reasons and a summary of the facts follow.

Overview of Facts

[11] The following is an extremely high-level overview of the facts. I emphasize this since the parties seemed unable to agree on the most basic of details relating to the chronology leading to this motion.

[12] The plaintiff Veritas is a Canadian equity research company with its head office in Toronto. It is in the business of conducting equity research which it offers to its sophisticated investor client base. The plaintiff Monga was formerly a significant shareholder of Veritas and one if its founders. For the avoidance of confusion, I shall refer to the plaintiffs collectively as the “Veritas parties” since they are plaintiffs in some proceedings (in Ontario) while defendants in others (in India).

[13] The defendants are both Indian corporations carrying on business in India. Neither has any business operations in Canada. There is disputed evidence as to the activities of one of them in possibly selling some equity securities by way of private placement to Ontario residents. This is discussed further below.

[14] Indiabulls Real Estate Limited (“Real Estate”) was incorporated in 2006 in New Delhi district and has offices in the district of Guragaon, Haryana State, India. The plaintiffs allege that Real Estate is a public company with shares listed on two Indian exchanges plus the Luxembourg Stock Exchange. Real Estate is a real estate developer in India.

[15] Indiabulls Housing Finance Limited (“Housing Finance”) is a financial services firm carrying on business in India. Housing Finance is the successor by merger of another Indian public company (Indiabulls Financial Services Limited or “Financial). The two corporations merged on or about March 8, 2013. Housing Finance is a public company whose shares were traded on certain exchanges in India in addition to the Luxembourg Stock Exchange in Europe. This case concerns the actions of Financial in 2011-2013 and those of the merged company Housing Finance thereafter.

[16] In 2012, Veritas published a report entitled “Bilking India”. As the title suggests, the report was not complimentary of the Indiabulls-related companies it analyzed (the two defendants plus a third “Indiabulls” company who is not a party to this litigation). The “Bilking India” report caused something of a stir in the Indian marketplace. It recommended selling the stock of the defendants. Apparently many did as the prices of the defendants’ shares declined quite steeply on the public markets – something in the order of 20% is alleged.

[17] The plaintiff Monga was one of the authors of the report. A co-author was an Indian resident and national named Nitin Mangal who acted as consultant to Veritas in some capacity (it is not clear if he was an employee or independent contractor). Veritas has authored several other reports about other prominent Indian companies in the preceding months with Mr. Mangal’s assistance which had also created a stir in the Indian marketplace.

[18] Veritas’ claim alleges that it released its report “only” to Veritas’ Asian clients plus one Canadian governmental entity, although it also published an “abridged” version of its report seven days later on Bloomberg. Veritas had a subscription based service with subscribers paying $40,000-$50,000 to receive such reports. Given the price, the subscription list was understandably “exclusive”. With the report’s “sell” recommendation, clients of Veritas were given an opportunity to consider and if thought advisable act on the advice by selling securities they owned or entering into short sales in advance of the public release of the report. Whether any Veritas clients actually did act on that advice is not known. Veritas claims that none would have done so in advance of public release of the report, although the evidence of a steep drop in share price is before me (as is evidence of the eventual recovery and blistering doubling in price of those same shares through to 2014 at least). That issue is not material to this case.

[19] As the markets became roiled, the defendants reacted. A friendly investment bank put out feelers and tried to get a copy of the report a day or two before it was actually released (in abridged format) on Bloomberg on August 8, 2011. It is here that a hotly disputed event occurred. The Veritas parties claim that this friendly party did not disclose what they were up to. Veritas claims that when asked for a copy of their report, they offered to sign the investment bank up as a client for a negotiated fee similar to the fees paid by other clients (i.e. $40,000 - $50,000) and that they offered to delay release of the already-circulated report for a day or so to allow the potential new client an opportunity to digest the report in advance of its public release. The defendants saw a more sinister motive. They claim that Veritas were offering to kill the report against payment of the funds demanded. In other words, one side claims extortion and the other claims ordinary commercial dealings.

[20] Once the report was released on August 8, 2011, the defendants were not pleased with the description of their business practices as described by the plaintiffs. They were of the view that it was defamatory - indeed, as shall be seen, these appear to have been the kindest thoughts that crossed their mind about the report. These parties have not been shy to attribute the worst of motives to each and every action of the other.

[21] Real Estate filed a criminal complaint against the authors of the report (Monga and Mangal) in its home jurisdiction of Gurgaon, India on August 9, 2012. Financial (prior to its merger with Housing Finance) did the same in its home jurisdiction of Mumbai. The police in both jurisdictions took up the complaints for investigation. The complaints allegedly raise questions of extortion and the plaintiffs claim were supported by doctored emails which deliberately misstated the nature of the negotiations with the “friendly” investment bank described above.

[22] The defendants published their own press release on August 8, 2012 by posting on their servers in India and taking out ads in the local print media. It is alleged that the press release was picked up by persons resident, among other places on earth connected to the internet, in Ontario. The press release is said to have been defamatory. The Veritas parties claim the press release was disseminated via Bloomberg (an international business news service). The defendants deny authorizing Bloomberg to do so. Whether it can be said to have been “broadcast” or “published” in Ontario or any other place on earth by virtue of being passively made available to any seeker (including automated “robots”) on the internet is an issue of unresolved dispute. That dispute at least is one more of law than of fact, although I needn’t seek to resolve it today.

[23] The police attempted to proceed to investigate the criminal complaints. Veritas claims that it offered full co-operation. Perhaps in their minds they did. However, the co-operation suggested by Mr. Monga’s affidavit suggested that they would co-operate with requests providing they arrived through formal Mutual Legal Assistance Treaty channels. They politely but firmly declined to come to India to discuss the matter. They have not presented me with any evidence that they volunteered disclosure of the documents regarding the sources of information used in the reports that the Indian police sought disclosure of.

[24] It would appear to be beyond dispute that the Veritas parties have been quite cautious about engaging in India directly and it is reasonable for me to infer that their hesitating co-operation with police investigations was cautious and tentative. As parties named in the complaints, they had every right to take legal counsel and carefully consider the degree of assistance if any they chose to lend to a police investigation that might possibly lead to charges against them. The verbal arm’s race underway between the parties to colour each other’s motives and actions with negative connotations on this subject, among others, falls on deaf ears. This court does not supervise Indian police investigations nor is it in the habit of second-guessing the right of potential suspects to such investigations to act on legal advice to protect their rights.

[25] The Veritas parties filed their Notice of Action on August 5, 2014, just shy of the second anniversary of the publication of their report and the riposte by way of press release of the defendants. They followed up with a more detailed Statement of Claim on September 3, 2014 which was served shortly thereafter in London England. The gist of the plaintiffs’ complaint is (i) allegedly false statements made to Indian police authorities in connection with the above-mentioned complaints; and (ii) defamation stemming from the press release of August 8, 2012 (the mode of dissemination of which remains contested). The plaintiffs claim that they have lost subscribers and suffered damages from loss of reputation.

[26] The first retort of the defendants to the Ontario claim was to file suit in India seeking an anti-suit injunction. In addition to the naming the Veritas parties, the Indian suit named the other co-author of the Veritas report, Mr. Mangal. An interim non-suit injunction was sought by the plaintiffs in the Indian proceedings against the Veritas parties and Mr. Mangal.

[27] The request for an interim injunction was heard by Manomohan Singh J. on September 25, 2014 before the High Court of Delhi. The Veritas parties did not appear although Mr. Mangal did appear through counsel.

[28] A copy of the Order and Reasons of the High Court of Delhi is before me. The plaintiffs in that suit (defendants in this) alleged that the defamation suit was time-barred in India and that the subject-matter of the suit concerned matters that were before the criminal investigating authorities and were thus a breach of process. No finding to that effect was made, contrary to the suggestions of the Veritas parties.

[29] Singh J. found: “I am of the view that the plaintiff has been able to make out a strong prima facie case of the grant of an ex parte ad interim order. The balance of convenience also lies in favour of the plaintiff”. In the result, the plaintiffs in this action and Mr. Mangal were each restrained from proceeding with this Ontario proceeding “and no further proceedings shall be initiated by defendants No. 1 to 3 against the plaintiff” before this (i.e. Ontario Superior) court.

[30] As noted, Mr. Mangal was represented by counsel in court and was and is an Indian resident. He was clearly subject to the in personam jurisdiction of the Indian court. The Veritas parties did not appear on September 25, 2014 and disclaim any advance knowledge of the proceeding although they concede to having learned of it afterwards.

[31] Assuming the Veritas parties were unaware of the injunction proceedings when they proceeded in September despite the presence of their consultant/employee Mr. Mangal in court, they certainly became aware of the proceedings in sufficient time to appear at the return of the return of the interim anti-suit injunction motion scheduled for April, 2014 in New Delhi. They admitted as much at the hearing before me. The Veritas parties made a deliberate choice not to contest the anti-suit injunction made against them in India although they clearly had an opportunity to do so before it was confirmed.

[32] The plaintiffs sought to make much of the detention of Mr. Mangal by Indian police for two weeks in connection with the police investigation in November, 2014. Mr. Mangal is not a party to these proceedings. An arrest warrant was also issued by the police in this time frame for Mr. Monga directed at an old address of his in India. The plaintiffs allege that, as of the present time at least, no charges have yet actually been laid. Indian procedures appear to permit detention of the object of an investigation prior to charges being laid in some circumstances.

[33] The defendants ultimately brought a motion before this court on February 27, 2015 seeking an order setting aside service of process on the defendants out of the jurisdiction, declaring that this court lacks jurisdiction or in the alternative staying proceedings on the grounds of forum non conveniens. I have referred to this as the defendants’ “Van Breda” motion after the Supreme Court of Canada decision which clarifies many of the issues associated with such motions (c.f. Club Resorts Ltd. v. Van Breda, 2012 SCC 17). The Notice of Motion notes, among other factors, the existence of the anti-suit injunction in India.

[34] The parties were discussing the scheduling of that motion somewhat before the defendants delivered their materials on or about February 27, 2015. The defendants had first surfaced on October 31, 2014 through counsel and the parties had worked out a litigation schedule intended to lead to a June 2015 hearing. On February 25, 2015 – two days before the defendants delivered their motion material – the plaintiffs obtained an affidavit of Mr. Mangal. It will be recalled that Mr. Mangal was one of the co-authors of the “Bilking India” report as well as a party specifically named in the anti-suit injunction issued by Singh J. on September 25, 2014. Mr. Monga frankly admits to having solicited the affidavit of Mr. Mangal for use in defending against the anticipated motion of the defendants to stay the Ontario action.

[35] Mr. Mangal’s affidavit allegedly pulled no punches in describing the period of his incarceration. The defendants have described the affidavit as incendiary and they of course have been compelled to expend resources to respond to the affidavit. Mr. Mangal was not required to provide the affidavit. The defendants note that Mr. Mangal provided the affidavit despite being himself unquestionably subject to the injunction of Singh J. which he had not – to that point at least – taken steps to set aside. Mr. Monga frankly admits to having personally solicited the affidavit because he thought the story of Mr. Mangal’s detention would be relevant to the pending Van Breda motion. He took steps to obtain the affidavit and in fact obtained it two days before seeing what materials the defendants were seeking to rely upon in arguing that Ontario should not assume jurisdiction over this dispute.

[36] Being personally resident in India and subject to the jurisdiction of the High Court, filing an affidavit in the Ontario proceeding was an astonishingly risky step for Mr. Mangal to have taken, whatever his views of the propriety or scope of Singh J.’s order or of his own detention by Indian police pursuant to their investigation. He might, for example, have appeared at the return of the interim injunction proceedings in April to argue for the lifting of the injunction to allow him to file his affidavit or sought directions as to whether swearing an affidavit would be considered to violate the injunction. The timetable for the hearing of the defendants’ Van Breda motion was not until June 2015. There was time enough for Mr. Mangal at least to have attempted to comply with or clarify Singh J.’s order.

[37] Unsurprisingly, contempt of court proceedings against Mr. Mangal have ensued. Among other aspects of the relief sought by the plaintiffs in this anti-suit injunction is an order preventing the defendants from taking any further steps to prosecute those contempt proceedings.

[38] On May 26, 2015, Housing Finance issued its own claim against the Veritas parties before the High Court in Delhi. I shall refer to this as the “Indian Claim” to distinguish it from the “Ontario claim”. The Indian Claim alleges defamation arising from the 2012 Veritas report as well as arising from the allegedly defamatory affidavits (including of Mr. Mangal) obtained for the Ontario proceedings. The Indian Claim was eventually served upon the Canadian plaintiffs. The manner and timing of formal service is a matter of some dispute. The sufficiency of service under the Indian Rules of Civil Procedure are of course none of my concern. It is sufficient for me to note that the Indian Claim had come to the Veritas parties’ notice by one means or another by June 22, 2015.

[39] I have distilled out of this abbreviated chronology materials filed before me regarding proceedings in India dealing with a Wall Street Journal reporter. The Wall Street Journal is a large and well-known organization. They are not a party to this proceeding and I am quite sure they are well able to attend to their interests before the courts in India without my being invited to wade into that dispute. More distractions and collateral issues are not what are required to resolve an interlocutory hearing.

[40] The plaintiffs have also filed material suggesting that the defendants have recently attorned to Ontario’s jurisdiction in some fashion. It is common ground that the pending stay motion of the defendants is no more than a conditional appearance in Ontario to this point. The plaintiffs allege that the defendants have sufficient presence to warrant my assuming in personam jurisdiction over them. They point to two additional factors. Firstly, it is suggested from “anonymous” sources that the CEO of Housing Finance came to Ontario to meet with unnamed financial industry professionals at some point in July 2015. I cannot begin to credit such obviously inadmissible evidence with any weight, even if it did have relevance. At most, this evidence suggests that the plaintiffs missed an opportunity to arrange personal service. I can hardly conclude more based on such sketchy and unreliable evidence of transitory presence.

[41] The plaintiffs also provided me with copies of what appears to me to be a draft private placement offering memorandum of Housing Finance dated September 11, 2015. There is no evidence before me that the document has been filed with the Ontario Securities Commission or that, in connection therewith, Housing Finance has attorned to the jurisdiction of Ontario in some way. The fact that the draft offering memorandum suggests that the securities described therein are offered for sale by way of private placement to sophisticated investors in Ontario does not demonstrate to me that they have in fact been offered for sale in Ontario or have found any such buyers. I have entirely disregarded this evidence for purposes of this motion – it is both equivocal and inconclusive as regards my personal jurisdiction, if any, over the defendants or any of them.

Issues

[42] The issue to be determined in this motion is whether the plaintiffs can satisfy me that they are entitled to an interlocutory anti-suit injunction. The plaintiffs recognize that on short notice and with inadequate materials before me, I am not in a position to rule definitively on the factors to be weighed in obtaining a permanent anti-suit injunction as described by Sopinka J. in the case of Amchem Products Inc. v. British Columbia (Workers’ Compensation Board). This being an interlocutory injunction only, I must apply the well-known three-part test in RJR -- MacDonald Inc. v. Canada (Attorney General), [1994] 1 SCR 311. That test requires me to assess if there is a serious issue to be tried, to consider the matter of irreparable harm to the parties and the balance of convenience. My analysis shall, accordingly, assess each of the three parts of the RJR test separately.

[43] There is a preliminary issue presented in this case that is not a common feature in many anti-suit injunction cases. It is by no means clear that I have in personam jurisdiction over the targets of this injunction at all. I can no more make orders against parties beyond my jurisdiction than King Canute can command the tides to refrain from arriving.

[44] I am quite troubled by the fact that I cannot determine that the defendants have attorned to Ontario jurisdiction from anything placed before me. The allegation via anonymous tip of a brief visit by the CEO of one of the defendants to Ontario is entirely inadmissible and statements made in a draft offering memorandum offering Indian securities by way of private placement do not appear to me to be sufficient to tip the scales in favour of personal jurisdiction. The plaintiff concedes that the defendants’ Van Breda motion pending amounts to a conditional appearance only. The defendants do not carry on business in Ontario and indeed the clash between the parties originates from the ill-starred efforts of the Veritas parties to penetrate the Indian market with their research products. Whether there is sufficient basis to have any proceedings in Ontario remains to be seen when the Van Breda motion is heard; I have very grave doubts as to whether I have jurisdiction to make any other order at all in respect of the defendants were I so inclined.

[45] I have not decided this matter based on jurisdiction alone. Were I required to make a finding, I would have to find that personal jurisdiction over the defendants has not been proved to my satisfaction. However, given that I cannot find that the plaintiffs satisfy the RJR test for obtaining an interlocutory injunction, I do not find that I need to come to a landing on this narrow point.

Analysis and Discussion

(i) Serious issue to be tried

[46] Should an interlocutory injunction be granted, it would only be for such time as it takes to have the matter heard on full evidence. The plaintiffs propose that this should occur, if necessary, at the same time as the hearing of the defendants’ Van Breda motion for a stay of proceedings. At all events, the “serious issue to be tried” that I must consider is whether there is a serious issue to be tried that the Veritas parties can satisfy the test for the issuance of a permanent anti-suit injunction which in turn requires me to consider the criteria for the issuance of such injunctions in the decision of Sopinka J. in Amchem (supra).

[47] The first consideration listed by Sopinka J. in Amchem (supra) is as follows (at para. 56): “As a general rule, the domestic court should not entertain an application for an injunction if there is no foreign proceeding pending”.

[48] The plaintiffs seek two orders in this case. The first is to bar the defendants from taking any further steps in the Indian defamation action commenced by them in May 2015. There being an existing foreign proceeding, the criterion is clearly met for this half of the requested relief. However, the plaintiffs also seek to prevent future contempt motions from being brought by the defendants against Mr. Mangal in respect of cross-examination or testimony he may yet give (but has not yet done). Mr. Mangal is not a party to the Ontario proceedings. While Mr. Mangal is a party to the Indian contempt proceedings that have already taken in respect of his affidavit of February 25, 2015 in the Ontario proceedings, there are obviously no contempt proceedings outstanding in relation to testimony he has not yet given. The order that may or may not prevent him from doing so is outstanding however. One of the two injunctions sought by the plaintiffs thus has aspects similar to a quia timet injunction that Sopinka J. indicated ought not ordinarily to be entertained.

[49] The importance of waiting on the foreign proceeding, as explained by Sopinka J. in Amchem, (supra) is that, in order to respect the principles of comity, “it is preferable that the decision of the foreign court not be pre-empted until a proceeding has been launched in that court and the applicant for an injunction in the domestic court has sought from the foreign court a stay or other termination of the foreign proceeding and failed” (Amchem, supra, at para. 56). This may be described as the second test in Anchem (supra). I take from this principle that I ought not to assume that the foreign court will fail to have due regard to similar principles in determining the proper forum for the proceeding that is the object of the non-suit injunction. I should not seek to bar the matter before the foreign court has had an opportunity to provide its own opinion on the matter. That opinion may well provide a full answer or provide me with guidance that I might take into account in considering the matter.

[50] The fact that the defendants failed to even attempt to persuade Singh J. as to why the anti-suit injunctions issued against them should be vacated in April when they had the opportunity weighs heavily against them. They have obviously also taken no steps to persuade the Indian court to desist in the Indian Claim pending before it either.

[51] The plaintiffs thus far have determined that it is not in their best interests to attorn to the jurisdiction of the Indian courts. That makes it difficult for them to satisfy this branch of the Amchem (supra) test. Choices have consequences. It does not automatically follow that this court’s role is to relieve the plaintiffs of the consequences of their choice. They did not venture to give the Indian courts much of a chance to prove them wrong by challenging the anti-suit injunction despite having an opportunity to do so. I am being asked to assume that any attempt to persuade Singh J., for example, of the privilege attaching to statements made by the defendants in affidavits filed in the Ontario proceeding, would have fallen on deaf ears. I cannot make any such assumption when they never attempted to persuade him. At least some of the arguments raised concerning forum of necessity are a reference to the consequences of their refusal to appear in India in the first place and are thus somewhat circular.

[52] Counsel points to the incarceration of Mr. Mangal and the similar warrant for Mr. Monga (apparently obtained on the erroneous assumption that he was an Indian resident) to argue that it would have been unreasonable to expect the plaintiffs to appear. I disagree. The defendants’ expert evidence, which appears both sensible and well-reasoned to me, is that it would have been entirely possible to appear in India through counsel, for example. The plaintiffs expert testimony, on the other hand, appears largely tied up in the consequences of the plaintiffs’ initial decision not to contest the anti-suit injunction proceedings.

[53] The plaintiffs decry the fact that India does not have the concept of “conditional appearance” on motions to challenge service ex juris. This is of course a relatively recent novelty in our own Rules of Civil Procedure. I can hardly tar India with the brush of failing to accord natural justice for not following every reform to Ontario’s Rules of Civil Procedure.

[54] The third part of the Amchem (supra) test considers if the domestic forum “is alleged to be the most appropriate forum and is potentially an appropriate forum”. Once again, the plaintiffs have significant problems in crossing this hurdle. There are two Indian proceedings that the plaintiffs are seeking to have the Ontario Superior Court bar, albeit through the exercise of in personam jurisdiction over the litigants. These are (i) the Indian Claim; and (ii) the feared contempt proceedings that might be brought in India against Mr. Mangal for violating existing Indian court orders should he decide to testify in the Ontario matter.

[55] The plaintiffs focused all of their attention on whether their own action belongs in Ontario as an appropriate or the most appropriate forum. In this regard, I am afraid that they showed up for the hockey game but at the wrong rink.

[56] Whether Ontario is an appropriate forum for the plaintiffs’ existing Ontario action is the very issue that will be before the court if as and when the defendants’ Van Breda motion is brought on for a hearing. Who will get the best of whom that day, I cannot venture to say. That is not the question before me. The question is whether the Indian Claim belongs in Ontario as a more appropriate forum than India. In that regard, the answer would appear to be “very unlikely”.

[57] The defendants carry on business in India and the damages alleged to have been suffered by them were predominantly in India. The plaintiffs report was written with the aid of an employee or consultant on the ground in Indian and was one of several such reports written about the Indian market with a view to penetrating that marketplace. To the extent truth of the reports is intended to be advanced as the defence in the matter – and the plaintiffs affidavits to date strongly success this is the case – the facts to be relied upon in establishing that truth are the public filings of the defendants in India, the work of the auditors in India, the affairs of an Indian employee trust (whose affairs played a large part in the report) and other evidence concerning the defendants’ business which is located in India without any connection to Ontario. Indeed, it is hard to see that there are any facts relevant to the main issue – truth or falsity of the defamatory statements – that are connected to Canada or Ontario in any way. The raison d’être of such research reports is to advise parties who may have or may in future initiate investment positions – long or short – in the securities of the subject of the report. Those securities are listed on Indian exchanges even if the clientele (prior to the release of the report on Bloomberg) was in Asia but allegedly outside of India.

[58] The only argument they advance to suggest that Ontario is even “an” appropriate forum for the Indian Claim is that it could be advanced by way of counterclaim. That of course pre-supposes the outcome of the defendants’ Van Breda motion (which, if successful, would see the Ontario “main” action stayed). As well, it asks me to ignore the very likely attempt by the plaintiffs in the Ontario action to advance a defence to the Indian action (if brought here by way of counterclaim) under the Limitations Act, 2002, S.O. 2002, c. 24. Viewing the Indian Claim in isolation, I could not conclude that Ontario is a preferable or even an appropriate forum for the hearing of it.

[59] The plaintiffs did not argue that the two actions (i.e. Indian and Ontario defamation actions) should be considered as a single lis. Nevertheless, I think there to be considerable merit to this approach given their obvious inter-relationship. The risk to the plaintiffs of course is that considering both existing actions as two aspects of a single lis might well tilt the Van Breda analysis further away from Ontario with the added weight of the jurisdictional factors relating to the Indian Claim.

[60] The RJR test, however, is whether there is a serious issue to be tried on whether the Anchem test can be satisfied. Viewing the two proceedings together as a single lis – a position the plaintiffs did not advance – arguably satisfies this test. Until the court hears the Van Breda motion, I cannot anticipate where that analysis will come out. There is at least some chance that, considering the two together in light of the Amchem criteria, this court may determine that Ontario is the more appropriate forum for both claims and an anti-suit injunction is appropriate.

[61] I am not of the view that this argument can salvage the second injunction sought to liberate Mr. Mangal from the potential threat to him of the existing Indian court orders barring him from participating in the Ontario action. Mr. Mangal is an Indian citizen and resident. He participated in the action in India which saw the injunction issued against him. He has participated in the contempt proceedings which have been brought against him to date arising from his affidavit filed in the Ontario proceedings. If this court were to issue an anti-suit injunction in respect of an Indian proceeding that an Ontario resident deliberately ignored, I strongly suspect that contempt proceedings would not be long in coming and I would hope and presume that an Indian court would respect this court’s jurisdiction to police the enforcement of its own orders over its own residents and citizens. The golden rule and comity both concur in suggesting that I should be extraordinarily slow to depart from that presumption. I see no basis to do so here.

[62] I cannot find that the plaintiffs have made a convincing case to me that there is a serious issue to be tried as regards the claimed injunction in the matter of Mr. Mangal. I consider that the plaintiffs have an argument for a serious issue to be tried in relation to the Indian defamation action if and only if I consider the two pending defamation actions as a single lis.

(ii) Irreparable harm

[63] The plaintiffs had a great deal of trouble describing what irreparable harm they feared suffering. They suggested that default judgment could be issued against them in a matter of days. That judgment might be brought to Canada and enforced against them. By failing to appear in India, they might have greater trouble in resisting enforcement.

[64] The problem with this argument is that it is quite circular. Default judgment is only to be feared if they fail to defend. They may yet decide to do so. They look to this court to provide them with advance insurance that they can pick whichever of the two options they have (defend, don’t defend) with more security. To the extent defending the Indian proceeding has become more complicated for them by their failure to defend the prior anti-suit injunction proceedings, the failing was their own and the foreseeable consequence of a deliberate choice made many months ago.

[65] The plaintiffs did not defend the anti-suit injunction proceedings brought against them in India. It is quite clear to me that the plaintiffs have made a considered decision to batten down the hatches and take their chances in Fortress Canada. If as and when a judgment from India is brought to Canada for enforcement, they have also made it clear that they will be alleging that they could not have obtained a fair hearing in India for all of the reasons they intend to argue for forum of necessity as and when the Van Breda motion is heard. If their faith in the strength of their arguments is borne out, they may yet succeed in resisting enforcement of the feared default judgment in which case they will have suffered no irreparable harm. If on the other hand a default judgment is ultimately enforced, it would almost certainly be because the grounds advanced today on an urgent basis with a limited record before me did not withstand close scrutiny in the light of day. Irreparable harm does not consist in being forced to make a tough business decision without advance insurance from the court. The harm is fully reparable since this court may yet decline to enforce an Indian judgment if the facts are as suggested by the plaintiffs.

[66] I can find no case for irreparable harm in the case of Mr. Mangal’s affidavit either. His affidavit was sought by the plaintiffs with a view to establishing their “forum of necessity” argument. Doubtless the affidavit has been framed as artfully as could be done with the collaboration of the witness to make the point as forcefully as possible. The plaintiffs need nothing more from Mr. Mangal. They argue that the defendants might seek to strike Mr. Mangal’s affidavit should he fail to appear for cross-examination. A first attempt to examine failed – despite defendants’ Ontario counsel travelling to India for the purpose – because counsel would not give satisfactory undertakings that were not sought from her until the last second.

[67] This does not suggest anything approaching irreparable harm. The court – if convinced of the justice of the plaintiffs’ arguments made on notice and with proper time to assemble evidence – could deny the defendants’ anticipated motion to strike the Mangal affidavit. The plaintiffs are not seeking to examine their own witness after all. The defendants may yet decide to give the requested undertaking and examine Mr. Mangal or they may decide to stick to their guns and take their chances in court on a motion to strike. Relative advantage in future procedural skirmishing before this very court can never be “irreparable” harm by definition since this court remains master of its own process and can always repair any procedural harm. Irreparable harm is not the same as legal uncertainty or lack of insurance. The admissibility of Mr. Mangal’s affidavit is something this court is fully capable of dealing with, with or without an anti-suit injunction. Frankly, I find this allegation to be ludicrous.

(iii) Balance of Convenience

[68] The balance of convenience strongly favours the status quo. The plaintiffs admit to having become aware of the Indian defamation action by Housing Finance by June 22, 2015. This motion was heard on Tuesday September 29, 2015. Materials were served on the responding parties on Thursday night and Friday morning. Given time zone differences, the defendants were unable to get responding materials assembled for the court in time. More than 90 days elapsed before the plaintiffs took action and then did so in a panic asking this court to render a very fast decision and leaving the responding parties with no time to file any responding materials. This smacks of a tactical manoeuvre not genuine necessity.

Disposition

[69] For the foregoing reasons, I would dismiss the plaintiffs’ motion. The defendants having been successful on the motion ought normally to have their costs. As I advised the parties, I will make no determination of the matter of costs, however, until hearing from them. I don’t know if there are any factors that might suggest costs should not be awarded to the successful party nor do I know if a different scale than partial indemnity may be appropriate. There was exhaustion in the room when argument finally ended late in the afternoon on this ten minute motion.

[70] Accordingly, I would direct the defendants to deliver their written submissions (restricted to five pages plus outline of costs) within fifteen days. The plaintiffs shall have a further fifteen days to respond with written submissions (same size restrictions).

[71] All costs submissions should be:

a. Electronic and respect the size restrictions (exclusive of Outline of Costs);

b. Contain hyperlinks to decisions on rather than full cases where possible;

c. Assume familiarity with Rule 57.01 and .03 (no boilerplate – get to the point); and

d. Assembled by the last party (in this case responding plaintiff) and delivered electronically by email to my assistant or by DVD or memory stick delivered to my attention at Judge’s Administration, Room 107 at 361 University Avenue.

Since outstanding costs awards are not typically tracked by our internal reserve system, parties should not hesitate to prod my assistant (gently) with a reminder if no response is heard within 3-4 weeks.

Sean F. Dunphy J.

Date: October 2, 2015