Court File and Parties
Citation: Watts v. Chun, 2016 ONSC 1586 Court File No.: CV-10-403998 Date: 2016-03-29 Superior Court of Justice - Ontario
Re: Sean Watts, Plaintiff And: Cindy Yewon Chun, and Hyelyeon Lee, Freeman Chen, Nicholas Kinney and Joe Doe, Defendants
Before: S. F. Dunphy J.
Counsel: M. Reinhart, for the Plaintiff responding party A. Smith, A. Shelley for the Defendants Chun and Lee
Heard: February 12, 2016
Endorsement
[1] There is a risk that comes with trying to ride two horses at once. If one horse stumbles, the rider may be thrown from both. That is what has happened here. The plaintiff started this defamation proceeding in 2010 but then decided that he might have better luck by starting a fresh action in Korea in 2011 while leaving the Ontario proceeding on simmer. At the time, he was resident in Korea and substantially all of the specific damages that he has alleged were caused by the defendants’ defamation occurred in Korea. He claims that the defamation resulted in the loss of his job and the failure of a business venture in that country. The Korean action was later dismissed because he failed to comply with a court order to post security for costs. He now wishes to return to ride the Ontario action to the finish line after all. The remaining defendants object and have asked that the Ontario action be stayed as an abuse of process.
[2] For the reasons that follow, I have decided to grant the motion and stay this action. Circus performers may be able successfully to ride two horses, litigants cannot. An action the plaintiff himself commenced in a Korean court with undoubted jurisdiction raising substantially identical issues and claiming damages allegedly suffered overwhelmingly in that jurisdiction has been dismissed. None of the parties to this action are resident in Ontario at this time. While some of the allegedly defamatory statements were certainly directed to Ontario, the evidence would suggest that the damages potentially attributable to them are slight or speculative whereas the claimed damages in Korea for the publications made there (where the plaintiff was then living and working) are alleged to be substantial. Ontario had undoubted jurisdiction when the claim was commenced here in 2010. However, the combination of the Korean decision coupled with the tenuous remaining links of the parties and the facts of this dispute to Ontario require me to exercise my discretion to issue the requested stay and I have done so.
[3] I heard this motion to stay the proceedings on February 12, 2016. A significant issue on the motion was the impact of the Korean action. I agreed to give the plaintiff a short window of time to see if additional relevant information regarding the status of that proceeding that is not already before me could be obtained. I indicated that no decision would be rendered before February 29, 2016. The moving party was able to obtain a small amount of additional material from the Korean court file and I deferred a ruling on this matter until March 21, 2016 to permit the plaintiff to respond to this information if he thought advisable. He did not avail himself of that opportunity and I am accordingly proceeding to render my decision based upon the record before me.
Facts and Overview
[4] In 2002, Hyelyeon Lee and her daughter Cindy Chun came to Toronto from Korea to permit Ms. Chun to pursue her studies. Ms. Lee was separated from her husband. Ms. Chun completed her high school studies in 2006 and subsequently moved to the United States to attend university where (after a hiatus in Europe) she now lives full time. Her mother remained in Toronto at first. Over this time frame, Mr. Lee had developed a close relationship with Mr. Watts who was then living in Toronto. Mr. Watts was originally her English tutor. However, the relationship became romantic for a time as well.
[5] Mr. Watts lived in Korea between 1995 and 2000. He returned to live in Toronto from 2000 to 2005. In about 2005 he moved back to Korea, returning to Toronto from time to time since he has family here. He now lives and works in Vietnam.
[6] In the course of their relationship, Mr. Watts provided certain investment management advice to Ms. Lee with the apparent design of securing an investor class immigration visa for her. The initial investment was in real estate in Ontario and Mr. Watts was to receive very substantial fees for his services. When Mr. Watts moved back to Korea, he also arranged for Ms. Lee to invest in a bar that he was opening there to serve the expat community in Seoul.
[7] By May 2008, Ms. Lee claims to have discovered that Mr. Watts had swindled her. Whether her conclusions in that regard were well-founded I cannot say. She was however quite angry and concluded, rightly or wrongly, that a man she had trusted had destroyed most of her life savings.
[8] She started an Ontario action in May 2008 against Mr. Watts to seek an accounting of her money. The outcome of the matter is not before me, although the court history of this file indicates that the earlier file (with which this file was for a time linked) resulted in a reference on sale being directed. I do not find the issue material – I am not here concerned with the merits of that dispute between the parties.
[9] Had Ms. Lee contented herself with seeking redress against Mr. Watts in court alone, the litigation story would have been simpler. Instead, she lashed out at Mr. Watts through emails sent to a number of his contacts in Korea and in Canada in June 2008. The emails made a number of negative comments about Mr. Watts that are on their face plainly defamatory. Whether the defence of truth would justify some or all of her comments is of course the main issue in the litigation. It is also alleged that Ms. Chun republished some of these derogatory comments on the internet through a blog that she created for the purpose. As well, copies of the email letters of Ms. Lee were re-posted on-line by her in the comments section of the Korea Herald beneath an article authored by the plaintiff. The article in question concerned the expat bar he had opened there in which Ms. Lee had been persuaded to invest.
[10] There is evidence suggesting that these internet postings were seen by only a relative handful of people, at least some of whom would likely have been the plaintiff seeking to discover what the defendants were up to and the defendants admiring their own handiwork. How many people not directly connected to the litigation became aware of these on-line posts is a matter of conjecture but what data there is suggests very few. Whether even one of those viewers is located in Canada is not known. The internet postings were available in Ontario as most things on the internet are, but there is no evidence today to indicate that they were ever actually seen by anyone in Ontario.
[11] While the impact of the internet postings may appear speculative, the impact of the emails sent by Ms. Lee is alleged to have been considerably more direct and damaging. Some of the emails were sent to Mr. Watts’ family in Toronto. The plaintiff does not suggest that any of this was believed by his family and thus damages from those emails would not likely be material. Some others were sent to business associates in Ontario, although it is not clear whether Mr. Watts had any active business with any of these or whether the emails had any tangible effect upon his reputation with any of them. The most damaging impact of the emails was alleged to be in Korea. At this time – June and July 2008 – Mr. Watts was a resident of Seoul and had a job teaching in the graduate business faculty at Yonsei University. One of the emails was directed to Mr. Watts’ employer who, it is alleged, terminated his employment soon thereafter as a result. Another was sent to the manager of the pub that he had opened in Seoul with the alleged effect of causing him to depart, thereby throwing the entire business venture into a crisis from which it did not recover. He thus claims that his damages extend to loss of his job and loss of a business.
[12] Apart from the enumerated Korean damages claimed, other damages claimed appear less direct and more speculative. Mr. Watts claims that a management consulting business he had established suffered. On discovery, his evidence suggested that this business had already been wound down and was dissolved at around this time. As well, he claims his real estate investing business suffered. This too was a relatively speculative claim. Real estate cares little about who owns it. While he claims some impact upon his reputation in Ontario that affected his ability to carry on his investment business in Ontario, the number of non-family members in Ontario who became aware of the publications appears to be tiny and the particulars of damages arising in Ontario that he was able to enumerate on discovery are negligible. There is no suggestion that Mr. Watts has actually attempted to make any subsequent investments in Ontario that may have been adversely affected, for example.
[13] The foregoing is not to suggest that the plaintiff has no damages claim in Ontario. That has not been found. I merely venture to conclude from the record before me that the Ontario-based damages appear on their face to be modest in comparison with the material and very specific damages allegedly arising in Korea.
[14] After staying for a time in Korea, Mr. Watts secured a teaching position in Vietnam were he currently resides.
[15] Ms. Lee’s efforts to obtain an investor-class visa apparently failed. She returned to Korea in 2012 and lives there at this time.
[16] Mr. Watts originally sought to commence his defamation proceedings in Federal Court in New York in 2009. His efforts to do so were premised on the residence of Ms. Chun in the United States at that time. The Federal Court determined of its own motion that it had no jurisdiction and dismissed the claim on October 9, 2009, apparently before the claim was even served upon any of the defendants. Ms. Chun claims to have learned of it only after the fact as a result of a Google search. While the moving parties attach significance to this proceeding, I do not. The court did not accept jurisdiction and its ruling can have no impact on the merits.
[17] This Ontario proceeding was commenced by way of Statement of Claim issued on May 31, 2010. At that time, the plaintiff was a resident of Korea. Ms. Lee however was still a resident of Toronto. Since Ms. Lee returned to Korea in 2012, none of the parties has been resident in Ontario.
[18] Three other defendants are named in the Ontario proceeding, but none of those claims are still active. The only remaining claims in this proceeding are as against Ms. Chun and Ms. Lee.
[19] Mr. Watts took other proceedings as well. He made a criminal complaint about Ms. Chun’s internet blog to the police in Korea in August 2008. The complaint was taken in hand by the Korean police who telephoned Ms. Chun while she was in New York, securing her admission to having been its author. When Ms. Chun visited Korea in 2010, she was briefly detained and advised that internet libel is a crime in Korea for which there is no defence of truth. She was fined the equivalent of about $500. The fine was paid.
[20] By 2011, the plaintiff claims to have grown frustrated by the progress of this action in Ontario. On May 19, 2011, the defendants brought a motion for security for costs. His residence in Korea made him susceptible to such a motion and it cannot have come as a very large surprise.
[21] Whatever the motive, Mr. Watts commenced a fresh action on June 18, 2011 in the “Jeju Regional Court” in Korea. He admitted that the claim was also for defamation arising from these events but suggested in his examination for discovery that it was for “slightly different” things. “Slightly different” also means “mostly the same” from which, in these circumstances, I would conclude “in all material respects the same”. The two law suits had a common origin and a common object. The plaintiff was able to obtain a copy of the Korean claim subsequent to the hearing of the motion. While written in Korean script, the claim contains extracts of the blogs and emails in English sufficient to confirm Mr. Watts’ admission that the claims were in respect of the same subject matter. I have relied on this subsequently obtained evidence in only a very minor respect since it simply confirmed the admissions already made by Mr. Watts. Mr. Watts did not seek to file any additional argument in respect of this evidence although given an opportunity to do so.
[22] I infer from the timing of the Korean action relative to the motion filed against him in Ontario that he brought the Korean action as an attempt to find a way around the obstacles that he found blocked his path to a hearing of his claim in Ontario. Further, his experience with the police investigation of Ms. Chun in 2008 to 2010 and her inability to plead truth as a defence very likely suggested to him that there may have been a jurisdictional advantage to proceeding in Korea. Whatever his motive, the action was brought by him and on his authority and claimed damages arising from the same causes of action as are raised in this action.
[23] The Ontario motion for security for costs was adjourned a number of times in the following months before eventually being struck for failure to be properly confirmed according to the Case History Report in the court file. Neither counsel was able to shed much light on events of that era since both are new to the file.
[24] The Korean court file reproduced (and translated) for the purposes of this motion reveals that the Regional Court issued an order on November 3, 2011 requiring Mr. Watts to post the equivalent of $4,890 as security for costs. Mr. Watts appealed that decision to the Gwangju High Court, Jeju Civil Division. That latter court issued a decision March 7, 2012 dismissing the appeal. Finally, on April 5, 2012, the Jeju Regional Court ordered that “all suits against the defendants are dismissed” as a result of the failure of the plaintiff to comply with the order requiring him to pay a deposit for security for costs.
[25] The plaintiff claims that he had been unable to post the required security for costs because he lacked the means to do so. However, he refused to produce any evidence of his income on discovery making that assertion impossible to verify. I was asked by the moving parties/defendants to draw the negative inference that he had the means to make the payment and chose not to comply with the Korean order. I readily do so. The amount ordered to be paid into court was modest and the plaintiff’s bald assertion of impecuniosity in that era is backed up by not a shred of evidence. Having refused to answer questions designed to test the premise of impecuniosity, he cannot ask me now to accept his un-tested evidence in that regard.
[26] The defendants have brought this motion pursuant to s. 106 of the Courts of Justice Act, R.S.O. 1990, c. C.43. They seek an order dismissing or staying the action on the basis that Ontario is forum non conveniens for hearing the action and that the action is an abuse of process as the defamation complained of has been the subject of litigation commenced by the plaintiff in New York and Korea.
Issues to be Decided
[27] This claim raises the following issues to be decided:
a. Would continuation of this proceeding constitute an abuse of process?
b. Is Ontario forum non conveniens (and is that objection timely)?
c. Would staying the action deny the plaintiff access to justice?
Analysis and Discussion
(a) Abuse of Process
[28] The plaintiff argues that the continuation of the action in Ontario would not constitute an abuse of process. He submits that his claims have not previously been adjudicated but were dismissed for reasons unrelated to the merits. I disagree.
[29] I start by dismissing any suggestion that I ought to attribute relevance to the New York proceeding. Chronologically, the New York proceeding preceded the Ontario proceeding. It was dismissed by the US court of its own motion for want of jurisdiction. The decision clearly involved no decision on the merits and would not raise an issue estoppel for anything other than the matter decided: jurisdiction.
[30] The same is not true of the Korean decision. The claim was undoubtedly within the jurisdiction of the Korean court. The plaintiff himself was resident in Korea at the time, the most significant of the torts alleged occurred in Korea and the damages suffered were primarily Korean. The Korean court issued an order over a plaintiff within its jurisdiction. The plaintiff failed to comply with the order and as a result the claim was dismissed. A decision of the court with jurisdiction dismissing a claim is a decision on the merits.
[31] If the plaintiff’s claim had been dismissed by this court for failure to comply with an order to post security for costs here, it would be inconceivable that this court would enforce a foreign court’s judgment in respect of the very claim that had been struck here. I can see no basis why the result ought to be different when the dismissal order is that of a Korean court instead.
[32] The fact that the merits were not fully reviewed by the Korean court was not for want of opportunity to do so. The plaintiff started his claim there voluntarily and could have pursued his claim there had he but complied with the orders of that court. There is no suggestion that the court lacked jurisdiction. Having lost an appeal of the order requiring him to post security for costs and having failed to comply with the order that he unsuccessfully appealed, the plaintiff’s claim was dismissed. Whether the merits were reviewed in fact, such an order precludes further proof of the merits and is thus a decision on the merits.
[33] Having invoked the jurisdiction of the Korean court, the plaintiff cannot now deny it because events have evolved in a manner unfavourable to him. It is not necessary for a claim to consider the underlying merits of a claim to be a decision “on the merits”. The merits were before that court – if they were not fully explored it is only because the plaintiff failed to comply with the orders of the court whose jurisdiction he invoked. The plaintiff has admitted that the issues he placed before that court were substantially identical to those before this court and the parties were the same as those now remaining in this proceeding (Mr. Watts, Ms. Lee and Ms. Chun).
[34] My review of the reasons of the appeal court also indicates that the merits were at least partly before the Korean court and argued by the plaintiff. Expert evidence before me confirms that one of the grounds for ordering security for costs under Korean law is based upon a review of the apparent merits of the claim. The plaintiff’s appeal argued that his claim had apparent merit and thus that no security should have been ordered. The appeal court considered his argument and the evidence filed and rejected his appeal. There was thus some review of the merits involved in the decision as well.
[35] In my view, it would be a clear abuse of process to permit the plaintiff to forum shop in the manner in which he proposes. It was his choice to bring a mirror of the claim that he had already started in Ontario to Korea. The Korean court disposed of his claim after he lost an appeal of an interlocutory motion. Choices have consequences.
[36] The plaintiff suggested in oral argument that a separate motion pleading res judicata alone ought to be required for the defendants to seek the relief they claim. I disagree.
[37] The Notice of Motion asked for an order staying this action on the basis that “this action is an abuse of the process of this Court as the defamation complained of in this claim has already been the subject of litigation commenced by the plaintiff in the Republic of Korea”. The evidence filed in support of the motion contained copies of the judgments of the appeal and trial level courts and Mr. Watts was cross-examined about the Korean proceeding at some length. The issue of res judicata was not something sprung upon the plaintiff at the hearing of the motion. Abuse of process is a broader doctrine that may be applied where the strict requirements of issue estoppel or res judicata are not fully present: Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77.
[38] As noted above, I provided the parties with an extensive period in which to file additional materials to address the effect of the Korean judgment. The plaintiff chose to file no further materials. The defendants/moving parties did so. The additional materials they obtained from the Korean court confirmed what the evidence before the court already indicated (and the plaintiff had admitted on examination): the same emails and internet postings were pleaded and relied upon in the Korean proceedings and the parties to the Korean proceeding were the same parties as the parties to this proceeding, i.e. Ms. Chun, Ms. Lee and Mr. Watts. This information confirmed but did not change the evidence already before the court.
[39] The motion squarely raised the notion of abuse of process by virtue of re-litigating a matter already brought by the plaintiff in Korea. I find that the continuation of the Ontario proceeding in the face of the orders made in the Korean action would be a clear abuse of the process of this court.
(b) Forum Non Conveniens
[40] In light of my findings on abuse of process arising from the Korean proceeding, I have not found it necessary to review the forum non conveniens arguments raised by the parties in great detail.
[41] Were the action to have been started today, the moving parties’ position on forum non conveniens would doubtless carry great weight. None of the parties are resident in Ontario and Ontario. While there was certainly some publication in Ontario, it seems unlikely that any substantial damages occurred here and the presence of witnesses and most damages in Korea combined with the lack of any resident parties would very likely result in a finding that Korea is the “clearly more appropriate” forum were the criteria laid out by the Supreme Court of Canada in Club Resorts Ltd. v. Van Breda, 2012 SCC 17, [2012] 1 S.C.R. 572 to be applied.
[42] The plaintiff points to the decisions of Goldhar v. Haaretz.com, 2015 ONSC 1128, 125 O.R. (3d) 619 and Breeden v. Black, 2012 SCC 19,[2012] 1 S.C.R. 666 as instances where claims with similarly tenuous Ontario connections have been allowed to proceed. There is some force to those arguments, but also a very large point of distinction. In both Goldhar and Black the plaintiffs had agreed to pursue only Canadian damages in the Ontario proceeding. In the present case, the main damages claimed – the only ones for which any levels of particulars were forthcoming – occurred in Korea. Not only would the proof of those claims require extensive Korean evidence but a Korean court has already disposed of them.
[43] The action is not being started today, however. It was started in 2010 when at least one of the defendants was resident in Ontario. Further, the defendants filed a statement of defence without contesting forum. It would require exceptional circumstances to permit a forum non conveniens application to be made successfully at this late date, particularly when it is premised at least in part on the change in residence of one of the defendants after the action was properly commenced in Ontario.
[44] I would not be disposed to grant the motion on the basis of forum non conveniens alone. However, I do find that the factors examined by the Court on such a motion can at least be considered as part of a broader abuse of process application. In my view, the current lack of Ontario connections of any of the parties and the relative predominance of Korean-based damages can be considered as additional elements in the abuse of process balancing. These factors also favour the court staying this proceeding as an abuse of process.
(c) Access to Justice
[45] The plaintiff argues that granting a stay of proceedings at this point will result in the plaintiff losing the opportunity to have his case heard on the merits. The plaintiff cites the case of Lilydale Cooperative Limited v. Meyn Canada Inc., (2007) 2007 3486 (ON SC), 84 O.R. (3d) 621 (S.C.J.) to argue that the court ought to give weight to the argument that he would be deprived of access to justice if the matter were to be stayed in favour of a Korean proceeding.
[46] In Lilydale, the plaintiff had started proceedings in Alberta and then subsequently brought essentially identical proceedings in Ontario. The defendants brought a motion to stay the Ontario proceedings on the basis of forum non conveniens. The plaintiff pleaded that an expired Alberta limitation period would preclude proceeding further with the Alberta action, thereby depriving him of access to justice. There was no decision on the merits emanating from the Alberta court.
[47] The situation here is quite the reverse of Lilydale. The plaintiff brought his action in Ontario first and then brought a subsequent action in Korea. The defendants did not object to his having started the second proceeding. He did not ask for consent to discontinue that proceeding without prejudice. The Korean action was dismissed after he unsuccessfully appealed an adverse decision.
[48] The plaintiff has not been denied access to justice – he has already had it. He voluntarily chose to allow his claim to be dismissed by failing to comply with an order made by a court of competent jurisdiction. There is no denial of access to justice, merely a denial of access to a “do-over”.
Disposition
[49] Accordingly, I am permanently staying the plaintiff’s action pursuant to s. 106 of the Courts of Justice Act as an abuse of this court’s process and exercising my discretion under Rule 25.11 to strike out the Statement of Claim without leave to amend on the basis of this abuse of process.
[50] The action being permanently stayed and the claim struck without leave to amend, the defendants ought to be entitled to their costs. I urge the parties to reach agreement on this. If they are unable to do so, written submissions (not to exceed three pages excluding costs outline) from the successful moving party defendants shall be delivered on or before April 15, 2016. The plaintiff shall have until April 22 to deliver responding materials (same length restrictions) while the respondents may deliver a brief reply if any by April 27, 2016. The parties shall deliver these to each other on or before the dates indicated but the respondents shall collect the submissions of ALL parties and submit them to me electronically via my assistant by April 27, 2016. Cases ought not to be appended unless not readily available on-line.
S. F. Dunphy J.
Date: March 29, 2016