Court File and Parties

Court File No.: CV-16-545179 Date: 2016/06/30

Superior Court of Justice – Ontario

Re: MCRL Overseas Printing Inc. v. Company’s Coming Publishing Ltd., Lone Pine Publishing and Lone Pine Publishing International

Before: Master Graham

Heard: June 20, 2016

Counsel: A. Katz, for the plaintiff M. Teitel, for the defendants (moving parties)

Reasons for Decision

(Defendants’ motion to stay action on the basis of forum non conveniens)

[1] The plaintiff is a printing company operating in Mississauga, Ontario. The defendants issued purchase orders to the plaintiff for books which were printed in China and shipped to the defendants in Edmonton, Alberta. The plaintiff’s action is for collection of its unpaid accounts to the defendants in the total amount of $140,000.00(U.S.). The defendants allege significant deficiencies in or damage to the books as a result of which large quantities of the books were returned to them by their customers.

[2] The defendants concede that the Ontario court is able to assume jurisdiction in this case but move for an order that the action be stayed on the basis that Ontario is forum non conveniens and that Alberta is the more appropriate forum.

[3] This court has jurisdiction to stay an action under s. 106 of the Courts of Justice Act:

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.

[4] The law on the issue of when an action should be stayed on the basis of forum non conveniens, because there is another more appropriate forum in which the case should be litigated, is set out in the Supreme Court of Canada decision in Van Breda v. Village Resorts Ltd., 2012 SCC 17:

101 . . . A clear distinction must be drawn between the existence and the exercise of jurisdiction. This distinction is central both to the resolution of issues related to jurisdiction over the claim and to the proper application of the doctrine of forum non conveniens. Forum non conveniens comes into play when jurisdiction is established. It has no relevance to the jurisdictional analysis itself. . . .

103 If a defendant raises an issue of forum non conveniens, the burden is on him or her 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 show, using the same analytical approach the court followed to establish the existence of a real and substantial connection with the local forum, what connections this alternative forum has with the subject matter of the litigation. Finally, the party asking for a stay on the basis of forum non conveniens must demonstrate why the proposed alternative forum should be preferred and considered to be more appropriate . . . .

108 Regarding the burden imposed on a party asking for a stay on the basis of forum non conveniens, the courts have held that the party must show that the alternative forum is clearly more appropriate. The expression "clearly more appropriate" is well established. It was used in Spiliada and Amchem. On the other hand, it has not always been used consistently and does not appear in the CJPTA or any of the statutes based on the CJPTA, which simply require that the party moving for a stay establish that there is a "more appropriate forum" elsewhere. Nor is this expression found in art. 3135 of the Civil Code of Québec, which refers instead to the exceptional nature of the power conferred on a Quebec authority to decline jurisdiction: "... it may exceptionally and on an application by a party, decline jurisdiction ...".

109 The use of the words "clearly" and "exceptionally" should be interpreted as an acknowledgment that the normal state of affairs is that jurisdiction should be exercised once it is properly assumed. The burden is on a party who seeks to depart from this normal state of affairs to show that, in light of the characteristics of the alternative forum, it would be fairer and more efficient to do so and that the plaintiff should be denied the benefits of his or her decision to select a forum that is appropriate under the conflicts rules. The court should not exercise its discretion in favour of a stay solely because it finds, once all relevant concerns and factors are weighed, that comparable forums exist in other provinces or states. It is not a matter of flipping a coin. A court hearing an application for a stay of proceedings must find that a forum exists that is in a better position to dispose fairly and efficiently of the litigation. But the court must be mindful that jurisdiction may sometimes be established on a rather low threshold under the conflicts rules. Forum non conveniens may play an important role in identifying a forum that is clearly more appropriate for disposing of the litigation and thus ensuring fairness to the parties and a more efficient process for resolving their dispute.

110 As I mentioned above, the factors that a court may consider in deciding whether to apply forum non conveniens may vary depending on the context and might include the locations of parties and witnesses, the cost of transferring the case to another jurisdiction or of declining the stay, the impact of a transfer on the conduct of the litigation or on related or parallel proceedings, the possibility of conflicting judgments, problems related to the recognition and enforcement of judgments, and the relative strengths of the connections of the two parties. [emphasis added]

[5] The court in Van Breda refers to previous decisions requiring the moving party to demonstrate that another forum is “clearly more appropriate”. However, the same court also clarifies this burden as meaning that a court that has properly assumed jurisdiction should exercise it unless the moving defendant can show that, in light of the characteristics of the alternative forum, it would be fairer and more efficient for it to assume jurisdiction.

[6] The defendants submit that the “presumptive connecting factor” that gives the Ontario court jurisdiction in this matter, being the making of the contract between the plaintiff and defendants in Ontario, constitutes a weak connection to Ontario and that this weak connection should be taken into account when considering the factors in paragraph 110 of Van Breda. The court in Van Breda (paragraph 109) does comment that “the court must be mindful that jurisdiction may sometimes be established on a rather low threshold under the conflicts rules”.

[7] Accordingly, while the issue of forum non conveniens must be determined independent of jurisdiction, a court assuming jurisdiction on the basis of a weak presumptive connection may be more susceptible to being displaced on the basis that it is forum non conveniens.

[8] The essential issue on this motion is whether the defendants can establish, based on a consideration of the factors in paragraph 110 of Van Breda, that it would be fairer and more efficient for this action to proceed in Alberta instead of Ontario. Although the plaintiff and defendants essentially agree that the location of the parties and witnesses are the most relevant factors for consideration on this motion, I will review all of the factors in paragraph 110 of Van Breda. My consideration of these factors is as follows:

Locations of parties and witnesses

[9] The plaintiff is a federally incorporated company with its head office in Toronto and its principal place of business in Mississauga. Its sole officer, director and shareholder Mankit Chan states that the plaintiff “carries on business in Canada and elsewhere as a printer”. There is no evidence as to the frequency of Mr. Chan’s travel for business away from Toronto.

[10] The defendants Company’s Coming Publishing Limited and Lone Pine Publishing are based in Edmonton, Alberta although they recently transferred their corporate registrations from Alberta to British Columbia. It is not disputed that these defendants’ entire workforce, with the exception of one person, is in Edmonton. The defendant Lone Pine Publishing International is incorporated in Barbados and has its contracted workforce in Edmonton.

[11] The plaintiff’s evidence is that it will call seven witnesses at trial, including Mr. Chan, Liba Ronge, his accounts receivable and payable clerk who was also in charge of shipments and logistics, representatives of the defendants’ customers Loblaws, Shoppers and CMMI (an agent for Walmart), Clive Law, the president of Service Publications and Christy Cook, the CEO of “TeachMy”. The plaintiff submits that the representatives of Loblaws, Shoppers and CMMI can testify as to the condition of the books received by them and the reason for the returns of the shipments. Based on what are essentially letters of reference, Clive Law and Christy Cook will testify as to the quality of printing work done by or through the plaintiff for their organizations.

[12] The defendants have provided a list of 15 witnesses. Shane Kennedy, the principal shareholder of the corporation that holds the shares for all three defendants and a director of the Canadian companies, will testify as to his discussions with the plaintiff and all aspects of the defendants’ damages. Mahmood Shah, the controller and CFO of the defendants, will testify as to his discussions with Mr. Chan once the damage was discovered, the collection of data relating to damage and the economic impact on the defendants of the damaged books. Leslie Hung, the defendants’ production manager, will testify as to the identity of the companies that ordered the books, the sending of purchase orders, his discussions with Mr. Chan once the damage was discovered and the assessment of the damaged books.

[13] Three of the defendants’ proposed witnesses are the presidents of three companies, not named as defendants, which ordered various books for which the defendant Lone Pine Publishing was billed.

[14] The remaining nine of the defendants’ proposed witnesses are employees described as the editorial director of Lone Pine Publishing, warehouse manager, former warehouse manager, warehouse coordinator, warehouse lead hand, assistant controller, office manager and two customer service staff. These individuals will testify as to the damage to or deficiencies in the books, customer complaints with respect to any such damage or deficiencies and responses to those complaints, the returns of the books and the damages sustained by the defendants as a result of the damage or deficiencies.

[15] All of the defendants’ proposed witnesses live in Edmonton except Leslie Hung, the defendants’ production manager, who lives in Vancouver.

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

[16] Despite the wording of this part of the test in Van Breda, this court cannot transfer this action to Alberta and can only make a finding that that province would be a more appropriate forum for the action than Ontario. In that event, the plaintiff would be required to incur the cost of retaining counsel to start a new action in Alberta. Any such cost would be mitigated by the fact that the plaintiff could simply draft a claim in Alberta in the same form as its Ontario statement of claim without having to prepare a whole new pleading. In addition, the plaintiffs would have to attend in Alberta possibly for their examinations for discovery and certainly for trial.

[17] The cost associated with declining the stay would be the cost to the defendants of attending in Ontario possibly for examinations for discovery and certainly for trial and of bringing their witnesses to Ontario for trial.

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

[18] Once again, this court can only order a stay of the Ontario action and has no authority to transfer it to another province. In the event of a stay, the plaintiff would be required to commence a new action in Alberta. Any delay arising from doing so should be minimal because, as indicated above, a statement of claim already exists and it is simply a matter of adapting it to the form required by the Alberta civil procedure rules and having it issued and served. The defendants will then be required to defend, which is the same position in which they will find themselves in this Ontario action if the requested stay is not granted.

[19] There are no related or parallel proceedings.

The possibility of conflicting judgments

[20] As there is no other related litigation pending in Alberta or anywhere else, there is no possibility of conflicting judgments arising from a refusal to stay this action.

The problems related to the recognition and enforcement of judgments

[21] The alternative proposed court is in Alberta, where the defendants carry on business. This would not be a hardship to the plaintiff because, in the event of a judgment in the Ontario action, it would have to institute any collection proceedings in Alberta or possibly British Columbia.

The relative strengths of the connections of the two parties

[22] The plaintiff, which is federally incorporated, has its head office in Ontario and its principal Mr. Chan operates the business from Ontario. Two of the defendants are incorporated in British Columbia and the third is incorporated in Barbados but they all carry on business in Alberta. On this basis, the plaintiff and defendants have similar connections to Ontario and Alberta respectively.

Location of physical evidence

[23] The court in Van Breda listed factors that a court “may consider” in deciding whether to apply forum non conveniens and further that these factors “may vary” depending on the context. This means that the list of factors specified is not intended to be exhaustive and other factors may be relevant. In this case, the defendants submit that the fact that the books returned to them in Edmonton are now being stored in two warehouses no more than an hour and a half drive from Edmonton is a relevant factor in the forum non conveniens analysis. The defendants’ evidence is that over 77,000 books have been returned although not all are damaged.

Analysis and Decision

[24] Reviewing the Van Breda factors, there is no pending litigation in another jurisdiction that might give rise to conflicting judgments and no potential problem with recognition or enforcement of any judgment. The parties have similar connections to their preferred forums and only minimal delay should result from an order requiring the plaintiff to pursue any litigation in Alberta. The critical factors are therefore the location of parties and witnesses and the physical evidence and the cost of either declining jurisdiction or declining the requested stay.

[25] Addressing first the additional costs to the parties, if Ontario continues to assume jurisdiction over this action, the litigation will be relatively more costly for the defendants who will have to travel to Ontario to defend it. If the action is stayed on the basis that Alberta is the more appropriate forum, then the plaintiff will incur the additional expense of travelling to Edmonton to advance its claim and defend any counterclaim. It is inevitable on a motion of this nature that the decision will increase the costs of litigation for one of the parties. This court must therefore consider how to achieve the most efficient resolution of the action by minimizing the total costs of the litigation.

[26] The plaintiff intends to call seven witnesses all of whom it submits are in Ontario. With respect to the plaintiff’s proposed witnesses, the defendants acknowledge that Mr. Chan and possibly Ms. Ronge would be necessary witnesses for the plaintiff. With respect to the proposed witnesses from Loblaws, Shoppers and CMMI, the defendants submit that first, no specific individuals have been identified and second, there is no evidence as to the nature of their evidence. Finally, the defendants submit that the evidence of Mr. Law and Ms. Cook will be of no assistance to the court in determining the condition of the books in the plaintiff’s shipments to the defendants.

[27] I accept that Mr. Chan and Ms. Ronge are necessary witnesses on the issues of the unpaid accounts, the parties that placed the orders and any complaints or lack thereof regarding the books. Although the plaintiff has not identified the individuals from Loblaws, Shoppers and CMMI (Walmart’s agent) whom it would call to testify, it is plausible that it would call witnesses from these entities in response to the defendants’ evidence of complaints from their customers. What is not clear is where any such witnesses live and work; they would not necessarily be from Ontario.

[28] The proposed witnesses Clive Law and Christy Cook would simply testify that they were happy with the plaintiff’s work for them. This evidence is of questionable probative value in assessing the nature and extent of any deficiencies in the books supplied to the defendants. They should not be included in determining the number of the plaintiff’s witnesses for trial.

[29] Accordingly, although the plaintiff plausibly has five witnesses for trial, it has provided no clear evidence as to where three of those witnesses, who are not individually identified, live and work.

[30] The defendants propose to call 15 witnesses at trial, 14 from Edmonton and one from Vancouver. Mr. Hung, their witness in Vancouver, is prepared to fly to Edmonton for the trial of the action. Although the plaintiff submits that the action is essentially for collection of a debt with respect to the printing and supply of books, the defendants have provided evidence of deficiencies in and damage to the books as both the basis of their defence and as justification for the number of witnesses they submit that they will require at trial.

[31] The plaintiff submits that the witnesses whom the defendants intend to call on the issue of deficiencies in the books should not be taken into account on this motion because the defendants failed to raise any such deficiencies in a timely manner. Mr. Chan deposes that he met with Mr. Kennedy and Mr. Hung of the defendants on July 20, 2015 at which time neither of them made any complaints about the plaintiff’s products. Mr. Kennedy, on behalf of the defendants, deposes in paragraph 38 of his affidavit of April 29, 2016 that he remembers raising the issue of damaged books during a meeting in Vancouver in July, 2015.

[32] Following this meeting, on July 21, 2015, Mr. Chan sent an email message confirming the payment plan suggested by Mr. Kennedy the previous day and referring to a new order on which “we will start the proofing process”. This email is contained in Mr. Chan’s first affidavit sworn April 12, 2016, and Mr. Kennedy, in his subsequent affidavits of April 14 and April 29, 2016, does not deny receiving the email. More importantly, Mr. Kennedy provides no evidence of any responding email alleging damage to or deficiencies in the books.

[33] The plaintiff also relies on the defendants’ subsequent email messages from Leslie Hung and Mahmood Shah to Mr. Chan dated September 17 and September 23, 2015 respectively. In his email of September 17, 2015, Mr. Hung, who appears to have been present at the meeting of July 20, 2015, thanks Mr. Chan for his patience and understanding and states that the defendants “have some hiccups receiving our payments from customers; and we will make our portion payments to you shortly”. In his message of September 23, 2015 to Mr. Chan and copied to Mr. Hung, Mr. Shah apologizes “for all of the current mess and misunderstanding”, attributes the delay to a cash flow problem in part attributable to the intermediary distributor of Walmart not clearing a large receivable, and sets out a payment schedule “to get us back on track to clearing this account”. Although both of these messages are sent well after the meeting of July 20, 2015 at which Mr. Kennedy alleges he raised the issue of damaged books, neither of them refer to any such damage or other deficiencies.

[34] One would expect that the defendants, in attempting to justify their delay in payment of the plaintiff’s accounts in September, 2015, would have relied on the alleged deficiencies in the books. Given the absence of any reference to such deficiencies in the defendants’ correspondence regarding their delay in payment, it is difficult to accept that Mr. Kennedy complained of damaged books at the July 20, 2015 meeting.

[35] On the defendants’ evidence, the first written allegation of any damage to or deficiencies in any of the books is an email of December 21, 2015 from Mahmood Shah (the defendants’ controller and CFO) to someone working with the defendants’ office manager Neda Farheen, and also sent to Mr. Chan, asking “Neda” to check with Leslie (presumably Leslie Hung, the defendants’ production manager) “to send you details of damaged and missing pages books with titles and confirm with Michael WM”. Despite this email, Mr. Chan deposes that the issues regarding damaged books were first brought to his attention in a letter from plaintiff’s counsel dated March 4, 2016 subsequent to service of the statement of claim on February 3, 2016. Given that Mr. Shah’s December 21, 2015 email referring to “damaged and missing pages books” was sent to him, it is difficult to accept Mr. Chan’s evidence in this regard.

[36] The majority of the defendants’ proposed witnesses (9 of 15) would be called to testify as to the damage to or deficiencies in the books supplied by the plaintiff. The weight to be given to this number of witnesses depends on whether the timeliness of any complaints regarding the condition of the books should be a factor on this motion.

[37] Despite their apparent failure to allege or particularize deficiencies in the books in a timely manner, the defendants have provided evidence of such deficiencies such as books printed with missing pages and with damaged and delaminating covers. The court must determine whether, in the face of this evidence, the absence of timely complaints of deficiencies is a reason for the court to disregard the witnesses who would testify regarding those deficiencies for the purpose of deciding whether or not Ontario is forum non conveniens.

[38] The court’s mandate on this motion is to determine whether the defendants have discharged their burden to show that it would be fairer and more efficient to deprive the plaintiff of its choice of forum. Irrespective of issues relating to the timeliness of complaints regarding deficiencies in the books, the condition of the books will be an issue at trial and it will be open to the defendants to call witnesses to testify on that issue. The plaintiff will, of course, be free to raise the timing of any complaints in response to the defendants’ allegations as to the condition of the books and in challenging the evidence of the witnesses called to prove those allegations. The court must therefore take into consideration all parties’ witnesses who will testify on the issues of the condition of the books and the timeliness of any complaints.

[39] I accept that the proposed witnesses Shane Kennedy, Mahmood Shah and Leslie Hung are all necessary witnesses on the issues set out in paragraph 12 above. The office manager Ms. Farheen is also plausibly a necessary witness on the issue of the cost of the damaged books. The three witnesses from the other publishers for whose orders the defendants allege that they have erroneously been charged are also necessary witnesses.

[40] I am less certain about the other eight proposed witnesses, all of whom the defendants suggest are required on the issue of deficiencies in the books and ensuing damages to the defendants. Specifically, I question whether it is necessary for the defendants to call all of a warehouse manager, a former warehouse manager, a warehouse coordinator and a warehouse lead hand to testify as to the assessment of damaged books. Similarly, there is no evidence as to why it would be necessary to call three witnesses with respect to customer complaints regarding the books. Essentially, there appears to be some “padding” with respect to these witnesses. For the purpose of this analysis, I would remove from the defendants’ list two of the warehouse staff and one of the employees dealing with customer complaints. On this basis, the defendants would have 12 witnesses at trial.

[41] In summary, the plaintiff is an Ontario company that carries on business throughout Canada. Although the purchase orders would have been received by the plaintiff in Ontario, the plaintiff knew that it would be performing the contract in Alberta by shipping the books to Edmonton where the defendants carried on business.

[42] The plaintiff has substantiated that two of its witnesses are in Ontario and while I accept that it could plausibly call three more witnesses on the issue of the deficiencies in the books, these witnesses have not been specifically identified so there is no clear evidence that they are Ontario residents. I accept that the defendants would call 12 witnesses 11 of whom are in Edmonton and one of whom (Mr. Hung) is prepared to travel to Edmonton from Vancouver.

[43] With respect to the physical evidence, although the plaintiff’s accounting records are in Ontario, the defendants’ records and all of the subject books are in Alberta. It will be much less onerous for the plaintiff to bring its accounting records to Alberta than for the defendants to ship large quantities of books to Ontario.

[44] The fact that the defendants carry on business in Alberta and that the contract between the plaintiff and defendants was performed in Alberta creates a stronger presumptive connection to Alberta than the plaintiff’s receipt in Ontario of the defendants’ purchase orders does to Ontario. Most importantly, 11 of a total of 14 identified witnesses for both parties are in Alberta and a 12th witness is in Vancouver. In addition, the bulk of the physical evidence is in Alberta. I therefore conclude that an Alberta court would be the forum “in a better position to dispose fairly and efficiently of the litigation” (Van Breda, supra, paragraph 109) and accordingly, this Ontario action is hereby stayed.

Costs

[45] At the conclusion of the hearing, counsel provided costs outlines and made brief submissions on costs. The defendants’ costs outline sets out costs of $12,971.23, including $425.89 for disbursements, and the plaintiff’s costs outline sets out costs of $4,299.79 including $287.29 for disbursements. Both counsel acknowledged that they did not need to make further submissions prior to the court making its decision on costs.

[46] The plaintiff was successful in obtaining a stay of the action in Ontario primarily on the basis that the bulk of the physical evidence and most of the witnesses on issues relating to the condition of the subject books are in Alberta. However, my decision on this motion is based simply on the location of the witnesses and physical evidence required to decide the issue and is in no way a decision on the issues themselves. There are still issues to be resolved with respect to the bona fides of the defendants’ complaints as to the condition of the books, given the timing of those complaints as discussed above.

[47] Assuming that the plaintiff commences a similar action in Alberta, the just disposition of the costs of this motion should turn on how the issue of deficiencies in the books is resolved at trial. The plaintiff’s costs figure of $12,971.23 is excessive and I find that $6,500.00 is a fair and reasonable amount in all the circumstances (See: Boucher v. Public Accountants Council (2004), 71 O.R.(3d) 291 (C.A.)). If the plaintiff commences an action in Alberta, the costs of this motion, fixed at $6,500.00 inclusive of HST and disbursements, shall be payable by the plaintiff to the defendants in the cause. For greater clarity, if the defendants are successful in defending any Alberta action, then the plaintiff shall pay these costs; if the plaintiff succeeds in an Alberta action, then these costs shall not be payable.

[48] If the plaintiff does not commence an action in Alberta within 90 days, then it shall pay to the defendants costs of $6,500.00 within 120 days of the date of these reasons.

Master Graham

Date: June 30, 2016