Court File and Parties

COURT FILE NO.: CV-16-546316 DATE: 2017/01/16 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: INTEGRITY WORLDWIDE INC., Plaintiff/Responding Party AND: CATHERINE KNAPP AND GLOBAL SAFETY & EQUIPMENT INC. Defendants/Moving Party Global

BEFORE: MASTER RONNA M. BROTT

COUNSEL: Catherine E. Allen, for the Plaintiff Fax: (416)365-0695 Philip Cho, for the Defendant Global Safety & Equipment Inc. Fax: (416)306-9874

HEARD: December 16, 2016

Endorsement

[1] The defendant Global Safety & Equipment Inc. (“Global”) brings this motion to set aside service of the Statement of Claim upon Global and to stay or dismiss the action against it on the basis that Ontario is not the proper forum.

[2] The plaintiff, Integrity Worldwide Inc. (“IWW”) is a corporation incorporated pursuant to the laws of Canada. It carries on business of the development, import and sale of safety protection systems for use on construction sites. Its registered head office is in Richmond Hill, Ontario and its operational head office is in Burlington, Ontario. IWW conducts most of its business in Ontario but it also conducts business in the rest of Canada, the United States, the United Kingdom and elsewhere.

[3] Global is a corporation incorporated pursuant to the laws of the State of Washington. Global’s head office is in Pacific, Washington. It carries on business providing operator safety training for the construction industry on a variety of products.

[4] The defendant Catherine Knapp (“Knapp”) is an individual residing in the Province of Ontario and was employed by IWW, as a sales support manager from August 4, 2015 to mid-December 2015. During her employment she worked out of the plaintiff’s Ontario office and she would, from time to time, travel to the United States as part of her employment duties.

[5] This action was commenced by IWW following Knapp’s resignation from her employment with IWW. It is alleged that Knapp breached her employment contract and Confidentiality Agreement, breached her fiduciary duty and interfered with contractual relations and conspired to do some of these when she, on December 4, 2015, emailed two Excel documents from the plaintiff’s Ontario office to Geoffrey Arther, the President of Global. The plaintiff further alleges that Knapp had put an independent contractor of IWW, Jon Hammond (“Hammond”) in touch with Global.

[6] As against Global, the plaintiff seeks, inter alia, damages for inducing Knapp to breach her employment contract, unlawful interference with the plaintiff’s economic relations and unlawful use of IWW’s confidential information. Further, IWW seeks, inter alia, to restrain Global from soliciting the plaintiff’s customers using any confidential information and/or interfering with other of the plaintiff’s employees.

Service of the Statement of Claim Outside Ontario

[7] On February 12, 2016, Global was served with the Statement of Claim outside of Ontario, in Pacific, Washington, without leave of the Court, pursuant to subrule 17.02 (f),(g),and (i) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. The rule states:

A party to a proceeding may, without a court order, be served outside Ontario with an originating process or notice of a reference where the proceeding against the party consists of a claim or claims,

(f) in respect of a contract where,

i. The contract was made in Ontario,

ii. The contract provides that it is to be governed by or interpreted in accordance with the law of Ontario,

iii. The parties to the contract have agreed that the courts of Ontario are to have jurisdiction over legal proceedings in respect of the contract, or

iv. A breach of the contract has been committed in Ontario, even though the breach was preceded or accompanied by a breach outside Ontario that rendered impossible the performance of the part of the contract that ought to have been performed in Ontario;

(g) in respect of a tort committed in Ontario;

(i) for an injunction ordering a party to do, or refrain from doing anything in Ontario or affecting real or personal property in Ontario.

[8] Pursuant to rule 17.06(1), a party who has been served with an originating process outside of Ontario may move, before delivering a defence, notice of intent to defend or notice of appearance:

a) for an Order setting aside the service and any Order that authorized the service; or,

b) for an Order staying the proceeding.

Pursuant to rule 17.06 (2), the Court may make an Order under subrule (1) or such other order as is just where it is satisfied that,

a) service outside Ontario is not authorized by these rules;

b) an order granting leave to serve outside Ontario should be set aside; or

c) Ontario is not a convenient forum for the hearing of the proceeding.

[9] In addition, pursuant to s. 106 of the Courts of Justice Act, R.S.O. 1990, c. C.43, the 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.

Rule 17.02 (f) – Re Contracts

[10] Global submits that as there was no contract between IWW and Global, the claim against Global does not relate to a contract in Ontario. Therefore it asserts that rule 17.02 (f) is not applicable and that service must be set aside.

[11] IWW submits that there was a contract between Knapp and IWW which was breached in Ontario when Knapp sent to Global the confidential information from the Ontario office.

[12] The Statement of Claim alleges that Global induced Knapp to breach her employment contract and her Confidentiality Agreement – both of which were entered into in Ontario. Rule 17.02 (f) uses the words “in respect of a contract…”. It is true that this litigation against Global does not arise from a contract entered into between the plaintiff and Global, but it certainly does arise in respect of the contract between IWW and Knapp. For this reason, service pursuant to rule 17.02 was appropriate.

Rule 17.02 (g) – Re Torts

[13] Global asserts that the allegations pertaining to Global’s alleged receipt of and use of the confidential information do not constitute acts occurring in Ontario. They submit that while it is alleged by IWW that Global maintained possession of the confidential information for the purpose of competing unfairly, any such alleged competition and/or alleged interference with the plaintiff’s economic relations, would be in respect of the plaintiff’s anticipated business in the U.S. and not Ontario.

[14] IWW submits that the alleged inducement and conspiracy by Global occurred in Ontario. Relying on the Court of Appeal in Ontario v Rothman’s Inc., 2013 ONCA 353, [2013] OJ No 2367, the plaintiff quotes the court at para 37, and it is well established that “a conspiracy occurs in the jurisdiction where the harm is suffered regardless of where the alleged wrongful conduct occurred”.

[15] Rule 17.02 does not require a review of the merits of the claim or an intense review of the evidence submitted by the plaintiff. Global knew that Knapp was an employee of IWW and therefore would be cognizant of employee/employer duties including non-disclosure of confidential information. Further evidence will surface at discoveries. I am satisfied that the emails from Knapp to both Global and Hammond are sufficient for the purposes of rule 17.

17.02 (i) – Re Injunctions

[16] In the Statement of Claim, IWW seeks injunctive relief as against Global prohibiting the defendants and their respective employees, servants, and agents from directly or indirectly using or disclosing the confidential information and/or copying, duplicating, transmitting, accessing etc. the confidential information. This relief is being sought as against both Global and Knapp. The latter resides in Ontario and she allegedly, while in Ontario, already disclosed some confidential information to Global.

[17] I find that service of the Statement of Claim outside Ontario was authorized pursuant to rules 17.02(f) (g) and (i). It need not be set aside.

Jurisdiction

[18] Notwithstanding the statutory provisions permitting service outside of Ontario without leave, Ontario courts may assert jurisdiction over a foreign defendant if there is a real and substantial connection to Ontario. To assess whether to assume jurisdiction, the court shall determine whether one of the ‘presumptive connecting factors’ outlined in Club Resorts Ltd. v Van Breda, 2012 SCC 17 applies. As stated at para 64:

when one of the presumptive connecting factors applies, the court will assume jurisdiction unless the defendant can demonstrate the absence of a real and substantial connection. If, on the other hand, none of the presumptive connecting factors are found to apply to the claim, the onus rests on the plaintiff to prove that a sufficient relationship exists between the litigation and the forum.

[19] The four presumptive connecting factors are outlined in Van Breda and the list is not exhaustive. They prima facie entitle a court to assume jurisdiction over a dispute and they are as follows:

a) The defendant is domiciled or resident in Ontario.

b) The defendant is carrying on business in Ontario.

c) The tort was committed in Ontario; and

d) The contract connected with the dispute was made in Ontario.

[20] Applying the facts of the dispute to the presumptive factors:

a) Global is not domiciled in Ontario therefore the first factor does not apply.

b) Global does not carry on business in Ontario. The second factor does not apply.

c) & d) Global submits that the claim really concerns the plaintiff’s alleged business losses in the United States and that any connection to Ontario is peripheral at best. As there is no evidence of any inducement having occurred in Ontario, and there is no evidence that Global actually took away jobs from IWW, Global submits that it cannot be said that any damages were suffered in Ontario.

Global further submits that despite the plaintiff’s allegations of breach of contract, breach of fiduciary duty, inducement to breach of contract and interference with contractual and economic relations, the contract actually has a very weak connection between the plaintiff and Global. Further, with respect to IWW’s allegations that Global used confidential information, because Global has no operations in Ontario, the defendant asserts that it cannot be said that Global received or used the confidential information in Ontario.

The contact connected with the dispute was made in Ontario. Global draws an analogy to and relies on Lazer-Tech Limited v Dejeray, 2010 ONSC 1662 wherein the plaintiff commenced an action in Ontario alleging that the defendants induced a customer to breach its contract with the plaintiff, and that the defendants also interfered with the plaintiff’s economic relations. In the case, the contract was made in Ontario and the alleged tortious acts occurred in British Columbia. Justice Penny found that although ‘a weak connection’ existed to Ontario because the contracts were made in Ontario, the real subject matter of the claim was in tort. Justice Penny stayed the action on the basis of lack of jurisdiction and forum non conveniens.

In Lazer-Tech, the Court found that the plaintiff’s evidence failed to challenge the defendant’s allegation that the tortious conduct occurred in British Columbia and not in Ontario.

At paragraphs 54 – 57 of the Statement of Claim, IWW sets out an alleged conspiracy, breach of contract, and other tortious acts. IWW has produced Knapp’s emails which include IWW’s confidential information that was sent to a competitor, Global.

In the case at bar, the plaintiff alleges that it was a victim of a conspiracy which allegation necessarily requires the plaintiff to marshal evidence during the discovery process. The plaintiff has produced evidence which connects Knapp and Global to an alleged delivery of confidential information – with that information being created and delivered in Ontario. Should the plaintiff succeed, its damages will be suffered in Ontario. This action is distinguishable from Lazer-Tech as Lazer-Tech did not involve any allegations of conspiracy. Further, in Lazer-Tech, the court relied on rule 17.02(h) [where damages are sustained] and that provision has since been revoked. Last, Lazer-Tech found that the plaintiff made no attempt to show that the tort occurred in Ontario where here the evidence is to the contrary. The analysis for jurisdictional determination does not require the depth of a Rule 21 motion. I need not consider the merits. In my view, the pleadings have sufficient particularity to permit a finding of jurisdiction. Both the third and fourth presumptive factors have been met. Accordingly, there is a juridical basis for Ontario to assume jurisdiction.

[21] Despite this finding, Van Breda made clear that when jurisdiction is invoked, each case would turn on its own facts. It is incumbent on the defendant to demonstrate that the court should decline jurisdiction under the principle of forum non conveniens. It lies with Global to demonstrate that an alternative forum is preferred and is more appropriate.

[22] Global submits that the court must look to the non-exhaustive list of factors set out by the Court of Appeal in Muscutt v Courcelles in assessing the convenience of a forum. In my view, the Muscutt factors are to be used to determine where an action should be litigated when there is “more than one forum capable of assuming jurisdiction.” Here, Global has failed to allege any more convenient forum – it has simply relied on the assertion that factors favour the United States. The United States is not a forum. As Global has failed to identify any more convenient forum and further, has failed to provide any explanation of why another forum is the more convenient forum, I conclude that Ontario is the most convenient forum for the adjudication of this dispute.

[23] Had Global offered an alternative, more convenient forum, it would have been necessary to review the Muscutt factors as summarized in Carrera v Coalcorp Mining Inc. [2009] OJ No 2776;

(i) The connection between the forum and the plaintiff’s claim,

(ii) The connection between the forum and the defendant,

(iii) Unfairness to the defendant in assuming jurisdiction,

(iv) Unfairness to the plaintiff in not assuming jurisdiction,

(v) The involvement of other parties to the suit,

(vi) The court’s willingness to recognize and enforce an extra-provincial judgment rendered on the same jurisdictional basis,

(vii)Whether the case is interprovincial or international in nature, and

(viii) comity and the standards of jurisdiction, recognition and enforcement prevailing elsewhere.

[24] Applying those factors to this case, there is a substantial connection between the plaintiff’s claim and Ontario. Both the plaintiff and the defendant Knapp reside in Ontario. The contracts between Global and Knapp and Global and Hammond were entered into in Ontario. The plaintiff’s confidential information is in Ontario. All of the plaintiff’s witnesses except Hammond are in Ontario. The majority of the plaintiff’s business is in Ontario as is their bank account.

[25] Rule 1.04 urges parties to resolve disputes in the most cost efficient, expeditious manner to achieve a just determination. The allegations in the Statement of Claim against Knapp and Global are inextricably linked. To force the plaintiff to commence an action against Global in some unknown jurisdiction (as Global has failed to identify a convenient forum) would undoubtedly result in a multiplicity of proceedings which could lead to conflicting legal and factual findings. This would unquestionably be unjust to the plaintiff.

[26] For the following reasons, Global’s motion is dismissed.

1. Global was properly served outside of Ontario pursuant to Rules 17.02(f)(g) and (i);
2. This court ought to assume jurisdiction over Global as there is a real and substantial connection to Ontario as the contract connected to the dispute was made in Ontario and the breach arguably occurred in Ontario.
3. Ontario is the most convenient forum for the adjudication of the dispute.

[27] The parties did not exchange costs outlines but counsel agreed to attempt to agree on the issue of costs. In the event that they are unable to reach an agreement, the plaintiff shall within 30 days serve and file brief (1 – 2 pages) costs submissions. Global shall respond with brief (1 – 2 pages) submissions within 15 days following receipt of the defendants’ submissions. There shall be no Reply without leave of the Court.

(original signed)______________ MASTER RONNA M. BROTT Date: January 16, 2017.