Yip v. HSBC Holdings plc, 2017 ONSC 5332

Yip v. HSBC Holdings plc, 2017 ONSC 5332

CITATION: Yip v. HSBC Holdings plc, 2017 ONSC 5332

COURT FILE NO.: CV-14-507953CP

DATE: 20170911

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

WAI KAN YIP

Plaintiff

– and –

HSBC HOLDINGS plc and DAVID BAGLEY

Defendants

Paul J. Bates and John Archibald for the Plaintiff

R. Paul Steep, Brandon Kain, Bryn Gray, and Charlotte-Anne Malischewski for the Defendants

HEARD: August 15,16, and 18, 2017.

PERELL, J.

REASONS FOR DECISION

A. Introduction and Overview

1This action is brought pursuant to the Class Proceedings Act, 1992, S.O. 1992, c. 6. The Plaintiff Wai Kan Yip asserts a claim under Part XXIII.1 of the Ontario Securities Act, R.S.O. 1990, c. S.5, against HSBC Holdings plc. He also asserts a common law negligent misrepresentation claim against HSBC Holdings.

2HSBC Holdings is the parent holding company of an international banking conglomerate with a head office in London, U.K. In his action, Mr. Yip also sues the co-defendant David Bagley, a former employee of HSBC Holdings, pursuant to Part XXIII.1 of the Ontario Securities Act.

3Mr. Yip sues HSBC Holdings, whose shares have never traded in Canada, as a “responsible issuer” under the Ontario Securities Act, and Mr. Yip alleges that he and other purchasers on foreign exchanges who purchased HSBC Holdings’ shares or who purchased its ADRs (American Depository Receipts) were misled by HSBC Holdings’ representations about: (1) compliance with anti-money laundering and anti-terrorist financing laws (“the compliance representation”); and, (2) its nonparticipation in an illegal scheme to manipulate the London Interbank Offered Rate (“Libor”) and the Euro Interbank Offered Rate (“Euribor”), which are benchmark interest rates used by banks across the world (“the Libor/Euribor representation”).

4Mr. Yip alleges that after the compliance representation and the Libor/Euribor representation were revealed as false, the investors in HSBC Holdings’ shares suffered a $7 billion (USD) loss because they overpaid for their shares or ADRs.

5There are two motions before the court. First, there is a motion by HSBC Holdings and Mr. Bagley to dismiss or stay Mr. Yip’s action on the grounds that the Ontario court lacks jurisdiction simpliciter or on the grounds that Ontario is forum non conveniens. Second, there is a cross-motion by Mr. Yip for a declaration that HSBC Holdings is a “responsible issuer” under s.138.8 of the Ontario Securities Act.

6The predominant factual ingredient of the main motion is the circumstance that HSBC Holdings’ shares were traded only in foreign stock exchanges. With respect to the cross-motion, it should be noted that if HSBC Holdings were a responsible issuer under s.138.8 of the Ontario Securities Act, then it would follow that the court has jurisdiction simpliciter over it and over Mr. Bagley, but the forum non conveniens issue of the main motion would remain to be determined.

7The fundamental legal question underlying both the motion and the cross-motion is: what is the jurisdictional reach of an Ontario court to protect Canadian and non-Canadian investors when the defendant is a foreign corporation whose securities do not trade on a Canadian stock exchange? Underlying this fundamental legal question are the legal questions of: (a) what does it mean to carry on business in Ontario? and (b) where is the location of a tort for the purposes of determining whether the Ontario court has jurisdiction simpliciter over a foreign defendant.

8For the reasons that follow, I conclude that:

• Contrary to HSBC Holdings’ contention, at this juncture of the action, the court has the jurisdiction to make a declaration about HSBC Holdings’ status as a “responsible issuer” under Part XXIII.1 of the Ontario Securities Act.

• HSBC Holdings is not a responsible issuer under s.138.8 of the Ontario Securities Act because it does not have a real and substantial connection to Ontario, and I so declare.

• HSBC Holdings does not have a presumptive real and substantial connection to Ontario by virtue of carrying on its business in Ontario notwithstanding that it has and must comply with Canadian banking regulations under the Bank Act, S.C. 1991, c. 46, and notwithstanding that it has a subsidiary, HSBC Bank Canada (HSBC Canada), that does carry on business in Ontario.

• If contrary to the above conclusions, HSBC Holdings does have a presumptive real and substantial connection to Ontario because it carries on business in Ontario, then in the circumstances of this case, this presumptive connecting factor has been rebutted.

• HSBC Holdings does have a presumptive real and substantial connection to Ontario by virtue of possibly committing a common law or statutory tort in Ontario, but this presumptive connecting factor has been rebutted in the circumstances of this case where HSBC Holdings’ misconduct fundamentally occurred outside of Canada.

• Since (a) HSBC Holdings is not exposed to liability as a responsible issuer; and (b) there is no presumptive connecting factor establishing a real and substantial connection between its misconduct and Ontario, the Ontario court, therefore, does not have jurisdiction simpliciter over HSBC Holdings and Mr. Bagley.

• If contrary to the above findings, the Ontario court has simpliciter jurisdiction, then in the circumstances of this case, Ontario would be forum non conveniens. For Mr. Yip and the putative Class Members, the U.K. is the natural forum and the forum conveniens.

• Thus, either the Ontario court does not have jurisdiction simpliciter or the Ontario court is forum non conveniens.

9I, therefore, grant HSBC Holdings’ motion and I dismiss Mr. Yip’s cross-motion. And, for the reasons that follow: (a) I dismiss Mr. Yip’s action under Part XXIII.1 of the Ontario Securities Act against HSBC Holdings and Mr. Bagley; and (b) I stay Mr. Yip’s common law negligent misrepresentation claim against HSBC Holdings.

B. Evidentiary Background

10The evidence for the motion and cross-motion comprised 18,000 pages. The record was comprised of: the Defendants’ motion records (731 pages); Mr. Yip’s motion records (14,485 pages); joint exhibit brief (759 pages); transcripts (825 pages); HSBC Holdings’ compendium (634 pages) and Mr. Yip’s compendium (559 pages). There were 19 witnesses. (The factums comprised 276 pages and the books of authorities comprised 4,596 pages.)

11In bringing their jurisdictional motion, the Defendants relied on the following evidence:

• Affidavit of David Bagley of Little Chesterford, Essex, England sworn on December 21, 2016. Mr. Bagley was cross-examined. Mr. Bagley is a qualified lawyer in England and Wales and Hong Kong. In 1992, he joined HSBC Holdings as an Assistant Legal Advisor. From January 1996 to 1998, he worked in Hong Kong as a Senior Legal Advisor to Hong Kong and Shanghai Banking Corporation Ltd. and from 1998 to January 2002, he worked in Dubai as the Regional Head of Legal and Compliance for HSBC Bank Middle East Limited. In January 2002, he became the Head of Group Compliance at HSBC Holdings based in London, England. In November 2012, he became the Head of Group Private Banking Compliance. He left HSBC Holdings in April 2013, and he is now the Director of Regulatory Risk, Fraud & AML at The Co-operative Bank in Manchester, England.

• Affidavit of Paul Belanger sworn on December 22, 2016. Mr. Belanger was cross-examined. Mr. Belanger is a lawyer practicing at Blake, Cassels & Graydon LLP in Toronto (call 1998). His practice encompasses regulation, business, and affairs of financial institutions. He is Group Leader of his firm’s Financial Services Practice.

• Affidavits of David Chivers, Q.C. sworn December 16, 2016 and July 13, 2017. Mr. Chivers was cross-examined. Mr. Chivers of London, England, a British barrister, was retained by the Defendants to provide an opinion about issues relating to English law. He is a Queen's Counsel practising from Erskine Chambers, barristers' chambers specializing in company law. He was called to the Bar by Lincoln's Inn in 1983.

• Affidavit of John C. Coffee, Jr., sworn on December 9, 2016. Professor Coffee was cross-examined. Professor Coffee is the Adolf A. Berle Professor of Law and Director of the Center on Corporate Governance at Columbia University Law School in New York City, where he specializes in securities regulation, corporate governance and class action practice. He has served on advisory committees to the New York Stock Exchange (“NYSE”), the Nasdaq, and the U.S. Securities Exchange Commission and was the only non-Canadian member of Canada’s Task Force on Modernizing Securities Regulation. He acted as Special Advisor to the White House’s Office of General Counsel when the Private Securities Litigation Reform Act was drafted and before Congress in 1995.

• Affidavit of Jacques Fleurant sworn on December 15, 2016. Mr. Fleurant was cross-examined. Mr. Fleurant, who joined HSBC Canada in 2000, resides in North Vancouver District. He is HSBC Holdings’ CFO, a member of several risk management committees, a member of its Executive Committee, and the Chair of its Asset and Liability Committee. In July 2012, he was Senior Vice President and CFO for Global Banking and Markets.

• Affidavits of Robert Keshen sworn on December 21, 2016 and July 21, 2017. Mr. Keshen, of the City of Toronto, is a researcher in the Research and Information Services Group, at McCarthy Tetrault LLP, counsel to the Defendants.

• Affidavit of Jonathan David Peplow sworn on December 22, 2016. Mr. Peplow was cross-examined. Mr. Peplow, of the City of London, England, joined the HSBC Group in 1997 is the Global Head of Legal Risk Management and Assurance.

• Affidavit of Paul Wing-Tai Shieh, S.C. sworn on December 16, 2016. Mr. Shieh was cross-examined. Mr. Shieh of Hong Kong, People's Republic of China, is a Chinese lawyer (call 1988). He was retained by the Defendants to provide an opinion about issues relating to Hong Kong law. Mr. Shieh is a Senior Counsel who is Head of Chambers at Temple Chambers in Hong Kong, barristers' chambers specializing in company law. He is a former Chairman of the Hong Kong Bar Association and Member of the Hong Kong Law Reform Commission.

• Affidavit of John Symon Wasty sworn on December 16, 2016. Mr. Wasty was cross-examined. Mr. Wasty is a lawyer from Hamilton, Bermuda and called in British Columbia (1989), England and Wales (1992), Hong Kong (2002), Bermuda (2008), New York (2010), and British Virgin Islands (2012). He is a Fellow of the Chartered Institute of Arbitrators. He was retained by the Defendants to provide an opinion about issues relating to Bermuda law. He is the Head of the Bermuda Dispute Resolution Department at Appleby (Bermuda) Limited in Hamilton, Bermuda. He specializes in commercial litigation.

12In resisting the jurisdictional motion, Mr. Yip relied on the following evidence:

• Affidavits of Douglas J. Cumming, of the City of Toronto, sworn on April 21, 2016. He has a Ph.D. (Economics, University of Toronto, 1999), J.D. (Law, University of Toronto 1998), and has a Chartered Financial Analyst (CFA) designation (2002).. Professor Cumming is a professor of finance and entrepreneurship at the Schulich School of Business, York University. He was retained to provide an opinion about market efficiency, loss causation, materiality, and aggregate damages.

• Affidavit of Richard Daingerfield of Chatham, New Jersey, sworn April 6, 2016. Mr. Daingerfield was cross-examined. Richard Daingerfield is a retired U.S. attorney who worked as an in-house attorney at the subsidiaries of two international banks; i.e., the NatWest Group, which is based in London, and the Royal Bank of Scotland Group. Mr. Daingerfield was retained to provide an opinion about HSBC Holdings’ connection to Ontario because of its role in and control over the business, operations, and practices of the HSBC Group.

• Affidavit of Dr. Irene Finel-Honigman of New York City, Ph.D. (Yale University), sworn April 5, 2016. Dr. Finel-Honigman was cross-examined. She is an adjunct professor of International Affairs at Columbia University's School of International and Public Affairs. Before joining Columbia's faculty in 2001, she was, among other things, a Senior Advisor on Finance Policy at the U.S. Department of Commerce in the Clinton Administration, and Director of French Programs (Corporate Classroom) for Credit Lyonnais, an international bank.

• Affidavit of Norman Groot sworn June 14, 2016. Mr. Groot is a lawyer with Investigation Counsel P.C., the lawyers of record for Mr. Yip.

• Affidavit of Fionnuala Martin of the City of Toronto sworn on April 22, 2016. Ms. Martin is an accredited Chief Compliance Officer with over 35 years’ experience in the securities industry, including consulting in the financial sector since 1966. She was retained to provide an opinion about the complexity of trading securities in a global market.

• Affidavit of Chris Mathers of the City of Toronto sworn April 20, 2016. Mr. Mathers is a former RCMP officer with a 20-year career as an investigator of corporate financial crime, including money-laundering. He has worked with the FBI, the U.S. Drug Enforcement Administration and the U.S. Customs Service. He is now the President of CHRISMATHERS INC., a consulting firm, which he founded in 2004 and which specializes in investigating and preventing corporate illegal activity including fraud and money laundering. He was retained by Mr. Yip to describe the nature and extent of HSBC Holdings’ anti-money laundering and anti-terrorist financing compliance during the class period.

• Affidavit of Philip Derek Rubens of London, England sworn January 20, 2017. Mr. Rubens was cross-examined. Mr. Rubens is a solicitor-advocate (called 1986) and partner of Teacher Stern LLP, a London, England law firm. He was retained to provide an opinion about the hurdles that a litigant might encounter in pursuing a claim based on section 90A of the Financial Services and Markets Act of 2000, 2000, c. 8ff.

• Affidavit of Everett Stern of East Norriton Township, Pennsylvania sworn July 31, 2014. Mr. Stern has a MBA. He is the President of Tactical Rabbit Inc. a private investigation and intelligence service. He has experience working in the Money Laundering Division of HSBC Bank USA, National Association, a member of the HSBC Group.

• Affidavit of the Plaintiff Wai Kan Yip sworn April 19, 2016. Mr. Kip was cross-examined. Mr. Yip was born in Hong Kong in 1974. He immigrated to Canada and acquired dual citizenship in 1997. He resides in Markham, Ontario.

• Affidavit of Thomas Youde, of Hanover, New Hampshire, Ph.D. (University of Minnesota, 2014) sworn June 14, 2016. Professor Youde is an Assistant Professor of Economics, Dartmouth College. He was retained to describe the schemes of certain banks to manipulate the Libor and Euribor.

C. Factual Background

1. HSBC Holdings, HSBC Group, and HSBC Canada

13HSBC Holdings is a corporation with a linage that goes back to 1865 with the establishment of the Hong Kong and Shanghai Banking Corporation. It is incorporated under the laws of England and Wales and is headquartered in London, U.K. It is now the parent holding company for a group of international banking and financial services companies that operate together as the HSBC Group and under the HSBC corporation banner.

14Although as will be seen, it might be described as a type of management company of a bank, HSBC Holdings is itself not a bank, and its revenue is wholly derived from dividends from its subsidiaries, which are domestically licensed banking operations around the world collectively known as the HSBC Group.

15How to characterize the business of HSBC Holdings having regard to its management and oversight of the HSBC Group is an issue of mixed fact and law that will be discussed further below.

16HSBC Holdings shares trade on the London Stock Exchange and the Hong Kong Stock Exchange with secondary listings on the Bermuda Stock Exchange and the Paris Euronext Stock Exchange. HSBC Holdings’ ADRs trade on the NYSE. HSBC Holdings has about 220,000 shareholders in 129 countries. HSBC Holdings’ securities have never traded or been listed on any Canadian stock exchange.

17HSBC Holdings, however, has raised capital directly from Canadian investors through private placements in accordance with Ontario securities legislation. In Ontario, HSBC Holdings offered its securities for sale by way of exempt private placements in 2009, 2014, and 2015.

18As discussed further below, in making his argument that HSBC Holdings is presumptively connected to Ontario, Mr. Yip makes much of and relies on the fact that in the private placements, HSBC Holdings disclaimed the application of Canadian securities law to the private placements.

19As already noted, HSBC Holdings does not itself operate as a bank and it has no banking licenses. It provides stewardship and central management services to its operating subsidiaries through a delegation of authority to the Group Management Board of the HSBC Group.

20The HSBC Group, which are the collective of the direct and indirect subsidiaries of HSBC Holdings, is one of the largest financial institutions in the world with approximately $2.7 trillion (USD) in assets, 89 million customers, 300,000 employees, and a global network of more than 9,800 offices in 75 countries and territories. The HSBC Group has a market capitalization of approximately $200 billion (USD) and had a pre-tax profit in 2013 of approximately $23 billion (USD).

21HSBC Holdings sets the strategy and risk appetite for HSBC Group, and HSBC Holdings approves capital and operating plans for the members of the HSBC Group. HSBC Holdings sets the policies, standards, and procedures for its operating subsidiaries. In his regard, HSBC Holdings sets and supervises the policies, standards, and procedures with respect to regulatory compliance, including anti-money laundering, and anti-terrorist financing policies and procedures.

22The management of the HSBC Group as an entity is the responsibility of the Group Management Board, which is headed by the Group CEO. The Group Management Board, which meets monthly, manages the subsidiaries on a global basis, and the Group Management Board implements the strategic policy objectives of HSBC Holdings. The Group Management Board reviews and approves key senior management positions and directorships at the operating subsidiaries around the world.

23HSBC Holdings’ employees travel to the countries where its subsidiaries carry on business, including Canada, and there is regular communication and collaboration between HSBC Canada and HSBC Holdings for risk management and business strategy purposes. HSBC Holdings, however, does not manage the day-to-day operations of its subsidiaries that constitute the HSBC Group.

24The direct or indirect subsidiaries of HSBC Holdings that constitute the HSBC Group are separately capitalized and distinct legal entities incorporated under the laws of the jurisdictions in which they operate, and each one has its own board of directors and its own management. The subsidiaries are subject to local laws and regulations. All of the business decisions of the discrete members of the HSBC Group must be implemented in accordance with applicable local laws. Any policies and standards set by HSBC Holdings are adapted as necessary to comply with local laws.

25HSBC Holdings - through the HSBC Group - has a global presence, and markets itself as having a global presence. Taken together, the subsidiaries that constitute the HSBC Group are a global business and a global network of collaborating bank operations that includes Canada and over 70 other countries and territories.

26The HSBC Group markets and presents the group of subsidiaries as having a sum greater than their myriad domestic or local parts; i.e., the subsidiaries that comprise the HSBC Group are marketed as a greater unified whole. The unity was designed by HSBC Holdings and implemented by the HSBC Group to better serve multinational clientele across borders.

27The HSBC Group aims to be recognized as the leading international trade and business bank and to distinguish itself by emphasizing the collaboration of the members of the HSBC Group and by what it described as “international connectivity”. The members of the HSBC Group collect and share customer information, and they offer similar banking goods and services, which are branded globally under the HSBC banner.

28The HSBC Group has four global lines of business, three of which are available in Canada; namely: (1) retail banking and wealth management; (2) commercial banking; and (3) global banking and markets. The fourth global business is private banking. The HSBC Group manages 11 global functions including: (1) finance; (2) compliance and risk management; (3) internal audit; (4) strategy and planning; (5) operations, services and technology, and (6) human resources.

29Although it is an indirect subsidiary of HSBC Holdings, HSBC Canada is a separate legal entity governed by its own board, management, and corporate structure and subject to the laws, rules, and regulations of Canada, including the Bank Act, where its banking operations are supervised by the Office of the Superintendent of Financial Institutions (“OSFI”), an independent agency of the Government of Canada. Five of HSBC Canada’s nine directors are independent of HSBC Group entities, including HSBC Holdings.

30HSBC Canada is headquartered in Vancouver. It carries on business across Canada. In Ontario, HSBC Canada has 50 branches. It is the seventh largest bank in Canada by assets. Its shares trade on the Toronto Stock Exchange (“TSX”). It is a reporting issuer in Ontario and other Canadian provinces. HSBC Canada’s assets, liabilities, and financial results are consolidated with those of HSBC Holdings in HSBC Holdings’ financial statements.

2. The Regulatory Connection to Canada

31HSBC Holdings has a regulatory connection to Canada because of its ownership of HSBC Canada, which is a foreign bank under the Bank Act.

32Pursuant to s. 2 of the Bank Act, because HSBC Holdings owns a “foreign bank,” it also is a “foreign bank,” which is defined as follows:

foreign bank, subject to section 12 [exemption from foreign bank status], means an entity incorporated or formed by or under the laws of a country other than Canada that

(a) is a bank according to the laws of any foreign country where it carries on business,

(b) carries on a business in any foreign country that, if carried on in Canada, would be, wholly or to a significant extent, the business of banking,

(c) engages, directly or indirectly, in the business of providing financial services and employs, to identify or describe its business, a name that includes the word “bank”, “banque”, “banking” or “bancaire”, either alone or in combination with other words, or any word or words in any language other than English or French corresponding generally thereto,

(d) engages in the business of lending money and accepting deposit liabilities transferable by cheque or other instrument,

(e) engages, directly or indirectly, in the business of providing financial services and is affiliated with another foreign bank,

(f) controls another foreign bank, or

(g) is a foreign institution, other than a foreign bank within the meaning of any of paragraphs (a) to (f), that controls a bank incorporated or formed under this Act,

but does not include a subsidiary of a bank named in Schedule I as that Schedule read immediately before the day section 184 of the Financial Consumer Agency of Canada Act comes into force, unless the Minister has specified that subsection 378(1) no longer applies to the bank;

33Under s. 510 of the Bank Act, subject to two exceptions, a foreign bank may not carry on business in Canada. The two exceptions are: (1) a foreign bank can incorporate a subsidiary and apply for it to be a Schedule II bank to carry on the business of banking in Canada; or (2) the foreign bank can establish a branch in Canada and apply to be a Schedule III bank.

34Under the Bank Act, although a foreign bank, HSBC Holdings is not authorized to carry on the business of banking in Canada, and it has never done so. HSBC Holdings has no offices, branches, or property in Canada and it is not a Schedule II or III bank under the Act. However, as a shareholder; i.e., as an owner of HSBC Canada, HSBC Holdings has reporting obligations under Part XII of the Bank Act. Under Part XII of the Act, HSBC Holdings is deemed to have “a financial establishment in Canada” by virtue of its ownership of a Canadian bank, and this imposes regulatory obligations on HSBC Holdings.

35HSBC Canada is a Schedule II bank. HSBC Canada carries on business in a priority market for the HSBC Group. HSBC Canada accounts for 3% of HSBC Holdings’ value. Thus, HSBC Canada makes an important, albeit, relatively speaking, modest economic contribution to the wealth of the whole collective. HSBC Canada was described as a spoke in the larger North American hub within the HSBC Groups’ global business operations.

36HSBC Canada was established in 1981 as a “Schedule II” bank under the Bank Act. It has 260 offices and 140 branches throughout Canada. It is also a reporting issuer in Ontario and other Canadian provinces.

37HSBC Bank Canada had an American subsidiary; namely, HSBC Bank USA, which was a “Schedule III” bank under the Bank Act. During the class period, HSBC Bank USA had a branch office in Toronto, Ontario.

38HSBC Bank USA surrendered its Canadian banking license following the events that are the subject of this action.

3. David Bagley

39David Bagley is a U.K. resident who has never resided or worked in Canada.

40From January 2002 until November 2012, Mr. Bagley was the Head of Group Compliance for the HSBC Group. Group Compliance was responsible for setting policies and standards with regard to regulatory compliance, anti-money laundering, and anti-terrorist financing. As noted above, the standards were designed by HSBC Holdings and monitored globally by HSBC Group.

41From May 2010 to January 2011, Mr. Bagley was also the temporary Regional Head of Compliance for HSBC North America, where his work was mainly, if not exclusively, directed at U.S. compliance.

4. Misrepresentations in the Secondary Market for HSBC Holdings’ Shares

42Mr. Yip alleges that from July 30, 2006 to July 11, 2012 (the “Class Period”), HSBC Holdings and its subsidiaries acting under its direction and control, including HSBC Canada, carried on business in violation of anti-money laundering and anti-terrorist financing laws and regulations and participated in a scheme to manipulate Libor and Euribor.

43In a vigorously disputed point, HSBC Holdings, however, submits that HSBC Canada had virtually no involvement in the conduct associated with the compliance representation and that HSBC Canada could have had no involvement with respect to the manipulation of Libor and Euribor. For his part, Mr. Yip requests rigorous scrutiny of the Defendants’ treatment of the evidentiary record, and he submits that it remains to be determined the extent to which HSBC Canada’s own conduct was culpable and non-compliant with anti-money laundering regulations.

44For my part, for the purposes of the jurisdictional motion and for the cross-motion, I shall simply assume (but make no finding) that HSBC Canada’s conduct was culpable, but I also note that HSBC Canada is not being sued and there is no claim against HSBC Holdings for vicarious liability. Mr. Yip sues only HSBC Holdings.

45In any event, Mr. Yip alleges that during the Class Period, HSBC Holdings and HSBC Canada, with the actual, implied, or apparent authority of HSBC Holdings, released documents and made public oral statements, that contained misrepresentations and that omitted material facts about HSBC Holdings’ longstanding systemic compliance, control, and ethical failures.

46The misrepresentations were revealed in July 2012. Between July 12 and July 23, 2012, the media reported the release of a report authored by the U.S. Senate Homeland Security Permanent Subcommittee on Investigations. The report was entitled: “U.S. Vulnerabilities to Money Laundering, Drugs, and Terrorist Financing: HSBC Case History.”

47The U.S. Senate Report and voluminous disclosures made by the HSBC Group to the U.S. Senate revealed that members of the HSBC Group had failed to disclose longstanding and systemic regulatory failures. A few failures in Canada were noted. The media reports also revealed that regulators were widening a Libor and Euribor investigation to include the HSBC Group.

48Mr. Yip alleges that as a result of the disclosure of the falsity of the compliance representation and the Libor/Euribor representation, HSBC Holdings lost approximately 11% of its market capitalization, approximately $20 billion.

49Professor Cumming estimates that during the Class Period, the misrepresentations had artificially inflated the value of HSBC Holdings’ shares and American Depository Receipts resulting in an overpayment by Class Members of approximately $7 billion (USD).

50Mr. Yip alleges that during the Class Period, there were misrepresentations by commission or by omission in public oral statements. The alleged misrepresentations were made in 56 documents. The misrepresentations are listed in the Amended Statement of Claim at paragraph 47 (a) to (yy).

51As noted above, the falsity of the representations concerns two discrete categories of misconduct; namely: (1) the HSBC Group’s failure to comply with anti-money laundering and anti-terrorist financing laws (“the compliance representation”); and, (2) the HSBC Group’s participation in an illegal scheme to manipulate the Libor and the Euribor (“the Libor/Euribor representation”).

52As a matter of source, the alleged misrepresentations fall into four categories: (1) documents prepared and released by HSBC Holdings outside of Canada, including documents published on its U.K. website (www.hsbc.com); (2) documents that were prepared outside of Canada by HSBC Holdings and re-released in Canada by HSBC Canada on its website (www.hsbc.ca); (3) documents prepared by HSBC Canada and released by it on its website or on SEDAR; and (4) public oral statements by individuals from HSBC Canada and its affiliate HSBC Bank USA.

53All of the HSBC Holdings’ documents identified in the Statement of Claim were released outside Canada, pursuant to HSBC Holdings’ decisions taken in England in accordance with foreign regulatory requirements. The documents were reviewed by the HSBC Holdings Disclosure Committee, all of whose members resided in England during the Class Period.

54As a matter of the source of the documents, in particular, it should be noted that:

• HSBC Holdings’ “Interim Results Highlights” and HSBC Holdings’ “Final Results Highlights” for 2006, 2007, 2008, 2009, 2010, 2011 and HSBC’s Holdings’ “Sustainability Reports” for 2007, 2008, 2009, 2010 and 2011 were available on HSBC Canada’s website.

• HSBC Canada’s own filings under domestic securities law included financial information about its parent company and the filings directed investors to HSBC Holdings’ website for complete financial, operational, and investor information about HSBC Holdings and the HSBC Group.

• HSBC Canada’s Annual Reports and its Annual Information Forms for 2006, 2007, 2008, 2009, 2010 and 2011 include the compliance representation.

• A document entitled “HSBC Bank Canada and its Subsidiaries’ Approach to Anti-Money Laundering and Anti-Terrorist Financing” was on HSBC Canada’s website.

• A document entitled “The Wolfsberg Group Anti-Money Laundering Questionnaire”, dated September 1, 2011 was on HSBC Canada’s website.

55It should be noted that: (a) the majority of the alleged misrepresentations are in the first category; (b) the impugned documents of the first category and of the second category were prepared and reviewed in the U.K. to comply with the disclosure requirements of the stock exchanges where HSBC Holdings shares were registered for trading (London, Hong Kong, Paris, Bermuda, and New York); and (c) the documents prepared or posted by HSBC Canada on its website were prepared or posted to comply with the requirements of Canadian securities legislation for the trading of HSBCs Canada’s own shares.

5. Foreign Law Evidence

56The Defendants’ foreign law experts, i.e., Professor Coffee, and Messrs. Chivers, Shieh, and Wasty, opined that in the stock exchanges where the vast majority of HSBC Holdings’ securities are traded (London, Hong Kong, Paris, Bermuda, and New York):

1. In secondary market securities litigation, the court would take jurisdiction and apply domestic law, only if: (a) the plaintiff acquired securities on a local exchange; or (b) the issuer defendant was resident or otherwise present in that forum for the purposes of service. The domestic court would not apply foreign law.

2. The domestic court would not assume jurisdiction if the plaintiff purchased his or her securities on a foreign exchange and the defendant is neither resident nor present within the domestic forum.

3. While the laws of U.K., Hong Kong, Bermuda and the U.S. provide causes of action similar to Ontario’s Securities Act, the law of these jurisdictions contain material differences and different policy decisions from Ontario law.

4. The assumption of jurisdiction by an Ontario court over HSBC Holdings based on HSBC Canada’s operations could have negative comity implications, and if reciprocated, the assumption of jurisdiction would expose Canadian banks to the extraterritorial reach of jurisdictions where their foreign subsidiaries operate.

57Professor Coffee deposed that a U.S. court would assert exclusive jurisdiction over a Class Member who acquired securities on the NYSE, but a U.S. court would not assume jurisdiction over Mr. Yip’s claim because he acquired his shares on the Hong Kong exchange. Professor Coffee opined that a U.S. court would not assume jurisdiction where the plaintiff purchased his or her securities on a foreign exchange and the issuer defendant was neither resident nor present within the U.S.

58Professor Coffee said that where it assumed jurisdiction, a U.S. court would apply its own statutory law to the claim.

59Mr. Chivers testified that an English court would have jurisdiction over Mr. Yip’s claim since both Defendants are resident in the U.K and the English court would likely not decline jurisdiction based on forum non conveniens. Mr. Chivers opined that the English court would likely apply its own common law and statutory law to Mr. Yip’s claim. Further, Mr. Chivers opined that in a case in which an English resident acquired securities on a foreign-to-England stock exchange, an English court would not assume jurisdiction over a foreign-to-England defendant unless the defendant was a resident or was present for service in England.

60Mr. Shieh opined that in a case where a plaintiff acquired securities on a non-Hong Kong exchange while being resident in Hong Kong and the defendant was not resident or otherwise present for service in Hong Kong, the Hong Kong court would not assume jurisdiction over the claim.

61Mr. Shieh testified that a Hong Kong court would assume jurisdiction over Mr. Yip’s claim because HSBC Holdings has a business office in Hong Kong and is present there for the purpose of service. Mr. Shieh opined that Mr. Bagley would likely be included as a necessary and proper party to the claim against HSBC Holdings.

62However, Mr. Shieh opined that the Hong Kong court could decline jurisdiction in favour of the courts of the U.K. based on forum non conveniens. It was his view that if the Hong Kong court did not decline jurisdiction, it would apply its own domestic law to Mr. Yip’s claim since he acquired his securities on a Hong Kong exchange, and the Hong Kong court would apply Hong Kong law for the torts of negligent misrepresentation and deceit (after considering Ontario law given the double actionability rule for choice of law that is operative in Hong Kong).

63Mr. Wasty opined that if the Bermuda court were in the same position as the Ontario court – i.e., the plaintiff before the Bermudian court had acquired his or her securities on a non-Bermuda exchange while being resident in Bermuda and the defendant was not resident or otherwise present for service in Bermuda – the Bermuda court would not assume jurisdiction over nor apply its own law to the dispute.

64Mr. Wasty testified that although a Bermudian court could assume jurisdiction over Mr. Yip’s claim because HSBC Holdings’ shares traded in Bermuda, it would likely refuse to do so, because HSBC Holdings is not a Bermuda company and is not domiciled or resident in Bermuda. Mr. Wasty said that if jurisdiction was assumed, the Bermudian court would likely decline it in favour of the U.K. court based on forum non conveniens. Mr. Wasty said that if the Bermudian court did not decline jurisdiction, it would not apply its own domestic law to Mr. Yip’s claim because he did not acquire his securities on a Bermuda exchange.

65Messrs. Chivers and Shieh testified that their conclusions would not be any different if an HSBC Holdings subsidiary carried on business in the jurisdiction while HSBC Holdings itself did not.

66The evidence of Professor Coffee and Messrs. Chivers, Shieh, and Wasty was that there are substantive differences between Ontario’s regulation of misrepresentations in the secondary market for securities and the law in the U.K., Hong Kong, U.S. and Bermuda. For example, the Ontario and U.S. statutory causes of action may be asserted without proof of reliance, but reliance is required under the U.K. and certain Hong Kong statutory causes of action. The Ontario statutory cause of action is subject to a damages cap and a judicial leave requirement that have no analogue in the U.K., Hong Kong, the U.S. and Bermuda. The mental state of the defendant required to impose liability varies by jurisdiction. In the U.K., knowledge or recklessness of falsity is required. In the U.S., scienter or an intent to defraud is required. In Hong Kong, negligence is required. The statutory defences also vary amongst the jurisdictions. The limitation periods in the U.K., Hong Kong, and Bermuda statutes are more generous than in Ontario.

67Professor Coffee testified that under the United States’ scheme for the regulation of the secondary market, Mr. Yip’s claim would not succeed because: (1) the class period would not be accepted by the court; (2) causation of loss could not be proven; and (3) the majority of Class Members would have no damages under U.S. law, which has a special provision regarding damages.

68Professor Coffee said that it would offend principles of comity for an Ontario court to permit a litigant to circumvent the policy choices made by U.S. legislators. He said that Mr. Yip was attempting to assert a theory that would yield a universal jurisdiction in Ontario to regulate stock trading around the world that, if accepted, would undermine the ability of other countries to regulate their markets in the way they choose.

69With respect to foreign law, it is relevant to the forum conveniens analysis to note the following:

• In the United States, investors rely on SEC Rule 10b-5, 17 C.F.R. s.240.10b-5, under s.10(b) of the Securities Exchange Act of 1934, to bring actions for misrepresentation in continuous disclosure. A plaintiff in a U.S. court must plead and prove scienter, namely an intent to deceive, manipulate or defraud: Ernst & Ernst v. Hochfelder, 425 U.S. 185 (1976). However, there is no cap on the damages that may be awarded against the issuer in the U.S.

• In Morrison v. National Australia Bank, 130 S. Ct. 2869, 2881-83 (2010), the U.S. Supreme Court held that the statutory cause of action under s.10(b) of the Securities Exchange Act and Rule 10b-5 promulgated thereunder applies only to the purchase or sale of a security listed on an American stock exchange and the purchase or sale of any other security in the U.S.

• The Securities and Exchange Act of 1934 provides that the U.S. district courts have "exclusive jurisdiction of violations of this title or the rules and regulations thereunder" including claims for secondary market misrepresentation. U.S. law precludes U.S. courts from entertaining private actions involving securities transactions outside the U.S.

• U.K. law allows secondary market misrepresentation claims, but the plaintiff is required to prove reliance. The statutory cause of action under U.K. law is only available to those who purchase securities on certain designated markets in the European Union, including the European Exchanges.

• There is no class action procedure available in the U.K., although provision is made for grouping claims, representative orders and consolidation of claims.

• Canada and the U.K. are parties to the Convention for the Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters and thus an Ontario judgment would be enforceable in the U.K.

• Under U.K., Hong Kong, and U.S law, the common law and statutory claims of putative Class Members are likely statute-barred.

6. Mr. Yip’s Purchase of HSBC Shares and his Class Action

70In January 2011, Mr. Yip opened a bank account with Hang Seng Bank in Hong Kong. Using this account, on August 10, 2011, Mr. Yip purchased 400 shares of HSBC Holdings at a total purchase price of 27,560 Hong Kong dollars (approximately $4,600). He placed his order by accessing the account online using his home computer in Markham, Ontario.

71Before making his purchase in Hong Kong dollars, Mr. Yip did not review any continuous disclosure documents of HSBC Canada or any documents that HSBC Holdings released in Canada. Rather, he accessed HSBC Holdings’ documents at www.hsbc.com by downloading them to his home computer in Markham.

72On July 4, 2014, Mr. Yip commenced a proposed global class action under the Class Proceedings Act, 1992, S.O. 1992, c. 6. The Defendants were served in England and did not attorn to the jurisdiction of the Ontario court.

73On May 16, 2016, Mr. Yip delivered an Amended Statement of Claim. The claim asserts that HSBC Holdings made misrepresentations and omissions in its continuous disclosure documents and public oral statements regarding: (a) violations of anti-money laundering and anti-terrorist financing policies in the United States, Mexico, Europe, Japan, and the Middle East (the compliance representation); and (b) participation in the United Kingdom and Europe in illegal schemes to manipulate the Libor and Euribor benchmark interest rates (the Libor/Euribor representation).

74Mr. Yip alleges that the misrepresentations and omissions created a misleading picture of HSBC Holdings’ compliance with applicable laws and the efficacy of its internal controls and risk management systems. He claims that this caused HSBC Holdings’ shares and ADRs to trade at artificially inflated prices during the Class Period.

75Mr. Yip alleges that the truth was revealed when (a) information was publicly disclosed in hearings and in a report by the Permanent Subcommittee on Investigations of the U.S. Senate Committee on Homeland Security and Governmental Affairs; and (b) when media reports revealed investigations into alleged Libor/Euribor manipulation.

76Mr. Yip asserts claims against HSBC Holdings for: (a) common law negligent misrepresentation; (b) contravention of ss. 138.3 of the Ontario Securities Act; and (c) in the alternative, a civil cause of action under the United Kingdom’s Financial Services and Markets Act, 2000. Mr. Yip’s claim against Mr. Bagley is limited to the cause of action under Part XXIII.1 of the Ontario Securities Act and equivalent legislation across Canada.

77More precisely, Mr. Yip claims, as set out in para. 1 of the Amended Statement of Claim, as follows:

1. The plaintiff Wai Kin Yip (the “Plaintiff”) claims:

(a) an order pursuant to the Class Proceedings Act 1992, S.O. 1992, c. 6 (the “CPA”) certifying this action as a class proceeding and appointing him as the representative plaintiff of the Class (as defined below);

(b) a declaration that the defendant HSBC Holdings plc (“HSBC” or the “Bank”) made misrepresentations (as defined for the purposes of Part XXIII.1 of the Securities Act, R.S.O. 1990, c. S.5 (the “OSA”) and, if necessary, the Other Securities Legislation (as defined below)) in documents released by HSBC and in documents released by HSBC Bank Canada (“HSBC Canada”) (which had actual, implied or apparent authority to act on HSBC’s behalf) and in public oral statements made on HSBC’s behalf;

(c) a declaration that the defendant David Bagley (“Bagley”) authorized, permitted or acquiesced in the release of documents by HSBC and HSBC Canada (which had actual, implied or apparent authority to act on HSBC’s behalf) and the making of public oral statements made on HSBC’s behalf that contained misrepresentations (as defined in the OSA and, if necessary, the Other Securities Legislation);

(d) an order granting leave nunc pro tunc to the date this action was issued to advance the causes of action set out in section 138.3 of the OSA and, if necessary, the equivalent provisions of the Other Securities Legislation;

(d.1) a declaration that the multiple misrepresentations and omissions referred to herein that have common subject matter or content may be treated as a single misrepresentation, including for the purposes of section 138.3(6) of the OSA, the equivalent provisions of the Other Securities Legislation and section 90A of the U.K. Financial Services and Markets Act 2000, 2000, c.8ff (the “FSMA”);

(d.2) a declaration that, throughout the Class Period, HSBC made the Compliance Representation (as defined below) and/or one or more other misrepresentations and omissions, and that, when made, the Compliance Representation and the other misrepresentations and omissions constituted misrepresentations, both at law and within the meaning of the OSA and, if necessary, the Other Securities Legislation;

(d.3) a declaration that HSBC made the Compliance Representation negligently;

(e) a declaration that HSBC is vicariously liable for the acts and/or omissions of its officers, directors, and employees including Bagley;

(f) damages for negligent misrepresentation (as against HSBC only) and the statutory claims (as against the defendants) in section 138.3 of the OSA and, if necessary, the Other Securities Legislation, in the amount of $20 billion or such other sum as this Honourable Court may find appropriate;

(f.1) damages for the statutory claims in section 90A of the FSMA (as against HSBC only) on behalf of

(i) members of the Class resident or domiciled outside of Canada (the “Non-Canadian Class”); and

(ii) members of the Class resident or domiciled in Canada (the “Canadian Class”), only in the alternative to their claim for damages under Part XXIII.1 of the OSA;

(g) punitive damages in such amount as this Honourable Court finds appropriate;

(h) an order directing a reference or giving such other directions as may be necessary to determine issues not determined at the trial of the common issues;

(i) pre-judgment interest pursuant to the Courts of Justice Act, R.S.O. 1990, c. C.43 (the “CJA”), as amended;

(j) costs of this action on a full or, alternatively, substantial indemnity basis and, pursuant to section 26(9) of the CPA, the costs of notice and of administering the plan of distribution of the recovery in this action plus applicable taxes; and

(k) such further and other relief as to this Honourable Court may seem just.

78In his Amended Statement of Claim, Mr. Yip seeks certification of a global class defined as follows:

All persons and entities, wherever they may reside or be domiciled, who acquired common shares or American depositary receipts (“ADRs”) of [Holdings] from and including July 31, 2006 to and including July 11, 2012 (the “Class Period”), except for Excluded Persons.

79For the purposes of the motion for certification, Mr. Yip seeks to represent a class consisting of all persons and entities within the Class who reside or are domiciled in Canada (the “Canadian Class”). Mr. Yip does not currently know the size of the Canadian Class.

80Mr. Yip purports to reserve his right to seek certification of a non-Canadian Class pending the outcome of the motion for certification of the Canadian Class.

81On June 15, 2016, Mr. Yip delivered a motion record seeking certification and leave under Part XXIII.1 of the Ontario Securities Act.

D. Discussion and Analysis

1. Introduction

82In the main motion brought by HSBC Holdings and Mr. Bagley, the two major questions before the court are: (1) whether the Ontario court has jurisdiction simpliciter over HSBC Holdings; and (2) if there is jurisdiction simpliciter, whether the Ontario court is forum non conveniens.

83Practically speaking, if successful, Mr. Yip’s cross-motion, which seeks a declaration that HSBC Holdings is a “responsible issuer” under Ontario’s Securities Act would affirmatively answer the first major question that the Ontario court has jurisdiction simpliciter but leave the forum conveniens question to be determined.

84With respect to the cross-motion, HSBC Holdings and Mr. Bagley’s position is that the court does not have the jurisdiction to make a declaratory order in the cross-motion.

85As I shall explain in detail below, I disagree with the Defendants’ submission that the court does not have jurisdiction to decide the cross-motion. In my opinion, the court has the jurisdiction. However, no doubt to HSBC Holdings’ ironic delight, I shall make the opposite declaration to the one sought by Mr. Yip and dismiss his motion.

86For the reasons that follow, I conclude that HSBC Holdings is not a responsible issuer under Ontario’s Securities Act. I further conclude that the court does not have jurisdiction simpliciter and that, in any event, the Ontario court is forum non conveniens.

2. The Court’s Declaratory Jurisdiction

87HSBC Holdings submits that by asking the court to declare that HSBC Holdings is a “responsible issuer,” Mr. Yip is seeking to avoid having to show a presumptive connecting factor that would give the court in personam jurisdiction over a foreign defendant. HSBC Holdings submits for the court to make the requested declaration would be inconsistent with the law established by Club Resorts Ltd. v. Van Breda, 2012 SCC 17, described below, and it submits that Mr. Yip’s request for a declaration is nonsensical.

88In this last regard, HSBC Holdings submits that it is nonsensical for a court to grant a declaration before it has determined whether it has jurisdiction to do so. Further HSBC Holdings submits that because leave to assert a cause of action has not yet been granted under Part XXIII.1 of the Ontario Securities Act, Mr. Yip’s request for declaratory relief is premature and should be refused.

89It may be immediately noted, however, that for its own motion, HSBC Holdings does not contend that the court does not have jurisdiction to rule on whether or not there is jurisdiction simpliciter nor does HSBC Holdings contend that it is premature for the court to rule on its HSBC Holdings’ own motion until after the court rules on Mr. Yip’s motion for leave under Part XXIII.1 of the Ontario Securities Act.

90With respect, it is HSBC Holdings’ submission that is reductio ad absurdum, because its argument would also apply to its own motion. If HSBC Holdings’ argument were correct, it produces the jurisdictional equivalent to a stalemate in chess; both motions would have to stop without determining the winner. If HSBC Holdings’ argument were correct, then the Ontario court would have no jurisdiction to rule not only on Mr. Yip’s cross-motion but also on HSBC Holdings’ motion, both of which turn on whether or not HSBC Holdings has a real and substantial connection with Ontario.

91The correct position is that the court has jurisdiction to determine whether it has jurisdiction. The power to make a declaration applies whether or not there is a cause of action at the instance of any party who is interested in the subject-matter of the declaration: Canadian Imperial Bank of Commerce v. Green, 2015 SCC 60 at para. 195.

92As it happens, HSBC Holdings should be happy to withdraw its argument and apologize for its rude submission of calling its opponent’s argument nonsense, because as already foreshadowed, I shall declare that HSBC Holdings is not a responsible issuer, and I shall dismiss Mr. Yip’s sensible but unsuccessful cross-motion on its merits and I shall grant HSBC Holdings’ main motion.

3. General Legal Background to the Jurisdiction Simpliciter Issue

93An Ontario court has jurisdiction simpliciter; i.e. an in personam jurisdiction over a foreign defendant when: (a) the foreign defendant has a presence in Ontario and service is properly effected on him or her (presence-based jurisdiction); (b) the foreign defendant attorns to the jurisdiction of the Ontario court; or (c) there is a real and substantial connection between Ontario and the dispute involving the foreign defendant: Club Resorts Ltd. v. Van Breda, supra; Chevron Corp. v. Yaiguaje, 2015 SCC 42; Incorporated Broadcasters Ltd. v. Canwest Global Communications Corp. (2003), 2003 CanLII 52135 (ON CA), 63 O.R. (3d) 431 (C.A.) at para. 36, leave to appeal refused [2003] S.C.C.A. No. 186. The Ontario court also can have jurisdiction simpliciter based on a jurisdiction of necessity, but these sources of jurisdiction are not factors in the case at bar.

94In Club Resorts Ltd. v. Van Breda, supra, to achieve order and fairness, which is a major goal of private international law, the Supreme Court of Canada developed a system of presumptive connecting factors to determine whether there was a real and substantial connection, and these presumptive connecting factors, informed by principles for applying them, replaced the former approach to determining whether a court had jurisdiction over a foreign defendant. The former approach depended on an ad hoc judicial discretion based on fairness to the parties to decide whether the domestic court should assume jurisdiction over a foreign defendant. The new approach substituted presumptive connecting factors to be established by the plaintiff that could be rebutted by the foreign defendant.

95The Club Resorts Ltd. v. Van Breda analytical framework begins by identifying circumstances where a court may presumptively assume jurisdiction. The underlying idea to all the presumptive factors is that there are some circumstances where there would inherently be a relationship between the subject matter of the litigation and the forum and where it would be reasonable to expect that the defendant should answer the claim made against him or her in that forum.

96Presumptive factors connecting a foreign defendant to a domestic jurisdiction include: (a) the parties’ contract having been made in the domestic jurisdiction; (b) the situs of tort; i.e., the location of the defendant’s misconduct being the domestic jurisdiction, and (c) the defendant carrying on business in the domestic jurisdiction, with the qualification that the business must have an actual and not a virtual presence.

97Under the Club Resorts Ltd. v. Van Breda, supra regime, the list of presumptive connecting factors is not closed, but the court should not adopt an ad hoc approach to assuming jurisdiction based upon the circumstances of a particular case. The court may, however, identify new factors that will establish a new presumptive connection, which can be used in other cases presumptively to assume jurisdiction. In identifying new presumptive factors, a court should look to connections that give rise to a relationship with the forum that is similar in nature to the ones which result from the established factors. Relevant considerations include: (a) similarity of the connecting factor with the recognized presumptive connecting factors; (b) treatment of the connecting factor in the case law; (c) treatment of the connecting factor in statute law; and (d) treatment of the connecting factor in the private international law of other legal systems with a shared commitment to order, fairness, and comity.

98In the immediate case, save perhaps for his argument that HSBC Holdings is a responsible issuer under Ontario’s Securities Act, Mr. Yip does not ask the court to identify a new presumptive connecting factor that establishes a rebuttable real and substantial connection.

99If a presumptive connection (already recognized or newly established) applies, the connection can be rebutted by the defendant proffering evidence that the connection to the domestic jurisdiction is weak. The burden of rebutting the presumption of jurisdiction rests on the defendant.

100The domestic court will also have jurisdiction simpliciter over a foreign defendant who resides in its jurisdiction, but the presence of the plaintiff in the domestic jurisdiction does not create a presumptive factor favouring jurisdiction over a foreign defendant who is not resident in the jurisdiction: Club Resorts Ltd. v. Van Breda, supra at para. 86.

101The place where damages were sustained by the plaintiff does not create a presumptive connecting factor to that place: Club Resorts Ltd. v. Van Breda, supra at para. 89.

102The fact that a party is a necessary party does not constitute a presumptive connection to the domestic court: Misyura v. Walton, 2012 ONSC 5397 at paras. 30-31, 37-39, 43; Club Resorts Ltd. v. Van Breda, supra at para. 55.

103Whether HSBC Holdings carries on business in Canada and whether the situs of HSBC Holdings’ misconduct is in whole or in part in Ontario are the critical issues in the case at bar, and I shall return to examine the law about these presumptive connecting factors in the discussion and analysis part of these Reasons for Decision.

104To succeed in showing jurisdiction simpliciter, the plaintiff need only show that there is a “good arguable case” for an assumption of jurisdiction: Ontario v. Rothmans Inc., 2013 ONCA 353 at paras. 53-54; Tucows.com Co. v. Lojas Renner S.A., 2011 ONCA 548 at para. 36, leave to appeal refused [2011] S.C.C.A. No. 450; Ecolab Ltd. v. Greenspace Services Ltd. (1998), 1998 CanLII 17738 (ON SCDC), 38 O.R. (3d) 145 (Div. Ct.) at pp. 149-154; Schreiber v. Mulroney (2007), 2007 CanLII 56529 (ON SC), 88 O.R. (3d) 605 (S.C.J.) at para. 18.

105On a jurisdiction motion, if unchallenged, the facts pleaded in the statement of claim are taken as true, and if they are sufficient to establish a good arguable case, the pleadings alone can satisfy the court that it has jurisdiction simpliciter over the claim: British Columbia v. Imperial Tobacco Canada Ltd., 2005 BCSC 946 at paras. 132-134; Ontario v. Rothmans Inc., supra, at para. 110; Ontario New Home Warranty Program v. General Electric Co. (1998), 1998 CanLII 14628 (ON SC), 36 O.R. (3d) 787 (Gen. Div.) at pp. 797-799.

106The good arguable case standard can apply solely to the pleadings, but where a defendant adduces evidence to challenge the allegations in the statement of claim, the plaintiff may respond with affidavit evidence and the good arguable case standard applies to the combination of the pleadings and the evidence adduced by the parties: Ontario v. Rothmans Inc., supra at paras. 101-102, 110; Vitapharm Canada Ltd. v. F. Hoffman-La Roche Ltd., [2002] O.J. No. 298 (S.C.J.) at para. 64.

107Any allegation of fact that is not put into issue by the defendant is presumed to be true for the purposes of the jurisdiction motion, and the plaintiff is under no obligation to call evidence for any allegation that has not been challenged by the defendant; however, if a foreign defendant files affidavit evidence challenging the allegations in the statement of claim that are essential to jurisdiction, the low evidentiary threshold for the plaintiff to meet is that it has a good arguable case on those allegations: Ontario v. Rothmans, supra.

108In determining whether there is a real and substantial connection between the action and Ontario, the court will consider whether the facts of the statement of claim demonstrate the jurisdictional connection, and where the statement of claim is unclear, the court may consider affidavit evidence. In determining whether a presumptive connecting factor is present, the court, however, should not accept allegations in the pleadings that are contradicted by the evidence adduced by the defendant: Éditions Écosociété Inc. v. Banro Corp., 2012 SCC 18 at paras. 37-38.

109A good arguable case is not a high threshold and means no more than the plaintiff has shown a serious question to be tried or a genuine issue to be tried or that the case has some chance of success: Inukshuk Wireless Partnership v. 4253311 Canada Inc, 2013 ONSC 5631 at para. 19; Tucows.com Co. v. Lojas Renner S.A., supra at para. 36.

110Where a court concludes that it lacks jurisdiction because none of the presumptive connecting factors exist, or because the presumption of a connection has been rebutted, the court does not exercise any discretion, and subject to the forum of necessity doctrine (where the court assumes jurisdiction as a matter of necessity), the court must dismiss or stay the action: Club Resorts Ltd. v. Van Breda, supra at paras. 79-81; Forsythe v. Westfall, 2015 ONCA 810 at paras. 48-50, leave to appeal refused, [2015] S.C.C.A. No. 460; Lapointe Rosenstein Marchand Melançon LLP v. Cassels Brock & Blackwell LLP, 2016 SCC 30 at paras. 25-27.

111As I shall explain below, in the case at bar, it shall be my conclusions that: (a) there are no presumptive connecting factors; and (b) if there are any, they have been rebutted by HSBC Holdings, with the result that the court does not have jurisdiction simpliciter.

4. Is HSBC Holdings a “Responsible Issuer” under Ontario’s Securities Act?

112As noted above, the fundamental question underlying both the motion and the cross-motion is what is the jurisdictional reach of an Ontario court to protect Canadian and non-Canadians investors in a foreign stock exchange where the defendant is a foreign corporation whose securities do not trade on a Canadian stock exchange. In the context of the case at bar, this question becomes: Is HSBC Holdings a “responsible issuer” under Ontario’s Securities Act?

113In answering this question, I agree with Mr. Yip’s arguments that under Part XXIII.1 of Ontario’s Securities Act, if a defendant is a responsible issuer, then it is liable for the documents and public oral statements it makes or that it authorizes to be made by others, including statements it authorizes or knows that are being made by its agents and subsidiaries. I also agree that in the immediate case, the long list of documents in the Amended Statement of Claim could qualify as documents under Ontario’s Securities Act for which there could be liability for misrepresentations. I also agree with Mr. Yip that in the case at bar, it makes no difference to HSBC Holdings’ potential liability that HSBC Canada is not a party to this action because Mr. Yip’s claim concerns HSBC Holdings’ securities not HSBC Canada’s securities.

114Most significantly, I agree with Mr. Yip’s argument that where the place of the trading in securities is outside of Ontario, as was the case with Mr. Yip’s purchase of HSBC Holdings’ shares in Hong Kong, this does not preclude a finding that the corporation whose shares do not trade in Ontario’s secondary market is a “responsible issuer” subject to regulation under Ontario’s Securities Act. I agree with Mr. Yip that there is no place of trading requirement under Part XXIII.1 of the Ontario Securities Act. I agree with Mr. Yip that the statutory cause of action under s. 138.3 was not intended to arise only if the public issuer was subject to continuous disclosure obligations in a province or territory of Canada or if some of the issuer's shares traded publicly in Canada: Abdula v. Canadian Solar Inc., 2011 ONSC 5105 aff’d, 2012 ONCA 211, leave to appeal refused, [2012] S.C.C.A. No. 246.

115However, to foreshadow a point that I will return to below in the discussion of the forum non conveniens doctrine, I note that while the statutory cause of action under Part XXIII.1 of the Ontario Securities Act for secondary market trading does not have a place of trading qualification, the Act does have a place of trading qualification for the statutory cause of action under Part XXIII for trading in the primary market: Abdula v. Canadian Solar Inc., supra at paras. 82-89; Coulson v. Citigroup Global Markets Canada Inc., 2010 ONSC 1596, aff’d 2012 ONCA 108; Pearson v. Boliden Ltd., 2002 BCCA 624, leave to appeal to S.C.C. refused, [2003] S.C.C.A. No. 29. Section 130(1) of the Ontario Securities Act has locative qualities, and s.130(1) establishes liability for misrepresentation in a prospectus that is tied to the period of distribution of a particular prospectus. The section provides as follows:

130(1). Where a prospectus, together with any amendment to the prospectus, contains a misrepresentation, a purchaser who purchases a security offered by the prospectus during the period of distribution or during distribution to the public has, without regard to whether the purchaser relied on the misrepresentation, aright of action for damages against,

(a) the issuer ...

116Returning to a discussion of secondary market misrepresentation claims, among other things, Part XXIII.1 of Ontario’s Securities Act creates a statutory cause of action for misrepresentations in the secondary market for securities. The purpose of the cause of action is to provide a civil remedy to ensure that adequate information is provided to investors in the secondary market for securities: 1654776 Ontario Limited v. Stewart, 2013 ONCA 184 at paras. 103-116.

117Part XXIII.1 is remedial legislation and should be construed broadly and liberally to achieve its purposes: Canadian Imperial Bank of Commerce v. Green, supra at para. 178. Section 138.3 was introduced to remedy the problem at common law that the plaintiff had to prove reliance to succeed on his or her negligent misrepresentation claim: McKenna v. Gammon Gold Inc., 2010 ONSC 1591 at para. 159, varied on different grounds 2010 ONSC 4068 (Div. Ct.).

118The case law establishes that in cases about the secondary market and claims under Part XXIII.1 of the Ontario Securities Act, an Ontario court has jurisdiction simpliciter over a foreign corporation defendant under the Act in three categories of cases; namely:

1. Where the foreign corporation’s securities trade in Ontario’s secondary market: Kaynes v. BP, plc, 2014 ONCA 580, leave to appeal to S.C.C. refused, [2014] S.C.C.A. No. 452, 2016 ONCA 601, leave to appeal to S.C.C. dismissed 2017 CanLII 1347; Silver v. IMAX Corp., 2009 CanLII 72334 (ON SC), [2009] O.J. No. 5585 (S.C.J.), leave to appeal refused 2011 ONSC 1035 (Div. Ct.); Drywall Acoustic Lathing and Insulation Local 675 Pension Fund (Trustees of) v. SNC-Lavalin Group Inc., 2012 ONSC 5288.

2. Where the foreign corporation’s securities trade in Ontario’s secondary market and also in a foreign secondary market(s): Kaynes v. BP, plc, supra; Silver v. IMAX Corp., supra.

3. Sometimes where the foreign corporation’s shares do not trade in Ontario’s secondary market but the foreign corporation has a real and substantial connection to Ontario: Abdula v. Canadian Solar Inc., supra.

119As I shall explain, the case at bar falls into this third category, where whether the court has jurisdiction simpliciter to decide a claim based on Part XXIII.1 of Ontario’s Securities Act will depend on the particular facts of the case.

120Liability under Part XXIII.1 arises “where the responsible issuer or a person or company with actual, implied or apparent authority to act on behalf of a responsible issuer” releases a document or makes a public oral statement that contains a misrepresentation. In the case at bar, Mr. Yip argues that HSBC Holdings is liable because it is a responsible issuer.

121Under s. 138.1 of Ontario’s Securities Act, a responsible issuer is defined as follows:

“responsible issuer” means,

(a) a reporting issuer, or

(b) any other issuer with a real and substantial connection to Ontario, any securities of which are publicly traded;

122Because HSBC Holdings is not a reporting issuer, the key premise to Mr. Yip’s argument is that HSBC Holdings qualifies as a responsible issuer under s. 138.1(b) of the Ontario Securities Act; i.e., that it is an other issuer with a real and substantial connection to Ontario: Abdula v. Canadian Solar Inc., supra.

123Whether the fundamental premise that underlies Mr. Yip’s claim is true is a question that can be narrowed. It is beyond dispute that HSBC Holdings is an “issuer,” which is defined in s. 1(1) of the Ontario Securities Act as “a person or company who has outstanding, issues or proposes to issue, a security.” And, it is beyond dispute that HSBC Holdings’ securities are publicly traded - albeit not in Ontario. As described above, HSBC Holdings’ securities are publicly traded in the U.K., Hong Kong, France, Bermuda, and the U.S. Further, because none of the qualifying circumstances apply, it is also beyond dispute that HSBC Holdings is not a “reporting issuer,” which is defined in s. 1(1) as follows:

“reporting issuer” means an issuer,

(a) that has issued voting securities on or after the 1st day of May, 1967 in respect of which a prospectus was filed and a receipt therefor obtained under a predecessor of this Act or in respect of which a securities exchange take-over bid circular was filed under a predecessor of this Act,

(b) that has filed a prospectus and for which the Director has issued a receipt under this Act,

(b.1) that has filed a securities exchange take-over bid circular under this Act before December 14, 1999,

(c) any of whose securities have been at any time since the 15th day of September, 1979 listed and posted for trading on any exchange in Ontario recognized by the Commission, regardless of when such listing and posting for trading commenced,

(d) to which the Business Corporations Act applies and which, for the purposes of that Act, is offering its securities to the public,

(e) that is the company whose existence continues following the exchange of securities of a company by or for the account of such company with another company or the holders of the securities of that other company in connection with,

(i) a statutory amalgamation or arrangement, or

(ii) a statutory procedure under which one company takes title to the assets of the other company that in turn loses its existence by operation of law, or under which the existing companies merge into a new company,

where one of the amalgamating or merged companies or the continuing company has been a reporting issuer for at least twelve months, or

(f) that is designated as a reporting issuer in an order made under subsection 1 (11)

124Thus, for HSBC Holdings to qualify as a “responsible issuer” under Ontario’s Securities Act, the facts must establish that HSBC Holdings, which is an issuer with publicly traded securities, has in accordance with the definition found in Part XXIII.1 (s.138.1) “a real and substantial connection to Ontario.”

125In other words, qualifying as a “responsible issuer” entails that the defendant is either a reporting issuer or that the defendant issuer has a real and substantial connection with Ontario. Whether an issuer of publicly traded securities has a real and substantial connection to Ontario is a fact-based determination that will sometimes be the case, and sometimes it will not be the case. In the case at bar, HSBC Holdings is not a reporting issuer, and thus the fundamental premise that underlies Mr. Yip’s proposed class action is narrowed to the question of whether HSBC Holdings has, to quote the definition of a responsible issuer, “a real and substantial connection to Ontario.”

126Mr. Yip submits, however, that s. 138.1 of the Ontario Securities Act modifies and is broader than Club Resorts Ltd. v. Van Breda, supra and that it prescribes or mandates that an Ontario court has jurisdiction simpliciter over a foreign defendant who is an issuer whose securities are publicly traded anywhere in the world. Going further, Mr. Yip submits that for the court to introduce the theory of Club Resorts Ltd. v. Van Breda and considerations of comity between jurisdictions into the reckoning of who qualifies as a “responsible issuer” would impermissibly derogate from legislative policy and be contrary to the objectives of access to justice and investor protection directed by the Ontario Legislature pursuant to its Securities Act.

127I disagree. In my opinion, s. 138.1 of the Ontario Securities Act rather adopts and incorporates Club Resorts Ltd. v. Van Breda as the measure of the court’s jurisdiction over a foreign corporation who is an issuer on a public exchange but whose shares do not trade in Ontario’s secondary marketplace for securities.

128I appreciate that in Club Resorts Ltd. v. Van Breda, Justice LeBel stated that the common law principles of private international law can be modified by statute, but that is not what the Ontario Legislature did in infusing s. 138.1 of the Act with the prerequisite of a real and substantial connection to Ontario. Rather, the Legislature was describing the circumstances where there was a perch for the exercise by an Ontario court of a regulatory, remedial, and compensatory jurisdiction over a foreign corporation issuing securities to the public outside of Ontario. Quite clearly, the Legislature said that to be a responsible issuer under Ontario’s Securities Act, the foreign defendant had to be a “reporting issuer” or an issuer with a real and substantial connection to Ontario.

129In the context of the case at bar, my point is that a foreign corporation whose shares do not trade in Ontario may sometimes be found to be a “responsible issuer” but this is a fact-based determination that depends upon the plaintiff establishing that the defendant has a real and substantial connection to Ontario.

130It follows that I disagree with HSBC Holdings’ argument that a foreign holding corporation whose shares do not trade in Ontario can never be found to be a responsible issuer. Rather, it all depends on the facts of the particular case as to whether an Ontario court has jurisdiction simpliciter for a claim under Part XXIII.1 of the Ontario Securities Act. Thus, in the immediate case, if there is an arguable case that the presumptive connecting factors from Club Resorts Ltd. v. Van Breda are demonstrable and not rebutted, then there would also be an arguable case that HSBC Holdings was a “responsible issuer” subject to regulation under Ontario’s Securities Act notwithstanding that HSBC Holdings’ shares are not listed for sale in Ontario’s secondary market. And if there was an arguable case against HSBC Holdings, then there would also be jurisdiction simpliciter over Mr. Bagley.

131Turning to the case law, this analysis of the Ontario court’s jurisdiction under Part XXIII.1 of the Ontario Securities Act is supported by a review of the case law. The discussion may begin by simply noting that there are cases where the court recognized that it had jurisdiction under Ontario’s Securities Act over a foreign corporation that was a public issuer of shares in Ontario’s secondary market for securities. These are cases where the defendant is a reporting issuer and hence under s. 138.1(a) of the Act, the foreign defendant is a responsible issuer. These are the cases that are in the first category of cases where the foreign corporation’s securities trade in Ontario’s secondary market, and they are listed above.

132Mr. Yip’s claim against HSBC Holdings does not fall within the first category of cases.

133The second category of cases where the court has jurisdiction simpliciter under the Ontario Securities Act are cases where the foreign corporation’s securities trade in Ontario’s secondary market and also in a foreign country’s secondary market(s). In these cases, the connection to Ontario is established because the foreign defendant is a reporting issuer in Ontario and these cases accept that this connection enables the Ontario court to lengthen the arm of its jurisdiction to regulating the trading of shares in Ontario stock exchanges to also include regulating the trading of those shares in stock exchanges outside Ontario. The leading case of this second category of cases is Kaynes v. BP, plc, supra.

134In Kaynes v. BP, plc, supra, Mr. Kaynes, who had purchased on the NYSE securities of British Petroleum (“BP”), a British company, brought a proposed class action on behalf of Canadian investors in BP’s securities. BP had property and did business in Ontario, and its securities traded on the TSX as well as on the London Stock Exchange, the Frankfurt Stock Exchange, and the NYSE. The trading in BP’s securities on the TSX, however, stopped when the securities were de-listed, but BP had undertaken to continue to disclose information in Ontario pursuant to its obligations as a reporting issuer under U.S. law.

135Mr. Kaynes’ action was pursuant to Part XXIII.1 of Ontario’s Securities Act for secondary market misrepresentations. Meanwhile in the U.S., another investor was suing BP on behalf of purchasers on the NYSE based on the Securities Exchange Act of 1934, and BP brought a motion to stay Mr. Kaynes’ proposed class action with respect to the putative Canadian class members who had purchased their securities on the NYSE. BP argued that the Ontario court did not have jurisdiction or, alternatively, on the basis of the doctrine of forum non conveniens, it argued that the Ontario court should not assume jurisdiction with respect to purchasers on foreign stock exchanges.

136In Kaynes v. BP, plc, supra, it is significant to note that BP did not challenge the Ontario court's jurisdiction with respect to the claims of proposed class members who purchased BP securities on the TSX.

137In Kaynes v. BP, plc, supra, in a decision, upheld by the Ontario Court of Appeal, Justice Conway held that the Ontario court had jurisdiction simpliciter with respect to not only the putative Class Members who had purchased their securities on the TSX but also for purchasers on the NYSE. The Court of Appeal, however, held that the U.S. court was forum conveniens and the Ontario court forum non conveniens, and thus the Court of Appeal stayed the Ontario action with respect to the NYSE-based claims. Subsequently, with changed circumstances, that I will describe below in the context of the discussion of forum non conveniens, the Court of Appeal set aside the stay and allowed the global class action to proceed in Ontario.

138In Kaynes v. BP, plc, in reaching the conclusion that the court had jurisdiction simpliciter over BP for a claim under Part XXIII.1 of the Ontario Securities Act in Ontario, the Court of Appeal relied on the circumstance that when BP released the impugned documents, which it did outside of Ontario, it knew - by virtue of the disclosure undertaking it had given - that even if the initial point of release was outside Ontario, the document was certain to find its way to Ontario and to its Ontario shareholders.

139In the Court of Appeal, Justice Sharpe said that this circumstance was analogous to the circumstance discussed by the Supreme Court of Canada in the product’s liability case Moran v. Pyle National (Canada) Ltd., 1973 CanLII 192 (SCC), [1975] 1 S.C.R. 393, where the Court held that a Saskatchewan court had jurisdiction simpliciter over an Ontario manufacturer who had no connection to Saskatchewan other than awareness that its product would enter that jurisdiction through the normal channels of trade. Justice Sharpe stated at para. 28 that by releasing a document outside Ontario that BP was required to send to Ontario shareholders, BP committed an act with sufficient connection to Ontario to qualify as the commission of a tort in Ontario. At para. 30 of his judgment, he stated:

30. While the present case does not involve a claim for negligent misrepresentation, I see no reason not to hold, by analogy, that when BP released documents that it was legally required to provide its Ontario shareholders, it committed an act that had an immediate and direct connection with Ontario, an act that is sufficient to establish a real and substantial connection between the claim of this plaintiff and Ontario.

140Mr. Yip’s Part XXIII.1 claim does not fall within the second category of cases because HSBC Holdings was not a reporting issuer and it never had an obligation by way of undertaking or otherwise to provide information to Ontario investors. It was not legally required to provide its Ontario shareholders with any documents. It prepared its documents to comply with the law of the jurisdictions in which its shares were listed for trading on the jurisdictions’ stock exchange. HSBC Holdings’ Ontario investors were not relying and could not rely on Ontario’s Securities Act to define HSBC Holdings’ continuing disclosure obligations.

141The third category of cases are cases where the foreign corporation’s shares do not trade in Ontario’s secondary market but the foreign corporation has a real and substantial connection to Ontario in the particular circumstances of the case.

142The leading case of the third category is Abdula v. Canadian Solar Inc., supra. In this case, Canadian Solar’s securities were publicly traded on the NASDAQ exchange in the United States but not on any Canadian exchange. Canadian Solar was a corporation that had originally been incorporated in Ontario, but had transferred to become a corporation under the Canada Business Corporations Act, R.S.C. 1985, c. C-44. Thus, Canadian Solar was technically a foreign corporation in the sense that it was not a domestic Ontario corporation, but it had some pre-existing connection to Ontario. Further, Canadian Solar’s executive offices and some of its governance and business operations were in Ontario, but it operated primarily in China, and its officers and directors did not live in Canada. It held its annual meeting in Toronto.

143In Abdula v. Canadian Solar Inc. the plaintiff Mr. Abdula alleged that Canadian Solar’s annual report and a press release contained misrepresentations., The Court concluded that Ontario’s Securities Act can provide a right of action against an issuer who is not a reporting issuer in Ontario. The statutory cause of action under s. 138.3 could arise if the issuer was a reporting issuer or if it qualified as a responsible issuer, which could happen even if the defendant was not a reporting issuer.

144In other words, in Abdula v. Canadian Solar Inc., the Court of Appeal held that if there was a real and substantial connection to Ontario, then a public issuer of shares in any stock exchange around the world could be a responsible issuer in Ontario. The court, however, did not decide that all issuers are subject to the Ontario Securities Act; rather, it decided that a foreign issuer with a real and substantial connection to Ontario fell within the Act’s definition of “responsible issuer.” In the Court of Appeal’s judgment, at para. 49, Justice Hoy, as she then was, stated:

49. The subject matter of Part XXIII.1 is a remedy to investors for misrepresentation in certain issuers' secondary market disclosure. In this case, at least some of that disclosure emanated from Ontario. That, together with the relationship of Canadian Solar to Ontario, constitutes a sufficient connection between Ontario and Canadian Solar to potentially subject Canadian Solar to a statutory cause of action pursuant to Part XXIII.1 of the OSA. ….

145In Kaynes v. BP, plc, supra at para. 32, Justice Sharpe explained the significance of the Abdula decision as follows:

32. …. Abdula recognizes, at para. 88, that "[e]xtra-territorial application is specifically envisaged by the paragraph (b) of the definition of 'responsible issuer' with its reference to issuers with a ‘real and substantial connection to Ontario.’”

146Returning to the case at bar, the question becomes whether HSBC Holdings is a responsible issuer within the third category of cases. As just explained above, notwithstanding that HSBC Holdings securities do not trade in Ontario’s secondary market for securities, it might qualify as a “responsible issuer” under Ontario’s Securities Act if it was an “issuer” with a “real and substantial connection to Ontario.”

147In other words, any public issuer of securities whose securities do not trade in Ontario may nevertheless be subject to Ontario’s Securities Act if it has a real and substantial connection to Ontario. If, for example, a public issuer on the NYSE carried on business in Ontario, it would qualify as a responsible issuer in Ontario and be subject to the long arm of Ontario’s Securities Act. Below, I will analyze whether HSBC Holdings has a real and substantial connection to Ontario and were I to conclude that it does, then it would follow that the court would have jurisdiction simpliciter to decide Mr. Yip’s Part XXIII.1 statutory cause of action.

148Whether HSBC Holdings has a real and substantial connection to Ontario is the fact-based issue that I shall examine below where I reach the conclusions that there are no presumptive factors connecting HSBC Holdings to Ontario or no presumptive factors that have not been rebutted. It follows from the analysis below that HSBC Holdings is not a responsible issuer under Ontario’s Securities Act and it further follows that the Ontario court does not have jurisdiction simpliciter.

149Before moving on to explain those conclusions, it is convenient here to address Mr. Yip’s argument that it is significant that when HSBC Holdings made private placements in Ontario, it expressly disclaimed the application of Ontario law; however, it did not do when it offered its securities for trading in the U.K., Hong Kong, France, Bermuda, and the U.S. However, the truth is that nothing turns on the absence of disclaimers in the issuance of securities in U.K., Hong Kong, France, Bermuda, and the U.S.

150The explanation for the irrelevancy is that a disclaimer in those jurisdictions would not negate whether, as a factual matter, there was a real and substantial connection between HSBC Holdings and Ontario. In other words, were I to conclude that HSBC Holdings carried on business in Ontario or that there was a good arguable case that it had committed a common law or statutory tort in Ontario, then its disavowal of the application of Ontario law would have availed it nothing. HSBC Holdings’ failure to disclaim the application of Ontario says nothing about whether Ontario actually has any long-arm jurisdiction reaching out from Ontario to govern HSBC Holdings’ activities in the U.K., Hong Kong, France, Bermuda, and the U.S.

5. The Claim against Mr. Bagley

151In the Amended Statement of Claim, Mr. Yip alleges that Mr. Bagley authorized, permitted or acquiesced in the Compliance Representation.

152I agree with Mr. Yip’s submission that if HSBC Holdings is a responsible issuer, then there is a cause of action against Mr. Bagley as an officer of HSBC Holdings.

153Sections 138.3(1) and (2) provide causes of action against “each officer of the responsible issuer who authorized, permitted or acquiesced in the release of the document” and “the making of a public oral statement.”

154However, as foreshadowed several times now, my conclusion below is that HSBC Holdings is not a responsible issuer, and the corollary to that conclusion is that the Ontario court has no jurisdiction simpliciter with respect to Mr. Bagley.

6. Does HSBC Holdings Carry on Business in Ontario?

155I turn now to the issue of whether HSBC Holdings carries on business in Ontario. This issue is significant because if HSBC Holdings does carry on business in Ontario, then it would follow that the court has jurisdiction simpliciter over it for both of Mr. Yip’s claim under Part XXIII.1 of the Ontario Securities Act and also for his common law negligent misrepresentation claim.

156Under the Club Resorts Ltd. v. Van Breda, supra scheme for determining whether the Ontario court has jurisdiction simpliciter, as noted above, the foreign defendant’s carrying on business in Ontario may be a presumptive connecting factor. However, also as mentioned above, how to characterize the business of HSBC Holdings having regard to its management of the HSBC Group is an issue of mixed fact and law.

157In Club Resorts Ltd. v. Van Breda, supra at para. 87, Justice LeBel stated:

87. Carrying on business in the jurisdiction may also be considered an appropriate connecting factor. But considering it to be one may raise more difficult issues. Resolving those issues may require some caution in order to avoid creating what would amount to forms of universal jurisdiction in respect of tort claims arising out of certain categories of business or commercial activity. Active advertising in the jurisdiction or, for example, the fact that a Web site can be accessed from the jurisdiction would not suffice to establish that the defendant is carrying on business there. The notion of carrying on business requires some form of actual, not only virtual, presence in the jurisdiction, such as maintaining an office there or regularly visiting the territory of the particular jurisdiction. But the Court has not been asked in this appeal to decide whether and, if so, when e-trade in the jurisdiction would amount to a presence in the jurisdiction. With these reservations, "carrying on business" within the meaning of rule 17.02(p) may be an appropriate connecting factor.

158In Yaiguaje v. Chevron Corp., supra at para. 85, Justice Gascon stated:

85. Whether a corporation is "carrying on business" in the province is a question of fact… [T]he court must inquire into whether the company has "some direct or indirect presence in the state asserting jurisdiction, accompanied by a degree of business activity which is sustained for a period of time"… These factors are and always have been compelling indicia of corporate presence… [T]he common law has consistently found the maintenance of physical business premises to be a compelling jurisdictional factor: LeBel J. accepted this in Van Breda when he held that "carrying on business requires some form of actual, not only virtual, presence in the jurisdiction, such as maintaining an office there"…

159Whether the defendant is carrying on business in the province is a question of fact, and the court will examine whether the defendant has a physical presence in the jurisdiction accompanied by a degree of sustained business activity: Club Resorts Ltd. v. Van Breda, supra at para. 87; Yaiguaje v. Chevron Corp., supra at para. 85; Incorporated Broadcasters Ltd. v. Canwest Global Communications Corp., supra at para. 36; Abdula v. Canadian Solar Inc., supra; Wilson v. Hull (1995), 1995 ABCA 374, 174 A.R. 81 (C.A.) at para. 13. Each case involving whether a defendant is carrying on business in Ontario or has a connection to Ontario must be considered on its unique facts: Stuart Budd & Sons Ltd. v. IFS Vehicle Distributors ULC, 2016 ONCA 977; 582556 Alberta Inc. v. Canadian Royalties Inc., 2008 ONCA 58.

160As appears from the excerpt above from Justice LeBel’s judgment in Club Resorts Ltd. v. Van Breda, supra, the Supreme Court was concerned that the notion of carrying on business in a jurisdiction be narrowly construed so as to avoid creating what would amount to forms of universal jurisdiction. What I take this to mean is that carrying on business “in” a jurisdiction means that the foreign defendant’s activity in the jurisdiction approaches that or has the intensity of the defendant being a resident in the jurisdiction amenable to being personally served with a court process in that jurisdiction, which as the discussion below will reveal is the source of the idea that carrying on business in the jurisdiction is presumptive of having a real and substantial connection with the jurisdiction. In saying that creating a universal jurisdiction was to be avoided, Justice LeBel was saying that there must be a concrete and not ephemeral connection between the business of the defendant and the particular jurisdiction or jurisdictions where a claim is being made against the defendant.

161As a matter of the development of the law, the presumptive connecting factor of the defendant carrying on business in the jurisdiction in which the plaintiff brings his or her lawsuit as entailing jurisdiction simpliciter over the foreign defendant in that jurisdiction came about in a roundabout way.

162In Ontario, under the former Rules of Practice, subject to the doctrine of forum non conveniens, an Ontario court would assume jurisdiction pursuant to Rule 25, which was amended in 1975 to permit service outside of Ontario on foreign defendants in 17 defined circumstances. Before the 1975 amendment, service ex juris in the 17 defined circumstances required a formal court order. The 1975 amendment removed the requirement for a court order for service ex juris. It is to be noted and emphasized that before and after the 1975 amendment, the defined circumstances where a foreign defendant could be served ex juris did not include the circumstance that the defendant carried on business in Ontario.

163This approach to service ex juris continued after 1985 with the enactment of the Rules of Civil Procedure, where rule 17.02 defined 19 circumstances (some circumstances were subsequently revoked) where service outside Ontario was authorized without leave of the court. Once again, it is to be emphasized that the 19 circumstances did not include carrying on business in Ontario as an operative factor.

164It was from the various lists of circumstances where service could be made ex juris that the Supreme Court in Club Resorts v. Van Breda fashioned some of its list of factors that were (or were not) to be taken as presumptive connecting factors to establish a real and substantial connection between the defendant and the jurisdiction.

165However, the Supreme Court did not derive carrying on business in Ontario as a presumptive connecting factor from Rule 25 of the Rules of Practice nor from rule 17.02 of the Rules of Civil Procedure because as emphasized, this factor was not a part of these rules. Rather, the Supreme Court of Canada derived the carrying on business in Ontario presumptive connective factor from the rules for personal service that were formerly set out in Rule 23 of the Rules of Practice and that are now found in rule 16.02 (1) of the Rules of Civil Procedure. (Rule 23 has been a part of civil procedure in Ontario since at least 1895.)

166Thus, as a presumptive connecting factor, carrying on business in Ontario actually derives from the traditional pre-Club Resorts v. Van Breda criteria that were based on personal service, which criteria, as the Supreme Court made clear in Yaiguaje v. Chevron Corp., supra, survived the scheme fashioned by the Supreme Court in Club Resorts v. Van Breda. In Yaiguaje v. Chevron Corp., supra at paras. 84-85, Justice Gascon stated:

84. Chevron Canada's appeal concerns the traditional ground of presence. Presence-based jurisdiction has existed at common law for several decades; …. If service is properly effected on a person who is in the forum at the time of the action, the court has jurisdiction regardless of the nature of the cause of action: ….

85. While simplified, justified, and explained many critical aspects of Canadian private international law, it did not purport to displace the traditional jurisdictional grounds. LeBel J. explicitly stated that, in addition to the connecting factors he established for assumed jurisdiction, "jurisdiction may also be based on traditional grounds, like the defendant's presence in the jurisdiction or consent to submit to the court's jurisdiction, if they are established": para. 79. In other words, "[t]he real and substantial connection test does not oust the traditional private international law bases for court jurisdiction": ….

167Rule 23 of the former Rules of Practice stated:

Rule 23 (1) A municipal corporation may be served ….

(2) In the case of a railway, telegraph or express corporation, service may be effected ….

(3) Any other corporation may be served with a writ of summons by delivering a copy to the president or … in charge of any branch or agency thereof in Ontario and any person who within Ontario transacts or carries on any of the business of, or any business for, a corporation whose chief place of business is out of Ontario shall, for the purpose of being served as aforesaid, be deemed to be deemed to be the agent thereof.

168Rule 16.02(1) of the Rules of Civil Procedure states:

PERSONAL SERVICE

16.02(1) Where a document is to be served personally, the service shall be made, …

(c) Corporation – on any other corporation, by leaving a copy of the document with any officer, director or agent who appears to be in control or management of the place of business;

(e) Person outside Ontario carrying on business in Ontario – on a person outside Ontario who carries on business in Ontario, by leaving a copy of the document with anyone carrying on business in Ontario for the person;

169There is case law about carrying on business as a presumptive connecting factor, discussed below, but for present purposes, there is a significant body of case law about former Rule 23 (3) and some case law about rule 16.02(1) of the Rules of Civil Procedure. I shall review this case law first and then return to discuss the contemporary case law about carrying on business as a presumptive connecting factor.

170The case law about Rule 23 was summarized by W.B. Williston and R.J. Rolls in the Law of Civil Procedure (Toronto: Butterworths, 1970) at pages 313-314, as follows:

Service upon an agent pursuant to Rule 23 is valid only if the corporation is actually carrying on business in Ontario. In Macklin v. Imperial Co. (1919), 16 O.W.N. 141 (S.C.), the manager of the company came to Ontario for the purpose of taking certain steps in connection with an Ontario debtor. While he was here, he was served with a writ against the company. It was held that the manager could not be said to be transacting business for the company, and the service on the company was set aside. Before a person within Ontario transacts or carries on business for a corporation within the meaning of the rule, that person must be an agent of the corporation who transacts or carries on, or controls or manages for them, some part of the business which the corporation professes to do and for which it was incorporated: Murphy v. Phoenix Bridge Company (1899), 18 P.R. 495 (C.A.); Wee-Gee Uranium Mines Ltd. v. New York Times Co., 1969 CanLII 443 (ON SC), [1969] 1 O.R. 741 (H.C.J.). Thus, the presence within Ontario of an officer of a foreign corporation not shown to be doing any business here or an isolated or incidental act done here or a correspondent resident here who was not shown to carry on business will not be sufficient: Wilson v. Detroit and Milwaukee Railway Company (1860), 3 P.R. 37; Burnett v. General Accident Assurance Corp. (1905), 6 O.W.R. 144; Macklin v. Imperial Warehouse Co. supra; Appel v. Anchor Insurance and Investment Corp. Ltd. (1921), 21 O.W.N. 25 (H.C.D.). A company in Ontario which sells tickets and completes arrangements in Ontario for the carriage of passengers on vehicles operated outside of Ontario by a foreign company is the agent of the foreign company for the purpose of service pursuant to the rule because the selling of transportation is an integral part of the defendant’s business: Droeske v. Champlain Coach Lines Inc., 1939 CanLII 104 (ON CA), [1939] O.R. 560 (C.A.). A purchaser of goods even under a sole distributorship does not carry on within Ontario any of the business for the vendor of those goods as to make the purchaser the agent within Ontario of the vendor: Sarco Canada Ltd. v. Pryrotherm Ltd., 1969 CanLII 349 (ON SC), [1969] 1 O.R. 426 (Master). The three requisites of good service are that the business done is continued for a substantial period of time, that the business is done at a fixed place and that the business alone is not merely the transaction by an agent within Ontario to his principal outside, but the actual transacting within the jurisdiction of some of the business of the company: Ingersol Packing Co. Ltd. v. New York Central (1918), 42 O.L.R. 330; Higgens v. Merland Oil Co. Ltd., [1933] O.W.N. 679 (H.C.J.); Droeske v. Champlain Coach Lines Inc., supra. The test to be applied in these cases should not be less stringent than the court would apply in granting an order for substitutional service: Sarco Canada Ltd. v. Pryrotherm Ltd., supra and, to have a meaningful effect, service should be made on someone notice to whom would be notice to the corporation, or whose duties could it upon him to bring it to their notice: Murphy v. Phoenix Bridge Company, supra.

171It is necessary to examine the case law about Rule 23 more closely, including cases reported after Williston and Rolls wrote their text; namely: Santa Marina Shipping Co. S.A. v. Lunham & Moore Ltd. (1978), 1978 CanLII 1363 (ON SC), 18 O.R. (2d) 315 (H.C.J.) and the cardinal case of Canada Life Assurance Co. v. Canadian Imperial Bank of Commerce (1974), 1974 CanLII 886 (ON CA), 3 O.R. (2d) 70 (C.A.), which is a factually comparable case to the case at bar.

172The seminal case about Rule 23 is Murphy v. Phoenix Bridge Company (1899), 18 P.R. 495 (C.A.), in which judgments were delivered by Osler, J.A. and Moss, J.A. In this case, Justice Osler pointed out at pp. 499-500 that it is important to remember that it is residence within the country that confers jurisdiction to affect personal service. At p. 501, Justice Osler stated:

I think that what is meant by "a person who transacts or carries on any of the business of, or any business for, any corporation," is, at the least, some person who is an agent of the corporation, who transacts or carries on here, or controls or manages for them here, some part of the business which the corporation profess to do and for which they were incorporated.

Justice Moss stated at p. 502-3:

In order -- as I understand the authorities -- that the before mentioned provisions may apply to the foreign corporation, it must be made to appear that it is carrying on business in Ontario in such manner as to render it subject to be deemed resident within Ontario for the purposes of service of process upon it.

173In Ingersol Packing Co. Ltd. v. New York Central (1918), 42 O.L.R. 330 (C.A.), Justice Masten (Justice Riddell concurring) set out at pp. 334 and 336 a three-part test for Rule 23; he stated:

First, the acts relied on as showing that the corporation is carrying on business in this country must have continued for a sufficiently substantial period of time. … Next, it is essential that these acts should have been done at some fixed place of business. If the acts relied on in this case amount to a carrying on of a business, there is no doubt that those acts were done at a fixed place of business. The third essential, and one which it is always more difficult to satisfy, is that the corporation must be 'here' by a person who carried on business for the corporation in this country. It is not enough to show that the corporation has an agent here; he must be an agent who does the corporation's business for the corporation in this country. This involves the still more difficult question, what is meant exactly by the expression 'doing business?'

Under the English Rule the question is, whether the company is exercising judgment and making determinations regarding this business at some place within the jurisdiction, and the cases to which I have referred make it plain that the mere receipt and transmission of the negotiations pro and con, without any power to the agent or representative to act except on specific instructions, is not transacting business within the jurisdiction so as to bring the foreign corporation "here." In other words, the English principle is bottomed on this: that the foreign corporation must be "here," that it can only be "here" if it has a branch or representative here who can do things -- not a mere conduit- pipe to receive proposals and report answers.

174The three-part test from the Ingersol case was applied in Higgins v. Merland Oil Co. Ltd., [1933] O.W.N. 679 (H.C.J.); Droeske v. Champlain Coach Lines Inc., 1939 CanLII 104 (ON CA), [1939] O.R. 560 (C.A.); Canada Life Assurance Co. v. Canadian Imperial Bank of Commerce, supra.

175In Appel v. Anchor Insurance and Investment Corp. Ltd. (1921), 21 O.W.N. 25 (H.C.D.), Justice Middleton stated at pp. 26-7:

The Rule now in force, so far as this application was concerned, was precisely the same as that in force when Murphy v. Phoenix Bridge Co. (1889), 18 P.R. 406 and 495, was determined. There was, in that case, difference of judicial opinion as to the effect to be given to the words, but in the end the apparently wide provision of the Rule was much restricted, and it was held by the Court of Appeal that service could be predicated only upon an actual transaction of business within the jurisdiction, and not upon some isolated act. There must be a "business" which could be fairly said to be "carried on" within this Province.

176Coming to the discussion of Canada Life Assurance Co. v. Canadian Imperial Bank of Commerce, supra, the facts were that Canada Life sued the C.I.B.C., which in turn brought third-party proceedings against Citibank, a New York City bank. Citibank had branches and affiliates in over 85 countries including the Mercantile Bank, which was an affiliated Canadian bank with a head office at Montreal and eight branches, one of which was located in Toronto. Citibank was the majority shareholder in Mercantile Bank, but it was gradually reducing its share ownership. Citibank provided Mercantile Bank with advice and expertise with respect to a wide range of banking and management techniques, and provided personnel to Mercantile Bank sometimes at no charge. One of the directors of Mercantile Bank was a senior vice-president of Citibank, and the chairman of Citibank was also chairman of Mercantile Bank. The banks were described in the Toronto Telephone Directory Yellow Pages and in other places as affiliated, and these advertisements indicated that Mercantile Bank had access to the world-wide banking operations of Citibank. Citibank and Mercantile Bank used each other for money transfers for customers but Citibank also used other Canadian banks. Mercantile Bank provided correspondent services in Ontario for Citibank.

177After an extensive review of the case law described above and before examining whether it could be said that Mercantile Bank, which had a separate corporate identity from Citibank, could be considered the alter-ego of Citibank and thus manifesting that Citibank was carrying on business in Ontario, Chief Justice Gale (Justices Evans and Dubin concurring) concluded that Citibank was not carrying on business in Ontario. At para. 35, Chief Justice Gale stated:

35. Do the services performed by Mercantile for Citibank constitute the carrying on of any of Citibank's business in Ontario? In my view, they do not. The function of a correspondent, as Mr. Farrar described it, involves "the utilization of the general banking facilities usually associated with acting in another country". Such services are available to all foreign banks, at fixed rates (which, however, may vary according to the number of transactions involved). It seems to me that one could fairly say that in acting as it does Mercantile, in conducting its business, is a vehicle serving to expedite the conduct of the business of other banks which is in fact transacted elsewhere. Where Citibank is concerned, Mercantile's functions are of an incidental nature, and these functions constitute an integral part of Mercantile's business as a bank. Further, fixing on the nature of their business association, as opposed to their family association, which, unless the corporate veil is to be lifted, is really irrelevant, their relationship does not appear to be such as to require Mercantile to bring to Citibank's notice a service of process such as this. Accordingly, I am satisfied that Galligan, J., erred in holding that Mercantile carried on sufficient of the business of Citibank in Ontario to be its agent for the purposes of service of a process of this Court.

178In Santa Marina Shipping Co. S.A. v. Lunham & Moore Ltd., supra, Justice Grange held that merely having assets in Ontario does not constitute carrying on business in Ontario where all dealings with the asset were conducted from Montreal.

179Turning next to the case law about rule 16.02(1) of the Rules of Civil Procedure, in Klein v. Handra Travel Services Ltd. (c.o.b. Handra Travel Group), 2014 ONSC 2221, Justice Hainey applied the three-part test from Canada Life Assurance Co. v. Canadian Imperial Bank of Commerce, supra to hold that the foreign defendant was properly served in Ontario.

180In Essex Garments Canada Inc. v. Cohen, [2005] O.J. No. 5716 (S.C.J.), the plaintiffs were unpaid trade creditors who sought an oppression remedy because the corporate defendant, which resided in Manitoba, had sold its subsidiary retail chain and the trade creditors were left unpaid. In this case, Justice Spies set aside the service of the corporate defendant because it did not carry on business in Ontario. At paras. 18-19 of her judgment, Justice Spies stated:

18. The defendant Gendis Inc. is a federally incorporated corporation, with its registered head office in Winnipeg, Manitoba. It is registered to carry on business in Ontario, but there is no evidence that Gendis has at any material time directly carried on business in Ontario. By the time the claim was issued Gendis no longer owned SAAN. Based on Gendis' annual report for the year ended January 29, 2005, Gendis at that time was active in investment management and in real estate leasing and management through a subsidiary, Gendis Realty Inc. Gendis Realty Inc. leased real estate it holds in Manitoba, Saskatchewan and Ontario. In addition, the plaintiffs rely on the fact that Gendis has issued shares in Ontario and is a reporting issuer in Ontario and publicly regulated by the Ontario Securities Commission. Its shares have been listed on the Toronto Stock Exchange for many years.

19. Although Gendis Inc. through a wholly owned subsidiary owns real property in Ontario, that does not give Gendis Inc. a physical presence in Ontario. Nor do the other factors relied upon by the plaintiffs. Gendis Inc. does not have any offices in Ontario and does not itself carry on business anywhere in Ontario. The fact that it is registered and therefore able to do so is not enough. In my view, a physical presence in Ontario would mean that Gendis Inc. has a place of business in Ontario that would permit service in Ontario pursuant to Rule 16.02 (1) (c). It does not and service on Gendis Inc. would not be possible in Ontario. Accordingly, I find that it does not have a presence in Ontario for the purpose of presence-based jurisdiction.

181With this background about the roundabout way that carrying on business in a jurisdiction became a part of the jurisdiction simpliciter analysis and about how the carrying on business factor was applied under the manner of service rules, I come to contemporary case law about carrying on business in Ontario as a presumptive connecting factor.

182I shall begin the discussion with Central Sun Mining Inc. v. Vector Engineering Inc., 2012 ONSC 7331, rev’d on other grounds, 2013 ONCA 601, leave to appeal refused, [2013] S.C.C.A. No. 475, which is an example of a case where a foreign defendant was held not to be carrying on business in Ontario notwithstanding doing business with the plaintiff who was carrying on business in Ontario.

183In this case, Central Sun Mining, whose head office was in Toronto, hired SRK(U.S.) to engineer, design and construct a mine that Central Sun Mining owned in Costa Rica. Central Sun Mining sued SRK(U.S.) for negligence, negligent misrepresentation, and breach of contract after the mine collapsed and could not be reopened. SRK(U.S.) were professional engineers resident in the U.S. who were part of the "SRK Group," which was a business style used by an international collective of engineering firms that described themselves as an international consulting practice with offices on six continents. Some personnel were shared among the SRK Group, but the members of the group were discrete corporations and each carried on business with one another on an arm’s-length basis. SRK(U.S.) had no office in Ontario, but it benefited by the presence of SRK-Canada which did have a Canadian office. SRK(U.S.) advertised in Canada, met clients and prospective clients in Canada, and participated in some projects with SRK-Canada in Canada, but SRK(U.S.)’s actual consulting work was always carried out in the U.S. With respect to the mine in Costa Rica, no one at SRK-Canada was involved. Justice Stinson concluded that SRK(U.S.) was not carrying on business in Canada. At paras. 64-67, 70-71, he stated:

64. Dealing first with the suggestion that the structure of the SRK Group supports the conclusion that the non-Canadian entities are carrying on business in Ontario, in my view the main purpose of this structure is promotional, in the sense that it permits the various SRK entities to market and advertise themselves internationally. As the Supreme Court noted in the passage I have just quoted, active advertising in a jurisdiction does not equate to carrying on business there.

65. Additionally, the plaintiff's submission ignores the well-established legal distinction between incorporated entities and their shareholders and affiliates. The mere fact that a corporation which has an Ontario presence may have a relationship with an out-of-Ontario affiliate does not equate in all cases to the non-Ontario entity carrying on business here. Even where (as here) the Ontario company subcontracts work to a U.S. affiliate, but the actual work is performed outside Ontario, I do not perceive that as amounting to the foreign affiliate carrying on business in Ontario. Nor do intermittent and infrequent visits to this jurisdiction equate to the establishment of a corporate presence in Ontario.

66. In the case of the plaintiff, it has a well-established practice of incorporating separate (and often foreign) subsidiaries to carry out its various overseas projects. Having relied (for tax and other business reasons) on the concept of separate corporate personae for its own purposes, it is somewhat contradictory for the plaintiff to ask the Court to ignore this reality when seeking to invoke the Court's jurisdiction as against non-resident defendants.

67. The plaintiff argues that the fact that SRK (U.S.) performed services for Ontario-based clients amounts to carrying on business here. Once again, however, the evidence indicates that the while some of the projects may have been located here, along with other projects located elsewhere, the actual consulting work was not carried out in Ontario. If the test is "did you do work for Ontario-based clients?" in my view that would be tantamount to creating universal jurisdiction in this Court for all Ontario-based businesses in relation to all their foreign suppliers, a notion that the Supreme Court cautioned against in Van Breda.

68. In my view, the evidence falls well short of establishing that SRK (U.S.) has or had what can be described as an actual presence in Ontario to the point that it can be found to have carried on business here. I therefore find that it did not.

69. Even if the SRK Defendants are considered to have at some point carried on business in Ontario, that is only a presumptive (but rebuttable) basis for this Court to assume jurisdiction over the current dispute. The same factors discussed above (in paras. 47 and 54) are, in my view, sufficient to rebut that presumption. The connection with Ontario remains tenuous, at best.

184In United States v. Yemec, 2012 ONSC 4207, Yemec operated an Ontario corporation that purchased lottery tickets from Lottery-P.E.I., a ticket retailer in Prince Edward Island. Lottery-P.E.I. was an authorized dealer of the New Brunswick-based Atlantic Lottery Corporation, which ran national lotteries and oversaw authorized lottery ticket retailers in the Maritime provinces. Yemec’s company would resell the tickets in the U.S. After his company was sued in the U.S., Yemec sued the Atlantic Lottery Commission. Justice Belobaba stayed the action.

185Justice Belobaba noted that the Lottery Commission had no physical presence in Ontario and that its only connection was that it visited Yemec’s business operation to audit that the sale of lottery tickets occurred in P.E.I., that the tickets remained there as required, and to verify that the plaintiff's company was complying with applicable rules and regulations. Justice Belobaba concluded that the Commission did business with (logical preposition) an Ontario corporation but the Commission was not carrying on business in (locative preposition) Ontario. Justice Belobaba drew the distinction of doing business with a jurisdiction and carrying on business in a jurisdiction.

186See also the following cases that employ an analytical methodology similar to that employed by Justice Belobaba: Colavecchia v. Berkeley Hotel Ltd., 2012 ONSC 4747; Haufler (Litigation guardian of) v. Hotel Riu Palace Cabo San Lucas, 2013 ONSC 6044; Szecsodi v. MGM Resorts International, 2014 ONSC 1323; Shah v. LG Chem, Ltd., 2015 ONSC 2628; Parque Industrial Avante Monterrey, S.A. de C.V. v. 1147048 Ontario Ltd. and Advantage Engineering Inc., 2016 ONSC 6004; King v. Giardina, 2017 ONSC 1588; Sgromo v. Scott, 2017 ONSC 2524; Sgromo v. Polygroup International, 2017 ONSC 2525; CIC Capital Fund Ltd. v. Rawlinson, 2016 BCSC 516. Generally speaking, the cases demonstrate that the court regards a defendant carrying on business in a jurisdiction as connoting that the defendant is performing some substantial aspect of its own business undertaking at the jurisdiction beyond providing goods and its services within that jurisdiction.

187In Lockwood Financial Ltd. v. China Blue Chemical Ltd., 2015 BCSC 839, a British Columbia case, Justice V. Gray held that owning shares of a company incorporated in a foreign jurisdiction is not conducting business in that jurisdiction.

188Based on the case law and based on the immense evidentiary record before the court, which included comprehensive cross-examinations about the nature of HSBC Holdings’ organization and the nature of its business, it is plain and obvious to me that HSBC Holdings is not carrying on its own business in Ontario. HSBC Holdings does not have a physical presence in the jurisdiction accompanied by a sustained degree of its own business activity in Ontario.

189For certain, HSBC Holdings does not carry on the business of banking in Ontario; it is not licensed in Canada to carry on the business of banking. Its subsidiaries, which are discrete corporate entities, carry on business in Canada and other countries around the world, but the subsidiaries’ businesses are not the business of HSBC Holdings. Rather, HSBC Holdings’ business, as distinct from the businesses of the corporations that it owns directly or directly, is that of managing a global enterprise of a group of commonly bannered banks to the extent of setting global standards for a global enterprise. I appreciate that HSBC Holdings has a regulatory connection to the Bank Act in Canada, but that connection is an incident of HSBC Canada carrying on its business in Canada, and it is not an incident of HSBC Holdings’ own business, which is carried on in London, England.

190A management business is not necessarily the same as the business it manages. The business of HSBC Holdings, which is that of managing a global enterprise, is not transacted in Ontario; HSBC Holdings’ business is transacted in London, U.K. The reality is that HSBC Holdings could carry on its business without any of its employees or agents ever coming to Canada or any of the 75 countries or territories or without HSBC Holdings ever having other than a metaphysical presence in the countries where HSBC Holdings’ subsidiaries carry on their quite different business, which is that of a bank servicing its customers with banking services.

191There is no doubt that HSBC Holdings’ business had a substantial involvement, effect, and influence on how its subsidiaries, including HSBC Canada, carried on their business, and Mr. Yip makes much of that involvement and effect as establishing that HSBC Holdings carried on business in Canada, but that a foreign-located business has an effect on a different business in a different place does not necessarily mean that the foreign business is carrying on its own business in that place. This last point is demonstrated by Canada Life Assurance Co. v. Canadian Imperial Bank of Commerce, supra, discussed above and discussed again below.

192Applying the three-part test from Ingersol Packing Co. Ltd. v. New York Central, supra: (1) very few, if any, of the activities of HSBC Holdings in managing and administering and setting standards for the HSBC Group occurred in Ontario; (2) HSBC Holdings had no fixed place of business in Canada; and (3) there are no HSBC Holdings’ person doing HSBC Holdings’ own business here in Canada. Thus, the test from Ingersol Packing Co. Ltd. v. New York Central is not satisfied.

193HSBC Holdings’ case for having the status of not carrying on business in Ontario is stronger than Citibank’s case in Canada Life Assurance Co. v. Canadian Imperial Bank of Commerce, supra, where Citibank and its subsidiary Mercantile Bank, which like HSBC Canada was not a party defendant, both carried on the same business, the business of banking. In Canada Life Assurance Co. v. Canadian Imperial Bank of Commerce, Citibank was not found to be carrying on business in Ontario notwithstanding that it had a connection with Mercantile, with which Citibank had a guiding and oversight influence. Insofar as the business activities of Citibank were concerned, Mercantile’s business activities were integral to Mercantile but incidental to Citibank’s business, which was carrying on a banking business in New York with branches and affiliates around the world.

194In comparison to Citibank and Mercantile, HSBC Holdings does not carry on the same business as HSBC Canada, and while HSBC Holdings has subsidiaries around the world, HSBC Holdings’ own business is that of being a shareholder owning a group of operating corporations, and in carrying on its own business of setting the standards for a group of subsidiaries, HSBC Holdings does not have branches or affiliates anywhere. If like Citibank, HSBC Holdings’ business were regarded as the same as the business of its subsidiary, HSBC Canada, whose business was the business of banking under the Bank Act, then HSBC Holdings’ business could not lawfully be carried out in Canada.

195In my opinion, despite protestations to the contrary, Mr. Yip’s argument is in its essence an argument that HSBC Canada is the alter ego of HSBC Holdings. The thrust of Mr. Yip’s argument is to pierce the corporate veil between HSBC Holdings and HSBC Canada, a non-defendant, and thus Mr. Yip argues that HSBC Holdings is directly or indirectly carrying on business in Canada through its ownership, control, and involvement in the operations of HSBC Canada. It is precisely this type of argument that was rejected in Canada Life Assurance Co. v. Canadian Imperial Bank of Commerce, supra.

196The separate legal personality of a corporation is not lightly disregarded and a shareholder, which may include the parent corporation can be sued for the wrongs of the corporation only in very limited circumstances. To successfully sue the shareholder for the faults of his or her corporation, the plaintiff must “pierce the corporate veil.” The separate existence of a corporation may be ignored when the corporation is under the complete control of the shareholder and its existence is being used as a means to insulate the shareholder from responsibility from fraudulent or illegal conduct. The corporate veil may be pierced when the corporation is incorporated for an illegal, fraudulent or improper purpose, or where respecting the separate legal personality of the corporation would be flagrantly unjust. To pierce the corporate veil, two factors must be established: (1) the alter ego must exercise complete control over the corporation or corporations whose separate legal identity is to be ignored; and (2) the corporation or corporations whose separate legal identity is to be ignored must be instruments of fraud or a mechanism to shield the alter ego from its liability for illegal activity.

197See: Kosmopoulos v. Constitution Insurance Co. of Canada, 1987 CanLII 75 (SCC), [1987] 1 S.C.R. 2; 642947; Shoppers Drug Mart Inc. v. 6470360 Canada Inc. (c.o.b. Energyshop Consulting Inc./Powerhouse Energy Management Inc.), 2014 ONCA 85; Parkland Plumbing & Heating Ltd. v. Minaki Lodge Resort 2002 Inc., 2009 ONCA 256; Haskett v. Equifax Canada Inc., 2003 CanLII 32896 (ON CA), [2003] O.J. No. 771 (C.A.); Ontario Ltd. v. Fleischer (2001), 2001 CanLII 8623 (ON CA), 56 O.R. (3d) 417 (C.A.); Transamerica Life Insurance Co. of Canada v. Canada Life Assurance Co. (1996), 1996 CanLII 7979 (ON SC), 28 O.R. (3d) 423 (Gen. Div.), aff’d [1997] O.J. 3754 (Ont. C.A.); Gregorio v. Intrans-Corp. (1994), 1994 CanLII 2241 (ON CA), 18 O.R. (3d) 527 (C.A.); Canada Life Assurance Co. v. Canadian Imperial Bank of Commerce supra.

198A foreign parent corporation does not carry on business in Ontario through a domestic subsidiary due only to its share ownership: Lockwood Financial v. China Blue Chemical, 2013 BCSC 839. For the activities of the subsidiary to be considered the acts of the parent corporation: (a) the subsidiary must be acting as the parent’s agent for the purposes of the parent’s business; (b) the parent corporation must completely control the subsidiary so that it has no autonomy; or (c) the parent incorporated the subsidiary for an improper purpose.

199The case at bar is not an appropriate case to pierce the corporate veil and insofar that Mr. Yip is relying on the activities of HSBC Canada, which are a part of its carrying on its business in Canada, as constituting HSBC Holdings carrying on its business in Canada, this reliance fails. HSBC Canada did not carry on any integral part of HSBC Holdings’ own business rather it carried on its own business and both HSBC Holdings and HSBC Canada complied with the regulatory requirements under the Bank Act. HSBC Holdings’ own business activities, which did not involve the business of banking, were not overseen by Canadian regulatory authorities because HSBC Holdings was not carrying on the business of banking in Canada.

200Thus, in my opinion, HSBC Holdings is not carrying on its own business in Canada.

201If I am wrong in this conclusion, then it is necessary to consider HSBC Holdings’ argument that this presumptive connection is rebutted. I agree with HSBC Holdings’ argument.

202HSBC Holdings has established facts that demonstrate that the presumptive connecting factor does not point to any real relationship between the subject matter of the litigation and the Ontario forum or points only to a weak relationship between HSBC Holdings and Ontario. Upon analysis, very little, if any, of HSBC Holdings’ own business is conducted in Canada and the circumstance that HSBC Holdings’ business affects or influences the business of HSBC Canada is not sufficient to establish a real and substantial connection between HSBC Holdings and Ontario. I conclude that HSBC Holdings has rebutted the connecting factor of carrying on business in Ontario.

7. Did HSBC Holdings Commit a Tort in Ontario?

203The next issue to address is whether HSBC Holdings committed a tort in Ontario. If it did, then it would fall on it to rebut this presumptive connecting factor.

204Mr. Yip alleges that HSBC Holdings and Mr. Bagley breached the statutory cause of action found in Part XXIII.1 of the Ontario Securities Act. In Ontario v. Rothmans Inc., supra the Ontario Court of Appeal held that a cause of action under an Ontario statute is a claim in respect of a tort committed within Ontario and hence a presumptive connecting factor for a real and substantial connection with Ontario.

205I begin the discussion of this point by noting the discussion above that reveals that for HSBC Holdings and Mr. Bagley to be liable for contravening s .138.1 of the Ontario Securities Act, the statutory tort, HSBC Holdings must be a responsible issuer, but for it to be a responsible issuer, it must first be found to have a real and substantial connection with Ontario. This circular, begging the question circumstance creates an analytical paradox because it becomes tautological and something that cannot be empirically proven or disproven to say that a statutory tort that by definition has a real and substantial connection is a tort committed in Ontario.

206To avoid this paradox, instead of asking whether HSBC Holdings committed the statutory tort in Ontario, I shall ask whether in the pleaded circumstances of this case, HSBC Holdings committed the closely related, and also pleaded, common law tort of misrepresentation in Ontario. This makes sense because the case law holds that the statutory tort under the Ontario Securities Act for misrepresentations in the secondary market for securities occurs in the place where the negligent misrepresentation was received and relied upon: Kaynes v. BP, plc, supra.

207A tort occurs in the jurisdiction substantially affected by the defendant’s activities or its consequences or where the important elements of the tort occurred: Central Sun Mining Inc. v. Vector Engineering Inc., 2013 ONCA 601; Gulevich v. Miller, 2015 ABCA 411; Das v. George Weston Limited, 2017 ONSC 4129.

208For the context of determining whether a presumptive factor applies, the torts of fraudulent or negligent misrepresentation occur where the misinformation is received or acted upon: Cannon v. Funds for Canada Foundation, 2010 ONSC 4517 at para. 52; 2249659 Ontario Ltd. v. Siegen, 2013 ONCA 354 at para. 31; Central Sun Mining Inc. v. Vector Engineering Inc., supra; Industrial Avante Monterrey, S.A. de C.V. v. 1147048 Ontario Ltd., 2016 ONSC 6004.

209Applying the case law to the circumstances of the immediate case, in my opinion, Mr. Yip has a good arguable case that HSBC Holdings committed a misrepresentation-based tort in Ontario and, therefore, subject to rebuttal, Mr. Yip has established a presumptive connecting factor and the Ontario court has jurisdiction simpliciter over HSBC Holdings and Mr. Bagley.

210However, based on the circumstances of the immediate case, I conclude that HSBC Holdings has rebutted this presumptive connecting factor.

211That Mr. Yip downloaded HSBC Holdings’ materials in Ontario is an extremely weak connection and that HSBC Holdings’ materials were available on HSBC Canada’s webpage does not point to any real relationship between the subject-matter of the litigation and Ontario.

212HSBC Holdings anticipated that it would be subject to the regulation of the London Stock Exchange, the Hong Kong Stock Exchange, the Bermuda Stock Exchange, Paris Euronext Stock Exchange and NYSE for its ADRs. HSBC Holdings prepared its documents in London U.K. in an attempt to comply with the disclosure laws of the U.K., Hong Kong, Bermuda, France and the U.S. HSBC Holdings could reasonably expect that purchasers of its shares would and could come from around the world and that these purchasers could and would read the regulatory filings made for the U.K., Hong Kong, Bermuda, Paris and New York stock exchanges. But in my opinion, HSBC Holdings had no reason to believe that it was obliged to comply with the disclosure requirements or to be subject to the regulation of the law of Ontario. If HSBC Holdings breached the disclosure requirements as alleged in the case at bar that breach is not closely connected to Ontario or Ontario’s Securities Act.

213If HSBC Holdings was obliged to comply with Ontario’s disclosure law, then it would also be obliged to comply with the law of any other countries in the world that regulates its own stock exchanges regardless of whether or not its shares traded on that country’s exchange. Although spoken in the context of the connecting factor of carrying on business in the jurisdiction and in the context of the contemporary highly interconnected world, Justice LeBel cautioned against creating what would amount to forms of universal jurisdiction in respect of tort claims arising out of categories of business or commercial activity. Exercising that caution in the immediate case, I conclude that HSBC Holdings has rebutted the presumptive connecting factor that the wrongdoing had a real and substantial connection to Ontario.

8. Does the Ontario Court Have Jurisdiction Simpliciter?

214With the background of the above discussion of the facts and the law about “responsible issuer,” carrying on business in Ontario, and committing a tort in Ontario, I can now address the question of whether the Ontario court has jurisdiction simpliciter for Mr. Yip’s claims against HSBC Holdings and Mr. Bagley.

215HSBC Holdings is a U.K. public issuer whose securities trade did not trade in Ontario. HSBC Holdings is not a reporting issuer in Canada. It does not carry on its business in Canada. The impugned misrepresentations for which it is sued were prepared in the U.K. in purported compliance with the laws of U.K., Hong Kong, Bermuda, France, and the U.S. where its securities are traded. The alleged misrepresentations concern alleged compliance failures by HSBC Holdings’ 70 or so subsidiaries from around the world in which its Canadian subsidiary played a minor role, if it was involved at all in the failures.

216In my opinion, there are no presumptive connecting factors or the presumptive connecting factors have been rebutted. There is no real and substantial connection upon which to ground a claim against HSBC Holdings as a responsible issuer under Ontario’s Securities Act.

217Since (a) HSBC Holdings is not exposed to liability as a responsible issuer and (b) there is no presumptive connecting factor establishing a real and substantial connection between Ontario, the Ontario court, therefore, does not have jurisdiction simpliciter over HSBC Holdings and Mr. Bagley.

9. General Legal Background to the Forum Conveniens Issue

(a) Introduction

218If I am correct in the above conclusions that the Ontario court does not have jurisdiction simpliciter, then I need not consider whether the Ontario court is forum non conveniens. Once a motion judge concludes that Ontario had no jurisdiction under the real and substantial connection test, it is unnecessary for them to decide the issue of forum non conveniens: 582556 Alberta Inc. v. Canadian Royalties Inc., supra at para. 15.

219However, in case I am wrong and given the likelihood of an appeal, I need to address HSBC Holdings’ submissions that: (a) I should exercise my discretion and not assume jurisdiction; and (b) rather, I should declare that the Ontario court is forum non conveniens and dismiss or stay the Ontario action.

220For the reasons that follow, I agree with HSBC Holdings’ argument that the Ontario court is forum non conveniens.

221To explain my reasons, I shall in the next part of my Reasons for Decision set out the general legal background to the forum conveniens issue. Then, in the next section, I shall answer the question of whether Ontario is forum non conveniens in the circumstances of the immediate case.

(b) Forum Non Conveniens: General Principles

222If a domestic Canadian court has jurisdiction simpliciter, the action against the foreign defendant may proceed, but subject to the court’s discretion to stay the proceedings on the basis of the doctrine of forum non conveniens. If and only if the court has jurisdiction simpliciter may it go on to consider the matter of forum conveniens; i.e., whether there is another forum that also has jurisdiction over the matter that would be the better forum to determine the dispute.

223The objectives in determining the appropriate forum are to ensure fairness to the parties and to provide an efficient process for resolving their dispute: Club Resorts Ltd. v. Van Breda, supra at para. 109; Bouzari v. Bahremani, 2015 ONCA 275 at para. 47.

224Before staying its own proceedings on the grounds of forum non conveniens, the Ontario court must be satisfied that there is another jurisdiction connected with the matter in which justice can be done between the parties at substantially less inconvenience and expense: Bonaventure Systems Inc. v. Royal Bank (1986), 1986 CanLII 2550 (ON SC), 57 O.R. (2d) 270 (Div. Ct.); Frymer v. Brettschneider (1994), 1994 CanLII 1685 (ON CA), 19 O.R. (3d) 60 (C.A.), aff’g (1992), 1992 CanLII 7410 (ON SC), 10 O.R. (3d) 157 (Gen. Div.); Breeden v. Black, 2012 SCC 19 at para. 23; Goldhar v. Haaretz.com, 2016 ONCA 515 at para. 49, leave to appeal granted [2016] S.C.C.A. No. 388.

225In Kaynes v. BP, plc, supra, the facts of which are described above, and to which I will add additional facts and commentary below, Justice Sharpe explained at para. 35 the nature of the forum conveniens analysis as follows

35. It is well-established that if the plaintiff succeeds in demonstrating that Ontario has jurisdiction, the court has the discretion to decline to exercise that jurisdiction under the forum non conveniens doctrine as was explained in Van Breda, at paras. 103-5. The defendant bears the burden "to show why the court should decline to exercise its jurisdiction and displace the forum chosen by the plaintiff". To succeed in discharging that burden, "[t]he defendant must identify another forum that has an appropriate connection under the conflicts rules and that should be allowed to dispose of the action" and "must demonstrate why the proposed alternative forum should be preferred and considered to be more appropriate." The doctrine "tempers the consequences of a strict application of the rules governing the assumption of jurisdiction" and "requires a court to go beyond a strict application of the test governing the recognition and assumption of jurisdiction." The forum non conveniens doctrine is a "flexible concept" which "cannot be understood as a set of well-defined rules, but rather as an attitude of respect and deference to other states": Van Breda, at para. 74. Forum non conveniens recognizes that there is "a residual power to decline to exercise its jurisdiction in appropriate, but limited, circumstances in order to assure fairness to the parties and the efficient resolution of the dispute": Van Breda, at para. 104.

226As Justice Sharpe noted, the flexible forum non conveniens doctrine espouses an attitude of respect and deference to other states. The principle of comity underlies the forum non conveniens analysis and compels a domestic court to engage in a contextual analysis and to give respect to the courts and legal systems of other jurisdictions that have assumed or could assume jurisdiction over a matter without leaning too instinctively in favour of the domestic court: Kaynes v. BP, plc, supra at paras. 35-54; Prince v. ACE Aviation Holdings Inc., 2014 ONCA 285 at para. 63, leave to appeal refused [2014] S.C.C.A. No. 273.

227Comity thus plays a very important role in the forum conveniens analysis. In Morguard Investments Ltd. v. De Savoye, 1990 CanLII 29 (SCC), [1990] 3 S.C.R. 1077 at p. 1096, Justice La Forest adopted the definition of comity expressed in Hilton v. Guyot, 159 U.S. 113 at pp. 163-64 (1895): “[T]he recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens or of other persons who are under the protection of its laws.”

228In Tolofson v. Jensen, 1994 CanLII 44 (SCC), [1994] 3 S.C.R. 1022 at para. 36, another important private international law case, Justice La Forest stated:

36. On the international plane, the relevant underlying reality is the territorial limits of law under the international legal order. The underlying postulate of public international law is that generally each state has jurisdiction to make and apply law within its territorial limit. Absent a breach of some overriding norm, other states as a matter of "comity" will ordinarily respect such actions and are hesitant to interfere with what another state chooses to do within those limits. Moreover, to accommodate the movement of people, wealth and skills across state lines, a by-product of modern civilization, they will in great measure recognize the determination of legal issues in other states. And to promote the same values, they will open their national forums for the resolution of specific legal disputes arising in other jurisdictions consistent with the interests and internal values of the forum state. These are the realities that must be reflected and accommodated in private international law.

229In Kaynes v. BP, plc, supra, the Court of Appeal concluded that the Ontario court was not the forum conveniens largely because of comity concerns. Justice Sharpe stated at para. 48:

48. Asserting Ontario jurisdiction over the plaintiff's claim would be inconsistent with the approach taken under both US and UK law with respect to jurisdiction over claims for secondary market misrepresentation. As the plaintiff's claim rests to a significant degree upon the disclosure obligations imposed by US securities law, the assertion of Ontario jurisdiction would also fly in the face of the US claim to exclusive jurisdiction. In these circumstances, the principle of comity strongly favours declining jurisdiction. Ontario is not, of course, obliged to follow slavishly the jurisdictional standards of other countries. However, the principle of comity requires the court to consider to implications of departing from the prevailing international norm or practice, particularly in an area such as the securities market where cross-border transactions are routine and the maintenance of an orderly and predictable regime for the resolution of claims is imperative. Moreover, where, as here, the plaintiff's claim rests to a significant degree on foreign law, the case for assuming jurisdiction is considerably weakened.

230The doctrine of comity is of particular importance viewed from the perspective of the contemporary global transaction of business. In Chevron Corp. v. Yaiguaje, supra at para. 75, Justice Gascon stated:

75. …. [T]the doctrine of comity (to which the principles of order and fairness attach) "must be permitted to evolve concomitantly with international business relations, cross-border transactions, as well as mobility": Beals v. Saldanha, 2003 SCC 72 para. 27]. Cross-border transactions and interactions continue to multiply. As they do, comity requires an increasing willingness on the part of courts to recognize the acts of other states. This is essential to allow individuals and companies to conduct international business without worrying that their participation in such relationships will jeopardize or negate their legal rights.

231As I shall explain further in the next section of these Reasons for Decision, in the context of a forum conveniens analysis, the doctrine of comity is of particular importance when considering a case involving an international matrix of securities law regimes.

232In addition to the overarching concern about comity, courts have developed a list of factors that may be considered in determining the most appropriate forum for an action; including: (a) the location of the majority of the parties; (b) the location of the key witnesses and evidence; (c) contractual provisions that specify applicable law or accord jurisdiction; (d) the avoidance of multiplicity of proceedings; (e) the applicable law and its weight in comparison to the factual questions to be decided; (f) geographical factors suggesting the natural forum; (g) juridical advantage; i.e., whether declining jurisdiction would deprive the plaintiff of a legitimate juridical advantage in the domestic court; and (h) the existence of a default judgment in the competing forum. See: Muscutt v. Courcelles (2002), 2002 CanLII 44957 (ON CA), 60 O.R. (3d) 20 (C.A.) at paras. 41-42; Incorporated Broadcasters Ltd. v. Canwest Global Communications Corp., supra; Young v. Tyco International of Canada Ltd. (2008), 2008 ONCA 709, 92 O.R. (3d) 161 (Ont. C.A.); Precious Metal Capital Corp. v. Smith, [2008] O.J. No. 1236 (S.C.J.), affd (2008), 2008 ONCA 577, 92 O.R. (3d) 701 (C.A.); Amtim Capital Inc. v. Appliance Recycling Centers of America, 2012 ONCA 664.

233The discretionary factors are not exhaustive, and the weight to be given any factor is a matter of the exercise of the court’s discretion, which is guided by three principles; namely: (1) the threshold for displacing the plaintiff’s choice is high and the existence of a more appropriate forum must be clearly demonstrated; (2) the court should consider and balance the efficiency and convenience of a particular forum with the fairness and justice of that choice to the parties; and (3) because a forum non conveniens motion is brought early in the proceeding, the court should adopt a cautious approach to fact-finding particularly with respect to matters that are at the heart of the lawsuit; the assessment of the factors should be based on the plaintiff’s claim if it has a reasonable basis in the record. See: Antares Shipping Corp. v. Capricorn (The), 1976 CanLII 5 (SCC), [1977] 2 S.C.R. 422; Amchem Products Inc. v. British Columbia (Workers’ Compensation Board), 1993 CanLII 124 (SCC), [1993] 1 S.C.R. 897; Hunt v. T&N plc, 1993 CanLII 43 (SCC), [1993] 4 S.C.R. 289; Young v. Tyco International of Canada Ltd. (2008), 2008 ONCA 709, 92 O.R. (3d) 161 (C.A.); Silvestri v. Hardy, 2009 ONCA 40 at para. 7; Orthoarm Inc. v. American Orthodontics Corp., 2015 ONSC 1880; Industrial Avante Monterrey, S.A. de C.V. v. 1147048 Ontario Ltd., 2016 ONSC 6004.

234In the forum conveniens analysis, juridical advantage is a problematic factor because: (a) assessing the merits of rival jurisdictions is inconsistent with the principles of comity; (b) juridical advantage is a difficult factor to measure; and (c) because, as Justice Sopinka observed in Amchem Products Inv. v. British Columbia (Workers’ Compensation Board, supra at pp. 919-920, if a party seeks out a jurisdiction simply to gain a juridical advantage rather than by reason of a real and substantial connection of the case to the jurisdiction, that is ordinarily condemned as forum shopping. Thus, juridical advantage typically does not weigh too heavily in the contemporary forum non conveniens analysis. See: Breedan v. Black, supra at paras. 26-27; Amchem Products Inc. v. British Columbia (Workers' Compensation Board), supra at p. 933.

235While the loss of a juridical advantage to a party remains a relevant consideration in the forum conveniens analysis, it is a concept that should be applied with some caution, having regard to the principle of comity and an attitude of respect for the courts and legal systems of other countries, many of which have the same basic values as Canadian courts: Bouzari v. Bahremani, 2015 ONCA 275 at para. 46; Prince v. ACE Aviation Holdings Inc., supra at para. 64.

236As a factor, juridical advantage is inconsistent with comity because it encourages a debate about which jurisdictions approach to the law is advantageous or disadvantageous and the domestic court may view disadvantage as a sign of inferiority in the rival jurisdiction and to favour its own jurisdiction as superior.

237As a practical matter, juridical advantage is difficult to measure because any loss of advantage to the plaintiff in the forum of his or her choice must be weighed as against the loss of advantage, if any, to the defendant in the rival jurisdiction.

238There is also another refined and sometimes undetected problem with the juridical advantage factor that skewers the forum non conveniens analysis and that substantially weakens the utility of the judicial advantage factor. The problem that the juridical advantage factor assumes that the rival courts will each apply their own different domestic law to the dispute; in other words, the juridical advantage factor in the forum conveniens analysis ignores or postpones choice of law, which is a discrete aspect of private international law.

239Choice of law is a discrete legal issue and different from jurisdiction simpliciter, which is essentially about whether the domestic court can make a binding determination over the foreign defendant or, in the class action context, over both foreign defendants and foreign plaintiffs. In contrast, choice of law is essentially about what law a court with jurisdiction simpliciter will apply when there is a foreign element in the litigation.

240For example, in the case at bar, as an alternative to relying on Ontario law, Mr. Yip relies on the securities law of Ontario’s sister provinces and on the securities law of England. In the case at bar, it remains open to HSBC Holdings to argue that if the dispute is tried in Ontario, it should be tried in accordance with the securities law of the U.K., Hong Kong, France, Bermuda, and the U.S. and not necessarily under Ontario Securities Act. However, for the purposes of the forum non conveniens debate, the parties assume that the Ontario court will apply its domestic law which is different than the law that would be applied if the case was tried in the rival jurisdiction.

241Often the juridical advantage factor disappears, because the law of both jurisdictions is the same. However, a genuine juridical advantage treats the laws of the rival jurisdictions as different and hence subject to comparative analysis. If the choice of law issue does not disappear, it may skewer the forum non conveniens analysis. This is what may have occurred in Kaynes v. BP plc, supra discussed above and discussed further immediately below and again in the next section of my Reasons for Decision.

242With respect to skewering the forum non conveniens analysis, in Kaynes v. BP plc, it is arguable that the Court of Appeal’s first decision was based on the assumption that the U.S. court in Texas would apply U.S. law to Mr. Kaynes’ claim and that the Court of Appeal’s second decision was based on the knowledge that Judge Ellison, presiding in the court in Texas, would not allow Mr. Kaynes’ claim to be tried based on Ontario law, which is how Mr. Kaynes fashioned his U.S. action. In other words, in the circumstances leading up to the Court of Appeal’s second decision to lift the stay, Mr. Kaynes wished to have the Texas court not apply Texas law but rather to apply Part XXIII.1 of Ontario’s Securities Act, and Judge Ellison refused to permit such a claim to go forward in Texas. And for good measure, Judge Ellison said that if Ontario law applied, Mr. Kaynes’ claim was statute-barred. For a further discussion of these aspects of Kaynes v. BP plc, see my recent decision: Kaynes v. BP plc, 2017 ONSC 5172.

243With this background to the general principles and simply highlighting the importance of comity and the problems associated with the juridical advantage factor, I move on to answer the question of whether in the immediate case the Ontario court is forum non conveniens.

10. Is Ontario Forum Non Conveniens?

244HSBC Holdings submits that Ontario is forum non conveniens. The onus is on it to prove this point.

245I shall begin the discussion of forum non conveniens by rejecting Mr. Yip’s argument that because the common law real and substantial connection rules are subject to statutory variation, therefore, once a real and substantial connection is established in the case at bar based on the Ontario Securities Act, there should be no further consideration of forum conveniens. In other words, Mr. Yip argues that if the court determines that it has jurisdiction simpliciter for a claim under Part XXIII.1 of the Ontario Securities Act, then a consideration of forum non conveniens is precluded.

246I reject this argument for four reasons. First, there is no authority that supports this argument and the authority of Kaynes v. BP, plc, supra stands against this argument because the courts in that case were not constrained from a forum non conveniens analysis in a case in which jurisdiction simpliciter was established. Second, the argument that the court is precluded from a forum conveniens analysis is contrary to the regime established by Club Resorts Ltd. v. Van Breda, supra. Third, this argument is contrary to the general principles of private international law. Fourth, the argument that the court is precluded from a forum non conveniens analysis would encourage forum shopping and a multiplicity of proceedings, once again, inconsistent with the principles of private international law.

247In particular, I note that Babington-Browne v. Canada (Attorney General), 2016 ONCA 549 does not support Mr. Yip’s argument. In that case, the Court of Appeal held that the real and substantial connection scheme of Club Resorts Ltd. v. Van Breda, supra did not apply to the determination of whether the Ontario court had jurisdiction over the Federal Government under the Crown Liability and Proceedings Act, R.S.C. 1985, c. C-50. Apart from the fact that the issue of subject matter jurisdiction over an entity with sovereign immunity pursuant to a statute is not remotely comparable to the issue of a court’s in personam jurisdiction over a foreign party, the reason for rejecting the real and substantial connection test in Babington-Browne v. Canada (Attorney General) was that the test would always be satisfied, which would make the test meaningless and inconsistent with the Crown Liability and Proceedings Act, which was meant to set boundaries and not provide an infinite boundless jurisdiction to sue the Federal Government in Ontario courts.

248I, therefore, shall proceed to a conventional analysis of the traditional forum non conveniens factors, but before doing so, I shall complete the discussion of the significance of Kaynes v. BP, plc, supra, to the analysis in the case at bar. In this regard, there was a great deal of argument about the significance of the Court of Appeal’s two decisions.

249HSBC Holdings’ position was that I should follow the Court of Appeal’s 2014 decision in Kaynes v. BP plc, supra, where it held that Ontario was forum non conveniens for the Part XXIII.1 claim involving securities sold on foreign stock exchanges. Further, HSBC Holdings submitted that I did not need to follow the Court of Appeal’s 2016 decision, where because of changed circumstances, the Court of Appeal lifted the stay and allowed the global Part XXIII.1 class action to proceed in Ontario. HSBC Holdings submitted that the Court of Appeal’s 2016 decision was distinguishable. Conversely, Mr. Yip argued that I should follow the Court of Appeal’s 2016 decision in Kaynes v. BP, plc and I should conclude that the Ontario court was forum conveniens.

250For my part, I shall follow both Court of Appeal decisions in Kaynes v. BP, plc insofar as those decisions set out the rules and principles for a conventional forum non conveniens analysis.

251I do not need to agree or disagree or opine about how the Court of Appeal in Kaynes v. BP, plc applied the discretionary factors, and in this sense the outcome of both decisions is not binding on me.

252Further, I repeat that the choice of law issue may have skewered the analysis in Kaynes v. BP plc, and I note that although at first blush, the factual circumstances for a forum non conveniens analysis and for the application of the rules and principles in the case at bar appear to be similar or identical to the factual circumstances in Kaynes v. BP, plc, there is a fundamental factual difference between the cases, and thus the case at bar calls for its own discrete forum non conveniens analysis.

253Unlike the situation in Kaynes v. BP, plc, supra, in the case at bar, there are no purchasers using an Ontario stock exchange. In contrast, in Kaynes v. BP, plc, there were Ontario and non-Ontario class members who purchased shares on the TSX, and there was no dispute that Ontario was forum conveniens for those class members. Thus, the forum non conveniens analysis in Kaynes v. BP, plc was really about whether the class members who had purchased their shares in foreign stock exchanges could board the litigation train that was about to embark for a leave motion under Part XXIII.1 of the Ontario Securities Act. The case at bar is different, and what it is really about is whether Ontario ought to offer up a litigation train at all for purchasers, none of whom purchased securities in Ontario.

254Turning then to perform a conventional forum non conveniens analysis, the existence of a default judgment in the competing forum is a non-factor in the case at bar.

255Performing a conventional forum non conveniens analysis, all of the following factors tend to favour London or Hong Kong as the preferred and more appropriate forum; namely: (a) the location of the majority of the parties; (b) the location of the key witnesses and evidence; (c) contractual provisions that specify applicable law or accord jurisdiction; (d) the avoidance of multiplicity of proceedings; (e) the applicable law and its weight in comparison to the factual questions to be decided; and (f) geographical factors suggesting the natural forum. To this list, I would add the factor of statutory provisions that specify applicable law or accord jurisdiction to courts outside Ontario.

256In my opinion, the U.K. rather than Ontario is the natural forum to resolve the dispute between the parties. The U.K. is the place where the majority of HSBC Holdings’ securities were traded during the class period. The Defendants reside in the U.K. The disclosure decisions were made in the U.K., and the material witnesses and evidence are located in the U.K. and very little if any evidence about the compliance representation and the Libor/Euribor representation concerns Ontario.

257Upon analysis, Mr. Yip’s main argument favouring Ontario is the considerable weight he places on the juridical advantage factor of the criteria for the exercise of the court’s discretion. In this regard, he submits that the availability of class actions and contingency fees favour Ontario. He submits that Ontario affords the plaintiff and putative Class Members the benefits of its class proceedings legislation, contingency fees, and the ability to defer the costs of pursuing their claims. He submits that in contrast, the U.K. and Hong Kong do not have any class actions regime, nor does Hong Kong permit contingency arrangements and, although the U.K. permits “no win, no fee” damages-based agreements, Mr. Yip submits that they are extremely rare in large-scale commercial cases. Further, with respect to juridical advantage, Mr. Yip argues that Canadians who purchased American Deposit Receipts in the U.S. would have no recoverable claim in the United States, and, therefore, the juridical advantage favours them having a claim under Ontario law. Further still