2383003 Ontario Inc. v. Big Lobster Seafood Incorporated, 2017 ONSC 5635
CITATION: 2383003 Ontario Inc. v. Big Lobster Seafood Incorporated, 2017 ONSC 5635
COURT FILE NO.: CV-16-565828
MOTION HEARD: 20170807
REASONS RELEASED: 20170922
SUPERIOR COURT OF JUSTICE – ONTARIO
BETWEEN:
2383003 ONTARIO INC., carrying on business as hARVESTER SQUARE uNITED
Plaintiff
- and-
BIG LOBSTER SEAFOOD INCORPORATED
Defendant
BEFORE: MASTER M.P. McGRAW
COUNSEL: Peter Lulic Email: luliclaw@gmail.com -for the Defendant
Bernie Romano Email: bernie@romanolaw.ca -for the Plaintiff
REASONS RELEASED: September 22, 2017
Reasons for Endorsement
I. Overview
[1] This is a motion by the Defendant Big Lobster Seafood Incorporated (“BL”) to stay this action on the basis that New Brunswick, not Ontario, is the proper jurisdiction.
[2] The Plaintiff, 238003 Ontario Inc. c.o.b. Harvester Square United (“HS”) is an Ontario corporation with its head office in Toronto. HS provides packaging, logistics and maintenance services and suppplies to the food industry.
[3] BL is in the wholesale business of storing and exporting lobster. It was incorporated in Ontario on November 22, 2013 with its registered office at 7475 Kimbel Street, Unit 1 in Mississauga. On February 10, 2015, BL registered in New Brunswick as an extra-provincial corporation.
[4] While BL insists that it moved all of its operations to Grand Manan, New Brunswick in 2015 and has no physical presence in Ontario, BL maintains its Ontario registration with the same Mississauga address and telephone number. Google and telephone directory searches still show the same Mississauga address and phone number as its primary contact.
[5] This action arises from two agreements between HS and BL, one for the provision of transportation services by HS and the second for the construction of a cold storage facility in New Brunswick. HS also provided additional packaging, transportation and related services to BL for which it issued invoices.
[6] The first agreement, the “Transportation Service and Collaboration Agreement” dated April 24, 2015 (the “Transportation Agreement”) sets out the terms pursuant to which HS transported BL’s seafood products between Toronto and Eastern Canada. The Transportation Agreement also provides that any amounts owing by HS for the purchase of BL seafood products could be set off against transportation fees owed to HS.
[7] The second agreement, the “Special Collaboration Agreement re: Cold Storage Facility and Frozen Food Project” dated April 26, 2016 (the “Construction Agreement”, collectively with the Transportation Agreement, the “Agreements”) sets out the terms pursuant to which HS agreed to construct a cold storage facility on property provided by BL in New Brunswick. This project did not proceed.
[8] HS and BL started doing business together in 2014, mostly through HS providing logistics services to BL. It is undisputed that until BL moved its operations to New Brunswick in 2015, the parties’ meetings and discussions took place at both BL’s offices in Mississauga and HS’ offices in Toronto and that BL considered its head office to be in Mississauga. It is also undisputed that BL continues to market its products in Ontario and accept business from Ontario clients.
[9] HS alleges that the Transportation Agreement was discussed, negotiated and signed in HS’ offices in Toronto and BL’s offices in Mississauga. HS states that the Construction Agreement was negotiated at the parties’ Ontario offices and was sent to BL in New Brunswick which BL signed and returned by email.
[10] BL disputes HS’ version of events and alleges that the discussions and negotiations leading to both Agreements took place in New Brunswick when HS representatives were visiting HS’ operations and/or assisting with refrigeration maintenance and that the Agreements were later drafted and signed by HS in Toronto. BL states that HS emailed the Agreements to BL in New Brunswick where BL signed and returned them by email.
[11] There are no jurisdiction, forum or choice of law provisions in the Agreements or the invoices. However, BL’s affidavit evidence is that when representatives of HS and BL discussed and negotiated the Agreements in New Brunswick, it was verbally agreed and understood by the parties that any disputes would be dealt with in New Brunswick, not Ontario. HS disputes that this was ever discussed or agreed.
[12] In its Amended Statement of Claim dated December 12, 2016, HS claims $120,000.00 for breach of contract and wrongful misappropriation. HS alleges that, on or about April 24, 2015, HS agreed, based on the Transportation Agreement, to purchase of 5,000 pounds of unshipped live premium lobsters and remitted payment in the amount of $35,000 to BL. HS alleges that HL never delivered the lobsters causing HS to incur damages including loss of the $35,000 payment and lost profits and business opportunities from the retail sale of the lobster which it claims had a retail value of approximately $78,000 as of the date of the Statement of Claim. HL disputes this claim and states that the $35,000 was with respect to the cold storage facility pursuant to the Construction Agreement.
[13] HS further alleges that BL is indebted to HS in the amount of $44,893.49 for unpaid invoices with respect to packaging, transportation and related services provided to BL from August 2015 to October 2016.
[14] Accordingly, HS’s claims arise from the Transportation Agreement (which contemplates the purchase of lobster) and the unpaid invoices. HS makes no claims under the Construction Agreement.
III. The Law and Analysis
[15] The test for whether an Ontario court has jurisdiction is whether there is a real and substantial connection between the matter, the parties and Ontario (Club Resorts Ltd. v Van Breda, 2012 SCC 17; James Bay Resources Ltd. v. Mak Mera Nigeria Ltd., 2015 ONSC 1538; aff’d 2015 ONCA 781).
[16] This test has 2 stages: i.) the plaintiff must establish that one of the listed presumptive factors, or a new factor which should be given presumptive effect, exists; and ii.) a defendant may rebut the presumption of jurisdiction by establishing facts which demonstrate that the presumptive connecting factor does not point to any real relationship between the subject matter of the litigation and the forum or points only to a weak relationship (Van Breda at paras. 94-95; Goldhar v. Haaretz.com, 2016 ONCA 515 at paras. 24-26).
[17] The law was recently summarized by Master Brott in Integrity v. Knapp, 2017 ONSC 382. In determining whether to assume jurisdiction, the court must determine whether one of the presumptive connecting factors set out in Van Breda applies. As stated at paragraph 64 of Van Breda:
“when one of the presumptive connecting factors applies, the court will assume jurisdiction unless the defendant can demonstrate the absence of a real and substantial connection. If, on the other hand, none of the presumptive connecting factors are found to apply to the claim, the onus rests on the plaintiff to prove that a sufficient relationship exists between the litigation and the forum.”
[18] The following is the non-exhaustive list of 4 presumptive connecting factors:
i.) the defendant is domiciled or resident in Ontario;
ii.) the defendant is carrying on business in Ontario;
iii.) the tort was committed in Ontario; and
iv.) the contract connected with the dispute was made in Ontario (Van Breda at para. 90; Integrity at para. 19).
[19] The existence of 1 presumptive factor is sufficient to establish jurisdiction (James Bay at para. 29). Analysis for jurisdiction determination does not require the depth of a Rule 21 motion or consideration of the merits; sufficient particularly in the pleadings is sufficient (Integrity at para. 20).
[20] It is difficult to rebut the presumption of jurisdiction where the presumptive connecting factor is a tort committed in the forum however, it may be possible where only a relatively minor element of the tort has occurred in a chosen forum such that it would point only to a weak relationship between the forum and subject matter of the litigation thus it would not be reasonable to expect the defendant would be called to answer proceedings in that jurisdiction (Van Breda at paras. 96-97; Goldhar at para. 25).
[21] In my view, although only 1 presumptive factor is required, as many as 3 may apply in the present case.
[22] Notwithstanding BL’s existing Ontario corporate registration with its registered office and mailing address at 7475 Kimbrel Street, Unit 1 in Mississauga and its maintenance of an Ontario address and phone number, BL denies that it is domiciled or resident in Ontario. BL submits that it has had no physical office or connection to Ontario since Februrary 10, 2015 when it registered extra-provincially in New Brunswick and moved its operations and head office.
[23] The effect and importance of an Ontario corporation’s registered office is reflected in section 19 of the Business Corporations Act (Ontario):
“(1) A corporation or a guarantor of an obligation of a corporation may not assert against a person dealing with the corporation or with any person who has acquired rights from the corporation that,
(c) the location named in the most recent notice filed under the Corporations Information Act or named in the articles, whichever is more current, is not the registered office of the corporation
except where the person has or ought to have, by virtue of the person’s position with or relationship to the corporation, knowledge to that effect.”
[24] Even though BL submits that it has no connection to Ontario, it has chosen to maintain an Ontario corporate registration with its registered office at the same address since 2013 and throughout the entire time that it did business with HS. BL has also chosen to register extra-provincially in New Brunswick and did so only 10 weeks before it entered into the Transportation Agreement with HS.
[25] The public, other corporations and HS are entitled to rely on BL’s Ontario registration. Based on what BL represented, what HS knew and the information available when it did business with BL, it was reasonable for HS to conclude that BL was an Ontario corporation with processing operations located in New Brunswick. While BL is not denying that its registered Ontario office is in Mississauga it is now downplaying and resiling from this registration in an attempt to deny HS the right to sue it in Ontario. BL has also chosen not to amend or correct its Ontario contact information that, over 2.5 years later, still appears prominently in response to a Google search.
[26] BL cannot arrange its affairs in this manner, hold itself out as an Ontario corporation, and then selectively pick and choose when it wishes to reap the benefits of an Ontario registration and address and when it wishes to honour or avoid the obligations associated with it. The fact that BL chose to register extra-provincially and moved its head office to New Brunswick does not change the fact that its Ontario registration and address have not changed since 2013. I conclude that BL is domiciled or resident in Ontario and therefore this presumptive connecting factor applies.
[27] Although it is only necessary to conclude that 1 of the presumptive connecting factors applies, I will consider the other 3 factors from the Van Breda list.
[28] BL submits that it does not carry on business in Ontario, however, admits that it continues to market its products in Ontario and accept business from Ontario clients. BL also admits that it was doing business in Ontario with HS at the time it registered extra-provincially and moved its head office to New Brunswick, approximately 10 weeks before the Transportation Agreement was signed on April 24, 2015. It submits that by this date, it had severed all connections to Ontario and was no longer doing business in Ontario. Similar to my conclusion above with respect to BL’s residence, the extra-provincial registration and move does not change the fact that BL has, was and continues to carry on business in Ontario. Therefore, I conclude that this presumptive connecting factor also applies.
[29] Although HS has, in part, pleaded its claim on the basis of the tort of wrongful misappropriation, the parties did not address this factor and there is insufficient information on the record to determine if it is at least arguable that a tort has been committed in Ontario. Accordingly, I cannot find that this presumptive connecting factor applies.
[30] Notwithstanding the absence of any jurisdiction provisions in the Agreements, BL urges me to find that that the Agreements were made in New Brunswick. BL also submits that HS’ claims arise from the Construction Agreement and not the Transportation Agreement.
[31] BL relies on affidavit evidence in which it alleges that the parties expressly agreed when the Agreements were negotiated in New Brunswick that all disputes would be resolved under the law of New Brunswick. HS disputes that jurisdiction was discussed, that any negotiations took place in New Brunswick and that any amounts or claims arise from the Construction Agreement. Based on the record and the pleadings, and given the early stages of these proceedings, I am unable to make these findings of fact as BL requests. HS has pleaded its claim with sufficient particularity and there is a reasonable basis to support its position.
[32] BL made a passing oral submission, without reference to case law, that since HS drafted the Agreements and had the opportunity to include a jurisdiction provision favouring Ontario, a negative inference should be drawn on the basis of contra proferentem in favour of BL and New Brunswick. I am not satisfied that the record before me supports this finding, and in any event, in the absence of more fulsome submissions I decline to draw such an inference.
[33] Further, the law of contract provides that when acceptance of a contract is delivered by email, as here, the contract is made in the jurisdiction where the email communicating acceptance is received, in this case, Ontario (TFS RT Inc. v. Kenneth Dyck, 2017 ONSC 2780 at para. 30). Therefore, even if I fully accept BL’s evidence that the Agreements were drafted and signed in Ontario by HS, emailed to New Brunswick, signed in New Brunswick by BL and then emailed back to HS in Ontario, this supports HS’ position that the Agreements were made in Ontario. Based on the above considerations and analysis, in my view, it is also likely that the Agreements were made in Ontario such that this presumptive connecting factor also applies.
[34] Having considered all of the factors and circumstances set out above, I conclude that there is a real and substantial connection between Ontario, the parties and the matter and that BL has failed to rebut this conclusion by demonstrating that there is no real connection or the connection is a weak one.
[35] Even though I have concluded that there is a real and substantial connection to Ontario, the court retains a residual power to decline to exercise its jurisdiction and stay an action based on the doctrine of forum non conveniens. This discretion is exercised in appropriate but limited circumstances in order to assure fairness and the efficient resolution of disputes (Van Breda at para. 104). The courts have developed the following non-exhaustive list of factors that may be considered in assessing the connections to each forum and determining the most appropriate forum for the action, which include:
(i) the location of the majority of the parties;
(ii) the location of the key witnesses and evidence;
(iii) contractual provisions that specify applicable law or accord jurisdiction;
(iv) the avoidance of multiplicity of proceedings;
(v) the applicable law and its weight in comparison to the factual questions to be decided;
(vi) geographical factors suggesting the natural forum; and
(vii) whether declining jurisdiction would deprive the plaintiff of a legitimate juridical advantage in the domestic court (Young v. Tyco International of Canada Ltd (2008), 2008 ONCA 709, 92 O.R. (3d) 161 (C.A.) at paras. 25-26; James Bay at para. 31).
[36] The application of these factors is an exercise of the court’s discretion which is guided by 3 principles:
(i) the threshold for displacing the plaintiff's choice is high, and the existence of a more appropriate forum must be clearly demonstrated;
(ii) 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
(iii) 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 (James Bay at para. 32)
[37] In applying these factors, I have also considered and applied Rule 1.04(1) which provides that the Rules of Civil Procedure shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits and Rule 1.04(1.1) which requires the court to make orders and give directions that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding.
[38] In assessing the connection of this action to both Ontario and New Brunswick, HS is located in Ontario and BL in New Brunswick. HS submits that it intends to call 3 witnesses who are all residents of Ontario and BL states that it intends to call 3 witnesses who are all residents of New Brunswick. There are no jurisdiction provisions in the Agreements, no evidence of any geographical factors or of any juridical advantage, no material difference in the law related to the action and no risk of a multiplicity of proceedings. Based on this application of the factors above, in my view, BL has not demonstrated that New Brunswick is a more appropriate forum and has not met the high threshold for displacing HS’ choice of Ontario or demonstrated that this is one of the limited circumstances where an Ontario court should decline to exercise jurisdiction.
[39] In arriving at this conclusion, I am mindful that at this early juncture in these proceedings, based on the record before me, I am unable to make findings of fact as urged by BL including that there was an oral agreement that all disputes under the Agreements would be resolved under New Brunswick law. Further, in my view, Ontario as the jurisdiction advances the interests of efficiency and fairness and is consistent with Rule 1.04.
[40] Based on all of the above factors and circumstances, I conclude that Ontario is the proper jurisdiction for this action and BL’s motion is dismissed.
IV. Disposition
[41] Order to go dismissing BL’s motion.
[42] If the parties cannot agree on the costs of this motion, they may file written costs submissions not to exceed 3 pages (excluding costs outlines) with me through the Masters Administration Office by November 30, 2017.
Released: September 22, 2017
Master M.P. McGraw