2020 ONSC 2900

Court File and Parties

Court File No.: CV-18-137-00 Date: 2020 05 08

Ontario Superior Court of Justice

Between: GLYCOBIOSCIENCES INC. Plaintiff – and – FOUGERA PHARMACEUTICLAS INC. and SANDOZ INC. and GLAXOSMITHKLINE and ALMIRALL (AQUA PHARMACEUTICALS) Defendants

Counsel: K. Drizen, Agent for the Plaintiff R. Godil, for the Defendant, GlaxoSmithKline A. Prenol, for the Defendant, Almirall (Aqua Pharmaceuticals)

Heard: November 12, 2019

Reasons for Decision

L. Shaw J.

Introduction

[1] The defendants, GlaxoSmithKline LLC (“GSK LLC”) and Almirall (Aqua Pharmaceuticals) (“Aqua”), are both pharmaceutical companies based in the United States. They move to set aside service of the Statement of Claim and to dismiss or stay the action against them. The action against the remaining defendants was dismissed by Miller J. on April 29, 2019.

[2] The plaintiff, Glycobiosciences Inc. (“Glyco”), is also a pharmaceutical company. It is incorporated under the laws of Ontario and has its head office in Georgetown, Ontario. On July 23, 2018, Glyco commenced an action in Ontario against all defendants seeking damages of $32,600,000 for breach of contract, tortious interference, and fraudulent and negligent misrepresentation. It also seeks $3,500,000 for exemplary and punitive damages.

[3] The action involves Glyco’s development and ownership of a wound care product known as IPM Wound Gel Bio Product (the “IPM Product”). It is a product which contains a high concentration of hyaluronic acid (2.5%). The essence of the claim is that GSK LLC and Aqua engaged in tortious activities meant to impede Glyco’s sale of this product so as not to compete with similar products in which they have an interest.

[4] This motion is brought by GSK LLC which is the company described in the Statement of Claim as a publicly listed and traded company in the United States with an office at 5 Crescent Drive, Philadelphia, Pennsylvania. The claim was served at that address. The Statement of Claim names the defendant as “GlaxoSmithKlein”. GSK LLC’s parent company is GlaxoSmithKlein PLC (“GSK PLC”) which is based in the United Kingdom. GlaxoSmithKlein Inc. (“GSK Inc.”) is an affiliate of GSK LLC. It is also owned by GSK PLC and is based in Canada. Neither of these companies were named as defendants.

[5] The defendant, Aqua, is the company described in the Statement of Claim as a Pennsylvania-incorporated company with an office at 707 Eagleview Boulevard, Suite 200, Exton, Pennsylvania. Aqua was served at that address. Aqua is a limited liability company rather than an incorporated corporation. The company that was served at that address and who brings this motion is Aqua Pharmaceuticals LLC, which is now known as Almirall LLC.

[6] For the reasons outlined below, service of the Statement of Claim is set aside, and the action is stayed for lack of jurisdiction.

Position of the Parties

[7] Glyco seeks damages from the defendants for breach of contract and for the torts of interference with economic relationships and fraudulent and negligent misrepresentation. During submissions, Glyco acknowledged that only the tort claims are being advanced against these defendants.

[8] The position of both GSK LLC and Aqua is that they do not carry on business in Ontario nor do they have an office, or any employees based in Ontario. They also submit that there is no evidence that any tort was committed in Ontario. Their position is that service of the Statement of Claim should be set aside as it is not authorized by the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. They further submit that the claim should be stayed or dismissed as this court does not have jurisdiction as there is no real and substantial connection between Ontario and the subject matter of this litigation.

[9] Glyco’s position is that both GSK LLC and Aqua carry on business in Ontario and committed torts in Ontario. Therefore, it submits that service of the Statement of Claim was proper pursuant to r. 17.02 of the Rules of Civil Procedure. It also submits that it has established that there is a good arguable case that there are presumptive connecting factors connecting the action to Ontario, thereby establishing that there is a real and substantial connection between the litigation, the parties, and Ontario. Accordingly, relying on the principles as set out in Club Resorts Ltd. v. Van Breda, 2012 SCC 17, [2012] 1 S.C.R. 572, this court has jurisdiction over the claim and the parties.

Background

[10] This litigation has its roots in prior proceedings commenced in 2011 in the United States. The predecessor of co-defendant Fougera Pharmaceutical Inc. (“Fougera”) commenced an action against Glyco in the United States. It sought a declaration as to the patent rights of a product it sold called Solaraze, which is also a topical gel used for the treatment of a skin condition. In response, Glyco filed counterclaims for patent infringement in relation to four patents allegedly used in the manufacturing of Solaraze.

[11] In 2012, Glyco commenced a separate action against Fougera and another company with respect to six other patents related to Solaraze.

[12] The 2011 and 2012 actions were settled by way of a Settlement Agreement dated November 6, 2012 (the “Settlement Agreement”). The parties to the Agreement were Glyco, Fougera and another company not named in this action. Neither GSK LLC nor Aqua were parties to that litigation or to the Settlement Agreement. The Settlement Agreement dealt with the product Solaraze and issues relating to Voltaren, another similar product.

[13] This proceeding relates to the wound gel product owned by Glyco – the IPM Product – and its related technologies. Glyco asserts that this product is a highly effective product for chronic non-healing wounds. Glyco’s current main business focus is to sell and license the IPM Product. A United States patent was issued/granted to Glyco in November 2017 which covers the IPM Product and its related technology. Glyco’s claim against GSK LLC and Aqua is that they interfered with Glyco’s relationships with its manufacturers and distributors so as to interfere with Glyco’s sale of the product. Glyco also alleges that they made fraudulent and negligent misrepresentations in Ontario, again designed to interfere with Glyco’s marketing and sale of the IPM Product.

a) Litigation History

[14] GSK LLC’s and Aqua’s motions, dated August 31, 2018 and September 4, 2018 respectively, to dismiss or stay the action were initially returnable on February 4, 2019. On that date, co-defendants Fougera and Sandoz Inc. (“Sandoz”) scheduled motions seeking orders to dismiss or stay the actions against them. Miller J. heard those motions and adjourned GSK LLC’s and Aqua’s motions to a date following the hearing of a motion brought by Glyco seeking production of documents from GSK LLC.

[15] Miller J. heard Fougera’s and Sandoz’s motions as those motions involved a distinct issue involving the Settlement Agreement. She stayed the actions against Fougera and Sandoz as she found that the dispute involving Glyco was governed by an arbitration clause in the Settlement Agreement.

[16] Glyco’s motion for disclosure from GSK LLC was returnable on March 4, 2019. Before the motion was to be heard, Glyco amended the Statement of Claim, without leave of the court, to name GSK Inc., GSK PLC, and GSK LLC as additional defendants.

[17] On March 4, 2019, Glyco sought an adjournment of its disclosure motion. On that date, Kurz J. ordered that the amended Statement of Claim be struck as the amendments were not made in accordance with r. 26.02 of the Rules of Civil Procedure. Glyco eventually did not pursue the disclosure motion.

[18] Glyco again amended its Statement of Claim on April 12, 2019 to add some additional particulars for tortious interference. The additional allegations related to the conduct of Fougera and Sandoz with respect to their motion to stay the action heard by Miller J. on February 4, 2019.

[19] On May 21, 2019, Glyco brought a motion seeking leave to amend the amended Statement of Claim to add GSK Inc., GSK PLC, and GSK LLC as additional defendants as the claim only named “GlaxoSmithKline” as a defendant. The motion was opposed by GSK Inc. and GSK PLC. GSK LLC did not appear or make submissions when the motion was heard.

[20] Doi J. dismissed the motion and found that the claims for damages based on the torts of interference with economic relationships and fraudulent and negligent misrepresentation in the proposed amended amended Statement of Claim were untenable at law as against GSK Inc., GSK PLC, and GSK LLC.

[21] This motion was adjourned a number of times before proceeding on November 12, 2019.

b) Review of the Statement of Claim

[22] As GSK LLC and Aqua have disputed the jurisdiction of this court, neither has filed a Statement of Defence.

[23] The claims against GSK LLC and Aqua are based on allegations of tortious interference and fraudulent and negligent misrepresentation.

[24] The claim alleges that Aqua owns the rights to, sells, and markets Solaraze in the United States and that GSK LLC sells and markets Voltaren in several markets around the world. Both products are similar to Glyco’s IPM Product.

[25] With respect to the tort of tortious interference, Glyco claims, at para. 23 of its Statement of Claim, that the defendants:

have in whole or in part, but when in part for the benefit of the group, fraudulently and deliberately interfered in Glyco’s business relationships, with the intention of keeping Glyco’s products off the market, for strategic and competitive advantage and have done so improperly and outside of any agreement.

[26] At para. 24 of the Statement of Claim, Glyco alleges that:

the defendants have interfered and caused damage to Glyco’s relationships with its manufacturers and distribution partners in a blatant attempt to “mothball” (keep Glyco’s products off the market) and for the defendants’ financial gain, and to attempt to cause Glyco to cease the development of its products and technology, Glyco’s IPM Hyaluronic Acid based high concentration topical delivery system.

[27] There are no particulars pleaded with respect to what tortious activities GSK LLC or Aqua are alleged to have been involved with to the detriment of Glyco.

[28] With respect to the tort of fraudulent and negligent misrepresentation, at para. 30 of the amended Statement of Claim, Glyco repeats the allegation that

the defendants, in whole or in part but with a common interest, have engaged in tortious interference and fraudulent conduct, to interfere with Glyco’s business relationship, including but not limited to, Glyco’s relationship with its manufacturer of its IMP Would Gel Bio product, and its business relationship with its distribution partners.

[29] There are no specific allegations regarding what statements were made by either GSK LLC or Aqua which Glyco claims were made fraudulently or negligently. There is no allegation that Glyco relied on any such statements to its detriment.

[30] The amended Statement of Claim also includes a number of additional paragraphs describing statements made by Sandoz and/or Fougera in their motion materials to dismiss the action against them. Glyco claims that these statements constitute fraudulent misrepresentations.

[31] Glyco also pleads, at para. 36 of the amended Statement of Claim, that the claims have a real and substantial connection with Ontario. In this regard, it submits that the tort of fraudulent and negligent misrepresentation was committed in Ontario and that damages were sustained in Ontario where Glyco is located and conducts its business.

c) Review of the Evidence

[32] Although not pleaded in its Statement of Claim, Glyco alleges in an affidavit sworn by Alan Drizen, the President of Glyco, that on March 21, 2016, it was contacted by Brienne Engel from www.yet2.com (“Yet2”). It advised that Yet2 had a client with an interest in Glyco’s IPM technology and products. Glyco was advised by Yet2 that the client it represented was GSK.

[33] Glyco alleges that while it and Yet2 were in the process of setting up a conference call with GSK for June 6, 2016, Glyco asked that the companies enter into a Confidentiality Disclosure Agreement (“CDA”) before the call took place to protect the information that Glyco would give to GSK. Glyco asserts that GSK refused to sign a CDA and requested that the phone meeting be cancelled.

[34] Glyco alleges that GSK, through its agent Yet2, represented to Glyco that it had an interest in its IPM Product, but that GSK’s real objective was to obtain proprietary information of Glyco’s products and related technology without entering into a CDA. Glyco alleges that in doing so, GSK made fraudulent and negligent misrepresentations to Glyco that Glyco relied on, in Ontario, where Glyco conducts its business. Specifically, Glyco alleges that GSK feigned interest though their agent, Yet2, while instead attempting to obtain Glyco’s proprietary information without entering into a CDA. Glyco submits that they were interfering with its manufacturing and distribution relationships.

[35] Glyco’s evidence is that another company purchased large commercial batches of its IPM Product which were to be delivered in January 2019 for launch for sale in the United States’ market. Glyco alleges that without the interference of the defendants, the product would have been launched for sale in the United States in December 2013.

[36] In its factum, Glyco alleges that the defendants interfered with and caused damage to its relationships with its manufacturers and distributors. In particular, the defendants interfered with Glyco’s relationship with its former manufacturer, Bioglan AB (“Bioglan”). It did so in an attempt to keep Glyco’s products off the market for the defendants’ financial gain, as a strategic and competitive advantage, and in attempt to cause Glyco to cease the development and sale of its products and technology.

[37] To be clear, there is no evidence of which of the named defendants interfered with Glyco’s relationship with Bioglan. Furthermore, no particulars were provided with respect to what the defendants did to interfere with Glyco’s relationships with Bioglan or with any other manufacturer or distributor. Furthermore, this was not evidence contained in any of the affidavits sworn by Mr. Drizen on behalf of Glyco and, as such, I did not consider it for this motion as it was not admissible evidence before the court.

[38] Glyco relies on the 2016 Annual Report of GSK PLC which lists GSK Inc. and GSK LLC as wholly-owned subsidiaries of GSK PLC.

[39] The uncontested evidence is that Aqua’s principal office is in Exton, Pennsylvania, and that it does not have an office in Ontario or have any employees based in Ontario.

[40] In an affidavit sworn January 3, 2019, Mr. Ron Menezes, the President and General Manager of Aqua, deposed that while some of Aqua’s affiliates are involved in the manufacture and/or sale of Solaraze in various countries, Aqua does not own rights to, manufacture, market or sell any Solaraze product in Ontario or elsewhere as alleged in the Statement of Claim. He also deposed that Aqua does not manufacture or sell a product in Ontario that competes with Glyco’s IPM Product or carry on business in Ontario.

[41] Aqua’s evidence is that it has not taken any action, whether in Ontario or elsewhere, that was designed to or has served to keep Glyco’s products off the market. It has also not prevented Glyco from developing its products and technology, whether its high concentration hyaluronic acid-based topical delivery system or otherwise. Aqua’s evidence is that it does not manufacture or sell any product in Ontario that competes with Glyco’s IPM Product and has not done anything to interfere with Glyco’s relationships with its distributors in Ontario.

[42] GSK LLC‘s evidence is that it does not carry on business in Ontario nor does it have an office or any employees in Ontario.

[43] GSK LLC’s affiliate, GSK Inc. is a company based in Canada and carries on business in Canada. GSK LLC’s evidence is that GSK Inc. is a separate and distinct corporate entity.

[44] GSK LLC’s uncontested evidence is that it does not own Solaraze and it has never been involved in the manufacturing, marketing or sale of Solaraze in Canada or elsewhere.

[45] According to GSK LLC, Voltaren is a pain relief product that shares a common ingredient with Solaraze. GSK LLC’s evidence is that it is involved in the marketing and sale of Voltaren, although not in Canada.

[46] As a result of a Joint Venture Agreement in March 2015, GSK LLC’s parent company, GSK PLC, acquired certain products from another company, Novartis AG. GSK LLC’s evidence is that no GSK entity acquired Solaraze or any other product containing hyaluronic acid as a result of that transaction.

d) Motion to Amend

[47] On May 28, 2019, Doi J. heard and dismissed Glyco’s motion to amend the Statement of Claim to add GSK PLC, GSK LLC, and GSK Inc. as defendants pursuant to rr. 5.04(2), 26.01 and 26.02 of the Rules of Civil Procedure. I will review the reasons of Doi J. as he made some findings regarding Glyco’s pleading that are relevant to this motion.

[48] Doi J. commented that the proposed amended amended Statement of Claim was identical to the amended Statement of Claim, other than naming the three additional defendants and identifying their office locations. No new claims or allegations were made against the proposed defendants.

[49] Doi J. found that in determining whether to grant leave to add a party, the court must be satisfied that the proposed amendment relating to the added party is legally tenable and conforms to the general rules regarding pleadings. He also found that it is not proper to lump together related corporate defendants and collectively proceed with a claim against them featuring generalized allegations that apply to all defendants indiscriminately based on bald allegations of enterprise liability. He found that specific acts by a corporate defendant which support a cause of action against the defendant must be pleaded.

[50] Doi J. commented that Glyco’s claim for fraudulent and negligent misrepresentation was connected to the November 6, 2012 Settlement Agreement. He found that Glyco’s claim that the defendants, in whole or in part, interfered with its business relationships with the intention of keeping its products off the market was a bald assertion. He found that the claim provided no particulars regarding the specific conduct of GSK or the other proposed defendants to support its assertion that they tortuously interfered with Glyco’s business relationships.

[51] Doi J. also found that the proposed claim against GSK Inc. for negligent and fraudulent misrepresentation was not tenable at law and should not proceed. According to his reasons:

Jurisprudence has interpreted Rule 25.06(8) to require that a pleading of misrepresentation or deceit must contain the following elements and particulars: (i) the alleged misrepresentation itself; (ii) when, where, how, by whom and to whom it was made; (iii) its falsity; (iv) the inducement; (v) the intention that the plaintiff should rely upon it; (vi) the alteration by the plaintiff of his or her position relying on the representation; (vii) the resulting loss or damage to the plaintiff; and, (viii) if deceit is alleged, an allegation that the defendant knew or the falsity of his statement; Hamilton v. 1214125 Ontario Ltd, 2009 ONCA 684 at para. 35, citing Lana International Ltd. v. Menasco Aerospace Ltd. (1996), 28 Or. R. (3d) (Gen Div.) at 350. In effect, Rule 25.06(8) requires full particulars of any allegations of fraud or misrepresentation that are raised in pleadings which must precisely state each allegation of any wrongful action and the relevant circumstances; Balanyk v. University of Toronto, [1999] O.J. No. 2162 (S.C.J.) at pars. 28 and 65. The purpose of the requirements under Rule 25.06(8) is to allow the defendant to understand with some precision what is alleged in order to give a reasonable response and to enable a trier of fact to properly infer intention or malicious conduct; White v. Canada, 2011 ONSC 5816 at para. 23.

[52] In reviewing the pleading, Doi J. found that Glyco did not allege any misrepresentation by GSK Inc. It also did not plead any particulars as to whether such misrepresentation was made innocently, negligently or fraudulently, when, where, how or by whom those representations were made, or whether Glyco detrimentally relied on the alleged misrepresentation or sustained any damages.

[53] Doi J. also found that Glyco’s claims against GSK Inc. for tortious interference with economic relations were not tenable at law. He found that the tort of intentional interference with economic relationships is available only when the defendant commits an unlawful act against a third party which intentionally causes economic harm to the plaintiff: A.I. Enterprises Ltd. v. Bram Enterprises Ltd., 2014 SCC 12, [2014] 1 S.C.R. 177, at para. 5. He found that for such a claim to be tenable, particulars of the tortious conduct must be pleaded with sufficient clarity to set out the facts that establish unlawful conduct. At para. 17 of his reasons, Doi J. found that:

A failure to plead that the defendant’s actions involved unlawful or wrongful acts directed at the third party, or that such actions would have been actionable by the third party against the defendant, is fatal to an unlawful means tort claim and renders the claim untenable at law; A Mantella & Sons Ltd. 2009 ONCA 115, [2009] O.J. No. 457 at para 23; aff’d 2009 ONCA 115 at para. 1; see also 2027707 Ontario Ltd. v. Richard Burnside and Associates Ltd., 2016 ONSC 530 at paras. 21-24.

[54] In reviewing the pleading, Doi J. found that the claim did not allege any unlawful means by GSK Inc. or any specific intent to harm Glyco. It only pleaded broad or generic allegations that were directed collectively against the current and proposed defendants. He also found that the proposed amended amended Statement of Claim did not plead particulars of any alleged misconduct by GSK Inc. that involved any third parties, or details as to which of Glyco’s relationships GSK Inc. interfered with, how GSK Inc. allegedly interfered with Glyco’s relationships, or whether GSK Inc.’s alleged misconduct is actionable by any third party. He concluded that failure to plead such particulars was fatal to Glyco’s claim against GSK Inc., which he found was not tenable at law and should not proceed.

[55] He made the same findings regarding the claims against the proposed defendants GSK PLC and GSK LLC and dismissed the motion to add them as defendants. It is my understanding that Glyco has appealed this decision.

[56] The parties scheduled an appointment with Doi J. to settle the terms of his order. In an endorsement dated July 12, 2019, Doi J. held that he would not include a paragraph that Glyco’s claim against GSK be dismissed, as the matter of striking Glyco’s claim was not before him. That issue remained to be dealt with on a different occasion.

Issues

[57] The two issues on this motion are as follows:

i) Whether service of the Statement of Claim on GSK LLC and Aqua outside of Ontario was authorized by the Rules? ii) Whether this court has jurisdiction over GSK LLC or Aqua with respect to this claim?

Governing Legal Principles

[58] The courts authority to stay or dismiss a proceeding is found in the Courts of Justice Act, R.S.O. 1990, c. C.43 and the Rules of Civil Procedure. Pursuant to s. 106 of the Courts of Justice Act, the court may stay any proceeding on such terms as are considered just. Under r. 17.06(1)(b) of the Rules of Civil Procedure, a party served with an originating process outside of Ontario may move for an order staying the proceeding. The court may make such an order where it is satisfied that service outside of Ontario is not authorized by the Rules or that Ontario is not a convenient forum for the hearing: Rules of Civil Procedure, r. 17.06(2). In addition, under r. 21.01(3)(a), a defendant may move to have an action stayed or dismissed on the ground that the court has no jurisdiction over the subject matter of the litigation.

[59] The defendants, relying on these rules, submit that service of the Statement of Claim ought to be set aside and the action dismissed or stayed on the basis that there is no real and substantial connection between Ontario and the subject matter of the litigation.

[60] Glyco relies on rr. 17.02(f)(iv) and (g) of the Rules of Civil Procedure for service of the Statement of Claim on GSK LLC and Aqua in the United States. According to those rules, a party may serve a Statement of Claim outside of Ontario, without a court order, where the proceeding against the party consists of a claim in respect of a contract, where the breach of contract has been committed in Ontario (r. 17.02(f)(iv)), or in respect of a tort committed in Ontario (r. 17.02(g)).

[61] The determination as to whether the court can assume jurisdiction over the action is governed by the principles set out by the Supreme Court of Canada in Van Breda. In that case, the court found that r. 17.02 is procedural and does not by itself establish jurisdiction in a case: Van Breda, at para. 43. In order for the court to assume jurisdiction over a claim, there must be a real and substantial connection between the subject matter of the litigation and the jurisdiction where the claim is brought: Van Breda, at paras. 22-24. If there is no real and substantial connection, the court lacks jurisdiction and the action must be dismissed or stayed.

[62] The analysis for presumptive connecting factors starts with the factors set out in r. 17.02. In Van Breda, the court then outlined the four presumptive connecting factors that prima facie entitles a court to assume jurisdiction over a claim. As outlined at para. 90 of Van Breda, the four presumptive connecting factors are as follows:

(a) The defendant is domiciled or resident in the province; (b) The defendant carries on business in the province; (c) The tort was committed in the province; or (d) A contract connected with the dispute was made in the province.

[63] The party that is asserting jurisdiction, in this case Glyco, has the onus of identifying a presumptive connecting factor that links the subject matter of the claim with the forum: Van Breda, at para. 100. If there is no presumptive connecting factor or if the presumption of jurisdiction resulting from such a factor is rebutted by the defendant, there is no real and substantial connection and thus no jurisdiction: Van Breda, at para. 81.

[64] In the absence of other considerations, the plaintiff’s presence in the jurisdiction will not create a presumptive relationship between the forum and either the subject matter of the litigation or the defendant: Van Breda, at para. 86.

[65] The notion of carrying on business in a jurisdiction requires some form of actual presence, not just virtual presence. This would include maintaining an office in the jurisdiction or regularly visiting the territory of the jurisdiction: Van Breda, at para. 87.

[66] Presumptive connecting factors should point to a relationship between the subject matter of the litigation and the forum, “such that it would be reasonable to expect that the defendant would be called to answer legal proceedings in that forum”: Frank v. Farlie, Turner & Co., LLC, 2012 ONSC 5519, at para. 114.

[67] Where a defendant challenges the court’s jurisdiction, the onus is on the plaintiff to establish a “good arguable case” for the court to assume jurisdiction based on the allegations in the Statement of Claim and any evidence led on the motion: Ontario v. Rothmans Inc., 2013 ONCA 353, at para. 54. The “good arguable case” is that one of the presumptive factors is present such that the cause of action falls within the court’s jurisdiction: Rothmans, at para. 106.

[68] The “good arguable case” requires admissible evidence and not just speculation of a good arguable case: Shah v. LG Chem, Ltd., 2015 ONSC 2628, at para. 11. The facts pleaded in the Statement of Claim must be taken as true unless challenged: Shah, at para. 62. Where a pleading lacks sufficient particularity to enable a defendant to know who the plaintiff alleges did what and when, or if the defendant leads evidence to challenge the factual underpinning for jurisdiction, the plaintiff bears the onus of establishing a good arguable case through a combination of the pleadings and the evidence adduced by the parties: Rothmans, at para. 86.

Analysis

[69] Glyco asserts that it has established that there is a good arguable case that two torts were committed in Ontario by both GSK and Aqua resulting in damages to Glyco. In addition, its position is that GSK and Aqua carry on business in Ontario. Glyco submits that these two presumptive connecting factors link the claim to Ontario and therefore this court can assume jurisdiction.

[70] In determining if there is evidence of a good arguable case, and not just speculation of a good arguable case, I have considered not only the pleading, but also the affidavit evidence filed on this motion. Cross-examinations of the deponents of the affidavits were not conducted.

[71] I will review the pleading and the evidence which Glyco claims establishes a good arguable case that there are connecting factors that permit this court to assume jurisdiction.

a) Are the Defendants Domiciled in Ontario?

[72] There is no evidence that Aqua is domiciled in Ontario. As pleaded in the Statement of Claim, it is a company based in the United States, incorporated pursuant to the laws of the State of Pennsylvania.

[73] There is also no evidence that GSK LLC is domiciled in Ontario. As pleaded in the Statement of Claim, it is a company incorporated in the United States with its head office in the State of Pennsylvania.

[74] There is therefore no good arguable case that the defendants are domiciled in Ontario.

b) Do the Defendants Carry on Business in Ontario?

[75] Glyco has presented no evidence that Aqua carries on business in Ontario. If Aqua’s affiliates manufacture or sell Solaraze in Ontario, that is not evidence that Aqua, a separate company incorporated in the United States, carries on business in Ontario. Aqua’s evidence, which is not contested, is that it does not own rights to, manufacture or sell Solaraze in Ontario or elsewhere, as alleged in the Statement of Claim.

[76] GSK LLC denies that it carries on business in Ontario. Glyco relies on the 2016 Annual Report of its parent company, GSK PLC, which identifies GSK LLC and GSK Inc. as its wholly-owned subsidiary companies that are affiliated. There is no dispute that GSK Inc. is a company incorporated in Canada that carries on business in Ontario. GSK LLC does not dispute that GSK PLC is its parent company and that it is affiliated with GSK Inc.

[77] However, GSK LLC, GSK PLC, and GSK Inc. are all separate companies. While GSK Inc. has a head office in Ontario, that is not evidence that GSK LLC is located or carries on business in Ontario. If GSK Inc. has employees in Ontario and elsewhere in Canada and manufactures and sells products in Ontario, that is not evidence that GSK LLC, a separate incorporated company, carries on business in Ontario.

[78] Glyco also alleges that GSK LLC has an interest in Voltaren, a product that competes with its IPM Product. GSK LLC’s evidence is that it is involved in the market and sale of Voltaren, but not in Canada. GSK LLC also denies that it has any interest in Solaraze and denies being involved in its manufacturing, marketing or sale in Canada.

[79] Glyco relies on an internet search it did for GSK on a website identified as www.gsk.ca. That website describes the operations of GSK Inc. and identifies its headquarters as being in Mississauga, Ontario and Laval, Quebec. However, that website does not describe the operations of GSK LLC and is not of any assistance in establishing that GSK LLC carries on business in Ontario.

[80] There is also no evidence that GSK LLC has an actual physical presence in Ontario necessary to establish that it carries on business in Ontario: Van Breda, at para. 87.

[81] It is irrelevant that GSK LLC’s affiliate, GSK Inc., or its parent company, GSK PLC, carry on business in Ontario. In George Leon Family Trust (Trustee of) v. Volkswagen Aktiengesellschaft, 2018 ONSC 4265, Belobaba J., relying on Van Breda, found that a wholly-owned subsidiary of a corporation that operates in Ontario does not mean that its parent company carries on business in Ontario: para. 29. Conversely, if a parent company operates in Ontario, that is not evidence that its wholly-owned subsidiary operates in Ontario. In my view, the same analysis applies with respect to companies that are affiliated but operate in different countries.

[82] I also concur with the reasons of Doi J. that it is improper to lump together related corporate defendants and collectively proceed against them based on bald allegations of enterprise liability. In this case, Glyco is suggesting that the court ignore that GSK LLC is a distinct legal entity from GSK Inc. and GSK PLC without providing any authority for doing so. GSK LLC is a separate legal entity. Where GSK Inc. or GSK PLC carry on business does not determine whether GSK LLC also operates in that jurisdiction.

[83] There is therefore no good arguable case that the defendants carry on business in Ontario.

c) Was a Tort Committed in Ontario?

[84] Both Aqua and GSK LLC deny that they have taken any steps, in Ontario or elsewhere, designed to keep Glyco’s products off the market or to prevent it from developing its products and technology. They both deny doing anything to interfere with Glyco’s relationships with its distributors in Ontario or making any fraudulent or negligent misrepresentations.

[85] Since this action was commenced, and in connection with the various motions before the court, Mr. Drizen, President of Glyco, has filed ten affidavits dated November 5 and November 10, 2018, January 2, 14 and 28, 2019, April 9 and 29, 2019, June 24, 2019, and July 2 and 8, 2019. In those affidavits, Mr. Drizen did not provide any further evidence, such as particulars or details, regarding Glyco’s claims against Aqua in connection with the two torts that it has pleaded. As such, there is no evidence to consider in order to determine if Glyco has a good arguable case that a tort was committed in Ontario by Aqua, other than the evidence of Mr. Menezes and the allegations in the Statement of Claim.

[86] Glyco did present some evidence in one of the affidavits relating to a specific claim against GSK LLC. I will consider this evidence in determining if there is a good arguable case that this presumptive connecting factor has been established.

[87] In paras. 23-27 of the amended Statement of Claim, Glyco sets out the basis of its claim of tortious interference with its business relationships with the intention of keeping Glyco’s products off the market for a strategic and competitive advantage. The pleading makes no specific claim against Aqua or GSK LLC, but makes a generalized claim against all the defendants named in the original action. When Glyco did amend the pleading, it included particulars against Fougera and Sandoz, but no further particulars about the tortious activities of Aqua or GSK LLC.

[88] Although the motion before Doi J. in May 2019 did not involve Aqua, he dealt with the claim for tortious interference with economic relations in the Statement of Claim and made a finding that the claim was not tenable at law. He found that the tort of intentional interference with economic relationships is available when the defendant commits an unlawful act against a third party which intentionally causes economic harm to the plaintiff. He found that for such a claim to be tenable, particulars of the tortious conduct must be pleaded with sufficient clarity to set out the facts that establish unlawful conduct.

[89] The claim does not plead what unlawful act was committed by Aqua or GSK LLC. It does not plead what third party was involved and what relationship they interfered with, other than generalized claims of interference with its marketing and sale of the IPM Product. It only pleads broad or generic allegations that are directed collectively against the defendants.

[90] In reviewing the pleading, in my view, Glyco has not met its onus of establishing a good arguable case that the tort of intentional interference with economic relationships by Aqua or GSK LLC occurred in Ontario. The pleading against them does not even raise the speculation of a good arguable case. The claim is completely devoid of any particulars and provides nothing more than a sweeping generalized statement against all defendants. Glyco had the opportunity to provide additional evidence for this court to consider, but failed to do so in any of the ten affidavits filed with this court since the action was commenced.

[91] Glyco has also failed to plead the elements of the tort of fraudulent or negligent misrepresentation against Aqua or GSK LLC. Glyco did not plead any particulars regarding what representation was made, to whom it was made, when it was made, and what reliance was placed on it by Glyco to its detriment.

[92] Again, Glyco had the opportunity to file evidence for this court to consider regarding the alleged tort committed by Aqua in Ontario. The bald allegations made against Aqua, which were made against the defendants collectively, are completely ambiguous and lack sufficient or any particularity for Aqua to know what Glyco is alleging.

[93] Glyco presented some additional evidence in the affidavits of Mr. Drizen on this motion that were not before Doi J with respect to its claim against GSK LLC. It relies upon these affidavits as evidence that GSK LLC committed the tort of fraudulent misrepresentation. I will consider this evidence in determining whether there is a good arguable case that a tort was committed in Ontario.

[94] As reviewed above, Glyco’s evidence is that in 2016, a third party contacted it on behalf of GSK requesting a phone meeting as GSK allegedly had an interest in Glyco’s product and technology. Glyco requested that GSK sign a CDA in advance of the meeting. GSK refused to sign the agreement and the phone meeting did not take place.

[95] Glyco asserts that the real purpose of the meeting was for GSK LLC to obtain proprietary information about Glyco’s products and technology without entering into a CDA. It makes that assertion, however, without any evidence to support its claim.

[96] This is the evidence upon which Glyco relies in support of its claim that GSK LLC made fraudulent and negligent misrepresentations to Glyco in Ontario. Glyco alleges that it relied on the statements that GSK LLC was interested in its products and technology when it was not. Glyco asserts that this is also evidence that GSK LLC interfered with Glyco’s manufacturing and distribution relationships.

[97] Accepting this evidence as true, this does not support a claim of a good arguable case of interference with any of Glyco’s manufacturing and distribution relationships or of a fraudulent misrepresentation.

[98] Even if GSK LLC’s purpose for the meeting was as claimed by Glyco, although Glyco asserts it relied on GSK’s representations that it wanted to schedule a meeting, there is no evidence of how it relied on those statements to its detriment and what damages it sustained. Furthermore, this evidence does not support a claim of interference with any relationships as there is no evidence of what third party was contacted by GSK LLC, what was said, and what damages were sustained.

[99] There is therefore no good arguable case that the defendants committed a tort in Ontario.

Conclusion

[100] Glyco has failed to discharge its onus of establishing a good arguable case that either GSK LLC or Aqua are domiciled in or carry on business in Ontario. Glyco has also failed to discharge its onus of establishing a good arguable case that any tort was committed in Ontario. Therefore, I find that there is no presumptive connecting factor linking the subject matter of the litigation to the defendants to Ontario. As such, there is no real and substantial connection between the action and Ontario. This court therefore lacks jurisdiction over the action.

[101] Having found that this court does not have jurisdiction, I do not have to consider if this court should exercise its discretion to assume jurisdiction under the doctrine of forum non conveniens. That doctrine only comes into play if the court determines that jurisdiction has been established: Van Breda, at para. 101.

[102] Service of the Statement of Claim is therefore set aside and the action against Aqua and GSK LLC is stayed for lack of jurisdiction.

Costs

[103] At the conclusion of this motion, I requested that the parties file their costs outlines. For the reasons outlined below, Glyco is ordered to pay $25,000.00 in costs, inclusive of H.S.T., to both GSK LLC and Aqua, plus their respective disbursements.

a) Governing Legal Principles

[104] In most cases, the successful party is entitled to costs for the step of the proceeding in which success has been achieved: Bell Canada v. Olympia & York Developments Ltd., [1994] O.J. No. 343 (C.A.).

[105] In determining costs, the starting point is s. 131 of the Courts of Justice Act. Section 131 provides that subject to the provisions of an Act or rules of court, costs are in the discretion of the court, which may determine by whom and to what extent the costs shall be paid.

[106] Rule 58 of the Rules of Civil Procedure sets out the factors to be considered by the court in exercising its discretion with respect to costs in accordance with s. 131 of the Courts of Justice Act. The factors relevant to this case, as outlined in r. 58.06(1), are:

(b) the complexity of the proceeding; (c) the importance of the issues; (d) the duration of the hearing; (e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding; (f) whether any step in the proceeding was (i) improper, vexatious or unnecessary, or (ii) taken through negligence, mistake or excessive caution; (h) any other matter relevant to the assessment of costs.

[107] In assessing costs, I also consider the principle of indemnity. Costs are typically payable on a partial indemnity basis. Substantial indemnity costs are generally not awarded unless the party seeking costs can persuade the court that the party against whom costs are sought has behaved in a reprehensible or egregious manner: Mortimer v. Cameron, [1994] O.J. No. 277 (C.A.); Davies v. Clarington (Municipality), 2009 ONCA 722.

[108] When fixing costs, I must also consider the reasonable expectations of the unsuccessful party: Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.), at para. 38. An unsuccessful party can reasonably expect to pay the successful party’s costs. However, I must determine whether the quantum of costs proposed by the applicant is excessive or within the reasonable contemplation of the unsuccessful party: Boucher, at para. 38.

b) Position of the Parties

[109] GSK LLC is requesting costs on a substantial indemnity basis in the amount of $72,867.00, plus H.S.T. of $9,472.71, for a total of $82,339.71. On a partial indemnity basis, its fees are $48,578.00, plus H.S.T. of $6,315.14, for a total of $54,893.14. Its disbursements are $786.43.

[110] Aqua is requesting costs on a partial indemnity basis. Its costs are $43,737.00, plus H.S.T. of $5,685.81, for a total of $49,422.81. Its disbursements are $1,402.68.

c) Analysis

[111] Based on my reasons, GSK LLC and Aqua are entitled to their costs as the successful parties.

[112] In my view, the costs sought by both defendants are not reasonable. When considering the principle of indemnity and the reasonable expectations of the unsuccessful party, I am required to consider the costs outline, including the time spent by counsel and the rates charged. While the hourly rates are not unreasonable, I find that the time incurred is excessive given the relatively modest material filed by the defendants. While Glyco filed a number of affidavits, Aqua only filed one affidavit, while GSK LLC filed four affidavits. Both filed factums and books of authorities. There were no cross-examinations on the affidavits. The two other motions heard by Miller J. and Doi J. involved other parties and proposed parties. Neither of these defendants participated in those motions.

[113] Next, I will address the conduct of Glyco. GSK’s position is that Glyco unnecessarily complicated and lengthened the duration of the proceeding by making overly-broad requests for disclosure from GSK LLC, bringing motions for disclosure that were adjourned, and unilaterally cancelling the examination of GSK LLC’s representative. Despite these allegations, I do not find Glyco’s conduct on this motion to be so egregious or reprehensible as to justify costs at a level other than on a partial indemnity scale. Although it filed a number of motions and affidavits and was ultimately not successful, Glyco’s conduct does not justify an award of costs on a higher scale.

[114] Next, I will consider the duration of the hearing. The costs requested by both defendants is considerable for this motion that was heard in a half day. Based on the duration of the hearing of this motion, the fees incurred by the defendants would not be within the reasonable expectations of Glyco nor are they reasonable having considered all of the factors as set out in r. 58.

[115] While the issues were no doubt of importance to the defendants, the issues were not overly complex. I note, for example, that the parties agreed on the legal principles to be applied.

[116] In assessing the reasonable expectations of the unsuccessful party, I have also considered the costs ordered in two similar motions involving Glyco. In Glycobiosciences Inc. v. Ansell Healthcare Products Inc., Court File No. 132-17 (Orangeville), McSweeney J. awarded $22,000.00 in costs to the defendants who successfully brought a motion to stay that action. In Glycobiosciences Inc. v. DPT Laboratories Ltd., 2019 ONSC 1877, Emery J. heard a similar motion. He awarded costs to the defendant, who was successful, in the amount of $17,500.00. These costs awards, in similar matters, assist in assessing what costs Glyco could reasonably expect to pay.

[117] I have also considered the steps taken in this litigation. While there were a number of dates scheduled for motions to be heard by the court, a number of dates were adjourned on consent. There was a prior attendance before Kurz J. in which he ordered costs against Glyco for that attendance. As I indicated, there were no cross-examinations of the witnesses who swore affidavits.

[118] In my view, for the reasons outlined above, a reasonable quantum of costs is $25,000.00, inclusive of H.S.T., to be paid by Glyco to GSK LLC, plus its disbursements of $786.43. Glyco shall also pay $25,000, inclusive of H.S.T. to Aqua, plus its disbursements of $1,402.68.

“Original signed on file” L. Shaw J.

Released: May 8, 2020