Beijing Hehe Fengye Investment Co. Limited et al. v. Fasken Martineau Dumoulin LLP et al.

[Indexed as: Beijing Hehe Fengye Investment Co. Ltd. v. Fasken Martineau Dumoulin LLP]

Ontario Reports

Ontario Superior Court of Jutice

Perell J.

February 11, 2020

149 O.R. (3d) 466 | 2020 ONSC 934

Case Summary

Civil procedure — Service ex juris — Forum non conveniens — Motion to set aside service ex juris — Two Chinese companies using same Canadian law firm to assist in acquiring same assets — Plaintiff company alleging defendant company contributed to firm's breach of fiduciary duty — Defendant company served with statement of claim in Hong Kong — Service ex juris set aside as defendant did not reside or carry on business in Ontario.

Conflict of laws — Forum non conveniens — Two Chinese companies using same Canadian law firm to assist in acquiring same assets — Plaintiff company alleging defendant company contributed to firm's breach of fiduciary duty — Majority of parties and witnesses with respect to the essence of the litigation located in China and critical communications occurred in Chinese — Ontario was forum non conveniens.

Conflict of laws — Jurisdiction — Real and substantial connection — Two Chinese companies using same Canadian law firm to assist in acquiring same assets — Plaintiff company alleging defendant company and its principal contributed to firm's breach of fiduciary duty — Defendants had no real and substantial connection to Ontario — They did not carry on business there, purchase agreements did not establish presumptive connection, and situs of alleged wrongdoing was not Ontario — Action against company and its principal dismissed as Ontario had no jurisdiction simpliciter.

The corporate plaintiff was incorporated under the laws of the People's Republic of China. The individual plaintiff was an Ontario resident and partner or joint venture with the corporate plaintiff in a project to acquire a controlling interest in a Vancouver-based mining company operating primarily in South Africa. The corporate plaintiff hired the defendant law firm to assist with its acquisition plans. [page467] The plaintiffs alleged that before and while the firm was acting for them, the firm was also acting for the defendant development company, which was seeking to acquire the same mining company. The development company, which was incorporated under the laws of the Hong Kong Special Administrative Region, was owned by the personal defendant, L. L did not speak, read or write English. He did not carry on business in Ontario and had no assets there. The development company ultimately acquired enough shares in the mining company to make it the largest shareholder. At least one of the share purchase agreements contained an Ontario choice of law clause and a forum selection clause providing non-exclusive jurisdiction to the courts of Ontario. The plaintiffs pleaded that the firm did not disclose its conflict of interest of competitors both seeking the same business asset, and that L and his company assisted in the firm's breach of fiduciary duty by using confidential information obtained from the firm to acquire the shares. L's company was served with the statement of claim in Hong Kong while L was never served, and neither attorned to the jurisdiction of the Ontario court. The company was noted in default. L and his company moved for an order setting aside service ex juris and the noting in default, staying or dismissing the action against them on the basis of no jurisdiction simpliciter, and in the alternative, staying the action under the doctrine of forum non conveniens.

Held, the motion should be allowed.

The service on the company was set aside, resulting in the noting in default also being set aside. Neither L nor his company could be served without leave as they did not reside in or carry on business in Ontario. The manner of service also did not accord with the Rules of Civil Procedure as it did not comply with the Hague Convention.

There was no jurisdiction simpliciter because Ontario had no real and substantial connection with the defendants. L did not carry on business in Canada and the only apparent business activity of his company in Canada was that of shareholder. The fact that they had Ontario lawyers and acquired shares traded on the Toronto Stock Exchange did not amount to carrying on business in Ontario. The fact that Ontario contracts were associated with the acquisition of a Vancouver-based company did not establish a presumptive connection to Ontario. The contracts were an object of, but not the subject of, the plaintiffs' complaints against the defendants. There was no good arguable case that the presumptive connecting factor associated with the situs of alleged wrongdoing was made out. If L or his company knowingly assisted the law firm and if they benefitted from that association, that resulted from dealings occurring in China or Hong Kong and not in Ontario.

The action against L and his company was dismissed on the issue of jurisdiction simpliciter, but Ontario was also found to be forum non conveniens. The majority of the parties and witnesses with respect to the essence of the litigation between two competing Chinese corporations were located in China. The critical communications occurred in Chinese. The proper forum was China or Hong Kong.

Club Resorts Ltd. v. Van Breda, [2012] 1 S.C.R. 572, [2012] S.C.J. No. 17, 2012 SCC 17, 343 D.L.R. (4th) 577, 429 N.R. 217, J.E. 2012-788, 291 O.A.C. 201, 91 C.C.L.T. (3d) 1, 17 C.P.C. (7th) 223, 10 R.F.L. (7th) 1, 212 A.C.W.S. (3d) 712, EYB 2012-205198, 2012 SOACQ para. 10,118, 2012EXP-1452, affg (sub nom. Van Breda v. Village Resorts Ltd.) (2010), 98 O.R. (3d) 721, [2010] O.J. No. 402, 2010 ONCA 84, 264 O.A.C. 1, 316 D.L.R. (4th) 201, 81 C.P.C. (6th) 219, 185 A.C.W.S. (3d) 68, 71 C.C.L.T. (3d) 161, 77 R.F.L. (6th) 1 (C.A.), affg 2008 32309 (ON SC), [2008] O.J. No. 2624, 60 C.P.C. (6th) 186, 173 A.C.W.S. (3d) 462 (S.C.J.), apld [page468]

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Rules and regulations referred to

Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 17.02, (p), 17.04(1), 17.05(3), 17.06, (1), (2), 39.03 [page470]

Treaties and conventions referred to

Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, November 15, 1965, Can. T.S. 1989 No 2

MOTION to dismiss an action for lack of jurisdiction.

James B. Camp and John Adair,for plaintiffs.

Shaun Laubman and Ryann Atkins,for defendants Ka An Development Co. Limited and Chang Yu Liu.

Ian W. Thomson, for defendants Fasken Martineau Dumoulin LLP, Lei Huang and Fasken Business Consulting (Asia) Inc.

PERELL J.: —

A. Introduction

[1] The plaintiff, Beijing Hehe Fengye Investment Co. Limited ("BHF Investment"), is a corporation incorporated under the laws of the People's Republic of China. The plaintiff, Rong Kai Hong, who is an Ontario resident, is a partner or joint-venturer with BHF Investment.

[2] In this action, BHF Investment and Mr. Hong sue (a) Fasken Martineau Dumoulin LLP ("Faskens"), a Canadian law firm; (b) Fasken Martineau, Fasken Business Consulting (Asia) Inc. ("Faskens Consulting"), which is a subsidiary of the law firm, which operates in Hong Kong and in China; (c) Lei Huang, a lawyer employed by Faskens Consulting; (d) Ka An Development Co. Limited, a corporation under the laws of the Hong Kong Special Administrative Region of China; and (e) Chang Yu Liu, who lives in Tianjin Province, China and who is the managing director of Ka An Development.

[3] Mr. Lui and Kan An Development bring a motion to have the action against them stayed or dismissed on the grounds that the court does not have jurisdiction simpliciter or alternatively on the grounds that Ontario is forum non conveniens.

[4] For the reasons that follow, I dismiss the action as against Mr. Lui and Ka An Development.

B. Facts

[5] BHF Investment is a private corporation incorporated under the laws of the People's Republic of China. Its primary businesses are in real estate development and in the mining industry. It is the majority shareholder of Hebei Zhongbo Platinum Co. Limited. According to the Statement of Claim, BHF Investments has partnerships with China's state-owned corporations. [page471]

[6] The plaintiff Rong Kai Hong, who is an Ontario resident living in Markham, Ontario, is a partner or joint-venturer with BHF Investment in a project to acquire a controlling interest in Eastern Platinum Ltd. Mr. Hong's dealings with BHF Investment have been through Shuming Du, who lives in Beijing, China.

[7] Eastern Platinum Ltd. is a public company listed on the Toronto Stock Exchange. It is a Vancouver-based mining company, operating primarily in South Africa. Three of Eastern Platinum's largest shareholders are (a) K2 & Associates Investment Management Inc.; (b) Harrington Global Inc.; and (c) Franklin Templeton.

[8] In 2014-2015, BHF Investment retained Faskens to provide legal advice and services in connection with its plans to acquire an interest in Eastern Platinum. There is no written retainer agreement between the plaintiffs and Faskens. BHF's primary contact with Faskins was Lei Huang of Faskens Consulting.

[9] Faskens Consulting has a Beijing Representative Office in Beijing, China and Mr. Huang is Fasken's Chief China Representative. He works at the Beijing Office and in Hong Kong. He has a law degree from McGill University and is licensed to practice law in China but not in Ontario.

[10] In their Statement of Claim, the plaintiffs plead that Mr. Hong disclosed confidential information to Faskens. The plaintiffs plead that on May 14, 2016, Mr. Hong sent an e-mail to Mr. Huang with instructions about making an offer for an interest in Eastern Platinum, Mr. Huang made the offer and in June 2016, he reported that Eastern Platinum had made a counteroffer.

[11] In their Statement of Claim, the plaintiffs plead that before and during the same time as the Faskens defendants were acting for them, Faskens was also acting for Ka An Development and receiving instructions from Mr. Liu to acquire control of Eastern Platinum. The plaintiffs plead that the Faskins defendants did not disclose their conflict of interest of competitors both seeking the same business asset.

[12] Mr. Huang received instructions from Mr. Lui for Ka An Development. Mr. Liu lives in Tianjin Province, China. Mr. Liu does not speak, read, or write in English. He is an entrepreneur who owns several corporations. He personally does not carry on business in Ontario, and he personally has no assets in Ontario.

[13] One of Mr. Liu's corporations is Ka An Development, which is incorporated under the laws of the Hong Kong Special Administrative Region. Ka An Development's offices are located in Hong Kong. It does not carry on business in Ontario, and it has [page472] no assets in Ontario. Ka An Development was incorporated in June 2015 by Daxin (Diana) Hu, who sold her interest in Ka An Development to Mr. Liu on May 16, 2016. Mr. Liu is the managing director of Ka An Development.

[14] It is not clear whether it was Ms. Hu or Mr. Lui who made the initial contact on behalf of Ka An Development, but in late 2015 or early 2016, Ka An Development retained Mr. Huang of Faskens Consulting. All communications between Mr. Huang and Mr. Liu, on behalf of Ka An Development took place in China or in Hong Kong. It appears that Mr. Huang took instructions from Mr. Lui and then passed on those instructions to Michael Boehm, a corporate lawyer in Fasken's Ottawa office. Instructions were also given by Kevin Lau, Mr. Lui's and Ka An Development's representative.

[15] Mr. Lui and other representatives of Ka An Development have never attended any meetings in Ontario with respect to its acquisition of shares of Eastern Platinum. Mr. Lui's communications were always through Mr. Huang and Mr. Lui never spoke to Mr. Boehm.

[16] It is a disputed and contentious point, but the plaintiffs assert that on April 22, 2016, on behalf of Ka An Development, Mr. Boehm met with K2 & Associates and Invesco at their respective offices in Toronto to negotiate a purchase of Eastern Platinum shares. It is further alleged that in May 2016, Mr. Boehn also attended a meeting in Bermuda with respect to the acquisition of Eastern Platinum shares.

[17] The plaintiffs allege that at these meetings, Faskens discouraged a sale of shares to the plaintiffs and rather promoted a sale to Ka An Development. In the Statement of Claim, Mr. Hong and BHF Investment plead that in May-June 2016, Mr. Huang disclosed to a representative of Ka An Development the confidential information of Mr. Hong and BHF Investments and that through the agency of Faskens, Mr. Lui and Ka An Development misused the information to acquire shares in Eastern Platinum.

[18] Ka An Development eventually purchased $24.5 million of Eastern Platinum shares making it the largest shareholder owning an 23.89 per cent interest. Ka An Development's share purchases took place through the exchange of a physical share certificate in Toronto and over the Toronto Stock Exchange. Faskins acted for Ka An Development in the acquisition of these shares.

[19] More precisely, Faskens acted on Ka An Development acquisition of 12.8 million shares from Invesco pursuant to a Share Purchase Agreement dated May 5, 2016, and it acted on the acquisition of shares from Harrington Global in August 2016. At least one of Ka An Development's share purchase [page473] agreements contained an Ontario choice of law clause and a forum selection clause providing non-exclusive jurisdiction to the courts of Ontario.

[20] In their Statement of Claim, the plaintiffs plead that Mr. Liu and Ka An Development knew that the Faskens owed the plaintiffs fiduciary duties and duties of care to the plaintiffs. The plaintiffs plead that Mr. Lui and Ka An Development assisted in the breach of fiduciary duty by using confidential information obtained from Faskens to acquire shares of Eastern Platinum. The plaintiffs plead:

49. All of the Plaintiffs' confidential information was imparted to Lawyer Defendants in confidence under cover of solicitor-client privilege. In breach of their obligations to keep the Plaintiff's information confidential, the Lawyer Defendants provided it to the Liu Defendants. Together, the Defendants misused the Plaintiffs' confidential information to devise the Liu Defendants' negotiation strategy with [Eastern Platinum] shareholders and, ultimately, enabled the Liu Defendants to succeed in buying control shares and controlling the board of [Eastern Platinum] below Plaintiffs' offer price.

[21] On July 5, 2016, Eastern Platinum held its annual general meeting of shareholders. There was a proxy fight between the plaintiffs and Ka An Development. In the result, Ka An Development's nominees were appointed to the board of directors, frustrating the plaintiffs' goal of obtaining control of the board. Faskens, with a team of largely Ontario-based lawyers, acted for Ka An on its proxy battle for control of the board. Three of the six directors nominated by Ka An and elected at the meeting live in Ontario, two live in Vancouver and one lives in Africa.

C. Procedural and Evidentiary Background

[22] On June 18, 2018, by Statement of Claim, Mr. Hong and BHF Investment and commenced this action against (a) Faskens, (b) Faskens Consulting, (c) Mr. Huang, (d) Ka An Development and (e) Mr. Liu.

[23] The claim against the Faskens defendants (Faskens, Faskens Consulting and Mr. Huang) is for $225 million for negligence, breach of fiduciary duty and misuse of confidential information.

[24] The claim against Ka An Development and Mr. Liu is for $225 million for knowing assistance in breach of fiduciary duty and for misuse of confidential information.

[25] Faskens, Faskens Consulting and Mr. Huang were served with the Statement of Claim and delivered notices of intent to defend. [page474]

[26] Mr. Liu has never been served with the Statement of Claim, and the time for doing so has expired.

[27] On June 22, 2018, Ka An Development was served with the Statement of Claim by leaving a copy of the pleading at Ka An Development's office in Hong Kong.

[28] China is a signatory of the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters signed at The Hague on November 15, 1965 (the "Hague Convention"). The Hague Convention applies in Hong Kong.

[29] For the immediate case, the Hague Convention would require service of judicial and extrajudicial documents in civil and commercial matters through the Chief Bailiff of the Court in the Hong Kong Special Administrative Region. In the immediate case, the service on Ka An Development was not in accordance with rule 17.05(3) of the Rules of Civil Procedure[^1] which applies the Hague Convention.

[30] Mr. Liu and Ka An Development have never attorned to the jurisdiction of the Ontario court.

[31] After receiving the Statement of Claim, Mr. Liu and Ka An Development's counsel contacted Mr. Hong and BHF Investments' counsel and raised concerns about the propriety of the service. Mr. Hong and BHF Investment responded by noting Ka An Development in default.

[32] On December 4, 2018, Mr. Liu and Ka An Development brought a motion for (a) if necessary, an Order pursuant to rule 17.06 of the Rules of Civil Proceduresetting aside service ex juris and the noting of Ka An Development in default; (b) staying or dismissing the action on the basis that court does not have jurisdiction simpliciter; and (c) in the alternative, an Order that the matter be stayed under the doctrine of forum non conveniens. The motion was supported by an affidavit subsequently translated and sworn by Mr. Lui on December 18, 2018.

[33] On December 10, 2018, in Civil Practice Court a timetable was established and the jurisdiction motion was scheduled for April 9, 2018.

[34] On April 1, 2019, Mr. Hong swore an affidavit in the jurisdiction motion.

[35] On April 2, 2019, in non-compliance with the timetable, Mr. Hong and BHF Investment delivered a responding motion record, an affidavit from Mr. Hong, and a notice of motion seeking [page475] an order extending the time for service on Mr. Liu and Ka An Development and for other relief.

[36] On April 2, 2019, Mr. Hong and BHF Investment delivered their factum, and Mr. Hong was cross-examined on his affidavit.

[37] On April 3, 3019, Mr. Lui and Ka An Development delivered an affidavit from M. Lilly Iannacita, a law clerk with Lax, O'Sullivan, Lisus, and Gottlieb, the law firm acting as their counsel.

[38] On October 3, 2019, Mr. Hong delivered another affidavit

[39] On October 3, 2019, pursuant to rule 39.03, Mr. Boehm was examined as a witness in aid of the motions.

[40] On November 8, 2019, another affidavit from Ms. Iannacita and another affidavit from Mr. Liu were delivered.

[41] Mr. Liu was cross-examined on November 19, 2019.

[42] Mr. Liu and Ka An Development delivered their factum around March 15, 2019.

[43] Around April 4, 2019, Mr. Liu and Ka An Development delivered a supplementary factum.

[44] The motions were argued on January 30, 2020.

D. Discussion and Analysis

1. Service ex juris

[45] Under rule 17.02, as of right, a plaintiff may serve a foreign party with originating process outside of Ontario for certain types of cases, which are listed in the rule. An originating process served outside Ontario without leave shall disclose the facts and specifically refer to the provision of rule 17.02 relied on in support of such service.[^2]

[46] In the case at bar, the plaintiffs pleaded that their Statement of Claim was "being served outside or Ontario without leave pursuant to Rule 17.02(p) because it is against parties ordinarily resident or carrying on business in Ontario".

[47] In the case at bar, Mr. Lui has not been served, but, in any event, he cannot be served pursuant to rule 17.02(p) because he does not reside in Ontario and he does not carry on business in Ontario. Thus, Mr. Lui cannot be served without leave.

[48] As will be explained further below, Ka An Developments also cannot be served pursuant to rule 17.02(p) because it does not reside in Ontario and it does not carry on business in Ontario. Thus, the purported service on Ka An Developments without leave was not in accordance with the Rules of Civil Procedure. [page476]

[49] Moreover, the manner of service on Ka An Developments was also not in accordance with the Rules of Civil Procedure. Under rule 17.05(3), an originating process or other document to be served outside Ontario in a contracting state under the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters[^3] signed at The Hague on November 15, 1965 shall be served "(a) through the central authority in the contracting state, or (b) in a manner that is permitted by the Convention and that would be permitted by these rules if the document were being served in Ontario". In the case at bar, service should have been made in accordance with rule 17.05(3) and it was not.

[50] Where service is made outside Ontario in a signatory state of the Hague Convention, the service will not be effective unless it is compliant with the requirements of the convention.[^4]

[51] Under rule 17.06(1), before delivering a defence, notice of intent to defend, or notice of appearance, a party who has been served with an originating process outside Ontario may move for an order setting aside the service and any order that authorized the service or for an order staying the proceeding. Under rule 17.06(2), the court may make an order under subrule (1) or such other order as is just where it is satisfied that (a) service outside Ontario was not authorized by the rules; (b) the order granting leave to serve outside Ontario should be set aside; or (c) Ontario is not a convenient forum for the hearing of the proceeding.

[52] In the immediate course, I set aside the purported service made on Ka An Development. It follows that the noting in default of Ka An Development should also be set aside.

2. General legal background to the jurisdiction simpliciter issue

[53] An Ontario court has jurisdiction simpliciter; i.e.,an in personam jurisdiction over a foreign defendant when (a) the foreign [page477] 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.[^5]

[54] In Club Resorts Ltd. v. Van Breda,^6 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. The Club Resorts Ltd. 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.

[55] Presumptive 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. The place where damages were sustained by the plaintiff does not create a presumptive connecting factor to that place.[^7] The fact that a party is a necessary party does not constitute a presumptive connection to the domestic court.[^8]

[56] Whether 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 [page478] accompanied by a degree of sustained business activity.[^9] 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.[^10]

[57] In Club Resorts Ltd.,[^11] at para. 87, LeBel J. stated:

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.

[58] In Yaiguaje v. Chevron Corp.,[^12] at para. 85, Gascon J. stated:

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"[.]

[59] A tort occurs in the jurisdiction substantially affected by the defendant's activities or its consequences or where the important elements of the tort occurred.[^13] For example, the torts of [page479] fraudulent or negligent misrepresentation occur where the misinformation is received or acted upon.[^14] In determining the situs of a tort for jurisdictional purposes, the court adopts a flexible and pragmatic approach to consider whether the jurisdiction was substantially affected by the defendants' activities, or its consequences or where the important elements of the alleged torts occurred. Whether all the elements required to complete the alleged tort occurred in the jurisdiction is not determinative.[^15]

[60] If a presumptive connection (established or newly established) applies, the connection can be rebutted by the defendant through evidence that the connection is weak.[^16] The ability to rebute the presumption of jurisdiction serves as an important check on a court overreaching and assuming jurisdiction.[^17] The burden of rebutting the presumption of jurisdiction rests on the defendant. In order to rebut the presumption, the defendant must demonstrate that the relationship between the forum and the subject matter of the litigation is such that it would not be reasonable to expect that the defendant would be called to answer proceedings in that forum.[^18]

[61] To succeed in showing jurisdiction simpliciter, the plaintiff need only show that there is a "good arguable case" for an assumption of jurisdiction.[^19] On a jurisdiction motion, if [page480] 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.[^20] 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.[^21]

[62] Any 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.[^22] A 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.[^23]

[63] In 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.[^24] [page481]

[64] Where 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 mustdismiss or stay the action.[^25]

3. Forum non conveniens: General principles

[65] If 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. The objectives in determining the appropriate forum are to ensure fairness to the parties and to provide an efficient process for resolving their dispute.[^26] Before 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.[^27] Once jurisdiction simplicity is established, the party seeking to displace the jurisdiction chosen by the plaintiff bears the burden, in the forum non conveniens analysis, to demonstrate that the court of the alternative jurisdiction is a clearly more appropriate forum.[^28]

[66] In 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 [page482] 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.[^29]

[67] The 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.[^30]

4. Does the court have jurisdiction simpliciter?

[68] In the case at bar, the plaintiffs submit that the court has jurisdiction simpliciter over Mr. Liu and Ka An Development because there is a real and substantial connection between Ontario and the dispute involving them. They assert that there are three presumptive connecting factors: (1) Ka An Development carries on business in Ontario; (2) contracts connected with the dispute were made in Ontario; and (3) Ontario is the situs of the torts and other misconduct alleged against Mr. Liu and Ka An Development. [page483]

[69] However, none of these presumptive factors are established on the facts of the immediate case.

[70] Mr. Liu personally does not carry on business in Canada. He is the owner or managing director of a corporation that also does not carry on business in Ontario. The only apparent activity of Ka An Development is that of a shareholder, and while shareholders may be said to control or own corporate businesses, the share-holders do not themselves carry on the business of the corporation that they own or control, and it is trite law that shareholders do not own the assets, goodwill or the business undertaking of the corporation that they own or control.[^31]

[71] Mr. Liu's and Ka An Development's activities do not take place in Ontario. They do not have any physical presence in Ontario. They have no employees based in Ontario. They do not make regular visits to Ontario for the purpose of conducting business. They make no business decisions in Ontario. That these defendants have Ontario lawyers and that these defendants acquired shares traded on the Toronto Stock Exchange does not amount to carrying on business in Ontario. There is no good arguable case that Mr. Liu or Ka An Development carry on business in Ontario.

[72] That there were Ontario contracts associated with Ka An Development's acquisition of an interest in Eastern Platinum, a Vancouver-based mining corporation carrying on operations in Africa, also does not establish a presumptive connection to Ontario.

[73] There is no contractual relationship between the plaintiffs and Mr. Lui and Ka An Development. There is no contract made in Ontario between the plaintiffs and Mr. Lui and Ka An Development. The plaintiffs on one side and Mr. Lui and Ka Development on the other are competitors not contracting parties.

[74] The contracts in the immediate case are an object of, but not the subject of, the plaintiffs' complaints against any of the defendants. The plaintiffs' complaints and causes of actions are not about the contracts but the causes of action are about what led to the contracts, namely, the Faskin defendants' alleged breach of fiduciary duty and Mr. Lui's and Ka An Development's alleged exploitation of confidential information obtained by the Fasken defendants. Ka An Development's purchase of shares is the tail of this litigation.

[75] The share purchase agreements themselves do not govern the dispute between the parties and they are not an element of [page484] the causes of action alleged. In Tamminga v. Tamminga,[^32] the Ontario Court of Appeal rejected a plaintiff's reliance on a contract that had little to do with the events giving rise to its tort claim, and only became pertinent after the tort had occurred.

[76] In the immediate case, there is no good arguable case that this presumptive connecting factor associated with contracts is made out. Alternatively, the presumption of a real and substantive connection on the basis of contact is rebutted.

[77] These conclusions bring the discussion to the question of whether Ontario is the situs of the torts and other misconduct alleged against Mr. Liu and Ka An Development.

[78] The alleged wrongdoings asserted against Mr. Lui and Ka An Development is that they knowingly assisted the Fasken defendants' breach of fiduciary duty and that they knowingly misused confidential information. The parties provided me with no authorities about where the situs of causes of action of this nature are located.

[79] The Statement of Claim and the evidence on the motion reveal that if one ignores the wrongdoing of Faskens, any wrongdoing by Mr. Lui and Ka An Development must have occurred outside of Ontario, i.e.,in Hong Kong and China. In other words, if Mr. Lui and Ka An Development knowingly assisted Faskens and if they benefitted from that association, then it was as a result of Mr. Lui's or Ka An Development's dealings with Mr. Huang, which occurred in Hong Kong and Beijing.

[80] At no time in the course of negotiating, investigating or executing the share purchase agreement with Eastern Platinum's shareholders did Mr. Lui or anyone at Ka An Investments ever travel to Ontario. None of Ka An's communications with its lawyers took place in Ontario. All meetings and communications took place in China or Hong Kong, where Mr. Lui and Ka An Development and Mr. Huang are located. All of the communications written or oral were in Chinese.

[81] While the place of damages is not a relevant factor in determining where wrongdoing occurs, it certainly does not help the plaintiffs' case for Ontario having jurisdiction simpliciter that the plaintiffs' Statement of Claim reveals that the joint-venturers' losses are closely connected to BHF Investment's business in China, where BHF Investment anticipated remunerative synergies from a connection to a source of platinum, which is an imported supply product for Chinese manufacturers. The [page485] evidence of damages would appear to have to come from activities in China.

[82] Although they might be witnesses, Mr. Lui and Ka An Development are not necessary parties to the plaintiffs' causes of action as against the Faskins defendants; moreover, as noted above, that a defendant might be a necessary party to a proceeding involving others in Ontario is not a connecting factor capable of establishing a real and substantial connection to the jurisdiction.

[83] Although I would not be categorical and conclude that a foreign defendant who perpetrated the wrongdoing of knowingly assisting a breach of fiduciary duty or who perpetrated the wrongdoing of misappropriating confidential information, does not perpetrate a wrongdoing in Ontario, on the facts of the immediate case, Mr. Lui's wrongdoing, if any, and Ka An Development's wrongdoing, if any, arose from what was disclosed to Faskens in Hong Kong and Beijing, and, thus, important elements of the wrongdoing occurred outside Ontario and the harmful consequences of that conduct were experienced by BHF Investments as were the unjust enrichments, if any, of Mr. Lui and Ka An Development were experienced outside of Ontario.

[84] I conclude that in the immediate case, there is no good arguable case that the presumptive connecting factor associated with the situs of the wrongdoing has been is made out. Alternatively, the presumption of a real and substantive connection on the basis of the situs of the tort is rebutted.

[85] I, therefore, conclude that Ontario does not have jurisdiction simpliciter, and the plaintiffs' action against Mr. Lui and Ka An Development should be dismissed.

5. Is Ontario forum non conveniens?

[86] On the assumption that the above analysis is incorrect and there is jurisdiction simpliciter in Ontario, I turn to the question of whether Ontario is forum non conveniens. As I shall next explain, my conclusion is that Ontario is forum non conveniens for the dispute between Mr. Hong and BHF Investments and Mr. Lui and Ka An Development. The proper forum for that dispute is China.

[87] In this regard, I begin by noting that in its essence, the litigation between the plaintiffs and these defendants is a dispute between two competing Chinese corporations, both of which had plans to acquire a foreign asset in Canada.

[88] In the immediate case, the seed of the problems that led to their dispute is that these two competing Chinese corporations retained the same lawyer who was based in Beijing, China and in Hong Kong, a special district of China. Mr. Huang, who practises [page486] law in China, is the lynchpin of the problem. Central to the litigation is what Mr. Hong told Mr. Huang, what, if anything, Mr. Du, who was the representative of BHF Investments, told Mr. Huang, and what Ms. Hu, Mr. Lau and Mr. Lui told Mr. Huang in Beijing and in Hong Kong.

[89] The majority of the parties and witnesses with respect to the essence of the litigation are located in China. BHF Developments, Mr. Lui, Ka An Development, Faskens Consulting, Mr. Huang are based in China. The critical communications are those with Mr. Huang and these communications occurred in the Chinese language in China.

[90] The plaintiffs submit that their claims the Faskens' defendants and the Ka An Development defendants are inextricably linked. This is an overstatement, and if the claims are inextricably linked, once it is kept in mind that the simultaneous retainers were formed in China with Faskens Consulting, the claims are not inextricably linked to Canada. The claims are only linked, if the plaintiffs' claim against Faskins succeeds, and the Ka An Development defendants are not necessary parties to that claim. If the claim against the Faskin defendants succeeds, it does not follow that the claim against the Ka An Development defendants will succeed, and China is the more convenient venue to try a case about what Mr. Lui and Ka An Developments did in Hong China and for that matter it is the more convenient venue to determine what damages BHF Developments suffered, if any, if there was wrongdoing.

[91] In my opinion, in the circumstances of this case, the proper forum for the litigation between the competing Chinese corporations about the consequences of an alleged simultaneous retainer with Faskins Consulting is Hong Kong or Beijing, China. Ontario is forum non conveniens.

E. Conclusion

[92] For the above reasons, the action as against Mr. Lui and Ka An Development is dismissed.

[93] If the parties cannot agree about the matter of costs, they may make submissions in writing beginning with the submissions of Mr. Lui and Ka An Development within 20 days of the release of these reasons for decision followed by the plaintiffs' submissions within a further 20 days.

Motion allowed.

[^1]: R.R.O. 1990, Reg. 194.

[^2]: Rule 17.04(1).

[^3]: Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, November 15, 1965, Can. T.S. 1989 No 2 (entered into force February 10, 1969, accession by Canada, September 26, 1988).

[^4]: Khan Resources Inc. v. Atomredmetzoloto JSC (2013), 115 O.R. (3d) 1, [2013] O.J. No. 1453, 2013 ONCA 189, affg (2012), 110 O.R. (3d) 298, [2012] O.J. No. 1059, 2012 ONSC 1522 (S.C.J.), revg [2011] O.J. No. 4793, 2011 ONSC 5465 (Master); Mitchison v. Zerona International Inc. (2014), 122 O.R. (3d) 604, [2014] O.J. No. 3939, 2014 ONSC 4738 (Master); Pharm Canada Inc. v. 1449828 Ontario Ltd. (c.o.b. Trinity Worldwide Services Inc.), [2011] O.J. No. 3709, 2011 ONSC 4808 (S.C.J.).

[^5]: Yip v. HSBC Holdings plc, [2017] O.J. No. 4729, 2017 ONSC 5332 (S.C.J.), affd (2018), 141 O.R. (3d) 641, [2018] O.J. No. 3681, 2018 ONCA 626, leave to appeal to S.C.C. refused [2018] S.C.C.A. No. 410; Chevron Corp. v. Yaiguaje, [2015] 3 S.C.R. 69, [2015] S.C.J. No. 42, 2015 SCC 42; Club Resorts Ltd. v. Van Breda, [2012] 1 S.C.R. 572, [2012] S.C.J. No. 17, 2012 SCC 17.

[^7]: Club Resorts Ltd. v. Van Breda, ibid., at para. 89.

[^8]: Misyura v. Walton (2012), 112 O.R. (3d) 462, [2012] O.J. No. 4457, 2012 ONSC 5397 (S.C.J.), at paras. 30-31, 37-39, 43; Club Resorts Ltd. v. Van Breda, supra, note 5, at para. 55.

[^9]: Chevron Corp. v. Yaiguaje, supra, note 5, at para. 85; Club Resorts Ltd. v. Van Breda, ibid., at para. 87.

[^10]: Stuart Budd & Sons Ltd. v. IFS Vehicle Distributors ULC (2016), 135 O.R. (3d) 551, [2016] O.J. No. 6644, 2016 ONCA 977; 582556 Alberta Inc. v. Canadian Royalties Inc., [2008] O.J. No. 250, 2008 ONCA 58.

[^11]: Supra, note 5.

[^12]: Supra, note 5.

[^13]: Das v. George Weston Ltd., [2017] O.J. No. 3542, 2017 ONSC 4129 (S.C.J.), affd [2018] O.J. No. 6742, 2018 ONCA 1053, leave to appeal to S.C.C. refused [2019] S.C.C.A. No. 69; Central Sun Mining Inc. v. Vector Engineering Inc. (2013), 117 O.R. (3d) 313, [2013] O.J. No. 4506, 2013 ONCA 601; Gulevich v. Miller, [2015] A.J. No. 1431, 2015 ABCA 411.

[^14]: Parque Industrial Avante Monterrey, S.A. de C.V. v. 1147048 Ontario Ltd. (2016), 134 O.R. (3d) 71, [2016] O.J. No. 5379, 2016 ONSC 6004 (S.C.J.); 2249659 Ontario Ltd. v. Siegen (2013), 115 O.R. (3d) 241, [2013] O.J. No. 2496, 2013 ONCA 354, at para. 31; Central Sun Mining Inc. v. Vector Engineering Inc. (2013), 117 O.R. (3d) 313, [2013] O.J. No. 4506, 2013 ONCA 601; Cannon v. Funds for Canada Foundation, [2010] O.J. No. 3486, 2010 ONSC 4517 (S.C.J.), at para. 52.

[^15]: Yip v. HSBC Holdings plc, (S.C.J.), supra, note 5, at para. 207; Airia Brands Inc. v. Air Canada, [2017] O.J. No. 5347, 2017 ONCA 792, at para. 112.

[^16]: Club Resorts Ltd. v. Van Breda, supra, note 5, at paras. 95-98, affg (sub nom. Van Breda v. Village Resorts) (2010), 98 O.R. (3d) 721, [2010] O.J. No. 402, 2010 ONCA 84, affg 2008 32309 (ON SC), [2008] O.J. No. 2624, 60 C.P.C. (6th) 186 (S.C.J.).

[^17]: Haaretz.com v. Goldhar, [2018] 2 S.C.R. 3, [2018] S.C.J. No. 28, 2018 SCC 28, at para. 40.

[^18]: Haaretz.com v. Goldhar, ibid., at para. 43; Club Resorts Ltd. v. Van Breda, supra, note 5, at paras. 81, 97.

[^19]: Ontario v. Rothmans Inc. (2013), 115 O.R. (3d) 561, [2013] O.J. No. 2367, 2013 ONCA 353, at paras. 53-54; Tucows.com Co. v. Lojas Renner S.A. (2011), 106 O.R. (3d) 561, [2011] O.J. No. 3576, 2011 ONCA 548, at para. 36, leave to appeal to S.C.C. refused [2011] S.C.C.A. No. 450; Ecolab Ltd. v. Greenspace Services Ltd. (1998), 1998 17738 (ON SCDC), 38 O.R. (3d) 145, [1998] O.J. No. 653 (Div. Ct.), at pp. 149-54 O.R.; Schreiber v. Mulroney (2007), 2007 56529 (ON SC), 88 O.R. (3d) 605, [2007] O.J. No. 4997 (S.C.J.), at para. 18.

[^20]: Ontario v. Rothmans Inc., ibid., at para. 110; British Columbia v. Imperial Tobacco Canada Ltd., [2005] B.C.J. No. 1400, 2005 BCSC 946, at paras. 132-134; Ontario New Home Warranty Program v. General Electric Co. (1998), 1998 14628 (ON SC), 36 O.R. (3d) 787, [1998] O.J. No. 173 (Gen. Div.,) at pp. 797-99 O.R.

[^21]: Ontario v. Rothmans Inc., ibid., at paras. 101-102, 110; Vitapharm Canada Ltd. v. F. Hoffman-La Roche Ltd., [2002] O.J. No. 298, [2002] O.T.C. 57 (S.C.J.), at para. 64.

[^22]: Ontario v. Rothmans Inc., ibid.

[^23]: Inukshuk Wireless Partnership v. 4253311 Canada Inc. (2013), 117 O.R. (3d) 206, [2013] O.J. No. 4104, 2013 ONSC 5631 (S.C.J.), at para. 19; Tucows.com Co. v. Lojas Renner S.A., supra, note 19, at para. 36, leave to appeal to S.C.C. refused [2011] S.C.C.A. No. 450.

[^24]: Éditions Écosociété Inc. v. Banro Corp., [2012] 1 S.C.R. 636, [2012] S.C.J. No. 18, 2012 SCC 18, at paras. 37-38.

[^25]: Lapointe Rosenstein Marchand Melançon LLP v. Cassels Brock & Blackwell LLP, [2016] 1 S.C.R. 851, [2016] S.C.J. No. 30, 2016 SCC 30, at paras. 25-27; Forsythe v. Westfall (2015), 128 O.R. (3d) 124, [2015] O.J. No. 6134, 2015 ONCA 810, at paras. 48-50, leave to appeal to S.C.C. refused [2015] S.C.C.A. No. 460; Club Resorts Ltd. v. Van Breda, supra, note 5, at paras. 79-81.

[^26]: Bouzari v. Bahremani (2015), 126 O.R. (3d) 223, [2015] O.J. No. 2018, 2015 ONCA 275, at para. 47; Club Resorts Ltd. v. Van Breda, supra, note 5, at para. 109.

[^27]: Breeden v. Black (2012), 114 O.R. (3d) 78, [2012] 1 S.C.R. 666, [2012] S.C.J. No. 19, 2012 SCC 19, at para. 23; Frymer v. Brettschneider (1994), 1994 1685 (ON CA), 19 O.R. (3d) 60, [1994] O.J. No. 1411 (C.A.), affg (1992), 1992 7410 (ON SC), 10 O.R. (3d) 157, [1992] O.J. No. 535 (Gen. Div.); Bonaventure Systems Inc. v. Royal Bank of Canada (1986), 1986 2550 (ON SC), 57 O.R. (2d) 270, [1986] O.J. No. 1197 (Div. Ct.).

[^28]: Haaretz.com v. Goldhar, supra, note 17.

[^29]: Amtim Capital Inc. v. Appliance Recycling Centers of America, [2012] O.J. No. 4608, 2012 ONCA 664; Young v. Tyco International of Canada Ltd. (2008), 2008 ONCA 709, 92 O.R. (3d) 161, [2008] O.J. No. 4046 (C.A.); Precious Metal Capital Corp. v. Smith, [2008] O.J. No. 1236, 60 C.P.C. (6th) 276 (S.C.J.), affd (2008), 2008 ONCA 577, 92 O.R. (3d) 701, [2008] O.J. No. 4368 (C.A.); Incorporated Broadcasters Ltd. v. Canwest Global Communications Corp. (2003), 2003 52135 (ON CA), 63 O.R. (3d) 431, [2003] O.J. No. 560 (C.A.), leave to appeal to S.C.C. refused [2003] S.C.C.A. No. 186.

[^30]: Silvestri v. Hardy (2009), 95 O.R. (3d) 555, [2009] O.J. No. 1948, 2009 ONCA 400, at para. 7; Young v. Tyco International of Canada Ltd., ibid.; Hunt v. T&N plc, 1993 43 (SCC), [1993] 4 S.C.R. 289, [1993] S.C.J. No. 125; Amchem Products Inc. v. British Columbia (Workers' Compensation Board), 1993 124 (SCC), [1993] 1 S.C.R. 897, [1993] S.C.J. No. 34; Antares Shipping Corp. v. Capricorn (The), 1976 5 (SCC), [1977] 2 S.C.R. 422, [1976] S.C.J. No. 79.

[^31]: Yip v. HSBC Holdings plc, supra, note 5.

[^32]: (2014), 120 O.R. (3d) 671, [2014] O.J. No. 2915, 2014 ONCA 478.