COURT FILE NO.: CV-20-001338

DATE: 20210621

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

RALPH PETER RIEDER zu WALLBURG and ADMG PUBLISHING LTD.

Plaintiffs/Responding Parties

– and –

PLISTA GMBH, MICHEL GAGNON, STEFANIE KOHNERT and STEFAN KLIMEK

Defendants/Moving Parties

Douglas J. Spiller, for the Plaintiffs

Elizabeth Kurz, for the Defendants

HEARD: May 28,2021

REASONS FOR DECISION

RSJ EDWARDS:

Overview

[1] The Defendants move to dismiss the Plaintiffs’ claim for lack of jurisdiction, or in the alternative an order staying the action on the basis that Ontario is not the appropriate forum. While the Plaintiff Ralph Peter Rieder zu Wallburg (“Rieder”) pleads his claims in tort, the underlying connection between Rieder and the Defendants arises out of an alleged breach of contract between ADMG Publishing Ltd. (ADMG) and the Defendant Plista GMBH (Plista). The contract was completed over the internet when Rieder accepted the terms and conditions on Plista’s website.

The Facts

[2] Rieder resides in Barrie, Ontario. He is the sole shareholder and president of ADMG. ADMG was incorporated in England in 2012. Since May 2016 ADMG has operated and carried on business in Ontario by means of an extra-provincial licence granted to ADMG by Ontario Corporation 1954435.

[3] Plista is a corporation organized under the laws of Germany with its headquarters in Berlin. Plista is a global platform for data driven native advertising. The individual Defendants are employees of Plista who also work in Berlin.

[4] Plista is in the business of working with “advertisers” and “publishers”. Advertisers will pay Plista to place advertisements on websites which Plista refers to as “publishers”. Plista then remunerates the publishers to host advertisements. ADMG is a publisher which has developed a network of websites for smaller German companies. Publishers use Plista’s self-booking portal to arrange for the hosting of advertisements. ADMG entered into a contract with Plista on February 6, 2019 (“the Contract”) utilizing Plista’s self-booking portal. ADMG accepted the terms of Plista’s contract by clicking “accept”.

[5] The terms of the contact required ADMG to host Plista’s advertisements on the ADMG network in return for which Plista agreed to pay ADMG for hosting the advertisements. The method of calculating what Plista would pay ADMG on a monthly basis was calculated and based on the number of times advertisements on the ADMG network were “clicked” by visitors.

[6] One of the essential terms of the contract stipulated that the jurisdiction for dealing with the contract was Germany. Specifically, paragraph 16.3 of the contract stated:

For all claims arising from the business relationship, the place of jurisdiction shall be Plista’s place of business, unless the publisher is a merchant, legal entity under public law or special fund under public law. However, Plista is also entitled to exercise its rights to the general jurisdiction. Only the non-harmonized law of the Federal Republic of Germany applies.

[7] Between February 2019 and July 2020, Plista placed advertisements on the ADMG network and paid ADMG for the number of advertisements clicks on the ADMG network. There were no issues in that timeframe. However, subsequent to April 2020 issues arose with respect to the number of clicks on the advertisements, resulting in a substantial potential increase in revenue for ADMG. Allegations of fraud were made by Plista suggesting that ADMG had fabricated the number of clicks. As a result, Plista terminated the contract on July 13, 2020.

[8] While Plista purported to terminate the contract as a result of alleged fraudulent conduct by ADMG, ADMG in its statement of claim pleads various torts. Specifically, the Plaintiffs allege that the individual Defendants conspired together to devise a fraudulent scheme to avoid payment of the sums owing to ADMG.

[9] The Plaintiffs further plead that the Defendants breached various statutory duties and violated the Competition Act and Canada’s Anti-Spam legislation. The Plaintiffs further plead negligence without any particularization, as well as bad faith conduct. Finally, the Plaintiffs allege that the Defendants defamed Rieder by making false allegations of “suspicious activity” surrounding the “clicks of ADMG”.

[10] While the contract at issue is between ADMG and Plista, the claims asserted by Rieder in tort are not made on behalf of the Plaintiff ADMG. In fact, the statement of claim specifically pleads in para. 2:

The Plaintiff ADMG is an interested party to the action but seeks no relief of any kind in this action brought in the Province of Ontario. (emphasis added)

Position of the Moving Defendants

[11] The Defendants argue that the Plaintiffs cannot establish that there is a real and substantial connection between the claims asserted by Rieder and the Province of Ontario. In that regard, relying on the presumptive connecting factors set forth in Van Breda v. Village Club Resorts Ltd., 2012 SCC 17, the Defendants argue:

a. that Plista is not domiciled or a resident in Ontario;

b. that Plista does not carry on business in Ontario;

c. that there was no tort committed in Ontario; and

d. that the contract was made in Germany, not Ontario.

[12] As it relates to the conspiracy claims pleaded in tort, the Defendants argue that what the Plaintiffs have pleaded is nothing more than an attempt to convert an alleged breach of contract claim into a conspiracy claim in order to ground jurisdiction in this court.

Position of the Plaintiffs

[13] Like the Defendants, the Plaintiffs rely on Van Breda and argue that contrary to the position asserted by the Defendants that:

a. Plista carries on business in Ontario;

b. that the alleged torts were committed in Ontario; and

c. that the contract was made in Ontario.

[14] In support of his position, Rieder argues that the contract between Plista and ADMG was affected over the internet at a point in time when Rieder was acting on behalf of ADMG and when Rieder was and remains a resident of Ontario. Rieder argues that the breach of contract as well as the various tortious claims connects Rieder’s dispute to Ontario.

[15] As it relates to the issue of where Plista carries on business, Rieder argues that the evidence establishes that Plista carries on business not only in Germany but elsewhere around the world, including Ontario.

[16] As to the issue of where the breach of contract occurred, Rieder argues that the breach was committed in Ontario when Plista delivered a notice of termination to his address in Barrie.

[17] As it relates to the issue of the appropriate forum for the hearing of the dispute, Rieder argues that the Defendants have failed to provide any evidence of prejudice if this matter is heard in Ontario. In that regard, Rieder again argues that the evidence establishes that Plista is engaged in the internet business worldwide with a presence in Ontario. Furthermore, it is argued that the damages claimed by Rieder were suffered in Ontario and therefore Ontario should be the appropriate forum for the hearing of this matter.

Analysis

[18] Rieder argues that Plista has a physical presence in Ontario because Plista is “intertwined” with a company known as Xaxis, which has an office on Bloor Street in the City of Toronto. The evidence further establishes that there is a common connection between Plista and Xaxis, as the Defendant Michel Gagnon is shown as having a position of authority in both Plista and XAXIS.

[19] While Plista’s website demonstrates some connection with Ontario through Xaxis, the fact still remains that Plista is a corporation organized under the laws of Germany with its headquarters in Berlin. Xaxis and Plista are entirety separate corporate entities and there is no dispute between the Plaintiffs and Xaxis.

[20] The reality of the internet is the access that anyone in the world with a computer linked to the internet can access a website. The fact that Plista may have represented on its website that it has launched “a market entry in Canada”, does not provide a sufficient basis to establish that Plista carries on business in Ontario. The fact that Plista has a website which is accessible in Ontario allowing an Ontario resident to contract with Plista over the internet, does not by itself amount to carrying on business in Ontario: see Vahle et al. v. Global Work & Travel Co. Inc., 2019 ONSC 3624, at para. 36, aff’d 2020 ONCA 224.

[21] What distinguishes the facts in this case from other cases where a defendant engages in what has been described as e-commerce is the absence of any evidence demonstrating that Plista actively solicits or advertises to residents of Ontario. The facts before this court are quite unlike the facts in Vahle where there was evidence of “aggressive sales tactics towards the plaintiffs by email and telephone”. There is no such evidence that would allow this court to make a finding that the Plaintiffs have met the burden of demonstrating a good arguable case that Plista carries on business in Ontario, and thus there is a presumption of jurisdiction.

[22] Even if this court accepted that the connection between Xaxis and Plista was sufficient to establish that Plista carries on business in Ontario, that presumption may still be rebutted. The Supreme Court of Canada in Haaretz.com v. Goldhar, 2018 SCC 28, at paras. 40 and 43, requires this court to conduct a careful examination of the connection to Ontario in cases involving the internet “where a presumptive connecting factor can easily be established”. In such situations, the court is warned that fundamentally the question to be asked is whether it would “be reasonable to expect that the defendant would be called to answer proceedings in that jurisdiction”.

[23] Unlike the facts before the court in Vahle where the defendant assured its clients that Canadian law would apply to their contract and any resulting dispute, on the facts before this court the contract makes quite clear in para. 16.3 that the law of Germany shall apply. It is therefore very difficult to accept an argument that it would be reasonable to expect that Plista would be called to answer proceedings in Ontario where the contract makes specific provision for the application of German law.

[24] The Plaintiffs argue that Plista carries on business for the purposes of the application of the Van Breda test and points to the maintenance of its office on Bloor Street where Xasis maintains its head office. The Plaintiffs also argue that as a result of Plista’s representations on its website that it is marketing in Canada, there is sufficient evidence to conclude that Plista carries on business in Ontario. The Supreme Court in Van Breda cautioned that mere access to a website is not sufficient to establish that a defendant carries on business in a jurisdiction. Specifically, 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…

[25] The Supreme Court in Van Breda did not decide whether and when e-trade in a jurisdiction would amount to a presence in the jurisdiction. That said, however, LeBel J. clearly sends a clear warning to the court determining a jurisdiction issue not to assume jurisdiction simply because a website is accessible in Ontario thereby allowing Ontario residents to enter into a contract.

[26] There is no evidence that Plista targeted Rieder, or for that matter targeted any Ontario resident through the use of its website. The facts of this case are clearly distinguishable from the facts in Vahle where the court had little difficulty in assuming jurisdiction.

[27] The Plaintiff has pleaded his action in tort and defamation; claims which Rieder argues were made independent of the contract between ADMG and Plista. In response Plista argues that the claims in conspiracy are pleaded for the sole purpose of obtaining a jurisdictional advantage. I agree.

[28] In Normart Management Ltd. v. West Hill Redevelopment Co., 1998 CanLII 2447 ONCA, Finlayson J.A. states:

…there can be no doubt on a plain reading of the statement of claim that the appellant is attempting to convert its straightforward action against the respondent corporations for breach of contract and breach of fiduciary duty arising out of that contract into a personal action against the officers and directors of the respondent corporations. The factual basis for and the damages flowing from the breach of the joint venture agreement and the so-called conspiracy to injure are one and the same.

[29] In coming to the conclusion that it did, the Court of Appeal in Normart makes clear that the plaintiff was simply attempting to convert its breach of contract and breach of fiduciary action into a conspiracy action against a broader range of parties by alleging the same factual basis and damages. Relying on what has been described as the merger principal, the Court of Appeal struck out the conspiracy allegations.

[30] A similar finding was arrived at by Lord Denning nearly 70 hears ago in Ward v. Lewis, (1954), [1956] 1 All E.R. 55, where Lord Denning stated:

…a party is not allowed to gain an added advantage by charging conspiracy when the agreement has become merged in the tort. It is sometimes sought, by charging conspiracy, to get an added advantage, for instance in proceedings for discovery, or by getting in evidence which would not be admissible in a straight action and tort, or to overcome substantive rules of law, such as here, the rules about republication of slanders. When the court sees attempts of that kind being made, it will discourage them by striking out the allegation of conspiracy, on the simple ground that the conspiracy adds nothing when the tort has in fact been committed.

[31] The claim advanced by the Plaintiffs in this action, in my view, rises or falls with respect to whether or not there has been a breach of the contract. The action, if it was allowed to proceed in Ontario, in my view is a simple breach of contract action. What the Plaintiff Rieder has attempted to do is plead claims in tort and defamation in the hope that he can obtain a jurisdictional advantage by proceeding with his claim in Ontario. Without the contract Rieder has no claim. The plaintiffs claim, if there is one, is a breach of contract action.

[32] For the reasons that I have already enunciated there is no temporal connection with Ontario. There is insufficient evidence, if any evidence at all, demonstrating that Plista carries on business in Ontario. The contract was completed over the internet. Rieder, on behalf of ADMG, accepted the terms of the contract. One of the essential terms of the contract requires that it be determined in accordance with the laws of Germany.

[33] If this court was to assume jurisdiction and accept that Ontario was the appropriate forum, any trial would inevitably involve witnesses either travelling from or appearing virtually from Germany. Some, if not all of the evidence, would be in German. A court would require the assistance of expert evidence with respect to the applicable German law as it relates to the interpretation of the terms of the contract.

[34] The only link with Ontario is the fact that Rieder is a resident of Barrie. While ADMG may carry on business as a result of a licence issued in Ontario, ADMG is not an Ontario corporation.

[35] The connection with Ontario, in my view, is weak at best. The appropriate forum for the determination of all issues relating to the breach of contract is Germany, not Ontario.

[36] The Defendants motion to dismiss this action pursuant to Rule 17.06 and s. 106 of the Courts of Justice Act is granted. The Plaintiffs’ motion to validate service of the statement of claim is dismissed. The other relief sought by the Plaintiffs is also dismissed.

[37] As for the issue of costs, I sought the assistance of counsel at the completion of argument and before the release of my Reasons. Plaintiffs’ counsel indicated that win or lose he felt that an appropriate disposition of costs would be in the order of $5,000. Counsel for the Defendants suggested that an appropriate figure in the event the Defendants were successful would be in the order of $30,000 and $20,000 if unsuccessful. Counsel may submit further written submissions and a bill of costs if they are so disposed and are unable to reach an agreement with respect to costs. Written submissions limited to two pages, together with a bill of costs, should be submitted to the court within 10 days from the date of receipt of these Reasons. If submissions are not received, the court will assume that the issue of costs has been resolved.

Regional Senior Justice M.L. Edwards

Released: June 21, 2021

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

RALPH PETER RIEDER zu WALLBURG and ADMG PUBLISHING LTD.

Plaintiffs/Responding Parties

– and –

PLISTA GMBH, MICHEL GAGNON, STEFANIE KOHNERT and STEFAN KLIMEK

Defendants/Moving Parties

REASONS FOR DECISION

Regional Senior Justice M.L. Edwards

Released: June 21, 2021