BAE Systems Southeast Shipyards AMHC Inc. v. Wiley

COURT FILE NO.: CV-20-643848

MOTION HEARD: 20210420

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: BAE Systems Southeast Shipyards AMHC Inc., plaintiff

-AND-

David A. Wiley, defendant

BEFORE: Master Abrams

COUNSEL: M. Beeforth, for the plaintiff T. Carsten, for the defendant

REASONS FOR DECISION

[1] The defendant seeks a stay of the within action on the ground of forum non conveniens.

[2] This action arises out of a 2018 purchase and sale transaction between BAE Systems Southeast Shipyards AMHC Inc. (also referred to herein as the “plaintiff”), a Florida company (that maintains a place of business in Florida), and Epic Maritime Asset Holdings, LLC, a Delaware company. The defendant was a director of Epic, at all relevant times. He resides in Ontario.

[3] The transaction in question involved the purchase, by Epic, of assets (including an Alabama shipyard) from the plaintiff. As part of the transaction, the plaintiff and Epic entered into a non-negotiable term promissory note[^1], pursuant to which Epic promised to pay the plaintiff $10,000,000 U.S. on October 12/19. The defendant and Epic’s other directors, the Clarkes (both residents of Virginia), each executed a personal guarantee in 2018 (the “Guarantee”), for the benefit of the plaintiff, in relation to any amounts owing under the promissory note.

[4] The Guarantee provided, at section 12, as follows: “This Guarantee shall be governed by and construed in accordance with the substantive laws (other than conflict laws) of the State of New York [emphasis added]. The parties…(i) consent to the personal jurisdiction of the state and federal courts located in the State of New York in connection with any controversy related to [the Guarantee]; (ii) waive any argument [emphasis added] that venue in any such forum is not convenient; (iii) agree that any litigation…in connection with [the Guarantee] may be venued in the state or federal courts located in…New York; and (iv) agree that a final judgment in any such suit, action or proceeding shall be conclusive and may be enforced [emphasis added] in other jurisdictions by suit on the judgment or in any other manner provided by law”.

[5] Thus, the Guarantee provided a choice of law clause and a non-exclusive forum selection clause. Both the plaintiff and the defendant herein attorned to the jurisdiction of the New York courts and waived any argument that New York is not a convenient forum.

[6] The plaintiff says that Epic defaulted on its obligations under the promissory note and that the three guarantors (the Clarkes and Mr. Wiley) failed to pay what was owed. That being so, the plaintiff took action against the three guarantors.

[7] In March of 2020, BAE Systems (represented by the same law firm representing it herein) brought suit against two of the three guarantors, the Clarkes. Its proceeding was commenced in New York, with section 12 of the Guarantee pled and relied upon in its Complaint. In the Complaint, Epic referenced the guarantors having “submitted to the jurisdiction of [the New York] court”, having “agreed to venue in [the New York] court”; and having “waived any argument that venue in [the New York courts] is not convenient”.

[8] In July of 2020, this action against the defendant, the third guarantor, was commenced in Ontario, by BAE Systems--with no reference made to the forum selection clause, in the statement of claim. The Ontario defendant asks that I exercise my jurisdiction, pursuant to s. 106 of the Courts of Justice Act, to stay this proceeding. He says that the claims against him arise out of the same Guarantee as the claims against the Clarkes, such that what was right for them (juridically) should be right for him.

[9] On this motion, the first issue for me to consider is whether the Superior Court of Justice (Ontario) has jurisdiction simpliciter to decide the dispute between BAE Systems and the defendant, Mr. Wiley. The answer to this question is ‘yes’. The defendant himself concedes that it does because he is an Ontario resident.

[10] The defendant’s Ontario residence notwithstanding, I may still decline to exercise my jurisdiction to order a stay on the basis of forum non conveniens--if there is an alternative forum with jurisdiction over the claim that is “more appropriate” and “should be preferred” (Club Resorts Ltd. v. Van Breda, 2012 SCC 17, [2012] 1 S.C.R. 572, at para. 103).

[11] As the plaintiff submits, the doctrine of forum non conveniens is designed “to ensure that both parties are treated fairly and that the process for resolving their litigation is efficient”. The burden is on the moving party to demonstrate why the court should decline to exercise its jurisdiction and “…to show that, in light of the characteristics of the alternative forum, it would be fairer and more efficient” to displace Ontario as the forum for the litigation of the plaintiff’s claims (Club Resorts Ltd. v. Van Breda, supra, at paras. 108-109).

[12] In its analysis, the court may have regard to a number of considerations in determining what forum is to be preferred. Some of those considerations include: the comparative convenience and expense for parties/witnesses; the applicable law; the potential avoidance of a multiplicity of proceedings and of possible conflicting decisions; the ease with which the judgment may be enforced; and fairness to the parties (see: Club Resorts v. Van Breda, supra, at para. 105 and Breeden v. Black, 2012 SCC 19, at paras. 29-36). To be determined is whether one forum emerges as being “clearly” more appropriate (Breeden v. Black, supra, at para. 37).

[13] In respect of these considerations (to which I have had regard and on which I heard submissions), my comments are as follows:

1. Witnesses: The plaintiff says that no potential witness resides in New York. That is true; but, as the defendant points out, with the Clarkes having been sued in the State of New York (on the very same Guarantee here at issue and with no witnesses in their case residing in New York), the plaintiff must have viewed New York as being a convenient forum--this consideration notwithstanding.

The plaintiff acknowledges that none of its potential witnesses resides in Ontario, either. Only the defendant resides in Ontario and, though he is the one party potentially most inconvenienced, he has brought this motion. He seemingly is not concerned about inconvenience or expense if the claim is to be tried in New York.

Counsel: The plaintiff says that both parties have expended resources retaining and instructing Ontario counsel and, if this action is stayed, there will be costs thrown away. I note that the action is in its nascent stages (with only a statement of claim having been served and this motion brought). I also note that the plaintiff says (see below) that this dispute is “not particularly complex”. The plaintiff’s acknowledgement as to lack of complexity detracts from the notion that the cost and effort of ‘starting over’, as it were, militates against the case being tried in New York. So too does the fact that, as referenced in paragraph 7, supra, the law firm representing BAE Systems in New York (and in respect of the claims against the Clarkes) is the same law firm representing it in Ontario.

These considerations relating to cost/convenience are, in my view, neutral.

2. The Governing Law: The Guarantee is governed by and to be construed in accordance with New York law. In the litigation against the Clarkes, New York legal principles and case law were relied upon by the parties. To permit the litigation to continue in Ontario is to put the parties to the time and expense of adducing expert evidence in respect of New York law. While it is true, as the plaintiff posits, that it is not uncommon for courts in Ontario to apply foreign law, and while the plaintiff submits (and I accept) that the claims herein are not particularly complex, nonetheless I agree with the defendant when he says that a New York court provides "a clearly more appropriate forum in which to litigate a New York contract” and apply New York law.[^2]

This consideration favours New York.

3. Multiplicity of Proceedings/Potential for Conflicting Decisions: Section 138 of the Courts of Justice Act dictates that, as much as possible, a multiplicity of proceedings is to be avoided. As referenced above, litigation in respect of the Guarantee was commenced in New York against the Clarkes; and summary judgment has been granted against the Clarkes. And while the Clarkes brought action against Epic in New York, that litigation has been discontinued. The defendant says that action may (or may not) be taken by him against Epic and/or the Clarkes in New York. Though the prospect of further action on the part of Mr. Wiley is speculative, it is a consideration that favours New York state—albeit minimally.

A consideration that favours New York more profoundly, however, is the risk of inconsistent results. The factual issues addressed by the court in New York, as they related to Epic and the Clarkes, are similar to those here at issue. The plaintiff admits that this is so. And, while the Clarkes are not parties to the Ontario litigation, it is true, they were two of the three guarantors. The plaintiff seeks to have an Ontario court apply the same analysis as was applied to the Clarkes to the third guarantor, the defendant, applying foreign law/legal principles. The defendant says that “the risk of conflicting decisions is obvious”. I accept that such a risk exists.

This consideration favours New York.

4. Enforcement of Judgment: Enforcement efforts may be easier if judgment is obtained in Ontario; but, this was known to the plaintiff when it attorned to the jurisdiction of the New York courts (albeit in a manner that is non-exclusive).[^3] To this end, BAE Systems included language to protect itself, with s. 12 of the Guarantee providing that “a final judgment in [New York] may be enforced in other jurisdictions…”.

While this consideration favours Ontario, it apparently was not one that gave the parties particular pause when the Guarantee was signed in that it was known, then, that the defendant was an Ontario resident.

5. Fairness and Efficiency: On the issue of fairness, the parties turned their minds to New York law, New York courts and the potential for arguments to be made that New York is not a convenient forum. There is nothing unfair to the parties about requiring of the plaintiff that it litigate its claims in accordance with New York law and in a New York courtroom. No evidence has been led to suggest that the legal process in Ontario would be more fair or efficient or as to a loss of juridical advantage if the claims are to be tried in the State of New York. And though is true, as the plaintiff submits, that waiving any argument that New York is not a convenient forum (as the plaintiff has done) is not the same as conceding that it is the most convenient forum, a waiver is stronger than an acknowledgement that there may be more than one convenient forum.

Indeed, it would be less efficient and more costly to have an Ontario court address a dispute over a New York contract that is to be construed in accordance with New York law.

This consideration favours New York.

[14] The defendant submits that, in all and when considered together, the relevant factors in the forum non conveniens analysis clearly favour New York as a more efficient and appropriate jurisdiction for the within dispute. For the reasons stated above, I agree. The action is stayed.

[15] Costs of the motion can be addressed in writing or orally, as counsel may prefer. Unless a request is made to have me address the issue of costs—this by August 20/21, I will assume that the issue has been settled as between the parties.

July 17, 2021 “Original Signed by Master Abrams”

[^1]: The promissory note was governed by New York law.

[^2]: This case is distinguishable from GIAO Consultants Ltd. v. 7779534 Canada Inc., 2020 ONCA 778, on which the plaintiff relies, in that (in GIAO Consultants) there were “both contract and tort claims in the statement of claim [that, as the Court of Appeal noted, could] raise difficult questions of the applicable law”.

[^3]: The plaintiff says that a non-exclusive jurisdiction clause is often given less weight in considering the appropriate forum than is an exclusive jurisdiction clause. Even if that is so, it is still a factor to be considered and applied in the court’s analysis (see, for instance: Mackie Research Capital Corporation v. Mackie, 2012 ONSC 3890, at para. 41).