COURT FILE NO.: CV-21-00656830-0000
DATE: 20211122
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
LITHIUM ROYALTY CORPORATION
Applicant
– and –
ORION RESOURCE PARTNERS, TRIDENT ROYALTIES PLC and LITHIUM AMERICAS CORPORATION
Respondents
Peter Griffin and Lauren Mills Taylor, for the Applicant
Zohar Levy and Chad Pilkington, for the Respondent, Trident Royalties PLC
Andrey Gray and Lara Guest, for the Respondent, Orion Resource Partners
Lara Jackson, for the Respondent, Lithium Americas Corporation
HEARD: June 4, 2021 and in Writing
VELLA J.
REASONS FOR DECISION – JURISDICTION MOTION
A. BACKGROUND
[1] The respondent, Trident Royalties PLC (“Trident”), brought a preliminary motion to set aside the service ex juris of the Notice of Application against it by Lithium Royalty Corporation (“LRC”) or, alternatively, to dismiss or stay the application against it on the basis that the court lacks jurisdiction simpliciter over Trident with respect to the subject matter of the application. LRC opposes this motion. The remaining respondents take no position on this motion.
[2] Orion brought a preliminary motion to have this application converted to an action.
[3] This matter is somewhat challenging from a procedural perspective since LRC advised during the course of the motion that it would consent to have this application converted into an action. Furthermore, LRC has misnamed the defendant, Orion Resource Partners, and its motion to amend the title of proceedings to name the correct Orion entity is pending (First Amended Notice of Application). For purposes of this motion, I will refer to the contracting Orion entity as “Orion.”
[4] Additionally, while making his responding oral submissions regarding the jurisdiction motion, counsel for LRC advised that he would be seeking leave to further amend the Notice of Application to add an additional subrule in support of LRC’s jurisdiction argument; namely r. 17.02(f)(ii), which applies where the contract contains a choice of (Ontario) law provision.
[5] Counsel for Trident advised that Trident would consent to the additional subrule being plead but requested time to respond to this new subrule as it raises a new dimension to the jurisdiction argument.
[6] Accordingly, I adjourned Trident’s jurisdiction motion to receive further written submissions on the limited issue of whether service under r. 17.02(f)(ii) was valid. I also adjourned LRC’s motion to further amend its Notice of Application in order to receive written submissions from the parties.
[7] I then adjourned the balance of the application since it will be converted to an action.
[8] In the interim, LRC brought a motion in writing to further amend its Notice of Application to plead not only r. 17.02(f)(ii), but also to add a claim based in the tort of inducing breach of contract, r. 17.02(p), and to properly plead r. 17.02(g) (which had been misstated in its factum) (“Second Amended Notice of Application”). During a case conference held before me on June 24, 2021, I set a timetable for the delivery of materials relating to LRC’s expanded motion to amend its Notice of Application. In addition I set a timetable for the deliver of facta relating to the expanded grounds for service ex juris, assuming I granted leave. Finally, a timetable has been consented to with respect to pre-trial steps relating to the pending conversion of the application to an action. The latter timetable is pending my ruling on Trident’s jurisdiction motion and LRC’s motion to amend its Notice of Application in accordance with the proposed Second Amended Notice of Application.
[9] I have now reviewed the written submissions, which are supplementary to the facta originally filed in relation to Trident’s jurisdiction motion and the facta relating to LRC’s motion to amend.
[10] Trident opposes LRC’s motion to amend its Notice of Application beyond pleading r. 17.02(f)(ii).
[11] However, it was conceded by LRC that Trident’s consent to the limited originally proposed amendment is in no way to be considered a fresh step in the litigation, such as to constitute an attornment to this court’s jurisdiction. However, LRC continues to rely on its original position that the affidavits tendered by Trident in support of its jurisdiction motion amount to an attornment because the affidavits, in its view, went beyond the facts strictly necessary to support Trident’s position on this motion.
[12] For the reasons that follow, both motions are granted.
B. ISSUES
[13] The issues raised are as follows:
(a) Should the court grant leave to amend the Notice of Application in order to permit the additional subrules of r. 17.02 and the claim against Trident of the tort of inducing a breach of contract to be pleaded?
(b) Should the court set aside service ex juris of this application on Trident?
(d) If service was properly effected under r. 17.02, does the court have jurisdiction simpliciter over Trident?
C. ANALYSIS
i. Background
[14] In a nutshell, LRC claims that it entered into a binding oral contract with Orion to purchase a royalty interest in a lithium mining project located in Nevada, United States (the “Royalty”).
[15] LRC claims that Orion wrongfully sold the Royalty to Trident, after Orion entered into a binding oral contract with LRC (the “alleged contract”). LRC now seeks, inter alia, an order of specific performance of the alleged contract against Orion.
[16] LRC states that Trident proceeded to close the transaction to purchase the royalty interest from Orion (the “Trident Contract”) while having actual knowledge of LRC’s binding oral contract with Orion. LRC points to the fact that the evidence from Trident, in the form of a press release issued by Trident, confirms that it knew of LRC’s claim in advance of closing the transaction with Orion. Further, LRC says that Trident sought and received an indemnity agreement from Orion as a condition of the purchase.
[17] LRC claims that Trident is properly before this court.
[18] Trident claims that it has no connection with Ontario, or Canada for that matter, whatsoever. It also points out that it is not a party to the alleged contract and submits, in any event, that none of the presumptive connecting factors established by Club Resorts Ltd. v. Van Breda, 2012 SCC 17, [2012] 1 S.C.R. 572, have been made out as against it in this proceeding.
ii. Leave to Amend the Notice of Application
[19] Rule 14.05 states that the “originating process” to start an application is a notice of application. However, as is clear from r. 25 and r. 26, “pleadings” do not include originating processes beyond those required for an action.
[20] Rule 14.09 provides that an originating process that is not a “pleading” may be amended in the same manner as a pleading. Therefore, this subrule permits the amendment of a Notice of Application in the same manner as a pleading by analogy to r. 26.01.
[21] Rule 26.01 provides that “[o]n a motion at any stage of an action the court shall grant leave to amend a pleading on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment.”
[22] Trident submits that because r. 14.09 states that “[a]n originating process that is not a pleading may [emphasis added by Trident] be struck out or amended in the same manner as a pleading” the mandatory requirement of r. 26.01 does not apply. In other words, the court has discretion to refuse to allow the amendment even if there is only prejudice that could be compensated for by costs or an adjournment.
[23] I respectfully disagree with this submission. Rule 14.09 references both the power to amend and the power to strike a pleading. These powers attract different legal tests. The policy justification behind r. 26.01 is to ensure that matters are adjudicated on their merits unless the proposed amendment would result in prejudice that cannot be compensated for by costs or an adjournment. Pleadings have been amended as late as mid-trial where circumstances warrant.
[24] In my view, the court must grant an amendment to a Notice of Application unless the proposed amendment would result in prejudice that cannot be compensated for by costs or an adjournment.
Is there prejudice that cannot be compensated?
[25] The next issue therefore is whether the proposed amendments will cause prejudice to Trident that cannot be compensated for by costs or an adjournment.
[26] Trident points out that by the time of its motion, it had offered up its witnesses for cross-examination, it had tendered its affidavit evidence, and LRC’s witnesses had been cross-examined. Trident submits that once LRC ascertained that its arguments on the previously pleaded r. 17.02 subrules were perhaps in difficulty, LRC sought leave to amend the Notice of Application to argue r. 17.02(f)(ii). Trident consented to this limited amendment on condition that the motion be adjourned so that it could prepare written responding submissions on this subrule. However, when LRC provided its formal motion for leave to amend, it expanded its request to plead the additional subrules under r. 17.02 and add a new claim, the tort of inducing breach of contract.
[27] Trident submits that permitting a request for leave to amend “mid-motion” is not fair as it requires Trident to respond to an “everchanging litigation landscape.” It relies on Cosentino v. Dominaco Developments Inc., 2018 ONSC 5056, aff’d 2019 ONCA 426. In that case, the self-represented plaintiffs had brought a motion for summary judgment in what was described as a complicated and protracted proceeding. The plaintiffs then sought to further amend their statement of claim in response to the defendants’ responding record. Cross examinations had already occurred, and the defendants had already provided their answers to undertakings arising from the cross examinations. At para. 38, the court focused on the prejudice to the defendants by the plaintiffs constantly altering its pleading after the defendants had committed their position in the evidence in response to the unamended statement of claim.
[28] Cosentino is distinguishable from the facts in this matter as it involved a summary judgment motion in which cross examinations had already been completed and positions on the merits of the action committed. Furthermore, the court held that the plaintiffs could seek leave to amend their statement of claim after the motion for summary judgment was heard and determined.
[29] In addition to Cosentino, Trident relies on a substantial body of jurisprudence in support of its position that the court will generally not permit amendments to pleadings typically in the context of pending motions to strike pleadings.
[30] These other cases relied upon by Trident generally dealt with parties who unilaterally purported to deliver amended pleadings (in actions) to cure deficiencies in response to motions to strike or otherwise dispose of the action. In many of these matters, the party attempting to amend the pleading had not sought leave of the court or consent of the parties to amend.
[31] For example, in Rooney et al. v. Woodland Park et al., 2011 ONSC 6758, at. paras. 13-15, the self-represented plaintiffs purported to amend their statement of claim without seeking consent or obtaining leave in the face of a motion to strike. In Rooney, while the motion to strike was granted, it was done without prejudice to the plaintiffs’ right to seek further amendments pursuant to the rules.
[32] Similarly in another case relied upon by Trident, Lasalle Bank National v. Mundi, 2004 CanLII 56082 (Ont. S.C.), the plaintiff purported to file an amended statement of claim without obtaining consent or leave of the court in the face of a motion to strike. Again, while the court granted the motion to strike, it did so without prejudice to the plaintiff’s right to move for leave to file an amended statement of claim to cure the deficiencies.
[33] In Gurniak v. Saskatchewan Government Insurance, 2016 SKQB 391, the purported amendment was delivered while the decision on a motion to strike was under reserve. This too is distinguishable from the present matter.
[34] In my view, the proposed amendments will not cause prejudice to Trident that could not be compensated for by costs or an adjournment. Indeed, an adjournment was granted, and I have received fulsome argument in the form of multiple facta from Trident and LRC on the merits of the additional grounds asserted by LRC to justify service ex juris and establish jurisdiction simpliciter, should leave be granted.
Should leave to amend be granted?
[35] Trident further submits that even in the absence of non-compensable prejudice, I should deny leave to amend since the proposed amendments constitute an abuse of process, fail to conform with the rules of pleadings, and/or are untenable at law: National Trust Co. v. Furbacher, [1994] O.J. No. 2385 (Gen. Div.), at para. 6.
[36] In Marks v. Ottawa (City), 2011 ONCA 248, 280 O.A.C. 251, at para. 19, the Court of Appeal stated that a proposed amendment must show an issue “worthy of trial and prima facie meritorious” and “must contain sufficient particulars.” Trident’s complaint largely focuses on the lack of particulars to support LRC’s proposed reliance on the additional subrules, and on the addition of the tort claim of inducing breach of contract.
[37] However, as LRC points out, and I agree, the requirements for the content of a notice of application are not the same as the requirements for the content of a pleading, including a statement of claim. A notice of application is only required to state the precise relief, grounds to be argued, and evidence to be relied upon at the hearing of the application. As observed by the Ontario Court of Appeal in 1100997 Ontario Ltd. v. North Elgin Centre Inc., 2016 ONCA 848, 409 D.L.R. (4th) 382, at para. 16, it is the supporting evidence that typically contains the relevant facts — not the notice of application.
[38] Furthermore, the test for amending a pleading, and by analogy a notice of application, is whether it is plain and obvious that the proposed amendments would not succeed at the hearing: Durakovic v. Guzman et al., 2018 ONSC 645, at para. 10. It is a low threshold.
[39] In my view, leave ought to be granted to LRC to amend its Notice of Application to plead reliance on subrules 17.02(f)(ii) (consented to), 17.02(g), and 17.02(p) and to add the claim of the tort of inducing breach of contract. This matter is at an early stage of the proceedings. Trident was provided with an adjournment and has fully responded to LRC’s proposed amendments within its motion to set aside service ex juris and, alternatively, to stay or dismiss the application as against it on the ground of a lack of jurisdiction simpliciter. Trident can also be compensated by costs if appropriate.
[40] I am not satisfied that the proposed claims are legally untenable, or that the claims, when viewed in the context of the evidentiary record before the court, lack sufficient particulars. I am also not satisfied that it is plain and obvious that these grounds would not succeed for purposes of the jurisdiction motion.
[41] Importantly, Trident has not persuaded me that it would have taken a different position on its motion based on the originally framed Notice of Application. Its witnesses were not cross-examined, and it has not sought to adduce any evidence that might be inconsistent with its original position. Indeed, its current position is consistent with the position outlined in Trident’s original factum. In other words, there is no “prejudice,” as defined by the jurisprudence, that cannot be compensated by an adjournment (already granted) or costs.
[42] Accordingly, LRC’s motion to amend its Notice of Application in the form attached to its Notice of Motion as Schedule “A” (referred to in the materials as the “Second Amended Notice of Application”), is granted.
iii. Preliminary Issue – Consent-Based Jurisdiction
[43] By way of a preliminary issue, LRC submits that Trident voluntarily attorned to this court’s jurisdiction by engaging in the merits of the application through its affidavits that were submitted in connection with Trident’s current jurisdiction motion. Trident disagrees and submits that the affidavit materials submitted were entirely for the jurisdiction motion. Additionally, Trident submits that any evidence that also addresses the merits of the application is necessary for the hearing of the jurisdiction motion, as it provides context for its jurisdiction arguments.
[44] LRC relies on Van Damme v. Gelber, 2013 ONCA 388, 115 O.R. (3d) 470, leave to appeal refused, 2013 CanLII 81914, in support of its position. However, Van Damme does not go as far as LRC suggests.
[45] In Van Damme, the appellant (Gelber) disputed the jurisdiction of the New York court when resisting the respondent’s motion to enforce the judgment issued by that court. The motion judge found that Gelber had voluntarily attorned to the jurisdiction of the New York court by having brought a motion for summary judgment challenging the merits of Van Damme’s claim in that court. Had the New York court granted summary judgment, Gelber would have accepted that result.
[46] The Ontario Court of Appeal upheld the motion judge’s decision and, at paras. 23-25, stated,
[23] There is also authority for the proposition that, if a party appears in a court to challenge jurisdiction or seek a stay on the basis of forum non conveniens, any additional steps taken by the party pursuant to an order of the court will also not amount to attornment: see Gourmet Resources International Inc. (Trustee of) v. Paramount Capital Corp., [1991] O.J. No. 2293, 5 C.P.C. (3d) 140 (C.A.); M.J. Jones Inc. v. Kingsway General Insurance Co. (2004), 2004 CanLII 6211 (ON CA), 72 O.R. (3d) 68, [2004] O.J. No. 3286 (C.A.), at paras. 18-31 (per Lang J.A., in Chambers). Giving these cases their widest reasonable reading, Gelber's motion challenging the jurisdiction of the New York court, his filing of a defence, and his conduct of depositions and discoveries did not amount to attornment.
[24] Gelber's conduct in advancing a motion for summary judgment dismissing Van Damme's claims, however, went far beyond his jurisdictional challenge. Nor was that motion precipitated by any court order. Gelber chose to advance substantive defences on the merits. In doing so, he implicitly accepted that the New York court had jurisdiction to decide those issues. That is attornment: see Clinton v. Ford (1982), 1982 CanLII 1906 (ON CA), 37 O.R. (2d) 448, [1982] O.J. No. 3336 (C.A.), at p. 452 O.R.
[25] Gelber's position is similar to that of the defendants in Mid-Ohio Imported Car Co. v. Tri-K Investments Ltd., 1995 CanLII 2084 (BC CA), [1995] B.C.J. No. 2199, 13 B.C.L.R. (3d) 41 (C.A.). In that case, the defendants had challenged the jurisdiction of the Ohio court, but had also raised other arguments before that court. The plaintiff was successful in Ohio and sought to enforce the Ohio judgment in British Columbia. The defendants resisted, claiming that by challenging the jurisdiction of the Ohio court, they could not be taken as having attorned to the jurisdiction of that court. Wood J.A., at paras. 15-16, accepted that a defendant does not attorn by challenging jurisdiction. He went on, however, to hold [at para. 16]:
In this case, all respondents who are presently before this court applied for an order that the plaintiff's claim of fraud be struck for lack of particularity. Had the Ohio court ruled in their favour on that application, they would unquestionably have accepted the judgment. In my view, they must equally accept the decision against them, because by combining that application with one that challenged the jurisdiction of the Ohio court, they thereby attorned to that court's jurisdiction over them in the dispute as a whole.
[47] It is clear that the courts will look for something beyond the content of the affidavits and cross-examinations tendered in relation to a jurisdiction motion, such as an independent motion attacking the merits of the claim, in order to find consent-based jurisdiction.
[48] I agree with Trident. The affidavits submitted in support of its jurisdiction motion, including that of its expert opinion on Nevada law and its application to the Royalty, do not constitute a fresh step in the proceeding. The affidavits were submitted solely in support of its jurisdiction. The fact that these affidavits also touch on the merits of the application is to be expected in jurisdiction challenges since it provides context and/or is relevant to challenging the presumptive connecting factors in a jurisdiction simpliciter analysis. As such, Trident has not voluntarily attorned to the jurisdiction of this court by virtue of the affidavits it tendered in support of its jurisdiction motion, and there is no consent-based jurisdiction.
iv. Service Ex Juris
[49] Rule 17.02 enumerates the grounds under which a party may validly serve out-of-province defendants. If the serving party is unable to establish any of the enumerated grounds, then service must be set aside. I recognize that the jurisprudence suggests that the jurisdiction simpliciter issue ought to be decided before the service ex juris issue. However, the parties did not present their arguments in that order, and in any event, the order of presentation does not make any practical difference to my analysis.
[50] LRC asserts the following subrules to demonstrate that its service on Trident falls under r. 17.02:
(a) rule 17.02(f)(i): the alleged contract entered into between LRC and Orion was made in the Province of Ontario;
(b) rule 17.02(f)(ii): the alleged contract between LRC and Orion contains a provision that the law of Ontario will apply;
(c) rule 17.02(f)(iv): Orion’s breach of the alleged contract was committed in Ontario rendering performance of the alleged contract in Ontario impossible;
(d) rule 17.02(g): Trident committed the alleged tort of inducing breach of contract in Ontario (since it arises from a dispute connected with a contract made in Ontario) ; and
(e) rule 17.02(p): Orion carries on its investment business in Ontario.
[51] In addition, LRC seeks to add a prayer for relief in relation to its tort claim; it seeks a declaration that by its conduct Trident induced a breach of the oral contract by Orion and, in the alternative, damages should be ordered.
v. Rule 17.02 – Was Service Validly Effected?
[52] Trident brings this motion in part for an order setting aside service ex juris.
[53] In determining whether a claim falls within one of the service ex juris provisions under r. 17.02 the notice of application and the evidence filed in support of the application will determine whether any of the grounds enumerated under r. 17.02 have been satisfied. However, where evidence is filed by the foreign defendant challenging service ex juris, the court must assess all of the evidence. The threshold for determining whether a ground for service ex juris has been established is low.
[54] The party relying on r. 17.02 must demonstrate that the application supports an arguable claim: Ontario (Attorney General) v. Rothmans Inc., 2013 ONCA 353, 115 O.R. (3d) 561, at paras. 53-54, leave to appeal refused, 2013 CanLII 83800 (S.C.C.); Inukshuk, at para. 19.
Rule 17.02(f)(i) – Was the contract between Orion and LRC made in Ontario?
[55] LRC relies on the allegation that the oral contract between Orion and LRC was formulated in Ontario. It submits that the acceptance of the contract was communicated and received in Ontario because LRC’s representatives were physically present in Ontario when they received Orion’s email (from Mr. Clegg) confirming acceptance of the deal on January 20, 2021. Furthermore, Orion communicated acceptance of the offer by email similarly delivered to LRC through the Toronto based server of Waratah Capital on January 20, 2021. LRC submits that through the videoconference call and the subsequent same day exchange of emails, the essential terms of the contract were established. In the alternative, at the latest a contract was formulated by January 26, 2021 after a term sheet was delivered. It is worth repeating that Orion disputes the formulation of the alleged contract with LRC.
[56] LRC submits that, at minimum, the dispute with Trident as pleaded in the Second Amended Notice of Application establishes a connection with the contract it alleges existed between it and Orion. For this analysis, Trident need not be a party to the disputed contract so long as the dispute between Trident and LRC is connected with a contract that was made in Ontario: Lapointe Rosenstein Marchand Melançon LLP v. Cassels Brock & Blackwell LLP, 2016 SCC 30, [2016] 1 S.C.R. 851, at para. 44.
[57] Trident submits that the alleged contract between LRC and Orion was formed in the United Kingdom because LRC in fact accepted Orion’s offer, and LRC’s email communicating acceptance was received by Orion in the United Kingdom. Furthermore, Trident submits that the evidence establishes that Mr. Ortiz of LRC was in Florida when he sent the email to Mr. Clegg of Orion irrespective of whether the email was transmitted through a server located in Toronto.
[58] Trident submits that it is well established law that the location of where a contract is made is determined by the location of the offeror when they receive the email accepting the offer. This is well established in cases such as Inukshuk Wireless Partnership v. Nextwave Holdco LLC et al, 2013 ONSC 5631, 117 O.R. (3d) 206, at para. 25.
[59] In Touchup RX v. Dr. Colorchip, 2020 ONSC 3068, at para. 65, the court held,
Acceptance of an offer by an offeree must be communicated to the offeror before a contract can be regarded as concluded. A contract is formed when and where acceptance is received by the offeror, not where it is sent. (Eastern Power Ltd. v. Azienda Communale Energia and Ambiente 1999 CanLII 3785, (1999), 178 D.L.R. (4th) 409 (Ont. C.A.) at para. 24, leave to appeal ref’d). The place of contract formation is the location the offeror receives the offeree’s acceptance of the agreement (Trillium Motor World Ltd. v. General Motors of Canada Ltd., 2014 ONCA 497 at paras. 66-68)…
Although there was once a postal exception to this rule – which held that the location where an acceptance was mailed determined the place of contract formation – this exception was born of commercial expedience and did not apply where the communication was instantaneous, such [as] where it is sent by telex, facsimile or, as here, email (Inukshuk Wireless Partnership v. NextWave Holdco LLC et al, 2013 ONSC 5631, at paras. 25-29; Christmas v. Fort McKay, 2014 ONSC 373, at paras. 18-19)
[60] Trident responds that it is obvious that the contract was formulated outside of Ontario. Orion is based in the United Kingdom. The Royalty is related to mining lithium in the state of Nevada. Trident submits that the fact that the emails purporting, according to LRC, to have constituted the offer and acceptance were transmitted through a server based in Toronto does not alter the fact that the recipient of the acceptance was physically elsewhere when the email was received.
[61] LRC pleads that the alleged oral contract that is at the heart of this dispute was negotiated during a videoconference call on January 20, 2021 between representatives of LRC and Orion, insofar as that is when the essential elements of the contract were concluded.
[62] Mr. Levinsky was one of the LRC’s representatives at this videoconference call. He deposed that he specifically confirmed with Mr. Clegg that he had authority, on behalf of Orion, to conclude the deal on the terms discussed during the course of the videoconference call. Mr. Clegg confirmed both his authority and that an email acceptance from LRC reflecting these terms would be sufficient to conclude the deal.
[63] Mr. Levinsky further deposed that shortly after the videoconference call, his colleague, Mr. Ortiz, sent an email to Mr. Clegg through the Toronto server of Waratah Capital, in which he accepted Orion’s alleged offer as follows:
Hi Philip,
We accept your offer of USD$198.7m in cash for 85% of the Thacker Pass royalty held by Orion. On closing, the 85% and 15% portion of the royalties shall be divided into two separate royalties with any repayment split accordingly.
Binding term sheet to follow.
Thanks,
Ernie
[64] Mr. Levinsky further deposed that Mr. Clegg responded shortly afterwards and confirmed the deal:
Ernie,
Ok, sounds good.
Best,
Philip
[65] LRC submits that because the email correspondence was exchanged through a server based in Toronto, the location of the contract acceptance was in Toronto. LRC further submits that the acceptance was really Mr. Clegg’s responding email to Mr. Ortiz’s email in which Mr. Clegg states “Ok, sounds good”, thus confirming the acceptance of the deal. In addition, Mr. Levinsky and Mr. Wellings were physically in Ontario at the time of the videoconference call and the email exchange. However, I do not accept this submission. It is clear on the face of Mr. Ortiz’s email that it was LRC that accepted Orion’s offer. There is uncontroverted evidence that Mr. Clegg was in the United Kingdom during the video conference call and when he received Mr. Ortiz’s email accepting the alleged offer on behalf of LRC.
[66] I also do not accept that the fact that LRC was using a server that was located in Toronto at the time of this email exchange determines the location of acceptance of the email by Mr. Clegg in this case. I do not agree that the British Columbia Court of Appeal’s decision in Equustek Solutions Inc. v. Google Inc., 2015 BCCA 265, 386 D.L.R. (4th) 224, at para. 20, aff’d 2017 SCC 34, [2017] 1 S.C.R. 824) stands for the proposition at large that the location of a server through which emails are exchanged establishes the location at which an emailed acceptance was received for the purpose of establishing where a contract was made.
[67] Importantly, LRC premised its application on the proposition that the essential terms of the alleged contract were concluded over the course of the January 20, 2021 videoconference, followed by Mr. Ortiz’s email acceptance of Mr. Clegg’s purported oral offer to sell the Royalty. The fact that Mr. Clegg then acknowledged Mr. Ortiz’s email ostensibly confirming the transaction does not change the place the acceptance of the offer was received, in this case, the United Kingdom.
[68] Accordingly, for purposes of this motion, there is not a good arguable case that the acceptance of Orion’s alleged offer was received in Ontario. Therefore, there is not a good arguable case that the alleged contract was made in Ontario.
Rule 17.02(f)(ii) – Was the contract between Orion and LRC to be governed by the law of Ontario?
[69] LRC also submits that the term sheet that was sent by it to Orion on January 22, 2021 and marked up by Orion on January 26, 2021 had a provision indicating that the laws of Ontario and Canada would govern the contract. Further, LRC submits that Orion accepted that term. The term sheet is alleged to be part of the binding terms of the contact.
[70] The term sheets, filed in evidence, reflect this choice of law provision.
[71] Orion disputes that there was any binding contract with LRC, and that there was therefore any binding term sheet. As deposed by Mr. Clegg, Orion says it never agreed to the terms in the term sheet; it was a proposal by LRC and subject to overall negotiation of a “potential” deal. However, Orion did not lead evidence to suggest that it altered the choice of law provision reflected in the term sheet.
[72] Trident also submits that LRC’s reliance on the term sheet as forming part of the alleged contract is inconsistent with its position that the contract was already made as of the videoconference call and subsequent email correspondence of January 20, 2021. However, this overstates the proposition advanced by LRC. LRC submitted that the essential terms of the contract were agreed to and accepted by it on January 20, 2021 and that the term sheet contained additional terms. It may be that Trident is ultimately correct, after a determination on the merits of LRC’s claims. However, at this stage of the proceeding, LRC need only establish that it has a good arguable case; in other words, it must show that if LRC’s facts (as revealed in its affidavits) are found to be true at the hearing of this matter then the choice of law provision is capable of being construed as a term of the alleged contract.
[73] Accordingly, LRC has a good arguable case that, assuming the alleged contract with Orion is valid and enforceable, it contained a provision that Ontario law was to govern. Therefore, the Notice of Application was properly served on Trident under r.17.02(f)(ii).
Rule 17.02(f)(iv) – Was a breach of contact committed in Ontario?
[74] The contract at issue is the alleged contract between LRC and Orion.
[75] LRC submits that but for the wrongful interference by Trident, the alleged contract would have been performed in Ontario.
[76] However, I agree with Trident that as it was not a party to the alleged contract between Orion and LRC, it could not have, and did not, breach that contract. This proposition is supported by the uncontroverted evidence that Trident’s dealings with Orion were carried out in locations outside of Ontario (and Canada for that matter).
Rule 17.02(g) – Did Trident commit a tort in Ontario?
[77] It is LRC’s position that Trident induced Orion to breach Orion’s alleged contract with LRC.
[78] The tort of inducing breach of contract has four elements:
(a) the plaintiff had a valid and enforceable contract;
(b) the defendant was aware of the existence of the contract;
(c) the defendant intended to, and did, procure a breach of that contract;
(d) as a result of the breach, the plaintiff suffered damages: Szecsodi v. MGM Resorts International, 2014 ONSC 1323, at para. 61.
[79] Trident submits that there is no evidence in the record that supports the second through fourth elements of the tort; therefore, there is no good arguable case to be made out against it under tort.
[80] LRC’s argument is again premised on the assumption that the alleged contract was made in Ontario. If the contract was made in Ontario, then the tort alleged against Trident arose from an Ontario contract. LRC relies on the Supreme Court of Canada decision rendered in Lapointe.
[81] Lapointe, at paras. 36 and 44, stands for the proposition that the court may assume jurisdiction over a non-contractual party (in a contract based matter) if the dispute against the non-contractual party is in relation to a contract that was made in the jurisdiction, such as to bring that party within the scope of the contractual relationship:
[36] Because this case engages the fourth presumptive connecting factor, namely whether a contract connected with the dispute was made in Ontario, it is necessary to identify the dispute. It must then be determined whether the dispute is connected to a contract “made” in the province where jurisdiction is proposed to be assumed: Van Breda, at para. 90.
[44] It is worth noting that nothing in Van Breda suggests that the fourth factor is unavailable when more than one contract is involved, or that a different inquiry applies in these circumstances. Nor does Van Breda limit this factor to situations where the defendant’s liability flows immediately from his or her contractual obligations, or require that the defendant be a party to the contract … It is sufficient that the dispute be “connected” to a contract made in the province or territory where jurisdiction is proposed to be assumed: Van Breda, at para 117. This merely requires that a defendant’s conduct brings him or her within the scope of the contractual relationship and that the events that give rise to the claim flow from the relationship created by the contract: paras. 116-17.
[82] While the analysis in Lapointe was focused on the jurisdiction simpliciter test, it is nonetheless applicable to this r. 17.02 analysis. However, for LRC’s proposition to work under the service ex juris analysis, it must have demonstrated that its alleged contract with Orion was made in Ontario. As I have determined based on the evidence that there is not a good arguable basis to support the allegation that the alleged contract between LRC and Orion was formed in Ontario, this argument must fail.
17.02(p) – Does Orion carry on business in Ontario?
[83] LRC submits that there is sufficient evidence in the record to give rise to a good arguable case that Orion carries on business in Ontario. However, as pointed out by Trident, the difficulty with this submission is that LRC named the wrong Orion entity.
[84] The limited evidence adduced on cross-examination was that Orion was “involved” in some transactions that related to projects in Ontario. LRC also adduced evidence that Orion is an investment business, and that it has some investments in Ontario.
[85] In any event, LRC has not raised an arguable case on its Second Amended Notice of Application or on the evidence to sustain this ground as a valid basis for service ex juris as against Trident. Rule 17.02(p) must relate to the foreign defendant who is challenging service and the jurisdiction of this court. There is no evidence that Trident carries on business in Ontario, nor was that proposition advanced by LRC. In my view, r. 17.02(p) relates to the foreign defendant against whom service ex juris is being effected.
vi. Does this Court Have Jurisdiction Simpliciter Over Trident?
[86] Having found that service was validly effected upon Trident under r. 17.02(f)(ii), I must now determine whether this court has jurisdiction simpliciter over Trident. Of note, the parties have not advanced a forum non conveniens argument at this motion.
[87] The burden is on LRC to show that it has a good arguable case for the assumption of jurisdiction, or that its case has “some chance of success”: Rothmans, at para. 54; Harrow and S.L. v. DeWind Turbines Ltd., 2014 ONSC 2014, at paras. 70–71, 73.
[88] Van Breda, at para. 90, established four presumptive connecting factors in tort, any of which will raise a rebuttable presumption of jurisdiction:
the defendant is domiciled or resident in the province;
the defendant carries on business in the province;
the tort was committed in the province; or
a contract connected with the dispute was made in the province.
[89] In Comstock Canada Ltd. v. SPI Systems Ltd., 2011 ONSC 2652, at para. 10, the court, relying on Muscutt v. Courcelles, 2002 CanLII 44957 ONCA, held that if the case falls within one of the connections listed in r. 17.02 (with the exception of r. 17.02(h) and (o)), a real and substantial connection for the purposes of an Ontario court’s assumption of jurisdiction against the defendant shall be presumed to exist.
[90] However, in Van Breda, the Supreme Court examined the then existing list of factors under r. 17.02 and developed the abovementioned list of presumptive connecting factors. In so doing, it excluded certain of the grounds under r. 17.02 from that list.
[91] LRC is domiciled in Ontario. However, the Supreme Court in Van Breda, at para. 86, expressly excluded the presence of the plaintiff in the jurisdiction as a sufficient connecting factor on its own to justify assertion of jurisdiction simpliciter over a foreign defendant.
[92] I have found that there is a good arguable case that the alleged contract has a choice of law covenant designating Ontario law as the governing law. However, that factor has also been rejected as a connecting factor sufficient in and of itself to give rise to the requisite real and substantial connection required for this court to assert jurisdiction simpliciter over a foreign defendant. For example, in Christmas, at paras. 21-22, the court stated:
[21] In my view, a Choice of Law provision should not be a new presumptive connecting factor for assuming jurisdiction in the circumstances of this case. Presumptive factors are those which connect the Defendant to the jurisdiction chosen by the Plaintiff in a real and substantial way. In this case, the Defendant agreed with the Plaintiff that Ontario law would apply to any dispute under the contract. Imposing jurisdiction on the Defendant solely as a result of its agreement on choice of law would unfairly broaden the scope of its contractual agreement to choice of forum in addition to choice of law. The parties themselves limited their agreement to choice of law.
[22] Moreover, Choice of Law is properly a consideration for the court when analyzing forum non conveniens. It is an error in law to conflate the legal test relating to forum non conveniens with the test for jurisdiction simpliciter: see Van Breda, at para. 101. Choice of Law is also one of the presumptive factors that permit a party to serve another party outside Ontario, pursuant to Rule 17.02(f)(ii) of the Rules. It is a proper procedural consideration only after jurisdiction is established.
See also, We Serve Health Care LP v. Onasanya, 2018 ONSC 1758 at para 58.
[93] LRC has not raised a good arguable case under any of the four presumptive connecting factors established by Van Breda and repeated in Lapointe exist with respect to Trident.
[94] On the other hand, the relief sought against Orion (specific performance of the alleged contract) clearly implicates Trident, since such a remedy would require Trident’s agreement to buy the Royalty to be undone. The Royalty has already been conveyed by Orion to Trident. If this matter proceeds without Trident as a party, a court may be reluctant to grant specific performance that will directly affect a party not before the court. However, this consideration, while relevant to a forum non conveniens argument, is not relevant to a jurisdiction simpliciter assessment.
[95] Orion has not disputed the jurisdiction of this court to adjudicate the claims against it. Indeed, it filed a response to the merits of LRC’s application. If LRC is forced to commence proceedings against Trident in another jurisdiction, this could give rise to inconsistent results if this Court ultimately deems specific performance to be the appropriate remedy as opposed to damages against Orion for breach of contract. However, again while this might be a valid consideration under a forum non conveniens argument, it is not relevant to a jurisdiction simpliciter assessment, based on the current recognized presumptive connecting factors.
[96] Notably, LRC has not advanced any case under jurisdiction simpliciter that recognizes that one foreign defendant’s attornment to a domestic forum is binding on another foreign defendant who contests jurisdiction. Furthermore, LRC did not advance the proposition that a new presumptive connecting factor ought to be established on the facts of this case.
[97] This poses a perhaps unique situation since Orion has voluntarily attorned to the jurisdiction of this court to have the validity of the alleged contract determined in Ontario, irrespective of where the alleged contract was made.
[98] In Lapointe, the court noted that there must be a “real” relationship between the subject matter of the litigation and the proposed forum: para. 27. Furthermore, at para. 30, the court reiterated LeBel J.’s observation from para. 82 of Van Breda that the list of presumptive connecting factors must be updated “as the needs of the system evolve” and:
Van Breda did not purport to set out “a complete code of private international law”; it specifically foresaw that the principles and factors governing jurisdiction would be “developed as problems arise before the courts”: para. 68 [citing Van Breda].
[99] On the other hand, the Supreme Court in Van Breda, at para. 91, provided the parameters for developing new presumptive connective factors. LRC did not address these factors.
[100] There is some sense to the proposition that the entire dispute relating to the ownership of the Royalty should be resolved before the same court. This would promote judicial efficiency, avoid a multiplicity of proceedings and avoid possible conflicting findings in different courts. However, these factors are also only relevant to a forum non conveniens analysis.
[101] LRC also placed much emphasis on the fact that Trident was well aware of LRC’s claim of ownership and the real prospect it would be joined in litigation that was based in Ontario. Indeed, Trident sought and received an indemnity from Orion to provide some measure of protection (the indemnity has not been produced in this litigation to date), and Trident anticipated that it might be brought into litigation between LRC and Orion (and was put on notice by a letter dated March 19, 2021 from LRC’s present lawyers). This is reflected in Trident’s own press release announcing its purchase of the Royalty (Trident is referred to as the “Company”) issued on March 19, 2021 that stated, in part:
Prior to the Company's agreed acquisition of the Thacker Pass royalty, Orion Resource Partners had engaged with other parties in respect of a possible sale of the royalty. One unsuccessful bidder has commenced legal proceedings in Ontario, Canada against Orion Resource Partners alleging that there was an oral agreement that gave rise to a binding agreement of purchase and sale and is seeking an order for specific performance in respect of that alleged agreement. Orion Resource Partners has informed the Company that it denies that there was an oral agreement, believes that the claims lack merit and has indicated that it will vigorously defend the proceedings. Following its due diligence process, the Company also believes that the allegations lack merit and believes that an award for specific performance has a weak prospect of success. Notwithstanding this, Trident believes that, in light of the remedy being sought, it may be joined as a party to the existing litigation as a matter of process, which would not in itself be viewed by the Company as material. As with all litigation, the outcome of any current or future legal proceedings cannot be predicted with certainty and may be determined adversely to the Seller and/or the Company. As any such adverse outcome could otherwise have a material adverse effect on the Company and its assets, liabilities, business, financial condition and results of operations, the Seller has provided the Buyer with an indemnity (subject to customary limitations and exclusions) and which is guaranteed by Orion, in connection with certain potential claims which may arise in the context of the transaction and in particular in connection with any such claims made against Orion Resources Partners. [Emphasis added.]
[102] However, the fact that Trident may have entered into this transaction with Orion with its eyes wide open and the knowledge it could be joined into litigation in Ontario again does not fall within one of the presumptive connecting factors.
[103] In the end, LRC did not advance any submission to the effect that a new presumptive connecting factor should be established to recognize circumstances in which a real and substantial connection is created between one foreign defendant and the forum where a foreign co-defendant voluntarily attorns to the domestic forum or the objecting foreign defendant was aware of the prospect of being joined into litigation in the foreign forum. Accordingly, this issue must await another day.
[104] Instead, LRC relied on a number of non-presumptive connecting factors (in addition to the failed presumptive connecting factors). This is not sufficient to vest jurisdiction simpliciter in this court.
[105] As the Supreme Court in Van Breda stated, at para. 93,
If, however, no recognized presumptive connecting factor — whether listed or new — applies, the effect of the common law real and substantial connection test is that the court should not assume jurisdiction. In particular, a court should not assume jurisdiction on the basis of the combined effect of a number of non-presumptive connecting factors. That would open the door to assumptions of jurisdiction based largely on the case-by-case exercise of discretion and would undermine the objectives of order, certainty and predictability that lie at the heart of a fair and principled private international law system.
[106] Accordingly, as LRC did not establish any presumptive connecting factor against Trident, this court does not have jurisdiction simpliciter over Trident.
D. DISPOSITION AND COSTS
[107] LRC’s motion to amend is granted.
[108] Trident’s motion is also granted and the application as against it is stayed.
[109] If needed, the parties may request a further case conference before me to settle the terms of this Order and the draft Order regarding the conversion of this matter to an action and the associated timetable already proposed.
[110] If the parties cannot agree on the matter of costs relating to these motions, then Trident will provide its cost outline and written submissions to me by December 3, 2021 and LRC will provide its cost outline and written submissions by December 17, 2021. The written submissions will not exceed 3 pages double spaced from each party. Each party may have 10 days thereafter to provide a brief reply submission no longer than 2 pages double spaced.
Justice S. Vella
Date: November 22, 2021
COURT FILE NO.: CV-21-00656830-0000
DATE: 20211122
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
LITHIUM ROYALTY CORPORATION
Applicant
– and –
ORION RESOURCE PARTNERS, TRIDENT ROYALTIES PLC and LITHIUM AMERICAS CORPORATION
Respondents
REASONS FOR DECISION (Jurisdiction Motion by Trident)
Vella J.
Released: November 22, 2021