Court File and Parties

COURT FILE NO.: CV-20-00637082-0000 MOTION HEARD: 20220405 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: KENNETH JAMES and TITHE HOLDINGS S.A., plaintiffs AND: THE HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED, Defendant

BEFORE: Associate Justice R. Frank COUNSEL: Mark Evans and Ara Basmadjian for the defendant/moving party Patrick Bakos for the plaintiffs/responding parties HEARD: April 5, 2022

REASONS FOR DECISION

A. INTRODUCTION

[1] This is a motion by the defendant, The Hongkong and Shanghai Banking Corporation Limited, for:

a. an order setting aside the service of the statement of claim on the defendant in Hong Kong, without leave;

b. an order staying this action on the basis that the courts of Ontario lack jurisdiction in this matter as there is no real and substantial connection between the circumstances giving rise to the claim and Ontario; and

c. in the alternative, an order staying this action based on the doctrine of forum non conveniens.

[2] For the reasons outlined below:

a. I find that the court has jurisdiction simpliciter with respect to this action; and

b. I am exercising my discretion to stay the action on the basis that Ontario is forum non conveniens.

B. BACKGROUND FACTS AND PROCEDURAL BACKGROUND

[3] The defendant, HSBC Hong Kong, is a bank incorporated pursuant to the laws of Hong Kong. The defendant’s head office is located in Hong Kong and it has branches located in the Asia-Pacific region. It has no operations in Canada.

[4] The plaintiff, Tithe Holdings S.A. (“Tithe”), is incorporated pursuant to the laws of Panama. Tithe carries on business from offices located in Panama City and the majority of Tithe’s business activities take place in Panama.

[5] The plaintiff, Kenneth James, resides in Ontario. Mr. James was a practicing lawyer in Ontario until late June 2012 after which his license was suspended and then revoked.

[6] In June 2007, and then again in March 2008, James physically attended at the defendant’s branch located at Causeway Bay in Hong Kong and opened personal bank accounts with the defendant. In October 2007, Tithe opened a separate commercial account with the defendant (together with Mr. James’s personal accounts, the “Hong Kong Accounts”).

[7] The officers and directors of Tithe completed account opening documents for the Tithe Hong Kong Account. This occurred in Panama and the account opening documents were sent to the defendant in Hong Kong. Tithe’s Hong Kong Account was opened when Mr. James, representing himself to be the “owner” of Tithe, attended at the defendant’s Causeway Bay branch in Hong Kong and signed certain documentation.

[8] By letters dated April 30, 2012, the defendant informed each of Mr. James and Tithe that the bank had decided to close their accounts (the “Closure Notice Letters”). These Closure Notice Letters advised the plaintiffs to “approach any of our branches to let us have your instruction(s) regarding the disposal of the funds before the due date”, which was 30 days from April 30, 2012. The Closure Notice Letters were received in Ontario.

[9] Mr. James also maintained commercial and professional accounts with HSBC Bank Canada (“HSBC Canada”).

[10] Following receipt of the Closure Notice Letters, Mr. James attended at a branch of HSBC Canada in Richmond Hill, Ontario and obtained assistance delivering instructions to the defendant regarding the disposal of the funds in the Hong Kong Accounts (the “Disposal Instructions”). An HSBC Canada employee in Ontario sent the Disposal Instructions to the defendant in Hong Kong.

[11] The Disposal Instructions instructed the defendant to transfer the funds in the Hong Kong Accounts (the “Funds”) to accounts that Mr. James held with HSBC Canada.

[12] The defendant did not process the Disposal Instructions. Rather, the defendant closed the Hong Kong Accounts and transferred the Funds to a suspense account located in Hong Kong where the Funds remain.

[13] In June 2012, the Defendant delivered to the plaintiffs the monthly statements of the Hong Kong Accounts reflecting zero balances and indicating that all of the Funds on deposit had been “withdrawn” and “debited as advised” on May 31, 2012.

[14] In May 2012, HSBC Canada froze Mr. James’s accounts. In August 2012, Mr. James commenced an action against (the “2012 HSBC Canada Action”). In that action, Mr. James claimed, among other things, damages for conversion of the funds in Mr. James’s accounts with HSBC Canada and damages resulting from wrongful freezing of his HSBC Canada accounts.

[15] In the 2012 HSBC Canada Action, Mr. James alleged that, based on the Disposal Instructions, the Funds had been withdrawn from the Hong Kong Accounts but had not been deposited in his HSBC Canada accounts as provided for in the Disposal Instructions. He further alleged that the Funds had been misappropriated by HSBC Canada.

[16] In its statement of defence in the 2012 HSBC Canada Action, HSBC Canada denied that the defendant had transferred the Funds to the plaintiffs’ HSBC Canada accounts in accordance with the Disposal Instructions but did not provide any further information about the whereabouts of the Funds.

[17] After Mr. James learned that the Funds had not been transferred to HSBC Canada as directed, he made inquiries with the defendant about the status of the Funds.

[18] Ultimately, the defendant’s representatives confirmed that in June 2012 the Funds had been transferred to a suspense account with the defendant in Hong Kong, and that they remain there.

[19] The plaintiffs and the defendant have not been able to agree on terms for the payment of the Funds to the plaintiffs.

[20] By statement of claim issued on February 27, 2020, James and Tithe commenced this action against the defendant. The plaintiffs served the statement of claim on the defendant, without leave, by hand-delivering a copy in Hong Kong.

[21] The defendant has not delivered a statement of defence and has not attorned to the jurisdiction of the Ontario courts.

C. PRELIMINARY EVIDENTIARY ISSUES

[22] The plaintiff’s responding affidavit evidence includes an affidavit of Mr. James sworn March 15, 2021. Exhibit “W” to that affidavit contains documents that were produced in the 2012 HSBC Canada Action. None of those documents were previously filed with the court.

[23] At the hearing of the motion, the defendant objected to the plaintiffs’ use of the documents on this motion as a violation of the deemed undertaking rule (Rule 30.1). The plaintiffs argued that the exceptions under Rule 30.1.01(4)-(8) apply and that the documents in issue are properly before the court. I reserved on the issue of whether the exceptions under Rule 30.1.01(4)‑(8) apply in the circumstances.

[24] Having reviewed the record and considered the submissions of the parties, I find that none of the exceptions under Rule 30.1.01(4)-(8) apply and that the documents at Exhibit “W” to the March 15, 2021 affidavit of Mr. James remain subject to the deemed undertaking rule. As a result, those documents are not properly in evidence on this motion, and I have disregarded them for purposes of deciding this motion.

[25] The plaintiff also sought leave to introduce into evidence the transcripts from the examination for discovery of Charles Perry as a representative of the defendants in the 2012 HSBC Canada Action. The examinations for discovery took place on March 26, 2018 and May 14, 2018.

[26] The defendant objected to the plaintiffs’ request for leave on the basis that: (1) the transcripts are subject to the deemed undertaking rule; and (2) the defendant only received notice of the plaintiffs’ intention to seek leave to file the transcripts in support of this motion after 4:00pm on the day before the hearing of the motion, and the defendant immediately advised the plaintiffs that it objected to the plaintiffs’ request for leave to file the discovery transcripts in the record for this motion.

[27] I note the plaintiffs’ extraordinarily late notice to the defendants that they would be seeking leave to introduce evidence on this motion that they have known about since 2018. I also note that the deadline for delivery of motion materials had long since passed. In any event, at the hearing of the motion, I held that the discovery transcripts were not accepted into evidence on that basis of the deemed undertaking rule and because none of the exceptions under Rule 30.1.01(4)‑(8) apply. I have disregarded the discovery transcripts for purposes of deciding this motion.

D. LAW AND ANALYSIS

(1) Jurisdiction simpliciter – general principles

[28] There are three bases for asserting jurisdiction in personam over an out-of-province defendant:

a. the foreign 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.[^1]

[29] The Supreme Court has explained the distinction between the traditional jurisdictional grounds (presence-based jurisdiction and consent-based jurisdiction) and assumed jurisdiction as follows:

82 Van Breda was a case about assumed jurisdiction, one of three bases for asserting jurisdiction in personam over an out-of-province defendant. The other two bases, known as the “traditional” jurisdictional grounds, are presence-based jurisdiction and consent-based jurisdiction: Muscutt v. Courcelles (2002), 2002 CanLII 44957 (ON CA), 60 O.R. (3d) 20 (Ont. C.A.), at para. 19.

84 While Van Breda simplified, justified, and explained many critical aspects of Canadian private international law, it did not purport to displace the traditional jurisdictional grounds. LeBel J. explicitly stated that, in addition to the connecting factors he established for assumed jurisdiction, “jurisdiction may also be based on traditional grounds, like the defendant’s presence in the jurisdiction or consent to submit to the court’s jurisdiction, if they are established”: para. 79. In other words, “[t]he real and substantial connection test does not oust the traditional private international law bases for court jurisdiction”: ibid.[^2]

[30] In Van Breda v Village Resorts Ltd,[^3] the Supreme Court considered the real and substantial connection test with respect to the assumption of jurisdiction, and its application in the context of a tort action. Lebel J. summarized the key principles as follows:

To recap, to meet the common law real and substantial connection test, the party arguing that the court should assume jurisdiction has the burden of identifying a presumptive connecting factor that links the subject matter of the litigation to the forum.[^4]

[31] In a case concerning a tort, the following factors are presumptive connecting factors that, prima facie, entitle a court to assume jurisdiction over a dispute:

a. the defendant is domiciled or resident in the province;

b. the defendant carries on business in the province;

c. the tort was committed in the province; and

d. a contract connected with the dispute was made in the province.[^5]

[32] The above list of presumptive factors is not exhaustive, and courts may identify additional presumptive factors.[^6]

[33] In Van Breda, the Supreme Court outlined the following test for assuming jurisdiction on the basis that a foreign defendant carries on business in the jurisdiction:

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.[^7]

[34] In Chevron, the Supreme Court added the following with respect to carrying on business in a province (for the purpose of establishing presence‑based jurisdiction):

85 To establish traditional, presence-based jurisdiction over an out-of-province corporate defendant, it must be shown that the defendant was carrying on business in the forum at the time of the action. Whether a corporation is “carrying on business” in the province is a question of fact: Wilson v. Hull (1995), 1995 ABCA 374, 174 A.R. 81 (Alta. C.A.), at para. 52; Ingersoll Packing Co. v. New York Central & Hudson River Railway (1918), 42 O.L.R. 330 (Ont. C.A.), at p. 337. In Wilson, in the context of statutory registration of a foreign judgment, the Alberta Court of Appeal was asked to assess whether a company was carrying on business in the jurisdiction. It held that to make this determination, the 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”: para. 13. These factors are and always have been compelling indicia of corporate presence; as the cases cited in Adams v. Cape Industries Plc (1989), [1990] 1 Ch. 433 (Eng. C.A.), at pp. 467-68, per Scott J., demonstrate, the 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”: para. 87.[^8]

[35] In Beijing Hehe, Justice Perell explained the test for determining whether a tort was committed in Ontario as follows:

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. For example, the torts of fraudulent or negligent misrepresentation occur where the misinformation is received or acted upon. 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.[^9]

[36] For the court to have jurisdiction over an action, it is sufficient that one of the claims made in the action is presumptively connected with Ontario. The Court of Appeal has explained this principle as follows:

25 Van Breda also says, at para. 99, that where an action involves several claims, it is enough that one of those claims is presumptively connected with Ontario. This gives the Ontario court jurisdiction over all the claims in the action, subject to a rebuttal of the presumption. Anything else, the Supreme Court says, would be incompatible with fairness and efficiency.[^10]

[37] The presumption of jurisdiction that arises where a recognized presumptive connecting factor exists is not irrebuttable. The burden of rebutting it rests on the party challenging the assumption of jurisdiction.[^11] In Beijing Hehe, Justice Perell noted as follows with respect to rebutting a presumptive jurisdictional connection:

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. The ability to rebute (sic) the presumption of jurisdiction serves as an important check on a court overreaching and assuming jurisdiction. 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.[^12]

[38] The Supreme Court has cautioned against conflating the jurisdiction simpliciter test with the forum non conveniens test:

43 In order for a defendant to succeed in showing that “a given connection is inappropriate in the circumstances of the case”, the circumstances 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 jurisdiction” (Van Breda, at paras. 81 and 97; see also para. 92). To satisfy this test, the party challenging the court’s jurisdiction should rely on factors other than those considered at the forum non conveniens stage: “... the factors that would justify a stay in the forum non conveniens analysis should not be worked into the jurisdiction simpliciter analysis...” (Van Breda, at para. 56).[^13]

[39] In Central Sun, the Court of Appeal considered the test for rebutting a presumptive connecting factor in the context of a claim of negligent misrepresentation, reiterating the distinction between the jurisdiction simpliciter test and the forum non conveniens test:

36 The second issue then, is whether the respondents have successfully rebutted that presumption. The motion judge found that they had done so by showing the relative weakness of the Ontario connection.

37 If this finding suggests that jurisdiction depends on a comparison of the relative strength of the connection of the dispute with Ontario on the one hand, and other jurisdictions on the other, that is an erroneous approach in my view. It is at the forum conveniens stage that comparison becomes important. At the jurisdiction stage of the analysis the respondents’ task is to show no real relationship or at most, a weak relationship between the subject matter of the action and the forum.

38 However, my more important reason for differing with the motion judge on this issue draws on the proposition in Van Breda that where a tort is committed in Ontario, rebutting the presumption of jurisdiction would appear to be difficult but may be possible if only a relatively minor element of the tort has occurred in the province. In this case, that simply cannot be shown. As noted above, the core of the tort of negligent misrepresentation is that the misrepresentation is received and acted upon. In this case, the misrepresentation was received and acted upon in Ontario. It cannot be said that only a relatively minor element of the tort occurred in this province. The respondents simply cannot show that only a relatively minor element of the tort occurred in the province, and they cannot therefore rebut the presumed jurisdiction of the Ontario court over this action.[^14]

(2) Forum non conveniens – general principles

[40] If the court is satisfied that jurisdiction simpliciter over the foreign defendant has been established, the action may proceed subject to the discretion of the court to stay the proceedings on the basis of forum non conveniens.[^15] The party seeking to stay the action and have the court decline to exercise its jurisdiction in the forum chosen by the plaintiff bears the burden to demonstrate that the court of the alternative jurisdiction is a clearly more appropriate forum.[^16]

[41] In Beijing Hehe, Justice Perell summarized the principles to be considered as follows:

65 …The objectives in determining the appropriate forum are to ensure fairness to the parties and to provide an efficient process for resolving their dispute. 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...

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 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.

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.[^17]

[42] In Van Breda, the Supreme Court noted that although the court should not stay an action merely because a comparable forum exists, forum non conveniens plays an important role in determining the proper forum for an action. Justice Lebel explained this principle as follows:

… But the court must be mindful that jurisdiction may sometimes be established on a rather low threshold under the conflicts rules. Forum non conveniens may play an important role in identifying a forum that is clearly more appropriate for disposing of the litigation and thus ensuring fairness to the parties and a more efficient process for resolving their dispute.[^18]

[43] Subject to considering the applicable principles and objectives, and assessing the applicable factors, as identified above, the application of forum non conveniens is an exercise of discretion.[^19]

(3) Does the court have jurisdiction simpliciter?

[44] The plaintiffs argue that the court has jurisdiction over this action on the basis that there are two presumptive connecting factors that the defendant has not rebutted, namely: (1) the defendant carries on business in Ontario; and (2) the alleged torts were committed in Ontario. The defendant argues that there is no real and substantial connection between the circumstances giving rise to the claim and Ontario, and that the Ontario court has no jurisdiction over this action.

(a) Is the defendant carrying on business in Ontario?

[45] The plaintiffs submit that there is a good arguable case that the defendant conducts business internationally, and that it directly conducted business with the plaintiffs in Ontario, for the following reasons:

a. it sent communications to the plaintiffs in Ontario on multiple occasions;

b. it directed the plaintiffs to visit any of “our branches” to instruct the defendant, and the plaintiffs visited a “branch” of the defendant in Ontario; and

c. the defendant processed the plaintiffs’ transactions that were conducted at a branch in Ontario.

[46] I do not accept the plaintiffs’ position. It conflicts with basic principles of corporate separateness as applied to the evidence on this motion.

[47] In the affidavit evidence filed by the defendant in support of this motion, the defendant denies having any operations in Canada. There is no contrary evidence indicating that the defendant owns or operates any branches or other banking operations in Ontario.

[48] In an attempt to undermine the defendant’s evidence, Mr. James points to various interactions he had with personnel at an HSBC Canada branch in Ontario. Mr. James also asserts that he understood the reference in the Closure Notice Letter to “our branches” to mean that the defendant conducts business in Ontario. I do not accept these submissions by the plaintiffs, nor do I accept Mr. James’s “evidence” that he understood that the defendant is carrying on business in Ontario based on his interaction with representatives of HSBC Canada. I also do not accept the plaintiffs’ argument that the transmission of the plaintiffs’ Disposal Instructions to the defendant from an HSBC Canada branch in Ontario establishes that the defendant is carrying on business in Ontario. While there is evidence that Mr. James attended at branches of HSBC Canada to facilitate communications with the defendant in Hong Kong, in my view this does not amount to the defendant carrying on business in Ontario. Rather, as part of his relationship with HSBC Canada, Mr. James sought and obtained assistance communicating with and providing instructions to the defendant, including the Disposal Instructions. Further, the defendant’s evidence is that the reference in the Closure Notice Letter to “our branches” is a reference to the defendant’s branches only, and I find it was not reasonable for Mr. James to conclude that this included branches of HSBC Canada.

[49] The defendant and HSBC Canada are related but distinct entities. Mr. James attended at one of the defendant’s branches in a Hong Kong as part of the process of opening the Hong Kong Accounts. Mr. James opened separate bank accounts in Canada with HSBC Canada. The fact that Mr. James attended on occasion at HSBC Canada branches to obtain assistance from personnel at HSBC Canada to communicate with the defendant in Hong Kong does not establish that the defendant is carrying on business in Ontario. It merely demonstrates that Mr. James had a banking relationship with two related but separate banks – the defendant and HSBC Canada.

[50] In summary, I find that the plaintiffs’ use of HSBC Canada as a conduit for sending communications, including the Disposal Instructions, to the defendant in Hong Kong is not sufficient to establish that the defendant is carrying on business in Ontario in the sense defined by the Supreme Court in Van Breda and Chevron. Taking the evidence as a whole, it is clear that Mr. James was merely using his relationship with HSBC Canada – as a customer of that Canadian bank – to facilitate delivery of the Disposal Instructions to the defendant in Hong Kong.

[51] In the result, I find that, for purposes of this jurisdiction motion, the defendant is not carrying business in Ontario.

(b) Were any of the alleged torts committed in Ontario?

[52] In the statement of claim, the plaintiffs claim damages against the defendant for breach of fiduciary duty, breach of the duty of good faith, negligence, negligent misrepresentation, conversion, misappropriation, deceit, breach of statutory duties, and breach of trust.[^20]

[53] The plaintiffs argue that their pleading that the defendant committed various torts in Ontario provides the necessary presumptive connecting factor to establish jurisdiction simpliciter, and that the defendant has failed to rebut the presumption. The defendant submits that the alleged torts were not committed in Ontario and that, to the extent that there is any connection to Ontario based on the tort allegations, the connection is superficial and weak and, therefore, does not point to any real relationship between the subject matter of the litigation and Ontario.

[54] One of the torts the plaintiffs allege was committed by the defendant in Ontario is the tort of negligent misrepresentation. Based on the allegations with respect to that tort, I find that the plaintiffs have established the necessary presumptive connecting factor. The allegations include the following:

a. Mr. James claims to have received representations from the defendant on his own behalf and on behalf of Tithe;

b. the representations are alleged to have been received in Ontario;

c. the representations are alleged to have been false and misleading and made negligently; and

d. the plaintiffs allege that they relied and acted on the representations in Ontario and suffered resulting damages.

[55] As noted above, the tort of negligent misrepresentation occurs at the place where the misinformation is received or acted upon.[^21] As such, I find that there is a presumptive connecting factor based on the alleged negligent misrepresentation received and acted upon in Ontario. Further, it is sufficient for jurisdictional purposes that one of the claims made in the action (i.e., the negligent misrepresentation claim) is presumptively connected with Ontario. On that basis, the court must assume jurisdiction over all aspects of the action.[^22]

[56] In its factum, the defendant makes passing reference to the “good arguable case” standard. Citing the decision of the Court of Appeal in Ontario v Rothmans Inc,[^23] the defendant submits that the evidentiary standard for the assumption of jurisdiction is a “good arguable case” through either the allegations in the statement of claim or a combination of those allegations and evidence filed on a jurisdiction motion. However, the defendant did not argue that the plaintiffs have failed to meet the good arguable case standard and, in any event, I note the following principle outlined by the Court of Appeal in Rothmans:

A jurisdiction motion is not the appropriate proceeding for scrutinizing in detail the adequacy of the pleadings, nor is it the proper place for engaging in a rigorous assessment of whether the plaintiff’s claim will ultimately succeed.[^24]

[57] As such, I find that the plaintiffs have established the existence of one of the factors described in Van Breda as presumptively connecting the action with Ontario.

[58] I also find that the defendant has failed to rebut the presumptive connecting factor. Applying the reasoning from Van Breda and Central Sun, where a tort is committed in Ontario, rebutting the presumption of jurisdiction would appear to be difficult but may be possible if only a relatively minor element of the tort has occurred in the province. In this case, the core of the tort of negligent misrepresentation is that the misrepresentation was received and acted upon in Ontario. As such, it cannot be said that only a relatively minor element of the tort occurred in this province. Therefore, the plaintiffs “cannot show that only a relatively minor element of the tort occurred in the province, and they cannot therefore rebut the presumed jurisdiction of the Ontario court over this action”.[^25]

[59] In view of my conclusion that, for jurisdictional purposes, the tort of negligent misrepresentation is alleged to have occurred in Ontario, I find that the defendant was properly served under Rule 17.02(g), and that the plaintiffs properly served the statement of claim on defendant in Hong Kong without leave.

(c) Other issues with respect to jurisdiction simpliciter

[60] The plaintiffs point to other allegations they submit establish presumptive connecting factors to Ontario, including the following:

a. the investigations which led to the closure of the subject accounts all took place in Ontario;

b. the Funds in the Hong Kong Accounts were to be paid to the plaintiffs in their Ontario bank accounts with HSBC Canada; and

c. the plaintiffs have suffered damages in Ontario.

[61] Having concluded that the court has jurisdiction simpliciter with respect to this action based on the presumptive connecting factor of the alleged tort of negligent misrepresentation having been committed in Ontario, I need not determine whether the above additional factors establish presumptive connecting factors to Ontario.

(4) Is Ontario forum non conveniens?

[62] Given my conclusion that the Ontario court has jurisdiction simpliciter, I next consider whether Ontario is forum non conveniens based on the applicable factors and principles.

(i) Location of the majority of the parties

[63] Mr. James is in Ontario, Tithe is in Panama and the defendant is in Hong Kong. I find this factor to be neutral.

(ii) Location of the key witnesses and evidence

[64] The parties have divergent views as to who the prospective witnesses will be, and which witnesses are key witnesses. The defendant submits that there will be six witnesses from Hong Kong, four from Panama and only one witness from Ontario. The defendant also submits that the location of evidence favours Hong Kong.

[65] The plaintiffs argue that there will be numerous witnesses from Ontario who will give evidence regarding the events relating to the Disposal Instructions. They also assert that the defendant’s prospective witnesses from Hong Kong are less important because they have no direct knowledge of the events in issue and are merely reporting what they have learned from reviewing the defendant’s records.

[66] The plaintiffs also seek to tie the claims to Ontario through reference to an alleged an alleged investigation of Mr. James and an alleged conspiracy including various Canadian law enforcement agencies that led to the freezing of Mr. James’s HSBC Canada accounts. They submit that there will be several important witnesses who have evidence about the alleged investigations in Ontario which the plaintiffs assert also led to the closure of the Hong Kong accounts.

[67] There are several problems with the plaintiffs’ position regarding the investigations, the most important of which it is not tied to the pleadings in any way. There is no pleading of a conspiracy and there are no allegations of any investigations in the statement of claim in this action. The only pleaded connection between this action and the 2012 HSBC Canada Action are the allegations that the plaintiffs discovered that the Funds from the Hong Kong Accounts were not transferred to Mr. James’s HSBC Canada accounts and remain with the defendant. The plaintiffs’ pleading, even read generously, does not raise any issues regarding the freezing of Mr. James’s accounts in Canada, an investigation into Mr. James by Canadian law enforcement authorities, or the sharing of information between jurisdictions (Canada and Hong Kong). Nor does the pleading include any allegations of a conspiracy among the defendant and other parties, including various Canadian law enforcement agencies (none of which are named as parties in this action or the 2012 HSBC Canada Action).

[68] Based on the plaintiffs’ own materials, Mr. James was aware of and raised complaints about these issues prior to the issuance of the statement of claim in this action, yet there are no pleadings about the investigations or an alleged conspiracy. As a result, I find that the plaintiffs’ assertions of a conspiracy are an attempt to create a list of witnesses in Ontario in order to bolster the plaintiffs’ argument that Ontario is the preferred forum for this action. Therefore, for purposes the forum non conveniens analysis, I do not accept the plaintiffs’ position that there are prospective witnesses who were involved in the investigation of Mr. James and who will have relevant and important evidence for this action. I also note that even if the investigation were relevant (which I find it is not), there would presumably be witnesses in Hong Kong who would also have evidence with respect to that issue.

[69] Having rejected plaintiffs’ assertion with respect to prospective Ontario witnesses regarding an alleged conspiracy and investigation of Mr. James, the only sure witness from Ontario is Mr. James. Other prospective witnesses from Ontario include employees or former employees of HSBC Canada who were involved in the Disposal Instructions. However, there is no evidence that those persons remain in Ontario, and the importance of their evidence is minimized by the defendant’s acknowledgement that it received the Disposal Instructions but failed to act on them. The more salient evidence with respect to the Disposal Instructions will come from witnesses in Hong Kong.

[70] The plaintiffs argue that the prospective witnesses in Hong Kong do not have any direct evidence of the opening of the Hong Kong Accounts or the events surrounding their closing and what occurred with respect to the Disposal Instructions. While that may be the case, it is not unusual for a corporation to be involved in litigation with respect to which the employees with direct knowledge are no longer available. The defendant will nevertheless lead the best evidence it has from its current employees, or former employees who remain available, and they will be important witnesses for the defendant’s case.

[71] In summary, I find that: (1) Mr. James will be the only key witness from Ontario; (2) there may be some witnesses from Ontario with whom Mr. James interacted with respect to the Disposal Instructions, but those witnesses are not key witnesses; (3) there will likely be some witnesses from Panama representing Tithe; and (4) all of the other key witnesses and the bulk of the witnesses will be from Hong Kong.

[72] In the result, I find that this factor favours Hong Kong.

(iii) Contractual provisions that specify applicable law or accord jurisdiction

[73] The relevant contractual provisions specify that the accounts and other matters related thereto were to be governed by and construed in accordance with the Rules of the Hong Kong Association of Banks and with the laws of Hong Kong. This factor favours Hong Kong.

(iv) Avoidance of multiplicity of proceedings

[74] The defendant asserts that, if the plaintiffs are successful in their action, they will be required to enforce their judgment in Hong Kong. The defendant argues that, as a result, a stay of the Ontario action is appropriate to avoid a multiplicity of proceedings. In my view, potential enforcement actions do not fall into the calculus for assessing whether allowing the action to proceed will lead to a multiplicity of proceedings. As a result, I do not consider the potential need to enforce an Ontario judgment in Hong Kong as a factor that weighs against allowing the action to continue to in Ontario.

[75] The plaintiffs argue that there are intertwined facts involved in this action and the 2012 HSBC Canada Action, and that staying this action will result in a multiplicity of proceedings and a likelihood of conflicting decisions in different courts. The plaintiffs also assert that if this action remains in Ontario, they will be moving to join it with the 2012 HSBC Canada Action, or have the actions heard together. In my view, the pleaded connection between the two actions is very limited, namely: (1) that the plaintiffs in this action allege that they instructed the defendant to transfer the Funds in issue to Mr. James’s HSBC Canada accounts; and (2) that Mr. James initially included a claim for the Funds in the 2012 HSBC Canada Action because he believed they had been transferred to HSBC Canada and misappropriated by HSBC Canada. Having received a pleading from HSBC Canada denying receipt of the Funds from the defendant, and having been advised by the defendant that the Funds were not transferred to HSBC Canada, the plaintiffs now make claims against the defendant relating to the Funds. However, the claims against the defendant in my view do not overlap, or overlap to a very minor degree, with the claims in the 2012 HSBC Canada Action. This conclusion is consistent with my conclusion, outlined above, that the potential witnesses for this action do not include persons who may have been involved in the investigation of Mr. James. Therefore, I do not consider that staying this action will result in a multiplicity of proceedings and a likelihood of conflicting decisions in different courts.

[76] In the result, I find that this is a neutral factor.

(v) The applicable law and its weight in comparison to the factual questions to be decided

[77] In Banro, Le Bel J. referred to La Forest J.’s decision in Tolofson v. Jensen, 1994 CanLII 44 (SCC), [1994] 3 S.C.R. 1022 “which established lex loci delicti, or the place where the tort occurred, as a general principle for determining choice of law for torts. However, La Forest J. also left room for the creation of exceptions to the general rule of lex loci delicti for torts such as defamation.”[^26] Lebel J also noted that:

In establishing lex loci delicti as a general rule, however, La Forest J. also recognized that "[t]here are situations ... notably where an act occurs in one place but the consequences are directly felt elsewhere, when the issue of where the tort takes place itself raises thorny issues.... Difficulties may also arise where the wrong directly arises out of some transnational or interprovincial activity" (p. 1050).[^27]

[78] On this motion, neither party focused their submissions on the applicable law of the alleged torts which, in the context of multijurisdictional torts, is a complex question. However, in addressing the issue of the applicable law, the plaintiffs assert in their factum that “it remains a live issue whether Ontario law or Hong Kong law will apply, since the agreements the Defendant relies on for this issue are far from clear as to the applicability of the law in these particular circumstances where the Defendant committed several torts by failing and/or refusing to deliver the Plaintiffs’ funds…”.

[79] The defendant’s submissions on the applicable law focus on the contractual agreements. As noted above, the relevant agreements provide that the accounts and matters related thereto were to be governed by and construed in accordance with the Rules of the Hong Kong Association of Banks and with the laws of Hong Kong. As well, the agreement with respect to the Tithe accounts provides that Tithe submits to the non-exclusive jurisdiction of the courts of Hong Kong.

[80] Applying lex loci delicti, Ontario law would be the applicable law for alleged torts that occurred in Ontario. In the jurisdictional analysis above, I concluded that the alleged negligent misrepresentation occurred in Ontario. Assuming the general rule of lex loci delicti is not displaced, Ontario law would be the applicable law for that alleged tort. However, even if Ontario law applies with respect to that tort and the other alleged torts, Hong Kong law applies with respect to the alleged breach of contract claim. Further, I am mindful of the plaintiffs’ acknowledgement that, in terms of the applicable law, “it remains a live issue whether Ontario law or Hong Kong law will apply”.

[81] In the result, I find that this factor is neutral.

(vi) Geographical factors suggesting the natural forum

[82] The relationship giving rise to the claims is contractual, and the contracts in issue are very closely tied to Hong Kong. Both plaintiffs – Mr. James (personally) and Tithe (through James) – travelled to Hong Kong to open the Hong Kong Accounts. The dispute related to the Funds, which remain in Hong Kong. I find that this factor favours Hong Kong.

(vii) Juridical advantage; i.e., whether declining jurisdiction would deprive the plaintiff of a legitimate juridical advantage in the domestic court

[83] The plaintiffs made numerous submissions that they will lose a juridical advantage if this action is stayed and proceeds in Hong Kong instead of Ontario. However, I find that the plaintiffs’ submissions are not based on any admissible evidence with respect to juridical advantage. They rely on inadmissible hearsay and the opinions of Mr. James rather than expert evidence to demonstrate that staying the action and declining jurisdiction would deprive the plaintiffs of a legitimate juridical advantage in the Ontario court. In the result, I find that this factor is neutral.

Conclusion on whether Ontario is forum non conveniens

[84] I find that the overall connection of the action to Ontario is weak and that there is a stronger connection to Hong Kong. The plaintiffs’ claims include a claim for breach of contract and various alleged torts. In my view, however, the connection with Ontario through the alleged torts is weak. The alleged torts themselves are not torts that are based on facts tied solely to Ontario; they are multijurisdictional torts, involving actions by the defendant that took place in Hong Kong. In contrast, as noted above, the relationship giving rise to the claims is contractual, and the contracts in issue are very closely tied to Hong Kong. Both plaintiffs demonstrated an ability to travel to Hong Kong to open the Hong Kong Accounts, presumably seeing a benefit to having bank accounts in Hong Kong with a bank that is based in Hong Kong. The applicable law of the agreements governing the Hong Kong Accounts is Hong Kong law. The Funds in issue were and remain in Hong Kong.

[85] While Mr. James is in Ontario, the defendant is located in Hong Kong and Tithe is a Panamanian company whose officers and directors are not in Ontario. As a result, the connection between Tithe, the action and Ontario is even weaker than the connection between Mr. James’s claim and Ontario, and in my view this is not altered because Mr. James is or was the ultimate beneficial owner of the Tithe shares.[^28]

[86] In the result, I find that there are several important factors that favour Hong Kong as the proper forum for the claims, a number of neutral factors, and no factors that favour Ontario. Therefore, based on the applicable factors and principles, I find that Ontario is forum non conveniens for the dispute, that the proper forum for the dispute is Hong Kong, and that the action should be stayed.

E. CONCLUSION

[87] For the reasons outlined above, I find that the plaintiffs have established the existence of one of the factors described in Van Breda as presumptively connecting the action with Ontario. I also find that the defendant has failed to rebut the presumptive connecting factor. As such, I find that the court has jurisdiction simpliciter over the action and that statement of claim was properly served on the defendant in Hong Kong, without leave, under Rule 17.02(g).

[88] I also find that Ontario is forum non conveniens, and I order that the action is stayed on that basis.

Costs

[89] The plaintiffs submitted that, if successful, they should be awarded substantial indemnity costs in view of the defendant’s conduct that led to this motion. The plaintiffs also submitted that the defendant should be liable for costs regardless of the outcome on the motion.

[90] The defendant submitted that the quantum claimed in the parties’ respective costs outlines is similar, with the plaintiffs’ partial indemnity costs at $23,361.62 and the defendant’s partial indemnity costs at $27,784.42. On that basis, the defendant submitted that the successful party should be awarded costs in the amount of $25,000 inclusive of disbursements and taxes.

[91] The defendant was successful on this motion and is presumptively entitled to its costs of the motion on a partial indemnity basis. I do not agree with the plaintiffs that the circumstances warrant displacing that presumptive entitlement.

[92] The overriding principles in determining costs are fairness and reasonableness; see Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.). In addition, I am guided by the factors set out in Rule 57.01(1) when awarding costs. In assessing the reasonable expectations of the parties on a motion such as this, I note the importance of the motion for the parties and the similar quantum claimed in the parties’ respective costs outlines.

[93] Considering all relevant factors, I find that it is fair and reasonable in the circumstances and within the reasonable expectations of the parties for the plaintiffs to pay the defendant costs on a partial indemnity basis and fixed in the amount of $23,500, inclusive of disbursements and taxes, within 30 days.

R. Frank Associate J.

Date: August 4, 2022

[^1]: Chevron Corp v Yaiguaje, 2015 SCC 42 ("Chevron") at paras 82, 84; Beijing Hehe Fengye Investment Co Limited v Fasken Martineau Dumoulin LLP, 2020 ONSC 934 ("Beijing Hehe") at para 53 [^2]: Chevron Corp v Yaiguaje, 2015 SCC 42 at paras 82, 84 [^3]: Van Breda v Village Resorts Ltd, 2012 SCC 17 ("Van Breda") [^4]: Van Breda at para 100 [^5]: Van Breda at para 90 [^6]: Van Breda at paras 91 and 100 [^7]: Van Breda at para 87 [^8]: Chevron Corp v Yaiguaje, 2015 SCC 42 at paras 85 [^9]: Beijing Hehe at para 59 [citations omitted] [^10]: Central Sun Mining Inc v Vector Engineering Inc, 2013 ONCA 601 ("Central Sun") at para 25 [^11]: Van Breda at para 100 [^12]: Beijing Hehe at para 60 [citations omitted] [^13]: Haaretzcom v Goldhar, 2018 SCC 28 at para 43 [emphasis added]; see also Central Sun at para 37 [^14]: Central Sun at paras 36-38 [^15]: Van Breda at 102; Beijing Hehe at para 65 [^16]: Van Breda at 103; Beijing Hehe at para 65 [^17]: Beijing Hehe at paras 65-67 [^18]: Van Breda at 109 [^19]: Banro Corp v Éditions Écosociété Inc, 2012 SCC 18 ("Banro") at para 41 [^20]: The plaintiffs’ statement of claim also includes a claim for breach of contract. However, the plaintiffs did not argue on this motion that the court has jurisdiction based on the breach of contract claim. [^21]: Beijing Hehe at para 60 [^22]: Van Breda, at para. 99; Central Sun at para 25 [^23]: Ontario v Rothmans Inc, 2013 ONCA 353 ("Rothmans") [^24]: Rothmans at para 118 [^25]: Central Sun at paras 36-38 [^26]: Banro at para 50 [^27]: Banro at para 50 [^28]: It is not clear from the evidence whether Mr. James remains the ultimate beneficial owner of the Tithe shares.