Court File and Parties
COURT FILE NO.: CV-2200687184 DATE: 20230526 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
INTERCAP EQUITY INC. Plaintiff – and – AESCAPE, INC. Defendant
Counsel: Jeffrey Larry and Jesse Wright, for the Plaintiff Lauren Mills Taylor and C. Angela Hou for the Defendant
HEARD: May 12, 2023
Papageorgiou J.
Nature of the Case
1The Plaintiff, Intercap Equity Inc. (“Intercap”) is an Ontario-based corporation which provides merchant banking and other investment services. The Defendant, Aescape Inc. (“Aescape”) is a privately held start up technology company based in New York City. Aescape is incorporated pursuant to the State of Delaware. It has developed robotic massage technology.
2In this case, Intercap alleges that Aescape breached an oral agreement with Intercap, whereby it agreed that Intercap would have an option to invest in Intercap (the “Alleged Option Agreement”).
Nature of the Motion
3Aescape brings a motion for the following: a) an Order dismissing the claim on the basis that this court does not have jurisdiction; b) an Order staying this action on the basis that Ontario is the forum non conveniens; and c) setting aside the service on Aescape on the basis that service was not effected in accordance with r. 17 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”).
4For the reasons that follow, I am dismissing the motion.
Jurisdiction
5The parties agree on the applicable legal test for jurisdiction which is as follows.
6In order to assume jurisdiction over a defendant, this court must be satisfied that the dispute as against a particular defendant has a real and substantial connection to Ontario: Club Resorts Ltd. v. Van Breda, 2012 SCC 17, [2012] 1 S.C.R. 572, at para. 100.
7Pursuant to Van Breda, to meet the real and substantial connection test, the party arguing that the court should assume jurisdiction has the burden of establishing a “good arguable case” that one of the following presumptive connecting factors is present in Ontario:
a) The defendant is domiciled or resident in Ontario;
b) The defendant carries on business in Ontario;
c) A tort was committed in Ontario; or
d) A contract connected with the dispute was made in the province.
See Tucows.Com Co. v. Lojas Renner S.A., 2011 ONCA 548 106 O.R. (3d) 561, at para. 36; Ecolab Ltd. v. Greenspace Services Ltd. (1998), 38 O.R. (3d) 145 (Div. Ct.) at pp. 7, 13-14; Schreiber v. Mulroney (2007), 88 O.R. (3d) 605 (S.C.) at para. 18.
8The Supreme Court in Van Breda explained that all of the presumptive connecting factors generally point to a relationship between the subject matter of the litigation and the forum such that it would be reasonable to expect that the defendant would be called to answer legal proceedings in that forum. Where such a relationship exists, one would expect a Canadian court to enforce a judgment on the basis of that presumptive connecting factor and one would expect the foreign court to do the same. The assumption of jurisdiction where presumptive connecting factors exist thus supports the principles of comity, order and fairness: Van Breda, at para. 92.
9The evidentiary threshold for establishing a presumptive connecting factor is very low: Shah v. LG Chem Ltd, 2015 ONSC 2628 at para. 11. Intercap is only required to establish that one connecting factor exists and that there is “some chance of success.” Soma Ray-Ellis v. Goodtrack et al, 2020 ONSC 6847 at para 10
10Further, even if a presumptive connecting factor is identified, it can be rebutted by convincing the court that assuming jurisdiction would be inappropriate: Van Breda, at para. 81.
11It is accepted that none of the first three presumptive connecting factors exist in this case.
12Therefore, the only issue with respect to jurisdiction, is whether there is a “good arguable case” that a contract between Intercap and Aescape connected with the dispute was entered into in Ontario.
Has Intercap established a good and arguable case that a contract was entered into in Ontario?
13It is undisputed that as a start-up, Aescape was actively seeking to raise funding in the years preceding the Alleged Option Agreement.
14Intercap was first introduced to Aescape in 2019. At the time, Mr. Jason Chapnik, Intercap’s majority shareholder and Chief Executive Officer (“Chapnik”), and James Merkur, the President of Intercap (“Merkur”) met with Aescape’s Chief Executive Officer, Eric Litman (“Litman”), in New York City to learn about Aescape.
15Although Intercap considered investing in Aescape in 2019, it decided not to.
16In January 2022, Litman approached Intercap to advise it of Aescape’s latest funding round.
17Beginning in around April or May 2022, Intercap and Aescape began having more serious discussions and negotiations about Intercap making an investment in Aescape.
18In April 2022, Aescape held a launch in New York City and Litman invited Intercap to the launch but Intercap did not attend.
19At the time of these discussions, Litman informed Intercap that Aescape was looking to close out the current funding round (at a $42 million valuation) and was moving to securing series A funding at higher valuations.
20Aescape’s counsel explained that the phrase obtaining funding “at a $42 million valuation”, means that as that date, Aescape had valued its company at $42 million.
21Counsel also explained that because the value of a start-up company can change significantly in a short amount of time, and because the value of any shares can be diluted by new issuances of shares, when investors decide to invest in a start-up, they purchase securities based upon a portion of the current valuation of the company, which fixes the price per share as at the time of their purchase. Typically, such investors require something called a “Safe Note” which provides protection to the investor in the event there is a future share issuance or equity financing. The Safe Note will provide that if there is a future share issuance, there are steps that the investor can elect to take to ensure that the value of the shares they purchased pursuant to a particular round of funding are not diluted. Counsel explained that an example of one such protection would be that the investor could convert their shares to preferred shares. Although there was no specific evidence on this point, counsel for Aescape made these submissions to explain the underlying context and there was no objection.
22In early May 2022 Merkur telephoned Litman advising that Intercap was still interested in investing in Aescape. Merkur inquired as to whether it was still possible to invest if Intercap completed its due diligence in an expedited manner. Recall that Litman had previously advised that he was looking to “close out” that funding round.
23Litman confirmed it was still possible.
24On May 5, 2022, Alex Yeung, the Vice President of Intercap (“Leung”) had a telephone conversation with Litman to discuss Intercap’s potential investment.
25During these discussions, Litman was eager for Intercap to travel to Aescape’s offices in New York to test the Aescape product. In particular, he was encouraging Chapnik, to attend because he knew that Chapnik was a key decision maker. He believed that if Chapnik saw the technology first-hand, it would make it more likely that Intercap would invest and that Aescape would thus receive this investment.
26In Yeung’s contemporaneous notes of the conversation, he wrote that he advised Litman that Intercap was only willing to travel to New York if it had a commitment from Aescape that Intercap would be able to invest in Aescape.
27Mr. Yeung then emailed Merkur and Chapnik and wrote that the next step “is for Jason [Chapnik]/James [Merkur] to call Eric [Litman] next week to secure some level of investment room/commitment to facilitate said visit to NY.”
28Litman and Merkur then spoke on May 17, 2022. At the time of the call, Litman was in New York City and Merkur was in Toronto.
29There is a dispute as to what was discussed during the May 17, 2022 telephone call.
30Merkur’s evidence as to the discussion which took place was: a) he advised Litman that Intercap was willing to invest a minimum of USD $1 million in Aescape based on the terms of the current round of the financing, which was at a USD $42 million valuation cap, subject only to Intercap completing its due diligence; b) Litman encouraged Intercap to travel to New York; c) Merkur made it clear that he and Chapnik were only willing to travel to New York later that week to complete the due diligence if Aescape agreed that Intercap had the option to invest in Aescape based upon the current valuation; and d) Aescape accepted Intercap’s offer and it was agreed that representatives of Intercap (Merkur and Chapnik) would travel to New York later that week to complete Intercap’s due diligence and then confirm if, and how much, Intercap was willing to invest in Aescape.
31Aescape’s witness, Litman, denies that there was any agreement. He states that the parties simply continued their negotiations with Merkur and Chapnik ultimately agreeing to attend in New York to view the robotic massage technology in person. However, when cross examined, he agreed that the purpose of the May 17 phone call was to encourage Intercap to travel to New York.
32He gave the following evidence during cross examination:
Q. And the purpose of that call, again, I take it, was because you were trying to encourage Merkur -- and, by extension, Chapnik -- to come down to New York; is that fair?
A. Correct.
Q. Right. And again, just as a couple weeks prior with Mr. Yeung, you believed that if you could entice them to come down to New York, it would make it more likely that they would agree to invest in Aescape, correct?
A. The product speaks for itself.
Q. Exactly. And you're confident in your product, right?
A. Very much so.
Q. And because the product speaks for itself, you believed that if they came to New York and saw the product, they would want to invest in it, correct?
We were hopeful that they would invest.
33On May 18, 2022, Litman forwarded to Merkur the Safe Note which investors in Aescape had to enter into.
34On May 19, 2022, Chapnik and Merkur traveled to New York to meet with Litman.
35Merkur states that at the meeting, Chapnik confirmed to Litman that Intercap was impressed with the prototype and likely to invest, but had not yet determined the exact amount they were willing to invest.
36Aescape’s counsel divided their argument into two phases. First challenging the fact that Intercap had demonstrated a good arguable case that a contract had been formed at all, and second if it had, then challenging the fact that such contract was entered into in Ontario.
Aescape’s argument that no contract was formed at all.
37First, I reject Aescape’s argument that Intercap has not provided sufficient evidence of consideration.
38As set out in Stephen Waddams, Law of Contracts, 8th ed. (Canada: Carswell, 2022), “the notion of exchange as an element of bargain further requires that what is exchanged for the promise sought to be enforced must be of some substance” (emphasis added).
39Litman’s evidence is that Aescape was seeking financing, believed that it was more likely that Intercap would invest if it attended with Chapnik to view the robotic technology and as such wanted them to attend in New York. The Alleged Option Agreement was thus valuable to Aescape as it increased the likelihood of Intercap investing, which is something Aescape had sought for some time. The Alleged Option Agreement was valuable to Intercap as it gave it the right to invest at least USD $1 million in Aescape if Intercap was satisfied with its due diligence. As such, although it may be an issue in the lawsuit as to whether there was sufficient consideration, for the purposes of this motion, Intercap has established a “good arguable case” that consideration flowed. No one referred me to any case law that suggested an agreement to travel to a foreign destination to view a product demonstration in furtherance of a potential investment which the other party was seeking and which put the travelling party to time and expense, could not constitute consideration. This case is quite fact specific because of Merkur’s evidence, if accepted, as to how the decision to travel to New York was arrived at.
40I also reject Aescape’s argument that Intercap has provided insufficient evidence of an intention to contract. As referenced by Aescape, in Ethiopian Orthodox Tewahedo Church of Canada v Teshome Aga et al, 2021 SCC 22 at para 36 the Supreme Court set out the test for contractual intention which is “whether the parties have indicated to the outside world, in the form of the objective reasonable bystander, their intention to contract and the terms of the contract.” The problem is, it is not possible to make this final determination on the basis of the disputed affidavit evidence before me, in particular because it involves verbal communications. Merkur’s evidence, although disputed, satisfies the “low threshold” established by the authorities.
41I also reject the argument that Intercap’s failure to provide evidence as to the duration of the option agreement is fatal. It is trite law that all material terms must be agreed upon at the time of contract. However, some terms can be implied where they are required for commercial efficacy. In argument, Intercap’s counsel asserted that it was implicit that the option would last only during Aescape’s current round of funding which was at the $42 million valuation, and which they had been discussing. While there is no evidence as to any specific discussion of duration, the funding round for which Intercap asserts it purchased an option, was the $42 million valuation round and there is evidence that during their communications Litman said that that he was looking to close out this round of funding. In my view, that is sufficient for the purposes of this motion to establish a good arguable case that there was an implied term that the option terminated at the end of that round of funding.
42I also reject the argument that the parties’ ongoing communications after the May 17, 2022 call, specifically with respect to the terms of the Safe Note, meant there was no intention to contract.
43In that regard, Intercap felt the Safe Note did not adequately protect its position. Merkur was concerned that the form of Safe Note was not the form which is typically used in the industry. Merkur further expressed concerns about liquidity events and returns they would get on them and asked to change the threshold in the Safe Note which permits shareholders to change it.
44Aescape’s lawyer argued these were significant changes; Intercap’s argued they were not.
45On July 1, 2022, Litman told Merkur that Aescape was no longer interested in Intercap’s proposed investment as it was not prepared to revise its Safe Note.
46Merkur immediately emailed Litman that day and said that their deal related to the Safe Note as was, and if Aescape was not prepared to change the Safe Note, Intercap would accept it as is. He stated:
I am reflecting on our discussion today and would strongly ask you to reconsider your position and let us invest $1 million at a $42 million cap as agreed.
In my opinion, we had a settled a negotiation before we came to NYC that you would let us invest $1 + million in your last round. How am I wrong in saying that?
We immediately flew down to NYC, had the demo and our meeting and had our counsel review the document.
Our counsel came back to you with what we felt were modifications to get this to deal market terms for an institutional investor like us. You did not accept our terms and then I came back and accepted your proposed terms.
47On July 5, 2022 Litman responded as follows:
As the weeks progressed following your visit to NYC without an investment amount and a new set of terms that materially changed the nature of the deal (e.g. 1.5X liq pref on a company at this stage is off-market and not a good precedent to set), the deal between us felt at risk, particularly in today’s climate. (emphasis added.)
AlleyCorp quickly stepped in to fill the gap with $3 m at $52m cap with no modifications to the deal and with that we’ve taken in what we need to go raise our Series A. Given the uncertainty in early state capital markets right now, I’m sure you can understand my position.
48On July 5, 2022 Merkur further responded:
We travelled to NYC with little notice on your schedule based upon the express agreement that we could invest on the same SAFE terms as the last investors.
You delivered the SAFE agreement the day before we travelled. Our lawyer reviewed and pointed out that the terms were not standard market terms for a SAFE. We asked you to adopt standard SAFE terms. You refused. Irrespective, we accepted the SAFE agreement for $1m. Now you are not following through as previously agreed.
49Counsel for Intercap points out that both Litman and Merkur made specific reference to there having been a “deal” reached in these communications. Litman’s complaint seems to be that Merkur had changed the deal by seeking changes to the Safe Note. Merkur alleges that it is plain that what happened was that Aescape got a better offer. He asserts that the Alleged Option Agreement remained open even though it was seeking to change the terms of the Safe.
50Aescape relies on Harvey v. Perry, [1953] 1 S.C.R. 233, where the Supreme Court held that no contract existed. That case involved oil mining leases and whether there was a concluded contract. The main difference between Harvey and this case, is that in Harvey the contract in question had to meet the requirements of the Statute of Frauds. The Court examined a series of letters which the party asserting the existence of the contract relied upon as the acceptance of an offer. The Court determined that this correspondence did not constitute an acceptance of any offer. There was even the following language in this correspondence “some discussion between you will be necessary before adequate instructions can be given to draw such an Agreement.” And “you and I will have to get together to complete the terms.”
51I do not have before me any written communications as to the actual alleged offer and acceptance; these communications were oral and disputed so it is not possible to conclude that there was no offer or acceptance here as the Court could in Harvey.
52In Harvey the party asserting the existence of the contract argued that despite the wording of these letters, the other party’s conduct in forwarding the leases, disclosed an intention on his part that his letter was an acceptance. The Court in Harvey did proceed to consider all of the subsequent communications (oral and written) in concluding that that negotiations continued as to material terms after this alleged acceptance (which it found was not), such that the correspondence and conversations when considered as a whole did not establish a contract was ultimately agreed to. It is not possible to provide the kind of final analysis as in Harvey, which was after a trial, on this disputed record before me.
53In this case, Intercap asserts that it was not seeking to renegotiate the Alleged Option Agreement which it says implicitly remained open until the end of the funding round. It was seeking to negotiate the terms of the Safe Note which it would have been required to enter into if it exercised the option. This may or may not be a distinction without a difference. It cannot be determined at this time on this record. As set out in Harvey, in some cases, a party who enters into a contract attempts to renegotiate when it considers the contract to be a bad deal, and these contracts are still enforced. Ultimately, it depends upon whether there was a concluded contract. If there was, then attempts by Intercap to renegotiate terms should not matter. As I have said, it is not possible to make this determination on this record.
54In summary, there are certainly disputed contractual issues in this case, which are as follows: whether all material terms had been agreed upon, whether a term can be implied for commercial efficacy as to the duration of the alleged option, and whether the subsequent negotiations around the terms of the Safe Note means that the parties did not have the requisite intention to have entered into a prior Alleged Option Agreement during the May 17 call.
55However, the fact that such issues exist does not mean that Intercap has not reached the low threshold of demonstrating “a good arguable case” that a contract was formed. It has provided evidence from witnesses and there are contemporaneous documents which support its case. I find that it has shown a “good arguable case”.
Aescape’s argument that if there was a contract, it was not formed in Ontario
56Aescape takes the position that even if an agreement was reached, it was not formed in Ontario.
57The alleged contract was verbal and as such, the place where the contract was formed is where the acceptance of the offer was received. Therefore, in this case, it depends upon who was the offeror: See Touchup RX v. Dr. Colorchip, 2020 ONSC 3068, at paras. 65-66; Lithium Royalty Corp v. Orion Resource Partners et al., 2021 ONSC 7686, at paras. 58-59; Eastern Power Ltd v. Azienda Communale Energia and Ambiente (1999), 178 D.L.R. (4th) 409 (Ont. C.A.) at para. 24, leave to appeal ref’d [2000] 1 S.C.R. xi (note); Christmas v. Fort McKay, 2014 ONSC 373, 14 C.C.E.L. (4th) 159, at paras. 18-19.
58Aescape says that it never made any offer which was accepted. But, if there was an offer, it says that the Statement of Claim admits that it was Aescape who made the alleged offer based upon this language: “Aescape gave Intercap the right to invest”. Reading the entire relevant paragraphs together, the Statement of Claim is silent on who made the offer:
The discussions resulted ultimately in an agreement reached on a phone call between Merkur and Litman on May 17, 2022 (the "Agreement"). Merkur was in Toronto, Ontario during the phone call when the Agreement was reached.
Pursuant to the Agreement, Aescape gave Intercap the right to invest between USD $1 to USD $3 million in Aescape at a USD $42 million valuation, subject to Intercap completing its due diligence.
59Second, Merkur’s evidence that Intercap was the offeror is “late breaking” evidence in response to the jurisdiction motion and is not credible. In that regard, Aescape points to the demand letter written by Intercap’s lawyer prior to the litigation dated July 2022 where it states: “The purpose of the meeting was, among other things, for Intercap to see a demonstration of Aescape’s robotic massage technology so that Intercap could determine how much it wished (up to the $3 million allocation that Aescape offered.” (emphasis added). It also takes the position that the Statement of Claim is inconsistent with Merkur’s evidence for the reasons cited above.
60While there is some conflict in the evidence between Merkur and what Intercap’s counsel said in its demand letter, again, Aescape is reading the demand letter too narrowly. The lawyer’s letter could conceivably be referencing the quantum of investment that Intercap could make pursuant to the Alleged Option Agreement. It may simply be poorly written or the lawyer may be wrong.
61In my view, even if there is some conflict, Merkur’s evidence is sufficient to reach the low threshold of establishing a “good arguable case” that he made the offer which resulted in the alleged agreement in Ontario.
If jurisdiction is presumptively established, has Aescape rebutted that presumption?
62Even where a plaintiff establishes a presumptive connecting factor to ground jurisdiction in Ontario, this presumption can be rebutted. The party seeking to rebut the presumption would have to show facts demonstrating that the connecting factor does not point to any real relationship between the subject matter of the litigation and the forum, or points to only a weak relationship such that it would not be reasonable to expect the defendant to answer proceedings in that jurisdiction: Van Breda, at paras. 95, 97.
63Aescape argues that it would be commercially absurd to litigate this matter in Ontario because Intercap seeks specific performance of the alleged option agreement to purchase an interest pursuant to the Safe Note. If Intercap is successful, it will have to enforce this order in New York which would require that Intercap enter into a written investment agreement which would be governed by the laws of New York or Delaware, pursuant to which all of Aescape’s investment agreements are governed.
64It argues that this dispute ultimately relates to whether Aescape offered Intercap an option to invest in its New York based company and as such should be tried in New York.
65In my view, the evidence does not establish only a weak link to Ontario. The entire lawsuit concerns an Alleged Option Agreement with evidence supporting this agreement having been made in Ontario. There is evidence that Intercap was solicited in Ontario, conducted negotiations from Ontario, made an offer from Ontario to travel to New York to conduct further due diligence on the condition that it was guaranteed an option to purchase in the current funding round. It has given evidence that the acceptance of the offer was received in Ontario. In my view, these circumstances are sufficient to ground a real and substantial connection to Ontario.
66The fact that the Safe Note would have to be entered into in New York if Intercap is successful does not mean that there is not a strong connection with Ontario based upon the case that Intercap has brought, which does not involve enforcing the terms of the Safe Note. If Intercap wins the lawsuit and obtains an order for specific performance which is enforced in New York, then any disputes in respect of the Safe Note would be a different matter.
Forum Non Conveniens
67If the court finds that Ontario has jurisdiction, Aescape asks it to decline to exercise jurisdiction on the basis of the doctrine of forum non conveniens. This doctrine allows the court to decline jurisdiction where the moving party demonstrates that there is a “clearly more appropriate forum”, taking into account the connections which this alternate forum has with the subject matter of the litigation. The doctrine “focusses on the contexts of individual cases, and its purpose is to ensure that both parties are treated fairly and that the process for resolving their litigation is efficient”: Van Breda, at paras. 103, 105, 108.
68The Court in Van Breda cautioned that cases are fact specific and relevant factors may vary depending on the context: see para. 43. Some relevant factors cited by the Court in Van Breda include the location of parties and witnesses, cost of transferring the case to another jurisdiction, the impact of a transfer on the conduct of the litigation or a parallel proceeding, the possibility of conflicting decisions, problems related to enforcement of judgments, the relative strengths of the connections of the two parties to the forums and the overall fair and efficient working of the Canadian legal system as a whole: Van Breda at paras. 107, 110. Other factors to be determined in the future, may also be relevant.
69In Young v. Tyco International of Canada Ltd., 2008 ONCA 709, 92 O.R. (3d) 161, at para. 26, the Ontario Court of Appeal described some additional factors that motion judges typically consider in exercising discretion, including the location where the contract was signed, applicable law of the contract, where the bulk of the evidence will come from, jurisdiction where the dispute arose and loss of juridical advantage.
70I will deal with each of these as it applies in this case.
71Intercap is resident in Ontario and conducts business here. Aescape is resident in New York and conducts business there. This factor is neutral.
72Intercap will have three witnesses from Ontario and Aescape will have one from New York. Although this factor favours Ontario, with COVID-19 and proceedings being conducted over zoom for some time now, this factor is not strong in the current context. However, I do note that the practice direction in Ontario still states that trials in Ontario are presumptively in person, so this factor still favours somewhat in favour of Intercap.
73Regarding contract formation, the only evidence as to who made an Offer was from Intercap who said it made the offer over the phone while in Ontario. Aescape denies any offer was made at all. Therefore, if an Offer was made, this record supports the conclusion that it was made from Ontario and then accepted in Ontario. Thus, if there was a contract, it was formed in Ontario as per the authorities above.
74With respect to governing law, Aescape asserts that New York law governs the Safe Note. However, I take Intercap’s point that the terms of the Safe Note are not in issue. Intercap does not sue on the Safe Note, but on the Alleged Option Agreement. No one raised any argument that the law of New York or Ontario were different as to contractual formation and interpretation as it would apply to the Alleged Option Agreement. Counsel for Aescape conceded this law was likely the same in both jurisdictions. The burden is on Aescape. If it wished to demonstrate the importance of the legal issues and why New York is more efficient or fair because of those, it should have provided some evidence in that regard. In Van Breda, at para. 72, the Court discusses the fact that the record before the judge might include expert reports or opinions about the state of the foreign law and the organization of and procedure in the foreign court. Aescape could have provided such evidence but did not.
75I add that if the contract was made in Ontario, then there is a strong argument that Ontario law applies to the Alleged Option Agreement even though New York law would apply to the Safe Note. Again, none of the provisions of the Safe Note are at issue in this proceeding in any event.
76Regarding juridical advantage, Aescape does not cite a juridical advantage for it to proceed in New York, but it does raise one for Intercap. It argues that Intercap will have to enforce its judgment in New York. To this, counsel for Intercap says that enforcing judgments in New York is easy. I have no evidence either way, but again the burden is on Aescape to prove that New York is more appropriate and if it considered this a strong factor, it should have provided evidence on this. I also take Intercap’s point that if it wants to accept this disadvantage, it should be permitted. While Aescape argues that “it defies common sense and litigation efficiency to allow an action to be prosecuted in Ontario, only to award a remedy that is to be enforced in New York”, it is a fact that there are many cases which proceed in one jurisdiction and then are enforced in another. On this point, in Van Breda, at para. 112, the Court cautioned that relying too often on the alleged loss of juridical advantage may be inconsistent with the spirit of comity and a strong attitude of respect in relations between different courts in terms of enforcement of orders.
77The parties agree that there will not be much physical evidence, that testimony can be conducted over zoom and that this is not an overly complicated case. This factor is neutral.
78There are no concerns about inconsistent decisions or a multiplicity of proceedings, and no expressed concerns about the fairness or efficiency to either party of proceeding in either Ontario or New York which is the heart of the matter. Although the words “efficient” and “fair” are used in Aescape’s factum, there is little explanation as to why the factors it references would result in greater efficiency or fairness if the matter proceeded in New York, apart from the fact that enforcement proceedings will be required if Intercap is successful which would constitute an additional step.
79In the end, this case is a simple case about whether an Alleged Option Agreement was reached over a telephone call. It arises in the context of a US company actively seeking the investment from a Canadian company, with most conversations occurring over the telephone. In my view, there is nothing significantly more or less convenient, efficient or fair about hearing this matter in either New York or Ontario.
80Given the high standard for displacing a plaintiff’s choice of jurisdiction, Aescape has failed to demonstrate that New York is “clearly the more appropriate forum” and that the characteristics of the New York forum would be fairer or more efficient than in Ontario: see Tyco International of Canada Ltd., at para. 28 and Fifteen Prince Arthur Corporation v. Desjardins Gestion International D’Actifis Inc., 2021 ONSC 1335, at para. 15 regarding the burden on the defendant.
Rule 17
81As noted above, in its materials, Aescape also sought to set aside service on the basis that Intercap had not properly pleaded the basis upon which Aescape was served, as required by r. 17. However, during the argument, Intercap’s counsel pointed out that there were communications between counsel where they agreed that Aescape’s counsel would accept service, without prejudice to its argument that Ontario courts did not have jurisdiction, or the case should be stayed on the basis of forum non conveniens. Aescape’s motion in this respect did not make much sense as a long-term strategy since Intercap could simply amend to plead the relevant parts of r. 17, but in any event, Aescape’s counsel’s agreement to accept service is a complete answer to this issue.
82The motion is dismissed.
83I strongly encourage the parties to resolve costs. If they cannot agree, they may make submissions no longer than five pages as follows: a) Intercap within seven days; and b) Aescape within seven days thereafter.
Papageorgiou J.
Released: May 26, 2023