Fridays with Rogers Partners

March 31, 2023

At our weekly meeting, Nasra Esak discussed the recent decision of the Ontario Court of Appeal in 778938 Ontario Limited v. EllisDon Corporation, 2023 ONCA 182.  

OVERVIEW

This appeal arose from an unsuccessful motion to stay an Ontario action on the basis that the Ontario Court did not have jurisdiction over a dispute involving a construction project in Nova Scotia.

BACKGROUND

The respondent (778938 Ontario Ltd.) contracted with the appellant (EllisDon) to provide construction management services in relation to the respondent’s condominium project in Halifax, Nova Scotia. The appellant was a registered Ontario corporation with corporate offices in Mississauga and Ottawa. All other parties in the matter were extra-provincial corporations duly registered to carry on business in Nova Scotia.

In October 2019, one of the subcontractors providing services for the project, Omega, commenced an action in Nova Scotia and alleged improper holdbacks by the respondent, as well as mismanagement and delays by the appellant. In November 2019, the respondent defended the action and counterclaimed against Omega, and in January 2020 commenced a third-party claim against the appellant for contribution and indemnity for any damages awarded to Omega. In June 2020, the appellant defended the action and counterclaimed against the respondent.

Prior to the appellant delivering their defence, the respondent commenced another action in Ontario against the appellant, alleging mismanagement and delays in relation to the entire project in Halifax. The appellant responded by bringing a motion to contest jurisdiction, arguing that the Ontario court lacked jurisdiction simpliciter due to the absence of a real and substantial connection with the subject matter, and that Nova Scotia was the more appropriate forum.

The motion judge dismissed the motion and held that Ontario had clear jurisdiction over the subject matter of the action. However, due to an error in transcribing the motion judge’s oral decision, the Court of Appeal undertook a fresh analysis of the issues when considering this appeal.

ISSUES

  1. Did the motion judge err in concluding that Ontario has jurisdiction simpliciter over the subject matter of the action?
  2. If not, did the motion judge err in failing to conclude that Nova Scotia is clearly the more appropriate forum for the adjudication of the parties’ dispute, given the multiplicity of proceedings and real risk of inconsistent findings?

JURISDICTION SIMPLICITER

The appellant conceded that jurisdiction simpliciter is established by the presence of one or more connecting factors which underlie the real and substantial connection test established in Club Resorts Ltd. v. Van Breda, 2012 SCC 17. However, the appellant submitted that jurisdiction is presumptive and could be rebutted in this case because the connection between the subject matter and Ontario was weak, and the appellant’s head offices were in Ontario.

The Court of Appeal rejected the appellant’s reasoning and held that there were clear real and substantial connections between the subject matter and the action. Aside from the presence of the parties in Ontario, the contract between the parties was negotiated and signed by the respondent in Ontario. As such, the corporate decision to enter into the contract was made by its corporate decision-makers in Ontario, and the alleged breach of contract would have taken place in Ontario as well as Halifax.

Therefore, the Court of Appeal agreed with the motion judge’s decision that Ontario had clear jurisdiction.

FORUM NON CONVENIENS

However, the Court of Appeal reaffirmed that they retain residual discretion to displace a plaintiff’s right to choose the forum to adjudicate their claim if the defendant satisfies the burden of demonstrating that another jurisdiction is clearly the more appropriate forum.

Factors a court may consider when determining forum non conveniens generally include[1]:

  1. the relative strengths of the parties connections to each forum;
  2. the interests of both parties: the comparative convenience and expense for the parties to the proceeding and for their witnesses in litigating in the court or in any alternative forum, including the domicile of the parties, and the locations of witnesses and of pieces of evidence;
  3. the law to be applied to issues in the proceeding;
  4. the desirability of avoiding a multiplicity of legal proceedings, and of avoiding conflicting decisions in different courts;
  5. the enforcement of an eventual judgment;
  6. juridical advantage or disadvantage;
  7. the interests of justice, including the fair and efficient working of the Canadian legal system as a whole.

When considering these factors, the Court of Appeal noted that many of the factors equally favored both Ontario and Nova Scotia jurisdictions.

When considering the pleadings, the Court of Appeal found that the allegations in the respondent’s statement of claim in the Ontario action mirrored those in the respondent’s third-party claim against the appellant in the Omega action in Nova Scotia. As such, it was the Court of Appeal’s view that all the principal issues between the respondents and the appellants in both actions overlapped, which would lead to the likelihood of inconsistent findings. The trial judges in both provinces would be required to make findings on the same issues and evaluate the same expert evidence based on how the pleadings currently stand. Accordingly, the Court of Appeal concluded that Nova Scotia was clearly the more appropriate forum of jurisdiction.

Furthermore, it was the appellant’s alternative position on appeal was that an interim stay should be granted pending the determination of the status of the Nova Scotia proceedings. The respondents did not oppose to this temporary stay. As a result, the Court of Appeal ordered that the Ontario action be stayed on an interim basis and without prejudice to the parties returning before the Ontario Courts to lift the stay.

CONCLUSION

The appeal was allowed on the basis that Nova Scotia was clearly the more appropriate forum for the hearing. As such, the Court of Appeal stayed the action on an interim basis without prejudice to the parties

[1] Club Resorts Ltd. v. Van Breda, 2012 SCC 17, para 105, 107, 110, 111