Ontario Courts Refuse to Stay Action Against Nigerian Defendants

The Court of Appeal for Ontario released its decision in James Bay Resources Limited v. Mak Mera Nigeria Limited, 2015 ONCA 781  this week.  This is an appeal by Nigerian appellants who had lost a motion to stay an action brought by James Bay Resources Limited (“James Bay Resources”) on the ground that the Ontario courts lacked “jurisdiction simpliciter” and Ontario was not the convenient forum for the determination of the dispute between the parties. 

 

James Bay Resources entered into a Memorandum of Understanding (“MOU”) with the appellant, Adewale Olorunsola (“Sola”) on March 3, 2011.  The MOU was negotiated and signed in Ontario.  It set out an arrangement between the parties with respect to the acquisition of Nigerian oil and gas assets. 

 

On February 12, 2012, James Bay Resources and the appellant, Mak Mera Limited (“Mak Mera”) entered into a letter agreement which replaced the MOU (“Agreement”).  The Agreement was far more detailed than the MOU.  Sola signed both the MOU and the Agreement.

 

A dispute arose between the parties in respect of the contractual arrangements.  The dispute was fueled by a letter sent by Mak Mera to Royal Dutch Shell PLL on July 2, 2014.  The letter was copied to James Bay Resources, as well as to many others, including the Nigerian Ambassador to Canada and a number of officials of the Nigerian government.  Madam Justice MacFarland of the Court of Appeal found that absence truth, the statements made in the letter were "quite clearly defamatory" of James Bay Resources.

 

On September 4, 2014, James Bay Resources commenced proceedings against Mak Mera and Sola in Ontario.  On September 16, 2014, Mak Mera, Sola and Sola’s father-in-law (a Nigerian resident and Chairman of Mak Mera), commenced an action in Nigeria against numerous parties including James Bay Resources and its CEO, Stephen Shafsky.  Some of the claims in the Nigerian action were similar to those in the Ontario action. 

 

James Bay Resources moved in The Federal High Court of Nigeria to strike the Nigerian action on the grounds that the Nigerian court lacked jurisdiction.  It was unsuccessful.  James Bay Resources is appealing that order.

 

On March 2, 2015, Mak Mera and Sola moved to strike or permanently stay the Ontario action.  Justice Paul Perell of the Ontario Superior Court of Justice concluded that Ontario had jurisdiction simpliciter and identified several presumptive factors that would apply, including that Sola is an Ontario resident and both the MOU and the Agreement were negotiated and signed in Ontario.  Justice Perell also found that the Agreement provides that it is governed by Ontario law and contains a choice of forum clause that names Ontario as the jurisdiction where any disputes would be resolved.  He noted, “Neither Mak Mera nor Mr. Sola has advanced any cogent argument that there is a rebuttal of the contractual connection as a presumptive factor.  Their arguments may be relevant to the issue forum conveniens, but jurisdiction is not rebutted.”.  Mak Mera and Sola appealed to the Court of Appeal. 

 

The appellants made no oral submissions rebutting the contractual connection as a presumptive factor.  Justice MacFarland held that the arguments raised on appeal went to the merits of the claims, not to jurisdiction of the Ontario courts.  Those issues did not displace or challenge the fact that both agreements (the MOU and the Agreements) were negotiated and signed in Ontario and that Sola is an Ontario resident – both are strong, presumptive factors.   

 

The appellants also argued that Justice Perell had erred in law by failing to specifically consider comity in his analysis.  Justice MacFarland embarked on a detailed analysis of the goal of comity in jurisdictional motions.  She referred to the decision of the Supreme Court of Canada in Van Breda v. Village Resorts, [2012] 1 SCR572:

 

The goal of the modern conflicts system is to facilitate exchanges and communications between people in different jurisdictions that have different legal systems.  In this sense it rests on the principle of comity.  But comity itself is a very flexible concept.  It cannot be understood as a set of well-defined rules, but rather as an attitude of respect for and deference to other states and, in the Canadian context, respect for and deference to other provinces and their courts.  Comity cannot subsist in private, international law without order, which requires a degree of stability and predictability in the development and application of the rules governing international or inter-provincial relationships.  Fairness and justice are necessary characteristics of a legal system, but they cannot be divorced from the requirements of predictability and stability which assure order in the conflicts system.   In the words of LaForest J., in Morguard, “what must underlie a modern system of private, international law and principles or order and fairness, principles that ensure security of transactions with justice”.

 

Accordingly, Justice MacFarland found that comity is not a stand-alone factor.  She held that it was part and parcel of the forum non conveniens assessment in a given case.  In dismissing the appeal, Justice MacFarland held that Justice Perell had considered the issue of comity in his analysis.  He had done so implicitly when he outlined and considered all of the relevant factors in coming to his conclusion that Nigeria was not the more convenient forum. 

 

Justice Perell was aware of the Nigerian litigation which was started after the Ontario action.  He was aware that James Bay Resources had filed a statement of defence in that action, and brought an unsuccessful motion to strike and was appealing the dismissal of its motion.  The appellants had cited no law for their argument that by filing a statement of defence in the Nigerian action, James Bay Resources had attorned to the jurisdiction of the Nigerian courts. 

 

Justice MacFarland agreed with Justice Perell’s conclusion that “balancing all factors, Nigeria is not clearly the appropriate forum for the dispute and Ontario is not forum non conveniens.”.

Regards,

Blair

 

 

Man can sue in Ontario for Lashes given in Qatar

Earlier this month, Master R.A. Muir, of the Ontario Superior Court of Justice, refused to stay an action commenced in Ontario by Fakhrul Islam Kazi against Qatar Airlines and others, as a result of his alleged treatment at the hands of officials in Qatar's criminal justice system. The Master found that the defendants had not met the burden of showing why the court should decline to exercise its jurisdiction and displace Ontario as the forum chosen by the plaintiff with another forum, i.e. Qatar.   

In the case (reported at Kazi v. Qatar Airlines, 2013, ONSC1370), the plaintiff boarded an Air Canada flight from Toronto to London's Heathrow airport. His ultimate destination was Dhaka, Bangladesh. However, his itinerary included a connecting flight between Heathrow to Doha, Qatar, on a flight operated by the defendant, Qatar Airlines.

During the course of the flight from London to Qatar, the plaintiff was involved in a dispute with members of the flight crew who alleged that he was smoking in a lavatory, consuming alcohol and behaving in an unruly and disruptive fashion. As a result, the flight crew notified airport security and the plaintiff was detained upon landing in Doha.

Mr. Kazi was charged with two offences under the laws of Qatar:

(a) drinking wine while being a Muslin; and

(b) disturbing the peace as a result of alcohol consumption.

Mr. Kazi was incarcerated in Qatar for almost two months. He was found guilty and sentenced to receive 40 lashes and pay a fine of approximately $550.

After returning to Canada, Mr. Kazi alleges that he suffered numerous injuries and damages as a result of his treatment while detained. He commenced a lawsuit against the defendants alleging that they had a duty to warn him of the prevailing laws of Qatar with respect to the consumption of alcohol by Muslims and that they had failed to take all reasonable steps to ensure that he was properly informed of such laws.

The defendants subsequently brought a motion seeking to stay the action on the basis that Qatar was the more appropriate forum in which to litigate the dispute.

In reviewing the law as set out by the Supreme Court of Canada's decision in Club Resorts Ltd. v. Van Breda, 2012, SCC17,  the Master concluded that Qatar was not clearly a more appropriate forum for disposing of the issues raised in the action. The Master reviewed factors such as the location of the witnesses and the expense required for them to travel to the place of trial and  the issue of the law to be applied to the claim, both of which he saw were neutral factors.  In applying the test set out in Van Breda, the Master reaffirmed that courts should use an analytical approach to establish the existence of a real and substantial connection between the case and  Ontario, and determine whether there was a similar connection to Qatar.  In this instance, the defendant had not shown that Qatar was clearly "in a better position to dispose fairly and efficiently of the litigation".

Regards,

Blair

Ontario Court refuses to assume jurisdiction in a New York MVA

In a recently released decision, Mr. Justice Perell of the Ontario Superior Court of Justice permanently stayed an action brought by a plaintiff who resided in Ontario, but who was struck by a motor vehicle while she was crossing a street in New York state. Justice Perell found that none of the presumptive factors which would give Ontario "jurisdiction simpliciter", i.e. a real and substantial connection to the action, were present in the case.

The plaintiff sued the driver of the motor vehicle for negligence. She also sued her insurance company under the under-insured coverage of her standard motor vehicle insurance policy. The defendant moved to have the plaintiff's action permanently stayed on the grounds that the Ontario Court did not have jurisdiction simpliciter, or alternatively, that Ontario was not the convenient forum for litigating the action.

The plaintiff did not oppose the motion. However, her insurance company which had cross-claimed against the defendant opposed the motion.

Justice Perell ruled that the Ontario Court did not have jurisdiction simpliciter over either the main action or the crossclaim. Because there was no jurisdiction simpliciter it was not necessary to rule on whether Ontario was "forum conveniens" - i.e. the more appropriate forum in which to litigate. However, since there may be an appeal, he ruled that Ontario is forum non-conveniens (i.e. not the more appropriate forum for litigating the action) and that New York was the proper forum in which to litigate the tort claim against the defendant.

After reviewing the facts, Justice Perell held that there were three ways in which the court could assert jurisdiction against an out of province defendant in a tort claim:

1. based on the defendant's presence in the jurisdiction;

2. based on the defendant's consent; and

3. based on the court's assumption of jurisdiction.

In the circumstances, this case was about "assumed jurisdiction".

Assumed jurisdiction arises when the court takes jurisdiction because the action has a real and substantial connection to Ontario. Justice Perell reviewed the recent decision of the Supreme Court of Canada in Club Resorts Ltd. v. Van Breda and the "analytical framework and legal principles" set out by the court in that case.

In concluding there was no jurisdiction simpliciter to Ontario, the judge reviewed the "presumptive" factors established by the Supreme Court and found that, the defendant was not domiciled or resident in Ontario; the defendant did not carry on business in Ontario; the tort was committed outside Ontario; and there was no contract connected with the dispute which was made in Ontario.

As for the factor that there was no contract connected with the dispute which was made in Ontario, Justice Perell concluded that the defendant was not a party to the contract between the insurance company and the plaintiff . The plaintiff's claim under her insurance policy could be tried without the defendant as a party (that might explain why the plaintiff was not opposing the defendant's motion). She intended to litigate in Ontario and leave the insurance company with the problem of re-litigating the issue in the United States.

The insurance company argued that the plaintiff's contract action against it had to be brought in Ontario and therefore the insurance company had a right of subrogation against the defendant. It argued that if the Ontario action was stayed against the defendant, it would have to litigate in two different jurisdiction with the possible of inconsistent judgments. Essentially, the insurance company's argument for assumed jurisdiction was that the defendant was a necessary party to the crossclaim and that his presence in the Ontario action was necessary to avoid a multiplicity of proceedings.

Justice Perell rejected the insurance company's argument based on the Ontario Court of Appeal's reasoning in the Club Resorts case.  The Ontario Court of Appeal held that damages being sustained Ontario or the fact that the foreign defendant was a necessary party are not presumptive factors that the court should take into account.

With respect to the issue of forum conveniens, Justice Perell reviewed the list of factors that the courts may consider in determining which forum was the more appropriate forum for the action: The defendant and two witnesses were in New York; the tort occurred in New York;  American law will govern liability; and quantification of damages would be governed by Ontario law. Considering all of these circumstances, the judge declined to exercise the court's jurisdiction. He ruled "It does not strike me as fair or unreasonable to make Ms. Misura travel to the jurisdiction where the action occurred and where the tortfeasor resides".

Regards,

Blair

Jurisdiction of Canadian Courts over Foreign Subject Matters

In two separate cases that were heard together at the Supreme Court of Canada in 2012, the court ruled that the courts of Ontario had jurisdiction to hear two lawsuits that were brought against tour companies offering vacations in Cuba where Ontario tourists were injured or killed while vacationing in Cuba.

In the first case, Morgan Van Breda suffered catastrophic injuries on a beach in Cuba. In the second case, Claude Charron died while scuba diving in Cuba. The plaintiffs brought actions in Ontario against a number of parties including Club Resorts Ltd., a company incorporated in the Cayman Islands that managed the two hotels where the accidents had occurred. Club Hotels sought to have the Ontario actions stayed on the basis that the courts of Ontario lacked jurisdiction and, alternatively, that Cuban courts would be the more appropriate forum for lawsuits based on the legal principal of forum conveniens.

In both cases, motions judges found that the Ontario courts had jurisdiction to hear the actions against Club Resorts. They also found that the Ontario court was clearly the more appropriate forum. Appeals of the ttwo cases were heard together in the Ontario Court of Appeal which dismissed the appeal of Club Resorts. The Supreme Court of Canada dismissed Club Resorts further appeal for the following reasons.

The court held that the cases concern the elaboration of the "real and substantial connection test (jurisdiction simpliciter)" and whether that test is an appropriate common law rule for the assumption of jurisdiction by a Canadian court. Under the jurisdiction simpliciter test, the Supreme Court held that a court can assume jurisdiction over a certain claim where, relying on a set of specific factors, those factors are given presumptive effect. The court held that it was preferable to have a system that had order and would permit the development of a just and fair approach to resolving conflicts.

To meet the real and substantial connection test, the party arguing that the court should assume jurisdiction over the case has the burden of identifying a presumptive connecting factor that links the subject matter of the case to the forum (Ontario in these appeals). Jurisdiction must be established primarily on the basis of objective factors that connect the legal situation or the subject matter of the litigation with the forum.

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:

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

2. the defendant carries on business in the province;

3. the tort was committed in the province; and

4. a contract connected with the dispute was made in the province.

Although these factors are considered presumptive, it does not mean that the list of factors is complete and a court can consider when and whether a new connecting factor should be given presumptive effect.

The burden of rebutting the presumption of jurisdiction rests with the party challenging the court's assumption of jurisdiction. That party must negate the presumptive effect of the listed factors or any new factor that the court uses in assuming jurisdiction and convince the court that the proposed assumption of jurisdiction would be inappropriate. The party may accomplish this by establishing facts that demonstrate that the presumptive connective factor does not point to any real relationship between the subject matter of the litigation and the forum or points only to a weak relationship.

If jurisdiction is established, the claim may proceed subject to the courts discretion to stay the proceedings on the basis of forum conveniens.

In Van Breda, the presumptive factor was that a contract had been entered into in Ontario. The Supreme Court held that the existence of a contract made in Ontario entitled the courts of Ontario to assume jurisdiction and Club Resorts had failed to rebut the presumption of jurisdiction.

In respect of whether Cuban courts would be clearly the more appropriate forum, the court held that a trial in Cuba would present serious challenges to the parties and that all things considered, the burden on the plaintiffs would be far heavier if they were required to bring their action in Cuba.

In the Charron case, the presumptive factor was that Club Resorts carried on business in Ontario. It had a fiscal presence in Ontario and had offices in Ontario. Club Resorts did not rebut that presumption of jurisdiction.

It also failed to discharge the burden of showing that a Cuban court would be clearly the more appropriate forum in the circumstances of the case.

Regards,

Blair

Supreme Court of Canada Enforces Choice of Forum Clause

Momentous.ca Corp. v. Canadian American Association of Professional Baseball Ltd., 2012 SCC 9

Shortly after filing a statement of defence, the respondents Canadian American Association of Professional Baseball Ltd., and others moved under Rule 21.01(3)(a) of the Ontario Rules of Civil Procedure, R.R.O. 1990, to dismiss a claim against them on the ground that Ontario Courts had no jurisdiction because the appellants had signed agreements providing that disputes would be arbitrated or litigated in North Carolina. The motion judge dismissed the action against all the respondents on the basis of these arbitration and forum selection clauses and the Ontario Court of Appeal for Ontario upheld the decision.
The issue before the Supreme Court of Canada was whether the defendants could move under Rule 21.01(3)(a) to seek dismissal of the action based on the arbitration and forum selection clauses in the agreements, notwithstanding the delivery of a statement of defence. The appellants argued that a party that delivers a statement of defence on the merits is precluded from relying upon a forum selection clause, even where the statement of defence explicitly seeks to enforce the clause.

The Supreme Court dismissed the appeal and held that the defendants were entitled to bring a motion to dismiss the action because the parties had agreed to arbitrate and litigate disputes in another forum. Although the motion must be brought promptly, there is nothing in Rule 21.01(3)(a) that requires it to be brought before delivery of a statement of defence. Within the framework provided by the Ontario Rules of Civil Procedure, a statement of defence that specifically pleads a foreign forum selection clause does not amount to consent that Ontario assume jurisdiction so as to preclude consideration on the merits of whether to enforce the clause.

The appellants did not argue that there was any reason, apart from the delivery of a statement of defence, for the court to determine that there was “strong cause” for Ontario to displace the forum that the parties have agreed should resolve their disputes.

Regards,

Blair