COURT OF APPEAL FOR ONTARIO

CITATION: 778938 Ontario Limited v. EllisDon Corporation, 2023 ONCA 182

DATE: 20230317

DOCKET: COA-22-CV-0119

Roberts, Nordheimer and Favreau JJ.A.

BETWEEN

778938 Ontario Limited o/a Starfish Properties and The Roy Building Limited

Plaintiffs
(Respondent)

and

EllisDon Corporation

Defendants
(Appellant)

 

Jeff Van Bakel and Samantha Gordon, for the appellant

Marco P. Falco and Aleksander Jovanovic, for the respondents

Heard: February 28, 2023

On appeal from the order of Justice Frederick L. Myers of the Superior Court of Justice, dated July 9, 2021.

REASONS FOR DECISION

[1]          This appeal raises the issue of the Ontario court’s jurisdiction over the subject matter of an action that overlaps with proceedings commenced earlier in Nova Scotia involving the same parties.

[2]          The appellant appeals from the motion judge’s dismissal of its motion to stay the Ontario action on the basis that Ontario does not have jurisdiction over the subject matter of the action and Nova Scotia is clearly the more convenient forum for the adjudication of the parties’ dispute.

[3]          Due to an unfortunate recording error, the motion judge’s reasons were only partially transcribed, thus foreclosing meaningful appellate review. As a result, we have undertaken afresh the analysis of these issues.

[4]          For the reasons that follow, we conclude that Ontario has jurisdiction simpliciter over the subject matter of the action. However, as we shall explain, Nova Scotia is clearly the more convenient forum for the adjudication of this dispute. We therefore allow the appeal and stay the Ontario action on the terms set out at the end of these reasons.

A.       Factual Overview

[5]          The subject matter of the Ontario and Nova Scotia proceedings concerns the respondents’ condominium construction project in Halifax, Nova Scotia (“the project”). 778938 Ontario Limited o/a Starfish Properties (“778938”) is an Ontario registered corporation and The Roy Building Limited (“The Roy”) is incorporated under the laws of Canada. They are related corporations and share common directors and officers. 778938 originally owned the property on which the project is being developed; on or about February 16, 2016, it transferred legal title and all beneficial interests to The Roy. The Roy contracted with the appellant, EllisDon Corporation (“EllisDon”), to provide pre-construction and construction management services in relation to the project. EllisDon is a registered Ontario corporation, with offices in Mississauga and Ottawa. All parties are extra-provincial corporations, duly registered to carry on business in Nova Scotia.

[6]          On October 2, 2019, one of the subtrades engaged to provide services on the project, Omega Formwork Inc. (“Omega”), commenced an action in Nova Scotia against the respondents, 778938 and The Roy. Omega’s contract was signed with 778938. The Roy assumed the contract as owner after the transfer of title to the property. Omega alleged improper holdbacks by the respondents and mismanagement and delays by EllisDon and its consultants on the project for which the respondents were responsible. On November 29, 2019, the respondents defended and counterclaimed against Omega. On January 25, 2020, the respondents also commenced a third party claim against EllisDon, seeking contribution and indemnity for any damages awarded to Omega. On June 30, 2020, EllisDon responded with a defence and counterclaim against the respondents, claiming damages that were not limited to issues related to Omega, but encompassed the entire project. On July 8, 2020, the respondents delivered a defence to EllisDon’s counterclaim.

[7]          Prior to EllisDon’s delivery of its defence and counterclaim, on May 29, 2020, the respondents commenced the Ontario proceedings against EllisDon by issuing a notice of action and on or around June 9, 2020, delivered a statement of claim. They seek damages of around $20 million against EllisDon, alleging mismanagement and delay by EllisDon in relation to the entire project in Halifax. EllisDon has not yet defended the action. Instead, it brought a motion to contest the jurisdiction of the Ontario court, arguing that the court lacks jurisdiction simpliciter because of an absence of a real and substantial connection with the subject matter of the action, and that Nova Scotia is clearly the more appropriate jurisdiction in which to try the dispute.

[8]          The motion judge dismissed EllisDon’s motion and delivered oral reasons. Due to an unfortunate recording error and through no fault of the motion judge, his oral reasons were only partially transcribed. As a result, we are left with only the motion judge’s conclusion on the jurisdiction simpliciter issue – that the Ontario court “has clear jurisdiction” over the subject matter of the action – and his incomplete analysis and conclusion in relation to the forum non conveniens issue. The motion judge rejected EllisDon’s position that Nova Scotia was clearly the more appropriate forum. He concluded that any risk of inconsistent findings could be obviated by creative case management between the jurisdictions and collaboration among the parties.

B.       Issues

[9]          EllisDon raises three issues:

i.             Did the motion judge err in concluding that Ontario has jurisdiction simpliciter over the subject matter of the action?

ii.            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?

iii.           In any event, should this court undertake afresh the analysis on both issues because of the absence of the entirety of the motion judge’s reasons?

C.       Analysis

[10]       As we earlier indicated, the partial transcription does not contain a sufficient portion of the motion judge’s reasons to permit meaningful appellate review. Essentially, we are left only with the motion judge’s conclusions on the two issues of jurisdiction simpliciter and forum non conveniens. It is not fair to the parties nor to the motion judge to review his conclusions without his full reasons.

[11]       If we reached the conclusion that the recording error foreclosed meaningful appellate review, the parties asked this court to determine the issues. We are in a position to do so under s. 134(1)(a) of the Courts of Justice Act, R.S.O. 1990, c. C.43, because of the nature of the issues and the record: Earl v. McAllister, 2021 ONSC 4050 (Div.Ct.), at para. 52.

(i)         Jurisdiction simpliciter

[12]       EllisDon did not seriously challenge that jurisdiction simpliciter is established in this case by the presence of one or more of the presumptive connecting factors that underlie the real and substantial connection test articulated by the Supreme Court of Canada in Club Resorts Ltd. v. Van Breda, 2012 SCC 17, [2012] 1 S.C.R. 572, at paras. 82, 90.[1] EllisDon conceded that the parties are headquartered, domiciled and carry on business in Ontario. This is not the case of an out-of-town defendant.

[13]       However, EllisDon argues that this jurisdiction is presumptive, and is rebutted because there is a very weak connection between the subject matter of the action and Ontario.

[14]       We reject EllisDon’s argument for the following reasons.

[15]       We are not persuaded that EllisDon has demonstrated that there is such a weak relationship between the forum and the subject-matter of the litigation that the proposed assumption of jurisdiction would be inappropriate: Van Breda, at paras. 81, 97.

[16]       In our view, assumed jurisdiction is clearly made out here by the real and substantial connection between the subject matter of the action and the forum. In addition to the presence of the parties in Ontario, there are other connecting factors. The contract was negotiated by the parties in Ontario and signed in Ontario by The Roy, at its headquarters in Ontario. There is no evidence as to where EllisDon signed the contract other than that the signatory was an employee resident in Nova Scotia who had come to Ontario during the contract negotiations. However, there is no issue that EllisDon is an Ontario registered corporation. It is therefore a fair inference that, regardless of who actually signed the contract, the corporate decision to enter into the contract was made by its corporate decision-makers located in EllisDon’s head office in Ontario. Moreover, the respondents’ unchallenged evidence is that in addition to EllisDon’s personnel in Halifax, consultants from EllisDon located in Ontario worked on the project, and the overall supervision of the project was by upper management of EllisDon located in Ontario. As a result, the alleged breach of contract and negligent supervision are asserted to have taken place in Ontario, as well as in Halifax.

[17]       Accordingly, we agree with the motion judge’s conclusion that the Ontario court “has clear jurisdiction.”

 (ii)        Forum non conveniens

[18]       That Ontario has jurisdiction simpliciter, however, is not the end of the analysis. The court retains the residual discretion to displace a plaintiff’s right to choose the forum for the adjudication of its claim and decline jurisdiction if the defendant satisfies its burden of demonstrating that another jurisdiction is clearly the more appropriate forum: see, e.g., Vale Canada Limited v. Royal & Sun Alliance Insurance Company of Canada, 2022 ONCA 862, at para. 147. The Supreme Court of Canada in Van Breda, per LeBel J., at para. 109, described the defendant’s burden and the court’s correct approach as follows:

The burden is on a party who seeks to depart from this normal state of affairs to show that, in light of the characteristics of the alternative forum, it would be fairer and more efficient to do so and that the plaintiff should be denied the benefits of his or her decision to select a forum that is appropriate under the conflicts rules. The court should not exercise its discretion in favour of a stay solely because it finds, once all relevant concerns and factors are weighed, that comparable forums exist in other provinces or states. It is not a matter of flipping a coin. A court hearing an application for a stay of proceedings must find that a forum exists that is in a better position to dispose fairly and efficiently of the litigation. 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.

[19]       Factors that a court may consider in deciding whether to apply forum non conveniens may vary depending on the context, but generally include the following:

i.             the relative strengths of the parties’ connections to each forum;

ii.            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;

iii.           the law to be applied to issues in the proceeding;

iv.           the desirability of avoiding a multiplicity of legal proceedings, and of avoiding conflicting decisions in different courts;

v.            the enforcement of an eventual judgment;

vi.           juridical advantage or disadvantage;

vii.         the interests of justice, including the fair and efficient working of the Canadian legal system as a whole.

(Van Breda, at paras. 105, 107, 110, 111)

[20]       In the present case, many of the relevant factors almost equally favour both jurisdictions:

•        The parties’ connections to each forum: they all are domiciled and carry on business in Ontario; however, the project is located in Nova Scotia.

•        The comparative convenience and expense for the parties and witnesses: the number and location of key witnesses are split between Ontario and Nova Scotia; documents can be produced in either jurisdiction; and neither side has alleged any financial prejudice in adjudicating the proceedings in Nova Scotia or trying the action in Ontario.

•        Enforcement: both jurisdictions have reciprocal enforcement statutes.

•        Applicable law: the contract stipulates that it will be interpreted in accordance with Nova Scotia law; however, there was no expert evidence explaining the applicable law of Nova Scotia and whether it differs from the applicable law of Ontario.

•        Loss of juridical advantage: the respondents raise the spectre of the expiry of the relevant limitation period if they start a new action in Nova Scotia; however, EllisDon has undertaken to waive and not rely on any applicable limitation period.

[21]       EllisDon submits, as it did below, that the determination of the forum issue really turns on the consideration of the inevitable risk of inconsistent findings caused by a clear and unnecessary multiplicity of proceedings. It argues that the respondents’ third party claim and EllisDon’s counterclaim reflect the breadth of the Ontario action.

[22]       We agree. While EllisDon’s claim for damages in its counterclaim is not entirely particularized, we do not share the motion judge’s observations that EllisDon’s counterclaim is limited to a claim for “$400,000 in outstanding invoices” asserted against the respondents nor that that “the only relevant facts will be issues that respond to or bear upon the invoices advanced by EllisDon.”

[23]       As pleaded in its counterclaim, EllisDon’s claim goes beyond its claim for unpaid invoices and puts into issue the respondents’ actions and its entire contractual relationship with EllisDon with respect to the whole Project, as follows:

EllisDon states that the actions of the [respondents], which include the imposition of significant changes in the Project’s design and Project delays, constitute breaches of the Agreement by The Roy Building Limited which have caused significant economic loss to EllisDon, particulars of which include, but are not limited to, lost revenue, lost profit, and extended duration and construction management costs, for which The Roy Building Limited is liable. [Emphasis added.]

[24]       The respondents’ statement of claim in the Ontario action similarly puts into issue its contractual relationship with EllisDon and its actions that the respondents plead amount to a breach of contract and negligence. The allegations include that EllisDon failed to properly manage and monitor the trades’ work on the project and provide notices of default where the trades were delayed, including to Omega.

[25]       When a comparison between the respondents’ third party claim and their Ontario action is made, it will be seen that the allegations in the respondents’ statement of claim mirror those in the respondents’ third party claim against EllisDon in the Omega action. While the respondents’ third party claim for damages is capped at those damages that may be awarded to Omega, their allegations in support of their third party claim, as in their amended Ontario statement of claim, broadly encompass all of EllisDon’s work on the project, specifically in the particulars set out in subparagraphs 11. (a) to (i) below:

11. The Defendants state that if the Plaintiff suffered any injury, loss or damages for which the Defendants, or either of them is found liable, in whole or in part to the Plaintiff, all of which is not admitted but denied, then such injury, loss or damage was caused or contributed to by the breach of the Construction Management Contract and/or negligence of [EllisDon], particulars of which include failing to, inter alia:

(a) exercise the care and skill required of a reasonably competent construction manager;

(b) coordinate, schedule, and monitor the work of trade contractors on the Project in a good and workmanlike manner or in accordance with the Construction Management Contract;

(c) document and coordinate the rectification of deficiencies on the Project;

(d) notify The Roy of defaults by trade contractors;

(e) hold sufficiently frequent trade coordination meetings;

(f) comply with the Project Schedule;

(g) properly staff the Project;

(h) properly manage and supervise its employees; and

(i) such further and other breaches or negligence as may appear.

[26]       We do not come to the motion judge’s conclusion that the Omega action and EllisDon’s counterclaim are “the tail…wagging the dog” and that EllisDon was importing issues from the Ontario action into the Nova Scotia action.  EllisDon was not tactically or otherwise broadening the scope of the Omega action; rather it was the respondents that first expanded the issues in the Omega action beyond the dispute with Omega to encompass EllisDon’s management of the entire project. EllisDon was entitled, and indeed obliged, to respond to all the respondents’ allegations that went beyond EllisDon’s interactions with Omega.

[27]       In our view, all the principal issues between the respondents and EllisDon in both actions overlap, leading to the likelihood of inconsistent findings. It is therefore difficult to see how case management can avoid the potential for inconsistent findings unless the parties agree that the Nova Scotia court will not determine the respondents’ third party claim and EllisDon’s counterclaim. As the pleadings currently stand, trial judges in both provinces will be required to make findings on the same issues. They will also presumably be required to evaluate the same expert evidence.

[28]       Accordingly, we conclude that Nova Scotia is clearly the more appropriate forum for the hearing of the dispute as it is presently pleaded.

[29]       The parties submit that it may be necessary to amend the pleadings, conduct a few more days of oral discovery, or seek a couple of further trial days in Nova Scotia. The examinations for discovery in the Omega action are complete and the action has been set down for trial for 15 days in November and December 2024. Given the status of the proceedings, including the scheduling of the trial some 20 months away, there is no indication that these steps cannot be accommodated if the parties cooperate and seek case management at their earliest opportunity.

[30]       EllisDon’s alternative position on this appeal is that an interim stay should be granted pending the determination of the status of the Nova Scotia proceedings and the resolution of the procedural and practical issues that we have raised in the above paragraphs. As an alternative position, the respondents are not opposed to a temporary stay. Indeed, they proposed that the Ontario action could be held in abeyance pending the determination of the Omega action to see what issues remained for determination in the Ontario action.

[31]       As a result, we order that the Ontario action be stayed on an interim basis and without prejudice to the parties returning before the Ontario Superior Court of Justice to ask to lift the stay, once they have sorted out how the proceedings will unfold in Nova Scotia. We note that there is nothing preventing the parties from coming to an agreement to limit the issues to be tried in Nova Scotia, including to hive off the respondents’ third party claim and EllisDon’s counterclaim and have those issues tried in the Ontario action. Indeed, this or another resolution in Nova Scotia that would avoid duplication with the Ontario proceedings would seem to be the only result that would justify lifting the stay of the Ontario action.

D.       Disposition

[32]       Accordingly, we allow the appeal on the basis that Nova Scotia is clearly the more appropriate forum for the hearing.

[33]       We therefore stay the Ontario action on an interim basis without prejudice to the parties returning before the Ontario Superior Court of Justice to argue that the stay should be lifted to permit the Ontario action to proceed, once they ascertain the status of the Nova Scotia proceedings.

[34]       The parties agreed that if EllisDon were successful on the forum non conveniens issue, it would be entitled to its partial indemnity costs in the amount of $15,000, and that the costs ordered by the motion judge should be to the successful party in the cause of the Ontario action. We so order.

 

“L.B. Roberts J.A.”

“I.V.B. Nordheimer J.A”

“L. Favreau J.A.”