Notable Cases

CITATION: Harrowand S.L. v. DeWind Turbines Ltd., 2014 ONSC 2014

COURT FILE NO.: CV-11-431831

DATE HEARD: February 24, 2014

ENDORSEMENT RELEASED: April 28, 2014

SUPERIOR COURT OF JUSTICE – ONTARIO

RE:  Harrowand S.L. v. DEWIND TURBINES LTD., DEWIND INC., DAEWOO SHIPBUILDING & MARINE ENGINEERING CO. LTD., DSME TRENTON LTD., COMPOSITE TECHNOLOGY CORPORATION, BENTON WILCOXON and ANDREW LOCKHART

BEFORE: Master R. Dash

COUNSEL: J. Gardner Hodder, for the plaintiff

Ira Nishisato and Katherine Menear, for the defendants Daewoo and DSME

Ronald Lachmansingh, for the defendant Wilcoxon

 

REASONS FOR DECISION

[1] Each of the defendants Daewoo, DSME Trenton and Wilcoxon move to set aside service ex juris of the statement of claim and to stay or dismiss the action against them on the basis that Ontario does not have jurisdiction. The defendants Daewoo and Wilcoxon also move to set aside the ex parte order of Master Hawkins authorizing substituted service of the statement of claim on them. Finally the defendant Wilcoxon also moves to stay or dismiss the action against him on the basis that Ontario is forum non conveniens.

OVERVIEW

[2] In a prior proceeding in Ontario the plaintiff obtained judgment against an American company and a British company for breach of an agreement to permit the plaintiff to market wind turbines in Ontario. During the currency of that proceeding, those companies, pursuant to an asset purchase agreement made in California, sold their assets relating to the wind turbine business to a Korean company. That agreement provided that the claims pending in the Ontario action would not be assumed by the purchaser. The judgment debtor companies thereafter ceased carrying on business and/or went bankrupt leaving the plaintiff with an uncollectable judgment. The plaintiff alleges that the Korean company reconveyed the wind turbine business to its Nova Scotia subsidiary (although that reconveyance is denied). In this action the plaintiff seeks to set aside the asset sale and alleged reconveyance as fraudulent transactions. The allegation is that the conveyances were intended to defeat the claim then pending in Ontario that was based upon breach of a contract to market products in Ontario. The primary issue is whether there is jurisdiction to try the fraudulent conveyance action in Ontario.

THE PARTIES

[3] The plaintiff Harrowand S.L. is a corporation registered in Andorra. Two principals of the company are referenced, Stephen CameronSmith, the plaintiff’s affiant, who resides in Ontario and Michael Spencer, who resides primarily in Spain.

[4] There are three related “DeWind defendants”. DeWind Turbines Ltd. (“DeWind UK”) is a company incorporated in the United Kingdom, was formerly known as EU Energy PLC and EU Energy Ltd. and carried on business in Europe. “DeWind U.K.” is used throughout this endorsement even if events occurred while under a predecessor name. DeWind Inc. (“DeWind Nevada”) was incorporated in November 2006 under the laws of Nevada (and later changed its name to Stribog Inc.). It is a matter of dispute on the evidence before me whether “EU Energy Inc.”, a Nevada corporation, was a subsidiary of DeWind UK or an alter ego of DeWind Nevada or both. Composite Technology Corporation (“CTC”) although incorporated in Florida, was a resident of Nevada at all material times. DeWind Nevada was a subsidiary of CTC and in July 2006 DeWind UK became a subsidiary of CTC. All or part of the DeWind business was the manufacture of wind turbines.

[5] The defendant Benton Wilcoxon has resided in California since 2001, was the Chief Executive Officer of CTC at all material times, was a director of DeWind Nevada and probably of DeWind U.K. The defendant Andrew Lockhart resides in Texas and was at material times the president of EU Energy Inc., and possibly of DeWind Nevada.

[6] There are two related Daewoo defendants. Daewoo Shipbuilding & Marine Engineering Co. Ltd. (“Daewoo”) is incorporated and resident in Korea and is in the business of building large commercial ships and offshore structures. It has no place of business nor does it do business in Ontario. DSME Trenton Ltd. (“DSTN”) was incorporated in 2010, is owned by Daewoo, has its business address in Nova Scotia and manufactures towers and blades for wind turbines. It has no place of business or registered office in Ontario, although there is a dispute whether it carries on business in Ontario (to be discussed further in this endorsement).

THE LETTER OF INTENT

[7] On February 20, 2006, the plaintiff entered into a letter of intent (“LOI”)with DeWind UK (then known as EU Energy PLC) and EU Energy Inc. to enter into a sales management agreement (“SMA”) to market to Canadian customers wind turbines produced by DeWind. Although the sales management contract was never signed the LOI provided that the terms set out in the LOI were binding until the SMA was signed.

[8] It is the evidence of Mr. CameronSmith that the LOI signed in February 2006 was negotiated and finalized in 2005 in Toronto. On that basis the plaintiff takes the position that the contract was made in Ontario.

[9] The plaintiff claims that it proceeded to locate Canadian customers (primarily in Ontario) for DeWind turbines pursuant to the agreement with the DeWind companies. The plaintiff thus asserts that it performed the contract primarily in Ontario. The plaintiff alleged that the DeWind companies failed to follow up with customers the plaintiff had located, failed to pay commissions to the plaintiff and on June 7, 2007 terminated their business relationship with the plaintiff. The plaintiff therefore asserts that the contract was breached in Ontario.

THE CONTRACT ACTION

[10] On December 14, 2007 the plaintiff commenced action 07-CV-345613 (the “Contract Action”) in Ontario against DeWind UK and DeWind Nevada for damages resulting from breach of the LOI.

[11] The DeWind defendants challenged the jurisdiction of the Ontario courts. They moved to set aside service outside Ontario and to stay the action on the basis that there was no real or substantial connection to Ontario and alternatively that Ontario was not the forum conveniens for the action. On February 6, 2009 Master Graham dismissed the motion. He determined that the claim arose out of a contract under which the parties contemplated that the plaintiff would be performing its contractual obligations under the LOI in Ontario and that by engaging the plaintiff to market their products in Ontario, the defendants were carrying on business in Ontario[1]. He therefore found there was a real and substantial connection of the action to Ontario.[2] He also found that there was no forum more convenient or appropriate than Ontario.[3]

[12] The defendants then filed a statement of defence in March 2009 in which they denied that the plaintiff had lived up to its obligations under the LOI, that the LOI was terminated by a subsequent letter agreement and release on March 30, 2006 (which the plaintiff denies)[4] and any ongoing informal arrangement was terminated on June 7, 2007.

[13] In April 2011 CTC filed for bankruptcy protection in the U.S. and the following month the defendants’ lawyers obtained an order removing them from the record. On July 6, 2011 Master Graham made an order that the defendants’ statement of defence be struck. On November 2, 2011 Justice Whitaker granted judgment in favour of the plaintiff against the defendants in the Contract Action for $15,262,751 exclusive of costs. As a result of the bankruptcy, the judgment against DeWind Nevada was vacated and the action against it stayed by order of Justice MacDonald. The judgment remained in effect as against DeWind UK and EU Energy Inc.

THE ASSET PURCHASE AGREEMENT (THE CONVEYANCE)

[14] On August 10, 2009, while the Contract Action was in progress, DeWind Nevada executed an Asset Purchase Agreement (“APA”) to sell to Daewoo all assets related to its wind turbine business for $46.5 million USD. (The sale of assets under the APA has also been referred to as the “Conveyance”). It is alleged that these assets included the very technology which created the sales opportunities under the LOI and which were the subject matter of the Contract Action. The APA was negotiated in California. CTC also signed the APA to guarantee the seller’s obligations under that agreement.

[15] Pursuant to the APA, Daewoo assumed certain liabilities of DeWind Nevada (primarily trade and operating liabilities) but specifically excluded other liabilities (called Excluded Liabilities) including:

any Liabilities arising from the consulting relationship with Harrowand S.L., including any accounts payable and any costs, fees or damages associated with any litigation related thereto (as described in Section 4.19(a) of the Seller Disclosure Schedule).

[16] Section 4.19(a) of the Seller Disclosure Schedule described the litigation as follows:

On December 14, 2007, Harrowand S.L. filed an action against DeWind Turbines, Ltd., Seller and EU Energy Inc. (collectively, “DeWind”) in the Ontario Superior Court of Justice for damages, unpaid fees and commissions in the amount of $14,917,000 in connection with the alleged breach of a letter of intent to enter into a sales management contract, which would grant Harrowand the exclusive right to market wind turbines produced by DeWind to Canadian customers. The business relationship was terminated in 2007. Harrowand admits the parties never executed, or entered into a sales management contract anticipated by the letter of intent. Harrowand alleges that it relied on the letter of intent and set about targeting Canadian customers for sales of DeWind’s turbines. In February 2009, the plaintiff prevailed on jurisdiction motion. The defendants delivered statement of defence to the plaintiff in March 2009. The parties exchanged affidavits of documents in May and July 2009.

[17] Daewoo relies on solvency representations by DeWind Nevada in the APA that DeWind Nevada will after closing of the sale agreement have sufficient assets in excess of liabilities to promptly satisfy any judgments against it taking into account all pending and threatened litigation, that the cash available will be sufficient to promptly pay all such judgments and that DeWind Nevada will not be rendered insolvent by the transactions contemplated in the APA. DeWind Nevada and CTC both agreed to indemnify Daewoo from breach of any representations and from any Excluded Liabilities.

[18] CTC then filed for bankruptcy protection in the United States in April 2011. It is unclear from the materials whether DeWind Nevada also separately filed for protection, but in any event it was a wholly owned subsidiary of CTC. None of the DeWind defendants have assets available to satisfy the judgment in the Contract Action.

THE CONVEYANCE ACTION

[19] On July 29, 2011, the plaintiff commenced this action (the “Conveyance Action”) for the alleged fraudulent conveyance of the DeWind wind turbine business and assets to Daewoo (the APA) and an alleged subsequent reconveyance of those assets to DSTN (the “Reconveyance”). The action named as defendants DeWind UK, DeWind Nevada, CTC and Daewoo, said to be the parties to the APA and as well as DSTN.

[20] The claim is also advanced against Wilcoxon and Lockhart personally, who as authorizing officers of the DeWind defendants, were parties to the fraudulent conveyance and as shareholders effected the Conveyance to benefit themselves. Lockhart neither defended nor brought a motion to stay and he has been noted in default.

[21] The plaintiff pleads that DSTN is using the very wind turbine technology acquired by Daewoo from DeWind Nevada and that DSTN is selling turbines to the very customers the plaintiff had brought forward on behalf of the DeWind defendants. The Daewoo defendants deny that such Reconveyance took place and state that DSTN does not manufacture or sell wind turbines, only towers and blades.

[22] The plaintiff pleads in the Conveyance Action that the APA and the Reconveyance were made with the intent to defeat the plaintiff as a creditor of the DeWind defendants, made with full knowledge of the plaintiff’s claims with no reservation to pay them and to put the assets of the DeWind defendants beyond the reach of the plaintiff. The DeWind Defendants were initially noted in default, but the action against them has been discontinued as a result of the bankruptcy stay.

[23] The plaintiff also claims damages against all defendants based on common law fraud in the amount of $15.5 million, approximately equal to the judgment in the Contract Action.

[24] In the statement of claim the plaintiff references and relies on subparagraphs 17.02(f) and in particular sub-subparagraphs (i) and (iv), (g), (h) and (p) in support of service outside of Ontario without leave. Subparagraph (h) was repealed by O. Reg. 231/13, which came into force on January 1, 2014, after the date of service. Those provisions read as follows:

17.02 A party to a proceeding may, without a court order, be served outside Ontario with an originating process or notice of a reference where the proceeding against the party consists of a claim or claims…

(f) in respect of a contract where,

(i) the contract was made in Ontario,..or…

(iv) a breach of the contract has been committed in Ontario, even though the breach was preceded or accompanied by a breach outside Ontario that rendered impossible the performance of the part of the contract that ought to have been performed in Ontario;

(g) in respect of a tort committed in Ontario…

(h) In respect of damage sustaineed in Ontario arisiong from a tort, breach of contract, breach of fiduciary dury or breach of confidence where ever committed…

(p) against a person ordinarily resident or carrying on business in Ontario…

[25] In addition, the plaintiff brought a motion ex-parte to extend time for service and for substituted service on the DeWind defendants, Wilcoxon and Daewoo. The motion was heard by Master Hawkins on March 6, 2012. The Master extended the time for service of the statement of claim, ordered service on Wilcoxon by mail in California, ordered service on Daewoo by serving it pursuant to the Hague Convention in Korea and by sending a copy to its Toronto lawyers, ordered service on the DeWind defendants and CTC by mailing a copy to the trustee in bankruptcy of CTC and extended the dates for delivery of a defence.

[26] The statement of claim was served personally on DSTN in January 2012. It appears that the other defendants were served pursuant to the substituted service order of Master Hawkins sometime after March 6, 2012, although I have not seen the affidavits of service.

[27] If I set aside service out of Ontario because there is no basis for such service under rule 17.02, I would also set aside the order for substituted service.

ASSUMPTION OF JURISDICTION: THE LAW

[28] The motion before me is brought under both rule 17.06 and section 106 of the Courts of Justice Act[5].Rule 17.06 provides:

17.06 (1) A party who has been served with an originating process outside Ontario may move, before delivering a defence, notice of intent to defend or notice of appearance,

(a) for an order setting aside the service and any order that authorized the service; or

(b) for an order staying the proceeding.

(2) The court may make an order under subrule (1) or such other order as is just where it is satisfied that,

(a) service outside Ontario is not authorized by these rules;

(b) an order granting leave to serve outside Ontario should be set aside; or

(c) Ontario is not a convenient forum for the hearing of the proceeding.

(3) Where on a motion under subrule (1) the court concludes that service outside Ontario is not authorized by these rules, but the case is one in which it would have been appropriate to grant leave to serve outside Ontario under rule 17.03, the court may make an order validating the service…

[29] Section 106 of the Courts of Justice Act provides:

106. A court, on its own initiative or on motion by any person, whether or not a party, may stay any proceeding in the court on such terms as are considered just.

[30] The moving parties seek to set aside service and stay the action on two grounds. Both the Daewoo defendants and Wilcoxon submit that Ontario cannot assume jurisdiction because of the absence of connecting factors that would establish a real and substantial connection with Ontario. In other words there is no jurisdiction simpliciter. Secondly, Wilcoxon argues that Ontario should not assume jurisdiction over him based on the doctrine of forum non conveniens.

[31] For Ontario courts to assume jurisdiction over defendants who do not reside in Ontario, the plaintiff has an onus of demonstrating that there is a real and substantial connection between the subject matter of the action, the defendants and Ontario. The court has developed a list of presumptive connecting factors to provide greater clarity, predictability and consistency to the determination of assumption of jurisdiction. The plaintiff bears the onus of establishing that one or more of the presumptive connecting factors for jurisdiction apply to the case.

[32] The list however is not exhaustive and a presumptive factor is rebuttable. If no listed or new presumptive factor applies or if a presumptive factor is rebutted, the court lacks jurisdiction on the basis of the real and substantial connection test and jurisdiction should not be assumed. On the other hand if a recognized presumptive factor applies, the court will have jurisdiction unless the party challenging the assumption of jurisdiction rebuts the presumption.[6]

[33] The list of presumptive factors in a tort case have been summarized by the Supreme Court as follows:

To recap, 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.[7]

[34] To rebut the presumption of jurisdiction when a recognized connecting factor applies:

The burden of rebutting the presumption of jurisdiction rests, of course, on the party challenging the assumption of jurisdiction. That party must establish facts which demonstrate that the presumptive connecting 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 between them. [8]

THE PRESUMPTIVE CONNECTING FACTORS

[35] The plaintiff concedes that none of the defendants are domiciled or resident in Ontario. The tort of fraudulent conveyance was committed outside Ontario.

[36] The plaintiff suggests three alternate connecting factors to Ontario.

[37] Firstly, the plaintiff argues that the defendant DSTN carries on business in Ontario, but withdraws the allegation that the defendant Wilcoxon carries on business in Ontario. Secondly, the plaintiff argues that the APA was an express agreement to defeat the plaintiff, a creditor with a claim pending in Ontario arising out of a contract made in Ontario and as such the dispute about the APA is “connected” with the LOI, a contract made in Ontario. Thirdly, the plaintiff argues that a claim under the Fraudulent Conveyances Act[9] is a statutory claim with status as an unlisted, but “new” connecting factor.

DSTN Carrying on Business in Ontario

[38] The plaintiff argues that DSTN carries on business in Ontario. DSTN was incorporated in Nova Scotia and has its offices in Nova Scotia. The evidence shows that DSTN has attended Canadian Wind Energy Association (“CANWEA”) trade shows as an exhibitor in 2010, 2011 and 2012 in different provinces, with the 2012 trade show being in Toronto. Its web page indicates it “is actively seeking to grow its client base and build its reputation as a high quality manufacturer of wind towers and blades.” In an Atlantic Business Summit in Toronto in 2011 DSTN gave a presentation that indicated that DSTN was expanding its blade production in Nova Scotia and is exploring “what export opportunities currently exist.” DSTN gave evidence before a Nova Scotia legislative committee that their main effort is focussed on the Atlantic region because Ontario relies heavily on local (Ontario) industry but that they had asked some federal politicians what could be done about opening up opportunities for them in other parts of Canada. It has referenced a CANWEA statement that Ontario has emerged as a very competitive destination for wind energy investments globally.

[39] From all of the above, the plaintiff concludes that DSTN is trying to expand its business into Ontario. While DSTN disputes that conclusion, even if it were true, a desire to carry on business in Ontario is insufficient to establish that DSTN is in fact carrying on business in Ontario:

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.[10]

[40] DSTN does not have an office in Ontario. Attending an annual trade show is not “regularly visiting” Ontario for business purposes. A desire to do business in Ontario, even if I accept that on the plaintiff’s evidence, is not the same as carrying on business in Ontario at this time.

[41] DSTN has not provided or contracted to provide any products or services in Ontario. It has however on one occasion in 2012 subcontracted with a tower manufacturer in Windsor, Ontario to provide temporary licensed welders and process workers for a 4-5 week period to work in the manufacturer’s facility. In my view lending a group of employees to work at an Ontario manufacturer’s plant does not amount to DSTN carrying on business in Ontario.

[42] Even if the limited involvement in Ontario could amount to the presumptive factor of carrying on business in Ontario, DSTN has rebutted that presumption by showing that any relationship between DSTN and Ontario based on the above described activities is a “weak relationship”.[11]

[43] Furthermore, the presumptive factor of carrying on business in the province “can be rebutted by showing that the subject matter of the litigation is unrelated to the defendant’s business activities in the province.”[12]

[44] While the plaintiff suggests that DSTN is using the very technology that Daewoo obtained in the APA and allegedly reconveyed to DSTN, there is no acceptable evidence to support that. To the contrary, while DSTN and DeWind Nevada are both in the wind energy business, DSTN has satisfied me that DeWind Nevada manufactured and sold wind turbines, whereas DSTN manufactures and sells only towers and blades, but not turbines. I am unable to determine on the conflicting evidence on this motion whether there was a reconveyance to DSTN of DeWind technology. That determination however is irrelevant to the “carrying on business” analysis since DSTN is not selling wind turbines in Ontario using DeWind technologies or otherwise (at least at this time).

[45] The plaintiff has not satisfied me that DSTN carries on business in Ontario and as such that presumptive connecting factor has no application to this action. I note that even if this argument had been successful it would not have been a connecting factor for any of the other defendants.

Statutory Torts

[46] The plaintiff argues that the list of presumptive connecting factors is not closed and that a new emerging connecting factor recognized in the jurisprudence is statutory torts. The Supreme Court has said as follows with respect to new presumptive factors:

As I mentioned above, the list of presumptive connecting factors is not closed. Over time, courts may identify new factors which also presumptively entitle a court to assume jurisdiction. In identifying new presumptive factors, a court should look to connections that give rise to a relationship with the forum that is similar in nature to the ones which result from the listed factors. Relevant considerations include:

(a) Similarity of the connecting factor with the recognized presumptive connecting factors;

(b) Treatment of the connecting factor in the case law;

(c) Treatment of the connecting factor in statute law; and

(d) Treatment of the connecting factor in the private international law of other legal systems with a shared commitment to order, fairness and comity.[13]

[47] In support of the “new” connecting factor of statutory tort, the plaintiff references the decision of the court of appeal in Ontario v. Rothman’s[14] upholding service ex juris on foreign tobacco manufacturers of a statement of claim seeking to recover the costs of health care services provided to the public as a result of tobacco related disease arising out of “tobacco related wrongs” pursuant to a stand-alone statutory right to sue that Ontario gave to itself under the Tobacco Damages and Health Care Costs Recovery Act, 2009 (“Tobacco Act”).[15]

[48] The court in Rothman’s concluded that the Tobacco Act created in effect a statutory tort of conspiracy alleged to have been committed in Ontario because a conspiracy occurs in the jurisdiction where the harm is suffered regardless of where the wrongful act occurred and in this case the damage was sustained in Ontario.[16] The court concluded that the action was therefore an action “in respect of a tort committed within Ontario” as contemplated by rule 17.02(g). As such it also qualified as a presumptive connecting factor of a tort committed in Ontario.[17]

[49] The court however went on to say:

If Ontario’s statutory claim, founded as it is on a common law tort, is not technically a claim “in respect of a tort committed in Ontario”, it is tantamount to such a claim and therefore qualifies as such, because it has all the characteristics of such a tort. At the very least, the statutory claim is sufficiently analogous to a tort committed in Ontario that it qualifies as “a new connecting factor” of the sort contemplated in Van Breda…”In identifying new presumptive factors”, LeBel J. said, at para. 91, “a court should look to connections that give rise to a relationship with the forum that is similar in nature to the ones which result from the listed factors”, one of which is a tort committed in the province. In that regard, he continued, one relevant consideration is the “[s]imilarity of the connecting factor with the recognized presumptive connecting factors”.

Here, all of the considerations that apply to the common law tort of conspiracy apply to the statutory tort claim created by the legislature. If a tort committed in Ontario is a presumptive factor entitling Ontario courts to assume jurisdiction over a dispute, a statutory tort with all of the same trappings, committed in Ontario, should be one too. Recognizing that connection is also in keeping with principles of comity, order and fairness – notions that underpin the objectives of the conflict of laws regime.[18]

[50] The court concluded that because the statutory cause of action in the Tobacco Act is a claim “in respect of a tort committed within Ontario”, or one sufficiently analogous thereto, that characteristic gives rise to a presumptive connecting factor as between the subject matter of the litigation, the appellants and the province, entitling Ontario courts to assume jurisdiction over the dispute.”[19]

[51] In short, Rothman’s recognized the statutory tort under the Tobacco Act as either a tort committed in Ontario, one of the listed presumptive connecting factors, or it was sufficiently analogous thereto to constitute a new presumptive connecting factor. It did not determine, as suggested by the plaintiff that there is a new presumptive connecting factor called a “statutory tort”. The court actually looked at the specific provisions of the statute creating the new tort and concluded they were analogous to an existing connecting factor – in this case a tort committed within Ontario.

[52] The Fraudulent Conveyances Act is an act of general application. It contains provisions to set aside conveyances made to defeat creditors. There is no analysis provided to show that it is similar or analogous to an existing recognized presumptive connecting factor. There is no analysis of how this statutory claim has been treated in case law or in international law. In fact several Ontario decisions have determined that Ontario courts do not have jurisdiction to determine fraudulent conveyance issues where the property conveyed was situate outside of Ontario and none of actions constituting the tortious conduct occurred in Ontario.[20] (Those decisions however were not called upon to consider whether jurisdiction could be assumed because a contract made in Ontario was connected to the fraudulent conveyance.)

[53] The mere fact that damage may have been sustained in Ontario is insufficient by itself to create a presumptive connecting factor.[21]

[54] The plaintiff has failed to establish a basis for a “new” presumptive connecting factor for a statutory claim under the Fraudulent Conveyances Act.

A Contract Connected with the Dispute was Made in Ontario

[55] Finally, the plaintiff asserts that the listed presumptive connecting factor, “a contract connected with the dispute was made in the province”[22] applies. This has alternatively been described as follows: “Claims related to contracts made in Ontario would also be properly brought in the Ontario courts.”[23] Therefore to meet the presumptive connecting factor, the claims made in this action based on the fraudulent conveyance of DeWind Nevada’s wind turbine business and assets pursuant to the APA must relate to a contract made in Ontario or there must be a contract made in Ontario connected to the fraudulent conveyance claim. In this case it is argued that the LOI, a contract made in Ontario to sell products in Ontario, is related to or connected with the fraudulent conveyance arising under the APA.

[56] Clearly the subject matter of this action is the APA and whether it constitutes a fraudulent conveyance. The APA is not a contract made in Ontario (it was made in California), it was made between parties none of whom reside in or carry on business in Ontario and it sold assets situated outside of Ontario. The action also concerns the alleged Reconveyance to DSTN. The existence of the Reconveyance is denied, but if it exists, it was not made pursuant to a contract made in Ontario and it concerns parties who neither reside in or carry on business in Ontario. That however does not answer the question whether this action is related to or connected with the LOI, a contract made (as well as performed and breached) in Ontario.

[57] The Daewoo defendants argue that the only contract relevant to the Conveyance Action is the APA. In my view that is not correct. The APA conveyed DeWind Nevada’s wind turbine business and assets to Daewoo. Daewoo assumed some trade liabilities but pursuant to specific terms of the APA “any liabilities arising from the consulting relationship with Harrowand S.L.” and any “damages associated with the any litigation related thereto” were excluded. The “consulting relationship with Harrowand S.L.” is precisely that which is the subject matter of the LOI and the “litigation related thereto” is the Contract Action. It lies at the heart of the Conveyance Action that while DeWind was litigating with the plaintiff respecting breach of the LOI, DeWind Nevada divested itself of its assets, and particularly those assets related to the wind turbine business, by sale to Daewoo, yet Daewoo specifically excluded assumption of any liability to the plaintiff arising out of the LOI.

[58] It is the very wind turbine business sold to Daewoo that was the subject matter of the LOI. The schedule to the APA describes the litigation with Harrowand S.L. as an action for damages in connection with a breach of a LOI “to market wind turbines produced by DeWind to Canadian customers.”

[59] Therefore by its very terms, the APA is connected with the LOI. Clearly the Conveyance Action, in which the APA is alleged to be a fraudulent conveyance, is related to or connected with the LOI, a contract made in Ontario, which was being litigated in Ontario when DeWind divested itself of its wind turbine business pursuant to the APA and for which there is now an unsatisfied judgment.

[60] Therefore, while the Conveyance Action is concerned with whether the APA constitutes a fraudulent conveyance, the APA is not, as the defendants argue, the “only” contract relevant to the Conveyance Action. The LOI is also relevant to and is connected with the Conveyance Action.

[61] The defendants also argue that the LOI, which formed the basis for the Contract Action, is not at issue in the Conveyance Action nor is it the subject matter of the Conveyance Action. While that may be true, to the extent that the validity and interpretation of the LOI is not in issue in the Conveyance Action (those issues having been determined in the Contract Action), that misses the point. To be a presumptive connecting factor, the LOI need not be “in issue” in the Conveyance Action. It is only necessary that the LOI be connected with the dispute in the Conveyance Action. I have determined that it is clearly connected. The APA which is the subject matter of the Conveyance Action, by its own terms, makes the LOI relevant to the Conveyance Action.

[62] The plaintiff has satisfied me that the presumptive connecting factor, that a contract connected with the dispute was made in Ontario, applies to this action. Ontario therefore has jurisdiction to try this action.

[63] While the presumption “can be rebutted by showing that the contract has little or nothing to do with the subject matter of the litigation”[24], in my view the LOI is front and centre to the Conveyance Action. But for the breach of the LOI and the action in Ontario litigating that breach, and but for the exclusion of liability (to Daewoo) for claims under the LOI in the APA, there would be no Conveyance Action.

[64] I appreciate that the Daewoo defendants will rely on DeWind’s solvency representations in the APA to demonstrate an absence of intent to defeat the plaintiff as a creditor of DeWind. That however goes to Daewoo’s defence to the action. It does not negate the existence of a connecting factor.

FORUM OF NECESSITY

[65] Because I have determined that a connecting factor applies to allow Ontario to assume jurisdiction, it is not necessary to consider the plaintiff’s fall-back argument that the “forum of necessity doctrine” applies to the facts of this case, however I consider its application for the sake of completeness.

[66] The “forum of necessity doctrine” continues to apply in “exceptional cases where, despite the absence of a real and substantial connection, the need to ensure access to justice will justify the assumption of jurisdiction.” This is an exception to the real and substantial connection test “where there is no other forum in which the plaintiff can reasonably seek relief.”[25].

[67] In this case however, the plaintiff has not satisfied me that that there is no other forum in which the plaintiff can reasonably seek relief. The hearsay evidence of Mr. CameronSmith that some unnamed lawyers told him that California and Texas would not assume jurisdiction over the Conveyance Action, with no explanation as to why that would be, and in the absence of expert evidence from those lawyers, has no evidentiary value whatsoever.

[68] Likewise, the plaintiff’s presumption that it would face an expired limitation period if a new action were to be commenced in California also has no evidentiary foundation. The plaintiff has failed to provide the court with evidence as to what the limitation period would be in California for fraudulent transactions. In any event, commencing this action in Ontario was a tactical decision on the part of the plaintiff and a missed limitation period does not amount to exceptional circumstances to engage the forum of necessity doctrine.[26]

[69] In the absence of convincing evidence that there is no other jurisdiction in which the plaintiff can reasonably seek relief, there is no justification to assume jurisdiction under the forum of necessity doctrine.[27] The plaintiff has failed to satisfy me that it is unable to seek relief for the alleged fraud and fraudulent conveyance in California. There is no basis for Ontario to assume jurisdiction under the forum of necessity doctrine.

GOOD ARGUABLE CASE

[70] In addition to arguing that that the plaintiff has failed to establish any of the presumptive connecting factors, the Daewoo defendants also submit that the plaintiff has not established a “good arguable case” for assuming jurisdiction. They base this on the following statement of law:

It is well established that an Ontario court will assume jurisdiction against a foreign defendant only where the plaintiff establishes a “good arguable case” for assuming jurisdiction through either the allegations in the statement of claim or a combination of the allegations in the statement of claim and evidence filed on a jurisdiction motion.[28]

[71] This is essentially a pleadings issue, although the plaintiff may be required to provide evidence to support the jurisdictional presumptive connecting factors if the pleadings do not support a cause of action or if evidence is put forward by the defendants to show there is not a good arguable case on facts supporting jurisdiction:

On our review of the two decisions relied upon by the appellants, at their highest, they stand for the proposition that a claimant may be required to call evidence to support undenied allegations in a statement of claim or other originating process either where the cause of action as pleaded appears to be devoid of merit or where the pleadings fail to demonstrate any air of reality concerning the possible existence of a presumptive connecting factor.[29]

[72] In any event, the pleadings herein are supported by the affidavit evidence of Mr. CameronSmith.

[73] The phrase “a good arguable case” is “not a high threshold and means no more than a ‘serious issue to be tried’ or a ‘genuine issue’ or ‘that the case has some chance of success.’”[30]

[74] The motion to stay for want of jurisdiction is not designed to determine the facts in issue going to the merits of the action, as opposed to the merits of the connecting factors:

In short, this is not a case where the statement of claim contains nothing more than a series of bald allegations devoid of any factual foundation. We are satisfied that the pleadings, in combination with the affidavit evidence filed by the parties, adequately establish a cause of action known to law with a sufficient connection to Ontario. While the appellants take issue with the particularization of some of the plaintiff’s allegations in its statement of claim, that issue may be addressed on a motion under rule 21.01(1)(b). 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.[31]

[75] I have reviewed the pleadings in the statement of claim (as well as the evidence of Mr. CameronSmith). They set out a proper cause of action in fraudulent conveyance. They also set out the jurisdictional connection between the Conveyance and the LOI, which is specifically excluded from assumption by Daewoo in the APA. It is true as alleged by Daewoo that no good arguable case is pled that the subject matter of the action (the Conveyance) occurred in Ontario or that the Daewoo defendants engaged in any actionable conduct in Ontario. This of course misses the point because the connecting factor relied on that I have accepted is the existence of a contract made in Ontario (the LOI) that is connected to the dispute respecting the Conveyance. In fact the LOI is specifically referenced in the APA. Despite purchasing all of the wind turbine assets from DeWind Nevada, Daewoo specifically rejected assuming any liabilities connected with the LOI or the Contract Action. In other words DeWind Nevada was left without its wind turbine assets yet left with the responsibility to pay the plaintiff for any liability arising out of marketing its wind turbines in Ontario.

[76] The Daewoo defendants point out that a necessary component of a fraudulent conveyance made for consideration is a fraudulent intent on the part of the transferee or at least knowing participation in the transferor’s fraudulent intent. They go to great length to demonstrate that the typical badges of fraud are absent, for example that the Conveyance was publically disclosed, the parties were at arm’s length, the consideration was adequate and the transaction was not done in haste. They point out that it was nothing more than a lawful asset purchase for valuable consideration and there is nothing unlawful about purchasing the assets of a corporation without assuming its liabilities. They also point out that there were specific solvency representations made by DeWind Nevada and CTC that Daewoo could rely upon to assume that DeWind Nevada would pay its liabilities, including those in the Contract Action as they came due.

[77] They also say that the Conveyance took place years before the judgment in the Contract Action, but of course the Contract Action was in litigation when the Conveyance was made.

[78] The plaintiff pleads that there were badges of fraud including a conveyance in haste (which is disputed) with full knowledge of plaintiff’s claims and with no reservation to pay them in order to avoid the consequences of the claim made in the Contract Action. The plaintiff argues that by excluding the plaintiff from the list of creditors whose claims would be paid, this is some evidence that both DeWind Nevada and Daewoo intended to defeat the plaintiff as creditor.

[79] The Daewoo defendants say that there is no evidence of a fraudulent intent on the part of Daewoo. Mere suspicion does not prove a fraudulent intent. Of course there has yet to be documentary or oral discoveries in the Conveyance Action. That is where a plaintiff seeks damaging admissions in support of the components of its claim. It is unfair at a pre-discovery point to say there is no evidence of fraudulent intent. As Daewoo states in its factum: “Fraudulent intent is a matter of fact to be determined in the circumstances of each case on the basis of the evidence as a whole”.

[80] In any event, these factors all go to the merits of the fraudulent conveyance claim and not to the merits of the jurisdictional connecting factors. As stated above: “A jurisdiction motion is not… the proper place for engaging in a rigorous assessment of whether the plaintiff’s claim will ultimately succeed.”[32]

[81] In my view, the statement of claim sets out a properly pled claim based in fraudulent conveyance including an intent by both the purchaser and vendor to defeat the plaintiff as creditor. To the extent there are any deficiencies in the pleadings, the “statement of claim can at least be amended to advance causes of action against the appellants that will have some prospect of success.”[33]

[82] The statement of claim together with evidence led by the plaintiff demonstrate a good arguable case that there is a contract made in Ontario that is connected with the Conveyance which is the subject matter of this action. Therefore there is a good arguable case that a presumptive connecting factor applies.

[83] DSTN also argues that based on its own uncontraverted evidence there was never a reconveyance of DeWind Nevada’s wind turbine business or assets from Daewoo to DSTN, that it is not using any technology from DeWind Nevada and that DSTN manufactures towers and blades but not turbines, whereas DeWind Nevada manufactured turbines. Again, this is a matter that the plaintiff can only explore during documentary and oral discoveries of Daewoo and DSTN. If true, the claim against DSTN will not survive a summary judgment motion. This is however, as indicated, not the occasion to determine whether the plaintiff will be successful on the merits.

[84] One question that appears to never have been addressed by the evidence on this motion is this: Daewoo paid $46.5 million for DeWind Nevada’s wind turbine business. What has Daewoo, a builder of large commercial ships and offshore structures, done with it? If it is expanding into the wind turbine business, will it exclude sale of wind turbines in Ontario, through DSTN or otherwise? These are questions the plaintiff can legitimately explore during the discovery process.

[85] In my view the plaintiff has met what has been described as a not high threshold of establishing that it has a good arguable case. Clearly there is a serious issue to be tried in which the plaintiff has “some chance of success”. The action will not be stayed based on the failure of the plaintiff to demonstrate a good arguable case that support one of the presumptive connecting factors.

SERVICE EX JURIS

[86] In light of my determination that a contract connected with this dispute was made in Ontario, I conclude that service ex juris was properly made without leave under rule 17.02(f)(i). Since the LOI was also breached in Ontario, even if preceded or accompanied by a breach in California or Nevada, service ex juris was also properly made without leave under rule 17.02(f)(iv). I also conclude that the damages arising from the alleged fraudulent conveyance were suffered by the plaintiff in Ontario, notwithstanding that the plaintiff is an Andorran company and as such service ex juris was also properly made without leave under rule 17.02(h). Although that subsection was repealed by O. Reg. 231/13 which came into force on January 1, 2014, service ex juris was made on the defendants prior to that date.

[87] If I am wrong that service ex juris without leave was authorized under rules 1702(f)(i) or (iv), I would validate service under rule 17.06(3) on the basis that Ontario has jurisdiction under one of the presumptive connecting factors as enunciated by the Supreme Court of Canada.

FORUM NON CONVENIENS

[88] The plaintiff has therefore established that Ontario has jurisdiction to hear the Conveyance Action. The defendant Wilcoxon has invoked the doctrine of forum non conveniens to argue that Ontario should “decline to exercise its jurisdiction”[34]. The Daewoo defendants have not argued forum non conveniens. If Wilcoxon is successful I would stay the action only as against Wilcoxon while the action would proceed against all other defendants remaining in the action.

The Law

[89] The “normal state of affairs is that jurisdiction should be exercised once it is properly assumed”.[35] The burden is on the defendant to show why the court should decline to exercise its jurisdiction based on forum non conveniens and why another forum is more appropriate:

If a defendant raises an issue of forum non conveniens, the burden is on him or her to show why the court should decline to exercise its jurisdiction and displace the forum chosen by the plaintiff. The defendant must identify another forum that has an appropriate connection under the conflicts rules and that should be allowed to dispose of the action. The defendant must show, using the same analytical approach the court followed to establish the existence of a real and substantial connection with the local forum, what connections this alternative forum has with the subject matter of the litigation. Finally, the party asking for a stay on the basis of forum non conveniensmust demonstrate why the proposed alternative forum should be preferred and considered to be more appropriate.[36]

[90] The burden is on the defendant to demonstrate that the alternative forum is “clearly” more appropriate.[37] It is insufficient to show “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”.[38]

[91] The party applying for a stay on the basis of forum non conveniens “may raise diverse facts, considerations and concerns”.[39] Courts considering whether another forum is clearly more appropriate typically consider the following factors, although the list is non-exhaustive[40]:

[T]he factors that a court may consider in deciding whether to apply forum non conveniens may vary depending on the context and might include the locations of parties and witnesses, the cost of transferring the case to another jurisdiction or of declining the stay, the impact of a transfer on the conduct of the litigation or on related or parallel proceedings, the possibility of conflicting judgments, problems related to the recognition and enforcement of judgments, and the relative strengths of the connections of the two parties.[41]

Loss of juridical advantage is a difficulty that could arise should the action be stayed in favour of a court of another province or country.[42]

[92] The following factors taken from B.C. legislation have also been considered and adopted:

(a) 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;

(b) the law to be applied to issues in the proceeding;

(c) the desirability of avoiding multiplicity of legal proceedings;

(d) the desirability of avoiding conflicting decisions in different courts;

(e) the enforcement of an eventual judgment; and

(f) the fair and efficient working of the Canadian legal system as a whole.[43]

[93] In considering these factors, “the doctrine focuses 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.[44]

Consideration of the Factors

[94] Wilcoxon submits that that the more appropriate jurisdiction to try this action is California.

[95] The Parties: Since the action has been discontinued against DeWind UK and DeWind Nevada, it is only necessary to consider the parties remaining in the action. The plaintiff is an Andorran company, although its wind turbine business was to be carried on in Ontario and one of its principals and its instructing representative, Stephen CameronSmith resides in Toronto, Ontario. (The other principal, Michael Spencer resides primarily in Spain.) The defendant Daewoo is a multinational corporation but is incorporated in Korea and its business address is in Korea. The defendant DSTN is incorporated in and has its business address in Nova Scotia. The defendant Wilcoxon resides in California. The defendant Lockhart resides in Texas, although he has been noted in default. Therefore the location of the parties favours no particular jurisdiction.

[96] Witnesses: The witnesses who can testify as to the circumstances surrounding the APA and the intentions of the parties to that Conveyance are located in California and Korea, although Wilcoxon has failed to identify any California witnesses other than himself. Wilcoxon identifies himself as the person who participated in the negotiations for the APA on behalf of both DeWind Nevada and CTC and was the sole signatory to the APA on behalf of both companies. The witnesses who can testify whether there has been a Reconveyance of the DeWind turbine business to DSTN, and if so the circumstances and the intentions of the parties, are located in Korea and Nova Scotia. There is no evidence of any witnesses in California relating to the alleged Reconveyance.

[97] There are no witnesses in Ontario who have evidence respecting the making of the agreements related to the Conveyance or the alleged Reconveyance. Witnesses in Ontario, particularly Mr. CameronSmith, would have evidence as to the effect of the Conveyance and the alleged Reconveyance on the plaintiff as creditor and ultimately judgment creditor of the DeWind defendants. The plaintiff also references six Ontario corporations that it identified for sales of DeWind turbines resulting in the plaintiff’s claim for commissions. While the representatives of those companies would have had evidence relevant to the assessment of damages in the Contract Action, that assessment is not binding on Daewoo, DSTN, Wilcoxon or Lockhart who were not parties to that action. Therefore, in order to support its claim for common law damages for fraud, the plaintiff may need to again prove the extent of its loss in the Conveyance Action and the representatives of those potential buyers could be witnesses.

[98] The plaintiff also says there will be Ontario witnesses (presumably including the representatives of above six corporations) as DSTN “penetrates the Ontario wind energy market” and “begins to develop relationships with Harrowand customers.” The plaintiff claims it will then be necessary to amend its claim to include unjust enrichment against DSTN. In my view that is speculation and conditional on possible future events, and should play no role in determining witnesses based on current pleadings.

[99] In the result, the location of witnesses favours no particular jurisdiction.

[100] Applicable Law: The signatories to the APA, namely Daewoo, DeWind Nevada and CTC, agreed that the APA “shall be governed by and interpreted and enforced in accordance with the Laws of the State of California.” They also agreed to a forum selection clause in favour of California courts “for the purposes of any Action arising out of this Agreement or any transaction contemplated thereby.” The choice of law and forum selection provisions in the APA of course are not binding on the plaintiff, who was not a party to the APA.[45]

[101] In any event, the choice of law and forum clauses in the APA are not applicable since the Conveyance Action is not about interpreting or enforcing the APA, but rather the effect of the APA in defeating the plaintiff as creditor of the DeWind defendants.

[102] In my view the applicable law would be the law of the tort respecting fraudulent transactions. “The governing law of the tort is not necessarily the domestic law of the forum”.[46] Neither Wilcoxon nor the plaintiff have made submissions whether the applicable law is the law of fraudulent conveyances in Ontario, where the action was commenced and where the plaintiff as creditor was defeated, or the law of fraudulent conveyances in California where the alleged fraudulent conveyance took place. In the absence of submissions on that point I decline to determine the issue. I do however note that the plaintiff has pleaded the Ontario Fraudulent Conveyances Act in its statement of claim as the foundation for the cause of action and this has not been challenged by Wilcoxon (other than the contractual choice of law provisions which I have determined are not applicable to this action nor binding on the plaintiff). Even if the California law on fraudulent conveyances should govern, Ontario courts may apply the foreign law.[47]

[103] In the result, the applicable law, on the evidence before me, favours equally both Ontario and California.

[104] Cost of Transferring the Case to California: Costs of transferring the action would in one sense not be significant given the early stage of the action. Pleadings are not yet complete. On the other hand the plaintiff has expended considerable funds investigating the claim, drafting and serving the claim, obtaining an order for substituted service and defending its choice of forum. It would be costly to bring new counsel in California up to speed. This factor slightly favours Ontario.

[105] Impact of the Transfer on the Conduct of the Litigation: The plaintiff argues that its lawyer in Ontario is conducting this litigation on a contingency basis, however Mr. CameronSmith avers: “I am concerned about the possibility of being able to engage counsel on a similar basis in other jurisdictions” and given the time and effort put in by Ontario counsel he believes “it would be daunting for any new counsel in another jurisdiction to become engaged in this matter after so much time has passed.” Mr. CameronSmith’s beliefs have no evidentiary value. There is no evidence that he has attempted to engage California counsel or attempted to ascertain if California counsel would take on the case on a contingency basis. As such this is a neutral factor.

[106] Impact of the Transfer on the Conduct of Related Parallel Proceedings/Avoiding Multiplicity of Proceedings: There are no related parallel proceedings that are ongoing. The factor is inapplicable.

[107] Possibility of Conflicting Judgments: The only possible conflicting judgment could be the calculation of damages differing from those assessed in the Contract Action. Given that the defendants remaining in this action were not parties to the Contract Action, and that damages in the Contract Action were assessed on an unopposed basis, the possibility of conflicting assessment could arise whether the Conveyance Action proceeds in Ontario or California. As a result it is a neutral factor.

[108] Recognition and Enforcement of Any Judgment: There is no expert evidence or California case law before me that California would refuse to recognize and enforce an Ontario judgment setting aside the APA as a fraudulent conveyance, notwithstanding that the APA was signed in California and that none of the assets transferred were situate in Ontario. On the other hand, Wilcoxon refers to Canadian jurisprudence that indicates that Canadian courts will recognize the jurisdiction of a foreign court to issue a judgment in personam if the foreign court had a real and substantial connection with the action,[48] but a judgment in rem, such as a declaration that a conveyance of assets is void would only be recognized in Ontario if the movables transferred were then located in the jurisdiction of the foreign court.[49] The APA lists the purchased assets as “all of the assets, properties and rights of every kind and description, real and personal and mixed, tangible and intangible, wherever situated that are related to” the wind turbine business. The purchased assets specifically included all inventory, equipment, intellectual property, contracts, receivables, books and records, claims, causes of action, insurance benefits, prepaid expenses, security deposits, equities in seller’s subsidiaries and the goodwill of the business. Some of the assets would be movables, some not.

[109] There is no evidence by Wilcoxon of where each class of asset was “located” at the time, whether in Nevada (where the vendors were located), California (where the sale took place) or elsewhere in the world. “Location” is also an elusive concept for certain classes of assets such as intellectual property. Some assets such as contracts and causes of action may be located in several forums. I am far from satisfied that any or all of the assets conveyed to Daewoo were situate in California. Furthermore, this decision was released before Van Bredawhen the approach to a real and substantial connection changed. The fact that a contract connected with the Conveyance was made, performed and breached in Ontario was not considered. It is far from certain that Ontario would not recognize a foreign judgment in these circumstances let alone whether California would refuse to recognize a similar judgment made in Ontario.

[110] It must also be remembered that any judgment setting aside the conveyance would need to be enforced in Korea, assuming that Daewoo moved the wind turbine business assets to Korea and there is no evidence of whether a Korean court would refuse to recognize an Ontario judgment setting aside the Conveyance.

[111] While on its face, this factor may favour a forum other than Ontario, at least for the relief of declaring void the Conveyance, it is far from clear what the appropriate forum would be. I have been given no reason to believe that there would be any difficulty enforcing in California a monetary judgment from Ontario based on fraud given my determination of the real and substantial connection of this action to Ontario.

[112] Loss of Juridical Advantage: The plaintiff argues that neither California nor Texas could assume jurisdiction over the Conveyance Action. The sole evidence in support of that position is the affidavit of Mr. CameronSmith where he states:

I originally contacted counsel in California for the purpose of commencing the Contract Action. He suggested that California was not the appropriate jurisdiction and that I should try Texas. I then contacted counsel in Texas and learned that it was not likely that Texas would assume jurisdiction and that the better forum for the Contract Action was Ontario.

[113] This statement has no evidentiary value. Firstly the failure to name the respective attorneys as the source of the information is contrary to rule 39.01(4) and thus inadmissible. Secondly, even if the attorneys had been named, no reasons were given for their view that neither California nor Texas was an appropriate jurisdiction. Thirdly, even if reasons had been given, those reasons should be in the form of expert evidence by way of affidavit from each attorney. There is no basis given for assessing whether these unnamed attorneys were qualified to offer expert evidence on the issue. Fourthly, the opinion was with respect to California or Texas assuming jurisdiction for the Contract Action, not the Conveyance Action. The issues to be determined in the Conveyance Action are very different from those in the Contract Action and there is a different factual foundation.

[114] The plaintiff also purports to raise the expiry of the applicable limitation period as a bar to commencing a fresh action in California as a loss of juridical advantage if Ontario does not exercise its jurisdiction. The evidence in support of that proposition again is the affidavit of Mr. CameronSmith as follows:

I presume that any other jurisdiction the court might consider to be appropriate for this action would have the same limitation rules, concerning the limitation of actions, as Ontario. That is to say, in any jurisdiction with a two year limitation period such as that of Ontario, the within claim by the plaintiff could not proceed. It has been more than two years since I learned of the Asset Purchase Agreement.

[115] In its factum, the plaintiff simply says: “the plaintiff would…face limitations issues if a jurisdiction could be found in which the plaintiff’s claims could be asserted.” Amazingly, the plaintiff has not provided the court with the California law of limitations as it relates to fraudulent conveyances. I cannot assume or take judicial notice that it would be two years from discoverability as in Ontario. It may be that there is no limitation on fraud in California. It would not have been difficult for plaintiff’s counsel to find and provide the court with that information. The possible loss of a limitation period is no more than the musings of the plaintiff.

[116] The plaintiff also states in its factum: “There is no evidence that another jurisdiction provides a remedy similar to the Fraudulent Conveyances Act.” Despite knowing that Wilcoxon was proposing California as the more appropriate forum, the plaintiff has made no effort to actually determine if California has legislation that could provide similar relief to the plaintiff. Again, the possibility that California does not have similar legislation is no more than the musings of the plaintiff.

[117] Had the plaintiff provided me with proof that there is no cause of action available in California that could provide relief similar to Ontario’s Fraudulent Conveyances Act or that under California law, the limitation period for commencing action would have expired, that would have gone a long way to satisfying me that Ontario is the most appropriate forum to hear this action.

[118] On the other hand, the defendant Wilcoxon says only that the plaintiff has adduced no evidence in support of its suggestion that it may face limitations issues. Wilcoxon has likewise failed to provide this court with evidence that any applicable limitation period in California has not expired. Likewise, Wilcoxon has provided no evidence to show that there is a legislative or common law cause of action in California similar to or to the same effect as Ontario’s Fraudulent Conveyances Act. This is particularly surprising given that Wilcoxon has the burden of demonstrating that California is the more appropriate forum to hear the Conveyance Action.

[119] Although it would have been easy for either party to provide me with proper information whether California could assume jurisdiction in this matter, whether there is a similar cause of action in California based on fraudulent conveyances and whether any applicable limitation period has expired, neither party has taken that initiative. I am therefore left not knowing if there is any juridical advantage to keeping this action in Ontario. As a result this is a neutral factor.

[120] Fairness: In my view it would not be unfair to require Wilcoxon to attend for the trial of this action in Ontario. Wilcoxon directly or indirectly controlled the DeWind companies that made an agreement with the plaintiff respecting the marketing of wind turbines in Ontario, then failed to pay commissions and terminated the agreement. While the action for breach of the LOI was in progress, Wilcoxon negotiated and signed the APA on behalf of both DeWind Nevada and CTC, which sold the wind turbine business. Those companies agreed that any indebtedness arising under the LOI would not be assumed by the purchaser but they promised the purchaser that they would promptly satisfy any judgments, then without making any provision to pay the indebtedness to the plaintiff, became insolvent. This left the plaintiff with an unsatisfied judgment while the assets of the vendor that could have been used to satisfy that debt were transferred to Daewoo. The plaintiff alleges that Wilcoxon personally benefitted from the failure of the DeWind defendants to apply the sale proceeds to retire the debt to the plaintiff. In any event it would be no more unfair to require Wilcoxon to travel to Toronto for trial than it would be for CameronSmith to travel to California for the trial. There is no evidence that it would be more unfair or onerous on either Daewoo or DSTN to litigate in Ontario as opposed to California.

Conclusion on Forum Conveniens

[121] This action involves a number of international litigants from at least five jurisdictions. In those circumstances, there often may be no single forum that is clearly the most appropriate, but rather several equally suitable alternatives:

Meanwhile, the business of litigation, like commerce itself, has become increasingly international. With the increase of free trade and the rapid growth of multi-national corporations it has become more difficult to identify one clearly appropriate forum for this type of litigation. The defendant may not be identified with only one jurisdiction. Moreover, there are frequently multiple defendants carrying on business in a number of jurisdictions and distributing their products or services world wide. As well, the plaintiffs may be a large class residing in different jurisdictions. It is often difficult to pinpoint the place where the transaction giving rise to the action took place. Frequently, there is no single forum that is clearly the most convenient or appropriate for the trial of the action but rather several which are equally suitable alternatives.[50]

[122] In the result, while I am unable to conclude that Ontario is necessarily an ideal forum to hear this action, I am on the evidence unable to conclude that California or any other forum is clearly more appropriate than Ontario. The burden is on Wilcoxon as the moving party to demonstrate that the alternative forum (California) is “clearly” more appropriate than Ontario and “to show why the court should decline to exercise its jurisdiction and displace the forum chosen by the plaintiff.” I have determined that Wilcoxon has not met that burden.

[123] As a result the action will not be stayed on the basis of forum non conveniens.

SUMMARY OF CONCLUSIONS

[124] I have determined that Ontario cannot assume jurisdiction on any of the following bases argued by the plaintiff:

(a) I am not satisfied that DSTN carries on business in Ontario and as a result the presumptive connecting factor of a defendant carrying on business in Ontario does not apply to this action;

(b) There is no new presumptive connecting factor for a “statutory tort” under the Fraudulent Conveyances Act;

(c) The evidence does not support the application of the “forum of necessity doctrine” in this case.

[125] On the other hand I have concluded that:

(a) there is a presumptive connecting factor that applies to permit Ontario to assume jurisdiction of this action, namely that a contract made (and breached) in Ontario is connected to this dispute;

(b) there is a good arguable case for assuming jurisdiction on that basis;

(c) the statement of claim was properly served ex juris under any one or more of rules 17.02(f)(i),17.02(f)(iv) and 17.02(h) (service having been made before the repeal of rule 17.02(h)); and

(d) the defendant Wilcoxon has failed to establish that there is a more appropriate forum than Ontario to try this action.

[126] In the result the action will not be stayed based either on want of jurisdiction or on the basis of forum non conveniens and service of the statement of claim ex juris and the order for substituted service made by Master Hawkins will not be set aside.

[127] Given that defences must now be delivered, it is appropriate to re-instate a deadline under rule 48.15 for dismissal of this action as abandoned, a deadline that had been held in abeyance by the order of Master Brott dated April 25, 2013. I have set a deadline for delivery of defences and then fixed a deadline under rule 48.15 which should allow sufficient time for the plaintiff to obtain default judgment if the defendants fail to defend and thus avoid an order by the registrar dismissing the action as abandoned.

COSTS

[128] If the parties are unable to agree upon appropriate costs for these motions, the plaintiff may within 14 days of release of these reasons provide brief written submissions as to costs together with a costs outline (Form 57B) together with redacted dockets.

[129] The defendants may provide brief responding submissions within 10 days after receipt of the plaintiff’s submissions. If the Daewoo defendants contest the quantum of the plaintiff’s costs, they must provide their own costs outline and redacted dockets. I already have a costs outline and dockets from the defendant Wilcoxon.

ORDER

[130] I hereby order as follows:

(1) The motion by the defendant Daewoo Shipbuilding & Marine Engineering Co. Ltd. to set aside service ex juris of the statement of claim, to set aside the order of Master Hawkins granting substituted service and to stay or dismiss this action based on absence of jurisdiction is dismissed.

(2) The motion by the defendant DSME Trenton Ltd. to set aside service ex juris of the statement of claim and to stay or dismiss this action based on absence of jurisdiction is dismissed.

(3) The motion by the defendant Benton Wilcoxon to set aside service ex juris of the statement of claim, to set aside the order of Master Hawkins granting substituted service and to stay or dismiss this action based on absence of jurisdiction or alternatively based on forum non conveniens is dismissed.

(4) The defendants shall deliver their statements of defence within 20 days of the date this endorsement is released.

(5) The deadline for dismissal of this action as abandoned by the registrar under rule 48.15 is extended to September 30, 2014.

___________________________

Master R. Dash

DATE: April 28, 2014

---

[1] Harrowand v. DeWind, [2009] O.J. No. 586, at para. 19

[2] Harrowand v. DeWind, supra, at para.20

[3] Harrowand v. DeWind, supra, at paras. 23-24

[4] The plaintiffs say that the subsequent Letter Agreement of March 30, 2006 dealt with a release of demands for earlier past services, whereas the action for damages was for future services under the LOI. The Letter Agreement also dealt with dissolution of a Canadian entity, EU Energy Canada Inc.

[5] Courts of Justice Act, R.S.O. 1990, Chap. C.43

[6] Van Breda v. Village Resorts Ltd., 2012 SCC 17 (CanLII), 2012 SCC 17, [2012] S.C.J. 17, [2012] 1 S.C.R. 572, 343 D.L.R. (4th) 577 at paras. 78-81, 93-94 and 100

[7] Van Breda v. Village Resorts Ltd., supra, at para. 90

[8] Van Breda v. Village Resorts Ltd., at para. 95

[9] Fraudulent Conveyances Act, R.S.O. 1990, Chap. F.29

[10] Van Breda v. Village Resorts Ltd., supra, at para. 87

[11] Van Breda v. Village Resorts Ltd., supra, at para. 95

[12] Van Breda v. Village Resorts Ltd., supra, at para. 96

[13] Van Breda v. Village Resorts Ltd., supra, at para. 91.

[14] Ontario v. Rothman’s Inc., 2013 ONCA 353 (CanLII), 2013 ONCA 353, 115 O.R. (3d) 561, 305 O.A.C. 261, 363 D.L.R. (4th) 506 (C.A.)

[15] Tobacco Damages and Health Care Costs Recovery Act, 2009, 2009, S.O. c. 13 para. 1

[16] Ontario v. Rothman’s Inc., supra, at paras. 34, 37 and 39

[17] Ontario v. Rothman’s Inc., supra, at paras. 31-32, 39 and 47

[18] Ontario v. Rothman’s Inc., supra, at paras. 44-45

[19] Ontario v. Rothman’s Inc., supra, at para. 47

[20] Consbec Inc. v. Walker, 2011 ONSC 2944 (CanLII), 2011 ONSC 2944, [2011] O.J. No. 2146 (S.C.J.) at para. 17; Lazer-Tech Ltd. v. Dejeray, 2010 ONSC 1662 (CanLII), 2010 ONSC 1662, [2010] O.J. No. 1080 (S.C.J.) at paras. 13-14 and 31-33; Pomini Inc. v. EMPCO-FAB Ltd., [1998] O.J. No. 3960 (O.C.G.D.), affirmed [1999] O.J. No. 2740 (C.A.) at para. 23

[21] Van Breda v. Village Resorts Ltd., supra, at para. 89

[22] Van Breda v. Village Resorts Ltd., supra, at para. 90

[23] Van Breda v. Village Resorts Ltd., supra, at para. 88

[24] Van Breda v. Village Resorts Ltd., supra, at para. 96.

[25] Van Breda v. Village Resorts Ltd., supra, at para. 100.

[26] Mitchell v. Jeckovich, 2013 ONSC 7494 (CanLII), 2013 ONSC 7494, [2013] O.J. No. 5644 (S.C.J.) at para. 49

[27] Elfarnawani v. International Olympic Committee, 2011 ONSC 6784 (CanLII), 2011 ONSC 6784 (S.C.J.) at para. 70

[28] Ontario v. Rothman’s Inc., supra, at para. 54.

[29] Ontario v. Rothman’s Inc., supra, at para. 113

[30] Inukshuk Wireless Partnership v. 4253311Canada Inc., 2013 ONSC 5631 (CanLII), 2013 ONSC 5631, 117 O.R. (3d) 206 (S.C.J.) at para. 19

[31] Ontario v. Rothman’s Inc., supra, at para. 118

[32] Ontario v. Rothman’s Inc., supra, at para. 118

[33] Ontario v. Rothman’s Inc., supra, at para. 114.

[34] Van Breda v. Village Resorts Ltd., supra, at para. 102.

[35] Van Breda v. Village Resorts Ltd., supra, at para. 109.

[36] Van Breda v. Village Resorts Ltd., supra, at para.103

[37] Van Breda v. Village Resorts Ltd., supra, at para.108

[38] Van Breda v. Village Resorts Ltd., supra, at para.109

[39] Van Breda v. Village Resorts Ltd., supra, at para. 105.

[40] Van Breda v. Village Resorts Ltd., supra, at para. 105.

[41] Van Breda v. Village Resorts Ltd., supra, at para. 110

[42] Van Breda v. Village Resorts Ltd., supra, at para. 111

[43] Van Breda v. Village Resorts Ltd., supra, at para. 105

[44] Van Breda v. Village Resorts Ltd., supra, at para. 105.

[45] Aldo Group Inc. v. Moneris Solutions Corporation, 2013 ONCA 725 (CanLII), 2013 ONCA 725 (C.A.) paras. 1 and 46

[46] Van Breda v. Village Resorts Ltd., supra, at para. 111.

[47] Van Breda v. Village Resorts Ltd., supra, at para. 111.

[48] Pomini Inc. v. EMPCO-FAB Ltd., supra at para. 17 quoting Morguard Investments Ltd. v. De Savoye (1990), 46 C.P.C. (2nd) 1 (S.C.C.)

[49] Pomini Inc. v. EMPCO-FAB Ltd., supra at paras. 21 and 23, quoting Castel on Canadian Conflict of Laws

[50] Amchem Products Inc. v. British Columbia (Workers’ Compensation Board), 1993 CanLII 124 (SCC), [1993] S.C.J. No. 34, (1993) 1 S.C.R. 897 at para. 20