Why Lawyers Should Always Read the Footnotes in Judgments

The decision of Justice Newbould in Re Ghana Gold Corporation2013 ONSC 3284 (Ont. SCJ) [“Ghana Gold”] is an important reminder to always the read the footnotes in judgments.

Briefly, Ghana Gold involves an application for protection under the Companies’ Creditors Arrangement Act,   RSC 1985, c C-36 (CCAA). The Ontario court granted an Initial Order to Ghana Gold Corporation, Ghana Gold Inc., (collectively “Ghana Gold”). Coastal Explorations Limited (“Coastal”) and Aburi Goldfields (Ghana) Ltd. (“Aburi”) including terms for immediate DIP financing, and an Administration charge, a DIP lender’s charge and a directors’ charge, and provided for a sale and investment solicitation process (“SISP”) inviting letters of intent to be submitted by June 11, 2013, offers by July 15, 2013 and court approval and closing by July 31, 2013.

Prior to the Initial Order, Coastal and Aburi sued Minatura (BVI) Ltd. (“Minatura”) and related companies in Ontario for damages arising from an alleged breach of a shareholders’ agreement which set up a joint venture between Coastal and Minatura for Aburi to develop and operate an alluvial gold mining operation in Ghana. The agreement called for Minatura  to deliver certain equipment and cash in exchange for 50% of the shares of Aburi and the right to nominate two of four directors of Aburi. Coastal and Aburi alleged that Minatura breached its contractual obligations and sought damages of $10 million plus punitive damages.

Minatura then commenced an action in Ghana against Coastal and Aburi for specific performance of the shareholders’ agreement, an injunction restraining the defendants from carrying on the business of Aburi to the exclusion of the plaintiffs and an order for an accounting of profits.

  Minatura then applied for relief to remove Aburi from the CCAA proceedings, seeking inter alia: a declaration that Aburi did not consent to being an applicant; an order that Aburi’s application for relief under the CCAA be stayed or deemed withdrawn; a declaration that the property covered by the Initial Order does not include Aburi’s property; or, in the alternative, an order that the pending dispute between Coastal and Minatura should be determined in Ghana.. Minatura added in its factum a request for an order suspending Aburi’s application as a debtor in the CCA proceeding pending a determination of the dispute over the control of Aburi in the Ghanaian action or as directed by the Ontario court.

In an earlier post entitled: The Perils of Drafting Ineffective Forum Selection Clauses”, I discussed the Court of Appeal for Ontario decision in 2249659 Ontario Ltd. v. Sparkasse Siegen2013 ONCA 354 which addressed issues pertaining to jurisdiction simpliciter, the effect of forum selection clauses and forum non conveniens and concluded:

Analysis

In my view, the “core of the action” is the contractual relationship relating to the Purchase Orders, without which no guarantee of payment would have arisen. It is arguable that the Confidentiality Agreement also formed part of the factual matrix and contractual nexus. In the end, the respondents should have drafted not only a better choice of forum and choice of law clause, but also an Entire Agreement clause to avoid having a collateral guarantee become the defining jurisdictional ground to assume jurisdiction over the respondents.

Justice Doherty adds an important footnote:

[1] The situation is quite different where the forum selection clause identifies Ontario as the forum of choice. In that situation, the clause arguably gives Ontario jurisdiction through the consent of the parties.

With respect to jurisdiction simpliciter, following Justice Le Bel’s analysis in Van Breda v. Village Resorts Ltd. 2012 SCC 17 (CanLII), [2012] 1 S.C.R. 572 (S.C.C.) Justice Newbould held that Ontario had subject-matter jurisdiction over the CCAA proceeding (at para. 55-56)  and the tort claim of negligent misrepresentation (at para. 57-59).

Why, then, are footnotes important?

Newbould J. found consent-based jurisdiction over Minatura based on the forum selection clause favouring Ontario in respect of the breach of contract claim:

[71] The text authorities also state clearly that a forum selection clause will provide the basis for jurisdiction. Castel & Walker, Canadian Conflict of Laws, 6th ed (April 2013) state at p. 11-6.1 that apart from attornment, “Parties who have entered into agreements nominating particular courts for the resolution of disputes between them may rely on those agreements to found jurisdiction.” In Dicey, Morris and Collins on The Conflict of Laws, 14th ed. (2006), it is stated at para. 12R-086 that where a contract provides that all disputes between the parties are to be referred to the jurisdiction of the English courts, the court normally has jurisdiction to hear and determine the proceedings. In Chesire and North’s Private International Law, 13th ed. (1999), it is stated at p. 296 :

Further, any person may contract…to submit to the jurisdiction of a court to which he would otherwise not be subject. Thus, in the case of an international contract it is common practice for the parties, one or even both of whom are resident abroad, to agree to any dispute arising between them shall be settled by the English court… A party to such a contract, having consented to the jurisdiction, cannot afterwards contest the binding effect of the judgment.

[72] In Pitel and Rafferty, Conflict of Laws, (Irwin Law Inc.) it is stated at p. 67:

Finally, it is well recognized that a defendant can submit to the jurisdiction of a court by a contract or agreement to submit. Thus, parties to a contract may agree that all disputes arising thereunder are to be referred to the courts of, for example, Ontario. Such a choice of forum clause will bestow jurisdiction on the Ontario courts.

[73] Minatura contends that there is authority to the contrary. In 2249659 Ontario Ltd. v. Sparkasse Siegen, 2013 ONCA 354 (CanLII), 2013 ONCA 354, Doherty J.A. stated:

[25] A forum selection clause applicable to the relevant litigation identifying a forum other than Ontario as the forum of choice cannot deprive Ontario of jurisdiction simpliciter. A forum selection clause is relevant to whether Ontario should exercise its jurisdiction and not whether Ontario has jurisdiction [1]: see Momentous.ca Corp. v. Canadian American Assn. of Professional Baseball Ltd., 2010 ONCA 722 (CanLII), 2010 ONCA 722, 103 O.R. (3d) 467, at paras. 33-40, aff’d 2012 SCC 9 (CanLII), 2012 SCC 9, [2012] 1 S.C.R. 359. The motion judge should have considered the question of jurisdiction simpliciter before examining the forum selection clauses. Those clauses, even if applicable to this litigation, could not assist in determining jurisdiction simpliciter.

[74] However, footnote [1] referred to by Doherty J.A. stated:

The situation is quite different where the forum selection clause identifies Ontario as the forum of choice. In that situation, the clause arguably gives Ontario jurisdiction through the consent of the parties.

[75] It is clear from this footnote that the Sparkasse Siegen case is distinguishable from this case in which there is a forum selection clause identifying Canada, or Ontario, as the forum of choice. I do not therefore take the statement of Doherty J.A. to run counter to the authorities to which I have referred, including LeBel J. in Van Breda, Sharpe J.A. in Muscutt v. Courcelles, the Court in Loat v. Howarth and the text authorities, that a forum selection clause is recognized in private international law to give jurisdiction to the court selected, in this case the courts of Canada. To the extent that the statement may run counter to these authorities, I am of course bound by Van Breda, and Muscatt v. Courcelles is concurrent authority to Sparkasse Siegen.

Admittedly, a footnote is usually obiter dicta, unless it forms part of the court’s reasons for decision. In this case, Justice Doherty’s footnote in Sparkasse Siegen was dispositive on the issue of subject-matter jurisdiction and the forum selection clause in Ghana Gold. 

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