Bank of Montreal v. Higgins: An ‘Inconvenient Truth" about Forum Non Conveniens

The recently released decision in Bank of Montreal v. Higgins, 2009 CanLII 55331 (ON S.C.) contains a decidedly novel approach to determining forum conveniens. The defendant (and plaintiff by counterclaim) Higgins moved for an order permanently staying the crossclaim of the co-defendant Frickey. Higgins took the position that the lis between the cross-claimants in the Ontario action was the same in the parallel action commenced in Nova Scotia, and, thus, Nova Scotia was forum conveniens. Both cross-claimants carried on business in Nova Scotia and Ontario. The Bank of Montreal, in the Ontario action, sued both of them upon their personal liability for business debts. Higgins’ s counterclaim, again in the Ontario action, alleged that the Canada Revenue Agency wrongfully exercised a purported priority, thus depriving the business of an ability to satisfy the outstanding debt owed to the Bank of Montreal.

Rather than undertaking the traditional two-step jurisdiction analysis for jurisdiction simpliciter (perhaps implicitly on the basis of Higgins’s presence in Ontario) or forum non conveniens analysis, the motions judge cites an obscure Federal Court of Canada decision, stating:

“[2] There is clear jurisdiction in the Court to stay an action (including a crossclaim) on just terms. That jurisdiction should only be exercised in the clearest of cases. A stay requires the party moving for it to show:

a) that continuance of the subject action would be unjust because it is oppressive or vexatious to him or is an abuse of the court process; and

b) that the stay would not cause an injustice to the respondent by denying him a personal or juridical advantage:

see Varnam v. Canada [1982] F.C.J. No. 511; 5 A.C.W.S. (3d) 376 (Federal Court of Canada). “

This is, regrettably, the wrong test.

In M.J. Jones Inc. v. Kinsgway General Insurance Co., 2004 CanLII 10547 (ON C.A.), Blair, J.A.confirmed the test for assuming jurisdiction over a non-attorning out-of-province defendant remains the Muscutt eight-factored “real and substantial connection” test: see, Muscutt v. Courcelles, 2002 CanLII 44957 (ON C.A.), (2002), 60 O.R. (3d) 20.

More pointedly, as Mr. Justice Blair notes:

“[22] In an action with multiple defendants and multiple claims, some of which have an extra-territorial dimension, the claims must be assessed as a whole, for purposes of the jurisdictional analysis, without treating the claim against the foreign defendant as a separate action: McNichol Estate v. Woldnik (2001), 13 C.P.C. (5th) 61 (Ont. C.A.); Muscutt, supra, at paras. 67-68; Incorporated Broadcasters Ltd. v. Canwest Global Communications Corp. 2003 CanLII 52135 (ON C.A.), (2003), 63 O.R. (3d) 431 at para. 38 (Ont. C.A.).

[23] In McNichol Estate Goudge J.A. stated, at pp. 64-65:

Rather, I think that the approach prescribed by Morguard and Hunt requires the court to evaluate the connection with Ontario of the subject matter of the litigation framed as it is to include both the claim against the foreign defendant and the claims against the domestic defendants. In doing so, the courts must be guided by these requirements of order and fairness. If it serves these requirements to try the foreign claim together with the claims that are clearly rooted in Ontario, then the foreign claim meets the “real and substantial connection” test. This is so even if that claim would fail the test if it were constituted as a separate action. This approach goes beyond showing that the foreign defendant is a proper party to the litigation. It rests on those values, namely order and fairness, that properly inform the real and substantial connection test and allows the court the flexibility to balance the globalization of litigation against the problems for a defendant who is sued in a foreign jurisdiction.

Furthermore, the Bank of Montreal v. Higgins decision is even more perplexing in that the court does not even mention the leading jurisprudence establishing the discretionary forum non conveniens test; namely: Amchem Products Inc. v. British Columbia (Workers’ Compensation Board), 1993 CanLII 124 (S.C.C.), [1993] 1 S.C.R. 897 at 923; Frymer v. Brettschneider, 1994 CanLII 1685 (ON C.A.), (1994), 19 O.R. (3d) 60 at 79 (C.A.).

It bears repeating that avoidance of multiplicity of proceedings and loss of juridical advantage are but two of a number of relevant factors under the rubric of forum non conveniens:

[30] As she was obliged to do, the motions judge considered all of the relevant factors in assessing the forum non conveniens argument, namely, (1) the location of the majority of the parties, (2) the location of key witnesses and evidence, (3) contractual provisions that specify applicable law or accord jurisdiction (there are no such provisions here), (4) the avoidance of multiplicity of proceedings, (5) the applicable law and its weight in comparison to the factual questions to be decided, (6) geographical factors suggesting the natural forum, and (7) whether declining jurisdiction would deprive the plaintiff of a legitimate juridical advantage available in the domestic court: see Muscutt, supra, at para. 41.” (M.J. Jones, at para. 30 per Blair, J.A.) [emphasis added]

See also, Teck Cominco Metals Ltd. v. Lloyd’s Underwriters, 2009 SCC 11, [2009] 1 S.C.R. 321, where Chief Justice McLachlin held at para. 25 that the “avoidance of multiplicity of proceedings is simply listed along with other factors. This suggests that the existence of foreign proceedings is only one factor, among many, to be considered in a forum non conveniens analysis.”

Moreover, sub-rules 17.02(o) (Necessary or Proper Party) and 17.02(q) (Counterclaim, Crossclaim or Third Party Claim) of the Ontario Rules of Civil Procedure do not confer jurisdiction and are pro tanto procedural. Cf. Dominion Securities v. Toronto Dominion Bank (1981), 15 Man. R. (2d) 120 (Q.B.) (the fact that as the defendant bank’s agent could be sued in Manitoba as a result of carrying on business there, did not by itself render its foreign principal subject to the jurisdiction).
Without the benefit of the relevant authorities, the motion judge went on to conclude that any potential injustice in losing the opportunity to maintain a cross-claim outweighed any inconvenience of carrying on litigation in two fora and the possibility of inconsistent verdicts. Accordingly, the motion to permanently stay the crossclaim was dismissed, the net result of which was that both parallel actions were allowed to proceed in Nova Scotia and Ontario. So much for avoidance of multiplicity of proceedings.

Antonin I. Pribetic

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