Ontario Court of Appeal Finds Ontario Has Jurisdiction in Breach of Confidence Case

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The Court of Appeal for Ontario in Dundee Precious Metals Inc. v. Marsland, 2011 ONCA 594, provides a useful overview of the conflict of laws principles for assuming jurisdiction in a breach of confidence context.

The appellant, the Dundee Precious Metals Inc. (“Dundee”), a public mining company with its head office in Toronto, sued its former Chief Operating Officer and Executive Vice President, the respondent Laurence Marsland, for breach of contract and breach of fiduciary duty. Dundee alleged that Marsland misappropriated a confidential corporate opportunity.

The contract between Dundee and Marsland expressly stated that it would be governed by Ontario law and Dundee alleged damages that were sustained in Ontario. Marsland, an Australian national, never lived in Canada. Pursuant to his employment agreement with Dundee, Marsland moved to Bulgaria to work on a mining project in Serbia. Marsland frequently visited Ontario and was in daily contact with Dundee while employed as the Chief Operating Officer. The conduct giving rise to Dundee’s claim took place in Bulgaria and Serbia.

Marsland entered into three agreements with Dundee and Resources Management:

                        1.         A Management Contract executed in Bulgaria on January 3, 2008 in which Marsland agreed to assume the management of Resources Management.

                        2.         A Final Release and Indemnity Agreement signed by Marsland in Perth, Australia at the end of his employment with Dundee.

                        3.         A severance agreement dated March 12, 2009.

As Corrick, J. noted:

[11]      The Management Contract provides that it is to be governed by the laws of Ontario and Canada. The Final Release and Indemnity Agreement provides that it is “deemed to have been made in and shall be construed in accordance with the laws of the Province of Ontario and federal laws of Canada.” Neither agreement contains a forum selection clause. [emphasis added]

The lack of a forum selection clause explains why the “strong cause” test was inapplicable in this case.

The Court of Appeal allowed the appeal and held that the motion judge erred in both her assessment of the connection between the claim and Ontario and in her application of the forum non conveniens test. In the panel’s view, there is a real and substantial connection sufficient to sustain Ontario jurisdiction and Ontario is the appropriate forum for this litigation.

The Court of Appeal writes:

[4]              It is common ground that, pursuant to Van Breda v. Village Resorts Ltd. (2010), 98 O.R. (3d) 721 (C.A.), jurisdiction simpliciter is presumed as the claim falls within Rule 17(f)(2) (“the contract provides that it is to be governed by or interpreted in accordance with the law of Ontario”). To be successful, Marsland therefore bears the onus of demonstrating the lack of a real and substantial connection with Ontario.

[5]              Van Breda holds, at para. 84 that “[t]he core of the real and substantial connection test is the connection that the plaintiff’s claim has to the forum and the connection of the defendant to the forum, respectively.”

(a) Connection of the claim to Ontario

[6]              We agree with the appellant that the motion judge’s conclusion that the connection between Dundee’s claim and Ontario was “weak” cannot withstand analysis. Dundee is a Canadian public corporation, headquartered in Ontario. Marsland, employed as Dundee’s Chief Operating Officer and Executive Vice President, was subject to the laws of Ontario and he took on fiduciary duties and duties of confidentiality under the law of Ontario, which continued even after the termination of his employment. Following the termination of his employment with Dundee, he signed a Management Contract and Release. Both agreements explicitly state that they are governed by Ontario law and both explicitly continue Marsland’s duty of confidentiality owed to Dundee. Dundee alleges that Marsland’s breach of fiduciary duty and breach of contract caused it damage in Ontario.

[7]              In our view, when all of these factors are considered, there is a strong connection between Dundee’s claim and Ontario and the motion judge erred by characterizing the connection as “weak”.

(b) Connection between Marsland and Ontario

[8]              The motion judge also found that there was “virtually no connection between Marsland and Ontario.” We respectfully disagree with this characterization as well. In our view, there was a significant connection between Marsland and Ontario.

[9]              Van Breda states, at para. 92:

As stated in Beals, at para. 32, “a defendant can reasonably be brought within the embrace of a foreign jurisdiction’s law where he or she has participated in something of significance or was actively involved in that foreign jurisdiction.”

[10]         Marsland was a senior executive of Dundee, fully engaged in its business for a period of several years. He attended Dundee board meetings in Toronto four to five times per year and attended senior management meetings in Toronto at least once per year. He also participated in weekly video conference calls, usually originating in Toronto, and was in daily telephone contact with Dundee’s president, who was based in Toronto. We cannot agree that there was “virtually no connection between Marsland and Ontario” given his position with Dundee, the duties he owed Dundee and the regular and on-going participation in Ontario-based activities in the performance of his duties.

[11]         The motion judge’s assessment and application of real and substantial connection test in this case would lead to the surprising proposition that a Canadian corporation headquartered in Ontario cannot use Ontario courts to enforce legal obligations owed to it under Ontario law by current and former senior officers who routinely traveled to Ontario on company business and who were in daily contact with the company in Ontario.

[12]         We conclude that the courts of Ontario have jurisdiction to entertain Dundee’s claim.

With respect to forum non conveniens, the panel concludes:

[13]         As this court stated in Incorporated Broadcasters Limited v. Canwest Global Communications Corp. (2003), 63 O.R. (3d) 431 at para. 58:

The starting place for considering convenient forum is “whether there clearly is a more appropriate jurisdiction than the domestic forum chosen by the plaintiff in which the case should be tried” (Frymer at p. 79 O.R.). Also see Spar Aerospace Ltd. v. American Mobile Satellite Corp., 2002 SCC 78, 220 D.L.R.   at para. 69 and 70 and Amchem Products Inc. v. British Columbia (Workers’ Compensation Board), [1993] 1 S.C.R. 897, 102 D.L.R. (4th) 96 at p. 921 S.C.R.

[14]         While we recognize that forum non conveniens is a discretionary decision attracting appellate deference, we respectfully conclude that the motion judge erred by failing to assess whether Marsland satisfied the onus of identifying another jurisdiction clearly more appropriate than Ontario in which to try this action. The motion judge mentioned Serbia and Bulgaria as possible alternate jurisdictions but did not identify either as being clearly more appropriate than Ontario. Her finding, at para. 42, that there are “no geographic factors, apart from the location of Dundee’s head office, pointing to Ontario as the most convenient forum” and that “[m]ost geographic factors point to a forum other than Ontario” is difficult to understand given the fact that the case involves duties owed under Ontario law to a Canadian company.

[15]         In our view, Marsland failed to demonstrate that there was another jurisdiction clearly more appropriate than Ontario to try this action and it follows that this was not a case for a stay on grounds of forum non conveniens.

 

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