Macdonald v Burke, 2017 ABQB 444

Court of Queen’s Bench of Alberta Citation: Macdonald v Burke, 2017 ABQB 444 Date: 20170714 Docket: 1501 13284 Registry: Calgary Between: Robert Henry (Bob) MacDonald, Jammin Rock Resources Inc., a body corporate, and Jammin Dowd Land Services, a registered partnership formed under the laws of New Brunswick Plaintiffs - and - Jeffery Cameron Burke, Transcanada Pipelines Limited, Dowd & Associates Ltd., a body corporate Peter Dowd, and John Dowd Defendants _______________________________________________________ Reasons for Judgment of J.T.

Prowse ,Q.C., Master in Chambers _______________________________________________________ [ 1 ] This is an application by Peter Dowd, John Dowd, and Dowd & Associates Ltd. (collectively “the Dowd defendants”), who are three of the five defendants in this Action, for: (

i) a ruling that the Court of Queen’s Bench of Alberta does not have territorial competence or jurisdiction in respect of the claims being made against them because those claims arise out of a New Brunswick partnership, and the issues in dispute are wholly within the jurisdiction of either a New Brunswick arbitrator or alternatively the courts of New Brunswick.

(ii) in the alternative, a ruling that the Court of Queen’s Bench of Alberta should decline to exercise its jurisdiction with respect to the claim against the Dowd defendants on the grounds of forum non conveniens . (iii) in the further alternative, a ruling that the plaintiffs’ claims against the Dowd defendants be referred to arbitration pursuant to the terms of a partnership agreement. (iv) finally, in the further alternative, an order that various paragraphs of the amended statement of claim be struck on the basis that they contain improper evidence and argument contrary to Rule 13.6(2)(

a) of the Alberta Rules of Court. A

summary of the plaintiffs’ claims [ 2 ] Here is a brief chronology of relevant events and pleadings, with an emphasis on those portions which relate to the jurisdictional issues: • The plaintiff, Robert Henry (Bob) MacDonald (“MacDonald”) resides in Nova Scotia and had experience managing and supervising right-of-way agents on major pipeline projects in Atlantic Canada.

He operated through his Nova Scotia corporation, Jammin Rock Resources Inc., (“JRRI”), which was registered to carry on business in New Brunswick. • On August 31, 2011, JRRI entered into a partnership agreement with Dowd & Associates Ltd. (“D&A”), a New Brunswick corporation, with its principal being Peter Dowd. Peter Dowd is a resident of New Brunswick. His brother, the co-defendant John Dowd, is a resident of Ontario. At no time was D&A extra-provincially registered in Alberta. • The partnership was named Jammin Dowd Land Services, which I will refer to as “the partnership”.

Initially the partnership was owed 50/50 but later it was amended so as to be owned 70% by JRRI and 30% by D&A. The partnership was registered to carry on business in New Brunswick with its head office in Fredericton, New Brunswick. • The partnership agreement contains a choice of law provision invoking the law of New Brunswick. It also contains the following arbitration provision: All matters and difference between the parties in relation to this Agreement shall be referred to the arbitration of a single arbitrator, pursuant to the provisions of the Arbitration Act (New Brunswick).

The award and determination of the arbitrator shall be binding upon the parties and their respective heirs, legal representatives, successors and assigns, and from which there shall be no appeal. • The purpose of the partnership was to obtain work from the defendant Transcanada Pipelines Limited (“TCPL”) with respect to the proposed Energy East Pipeline. Initially the partnership was successful in obtaining contracts from TCPL with respect to planning and right of way work concerning that project. • Unfortunately there was a falling out between TCPL and MacDonald in April of 2014.

MacDonald blames this on an incident where he says that he was instructed by TCPL’s employee, the defendant Jeffery Burke, to terminate an employee of the partnership. When the dismissed employee sued both the partnership and TCPL for wrongful dismissal, a dispute arose as to whether Burke did or did not instruct the partnership to dismiss the employee. • Shortly after this dispute arose, TCPL, on May 14, 2014, reduced the partnership’s right of way work by 50% and eliminated the partnership’s role in project management services.

A week later TCPL instructed the partnership to remove MacDonald from the performance of any work for TCPL. • In June of 2014 Peter Dowd and his brother John Dowd met with the partnership’s lawyer to discuss a restructuring of the partnership. • On July 11, 2014, D&A served a Notice of Intention to have an arbitrator appointed pursuant to the Arbitration Act of New Brunswick to rule on the dispute between JRRI and D&A. • On July 30, 2014, D&A filed an application in the Court of Queen’s Bench, New Brunswick, seeking an order of the Court appointing an arbitrator. • In early August of 2014 letters and emails circulated among counsel with a view to achieving consensus on a date for the arbitration hearing. • On August 13 th 2014, the Dowd defendants advised TCPL that, due to the fact that they expected the arbitration would not be successful in expelling MacDonald’s corporation from the partnership, the only course of action that would accomplish this objective was to dissolve the partnership within 90 days, with the goal of having the TCPL work end up being performed by D&A, instead of the partnership.

MacDonald and JRRI were unaware, until the production of documentation in this litigation, that the Dowd defendants had made this approach to TCPL. • On August 14, 2014, D&A cancelled the arbitration. • On August 15, 2014, unaware of the intended unilateral “dissolution” of the partnership by D&A, JRRI served a Notice of Intention to have an arbitrator appointed pursuant to the Arbitration Act of New Brunswick. • On August 18, 2014 - D&A notified JRRI that, in accordance with paragraph 17(

b) of the partnership agreement, the partnership would be dissolved in 90 days, on November 14, 2014. • On August 26, 2014, given this development, MacDonald advised that he was withdrawing JRRI’s Notice of Intention to arbitrate.

• TCPL continued to reduce the partnership’s work during the fall of 2014 and the partnership’s work for TCPL had ceased entirely by February of 2015. • On December 21, 2015, MacDonald and his corporation JRRI commenced these proceedings against TCPL and TCPL’s employee Burke, alleging bad faith withdrawal of work from the partnership. • MacDonald and JRRI sued TCPL and Burke in Alberta because the contract between TCPL and the partnership rendered the law of Alberta applicable to any actions initiated by either party, and the parties irrevocably consented to the exclusive jurisdiction of the Courts of Alberta (Judicial district of Calgary) for any claim arising out of or related to that agreement. • When TCPL and Burke pleaded in their statements of defence that JRRI (as opposed to the partnership) had no standing to bring the Action, the plaintiffs amended their statement of claim in December of 2015 to add the partnership as an additional plaintiff. • When the plaintiffs, through document production, discovered the communication sent to TCPL on August 13, 2014 (see above) and further correspondence to the same effect, they amended their statement of claim on November 9, 2016 to add the Dowd defendants as defendants, alleging that the Dowd defendants had breached their fiduciary duty of loyalty to the plaintiffs. • D&A was dissolved on February 2, 2017.

Territorial jurisdiction regarding the Dowd defendants [ 3 ] The Dowd Defendants do not reside or carry on business in Alberta. Does the Court of Queen’s Bench of Alberta have territorial jurisdiction over them regarding this dispute? [ 4 ] The leading case in this area is Van Breda v Village Resorts Ltd. , 2012 SCC 17 , 2012 CarswellOnt 4268.

In that case a Canadian resident staying as a resort in Cuba suffered catastrophic injuries in an accident. [ 5 ] The plaintiff was staying at a hotel managed by Club Resorts Ltd., a company incorporated in the Cayman Islands. [ 6 ] A claim was brought by the plaintiff in the Ontario court, and Club Resorts brought a motion to dismiss for want of jurisdiction, or alternatively, forum non conveniens . [ 7 ] Dealing with territorial jurisdiction, the question was whether there is a real and substantial connection between the Province of Ontario, in which the Court was located, and the events founding the claim. [ 8 ] In Van Breda , the Supreme Court of Canada noted a list of presumptive connecting factors to aid in the analysis of whether the Court should assume jurisdiction. [ 9 ] The Court noted, in cases concerning a tort, the following 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 [ 10 ] The presumptive connecting factor asserted between the plaintiffs and the Dowd defendants is the contract made in Alberta between TCPL and the partnership for the carrying out of planning and right of way work in New Brunswick. [ 11 ] The contract in question was between TCPL and the partnership.

This presumptive factor does not require that each plaintiff be a party to the contract, or that each Dowd defendant be a party to the contract, just that a contract “connected with the dispute” was made in Alberta. [ 12 ] For example, neither the plaintiff in the Van Breda case nor the defendant, Club Resorts, was a party to the Ontario contract which founded the presumptive connecting factor. [ 13 ] The plaintiff, Morgan Van Breda, was the spouse of Viktor Berg, a professional squash player. He had entered into a contract in Ontario with a Mr.

Denis, who operated a specialized travel agency known as Sport au Soleil. Sport au Soleil had an agreement with Club Resorts under which Sport du Soleil found tennis and squash professionals and sent them to Club Resorts’ hotels in exchange for bed and board at the hotel. This accommodation at the resort was extended to the plaintiff Morgan Van Breda. Hence a contract entered into in Ontario, between Viktor Berg and Sport au Soleil, was found to be a contract “connected to the dispute” between Morgan Van Breda and Club Resorts, even though neither Ms.

Van Breda nor Club Resorts were parties to the contract. [ 14 ] Similarly, in Lapointe Rosenstein Marchand Melancon LLP v Cassels Brock & Blackwell LLP , 2016 SCC 30 , [2016] 1 SCR 851, the contract which provided a real and substantial connection to Ontario was not a contract to which the proposed out of province third party law firms were parties. [ 15 ] The contract between TCPL and the partnership for the provision of services within New Brunswick is clearly connected to the dispute between the plaintiffs and the Dowd defendants.

Accordingly it is my conclusion that the Court of Queen’s Bench of Alberta does have jurisdiction simpliciter over the claim made by the plaintiffs against the Dowd defendants, and that the action is properly before this Court.

Forum non conveniens [ 16 ] The Dowd defendants alternatively submit that this Court should decline to exercise its jurisdiction on the grounds of forum non conveniens .

They submit that the allegations against the Dowd defendants are more closely tied to New Brunswick, and the Dowd defendants would suffer substantial prejudice if forced to defend the claim in Alberta. [ 17 ] The principles to be applied when forum non conveniens is raised are found in the Van Breda decision at paragraph 103 : 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 conveniens must demonstrate why the proposed alternative forum should be preferred and considered to be more appropriate. [ 18 ] In my view, for the two reasons set out below the Dowd defendants have not met the burden on them of establishing that Alberta is a forum non conveniens . (

i) The possibility of conflicting factual determinations [ 19 ] The reason why TCPL ceased giving work to the partnership is a key factual issue in the plaintiffs’ claim against TCPL and Burke. TCPL asserts that it was dissatisfied with the partnership’s work. [ 20 ] The plaintiffs, to the contrary, assert that one of the reasons for TCPL ceasing to give work to the partnership was the conduct of the Dowd defendants in seeking to have the remaining partnership work transferred to them directly.

This assertion is a critical factor in the plaintiffs’ claim against the Dowd defendants. [ 21 ] A trier of fact will have to reach a conclusion regarding the factual issues outlined above, and it should be one trier of fact, not two (one in Alberta and the other in New Brunswick). [ 22 ] Accordingly, in my view, the possibility of conflicting factual determinations weighs against a conclusion that Alberta is a forum non conveniens . [ 23 ] To acquiesce to the proposal of the Dowd defendants that the litigation between the plaintiffs and the Dowd defendants occur in New Brunswick (whether through arbitration or the New Brunswick Court) would leave open the real risk of contrary factual conclusions in these intertwined claims. (ii) the dissolution of D&A [ 24 ] The Dowd defendants have either caused or allowed D&A to be dissolved as a corporate entity.

It seems bizarre in such circumstances to direct that litigation or arbitration take place in New Brunswick between JRRI and its now non-existent partner. In addition, it would seem clearly possible that the limitation period may have expired for either court proceedings or arbitration proceedings in New Brunswick. See Babcock & Wilcox Canada Ltd. v Agrium Inc. , 2005 ABCA 82 , 2005 CarswellAlta 208.

The Dowd defendants assert that the plaintiffs have attorned to the jurisdiction of New Brunswick via the arbitration process and in any event need to follow that arbitration process [ 25 ] Both D&A and JRRI at one point in time gave a notice to arbitrate in New Brunswick pursuant to the partnership agreement, but both abandoned those notices.

Since those proceedings are no longer extant and there is no ‘improper duplication of proceedings’ as asserted by the Dowd defendants. [ 26 ] With respect to staying the Alberta Action so that new arbitration proceedings could now be undertaken in New Brunswick, that suggestion is not viable for the reason already given, that is, the Dowd defendants have either dissolved D&A or allowed it to be dissolved. This eliminates the possibility of arbitration proceedings in New Brunswick. Striking portions of the statement of claim for non-compliance with

Part 13 of the Rules of Court. [ 27 ] I agree with the Dowd Defendants that the amended amended statement of claim is not succinct, and contains evidence and argument, contrary to

Part 13 of the Rules of Court. [ 28 ] Rather than engaging in a word by word review, I direct that the plaintiffs submit an abbreviated form of the amended amended statement of claim to the defendants within 30 days from publication of these reasons. If the defendants are satisfied with that new format then I will sign an order authorizing it to be filed. If the defendants are not satisfied then I will hear submissions in that regard. Costs [ 29 ] If the parties cannot agree on costs, they may seek a ruling from me in that regard. Heard on the 10 th day of July, 2017.

Dated at the City of Calgary, Alberta this 14 th day of July, 2017. J.T. Prowse, Q.C. M.C.C.Q.B.A. Appearances: Melanie Gaston Taylor Schappert Osler, Hoskin & Harcourt LLP for the Dowd defendants J. Gregory MacDonald, Q.C. Goodman MacDonald for the plaintiffs