DreamBank Online Gifting v. BeneFACT Consulting Date:, 2011 BCPC 459

Citation: DreamBank Online Gifting v. BeneFACT Consulting Date: 20110920 2011 BCPC 0459 File No: 1032130 Registry: Vancouver IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: THE DREAMBANK ONLINE GIFTING COMMUNITY INC. CLAIMANT AND: BENEFACT CONSULTING GROUP INC. DEFENDANT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE MEYERS Counsel for the Claimant: G. Munroe, Articled Student Appearing for the Defendant by teleconference : C. Marler, an officer of the company Place of Hearing: Vancouver , B.C. Date of Hearing: September 20, 2011 Date of Judgment: September 20, 2011

[ 1 ] THE COURT: This is a case which has to do with DreamBank Online Gifting Community Inc. which is a company incorporated in B.C. They contract with BeneFACT Consulting Group Inc. which is a company incorporated in Mississauga, Ontario.

The contract is drawn by BeneFACT Consulting Group and it is a rather simple or simplified contract actually looking more like a letter than a formal contract, but nonetheless, that is the one that BeneFACT requested that DreamBank sign in order to set up their contractual obligations. [ 2 ] BeneFACT provided the contract to DreamBank and DreamBank's CEO, Dawn Bowles, signed that contract on behalf of DreamBank.

The contract was signed June 2nd of 2009 by Bowles and then BeneFACT Consulting Group Inc. signed the contract on June 26th, 2009. [ 3 ] Essentially what the business relationship between the two parties was, is that DreamBank Online Gifting Community Inc. had the right to obtain certain grants from the federal government and the provincial government in terms of scientific research and experimental development and needed help in preparing what apparently were very complicated documents to make the applications.

BeneFACT said on their website that they were one of the leading companies in successfully doing that for many companies and that they operated and had helped clients throughout Canada. On the basis of that, the contract was signed. [ 4 ] The contract which has been filed here, is on a letterhead format, "BeneFACT Consulting Group Canada's Premier SR&ED Experts," and then in the top right-hand corner, their address is shown as "BeneFACT Consulting Group Inc., 200 University Avenue, Suite 804, Toronto, Ontario," and then there is a telephone number and a fax.

The telephone number is a toll-free number and, in the body of the contract, it sets out what BeneFACT are going to do and what they are going to charge. [ 5 ] The signature takes place at the bottom.

It does not say where each of them are signed, but we do know from the Affidavit and the argument, that Dawn Bowles signed hers in Vancouver on June 2nd, sent it back to BeneFACT, and they signed it in Ontario on June 26th, 2009. [ 6 ] In the little contract, there is no statement -- as there is in many contracts where one company is in one province and another in another or if they are in two different countries, that the law of, and they pick a province or a country, shall apply.

They also do not say that if there is a conflict, the matter should be heard in B.C. courts, Mexico, Ontario or whatever the case may be. This contract is totally silent as to which laws are to apply and which courts are to be resorted to, in the event of a contract breach alleged by either of the sides. [ 7 ] Nothing on the document itself refers to BeneFACT being a company incorporated in the Province of Ontario. They simply have an address that is on their letterhead as Toronto, Ontario.

I understand from further discussion that, in fact, the office and it may be that it has changed since 2009, I do not know, but they are now in Mississauga, but there is nothing on the contract itself dated June 18th, 2009, that says anything other than between: ...

DreamBank Online Gifting Community Inc. hereinafter called the client and BeneFACT Consulting Group Inc. hereinafter called BeneFACT Consulting. [ 8 ] So on the surface of it, there is certainly no direction or agreement as to the law in Ontario to apply or the law in B.C. to apply or there should be resort to B.C. courts or to Ontario courts in the event of a dispute and there is nothing specifically on the contract that denotes that BeneFACT is an Ontario company, having their head office in Ontario and doing all their business in Ontario. [ 9 ] Now, this becomes of some significance because on the website of BeneFACT where the DreamBank became first aware of them, what it provided on their website, BeneFACT's website, it said: Scientific research and experimental development is a federal tax incentive program offered by the Canadian Government to assist companies engaged in innovation.

It aims to stimulate experimentation, technological advancement for the benefit of the Canadian economy. [ 10 ] The website goes on to describe the contact numbers and, first of all, there is a toll-free number, 1-855-TAX-BACK, that is T- a-x, Back, and then there is Toronto Ontario code, 416-360-7733, then there is a Calgary area code, 403-775-7565, and then there is a Vancouver number with a Vancouver area code, 604-628-9870.

At the bottom of the website is corporate headquarters showing as 5060 Spectrum Way, Suite 440, Mississauga, Ontario. [ 11 ] Now, in the dealings that DreamBank had with BeneFACT, they were told that there was a B.C. contact and I just go back for a moment to the website that did say: BeneFACT provides its comprehensive claim preparation services to clients in all provinces. We will also assist you in applying for applicable provincial R&D refunds. [ 12 ] Now, there is an email that was filed dated June 24, 2009, and that was filed by DreamBank. This was an email from Dawn Bowles, the CEO of DreamBank.

It was an email to a fellow by the name of Mark from BeneFACT and this is what it says: Hi Mark, thanks again. As per our conversation, I am confirming our intention to use BeneFACT for our '08 and '09 fiscal SR&ED claims. I will sent the signed document to you tomorrow when back in my proper office. [ 13 ] The next paragraph of the email says: In the meantime, as discussed, let's plan on 10:00 a.m. to 2:00 p.m. meeting next Friday, July 3rd, with your Vancouver team member, myself, and our technical director, Chris Cummer.

I confirm [sic] if our location will be available or if we will require you to provide one. Thanks again and back to you soon, Mark. Have a good afternoon in the sun.

Signed, "Dawn." [14] So this email confirms what the Affidavit of Dawn Bowles said, that she was of the belief that because there was a Vancouverphone number, because she spoke to Mark who called her back every time she called the Vancouver phone line, that Mark was indeed inVancouver and her dealings with Mark were such that he was going to be personally present as the Vancouver team member and meetwith them at the offices of DreamBank, assuming DreamBank was available. [15] So we have her evidence, that is, Bowles' evidence, that at all times, she believed that they, that is, that BeneFACT, had anoffice or at least team members or employees in the Vancouver office and, as far as she was concerned, because the phone number was a604 number, and she would call that number and deal with Mark, that at all times she believed that she was dealing with a companywhose head office was in Ontario, however, they did have regional representatives at least here in Vancouver.

That brings me to now theissue before the Court. [16] When the lawsuit is started, it is a lawsuit by DreamBank suing BeneFACT Consulting and the lawsuit is filed in theProvincial Court of B.C. and a Reply is filed by BeneFACT Consulting Group. When the Reply is filed, there is no mention of atoningto or not atoning to the jurisdiction of the B.C.

Courts. [17] In other words, often if somebody is sued and they take the view that the place that they are sued in or the jurisdiction theyare sued in, has no authority, they will file the Reply to get it in within the time, but will say in that Reply, "We filed the Reply withoutan admission as to the jurisdiction of the court and we are not atoning to the jurisdiction of the court." [18] BeneFACT did not do that and I do understand from what the paralegal who argued the case on behalf of BeneFACT said, isthat they had a real short time fuse on it, 14 days to file a Reply, and they did not want to miss the date for filing so they simply filed aReply and figured, "Well, we'll deal with this jurisdiction issue later." I accept that it was not their intention from square 1, to atone tothe jurisdiction of this Court.

However, the argument as to who has jurisdiction or whether this court has jurisdiction was notimmediately made. That took place many months after filing the Reply. [19] Again, though, in terms of looking at this, we have August 17th of 2010 being the Notice of Claim filed and then we have asituation where they, that is, BeneFACT, have explained why they waited to file an indication that there was no jurisdiction here in B.C. That Application was filed March 15th, 2011. Their Reply had been filed October 25th, 2010. [20] So I do accept why originally -- sorry, the Reply was September 30th of 2010.

I do accept why the Reply, and I should havesaid Counterclaim also, by BeneFACT did not mention that they were not atoning to the jurisdiction for the reasons that Ms. Marlergave, but it does not really explain why it would take all the way until March of 2011 for there to be an Application filed which is the onehere, arguing that the Court has no jurisdiction. [21] I also add that on December 30th, 2010, there was a mediation conference and, if I recall the evidence or submissions, therewas mention of that at that time, but the mediator said they would not deal with that.

If I am correct in that, one wonders why December30th until March 15th passed before they filed their Application to challenge the jurisdiction. [22] So although I do accept Ms. Marler's comment that on October 25th of 2010, she did not raise the issue or mention whyjurisdiction was contested, it was not until March 15th, 2011, that she contested the jurisdiction.

However, even if there is a lateness inraising the issue, I do not intend to hold that as a reason to disallow her Application for that reason alone. [23] What I have to do is look at the merits of the case, notwithstanding my view that the Application for lack of jurisdiction,should properly have been brought much earlier than it was. But as I say, I am not holding that as reason alone, not to proceed to analyzewhether there is any substance to the argument. [24] The first Act that is important here is the Court Jurisdiction and Proceedings Transfer Act and that is

an Act of BritishColumbia and the Act itself talks about proceedings against the person and talks about the territorial competence of courts in B.C.; thenthe Act in its second part deals with transfer of proceedings. In this case, we are only dealing the court's jurisdiction which is

Part 1 andpart of

Part 2. [25] In the definition section, "person" is defined as including a state and then "state" is defined as Canada or a province or territoryof Canada and a foreign country or subdivision of a foreign country. Interestingly, when the

Part 2 talks about territorial competence ofcourts in B.C., it says "Proceedings against a person" in black letters, "A court has territorial competence in a proceeding that is broughtagainst a person only if," and it outlines the usual criteria about the matter having a real and substantial connection to B.C., but also saysthat where the person submits to the jurisdiction, or there is an agreement that this should be the location, or that person who sued isordinarily resident in B.C. [26] There are other comments about proceeding against a person, proceeding against a no-named defendant, proceeding against avessel (meaning a motor vessel), I guess, a ship or a boat, but there is nothing in there that relates to suing a corporation, althoughstrangely, s. 7 talks about ordinary residents of corporations ordinarily resident in B.C., how they establish that; ordinary residents ofpartnerships, how that is established; ordinary residents of unincorporated associations, but yet we are left with the definition of "person"seeming on the surface not to include a corporation and it does seem kind of strange.

However, when counsel takes me to the leadingcase on this Act and the

interpretation, things look different. [27] Counsel took me to Teck Cominco Metals v. Lloyds Underwriters, 2009 SCC 11 , [2009] 1 S.C.R. 321. This was alawsuit that had to do with environmental impact of rubbish or chemicals that were being dumped into a stream by Teck Cominco andthey were rolling all the way into Washington State. [28] Washington State and the insurance company for Teck took the view that B.C. should have the jurisdiction here and notWashington. Teck had sued its insurers in the U.S. for coverage in relation to environmental damages occurring in the U.S. downstreamfrom B.C.

The insurers commenced parallel proceedings in B.C. seeking declaration orders regarding their obligation or lack of, to

defend and indemnify, Teck. The insurers started the action in B.C. The action against Teck started in Washington. [ 29 ] In that case, it was held that, "British Columbia's Court Jurisdiction and Proceedings Act ," which is the one I have been referring to: ... creates a comprehensive regime that applies to all cases where a stay of proceedings is sought on the ground that the action should be pursued in a different jurisdiction ...

It requires that in every case, including cases where a foreign judge has asserted jurisdiction in parallel proceedings, all the relevant factors listed in s. 11 be considered in order to determine if a stay of proceedings is warranted. This includes the desirability of avoiding multiplicity of legal proceedings.

Section 11 is a complete codification of the common law test for forum non conveniens admitting of no exceptions. [ 30 ] The case went on to say: While a court should strive to avoid parallel proceedings, the desire to avoid them cannot overshadow the objective of the forum non conveniens analysis which is to ensure, if possible, that the action is tried in the jurisdiction that has the closest connection with the action and the parties. [ 31 ] The first thing that struck me in reading that case is the litigants or the parties were all corporations and there was no issue raised similar to my questioning about "a person".

I have to take it, therefore, that if it went from Trial Division, the Court of Appeal, to the Supreme Court of Canada, without that issue coming up and the Supreme Court was content, as were the Court of Appeal and the Supreme Court of B.C., to deal with the parties falling within the definition of "person", then I must follow that reasoning and, therefore, I cannot say that the Court Jurisdiction and Proceedings Act only applies to persons and not corporations. [ 32 ] In short, Teck v.

Lloyd Underwriters were two companies suing and the Supreme Court of Canada did not see it as any issue nor did the Court of Appeal or Supreme Court of B.C. that a company was not a person. So the concern I had, is by the wayside. But when I analyze that particular case, it is important for me to do a number of things.

One is to see, well, what really was the issue on that case and, at page 8, paragraph 15 of the Teck case, the Supreme Court says: The only issue on this appeal is whether the coverage proceedings commenced in British Columbia should be stayed, in view of the prior parallel proceedings in Washington State and the assertion of jurisdiction by the U.S. District Court.

Resolving this issue requires us to consider the application of s. 11 of the ... [ Court Jurisdiction and Proceedings Act ] in circumstances where prior proceedings have been commenced outside ... [of B.C.] and the foreign court has refused to stay its action. [ 33 ] It goes on to say in dealing with that single issue that the Court Jurisdiction and Proceedings Transfer Act : ... creates a comprehensive regime that applies to all cases where a stay of proceedings is sought on the ground that the action should be pursued in a different jurisdiction ...

It requires that in every case, including cases where a foreign [jurisdiction] judge has asserted jurisdiction in parallel proceedings, all the relevant factors listed in s. 11 be considered in order to determine if a stay of proceedings is warranted. ...

Section 11 of the ... [ Court Jurisdiction Proceedings Transfer Act ] was intended to codify the forum non conveniens test, not to supplement it. ...

Section 11 of the ... [Act] thus constitutes a complete codification of the common law test for forum non conveniens . It admits ... [to] no exceptions. [ 34 ] Finally, what the Supreme Court ruled was that: ... the objective of the forum non conveniens analysis which is to ensure, if possible, that the action is tried in the jurisdiction that has the closest connection with the -- [ 35 ] The one who files first should not in any way affect which court should have the jurisdiction to hear the case.

It mattered more or at least, the rule was which has closest connection with the action and the parties should prevail and not be trumped by whoever files first in some other court jurisdiction. [ 36 ] So, in my view, Teck Cominco was restricted, as the Judge said, to the narrow question of whether another court has had the filing first, they asserted jurisdiction, does that supersede any jurisdiction in our court to file a parallel action? They say -- they dealt with that issue and the answer was no.

So, as far as this case is concerned, that Teck case is restricted to a very different legal issue and very different facts. [ 37 ] In the case before this Court, nobody has filed anything anywhere except in B.C. So we do not have the issue of competing jurisdictions, competing filings, or one court outside of B.C. has already asserted jurisdiction.

So that case, although helpful, certainly, is not on all fours with this case here. [ 38 ] One of the things that has to be looked at is s. 11, as the Supreme Court said, because the Act is all-inclusive and its intention was to combine what the existing law was and allow no exceptions. However, the Court did not refer to -- and perhaps this is important to our case, that s. 12 of that Act is relevant and important.

Section 12 says, "Conflicts or inconsistencies with other Acts."

Section 12 says: If there is a conflict or [an] inconsistency between this Part and another ... [Part] [sic] of British Columbia or of Canada that expressly ...

(

b) denies jurisdiction or territorial competence to a court, that other Act prevails. Or if it "expressly confers jurisdiction or territorial competence on a court." [ 39 ] So in the Small Claims Act where jurisdiction is set forth as to where you have to file a claim, it does cover specifically in Rule 2, where if you are suing a company, you can and must file the claim.

Section 2 of the Small Act [sic] says: The purpose of this Act and the rules is to allow people who bring claims to the Provincial Court to have them resolved and to have enforcement proceedings concluded in a just, speedy, inexpensive and simple manner. [ 40 ] In Rule 1 which speaks about making a claim, Rule 1(2), "Filing a notice of claim" says: A claimant must file a notice of claim and pay the required fee at the Small Claims Registry nearest to where (

a) the defendant lives or carries on business, or (

b) the transaction or event that resulted in the claim took place. [ 41 ] In this case, DreamBank say that the defendant company does carry on business in B.C.

They had a representative, she believed, here, they advertised here, they did their solicitations here, they were going to carry on meetings here, and that at no time was she required to go to Ontario, but rather the BeneFACT people would be gathering data here in B.C. and then, yes, the work itself would end up being done in Ontario, but then all of the meetings with the client were here and it was doing both federal and provincial grant applications for DreamBank. [ 42 ] So from the claimant's point of view, the defendant was carrying on business here.

In their website, they also said that they represent clients in each province of Canada. They also said that they had a phone number for a B.C. representative, a Calgary representative, a Toronto representative, but their head office was presumably in Toronto at one time and then Mississauga later. [ 43 ] The fact that the 604 area code number you called in B.C. was automatically transferred to a 1-800 number, was not within the knowledge of DreamBank. They called Vancouver and, as far as they knew, whoever called them back after they left a message, was here in Vancouver. [ 44 ] In any event, s. (2)(

b) of Rule 1 speaks of, "the transaction or event that resulted in the claim took place," and, again, DreamBank say that they are here, and as the claimant, they did all of the consultations by telephone or email and also orally with Mark who she believed was in B.C. and at a B.C. telephone number. Their company was in B.C. [ 45 ] The applications were going to be federal and provincial and, as far as she was concerned, she signed the contract here, the company signed it in their head office in Ontario, but that did not make the substance of the transaction there in Ontario, rather than here.

The general rule in the Small Claims Act , which I say has specifically dealt with the jurisdiction issue in Rule 1(2), is such that a claim against an outside company, that is, an outside-this-jurisdiction company, can under those two circumstances be filed here. [ 46 ] When Rule 2 goes on to say how you serve a company, it specifically canvasses the area of "How to serve an extraprovincial company" in Rule 2(4): If the defendant is an extraprovincial company within the meaning of the Business Corporations Act , the notice of claim must be served (

a) by delivering a copy of it to the delivery address shown for the head office of the extraprovincial company in the office of the Registrar of Companies ... By mailing a copy of it to the registered office or: ... to the mailing address shown for the head office of the extraprovincial company in the office of the Registrar ... (

c) by mailing a copy of it by registered mail to the mailing address shown in the office of the Registrar of Companies ... (

d) by leaving a copy of it with the attorney ... (

e) if no attorney ... [on the following rule]. [ 47 ] There is no evidence before me that this company was -- that is, BeneFACT Consulting was registered here under the Business Corporations Act as an "extraprovincial company". From the arguments that I have heard, I am assuming it was not so registered. What was done by way of service, it was done by delivering a copy of the notice to the company head office in Ontario and nobody has taken any issue with the proper service of that document. The general rule is that a lawsuit should be tied to the jurisdiction that has the closest connection with that action and the parties.

[ 48 ] In the Teck decision at paragraph 32 and 38, that is specifically mentioned when the Court said at paragraph 32: ... the chambers judge dismissed ... motions to stay the B.C. Coverage Action.

In arriving at this conclusion, the chambers judge carefully considered all of the factors mandated for consideration by ... 11(2) of the [Jurisdiction and Proceeding Transfer Act] [sic] namely: the comparative convenience and expense for the parties to the proceeding and for their witnesses, in litigating in the court ... in any alternative forum ... the law to be applied to issues ... [of] proceeding[s] ... the desirability of avoiding ... [multiple] legal proceedings ... the desirability of avoiding conflicting decisions in different courts ... the enforcement of an eventual judgment ... and the fair and efficient working of the Canadian legal system as a whole ...

Then at 38, repeating : ... the objective of the forum non conveniens analysis, which is “to ensure, if possible ... the action is tried in the jurisdiction that has the closest connection with the action and the parties ... [ 49 ] It does not say that all parts of the case have to be filed only in one jurisdiction.

What it is saying is that if there is a substantial connection or a close connection of the action and parties to one jurisdiction or another, it should be filed there but not that everything has to be filed in the one jurisdiction only. [ 50 ] When I look at this issue here, I find that the real and substantial connection between the parties is within B.C. because the facts on which these whole proceedings are based are that the contractual obligations to a substantial extent were to be (although all the paperwork and the expertise was all done in Ontario), at the place of business of DreamBank.

It was at DreamBank's place where the materials were to be gone over, explained, and were to be done by a representative of BeneFACT who at all times was held out to be and understood by DreamBank to be, a team player or team employee living and working in Vancouver. [ 51 ] Again, the contract which was drafted by BeneFACT is subject to the Rule that whoever drafts the contract has the responsibility of putting into that contract crucial issues and, if there is a confusion or absence of conditions that end up coming to the court, the court gives the benefit of the doubt to the party who did not draft the contract.

The reason, of course, is that, if you have the responsibility to draft the contract, you should include in there provisions that are significant. [ 52 ] In this case what was missing in the contract was, if there were a dispute, which law would apply; if there were a dispute, which courthouse or court jurisdiction do you go to? Both of those were at -- BeneFACT's ability to put those terms in their contract. For whatever reason, they chose not to. [ 53 ] Also, in their website, they actually solicited business in all of the provinces in Canada, including B.C.

They were, in my view, carrying on business in B.C. and I say that because both their website and what the representative from BeneFACT, told the owner of DreamBank, Ms. Bowles, was that they did lots of work in B.C., they would come to her place, his phone number was a B.C. phone number.

It was only after a meeting had to be cancelled, that she ever found out that BeneFACT did not have anybody here and Mark was not a B.C. resident nor did BeneFACT or Martin, have a B.C. office. [ 54 ] All of the conversations that they had between them, in my view, for setting up the contract and applications, getting facts together for what was required to make the proper claims on DreamBank's behalf, took place either by email or by phone with the understanding of DreamBank that everything was -- although to be eventually drawn up out east, all of the groundwork would be carried out here in B.C. [ 55 ] I have also to look at one of the issues that was mentioned in the Teck case and that is that the Court has to look at the enforcement if there is an eventual judgment and the difficulties for claimant if they are in B.C. and they are forced to go to Ontario.

If they get a judgment, it is much easier, of course, and less costly to enforce a judgment here than in Ontario should that become necessary. [ 56 ] I also have to look at the comparative costs, convenience for each of the parties, and their witnesses in litigating in Ontario versus B.C.

Here in B.C., the witnesses and the CEO of the Claimant are in B.C. and it is a smallish company without significant funds. [ 57 ] BeneFACT, although they are a large group, I really do not know how financially secure they are, but given that they are operating across Canada, given that they are apparently doing 90 percent of the grant applications and are successful, they would have more funds at their disposal to allow somebody come in here to B.C. for the trial.

Also this Mark fellow was probably a witness that both sides will need and, in the past, certainly, he has been the B.C. contact, so there is no reason to believe that he is -- one of their key witnesses, would not be able to be flown out here for a trial. [ 58 ] So in the final analysis, in my opinion, the Small Claims Act specifically deals with the jurisdiction of the Small Claims Court over companies both in B.C. or outside of B.C. and that Act trumps or take priority over the Court Jurisdiction and Proceedings Transfer Act by virtue of s. 12 of that latter Act, which states that if there is any conflict or inconsistency, the specific Statute takes priority.

I hold that it does and I hold that the substantial and real connection is more with B.C. than it is with Ontario and, as a matter of convenience, expense, and then enforcement, as well, that the proper venue should be in B.C. I also find that the company, BeneFACT, was indeed carrying on business in B.C.

BeneFACT, at least from the point of view of DreamBank, was carrying on business in B.C., having a B.C. telephone number on the website, having a Vancouver local number, and having business offices or personnel at least, stationed in B.C. [ 59 ] As I say, I am not taking into account the lateness of the defendant in raising the jurisdictional question or ruling that the defendant by their silence atoned to the jurisdiction here. [ 60 ] So the case must, in my view, proceed in B.C. However, there is a Counterclaim, as well.

I leave that to the other side, whether they wish to sue in Ontario for the Counterclaim or not and then the Ontario courts will have to rule on that. In the meantime, the Counterclaim is here and both, unless separated, will stay in this court. [REASONS FOR JUDGMENT CONCLUDED]