2010 ONSC 6484, 2010 ONSC 6484

Dundee Precious Metals Inc. et al. v. Marsland et al. [Indexed as: Dundee Precious Metals Inc. v. Marsland] (ON SC), 104 O.R. (3d) 51 2010 ONSC 6484 Ontario Superior Court of Justice, Corrick J.

November 25, 2010 Conflict of laws -- Jurisdiction -- Company with head office in Toronto and its Bulgarian subsidiary suing former employee and hisSerbian company for breach of contract and breach of fiduciary duties -- Plaintiffs alleging that defendant made unauthorized use ofconfidential information to attempt to usurp opportunity to develop mining project in Serbia -- Defendant an Australian national residingin Bulgaria -- Contracts between plaintiffs and defendant governed by Ontario law but not containing choice of forum clause -- No realand substantial connection existing between claim and Ontario -- Ontario not having jurisdiction.

D Inc., a public corporation with a head office in Toronto, was a mining company with interests in Bulgaria, Armenia, Serbia andNamibia. RM, a Bulgarian corporation, was a subsidiary of D Inc. They sued M, the former chief operating officer and executive vice-president of D Inc., for breach of contract and breach of fiduciary duties, alleging that M made unauthorized use of D Inc.'s confidentialinformation to try to usurp an opportunity to develop a mining project in Serbia. [page52 ]M was an Australian national residing inBulgaria. While employed by D Inc., he occasionally attended meetings in Toronto.

A management contract and a final release andindemnity agreement between the plaintiffs and M were governed by Ontario and Canadian law, but did not contain a forum selectionclause. The plaintiffs also sued BR, a Serbian company incorporated by M. The defendants brought a motion for an order dismissing theaction on the basis that Ontario lacked jurisdiction, or alternatively sought to stay the action on the basis of forum non conveniens. Held, the motion should be granted. The connection between the claim and Ontario was weak.

While D Inc.'s head office was in Ontario, it was its Serbian operations thatwere at issue in the litigation. It was likely that the alleged breaches occurred in Serbia or Bulgaria, where M was operating. There wasno connection between BR and Ontario. There was virtually no connection between M and Ontario. The fact that he was an employee ofan Ontario corporation at the relevant time was not a significant connection. It was not unfair to hold that the plaintiffs could not proceedagainst M in Ontario. As the case lacked a real and substantial connection to Ontario, Ontario lacked jurisdiction simpliciter.

If that conclusion was wrong, then the action should be stayed on the basis that Ontario was forum non conveniens. MOTION for an order dismissing or staying the action. Cases referred toVan Breda v. Village Resorts Ltd. (2010), 98 O.R. (3d) 721, [2010] O.J. No. 402, 2010 ONCA 84, 264 O.A.C. 1, 316D.L.R. (4th) 201, 81 C.P.C. (6th) 219, 185 A.C.W.S. (3d) 68, 71 C.C.L.T. (3d) 161, 77 R.F.L. (6th) 1 [Leave to appeal to S.C.C. granted[2010] S.C.C.A. No. 174], apld Unity Life of Canada v. Worthington Emond Beaudin Services Financières Inc. (2009), (ON SC), 96 O.R. (3d) 769, [2009] O.J.

No. 2305, 178 A.C.W.S. (3d) 37 (S.C.J.), consd Mountain West Resources Ltd. v.Fitzgerald, [2004] B.C.J. No. 590, 2004 BCSC 405, 129 A.C.W.S. (3d) 858, [2004] B.C.T.C. 405, distd Other cases referred to Black v.Breeden, [2010] O.J. No. 3423, 2010 ONCA 547, 265 O.A.C. 177, 321 D.L.R. (4th) 659, 91 C.P.C. (6th) 94, 76 C.C.L.T. (3d) 52;Molson Coors Brewing Co. v. Miller Brewing Co. (2006), (ON SC), 83 O.R. (3d) 331, [2006] O.J. No. 4236, 37C.P.C. (6th) 394, 152 A.C.W.S. (3d) 418 (S.C.J.); Muscutt v. Courcelles (2002), (ON CA), 60 O.R. (3d) 20, [2002]O.J.

No. 2128, 213 D.L.R. (4th) 577, 160 O.A.C. 1, 13 C.C.L.T. (3d) 161, 26 C.P.C. (5th) 206, 114 A.C.W.S. (3d) 634 (C.A.); ProSwing Inc. v. Elta Golf Inc., [2006] 2 S.C.R. 612, [2006] S.C.J. No. 52, 2006 SCC 52, 273 D.L.R. (4th) 663, 354 N.R. 201, J.E. 2006-2235, 218 O.A.C. 339, 41 C.P.C. (6th) 1, 52 C.P.R. (4th) 321, 152 A.C.W.S. (3d) 70, EYB 2006-111169 Rules and regulations referredto Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 17.02(f) (ii) Diane L. Evans and Sylvia M. Samuel, for plaintiffs.

Kimberly Boara Alexander, for defendants. [page53 ] CORRICK J.: -- Introduction [1] The defendants move for an order dismissing this action on the basis that Ontario lacks jurisdiction in the matter. Alternatively, thedefendants seek a stay of the action on the basis of forum non conveniens. For the reasons that follow, I find that Ontario does not havejurisdiction in this matter and therefore dismiss the action. The Parties [2] Dundee Precious Metals Inc. ("Dundee") is a public corporation with its head office in Toronto, Ontario. It is a mining company withinterests in Bulgaria, Armenia, Serbia and Namibia.

Resources Management Services Krumovgrad Eood ("Resources Management"), asubsidiary of Dundee, is a Bulgarian corporation. [3] Laurence Marsland ("Marsland") is an Australian national currently residing in Bulgaria. From January 8, 2004 to February 28, 2009,he was the chief operating officer and an executive vice-president of Dundee, with responsibility for operations in Bulgaria, Armenia,Serbia and Nunavut. Base Resources is a Serbian company incorporated by Marsland in 2009.

The Claim [4] The Statement of Claim alleges that Marsland breached his contractual and fiduciary duties to Dundee by making unauthorized use ofDundee's confidential information to try to usurp a corporate opportunity from Dundee. The claim alleges that Marsland incorporated

Base Resources to use as the vehicle to carry out his breaches. [5] More specifically, Dundee and Resources Management allege in their Statement of Claim that while Marsland was an employee ofDundee, he became aware of an opportunity to develop a mining project in Serbia (the "Cerovo Project"). They further allege thatfollowing the termination of his employment with Dundee, and while he was a consultant to Dundee, Marsland used confidentialinformation he obtained while an employee of Dundee to try to misappropriate Dundee's opportunity to develop the Cerovo Project. [6] Among other things, Dundee and Resources Management seek the following in the Statement of Claim:

(1) An interim injunction restraining Marsland and Base Resources from using Dundee's confidential information [page54 ]and fromfurther discussing the Cerovo Project with Serbian officials.

(2) A declaration that any part of the Cerovo Project that may have beenacquired by Marsland and Base Resources after July 2009 be held in trust for them.

(3) An accounting of all gains made by Marsland andBase Resources as a result of the use of Dundee's confidential information or their acquisition of any part of the Cerovo Project. (4)General damages in the amount of $10 million for breach of contract, confidence and fiduciary duty. The Evidence [7] Dundee Plemeniti, a wholly owned subsidiary of Dundee, operates in Serbia. Revenue Dundee earns in Serbia is earned by DundeePlemeniti. Although the evidence about the corporate structure is unclear, it appears that Dundee owns companies, which in turn ownDundee Plemeniti. [8] Before working for Dundee, Mr.

Marsland lived in London, England. As part of his agreement with Dundee, he moved to Bulgaria.He worked in Bulgaria and Serbia. He has never lived in Canada, nor has he ever had any assets in Canada. He has never had a permitallowing him to work in Canada and he has never paid Canadian taxes. [9] Throughout his employment with Dundee, Marsland attended weekly meetings by video or conference call, and attended in person atDundee's offices five or six times each year.

Between January 2004 and February 2009, Marsland attended approximately 25 meetings inToronto. [10] 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 ResourcesManagement.

(2) A final release and indemnity agreement signed by Marsland in Perth, Australia at the end of his employment withDundee.

(3) A severance agreement dated March 12, 2009. [11] The management contract provides that it is to be governed by the laws of Ontario and Canada. The final release and indemnityagreement provides that it is "deemed to have been [page55 ]made in and shall be construed in accordance with the laws of the Provinceof Ontario and federal laws of Canada". Neither agreement contains a forum selection clause. The Real and Substantial Connection Test [12] To assume jurisdiction in this matter, the court must be satisfied that there is a real and substantial connection to Ontario.

SharpeJ.A. described the core of the real and substantial connection test as "the connection that the plaintiff's claim has to the forum and theconnection of the defendant to the forum": Van Breda v. Village Resorts Ltd. (2010), 2010 ONCA 84 , 98 O.R. (3d) 721, [2010]O.J. No. 402 (C.A.), at para. 84, leave to appeal to S.C.C. granted [2010] S.C.C.A. No. 174. [13] The court in Van Breda clarified the test it had previously set out in Muscutt v. Courcelles (2002), (ON CA), 60O.R. (3d) 20, [2002] O.J. No. 2128 (C.A.).

The test is summarized, at para. 109 of Van Breda, as follows: -- First, the court should determine whether the claim falls under rule 17.02 (excepting subrules (

h) and (o)) to determine whether a realand substantial connection with Ontario is presumed to exist. The presence or absence of a presumption will frame the second stage ofthe analysis. If one of the connections identified in rule 17.02 (excepting subrules (

h) and (o)) is made out, the defendant bears theburden of showing that a real and substantial connection does not exist.

If one of those connections is not made out, the burden falls onthe plaintiff to demonstrate that, in the particular circumstances of the case, the real and substantial connection test is met. -- At the second stage, the core of the analysis rests upon the connection between Ontario and the plaintiff's claim and the defendant,respectively. -- The remaining considerations should not be treated as independent factors having more or less equal weight when determiningwhether there is a real and substantial connection but as general legal principles that bear upon the analysis. -- Consideration of the fairness of assuming or refusing jurisdiction is a necessary tool in assessing the strengths of the connectionsbetween the forum and the plaintiff's claim and the defendant.

However, fairness is not a free-standing factor capable of trumping weakconnections, subject only to the forum of necessity exception. -- Consideration of jurisdiction simpliciter and the real and substantial connection test should not anticipate, incorporate or replicateconsideration of the matters that pertain to forum non conveniens test. -- The involvement of other parties to the suit is only relevant in cases where that is asserted as a possible connecting factor and inrelation to avoiding a multiplicity of proceedings under forum non conveniens. -- The willingness to recognize and enforce all extra- provincial judgment rendered on the same jurisdictional basis is as an overarchingprinciple that disciplines the exercise of jurisdiction against extra-provincial defendants.

This principle provides perspective and isintended to prevent [page56 ]a judicial tendency to overreach to assume jurisdiction when the plaintiff is an Ontario resident.

If the courtwould not be prepared to recognize and enforce an extra-provincial judgment against an Ontario defendant rendered on the samejurisdictional basis, it should not assume jurisdiction against the extra-provincial defendant. -- Whether the case is interprovincial or international in nature, and comity and the standards of jurisdiction, recognition and enforcementprevailing elsewhere are relevant considerations, not as independent factors having more or less equal weight with the others, but asgeneral principles of private international law that bear upon the

interpretation and application of the real and substantial connection test.

-- The factors to be considered for jurisdiction simpliciter are different and distinct from those to be considered for forum nonconveniens.

The forum non conveniens factors have no bearing on real and substantial connection and, therefore, should only beconsidered after it has been determined that there is a real and substantial connection and that jurisdiction simpliciter has beenestablished. -- Where there is no other forum in which the plaintiff can reasonably seek relief, there is a residual discretion to assume jurisdiction. [14] The first stage of the test is the determination of which party bears the burden of showing that a real and substantial connection doesnot exist.

A real and substantial connection is presumed to exist in this case as the claim of Dundee and Resources Management falls, inpart, under rule 17.02(f)(ii) [of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194], Marsland and Base Resources therefore bear theburden of showing that a real and substantial connection does not exist. [15] The second stage of the test requires an examination of the connection between Ontario and the plaintiff's claim and Ontario and thedefendant.

Connection between Ontario and the Plaintiffs' Claim [16] Dundee and Resources Management submit that the following facts support a connection between Ontario and their claim:

(1) Dundee is a Canadian public corporation headquartered in Ontario. Its shares are traded on the Toronto Stock Exchange. (2)Marsland was an employee of Dundee and this action arises out of a dispute between a Canadian company and its employee.

(3) Ontarioand Canadian law govern the management contract between Dundee and Marsland.

(4) The final release and indemnity agreement isdeemed to have been made in Ontario and is governed by Ontario and Canadian law. [page57 ] [17] Marsland and Base Resources submit that the plaintiffs' claim has little to do with Ontario for the following reasons:

(1) It seeks an interim and permanent injunction to restrain Marsland from using confidential information he obtained while working inBulgaria to pursue a mining project in Serbia. [See Note 1 below]

(2) It seeks to restrain Marsland, who is not in Ontario, from discussingthe development of the Serbian mining project with the Serbian government and a state-owned mining company in Serbia.

(3) It seeks adeclaration regarding beneficial ownership of land in Serbia.

(4) It seeks an accounting of all gains made by Marsland and BaseResources as a result of the use of Dundee's confidential information. Any such funds would not be located in Ontario.

(5) It does notallege that Marsland or Base Resources committed any wrong in Ontario. [18] The facts of this case are not unlike those in Unity Life of Canada v. Worthington Emond Beaudin Services Financières Inc. (2009), (ON SC), 96 O.R. (3d) 769, [2009] O.J. No. 2305 (S.C.J.), where Strathy J. held that the connection between theplaintiff and Ontario was real, but was not substantial in the sense of significant or weighty. In that case, the plaintiff carried on businessacross Canada and had its head office in Ontario.

The plaintiff suffered damages in Ontario in the sense that damage to its businessanywhere in Canada ultimately hit its bottom line when the accounts were prepared in Ontario. [19] Similarly, in this case Dundee's head office is in Ontario, but it is its Serbian operations that are at issue in the litigation. Likewise,the only evidence that Dundee will suffer damages in Ontario is that it wholly owns the subsidiary company that earns any revenuegenerated in Serbia.

The only information before the court regarding the damages Dundee has suffered is a bald statement in theStatement of Claim asserting that Dundee has sustained damages in Ontario. [20] Dundee submits that the absence of a contract between the parties in the Unity Life case is an important fact that distinguishes thatcase. I agree. Two of the agreements entered into [page58 ]between Marsland and Dundee and Resources Management provided thatOntario and Canadian law governs them. However, it is significant that despite the specification of the governing law, the agreementscontain no forum selection clause.

Dundee submits that it is logical to infer that Marsland knew any dispute would be dealt with inOntario given that the agreements stated that Ontario law governed them. Given the sophisticated nature of the two parties to theseagreements, I do not agree with that logic. In my view, it is more logical to assume that had the parties agreed on a forum, they wouldhave specified it in their agreements. [21] This case is different from the case of Mountain West Resources Ltd. v. Fitzgerald, [2004] B.C.J. No. 590, 2004 BCSC 405, uponwhich Dundee relies.

In that case, the plaintiff was a British Columbia company that carried on business in British Columbia and had itsshares traded on the Vancouver Stock Exchange. The non-resident defendant, Fitzgerald, had been the president of Mountain-West.

Incontrast to this case, Fitzgerald resided in British Columbia at the time he was alleged to have breached his duties to Mountain West. [22] Dundee and Resources Management do not plead where Marsland breached his duties by using Dundee's confidential information.On the basis of the evidence before the court, it is most likely that the breaches occurred in Serbia or Bulgaria, where Marsland wasoperating. [23] In my view, the connection between Dundee's claim and Ontario is weak. [24] I turn now to the connection between the defendants, Marsland and Base Resources, and Ontario. [25] "When assessing the connection between the forum and the defendant, the primary focus is on things done by the defendant withinthe jurisdiction": Van Breda, para. 89. [26] Dundee relies on a number of facts to support its submission that there is a connection between Marsland and Ontario:

(1) Marsland was the second-in-command of an Ontario company, and this is a dispute between the company and its employee BaseResources, a company set up by Marsland to carry out the breaches Dundee alleges.

(2) Marsland attended approximately 25 meetings inToronto between 2004 and 2009.

(3) Marsland discussed with the president of Dundee the possibility of relocating to Toronto. [page59 ]

(4) Marsland kept an office at Dundee's headquarters in Toronto, which he used when he attended meetings. [27] There is no connection between Base Resources and Ontario. It was incorporated in Serbia and has its offices in Serbia. It has noassets or interests in Ontario. [28] In my view, there is virtually no connection between Marsland and Ontario. Marsland lived in Bulgaria during his employment with

Dundee. He has never lived in Ontario or Canada, has no assets in Canada and has never paid Canadian or Ontario taxes. He did attendboard meetings in Toronto. He would arrive a few days before the meeting and leave a few days after the meeting. While in Toronto at ameeting, he would use a vacant office that other visitors to Dundee's Toronto office used and that was ultimately occupied in 2006 by astaff member based in Toronto. Marsland had no staff in Toronto, nor did he keep any of his files in the Toronto office. He worked on alaptop computer, which he carried with him.

The fact that he is an employee of a company headquartered in Ontario is not a significantconnection. Fairness [29] The court in Van Breda noted that the fairness of assuming or refusing jurisdiction is an appropriate consideration in assessing thestrengths of the connections between the forum and the plaintiffs' claim and the defendant. "However, fairness is not a free-standingfactor capable of trumping weak connections, subject only to the forum of necessity exception": Van Breda, para. 109. [30] It is not unfair to hold that Dundee cannot proceed against Marsland in Ontario.

Dundee has offices in Serbia and Bulgaria.Resources Management is located in Bulgaria. It entered into an employment contract in Bulgaria with Marsland, an Australian nationalliving in England. Marsland was responsible for Dundee's operations in Bulgaria and Serbia. The mining project at the root of thisdispute is located in Serbia. [31] Finally, even if Dundee were to obtain a judgment in Ontario against Marsland, it would have to proceed against Marsland in aforeign jurisdiction to enforce it.

General Principles [32] The court in Van Breda observed that the international nature of the case, comity and the standards of jurisdiction, recognition andenforcement prevailing elsewhere are to be viewed, not as independent factors, but as general principles of private [page60 ]internationallaw that bear upon the

interpretation and application of the real and substantial connection test: para. 109. [33] The willingness of an Ontario court to recognize and enforce an extra-provincial judgment against an Ontario resident on the samejurisdictional basis being asserted is a principle intended to prevent a judicial tendency to overreach to assume jurisdiction over a non-resident defendant: Van Breda, para. 109.

Although it is unnecessary to consider this principle in detail given my view that the courtshould not assume jurisdiction in this case, it is noteworthy that an Ontario court would not enforce a foreign order for interim reliefsince, by definition, an interim order is not final: Pro Swing Inc. v. Elta Golf Inc., 2006 SCC 52 , [2006] 2 S.C.R. 612, [2006]S.C.J. No. 52. Dundee seeks interim relief as part of its claim. [34] This case is international in nature, requiring the exercise of caution and restraint in the assumption of jurisdiction: Van Breda, para.104; Black v. Breeden, [2010] O.J.

No. 3423, 2010 ONCA 547, at para. 72. [35] I find that this case lacks a real and substantial connection to Ontario and that this court lacks jurisdiction simpliciter. I thereforedismiss the action. Forum Non Conveniens [36] Had I found a reasonable and substantial connection to Ontario, I would have exercised my discretion and stayed the action on thebasis of forum non conveniens on the basis of the test set out in Muscutt for the following reasons. [37] Three of the four parties are non-residents. Marsland and Base Resources are not resident in Ontario. Resources Management isresident in Serbia.

Only Dundee is resident in Ontario, but it has offices in Serbia and Bulgaria. [38] All of the witnesses, except one, are based in Serbia and Bulgaria. The Serbian and Bulgarian witnesses require a visa to come toCanada to testify.

The one witness resident in Ontario does not require a visa to go to Bulgaria or Serbia. [39] Although two agreements between the parties are governed by Ontario law, they contain no forum selection clause. [40] There is no evidence before the court that multiple proceedings would be required if Ontario declined jurisdiction. [41] There is no dispute that Ontario and Canadian law applies to the

interpretation of two of the agreements entered into between theparties. This law can be proven as a fact in a foreign court. Ontario and Canadian law does not govern the entire matter. Dundee allegesthat Marsland breached his fiduciary duties as an employee.

Marsland was employed by Dundee [page61 ]in Bulgaria for four yearsprior to entering into the agreement to assume the management of Resources Management. [42] There are no geographic factors, apart from the location of Dundee's head office, pointing to Ontario as the most convenient forum.Most geographic factors point to a forum other than Ontario. [43] Dundee and Resources Management submit that the failure of the Ontario courts to assume jurisdiction in this matter will deprivethem of having the case heard on the Commercial List in Toronto by a judge with expertise in commercial litigation.

How much of ajuridical advantage Dundee believes this factor to be is unclear given that Dundee did not commence this action on the Commercial List.Furthermore, as Lederman J. observes in Molson Coors Brewing Co. v. Miller Brewing Co. (2006), (ON SC), 83O.R. (3d) 331, [2006] O.J. No. 4236 (S.C.J.), at para. 24, "the Toronto Commercial list has no monopoly on judicial abilities to deal withintricate commercial law issues.

Accordingly, it is not a factor." [44] The loss of a juridical advantage by Dundee and Resources Management as a result of the lack of oral discovery in Serbia is notsufficient in my view to require Marsland to defend this action in Ontario. Costs [45] Marsland and Base Resources are entitled to their costs, fixed at $25,000, as agreed upon by counsel, to be paid within 30 days. Motion granted. Notes ----------------

Note 1: Transcript of cross-examination of Jonathan Goodman, question 179. ----------------