MALCOLM ROBERT BLAIR, NOLAN MCDONALD, CHRIS ANJEMA, BLAIR CONSTRUCTION 2012 INC., v. FRAME, 2023 NBKB 175

SJC-390-2020 IN THE COURT OF KING’S BENCH OF NEW BRUNSWICK TRIAL DIVISION JUDICIAL DISTRICT OF SAINT JOHN CITATION: 2023 NBKB 175 BETWEEN: MALCOLM ROBERT BLAIR, NOLAN MCDONALD, CHRIS ANJEMA, BLAIR CONSTRUCTION 2012 INC., and FRAME RATES INC., Plaintiffs - and - STEVEN BERNSTEIN, DOMINION FILM LLC, K STREET PICTURES INC., CHARLES AGRON, and JACKSON KIERAS SETTIPANE, Defendants BEFORE: Justice William T. Grant HEARING HELD: Saint John DATE OF HEARING: July 24,2023 DATE OF DECISION: September 20, 2023 COUNSEL: Matthew T. Hayes for the Respondents/Plaintiffs Matthew R.S.

Pearn for K Street Pictures Inc . and Charles Agron Steven Bernstein: per se Jackson Settipane: per se and for Dominion Film LLC DECISION

GRANT J. [ 1 ] These three jurisdictional motions arise out of an action in which the plaintiffs sue the defendants for the torts of interference with their economic interests, interference with their contractual relations, conspiracy to interfere with their economic interests and unjust enrichment. [ 2 ] It is one of three actions currently before this court arising out of the production and marketing of a film known as “The Last Call”.

In the first two actions, started in 2016 and 2017 the defendant, Steven Bernstein, who is a party added by counterclaim in the 2016 action and a defendant in both this and the 2017 actions, asked the Court to rule that it had no jurisdiction to deal with the claim as against him. On December 17, 2018 Justice McLellan ruled that by filing a Statement of Defence and taking further steps with regard to the pleadings Mr.

Bernstein had attorned or agreed to the jurisdiction of this Court and dismissed the motion. [ 3 ] In the second action which was based on both contract and tort and included as a plaintiff, Chris Anjema who is also a plaintiff in this case, Mr. Bernstein argued that the Court had no jurisdiction because there was a contract between him and Mr. Anjema in which the parties had agreed to submit any dispute to arbitration in Texas.

Justice McLellan reviewed the law and the factors to be considered in determining whether or not the dispute had a real and substantial connection to the jurisdiction and found that there are other factors that outweigh the arbitration clause such that there is a real and substantial connection to this jurisdiction and dismissed that motion as well. [ 4 ] In this action the plaintiffs allege that in November of 2013, in reliance upon representations made by Mr. Bernstein, the plaintiffs, Blair Construction and Chris Anjema, entered into two investor agreements with Mr.

Bernstein’s then company Dominion Film LLC in which Blair Construction and Mr.

Anjema agreed to invest $295,000 and $850,000 respectively in exchange for a 120% return on their investments as well as a share, along with other investors, of 50% of the net proceeds of the film which was to be filmed primarily in Saint John, New Brunswick. [ 5 ] They further allege that in June 2014, when the costs of production had exceeded the budget, the plaintiff, Malcolm Blair loaned the film a further $500,000 with an interest rate of 20% as well as complete control over all spending on the film and other conditions including control over selling the film. [ 6 ] The plaintiffs further allege that they later learned that Mr.

Bernstein had mismanaged and misrepresented the film’s finances resulting in Malcolm Blair, Nolan McDonald and his company, Frame Rates Inc., advancing a further $300,000 to complete the production of the film. [ 7 ] They also allege that post-production of the film stalled due, inter alia, to Mr. Bernstein’s refusal/inability to act in accordance with his representations and warranties. [ 8 ] They further allege that in 2016 Mr.

Bernstein committed various breaches of the investor agreements and the extended financing agreement, i.e. the $500,000 loan. [ 9 ] With respect to the defendants, Jackson Settipane and K Street Pictures the plaintiffs allege that Mr. Settipane signed a contract with Steven Bernstein (“the transfer agreement”) whereby , inter alia , he transferred to Mr. Settipane his shares in Dominion Film LLC as well as some of the benefits from the film, including producers’ credits, that he had previously transferred to Mr.

Blair in exchange for the $500,000 loan. [ 10 ] They further allege that this and other actions taken by Mr. Bernstein and Dominion Film LLC interfered with their economic interests.

[ 11 ] The plaintiffs further allege that Mr. Bernstein and others signed a distribution agreement with K Street Pictures Inc. of which Charles Agron is president which also, among other things, made Mr. Agron a producer of the film and entitled Mr.

Settipane to an advance on the film’s gross receipts, all of which interfered with their economic interests. [ 12 ] They further allege that by entering into the transfer agreement and the distribution agreement the defendants, Steven Bernstein and Jackson Settipane, induced a breach of the investor agreements and the extended financing agreement they had made with Steven Bernstein and Dominion Film LLC. [ 13 ] The plaintiffs further allege that the defendants conspired to cause them economic harm by what they did and that they have been unjustly enriched to the detriment of plaintiffs.

They claim disgorgement of profits, special damages, aggravated and/or punitive damages, and other relief. [ 14 ] The defendants, who have not filed statements of defence, have now brought these three motions in which they claim identical relief, viz .:

a) That under Rule 19.05(1) service of the notice of action and statement of claim be set aside and either dismissing or staying the plaintiffs’ claim because: i. Service outside New Brunswick was not authorized by the Rules of Court or by an Order of this court; ii. The court does not have jurisdiction over them; and/or iii. New Brunswick is not a convenient forum for the trial of this proceeding. [ 15 ] They further claim dismissal or a stay of the action against them under Rule 23.01(2) because: i. New Brunswick does not have jurisdiction to try the action against them; and/or ii.

New Brunswick is not a convenient forum for the trial of this case. [ 16 ] They also claim that the notice of action should be struck under Rule 27.09(

e) as it does not conform with the Rules of Court as well as costs of their motions. [ 17 ] Rule 19.05 states:

(1) A party who has been served outside New Brunswick with an originating process may apply to the court by Notice of Motion (Form 37A) (

a) within the time for filing and serving a pleading or affidavit in response, and (

b) before filing and serving such pleading or affidavit, For an order setting aside such service and staying or dismissing the proceeding.

(2) An order may be made under paragraph (1) on the ground that (

a) service outside New Brunswick is not authorized by these rules or by an order made pursuant thereto,

(

b) the court does not have jurisdiction, or (

c) New Brunswick is not a convenient forum for the trial or hearing of the proceeding.

(3) A party served outside New Brunswick shall not be held to have submitted to the jurisdiction of the court by serving a Notice of Motion pursuant to paragraph (1). [ 18 ] The plaintiffs rely on Rule 19.01(

i) of the Rules of Court as their authority for serving the Notice of Action with Statement of Claim attached on the defendants outside the Province of New Brunswick without leave of the court. That Rule reads as follows: 19.01 Without a court order, a party to a proceeding may be served outside New Brunswick with an originating process where the proceeding against that party consists of a claim or claims (

i) in respect of damage sustained in New Brunswick arising from a tort or breach of contract wherever committed. [ 19 ] As set out in the Statement of Claim at paragraphs 6 – 10 inclusive all of the defendants live and/or have their registered offices outside the Province of New Brunswick. [ 20 ] The defendants submit that service outside of New Brunswick without a court order is not authorized by Rule 19.01(

i) because the plaintiffs have not provided affidavit evidence showing that any damages have been suffered by them or how those damages were caused. [ 21 ] In their Statement of Claim the plaintiffs have alleged that due to the torts committed by the defendants they have suffered damages including, but not limited to, the loss of their investments totaling more than $1,000,000, the balance of the $500,000 loan, and expected profits and credits under their agreements. [ 22 ] In my view, the plaintiffs do not have to prove their damages by affidavit evidence at this stage of the proceeding since much of that proof depends on the result of the accounting they claim in their action.

In any case, they have provided affidavit evidence referencing some damages they have suffered (see Malcolm Blair’s affidavit at paragraphs 61 – 64 and Nolan McDonald’s affidavit at paragraphs 62 – 65) arising from the torts they allege the defendants have committed. I therefore find that service of the originating process in this action outside of New Brunswick is authorized by Rule 19.01(i). JURISDICTION [ 23 ] In Pro Transport Inc. v. Abb Inc. , [2017] NBQB 241 at paragraph 25 Lavigne J. (as she then was) stated: 25.

Rule 19.01 is procedural in nature and merely effecting service in accordance with the Rules of Court does not, in itself, give a court jurisdiction over proceedings involving an out-of-province defendant; a determination must still be made as to whether the courts in New Brunswick have jurisdiction to try this action ( see Best v. Palacios, [2016] N.B.J. No. 234 , 2016 NBCA 59 (N.B.C.A.) , at para. 25 ; Van Breda v. Village Resorts Ltd., [2010] OJ.J. No. 402 , 2010 ONCA 84 (Ont. C.A.) at para. 43 ; and

Levasseur v. Autoritè des Marchès Financiers, [2012] N.B.J. No. 456 , 2012 NBQB 409 (N.B. Q.B.) , PARA 13 ) 2 [ 24 ] The issue of jurisdiction is determined by applying the test of whether or not there is a real and substantial connection between the dispute and the jurisdiction in which the plaintiff has started the litigation. If this Court decides that there is such a connection, it must then decide whether or not New Brunswick is the convenient or most appropriate forum to decide the dispute. [ 25 ] In the case of Club Resorts Ltd. v.

Van Breda , 2012 SCC 17 , the court set out four (4) factors that a court must consider in deciding whether or not it has jurisdiction to hear and decide a tort case. After discussing this issue and its history Lebel J. stated at paragraph 90: 90. To recap, in a case concerning a tort, the following factors are 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. [ 26 ] He had earlier stated at paragraphs 80 – 81: 80. Before I go on to consider a list of presumptive connecting factors for tort cases, I must define the legal nature of the list. It will not be exhaustive. Rather, it will, first of all, be illustrative of the factual situations in which it will typically be open to a court to assume jurisdiction over a matter. These factors therefore warrant presumptive effect. The plaintiff must establish that one or more of the listed factors exists.

If the plaintiff succeeds in establishing this, the court might presume, absent indications to the contrary, that the claim is properly before it under the conflicts rules and that it is acting within the limits of its constitutional jurisdiction. 81. The presumption with respect to a factor will not be irrebuttable, however. The defendant might argue that a given connection is inappropriate in the circumstances of the case.

In such a case, the defendant will bear the burden of negating the presumptive effect of the listed or new factor and convincing the court that the proposed assumption of jurisdiction would be inappropriate. If no presumptive connecting factor, either listed or new, applies in the circumstances of a case or if the presumption of jurisdiction resulting from such a factor is properly rebutted, the court will lack jurisdiction on the basis of the common law real and substantial connection test.

REAL AND SUBSTANTIAL CONNECTION TEST [ 27 ] As stated earlier this action is based on the torts of interference with economic relations, inducement of breach of contract, conspiracy to cause economic harm to the plaintiffs and unjust enrichment. Those alleged torts are all connected to the investor agreements and the extended financing agreements. While Mr. Settipane, Mr.

Agron and K Street Pictures were not parties to those agreements they were, nevertheless, contracts made in New Brunswick which, I find, are clearly connected to the tort claims asserted by the plaintiffs in this action. [ 28 ] Moreover, the case law supports the proposition that a conspiracy occurs where the damage is suffered (see British Columbia v. Imperial Tobacco Canada et al 2006 BCCA 398 ) regardless of where the offending conduct occurred and I find in this case that the alleged damages claimed by the plaintiffs, if their claim is found to be valid, were suffered at least in part, in New Brunswick.

[ 29 ] It follows, and I therefore find, based on the record on these motions, that, provided it can be proven, the tort of conspiracy was committed in New Brunswick which is a second presumptive connecting factor under the real and substantial connection test. [ 30 ] Based on these two presumptive connecting factors I find that the real and substantial connection test has been satisfied and that this court therefore has jurisdiction over this action.

FORUM CONVENIENS [ 31 ] If a court decides that there is a real and substantial connection, and it has jurisdiction over the dispute it may still decline jurisdiction if it is satisfied that its jurisdiction would not be the convenient or most appropriate forum in which the dispute should be decided. This issue must be raised by the parties and the onus of proving it rests on the party asserting it: see Van Breda, supra., at paragraphs 102 – 103 and 109 and Coutu v.

Gauthier (Succession de) 2006 NBCA 16 at paragraph 80 . [ 32 ] While there is no exhaustive list of factors that a court should consider in deciding whether or not it is the most convenient forum, the cases indicate that the factors to be considered include: (

a) the comparative convenience and expense for the parties to the proceeding and for their witnesses, in litigating in the court or in any alternative forum; (

b) the law to be applied to issues in the proceeding; (

c) the desirability of avoiding multiplicity of legal proceedings; (

d) the desirability of avoiding conflicting decisions in different courts; (

e) the enforcement of an eventual judgement; and (

f) the fair and efficient working of the Canadian legal system as a whole. [s. 11(2)] [ 33 ] The defendants all assert that New Brunswick is not a convenient forum for this action citing the facts that they are not resident here, that many witnesses would have to travel long distances from places including Texas, California, Nevada, and Rhode Island and that it would be prohibitively expensive for them to defend this case in New Brunswick. They also note that since they have no assets in New Brunswick, enforcement of any judgment against them would be cumbersome at best.

They also argue that this court should decline jurisdiction as the case against them is “weak at best” as Mr.

Settipane says. [ 34 ] They further submit that both the Distribution Agreement and the Transfer Agreement, which are the transactions impugned by the plaintiffs in this action, were between parties that are all located outside of this jurisdiction and that they include “choice of forum” and “choice of law” clauses designating California as the forum for resolving disputes. [ 35 ] The problem with the latter argument is that the plaintiffs are not parties to the impugned agreements and are therefore not bound by those clauses. [ 36 ] As for the fact that the defendants don’t reside in New Brunswick while that is a factor, it is a neutral one in my view since it would be equally inconvenient for the plaintiffs to bring this action elsewhere.

The same applies to the issue of expense. [ 37 ] The defendants submit that all of their dealings related to the film occurred in California and/or Nevada so either of those jurisdictions would be a more convenient forum to deal with the claim and it would be more fair to both the defendants and any witnesses

involved with the impugned agreements. [ 38 ] However, this action isn’t solely about those agreements. It also concerns the investor agreements and the financing agreements so that same argument can be validly made concerning the plaintiffs and their witnesses. [ 39 ] Moreover Mr. Bernstein, who will be a key witness in determining whether or not there is merit to the plaintiffs’ claims in this action, is involved in all of the agreements, both the impugned ones and the allegedly affected ones, and he is also involved in all three of the actions.

It would be highly inefficient and a waste of judicial resources, in my view, to separate this action from the other two and require the plaintiffs to lead the same evidence in another forum that they will have to lead in the first two actions in this forum. It would also create a risk of conflicting decisions if the same evidence was submitted for adjudication in two different courts. [ 40 ] The defendants further submit that the applicable law would be that of California which is partially correct but proof of the law of another jurisdiction is not an insurmountable hurdle.

Moreover, just as with the enforceability of a judgement, it is the plaintiffs’ problem and if they are willing to assume that burden they are entitled to do so. More importantly, those factors do not prejudice the defendants in my view. [ 41 ] The defendants, particularly Mr. Settipane, also ask this court to consider the “weakness” of the plaintiffs’ case but even if that were a relevant factor it is far too early in this litigation for the court to make such an assessment. [ 42 ] Mr.

Agron and K Street Pictures Inc. also submit that if the court assumes jurisdiction over the other defendants they should nevertheless be treated differently and severed from this action as they are not necessary parties.

They submit that doing so would be fair as they could not have appreciated that they might be entangled in such a case, particularly given that they undertook customary due diligence before acquiring the distribution rights to the film. [ 43 ] They submitted the affidavit of their attorney, Kevin Koloff, who outlines the due diligence he undertook on their behalf and which, he says, revealed no evidence of any outstanding interests or claims against the film save the lien filed in Quebec which was settled at or before the conclusion of the impugned transactions.

That settlement agreement, however, between Dominion Film LLC and certain creditors in Quebec states at paragraph 12 (see ROM p. 419) 12. Dominion Films, LLC agrees to give a copy to the Union of any alleged agreements between it and Mr. Malcolm Blair and Mr. Nolan McDonald regarding the film Dominion, ( sic ) except to the extent any such agreements are restricted from disclosure by confidentiality. [ 44 ] While this is not necessarily a reference to a lien or claim against the film it was evidence acquired by K Street Pictures and Mr.

Agron’s attorney that referred to agreements between Dominion and two of the plaintiffs, presumably concerning the film. It may or may not ultimately be significant but in my view it proves they were aware of the involvement of those two plaintiffs in the film before entering into the impugned agreements and casts doubt on their assertion that they were as “in the dark” about the involvement of the plaintiffs in the film as they assert. That, combined with the other factors, is sufficient reason, in my view, to deny their request to be severed from the other defendants. [ 45 ] Mr.

Settipane would have an even stronger argument for severance but that would, in my view, be outweighed by the factors of judicial economy and the potential for conflicting decisions if two or more courts were evaluating the same evidence. [ 46 ] I am not unmindful of the difficulty of being required to defend a lawsuit in a jurisdiction far removed from where you live and I accept that doing so in this case is very inconvenient for the defendants, particularly those who are not parties in the other two actions.

However, it would not be more fair, in my view, to decline jurisdiction and require the plaintiffs to be placed in the same position in another jurisdiction. Moreover, I find that assuming jurisdiction over the action will likely avoid both a multiplicity of proceedings and the risk of conflicting findings based on the same evidence and I therefore find that in all the circumstances New Brunswick is a convenient forum for the trial of this action.

I therefore refuse to exercise my discretion to decline jurisdiction and dismiss the defendants’ motions in that regard. [ 47 ] The defendants also ask the Court to strike the Notice of Action and Statement of Claim under Rule 27.09(

e) on the grounds that it is not in conformity with the Rules of Court . No evidence or submissions were advanced in support of that prayer for relief so it is also

dismissed. COSTS [ 48 ] The plaintiffs were successful in defending all three motions and are therefore entitled to costs. I award costs to the plaintiffs of $2,000 inclusive of disbursements against the moving parties in each motion. ________________________________________________ William T. Grant Judge of the Court of King’s Bench of New Brunswick