Quadrangle Holdings Ltd. v. Coady, 2013 NSSC 416

SUPREME COURT OF NOVA SCOTIA Citation: Quadrangle Holdings Ltd. v. Coady, 2013 NSSC 416 Date: 20131212 Docket: Hfx No. 291455 and Hfx No. 356846 Registry: Halifax Between: Quadrangle Holdings Limited, a body corporate Plaintiff v. Blair Coady Defendant Between: Quadrangle Holdings Limited Plaintiff v. James Matheson and Industrielle Alliance Valeurs Mobilières Inc. Defendants v. Blair Coady Third Party Decision Judge: The Honourable Justice Gerald R. P. Moir Heard: June 19 and 20, 2013 Final Written Submissions: July 15, 2013

Counsel: S. Bruce Outhouse, Q.C., for Quadrangle Holdings Limited William L. Ryan, Q.C., and Christopher Madill for Blair Coady Duane Rhyno for James Matheson Robert Purdy, Q.C., for Industrielle Alliance Valeurs Mobilières By the Court : Introduction I. The path of litigation brought by Quadrangle Holdings Limited against Blair Coady in Nova Scotia, then Alberta, and now back in Nova Scotia over the past five years leads us to an interesting question. II. The claim is about misappropriation of shares. Quadrangle claims that Mr.

Coady used his position in Shannon International Resources Inc. to misappropriate some of Quadrangle's shares in Rally Energy Ltd., of which Mr. Coady was also an officer and director. The Rally shares had been pledged by Quadrangle to Shannon as security for Quadrangle's promise to pay for some shares in Shannon. III. Instead of holding the shares as security, Mr. Coady caused Shannon to deliver them to Lynch Investments Limited in Halifax. Under instructions from a Mr. James Matheson, with whom Mr.

Coady had a business relationship, Lynch Investments disposed of most of the Rally shares and credited the proceeds to a Shannon account. Quadrangle found this out in October of 2005. IV. At first, recovery from Shannon seemed possible, and an agreement was reached in that regard. It turned out that Shannon was, or became, judgment-proof. Quadrangle sued Mr. Coady in Nova Scotia early in 2008, three years and three months after Quadrangle discovered the alleged defalcations. V.

Although some of the companies were incorporated in exotic places, the people and the events are connected with Alberta and the Maritimes. In 2008, the Supreme Court of Nova Scotia was asked to declare that it did not have jurisdiction or to decline jurisdiction in favour of Alberta on the basis of forum non conveniens . Justice Coady refused to decide whether jurisdiction existed, but he declined jurisdiction in favour of Alberta. VI. So, Quadrangle sued in the Alberta Court of Queen's Bench. Mr. Coady obtained

summary judgment on the basis of the limitation of actions statute in Alberta. Justice McCarthy heard the motion. His reasons on this point end with "I therefore conclude that Coady has demonstrated beyond doubt that Quadrangle's claim against him is statute barred" (para. 49). However, he did not determine that the Alberta limitation statute applied so as to prescribe Quadrangle's claim. He did not have to. VII.

Section 12 of the Alberta Limitations Act adds a procedural impediment to its substantive limitation periods. Subsection 12(1) precludes a person from bringing a claim that is outside the Alberta limits before the Alberta courts, even if the substantive law of another place applies. VIII. Quadrangle seeks to revive the Nova Scotia proceedings. So, the interesting question at the end of this five-year path is what to do when a court to which we have deferred on the basis of forum non conveniens turns out to be statutorily barred from hearing the case. Counsel have not been able to find authorities directly on point. Issues

IX. In 2011, Quadrangle started a second Nova Scotia action. In this one, it seeks remedies against Mr. Matheson and the successor to Lynch Investments, Industrielle Alliance Valeurs Mobilières Inc. X. The plaintiff moves for an order confirming that the order finalizing the 2008 motion imposed a stay or correcting that order to do so. It asks that the stay be terminated. Finally, it asks that the 2008 proceeding be consolidated with the newer one. XI. The simpler of the issues can be disposed of briefly. XII.

The order of June 19, 2008 declared "that the Province of Alberta, rather than the Province of Nova Scotia, is the forum conveniens for the Plaintiff's claim against the Defendant". In my view, that finding implies the regular remedy when jurisdiction is declined in favour of a more convenient place. That is, a stay of the home proceeding. The order could be amended under Rule 78.08(

b) to expressly provide that which is implied, but there is no need. XIII. The 2008 and 2011 proceedings should be consolidated if the 2008 proceeding is revived. XIV. Mr. Coady submits that I should determine whether the Alberta or Nova Scotia limitations statute apply. Quadrangle says that I have not been asked to do that, that I must decide only whether jurisdiction exists. It submits that case law supports the view that when there is a real question of conflicting laws, what constitutes the applicable law should not be decided on a preliminary motion.

If a limitations defence is pleaded later, the court could separate the question of the applicable statute and order it determined as a question of law. XV. The predominant issue is: whether the stay should be lifted? However, when determining that question I have to confront: whether the predominant issue requires a determination of which limitation statute applies? Quadrangle's Claims XVI. We have the statements of claim from the 2008 Nova Scotia action, the Alberta statement of claim, and the recent statement of claim and third party claim in the 2011 Nova Scotia action. Also, we have an affidavit of Dr.

George Findlay, the beneficial owner of Quadrangle. Important documents, such as a subscription agreement and a promissory note, are exhibited to other affidavits. XVII. I can summarize the claims as follows. XVIII. In 2003, Rally was about to drill for natural gas on Prince Edward Island, and Shannon was a minor participant. Dr. Findlay attended a presentation in Halifax put on by Mr. Coady and others. He also met Mr. Matheson at that time. Findlay and Coady discussed Quadrangle investing in Shannon. XIX.

In July 2003, Shannon and Quadrangle signed a securities subscription agreement under which Quadrangle acquired, by private placement, common shares in Shannon and fixed price warrants for additional shares. In May 2004, Quadrangle exercised the warrants. Quadrangle owed $US 160,000, but it did not pay cash. Instead, Quadrangle promised to pay for the shares in the next October with interest. XX. As security for the promise to pay $160,000, Quadrangle pledged 500,000 shares in Rally.

It executed a "promissory note" that is really a security agreement at the same time as it exercised the warrants, and it delivered the Rally shares to a Shannon account with BMO Nesbitt Burns. XXI. Shortly after the pledge, Mr. Coady transferred the Rally shares to a Shannon brokerage account at Lynch Investments in Halifax. Mr. Coady told Lynch it could take instructions for sale of these from Mr. Matheson, a former investment adviser. Some 373,000 Rally shares were sold by Lynch Investments under Mr. Matheson's instructions well before the $160,000 payment was due.

Quadrangle was not in default of its agreement with Shannon. The statement of claim says that proceeds went to another of Mr. Coady's

companies, Shear Wind Inc. XXII. Quadrangle claims that Mr. Coady caused the Rally shares to be sold without the knowledge or authority of Quadrangle and misappropriated the proceeds. Terms for Exclusive Jurisdiction and Choice of Forum XXIII. Mr. Coady attempts to rely on terms of these kinds in the securities subscription agreement and the "promissory note". Let us take a closer look at the documents. XXIV. The securities subscription agreement was signed by Quadrangle on July 24, 2003, and it was accepted by Shannon on August 13, 2003. The warrant certificate was issued on August 28, 2003. XXV.

Quadrangle took 400,000 common shares in Shannon. The subscription agreement provided for Quadrangle to get one warrant for each share. Under the warrants, Quadrangle could acquire up to 400,000 more shares before October of 2004 for forty cents a share. XXVI. The subscription agreement refers extensively to American securities law, especially the Securities Act of 1933 .

That legislation is denoted by the phrase "the Act" in the exclusive jurisdiction clause: This Agreement will be construed and enforced in accordance with and governed by the laws of the Province of Alberta, except for matters arising under the Act… .

The subscription agreement also contains an attornment clause: Each of the parties consents to the exclusive jurisdiction of the courts of Calgary, Alberta in connection with any dispute arising under this Agreement and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens , to the bringing of any such proceedings in such jurisdictions. XXVII. According to Mr. Coady's Alberta affidavit, Quadrangle wanted to exercise the warrants before they expired but did not have the required cash.

On May 7, 2004, an agreement was made under which the warrants were exercised, and Quadrangle delivered a "promissory note" for $US 160,000 payable on October 8, 2004. XXVIII. The note contains extensive terms. It is arguable that the document falls outside the requirement for "an unconditional promise … to pay" in s. 176(1) of the Bills of Exchange Act .

Seeing as "Bills of Exchange and Promissory Notes" are within the exclusive legislative jurisdiction of the federal Parliament under s. 91(18) of the Constitution Act , it is also curious that clause 9 of the note provides, "This Note shall be governed by and construed in accordance with the laws of the Province of Alberta … ." It also contains an attornment clause: "Jurisdiction for any dispute shall be the courts in and for Calgary, Alberta." XXIX.

The provision expressly applying Alberta law and the extensive terms indicate that the parties intended a contract governed by the laws of Alberta, despite the name and the form of the document. XXX. Clause 2 of the agreement provided for security in "500,000 shares of the common stock of Rally Energy Corp. registered in the name of the Promissor". These shares were to be "held in pledge … as security for the performance of all of the Promissor's obligations under this Note". Quadrangle was required to deliver the shares to Shannon's brokerage account at BMO Nesbitt Burns, Inc.: clause 2(a).

According to clause 2(b), "Promissor hereby grants to Holder a possessory lien and a security interest in the Collateral pursuant to the laws of Alberta", and Quadrangle promises to maintain the security interest as a "first lien" on the Rally shares.

XXXI. The nature of the transfer as a security interest meant that Shannon could not dispose of the shares without default by Quadrangle. However, the document went on in several ways to make that expressly clear. Clause 2(

c) provided that Shannon "may not register the Collateral in [its] name or in the name of [its] nominee … unless the Collateral is foreclosed upon as set forth herein." The remedy is provided in clause 5: In the event that Promissor fails to pay the Note upon the Maturity Date, Holder shall have the right to foreclose upon the Collateral and dispose of same in a commercially reasonable manner. Note Holder shall provide Promissor 5 days notice of its election to franchise and Promissor shall have the opportunity to cure such default during such period.

The obligations of Promissor under the Note shall be reduced by the accountable sale proceeds from the sale of the Collateral and the Holder shall full recourse against the Promissor for any deficiency thereof. XXXII. Thus, Shannon had no right to part with possession, or to sell the shares, before October of 2004. The shares were to be returned to Quadrangle on redemption. Justice Coady's Reasons XXXIII. The decision was given orally on June 12, 2008. Justice Coady said that the primary issue was whether to exercise the discretion to defer to Alberta under forum non conveniens .

"I am going to proceed with that issue first." XXXIV. After discussing the applicable law, Justice Coady reviewed the evidence that tended towards Alberta: most witnesses and most of the corporations involved are located in Alberta, the "promissory note" contracts for Alberta, geographical factors point in favour of Alberta, and the contractual and corporate documentation were created in Alberta. He reviewed Quadrangle's points in favour of Nova Scotia.

"They have said that the shares were transferred by James Matheson." But, Justice Coady did not have evidence "that he is alleged to be a major player." Quadrangle relied on its corporate registration in Nova Scotia, but it had "only been registered since 2008". XXXV. The only other point made by Quadrangle was that, "the unauthorized trading took place in Nova Scotia". That can be cited as a point in favour of the respondent. Not much evidence has been advanced on that … but I still find that that's a small point in a larger picture … . XXXVI.

Justice Coady concluded: In view of the foregoing, I find that the defendant has established that Alberta has a closer connection to the matters in issue than Nova Scotia and the balance of convenience favours Alberta. Note that Justice Coady did not decide, and does not appear to have been asked to consider, whether the law of Alberta or Nova Scotia applies to the pleaded cause. XXXVII. Justice Coady found that there was no juridical advantage to proceeding in Nova Scotia.

It was not drawn to Justice Coady's attention that the Queen's Bench of Alberta cannot hear a claim that would be prescribed under the Alberta limitations statute even if the Alberta limitation did not apply to the claim. XXXVIII. At the end of the decision, Justice Coady said "I do not think that it is necessary to say anything about the Rule 14.25 application [to strike for absence of jurisdiction], given my prior rulings."

Justice McCarthy's Reasons XXXIX. Justice McCarthy released his decision on January 10, 2012. XL. Quadrangle had sued Mr. Coady, Mr. Matheson, a Mr. Max Wandinger, and Industrielle Alliance in the Alberta Queen's Bench on similar causes to those covered by the Nova Scotia pleadings. The defendants brought motions for

summary judgment on the basis that "it is plain and obvious that the action is statute barred under the Limitations Act ". XLI. Justice McCarthy made this crucial finding: "Clearly, as of mid-October 2005, Quadrangle was aware that the shares had been misappropriated." Subsection 3(1)(

a) of Alberta Limitations Act provides that a defendant "is entitled to immunity from liability in respect of [a] claim" two years after the claimant knew, or ought to have known, of an injury, of conduct of the defendant to which the injury is attributable, and that the injury warrants a proceeding. (The subsection also prescribes the claim after ten years regardless of knowledge.) Subsection 12 extends the limitations to any proceeding brought in Alberta no matter what jurisdiction's law applies. XLII.

Quadrangle made several arguments against the proposition that, for more than two years before it started the Alberta suit, it knew, or ought to have known, that a proceeding was warranted. Justice McCarthy explained Quadrangle's submissions in detail, but he answered them with a pointed simplicity: "discoverability refers to facts, not law." As stated in Salna , discoverability refers to facts, not law.

In this case the province of Alberta was certainly not an unknown or undisclosed location considering that Coady is a resident of Calgary, Shannon had a head office in Calgary, Shannon leased office space on a month-to-month basis from Rally, an Ontario company which carried on an oil and gas business in the province of Alberta. In addition, both the Promissory Note and the Subscription Agreement provide that the parties to the agreements were governed by the laws of the province of Alberta or that the governing law and jurisdiction regarding any dispute was the province of Alberta.

This is not a case where considering Quadrangle's circumstances, one would conclude there was no reason for knowing that proceedings were warranted in Alberta. XLIII. Justice McCarthy concluded "Coady has demonstrated beyond doubt that Quadrangle's claim against him is statute barred". (The

summary judgment motions of the other defendants were dismissed.) XLIV. The core issue confronted by Justice McCarthy was when Quadrangle knew, or ought to have known, that a proceeding in Alberta was warranted. That is what his discussion, including the discussion of the terms about choice of law and forum, was all about. XLV. Justice McCarthy did not discuss the applicability of Alberta or Nova Scotia law. Because of s. 12 of the Alberta Limitations Act , he did not have to decide applicable law. Termination of Implied Stay XLVI. A stay of proceedings may be temporary or permanent.

A stay based on abuse of process is usually permanent. Other kinds of stays are usually temporary: Linda S. Abrams & Kevin P. McGuinness, Canadian Civil Procedure Law , 2 nd ed. (Markham: LexisNexis Inc., 2010), para. 8.142. The authors go on to say: Normally, a stay is not a final order of a court, because a motion can always be made for the lifting of the stay.

The inherent nature of such an order contemplates the possibility that the court which made the order will revisit the question of whether proceedings should be instituted or allowed to proceed, on the motion of a person affected by it. … In dealing with that question, the judge from whom leave is sought should consider whether the refusal to lift the stay has (or, if left in place, would have) the practical effect of extinguishing or severely prejudicing the rights of the party seeking leave.

XLVII. To similar effect is the passage from Halsbury's quoted at para. 61 of Sezerman v. Youle, 1996 NSCA 92 , [1996]N.S.J. 172. Justice Chipman concluded at para. 63: Thus it would appear that the court's inherent jurisdiction would permit the lifting of a stay should circumstances later come to handmaking it unjust that it continue. XLVIII. The parties were unable to find cases in which a stay issued on a finding of forum non conveniens was set aside. Counsel forQuadrangle was able to refer me to CKF Inc v. Huhtamaki Americas Inc., 2009 NSSC 21.

At para. 29, Justice Edwards quoted from theendorsement of an Ontario Master who had concluded that Ontario should defer to Nova Scotia on the disputes between CKF andHuhtamaki. The Master had provided for the possibility that this court might decline: "Either party may move to lift the stay on propergrounds should the Nova Scotia court decline jurisdiction." XLIX. Some of the argument about whether the stay implied by Justice Coady's order should be lifted suggested a return to theforum non conveniens analysis, particularly the issue of juridical advantage.

On the contrary, we should apply the broad principle thatthe stay should be lifted when "circumstances later come to hand making it unjust that it continue". L. Mr. Coady opposes review. He says that Quadrangle is challenging the authority of this court's previous findings. Heclaims "the Plaintiff has improperly launched a collateral attack on a prior decision of this Court" and cites Behn v. Moulton ContractingLtd., 2013 SCC 26. LI.

Behn is the latest in a line of decisions recognizing that, in certain cases of attempted relitigation to which res judicataand issue estoppel do not apply because of lack of mutuality, a Canadian court may have resort to a stay for abuse of process. LII. This is not a case of proposed relitigation. The plaintiff moves to lift a stay on the ground that newly discoveredcircumstances make it unjust that the stay continue. LIII. I doubt that this is a situation to be resolved under the logic about juridical advantage.

That subject concerns advantagesand disadvantages that are more narrow than the drastic disadvantage of the court in the other jurisdiction being unable to act. It isfundamental to exercising the discretion to defer a claim to a more convenient forum that the other forum can and will adjudicate theclaim. LIV. As will be seen, this case concerns a tort committed within the province and, therefore, the case has a real and substantialconnection with the province. See Court Jurisdiction and Proceedings Transfer Act, s. 11(g). Both Alberta and Nova Scotia havejurisdiction simpliciter.

We would not have deferred to Alberta, and will not continue to do so, if the claim is not barred by the AlbertaLimitations Act but that statute bars the Alberta Queen's Bench from hearing the case. LV. Supposing that our Limitation of Actions Act applies rather than the Limitations Act of Alberta, it would be unjust topermit Mr. Coady to shield himself from the consequences of his alleged misappropriation just because this court deferred to the AlbertaQueen's Bench for a more convenient forum. More so, because Justice Coady was not made aware of the disability imposed on theQueen's Bench. LVI.

Determination of the applicable law may be premature on a motion early in the suit. The evidence around the allegeddefalcation may be obscure or uninvestigated, or the parties may not have had the opportunity to fully argue the issue. On thesemotions, the judge and the parties may well have to be content to see the stay lifted and the issue of applicable law left for another day. LVII. Here, the evidence available to the parties is displayed in the extensive materials before me. And, the parties have fullyargued the issue of applicable law.

In those circumstances, the justice of lifting the stay should be determined in light of the applicablelaw.

LVIII. If substantive Alberta law applies to bar Quadrangle's claim, where is the justice in lifting the stay? But, if the Nova Scotia Limitation of Actions Act applies, then the justice of lifting the stay becomes manifest because our statute does not bar the claim. For those reasons, and with respect for Quadrangle's arguments to the contrary, I will determine whether the Alberta or the Nova Scotia limitations statute applies. We will begin by examining evidence about the alleged misappropriation. Then, we will consider authorities on conflicts of substantive law. Alleged Misappropriation LIX.

According to Quadrangle's present counsel, its pleadings in this action, which were drawn by previous counsel, allege primarily the tort of conversion. The securities subscription agreement and the "promissory note" are part of the background facts. They do not found any cause asserted by Quadrangle against Mr. Coady. LX. Mr. Coady takes exception to this characterization of the statement of claim. He emphasizes references to the securities subscription agreement and the promissory note in the decisions of Justice Coady and Justice McCarthy.

He points out that the word "conversion" appears nowhere in the extensive statement of claim. LXI. Quadrangle's pleadings, read with the evidence in mind, do not suggest a claim is being made under the 2003 securities subscription agreement or the 2004 security agreement in the form of a promissory note. LXII. One does not have to plead the name of a cause, just the material facts. In my view, the pleadings about misappropriation of the Rally shares call upon Mr. Coady to answer a claim under the tort of conversion, as well as other non-contractual causes referred to in the pleadings. LXIII.

I have been provided with much evidence about the alleged misappropriation. It is time to see the details. LXIV. In his affidavit in the Alberta proceeding, Mr. Coady admitted that "Between July 7 and November 16, 2004, 373,000 of the Rally Shares pledged by Quadrangle were sold out of [Shannon's] account with Lynch Investments." Note the passive voice. LXV. Mr. Coady was cross-examined out of court on this affidavit. A copy of the transcript is before me. Mr.

Coady said that he is a long time resident of Calgary, he does not have a residence in Nova Scotia, and his company, Shannon, has its office in Calgary, not Nova Scotia. However, Shannon held its annual meetings in Nova Scotia because most of the shareholders lived here. LXVI. According to Quadrangle's Alberta pleadings, Mr. Matheson was active as an investment adviser in Alberta, but the Alberta Securities Commission banned him for fifteen years. He was a resident of Halifax when the misappropriation is alleged to have occurred. According to the cross-examination, Mr. Coady first met Mr.

Matheson in Inverness, the two decided to incorporate and promote Shannon, and Mr. Matheson was a major shareholder. LXVII. Mr. Matheson introduced Mr. Coady to Lynch Investments in Halifax. They became Shannon's investment advisers. A client application form was filled out that gave Shannon's address as 1550 Bedford Highway. Mr. Coady instructed Lynch to take trading instruction on Shannon's account from Mr. Matheson. LXVIII. The Shannon account was opened at Lynch in Halifax in March of 2002 with a deposit of Rally shares Shannon owned outright. Lynch took instructions for trades from Mr.

Matheson, who consulted with Mr. Coady. LXIX. An investment adviser at Lynch was later disciplined by IIROC for accepting instructions to make trades from Mr. Matheson. The IIROC panel convened, heard evidence, and rendered its decision in Halifax.

LXX. Mr. Coady and Mr. Matheson were involved in the private placement of Shannon shares and warrants in 2003. They wereinvolved in the arrangements with Quadrangle for exercise of its warrants in 2004, and both were aware that the 500,000 Rally shareswere turned over by Quadrangle to Shannon only as security for the $160,000 due as a result of the exercise of the warrants. Mr. Coadytestified that he knew Quadrangle was never in default, and the evidence suggests that the same goes for Mr. Matheson. LXXI. According to Mr.

Coady's cross-examination, the share certificate for the Rally shares pledged by Quadrangle was deliveredby Quadrangle to Shannon. Shannon needed money. Mr. Matheson and Mr. Coady decided to send the certificate to Lynch in Halifaxand have the shares credited solely to Shannon so they could be sold without Quadrangle's knowledge. Mr. Coady said they thought hewould be able to restore things later, without Quadrangle ever finding out. LXXII. Mr. Matheson arranged the sales. At various time, 373,000 of the pledged Rally shares were sold. All transactions weredone at Lynch Investments in Halifax.

No proceeds were remitted to Quadrangle. They were used up in various transactions referred toduring the cross-examination of Mr. Coady. Applicable Law LXXIII. In Curves International Inc. v. Archibald, 2011 NSSC 217, Justice Coughlan drew a distinction between a choice of lawclause in a contract and the applicable law for a tort related to the contract. LXXIV. A franchisor sued the franchisee, who moved for dismissal on the basis of a term in the franchise agreement applying Texaslaw and attorning to the courts of that state.

Initially, the plaintiff just pleaded breach of contract, but the pleadings were amended toinclude claims in tortious conspiracy, intentional interference, and inducement of breach. At para. 23, Justice Coughlan held: Nova Scotia law applies to Curves' claims in tort. The forum selection clause only deals with claims arising from the contract. Thesubstantive law to be applied to torts is the law of the place where the activity accrued. LXXV. The so-called promissory note contained a clause preventing Shannon from registering the Rally shares in Shannon's ownname.

Shannon breached that clause, and its contractual liability could be decided under Alberta law as the choice of law clausesuggests. LXXVI. Quadrangle does not claim for breach of contract. The alleged misappropriation was also a tort. As in Curves International,the choice of law clauses in the subscription agreement and the "promissory note" are inapplicable to the causes alleged by Quadrangle. LXXVII. People can contract that a dispute between them that alleges tortious behaviour will be determined by the law of a certainplace, but that is not what happened in Curves International or here.

The subscription agreement provided "This agreement will beconstrued and enforced in accordance with and governed by the law of the Province of Alberta", and the so-called promissory note said"This Note shall be governed by and construed in accordance with the laws of the Province of Alberta". The present suit does not seek toenforce any promise under the security agreement or the "promissory note". LXXVIII. Moreover, Mr. Coady is not a party to the security agreement or the note. He is sued as a joint tortfeasor, not as a contractingparty. He is a party to no agreement about choice of law. LXXIX.

Therefore, the choice of law clause in the subscription agreement and the "promissory note" do not have any impact on thedetermination of whether Alberta law or Nova Scotia law applies to the causes pleaded by Quadrangle. LXXX. So, the question is whether Alberta or Nova Scotia law applies according to the common law principles for determiningapplicable law where there is no agreement on the subject. This takes us to Tolofson v. Jensen, (SCC), [1994] 3 S.C.R.1022.

LXXXI. Tolofson determined two appeals, one involving British Columbia residents injured in a motor vehicle accident in Saskatchewan and the other involving Ontario residents injured in Quebec. The Supreme Court adopted the territoriality principle for determining the law applicable to a wrong committed in another state or another province. "[O]ne does not ordinarily ignore the law of the land in favour of those who visit" p. 1058.

There is little to be gained in creating an exception to the territoriality principle (p. 1062). (Compare Justice La Forest's majority reasons, with those of Justice Major on this point.) LXXXII. Mr. Coady relies on Club Resorts Ltd. v. Van Breda , 2012 SCC 17 . That decision was about presumptive connecting factors that may give a court jurisdiction over a tortious claim on the basis of a real and substantial connection to the jurisdiction. Mr. Coady emphasizes the rebuttable presumption in tortious claims involving related contracts: "a contract connected with a dispute was made in the province" (para. 90).

This presumption is refined in s. 11(

c) and (

h) of the Court Jurisdiction and Proceedings Transfer Act . LXXXIII. Mr. Coady emphasizes the context in which the court recognized this and other presumptions, particularly "the need for security, stability and efficiency in the design and implementation of a conflict of laws system": para. 73. Mr. Coady argued that the prospect of Shannon being subject to the laws of Alberta with, on the same facts, Mr. Coady being governed by Nova Scotia law would constitute "an unprincipled segregated approach to a determination of the governing law". LXXXIV.

While much of the discussion in Club Resorts is helpful for seeing the policy backdrop of conflicts of law principles, and while it is especially helpful for pointing out that place of a tort is not always as easy to see as in cases of car accidents, the decision is not on point. There are three distinct subjects: 1) whether jurisdiction exists (jurisdiction simpliciter )? 2) if jurisdiction is extant, whether the court should exercise the discretion to defer to another state's extant jurisdiction ( forum non conveniens )? 3) what is the applicable law? LXXXV.

Club Resorts dealt with the first of the three subjects. The place of the tort is just one of the rebuttable presumptions for the existence of jurisdiction: para. 77 and 90 of Club Resorts and s. 11(

g) of the Court Jurisdiction and Proceedings Transfer Act . Thus, more than one jurisdiction can have jurisdiction. On the other hand, place of the tort is determinative of applicable law: Tolofson . So, while jurisdiction may exist in many states, only the law of one of them applies. LXXXVI. The notion that Alberta law applies to the claim in breach of contract against Shannon but not to the claim in conversion against joint tortfeasors is not "unprincipled". It is grounded in principle if the contract imposes Alberta law for breach of contract, but not tort, and the tort occurred outside Alberta.

As discussed earlier, the contract does not provide for tortious liability, and anyway, the defendants are not parties to it. So, where did the alleged misappropriation occur? LXXXVII. "The difficulty lies in locating the situs ...": Club Resorts , para. 88. Mr. Coady appears to have been in Alberta most of the time when Mr. Matheson consulted him about trading the pledged Rally shares. Mr. Matheson appears to have been on the Bedford Highway in Halifax. Lynch Investments had information that Shannon had an office on the Bedford Highway. It took instructions from Mr.

Matheson, apparently given in Halifax and certainly received here. The share certificate was in Halifax. The trades were made here. LXXXVIII. This evidence shows that the transactions alleged to be tortious took place in Halifax. The law applicable to the alleged misappropriation is that of Nova Scotia, not Alberta. Our Limitation of Actions Act applies, not the Alberta Limitations Act . The claims are not statute barred. Conclusions LXXXIX. I will order that the stay of proceedings implied in this court's order dated June 19, 2008 is terminated.

I will also order that the proceedings under Halifax numbers 291455 and 356846 be consolidated under 291455, with the style changed to name the three defendant parties as defendants. Unless a better suggestion is made, the order may simply provide that the third party claim be taken as a cross-claim. Counsel may address costs in writing, if they wish. J.