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Court Confirms Test for Proper Location of Proceeding

Damages

You’re located in Ontario and want to sue someone in another province regarding a loss you suffered in Ontario. No problem, right? Like many aspects of the law, however, it’s not always that simple – instead, the classic lawyer’s answer of “it depends” applies when considering where you must file your claim.

Out of Province Claims

A defendant has two options when served with an out of province claim. It can:

  1. accept the claim and defend it, or
  2. it can assert that the originating province is not the correct location.

If the defendant chooses to object to the location, it may:

  1. contest the service of the claim as improper,
  2. assert that the jurisdiction is incorrect (contesting the jurisdiction simpliciter of the claim), or
  3. assert that while the jurisdiction is correct, that there is a more appropriate forum for the matter (seeking a finding of a forum non conveniens).

Logan Instruments Corp. v Wang

In Logan Instruments Corp. v Wang, the defendant unsuccessfully pursued two of these three grounds of relief. The Court’s application of the forum non conveniens test confirmed that the changes to the litigation process brought about in response to COVID are not only here to stay but will also factor into its decisions.

The Facts

Logan Instruments involves a dispute arising from the defendant’s alleged misuse of confidential information obtained during employment. The plaintiff, located in Ontario, served the defendant, in British Columbia, with the statement of claim, initiating the proceedings.

The defendant asserted that British Columbia was the more appropriate venue for the matter to proceed and moved to have the service set aside and, in the alternative, for a finding that Ontario was a forum non conveniens, and that British Columbia was a more appropriate forum for the matter to proceed.

The Court’s Analysis

The Court did not address the service of the statement of claim, and focused on whether British Columbia was the better location for the matter to proceed. The Court considered some of the potentially relevant factors, as follows:

The location of the parties was deemed to be a neutral factor – one located in Ontario, the other in BC. Interestingly, the location of the witnesses and evidence did not weigh on the Court’s analysis. The Court noted that there will likely be witnesses from both BC and Ontario, as well as multiple other jurisdictions, but that the availability of remote and hybrid proceedings was a significant factor. The advances in technology made in response to the pandemic made the remote testimony of witnesses and the use of electronic documents in Ontario (and British Columbia) the norm and not the exception (this had been previously cited in Kore Meals LLC v. Freshii Development LLC).

The Court also found that there was a strong argument that the contract was formed in Ontario. As we have previously written about, a contract is formed where acceptance is received. This was a point in favour of Ontario as the appropriate forum.

Finally, the Court noted that there was no evidence that the plaintiff had operations in British Columbia (apart from the employment of the defendant).

Strangely, counsel for the defendant sought permission for his client to make submissions to the court on the motion, which was denied, and then asserted that his client’s knowledge of the law in British Columbia was a factor in favour of proceeding in British Columbia. The Court refused to give any weight to this factor, noting that the defendant had not indicated he intended to proceed as his own counsel, or that he had had difficulty in finding capable Ontario counsel.

The Holding and Costs Award

The Court found in favour of the plaintiff.

In awarding costs, the Court noted that the parties had previously appeared on the same matter before Toronto’s Civil Practice Court (“CPC”) in late 2021. The Court also noted that the plaintiff’s counsel had sent the defendant’s counsel a letter several days before the 2021 CPC appearance, offering to permit it to withdraw its motion in exchange for its agreement to pay the plaintiff’s costs on a partial indemnity basis.

The Court noted that this letter referenced several of the same cases that it had relied on in reaching its decision and exercised its discretion to award the plaintiff its costs on a substantial indemnity basis.

Takeaways

Logan Instruments stands as a good example of the potential risks associated with retaining an employee outside of the employer’s province. The use of technology has caused the world to shrink, and enabled companies to seek, retain, and use talent from all over the world. This is fine if things are going well. However, when matters become acrimonious, the location of the parties may abruptly become important. While the plaintiff was successful here, the defendant’s decision to contest the location of proceedings caused the underlying case to be on pause for several years. During this time, the plaintiff’s damages continued to accrue – and they were no closer to a remedy.

While this is not a reason to avoid hiring someone outside of the employer’s province, it may be worth considering before hiring.

At Rudner Law, we have experience representing both employees and employers in litigation. You can visit our website to learn more about employee-side litigation and employer side litigation.

If you have any questions about your situation or if you would like to get legal advice, please feel free to contact us.

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