



COURT OF
APPEAL FOR BRITISH COLUMBIA




Citation:



Ezer v.
  Yorkton Securities Inc.,









2005 BCCA 22




Date: 20050107





Docket: CA031804; CA031805

Between:

Adam J.
Ezer

Appellant

(
Plaintiff
)

And

Yorkton
Securities Inc. and Daniel Danzig

Respondents

(
Defendants
)












Before:



The Honourable Mr.
  Justice Donald





The Honourable Madam
  Justice Levine





The Honourable Mr.
  Justice Smith




Oral Reasons for Judgment




A.J. Ezer



Appearing in person





H.R. Anderson



Counsel for the Respondents





Place and Date:



Vancouver, British Columbia





January 7, 2005








[1]

LEVINE J.A.:
Adam Ezer appeals from the order of Goepel
J. made April 14, 2004 staying his actions against Yorkton Securities Inc. ("Yorkton")
and Daniel Danzig.  The chambers judge found that the "exclusive
jurisdiction clause" in an Account Agreement entered into between Mr. Ezer
and Yorkton was enforceable and Ontario was the proper forum for the
proceedings, including those against Mr. Danzig personally.

[2]

The reasons for
judgment of the chambers judge may be found at 2004 BCSC 487.

Background

[3]

Mr. Ezer, now a law
student, was employed in the brokerage industry between 1992 and 2000, when he
was ages 17 to 25.  In 2000, he owned shares in 2dobiz.com Inc., a Nevada
corporation which carried on business in Vancouver.  The sale of the shares was
restricted.

[4]

A mutual acquaintance
introduced Mr. Ezer to Mr. Danzig.  Mr. Danzig was an experienced broker
employed by Yorkton in Toronto.  He was registered under the securities
legislation of Ontario, but was not registered under the B.C.
Securities
Act
, R.S.B.C. 1996, c. 418.  Mr. Ezer contacted Mr. Danzig to open an
account.  Mr. Ezer signed the New Client Application Form in Vancouver and
forwarded it to Toronto, where, the chambers judge found, it was accepted by
Yorkton.  The contract contained the following terms:

2.         That this agreement and every transaction
carried out for the account of the Client is subject exclusively to the laws
and regulations of the Province of Canada in which the Yorkton accepts this
agreement

3.         Any disputes arising between Yorkton and
the Client shall be exclusively within the jurisdiction of the Courts of the
Province in which Yorkton accepts this agreement.

[5]

Mr. Ezer alleges that
Mr. Danzig prematurely filed certain forms with the U.S. Securities and
Exchange Commission regarding the proposed sale of the shares of 2dobiz.com and
subsequently took other steps regarding the sale of the shares too late, all of
which, Mr. Ezer claims, resulted in a loss to him.  In December 2002, Mr. Ezer
brought an action in B.C. Supreme Court claiming damages for negligence and
breach of contract.  He amended the writ of summons to bring the action under
the
Class Proceedings Act
, R.S.B.C. 1996, c. 50.  In June 2003,
Mr. Ezer commenced a second action in B.C. Supreme Court, claiming essentially
the same relief on the same facts as claimed in the first action.

[6]

Yorkton and Mr. Danzig
applied to stay both actions, relying on the "exclusive jurisdiction
clause" in the Account Agreement.

Decision of the Chambers Judge

[7]

In staying the actions,
the chambers judge found:

(a)        The Account Agreement was valid despite the
fact that Mr. Danzig was not registered as a "salesperson" under the
B.C.
Securities Act
.  He commented that "it is far from
clear" that the
Act
applied to Mr. Danzig (citing
Pearson
v. Boliden Ltd.
(2002), 7 B.C.L.R. (4
th
) 245 (C.A.)), but upheld in any event, the fact that
Mr. Danzig was not registered did not render the contract illegal or
unenforceable (citing
Davidson & Co. v. McLeery
(1970), 14
D.L.R. (3d) 756 (B.C.C.A.) ("
Davidson
")).

(b)        This Court interpreted the same exclusive
jurisdiction clause in
Scalas Fashions Ltd. v. Yorkton Securities Inc.
(2003), 17 B.C.L.R. (4th) 6 (C.A.) ("
Scalas
"), and
found it to be enforceable.  The chambers judge held
Scalas
to be
indistinguishable.

(c)        Ontario is the more appropriate forum.  The
chambers judge noted the following:

           Mr.
Ezer's brokerage account was opened in Toronto.

           Yorkton
accepted the account agreement in Toronto.

           The
Account Agreement states that it is subject to the law of the place where it
was accepted, in this case Ontario.

           The
Notice of Proposed Sale Documents were forwarded to the SEC from Toronto.

           Yorkton
and Mr. Danzig received and acted on Mr. Ezer's orders in Toronto.  Mr. Ezer
was in Australia when he gave those instructions.

           Yorkton
does not have employees or carry on operations in British Columbia.

           Most
of Yorkton's potential witnesses reside in Toronto and none of them reside in
Vancouver.

(d)        Mr. Ezer had the burden to show
"strong cause" why a stay should not be granted.  Mr. Ezer's medical
reasons and differences between Ontario and B.C. class legislation with regard
to costs were not sufficient to override the exclusive jurisdiction clause.

(e)        The chambers judge awarded Yorkton one set
of costs for the stay applications.

Grounds of Appeal

[8]

Mr. Ezer raises the
following grounds of appeal:

(a)        The chambers judge erred in failing to find
the contract void because Mr. Danzig was not registered in B.C.

(b)        The application for certification of the class
action should have been heard before the chambers judge considered the stay
applications.

(c)        The chambers judge erred in staying the
action against Mr. Danzig, who was not a party to the Account Agreement.

(d)        The chambers judge erred in finding that
Mr. Ezer had not shown "strong cause" for not enforcing the exclusive
jurisdiction clause.

(e)        The chambers judge erred in failing to find
that Yorkton had attorned to the jurisdiction by bringing its application for a
stay, filing extensive materials in support and filing statements of defence
denying jurisdiction.

(f)         The chambers judge erred in failing to
impose any conditions on the stays.

(g)        The chambers judge erred in awarding costs
of the stay applications to Yorkton and Mr. Danzig.

Analysis

Validity of the Account Agreement

[9]

Mr. Ezer's principal
argument on appeal is that the Account Agreement is invalid because Mr. Danzig
breached s. 34 of the B.C.
Securities Act
by carrying on a
"trade" while he was not registered under the
Act
.

[10]

It is a nice question
whether Mr. Danzig was required to be registered under the B.C.
Act
.
 In
Pearson v. Boliden Ltd.
,
supra
, Newbury J.A. for the
Court discussed the scope of provincial securities legislation.  After
considering other authorities, she concluded (at para. 62), citing
Pezim
v. British Columbia (Superintendent of Brokers)
, [1994] 2 S.C.R. 557 at
589, that "
the 'primary
aim' of the provincial
Securities Acts
is the protection of the
public from acts or conduct  particularly the solicitation of trades and the sale
of securities  taking place within the respective provinces
".  She noted, however, (at para. 65)
that the broad definition of "trade" in most of the provincial Acts
means that an underwriter or dealer in one province, who solicits business in
another province, may be subject to both Acts.

[11]

I do not find it
necessary to decide for the purposes of these appeals whether Mr. Danzig's
activities on Mr. Ezer's account, which on the evidence were carried on solely
in Ontario, required him to be registered in B.C.

[12]

The contract containing
the exclusive jurisdiction clause was between Mr. Ezer and Yorkton.  At all
material times, Yorkton was registered under the B.C.
Securities Act
as a dealer, although it had no employees in B.C.  Mr. Danzig's status as the
salesperson handling Mr. Ezer's account is a collateral matter insofar as the
question of jurisdiction is concerned.

[13]

In
Davidson
,
this Court held that a contract between a broker and a client was enforceable,
despite the fact that an unlicensed sales trainee conducted trades in the
account.  The Court held that the unlicensed person was not a party to the
contract and his status was a collateral fact not affecting the validity of the
contract.  The Court upheld the decision of the Supreme Court judge granting judgment
to Davidson for the balance owing on the account between it and the client.

[14]

The same reasoning
applies here, with the additional point to be made that the applications and
appeals do not concern a claim made under the contract relating to Mr. Danzig's
activities, but the preliminary matter of the interpretation of the exclusive
jurisdiction clause in the contract.

[15]

Insofar as the
interpretation of the exclusive jurisdiction clause is concerned, this case is
indistinguishable from
Scalas
, in which the same clause was found
to be enforceable.  Mr. Ezer attempts to distinguish
Scalas
on
the basis that the status of the salesperson was not raised, but as I have
said, the status of Mr. Danzig does not affect the enforceability of the
clause.

[16]

I would dismiss this
ground of appeal.

The Certification Application

[17]

Mr. Ezer claims,
relying on
MacKinnon v. National Money Mart Co.
, 2004 BCCA 473
("
MacKinnon
"), that the chambers judge should have
heard the application for certification of the class proceeding before deciding
the stay applications.

[18]

The issue in
MacKinnon
was whether an arbitration clause in the contract was "inoperative"
in the face of a class proceeding.  This Court found that there was a conflict
between s. 15 of the
Commercial Arbitration Act
, R.S.B.C. 1996,
c. 55, and s. 4 of the
Class Proceedings Act
.  The conflict could
only be resolved by determining whether the class proceeding met the
requirements for certification, including determining that a class proceeding
"would be the fair and preferable procedure for the fair and efficient
resolution of the common issues".  This could only be determined after
considering the application for certification.

[19]

There is no such
statutory conflict in this case.  The question is whether the jurisdiction in
which the action may be brought is determined by the contract between the
parties.  If the exclusive jurisdiction clause is enforceable, Mr. Ezer cannot
bring any action against Yorkton in B.C., including a class proceeding, and
there is no action to be certified.  The issues of whether a class proceeding
is the fair and preferable procedure or there are common issues do not arise.

[20]

The chambers judge
clearly recognized this when he pointed out that other members of the purported
class who are not subject to an exclusive jurisdiction clause may commence
class action proceedings against Yorkton in B.C.

[21]

I would dismiss this
ground of appeal.

The Action Against Mr. Danzig

[22]

Mr. Ezer says that Mr.
Danzig cannot rely on the exclusive jurisdiction clause, as he was not a party
to the Account Agreement.  Mr. Ezer argues that his action against Mr. Danzig
in B.C. should not be stayed, because he does not intend to commence
proceedings against either Yorkton or Mr. Danzig in Ontario.

[23]

This Court considered a
similar argument in
B.C. Rail Partnership v. Standard Car Truck Co.
(2003),
188 B.C.A.C. 149, 2003 BCCA 597.  In that case, B.C. Rail Partnership sued
Greenbrier, with whom it had entered into a lease containing an exclusive
jurisdiction clause, and Trenton and a third party, who were not parties to the
lease.  Greenbrier and Trenton applied for a stay of the action in B.C.,
relying on the exclusive jurisdiction clause.  This Court granted the stay of
the action against both Greenbrier and Trenton, on the basis that B.C. Rail had
sued all three defendants in a single action and had not indicated that it
wished to sue any of them separately.

[24]

While Mr. Ezer suggests
that he may wish to sue Mr. Danzig separately in B.C., in my opinion it would
be unjust and impractical not to stay the action against Mr. Danzig.  The
claims against Mr. Danzig turn on the same facts as the claims against Yorkton.
 Allowing Mr. Ezer to sue Mr. Danzig in B.C. while requiring that he sue
Yorkton in Ontario risks duplicitous proceedings and inconsistent results.  Mr.
Ezer's protestations that he does not intend to commence proceedings in Ontario
cannot be relied on while he seeks conditions on the stays that would relate to
such proceedings.

[25]

I would dismiss this
ground of appeal.

"Strong Cause"

[26]

Mr. Ezer does not take
issue with the application by the chambers judge of the "strong
cause" test for determining whether the actions should be stayed.  The
burden was on Mr. Ezer to show "strong cause" why the exclusive
jurisdiction clause should not be enforced:
Sarabia v. Oceanic Mindoro
(The)
(1996), 26 B.C.L.R. (3d) 143 (C.A.);
Scalas
at
para. 44;
Z.I. Pompey Industrie v. ECU-Line N.V.
, [2003] 1 S.C.R.
450
,
2003 SCC 27 at para. 21.

[27]

Mr. Ezer claims,
however, that the chambers judge made numerous errors of fact in concluding
that Ontario was the more convenient forum for the litigation.

[28]

In my opinion, the
chambers judge considered the relevant factors and the evidence supported his
factual findings and conclusions.  Mr. Ezer has not shown that the chambers
judge made any error of law or any overriding or palpable error of fact.

[29]

I would dismiss this
ground of appeal.

Attornment to the Jurisdiction

[30]

Mr. Ezer claims that
Yorkton and Mr. Danzig attorned to the jurisdiction of B.C. by filing
statements of defence and materials in support of their applications for a stay
of the actions that addressed the merits of his claims.

[31]

Yorkton denies that it
put the merits of Mr. Ezer's claims before the B.C. Courts in any way, and
relies on Rule 14(6.4) of the
Rules of Court
.  It acknowledges
that it did not meet the 30-day time limit following the filing of an
appearance for bringing its stay applications under Rule 14(6.4), and asks for
an extension of time if it is necessary.

[32]

Rules 14(6) and (6.4)
provide:

Disputed jurisdiction

(6)
A party who has been served with an originating process
in a proceeding, whether served with the originating process in that proceeding
in or outside of British Columbia, may, after entering an appearance
,

(a)        apply
to strike out a pleading or to dismiss or stay the proceeding on the ground
that the originating process or other pleading does not allege facts that, if
true, would establish that the court has jurisdiction over that party in
respect of the claim made against that party in the proceeding,

(b)
apply
to
dismiss or
stay the proceeding on the ground that the court does not
have jurisdiction over that party in respect of the claim made against that
party in the proceeding
,
or

(c)
allege
in a pleading that the court does not have jurisdiction over that party in
respect of the claim made against that party in the proceeding
.

. . .

Party does not submit to jurisdiction

(6.4)
If, within 30 days after entering an appearance in a
proceeding, a party of record delivers a notice of motion under subrule (6)
(a)
or
(b)
or (6.2) to the other parties of record
or files a pleading
referred to in subrule (6) (c)
,

(a)
the
party does not submit to the jurisdiction of the court in relation to the
proceeding merely by filing or delivering any or all of the following
:

(i)
the
appearance
;

(ii)
a
pleading under subrule (6)(c)
;

(iii)
a
notice of motion and supporting affidavits under subrule (6)
(a) or
(b)
,
and

(b)        until
the court has decided the application or the issue raised by the pleading, the
party may, without submitting to the jurisdiction of the court,

(i)         apply
for, enforce or obey an order of the court, and

(ii)         defend
the action on its merits.

[Underlining added.]

[33]

Yorkton and Mr. Danzig
filed appearances in the actions on June 13 and June 18, 2003.  Rule 14(6.4)
became effective July 1, 2003.  Yorkton and Mr. Danzig filed Statements of
Defence in both actions, denying the jurisdiction of the B.C. Supreme Court, on
August 7, 2003.  They filed their applications for a stay in both actions on
August 5, 2003.

[34]

The affidavits filed by
Yorkton and Mr. Danzig in support of their stay applications do not put the
merits of the actions before the Courts.  In a subsequent affidavit which Mr.
Ezer sought to file on the appeals as fresh evidence, Mr. Danzig denied the
allegations made by Mr. Ezer and stated they are false.  These statements were
made in the context of opposing Mr. Ezer's application to delay the hearing of
the appeals.

[35]

I do not consider that
the affidavits or other materials filed by Yorkton and Mr. Danzig on their
applications contesting jurisdiction or in response to Mr. Ezer's applications
offended the principle that a party contesting the jurisdiction of the Court
must limit its submissions to that issue: see
Mid-Ohio Imported Car Co. v.
Tri-K Investments Ltd.
(1995), 13 B.C.L.R. (3d) 41 at para. 15.

[36]

But for the late filing
of their applications for a stay, Yorkton and Mr. Danzig complied with Rule
14(6.4).  I would extend the time for filing their applications under that
Rule.

[37]

I would dismiss this
ground of appeal.

Conditions

[38]

Mr. Ezer claims that
the chambers judge should have imposed conditions on the stays of his actions.  In
his oral submissions on the appeals, he sought two conditions: that Yorkton and
Mr. Danzig will not seek security for costs if he sues them in Ontario, and if
he proceeds expeditiously in Ontario and is denied access to those courts, he
can apply to the B.C. Courts to end the stay.

[39]

Mr. Ezer claims that he
sought conditions from the chambers judge, which Yorkton denies.  Mr. Ezer
filed as fresh evidence on the appeals a copy of his written submissions made
to the chambers judge, in which he summarizes the conditions imposed by the
Court in
Crockett v. Society of Lloyd's
(2000), 189 Nfld. &
P.E.I.R. 129, 2000 PESCTD 42.  He did not expressly seek such conditions in the
written submissions.

[40]

Whether or not Mr. Ezer
sought conditions from the chambers judge, the chambers judge made no error in
refusing to impose conditions on the stays.  The effect of the stays is that
the B.C. Courts do not have jurisdiction over Mr. Ezer's actions; thus, there
is no jurisdiction to impose conditions attempting to govern how the actions
proceed in Ontario.

[41]

Furthermore, the
conditions Mr. Ezer seeks are not appropriate.  Mr. Ezer has brought numerous
applications in relation to these proceedings in addition to the appeals,
resulting in significant costs to all parties.  I would not deny the
respondents the opportunity to apply for security for costs if he commenced
actions in Ontario.  Nor would I protect Mr. Ezer from the effect of any
limitations periods in Ontario: he has known since, at the latest, the summer
of 2003, of the existence of the exclusive jurisdiction clause and the position
of the respondents with respect to it.  He initially indicated to them that he
intended to commence proceedings in Ontario.  I am not satisfied that he was
previously unable to do so.

[42]

I would dismiss this
ground of appeal.

Costs

[43]

The chambers judge
awarded Yorkton and Mr. Danzig one set of costs on their applications.  Mr. Ezer,
relying on
Scalas
, seeks an order that Yorkton pay his costs of
the stay applications.

[44]

In
Scalas
,
this Court required Yorkton to pay
Scalas
costs of both the
appeal and the Supreme Court hearing although it was successful on its appeal
of the chambers judge's refusal to grant a stay.  The reason for awarding costs
against Yorkton was that it did not produce a copy of the Account Agreement
until after the litigation had been commenced in B.C.

[45]

In this case, the
chambers judge noted that Mr. Ezer had the Account Agreement well before the
stay applications were heard, although it was in dispute whether he had it or
knew of the exclusive jurisdiction clause before he started the litigation.  It
is clear that Mr. Ezer was aware of the exclusive jurisdiction clause and
Yorkton and Mr. Danzig's positions with respect to it well before many of the
costs of these applications, including the appeals, were incurred.  The
chambers judge made no error in awarding the costs of the applications to
Yorkton and Mr. Danzig, and was more than fair to Mr. Ezer when he limited the
award to one set of costs.

[46]

I would dismiss this
ground of appeal.

Conclusion

[47]

I would dismiss Mr.
Ezer's appeal and affirm the order of the chambers judge.

Fresh Evidence

[48]

Mr. Ezer applied to
adduce fresh evidence on the appeals, and filed an affidavit containing the
fresh evidence.  As is customary in this Court, the affidavit was received and
the determination of whether the fresh evidence would be admitted was reserved
until judgment was given on the appeals.

[49]

I have referred to
portions of the fresh evidence in my reasons for judgment: Mr. Ezer's written
submissions to the chambers judge and Mr. Danzig's affidavit in response to Mr.
Ezer's application to delay the hearing of the appeals.  To that extent, I
would admit the fresh evidence.  I would not admit the balance of the fresh
evidence as I do not find it relevant to the questions decided on the appeals.

Applications for Review of Orders of Chambers Judges

[50]

Mr. Ezer brought
several applications in this Court concerning the timing of the hearing of the
appeals and other matters.  He applied for review of the orders made by Hall
J.A., made November 26, 2004, and Mackenzie J.A. made December 23, 2004.

[51]

The substance of Mr.
Ezer's application for review of the order of Hall J.A. was dealt with at the
hearing of the appeals.  Mr. Ezer's objections to certain portions of the
respondents' factum was found to be irrelevant.  His application to admit fresh
evidence was heard and I have dealt with it above.  The application to vary
Hall J.A.'s order is dismissed.

[52]

Mackenzie J.A. refused
to adjourn the hearing of the appeals.  Since the appeals were heard and
judgment has been given, Mr. Ezer's application to vary Mackenzie J.A.'s order
is moot and is dismissed.

Costs of the Appeals

[53]

Yorkton and Mr. Danzig
are entitled to the costs of the appeals and the applications to vary the
orders of the chambers judges.

[54]

Their counsel has
requested that we receive submissions on their claims for increased or special
costs.  If counsel wish to make such submissions, we will receive them in
writing.

[55]

DONALD J.A.:
I agree.

[56]

SMITH J.A.:
I agree.

[57]

DONALD J.A.:
The appellant's applications are
dismissed.  The appeal is dismissed with costs to the respondents.

The Honourable Madam Justice Levine


