





CITATION:
Title v. Canadian Asset
          Based Lending Enterprise (CABLE) Inc., 2011
ONCA 715



DATE: 20111115



DOCKET: C53396, C53398 and C53400



COURT OF APPEAL FOR ONTARIO



Sharpe, Juriansz and Watt JJ.A.



BETWEEN:



David Title



Plaintiff (Respondent)



and



Canadian
          Asset Based Lending Enterprise (CABLE) Inc., 7178255 Canada Inc.,

9208  9945
          Quebec Inc., Druker & Associates Inc., Allen Rubin,

Michael Leiberman, Fred Leiberman
          and Joel Leiberman



Defendants (Appellants)



Howard Borlack and Lisa LaHorey, for the appellants Druker
          & Associates Inc.

Jeffrey A.L. Kriwetz, for the appellants Canadian Asset Based
          Lending Enterprise Inc. and Allan Rubin

François Sauvageau, for the appellants 7178255 Canada
          Inc., 9208  9945 Quebec Inc., Druker & Associates Inc., Allen Rubin, Michael
          Leiberman, Fred Leiberman and Joel Leiberman



Michael Gayed, for the respondent



Heard:
October 18, 2011



On appeal from the order of Justice Frank J.C. Newbould of the
          Superior Court of Justice, dated February 9, 2011, with reasons reported at
          2011 ONSC 922.







Sharpe J.A.:

[1]

This appeal concerns the jurisdiction of the Superior Court of Justice
    of Ontario to entertain an action alleging a conspiracy to use fraudulent
    bankruptcy proceedings in Quebec to defeat the process of the Ontario courts.

FACTS

[2]

The respondent Title, plaintiff in the action that is the subject of
    this appeal (the second action), is an Ontario resident. The personal
    appellants, defendants in the same action, are Quebec residents, and the
    corporate appellants, also defendants, have their head offices in Quebec. The
    appellant Druker & Associates Inc. (Druker), also a defendant, is a
    Quebec trustee in bankruptcy.

[3]

The Quebec bankruptcy proceedings at the core of Titles claim involve
    two companies, 6048668 Canada Inc. (Sistek) and 2924218 Canada Inc.
    (Premier). Title is a shareholder and an officer of Sistek. On March 5, 2009,
    Title commenced an Ontario action against Sistek, Premier, and Fred and Joel
    Leiberman, shareholders and directors of Sistek and Premier. He alleges breach
    of contract and oppression and is seeking damages and shares in Premier (the
    first action).

[4]

Fred and Joel Leiberman, Sistek and Premier initially failed to defend
    the first action. Title set down a motion for partial default judgment, returnable
    May 7, 2009. Title also sought the appointment of a receiver as Canadian Asset
    Based Lending Enterprise (CABLE), a Sistek secured creditor, was entitled to
    enforce its security on the following day. Within a day of receiving notice of
    this motion, and without notice to Title, both Sistek and Premier made
    assignments in bankruptcy. Druker was appointed trustee. Within three weeks, a
    company newly formed by Fred and Joel Leiberman and their brother Michael, 9208-9945
    Quebec Inc. (9208), purchased Sistek and Premiers assets for $2.26, and
    assumed CABLEs debt. The appellant, 7178255 Canada Inc. (7178255), a company
    also controlled by the Leibermans, took over the operation of the business
    acquired by 9208 from the trustee.

[5]

Title alleges that Fred and Joel Leiberman, their brother Michael
    Leiberman, Druker (the trustee in bankruptcy for Sistek and Premier), CABLE and
    Allan Rubin (CABLEs president) conspired to bring fraudulent bankruptcy
    proceedings.

[6]

In January 2010, Fred and Joel Leiberman delivered a statement of
    defence and counterclaim in the first action, pleading, among other things,
    that they did everything they could to save Sistek and Premier from bankruptcy.
    In April, 2010, Title commenced the second action that is the subject of this
    appeal.

[7]

The appellants moved to have the second action dismissed on the basis that
    Ontario lacks jurisdiction to entertain the claim or to stay the action on the
    ground that Quebec is the more appropriate forum. Druker also moved to have the
    action dismissed on the ground that Title failed to obtain leave pursuant to s.
    215 of the
Bankruptcy and Insolvency Act
, R.S.C. 1985, c. B-3,

(BIA).
    The motion judge dismissed the motion, holding that: (1) there was a sufficient
    real and substantial connection between the claim and Ontario to support
    jurisdiction
simpliciter
; (2) the appellants failed to demonstrate that
    Quebec was a more appropriate forum; and (3) that the failure to obtain leave
    pursuant to the s. 215 of the BIA was a mere irregularity.

ISSUES

[8]

The issues raised on this appeal are:

(1)

Did the motion judge err in
    holding that Ontario had jurisdiction
simpliciter
to entertain the claim?

(2)

Did the motion judge err by
    refusing to stay the action on grounds of
forum non conveniens
?

(3)

Did the motion judge err by
    failing to stay the action against Druker on the ground that leave had not been
    obtained pursuant to s. 215 of the BIA?

ANALYSIS

(1)  Did the motion judge err in holding that
    Ontario had jurisdiction simpliciter to entertain the claim?

(a) Real and substantial connection

[9]

I see no error in the motion judges reasons for finding that Title
    satisfied the test for real and substantial connection established in
Van
    Breda v. Village Resorts Limited,
2010 ONCA 84, 98 O.R. (3d) 721. As the
    claim did not fall within any relevant enumerated categories of rule 17.02, the
    motion judge placed the onus of satisfying the
Van Breda
test on Title.

[10]

There was ample evidence to support the motion judges factual findings
    that the test had been satisfied.

[11]

There is a strong connection between the Titles claim and Ontario. Title
    is an Ontario resident who, when employed by Sistek, worked from his home in
    Ontario. The claim alleges a fraudulent conspiracy to deprive Title of the
    legal rights he asserts in the first action.

[12]

The defendants also have a strong connection with Ontario with respect
    to this matter. Although they are resident in Quebec, the personal appellants, Fred
    and Joel Leiberman, attorned to the first action in Ontario and are alleged to
    have conspired with the other appellants to, in effect, defeat the process of
    the Ontario courts. In my view, where a party conspires to defeat the process
    of the Ontario courts, that party has participated in something of
    significance or has been actively involved in Ontario and therefore can be
    reasonably brought within the embrace of Ontarios  jurisdiction:
Beals v.
    Saldanha,
2003 SCC 72,  [2003] 3 S.C.R. 416, at para 32;
Van Breda,
at para. 92.

[13]

In addition, 9028 and 7178255
,
successors to Sistek and Premier
,
sell

products and conduct a substantial volume of their business in
    Ontario. They have a senior officer and employee responsible for sales residing
    in Ontario. CABLE has also engaged in relevant activity in Ontario having taken
    security over Titles home in Ontario to secure a loan to Sistek and Premier.

[14]

On this record, the motion judge did not err in finding a real and
    substantial connection sufficient to justify the assertion of Ontario
    jurisdiction over the claim and against these defendants.

(b) Attornment

[15]

I also agree with the motion judges conclusion that Druker attorned to
    Ontario jurisdiction by asking the Ontario court to stay the proceedings
    against it on the ground that leave had not be obtained pursuant to s. 215 of
    the BIA. As the motion judge held, at para. 34, by asking the Ontario court to
    grant a stay under s. 215, Druker asked the court to assume jurisdiction to
    the extent necessary to enforce section 215 of the BIA and it would be
    inconsistent to do that and at the same time assert that the Court has no
    jurisdiction over the case: see
Wolfe v. Wyeth
, 2011 ONCA 347, 332
    D.L.R. (4
th
) 157, at para. 44;
Sauer v. Canada (A.G.)
(2006),
    79 O.R. (3d) 19 (S.C.J.), at para. 87;
M.J. Jones Inc. v. Kingsway General
    Insurance Co.
(2004), 72 O.R. (3d) 68 (Lang J.A. in chambers), at para. 20.

(c) Quebec bankruptcy proceedings.

[16]

While I agree with Drukers submission that the action against it should
    be stayed under s. 215 of the BIA unless and until leave to proceed against
    Druker has been obtained (a point to which I return below), I do not agree that
    Title is otherwise required to proceed in Quebec within, or on account of, the
    bankruptcy proceeding now pending in that province.

[17]

The remedy Title seeks in this Ontario action is damages against parties
    who, with the exception of Druker, are not even before the Quebec bankruptcy
    court. Title could therefore not claim damages against those parties in the Quebec
    bankruptcy proceedings.

[18]

Moreover, Title is not asking the Ontario Superior Court to nullify or
    set aside the Quebec bankruptcy proceedings. Title asserts a claim for damages
    that he alleges he suffered as a result of that bankruptcy. The bankruptcy is
    simply a factual ingredient to the cause of action Title asserts in Ontario. If
    Title succeeds with his Ontario claim that the Quebec bankruptcy was the result
    of a fraudulent conspiracy, that finding will have no legal effect on the
    Quebec bankruptcy. The Ontario proceedings do not amount to either a direct or
    a collateral attack on the Quebec bankruptcy. The principle expressed in
Garland v. Consumers Gas Co
., 2004 SCC 25, [2004] 1 S.C.R. 629,
at para. 72 and
Canada (Attorney General)

v. TeleZone Inc.,
2010 SCC 62, [2010] 3 S.C.R. 585, at
    para. 64
is apposite: where the specific
    object of a litigant is not to invalidate or render inoperative an order
made in another proceeding, but rather to recover money owed to the litigant as
    a result of the order, the doctrine of collateral attack does not deprive a
    court of jurisdiction.
TeleZone
stands as authority for the proposition
    that where the litigant seeks a monetary remedy in a provincial superior court,
    and does not seek to set aside or nullify the order of another tribunal that is
    subject to the jurisdiction of another court, the practical concern for access
    to justice prevails.  The litigant should not be put through the unnecessary
    expense and inconvenience of setting aside the order simply as a preliminary
    step to pursuing the claim for damages.

[19]

I hasten to add, however, that I express no view, one way or the other,
    as to any substantive defence any of the appellants may have to Titles claim
    that may arise from the Quebec bankruptcy proceedings. I am dealing strictly
    with the issue of jurisdiction.

(2)  Did the motion judge err by refusing to stay
    the action on grounds of
forum non conveniens
?

[20]

I see no error in the motion judges analysis of
forum non conveniens
.
    In particular, I agree that the appellants failed to demonstrate that Quebec is
    clearly a more appropriate forum for this action. I agree with the motion
    judges conclusion that if Title were forced to sue in Quebec, the result would
    be a multiplicity of proceedings on closely related issues.

(3)  Did the motion judge err by failing to stay
    the action against Druker on the ground that leave had not been obtained
    pursuant to s. 215 of the
Bankruptcy and Insolvency Act
?

[21]

The BIA, s. 215 provides:

Except by leave of the
    court, no action lies against the Superintendent, an official receiver, an
    interim receiver or a trustee with respect to any report made under, or any
    action taken pursuant to, this Act.

[22]

I agree with the motion judges conclusion that failure to obtain leave
    is an irregularity that can be cured: see
New Alger Mines Ltd. v. Thorne
    Riddell

Inc.,
(1986), 54 O.R. (2d) 562 (C.A.). However, until that
    irregularity has been cured, the action cannot proceed in the face of s. 215. It
    follows, in my respectful view, that the motion judge erred by failing to grant
    a stay of the action against Druker unless and until the court grants leave
    pursuant to s. 215.

[23]

I would add that it is my view that the court refers to the court with
    jurisdiction over the bankruptcy proceedings, namely the Quebec Superior Court.
    Court is defined in s. 1, with exceptions not relevant here, as a court
    referred to in subsection 183(1) or (1.1) or a judge of that court, and
    includes a registrar when exercising the powers of the court conferred on a
    registrar under this Act.  Section 183(1.1) provides

In the Province of Quebec, the
    Superior Court is invested with the jurisdiction that will enable it to
    exercise original, auxiliary and ancillary jurisdiction in bankruptcy and in
    other proceedings authorized by this Act during its term, as it is now, or may
    be hereafter, held, and in vacation and in chambers.

The Ontario Superior Court of Justice has the same
    jurisdiction by virtue of s. 183(1). However, when read in the context of the BIA

as a whole, the reference to 
the
court in s. 215 (rather than 
a
court) indicates that it is the court having general control and superintendence
    of the bankruptcy that must grant leave to allow a suit against a trustee to
    proceed.

DISPOSITION

[24]

Accordingly, I would allow Drukers appeal, but only with respect to a
    stay pursuant to s. 215 of the BIA. The appeals of the other appellants are
    dismissed.

[25]

The motion judge awarded Title costs fixed at $35,000 payable jointly
    and severally by the appellants. In view of the result on appeal, I would award
    Title costs of $50,000 inclusive for the motion and the appeal against all
    parties except Druker on a joint and several basis. Given Drukers partial
    success, I would award Druker costs of $25,000 inclusive for the motion and the
    appeal as against Title.

Robert J. Sharpe J.A.

I agree R.G. Juriansz
    J.A.

I agree David Watt
    J.A.

RELEASED: November 15, 2011


