



COURT OF APPEAL FOR ONTARIO

CITATION: Fraser v. 4358376
    Canada Inc., 2014 ONCA 553

DATE: 20140722

DOCKET: C58321

Sharpe, Simmons and Benotto JJ.A.

BETWEEN

John Fraser

Plaintiff/Respondent

and

4358376 Canada Inc. Operating as Itravel 2000 and
    Travelzest PLC, The Cruise Professionals Limited,
Jonathan Carroll and
    Adrian Cobbold

Defendants/Appellants

Jeffrey E. Goodman and Kathryn J. Bird, for the
    appellants

Nadine Cote, for the respondent

Heard: June 26, 2014

On appeal from the order of Justice James M. Spence of
    the Superior Court of Justice dated January 9, 2014.

By the Court:

[1]

The central issue on this appeal is whether the appellants, the
    individual defendants, attorned to the jurisdiction by taking certain
    procedural steps in conjunction with their motion to stay or dismiss the action
    on the ground that the Ontario courts have no jurisdiction.

[2]

The respondent plaintiff originally brought this action for wrongful
    dismissal against the corporate defendants. Those defendants moved for an order
    staying or dismissing the action on the ground that the respondents claim was
    governed by a jurisdiction clause in his employment contract that required any
    disputes to be litigated in England.

[3]

In the face of the jurisdiction motion, but before it had been set down
    for hearing, the respondent moved for and obtained an order adding the appellants
    as parties. The respondent alleged intentional interference with his economic
    relations, inducement of breach of contract and related agreements and asserted
    statutory claims arising from the personal appellants positions as senior
    officers and directors of the corporate defendants. The appellants were served
    with that motion but they advised the respondent that given their position as
    to jurisdiction, they would not appear.

[4]

After the appellants were added as defendants, the corporate defendants
    were placed into receivership pursuant to bankruptcy legislation in Ontario, in
    the case of itravel2000 and The Cruise Professionals Limited, and in the United
    Kingdom, in the case of Travelzest plc. As a result of the bankruptcy
    proceedings, the actions against the corporate defendants were stayed.

[5]

Following the bankruptcy proceedings in Ontario and the United Kingdom,
    the individual defendants filed an amended notice of motion to bring the
    jurisdictional issue before the court. The amended notice of motion asked for a
    temporary stay of the actions against the personal defendants until the stay of
    the actions against the corporate defendants had been lifted or until the
    proceedings against those defendants had been dismissed or otherwise finally
    resolved. The amended notice of motion also asked for an order striking out or
    expunging the fresh as amended statement of claim on the ground that the court
    was required to deal with the issue of jurisdiction on the basis of the
    pleadings as they existed at the time the jurisdiction motion was first
    brought.

[6]

The basis for the appellants request for a temporary stay pending
    resolution of the bankruptcy proceedings was that the claims against the
    individual defendants were inextricably tied to the claim of wrongful dismissal
    against the corporate defendants and that the jurisdictional issue was entirely
    predicated upon the terms of the respondents employment contract with the
    corporate entities. The appellants took the position that so long as the claims
    continued against the corporate defendants, the issue of jurisdiction could not
    be fairly resolved without their presence. The bankruptcy stays made that
    impossible.

[7]

The motion judge ruled that by asking for the temporary stay pending the
    lifting of the bankruptcy stay or dismissal of the claims against the corporate
    defendants, the individual defendants had attorned to the jurisdiction of the
    court. He further ruled that as his ruling on attornment resolved the issue of
    jurisdiction the request for a temporary stay was rendered moot. He dismissed
    the request to strike the amended statement of claim and he awarded costs of
    the one day motion on a substantial indemnity basis in the amount of $83,163.

[8]

The appellants appeal the declaration that they had attorned to the
    jurisdiction and seek leave to appeal the costs order. The respondent takes the
    position that the appellants have attorned but also argues that if they have
    not, the motion for a temporary stay should be dismissed.

[9]

We agree with the appellants that the motion judge erred in law by
    concluding that the steps they took amounted to attornment. In our view, all
    the steps taken by the appellants are more properly characterized as procedural
    steps taken within the confines of the jurisdiction motion.

[10]

By
    asking for a temporary stay, the appellants were asserting their position that
    proper resolution of their jurisdictional motion required that the corporate
    defendants be present before the court.  The temporary stay they requested was
    for that specific and limited purpose.

[11]

In
    our view, a party who challenges the jurisdiction of the court is entitled to
    insist upon a proper procedural foundation for the determination of the
    challenge. Provided that the partys steps request no more than that, they do
    not amount to attornment.

[12]

As
    the motion judge decided that the appellants had attorned by seeking a temporary
    stay, he did not deal with the argument that by asking the court to strike out
    the amended statement of claim the appellants had attorned. He dealt with that
    request on the merits and dismissed it.

[13]

We
    find it difficult to understand how the appellants could ask the court to
    strike the amended statement of claim on the basis that the amendment had
    followed the original jurisdiction motion since it was only through the
    amendment that they became parties with an interest in proceeding with the
    motion. We agree with the motion judges reasons dismissing that motion on its merits.
    On the issue of attornment, however, we conclude that the motion to strike the
    statement of claim, although ill-founded, was entirely based and dependent upon
    the appellants contention that the courts of Ontario had no jurisdiction to
    entertain the claim. Like the motion for the temporary stay, the motion to
    strike the claim was nothing more than a request to have the jurisdictional
    motion proceed on a proper procedural foundation.

[14]

We
    recognize that decisions of this and other courts have taken a broad view of
    the kind of steps taken in a proceeding that amount to attornment. See, for
    example:
Wolfe v. Pickar
, 2011
    ONCA 347,
332 D.L.R. (4
th
) 157;
Mid-Ohio Imported
    Car C. v. Tri-K Investments Ltd.
(1995), 129 D.L.R. (4th) 181 (B.C.C.A.).
    However, the test expressed in those cases is whether the party appears in
    court and
goes beyond challenging the jurisdiction
of
    the court based on jurisdiction
simpliciter
and
forum non

conveniens
:
Wolfe v. Pickar
, at para. 44 (emphasis added).

[15]

We
    know of no authority for the proposition that procedural steps brought within
    the confines of a jurisdiction motion dealing solely with the mechanics of
    having that motion heard in a proper procedural setting amount to attornment.
    In our view that is all that occurred in this case. The appellants did not go
    beyond challenging the jurisdiction and the motion judge erred in law in
    concluding otherwise.

[16]

This
    brings us to the respondents request that if we find there has been no
    attornment, we deal with motion for the temporary stay on its merits. It is
    entirely regrettable that this action has become mired in a dispute over
    jurisdiction involving parties that almost certainly will never be brought
    before the court. It is our view that the interests of justice would be served
    by dealing with the motion for a temporary stay pursuant to the power conferred
    by the
Courts of Justice Act
, R.S.O., c. C.43, s. 134(1).

[17]

In
    our view, the appellants request for a temporary stay should be dismissed. As
    matters stand, the action against the corporate defendants is stayed by virtue
    of the bankruptcy proceedings. There is nothing in the record to suggest that
    there is any realistic prospect that the bankruptcy stay will be lifted or that
    the claims against the corporate defendants will ever proceed. We see no reason
    why what appears to be the purely theoretical possibility of the claims
    proceeding against the corporate defendants should preclude the respondent from
    proceeding with his claims against the appellants.

[18]

We
    note that counsel for the appellants was also counsel for the corporate
    defendants before the bankruptcy and if so advised, it remains open to him to
    move to have the bankruptcy stays lifted.

[19]

We
    express no view as to merits of the appellants position as to jurisdiction
    apart from holding that the procedural steps they have taken do not amount to
    attornment to the Ontario jurisdiction.

[20]

Accordingly
    we allow the appeal and set aside the order of the motion judge. As the costs
    order necessarily must also fall as a consequence, it is not necessary for us
    to deal with the submission that this was not a case for substantial indemnity
    costs order or that the costs awarded were excessive.

[21]

There
    has been divided success on this appeal. We note as well that the appellants
    have consistently taken the position that if the action does not proceed
    against the corporate defendants, they would not dispute jurisdiction. The
    respondent has not provided us with a satisfactory explanation for refusing to
    act on that offer. In these circumstances, neither party is entitled to costs
    of the motion or of this appeal.

Robert J. Sharpe J.A.

Janet Simmons J.A.

M.L. Benotto J.A.

Released: July 22, 2014


