





CITATION:
Wolfe v. Pickar, 2011
          ONCA 347





DATE:
          20110505



DOCKET: C52181



COURT OF APPEAL FOR ONTARIO



Goudge, Gillese and Watt JJ.A.



BETWEEN



Dr. Bernard Wolfe and DMW Kildeer Incorporated



Plaintiffs (Respondents)



and



Wyeth and James H. Pickar
and Wyeth Corporations



Defendants (
Appellants
)



John P. Koch and Allison A. Thornton, for the appellants



Earl Cherniak (Q.C.), Peter Kryworuk and Yola Ventresca, for
          the respondents



Heard: April 20, 2011



On appeal from the order of Justice Steven Rogin of the
          Superior Court of Justice dated April 30, 2010, with reasons reported at 2010
          ONSC 2368.



Goudge J.A.:



[1]

The appellants appeal from the order of Rogin J.
    dismissing their motion (a) to dismiss or permanently stay the respondents
    action as
res judicata
because of a
    Pennsylvania court order that the respondents claims are time barred under
    Pennsylvania law or, in the alternative, (b) to declare that the Ontario court
    has no jurisdiction over the appellants or the subject matter of the action, or
    (c) to declare that Ontario is not a convenient forum for this action.

[2]

For the reasons that follow, I agree with the
    conclusions of the motion judge on all three issues. I would therefore dismiss
    the appeal.

THE BACKGROUND

[3]

In
    this action, the respondents allege that the respondent Dr. Wolfe conceived and
    developed a low dose hormone replacement therapy for women, through his
    research at the University of Western Ontario in London. Pursuant to an
    agreement he made with the appellants, he disclosed confidential information to
    them concerning the therapy.

[4]

On
    September 12, 2002, the appellant Wyeth filed a patent application in Canada
    for a low dose hormone replacement therapy naming the appellant Dr. Pickar, its
    assistant vice president clinical research and development, as the sole
    inventor. The appellants position is that this was developed independently of
    Dr. Wolfes work.

[5]

On
    September 27, 2007, Dr. Wolfe commenced an action against Wyeth in the Federal
    Court of Canada seeking an order that its patent application be amended to list
    him as the sole inventor.

[6]

The
    same day, the respondents commenced this action, claiming damages for breach of
    contract, wrongful use of confidential information, and breach of fiduciary
    duty, and an accounting of profits earned by the appellants, together with
    corollary relief. The statement of claim was served on the appellants in
    Pennsylvania on November 28, 2007.

[7]

On
    February 15, 2008, the appellants commenced an action in Pennsylvania for a
    declaration that any claims Dr. Wolfe may have against Wyeth for breach of
    contract, misappropriation and breach of fiduciary duty are barred by the
    Pennsylvania statute of limitations and that, on the merits, Wyeth has not
    committed any of these wrongs.

[8]

Dr.
    Wolfe sought an order from the Pennsylvania court staying the appellants
    action in that court. On May 8, 2008, Judge Robert F. Kelly of the United
    States District Court for the Eastern District of Pennsylvania dismissed the
    motion. In his reasons, he found that that court had personal jurisdiction over
    Dr. Wolfe and that venue was proper there.

[9]

In
    July 2008, both parties to the Pennsylvania action moved for judgment on the
    pleadings.

[10]

On
    August 28, 2008, Judge Kelly issued his order with reasons granting Dr. Wolfes
    motion and also granting Wyeths motion insofar as Wyeth requests that this
    court declare that Dr. Wolfes claims are barred by the Pennsylvania statute of
    limitations. He denied Wyeths motion in all other respects. In particular, he
    declined to decide the merits of Dr. Wolfes claims.

[11]

On
    September 15, 2008, the appellants then brought the motion in this action that
    resulted in the order under appeal.

[12]

The
    motion judge declined to apply the doctrine of
res judicata
and issue estoppel. He found that the issue decided in
    the Pennsylvania court was not the same as the issue before him. In the
    alternative, he held that he would exercise his discretion not to apply that
    doctrine because it was open to the appellants to advance their limitation
    defense at trial on the basis of all the evidence and thereby avoid an
    accusation of forum shopping, one of the evils the doctrine is designed to
    avoid.

[13]

The
    motion judge went on to find that Ontario could properly accept jurisdiction
    over the action because the real and substantial connection test was met.

[14]

Finally,
    the motion judge concluded that Ontario is a convenient forum for the action.

ANALYSIS

[15]

In
    this court, the appellants focus primarily on the first of these findings but
    challenge the other two as well. I will deal with each issue in turn.

First
    Issue:
Res Judicata
and Issue
    Estoppel

[16]

The
    appellants position is that in adjudicating the action brought by the
    respondents, the Ontario court must find that their claims are time barred by
    the Pennsylvania statute of limitations because of the August 28, 2008, order
    of the Pennsylvania court. They argue that the Ontario court must recognize and
    apply that order. The appellants say that, as a consequence, the respondents
    action must be dismissed or permanently stayed, as being time barred.

[17]

The
    appellants position is not that any of the causes of action advanced by the
    respondents have been adjudicated but rather that the limitation issue has
    been.

[18]

While
    the appellants notice of motion seeks an application of
res judicata
, it is better described as issue estoppel, because the
    appellants focus on one issue not on an entire cause of action: see
Danyluk v. Ainsworth Technologies
, [2001]
    2 S.C.R. 460, at p. 474.

[19]

In
Danyluk
, Binnie J., writing for the
    court, begins with the admonition that this judicial doctrine was designed to
    serve the ends of justice and should not be applied mechanically to work an
    injustice. He went on to make clear that the court always has the discretion,
    albeit one of quite limited application, to decline to apply the doctrine on
    this basis.

[20]

At
    p. 476 of
Danyluk,
Binnie J. adopted
    the definition of issue estoppel offered by Middelton J.A. in
McIntosh v. Parent
, [1924] 4 D.L.R. 420,
    at p. 422:

When
    a question is litigated, the judgment of the Court is a final determination as
    between the parties and their privies. Any right, question, or fact
distinctly
    put in issue and directly determined
by a Court of competent jurisdiction
    as a ground of recovery, or as an answer to a claim set up, cannot be re-tried
    in a subsequent suit between the same parties and their privies, though for a
    different cause of action.

[Justice
    Binnies Emphasis]

[21]

Justice
    Binnie also added the refinement offered by Dickson J. (later C.J.) in
Angle v. Minister of National Revenue
, [1975]
    2 S.C.R. 248, at p. 255:

It will not suffice he said, if the question
    arose collaterally or incidentally in the earlier proceedings or is one which
    must be inferred by argument from the judgment.

[22]

At p. 477 Binnie J. went on to lay out the three
    requirements for the application of the issue estoppel:

(1)

the same
    question has been decided;

(2)

the
    judicial decision which is said to create the estoppel was final; and,

(3)

the parties
    to the judicial decision or their privies were the same persons as the parties
    to the proceedings in which the estoppel is raised or their privies.

[23]

The first of these three is the focus here: has the
    same question been decided in the prior proceeding. The question in the Ontario
    action is whether the Ontario court should find that the respondents claims in
    this action are time barred by the Pennsylvania statute of limitations. As the
    respondents argue, that question unpacks into two parts: should the Ontario
    court apply Pennsylvania law to these claims; and if so, does the Pennsylvania
    statute bar the claims. It is apparent that if the choice of law by the Ontario
    court is not Pennsylvania law, the Pennsylvania statute has no application to
    this case.

[24]

It is necessary then to determine what the Pennsylvania
    court decided and whether it is the same two part question that is before the
    Ontario court. Only if both parts were directly put in issue before the
    Pennsylvania court and directly determined by it is the first requirement of
    issue estoppel met.

[25]

The Pennsylvania order was the response to motions for
    judgment on the pleadings by both Wyeth and Dr. Wolfe.

[26]

Wyeth had pleaded that Dr. Wolfes claims for breach of
    contract, misappropriation and breach of fiduciary duty asserted in the Ontario
    action were time barred by the Pennsylvania statute of limitations. Hence its
    motion for partial judgment on the pleadings sought a declaration that these
    claims are time barred.

[27]

Dr. Wolfe moved for judgment on the pleadings that the
    Pennsylvania statute of limitations procedurally precludes him from asserting
    Pennsylvania based claims for breach of contract, misappropriation, or breach
    of fiduciary duty against Wyeth in the Pennsylvania court.

[28]

In its reasons for its August 28 order, the court said
    only this about the limitation issue:

With regard to the statute of limitations question,
    the parties agree, and this Court finds, that Dr. Wolfes claims are
    time-barred by the Pennsylvania statute of limitations.

[29]

The August 28 order of the Pennsylvania court is as
    follows:

(1)

The Motion
    for Judgment on the Pleadings filed by the Plaintiff Wyeth (Doc. No. 24) is
GRANTED
insofar as Wyeth requests that
    this Court declare that Dr. Wolfes claims are barred by the Pennsylvania
    statute of limitations. Wyeths Motion is
DENIED
in all other respects;

(2)

The Motion
    for Judgment on the Pleadings filed by Defendant Dr. Bernard M. J. Wolfe (Doc.
    No. 25) is
GRANTED
.

[30]

This order granted the order sought by Dr. Wolfe that
    the Pennsylvania statute of limitations precludes him from asserting his claims
    in the Pennsylvania court.

[31]

In this order, the court also granted Wyeths motion
    for judgment but only insofar as Wyeth requested that the court declare that
    Dr. Wolfes claims were barred by the Pennsylvania statute of limitations.

[32]

The Pennsylvania court went on to decline Wyeths
    requests to consider the merits of Dr. Wolfes claims saying in its reasons
    that it would be improper to make a declaration as to the merits for the sole
    purpose of providing Wyeth with a judgment that it can later use for the
    purposes of
res judicata
in the
    Ontario action. The reasons conclude by saying:

The Canadian court is free to accept or reject any
    findings of this Court. Neither this Court, nor the parties, have any basis
    with which to determine how the Ontario Court will handle this case before it.

[33]

When the Pennsylvania order is considered with this
    background, it is clear that it is a consent order. It is also clear that Dr.
    Wolfes position before that court was confined to claims he might assert in
    the Pennsylvania court. He said nothing about his claims made in the Ontario
    action, let alone the choice of law that should be made by the Ontario court to
    adjudicate them.

[34]

The consent order must therefore be taken as going no
    further than Dr. Wolfes position, namely that his claims are time barred if he
    were to assert them in the Pennsylvania court. It is not a consent order that
    in adjudicating the appellants claims the Ontario court should apply
    Pennsylvania law to find the claims to be barred by the Pennsylvania statute of
    limitations.

[35]

This reading is consistent with the tenor of the
    closing passage of the Pennsylvania courts reasons, which indicate that its
    decision was not intended to determine how the Ontario court will adjudicate
    the appellants claims.

[36]

Moreover, on its face, the Pennsylvania court order
    says nothing about the choice of law that the Ontario court should make in
    adjudicating the appellants claims. Nor does the Pennsylvania court put
    forward any reasoning on that issue. It was clearly not a question distinctly
    put in issue and directly determined by that court.

[37]

In short the Pennsylvania court did not decide the
    question that the appellants put before the Ontario court in this action. It
    did not decide that the Ontario court should find that Pennsylvania law applies
    and, as a consequence, find the respondents claims to be time barred.

[38]

This result is consistent with the ends of justice, the
    objective of the doctrine. The choice of law question is fact dependant, may
    well be complicated and may be differently answered depending on the particular
    cause of action. It is a question best decided on a full record at trial: see
General Refractions Co. of Canada v.
    Venturedyne Ltd.
2001 Carswell Ont. 613 at para. 27. It best serves the
    ends of justice to address that question on a full trial record not on a
    preliminary motion.

[39]

The other side of the coin is that to give the court
    order the effect contended for by the appellants would not serve the ends of
    justice. In the circumstances, it is not necessary to do so in order to permit
    the appellants their limitation defence. They can advance that at trial in the
    Ontario action. Moreover, to give it that effect in the circumstances, would at
    least give the appearance of sanctioning forum shopping, something courts ought
    not to do: see
Amchem Products Inc. v.
    B.C. (W.C.B.)
, [1993] 1 S.C.R. 897, at p. 912.

[40]

Because it would not serve the ends of justice to do
    so, I agree with the motion judge that, in any event, the court ought not to
    exercise its discretion and should refuse to apply the doctrine of issue
    estoppel.

[41]

For these reasons, I reject the appellants argument
    based on the Pennsylvania order of August 28, 2008, that issue estoppel applies
    and requires the appellants claims to be dismissed or permanently stayed as
    time barred. Since that order does not give rise to issue estoppel, there is no
    need, at least at this stage of the action, for the Ontario court to consider
    whether to recognize and apply that order.

Second
    Issue: Jurisdiction

[42]

Independent
    of the applicability of issue estoppel, the appellants argue that the motion judge
    erred in finding that the Ontario court can take jurisdiction over them for the
    purposes of this action. They say that he erred in finding that the real and
    substantial connection test was met.

[43]

The
    respondents primary answer is that, in any event, the appellants have attorned
    to the jurisdiction of the Ontario court. The Ontario court therefore has
    consent-based jurisdiction, and there is no need to examine whether Ontario can
    assume jurisdiction over the appellants. The respondents base this on the position
    taken by the appellants before the motion judge, where they sought an order
    from the Ontario court declaring that this action is
res judicata
and an abuse of process and should therefore be
    dismissed or permanently stayed. Only in the alternative did the appellant seek
    an order declaring that the Ontario court has no jurisdiction over them.

[44]

I
    agree with the respondents. The appellants did not come before the motion judge
    under duress. Rather they voluntarily engaged the jurisdiction of the Ontario
    court by seeking to have the court apply the doctrine of issue estoppel, and as
    a consequence, dismiss or permanently stay the Ontario action. They sought to
    have the Ontario court engage with that issue. I agree with the British
    Columbia Court of Appeal in
Mid-Ohio
    Imported Car Co. v. Tri K Investments Ltd.
(1995), 129 D.L.R. (4
th
)
    181 that when a party to an action appears in court and goes beyond challenging
    the jurisdiction of the court based on jurisdiction
simpliciter
and
forum non

conveniens
, the party will be
    regarded as appearing voluntarily, thus giving the court consent-based
    jurisdiction. That is what happened here.

[45]

In
    any event, in my view, the motion judge was correct to conclude that the
    Ontario court could assume jurisdiction on the basis of the real and
    substantial connection test. The appellants do not contest that the taking of
    jurisdiction by the Pennsylvania court is no impediment to this conclusion.
    More than one court can have jurisdiction over a particular matter.

[46]

In
    assessing this issue where there are factual matters in dispute, the
    plaintiffs version of the facts should be accepted as long as it has a
    reasonable basis in the record. I agree with the reasoning of my colleague
    Laskin J.A. in
Young v. Tyco International
    of Canada Ltd.
(2008), 92 O.R. (3d) 161 (Ont. C.A.). While he was speaking
    of the
forum non

conveniens
analysis the same logic applies to jurisdiction
simpliciter
. At para. 34 he said this:

However,
    the important point is that at this preliminary stage of the action, the motion
    judges assessment and weighing of the
forum
    non conveniens
factors should be based on the plaintiffs claim if it has a
    reasonable basis in the record, not on the defendants defence to that claim.
    This approach makes sense to me because the ultimate question is whether an
    Ontario court should take jurisdiction over the plaintiffs claim.

[47]

In
    my view, in this case, it is clear that
service
    ex juris
was properly done under rule 17.01(f) and (g) and that
    jurisdiction should therefore be presumed unless the appellants demonstrate
    otherwise. The respondents assert that the contract in question was made in
    Ontario. All the negotiations, save one minor meeting, took place in London.
    Moreover, they point to the appellants misuse of confidential information to
    support their patent application to acquire legal protection in Ontario for
    that information as the commission here of the torts pleaded.

[48]

Turning
    to the core considerations for real and substantial connection, the connection
    between Ontario and the respondents claim is clear. Among other things, Dr.
    Wolfes research was all done here. The negotiations underlying the relationship
    between the parties essentially all took place here and the respondents
    suffered their loss of profits here.

[49]

I
    think the connection with the appellants is equally clear. They carried on
    business in Ontario by concluding their arrangement with the respondents here.
    Both respondents interacted with Dr. Wolfe in support of his research here.
    They received confidential information coming from Ontario. Both appellants
    were in a relationship with Dr. Wolfe that originated in Ontario in which
    activity in Ontario was central. They could well have foreseen litigation in
    Ontario if obligations arising out of this relationship were not honoured. They
    have sought legal protection in Ontario for the use of this confidential
    information.

[50]

Finally,
    viewed through the lens of fairness, these connecting factors must be assessed
    to be even stronger. It is not unfair to the appellants for Ontario to take
    jurisdiction, since they will still have every opportunity in the Ontario
    action to argue that the respondents claims are time barred by the
    Pennsylvania legislation. However, if Ontario declines jurisdiction, the
    respondents will be left without a forum to provide a remedy.

[51]

Thus,
    I conclude that the motion judge correctly decided this issue. I do so without
    the need to assess whether the same conclusion could be justified by the
    doctrine of necessity.

Third
    Issue:
forum conveniens

[52]

Here,
    too, the appellants argued that the motion judge erred. They acknowledge that
    he exercised his discretion in reaching his decision and that this court must
    give that decision deference. However, based on
Frimer v. Bretschaur
(1994), 19 O.R. (3d) 60 (C.A.), they argue
    that he placed the onus on them to demonstrate that Ontario is not the most
    convenient forum and that this constitutes error since they have been brought
    into the jurisdiction by
service ex juris
.

[53]

The
    simple answer is that they have attorned to the jurisdiction. They have
    voluntarily appeared. They have not been brought unwillingly by
service ex juris
.

[54]

Even
    if attornment had not occurred, I do not think the motion judge erred. He
    correctly proceeded on the basis that the appellants could succeed only by
    clearly establishing that Pennsylvania is a more appropriate forum to have the
    issues decided than Ontario, the forum chosen by the respondents. That is the
    ultimate question: see
Precious Metal
    Capital Corp. v. Smith
(2008), 92 O.R. (3d) 701 (C.A.) at para. 30.

[55]

The
    motion judges only passing reference to onus was in reference to two factors:
    the location of key witness and the location of the bulk of the evidence.
    Without resort to any evidentiary onus, he determined both to be equally
    balanced between Ontario and Pennsylvania and therefore neutral. The reference
    to onus is to say no more than that if the appellants wished to have him put
    these factors on the Pennsylvania side of the scales for the ultimate question,
    the motion judge had to find that neither were equally balanced. That is true.
    The trial judge made no error in principle in his approach to this issue.

[56]

Absent
    a basis on which to interfere with the motion judges exercise of discretion, I
    see no basis for interfering with his conclusion that Ontario is the convenient
    forum for this action.

[57]

For
    these reasons, the appeal is dismissed. Costs to the respondent fixed at
    $25,000, inclusive of disbursements and applicable taxes.

RELEASED:  MAY 05 2011
    (S.T.G.)

S. T. Goudge J.A.

I agree. E. E. Gillese J.A.

I agree. David Watt J.A.


