



COURT OF APPEAL
    FOR ONTARIO

CITATION: Yip v. HSBC Holdings plc, 2018 ONCA 626

DATE: 20180711

DOCKET: C64403

Lauwers, Benotto and Nordheimer JJ.A.

BETWEEN

Wai Kin Yip

Plaintiff (Appellant)

and

HSBC Holdings plc and David Bagley

Defendants (Respondents)

Proceeding under the
Class
    Proceedings Act, 1992

Paul J. Bates, John Archibald, and Earl A. Cherniak,
    Q.C., for the appellant

Paul Steep, Brandon Kain, and Bryn Gray, for the
    respondents

Heard: May 15-16, 2018

On appeal from the order of Justice Paul M. Perell of the
    Superior Court of Justice, dated September 11, 2017, with reasons reported at
    2017 ONSC 5332, and from the costs order, dated November 20, 2017, with reasons
    reported at 2017 ONSC 6848.

BY THE COURT:

[1]

Mr. Yip, the proposed class representative and appellant, brought this
    action under the
Class Proceedings Act, 1992
, S.O. 1992, c. 6. He
    asserts a statutory claim for secondary market misrepresentation under Part
    XXIII.1 of the
Securities Act,
R.S.O. 1990, c. S.5, against HSBC
    Holdings plc, as a "responsible issuer", and David Bagley, former
    Head of Group Compliance at HSBC Holdings. He also asserts a common law
    negligent misrepresentation claim against HSBC Holdings.

[2]

The motion judge dismissed the claim under the
Securities
    Act
and stayed the common law claim. He held that an
    Ontario court did not have jurisdiction
simpliciter
,
and even if it did, Ontario was not the appropriate
forum
.
He
awarded $1,000,455.22 in costs on a partial indemnity
    scale, all inclusive.

[3]

We dismiss the jurisdiction appeal because we are in substantial
    agreement with the reasons of the motion judge. However, we make
    jurisprudential observations in three general areas arising from the
    appellants arguments: (i) the proper interpretation of the definition of
    responsible issuer in s. 138.1 of the
Securities Act
; (ii) the
    application of the jurisdiction
simpliciter
test to the common law and
    statutory tort claims of misrepresentation; and (iii) the application of the
    doctrine of
forum non conveniens
. We allow the costs appeal in part.

A.

The Jurisdiction Appeal

[4]

We begin with a brief review of the nature of the claim and some of the
    pertinent facts.

[5]

HSBC Holdings is the parent holding company of an international banking
    conglomerate with its head office in London, U.K. The foreign element of the
    case arises because the securities have never traded or been listed on any
    Canadian stock exchange. They are traded on the London and the Hong Kong Stock
    Exchanges with secondary listings on the Bermuda Stock Exchange and the Paris Euronext
    Stock Exchange. HSBC Holdings ADRs (American Depository Receipts) also trade
    on the New York Stock Exchange. HSBC Holdings has about 220,000 shareholders in
    129 countries, including Canada.

[6]

Mr. Yip bought his shares in HSBC Holdings using a Hong Kong bank
    account on the Hong Kong Stock Exchange, which he accessed using his home
    computer in Markham, Ontario. He accessed HSBC Holdings disclosure documents
    from its website and not from the website of its banking subsidiary, HSBC
    Canada.

[7]

Mr. Yip asserts that he and other purchasers of HSBC Holdings' shares or
    ADRs were misled by HSBC Holdings continuous disclosure documents and public
    statements in two primary respects: (i) that it had complied with anti-money
    laundering and anti-terrorist financing laws; and (ii) that it had not participated
    in an illegal scheme to manipulate certain international benchmark interest
    rates. The motion judge proceeded on the assumption that these misrepresentations
    occurred.

[8]

Mr. Yip asserts that these misrepresentations caused investors in HSBC
    Holdings to suffer about $7 billion (USD) in losses because they purchased HSBC
    Holdings shares or ADRs at artificially inflated prices. This is the basis of
    his statutory and common law tort claims for misrepresentation.

[9]

The motion judge heard two motions. HSBC Holdings and Mr. Bagley moved to
    dismiss or stay Mr. Yip's action because the Ontario court lacks jurisdiction
simpliciter
and because Ontario is
forum non conveniens
. Mr. Yip cross-moved for a
    declaration that HSBC Holdings is a responsible issuer under s.138.8 of the
Securities
    Act
. The motion judge dismissed Mr. Yips
Securities Act
action
    and stayed the common law misrepresentation claim. He dismissed Mr. Yips
    cross-motion.

The Appellants Arguments

[10]

Mr.
    Yip argues, first, that this court should adopt a statute-specific and unique
    interpretation of the words real and substantial connection in the definition
    of responsible issuer in s 138.1 of the
Securities Act
. His second
    argument is that, even if the common law test for a real and substantial
    connection applies to the statutory definition of a responsible issuer, the
    motion judge erred in his application of the common law test for a real and
    substantial connection. His third argument is that the motion judge erred in
    his application of the doctrine of
forum non conveniens
.

[11]

We
    reject all three arguments for the reasons that follow.

(1)

The Appellants First Challenge: The proper interpretation of the
    definition of responsible issuer in s. 138.1 of the
Securities Act

[12]

Mr.
    Yip argues that the court should interpret the provisions of Part XXIII.1 of the
Securities Act
, on which he bases his case, in a purposive manner.

[13]

We
    acknowledge the purposes of the
Securities Act
set out in s. 1.1,
    which are to provide protection to investors from unfair, improper or
    fraudulent practices; to foster fair and efficient capital markets and
    confidence in capital markets; and to contribute to the stability of the
    financial system and the reduction of systemic risk. In furtherance of those
    purposes, Part XXIII.1 of the
Securities Act
, which was enacted in
    2005, imposes civil liability for secondary market misrepresentations. Part
    XXIII.1 is remedial legislation intended to promote the twin purposes of
    facilitating and enhancing access to justice for investors and deterring corporate
    misconduct and negligence:
Canadian Imperial Bank of Commerce v. Green
,
    2015 SCC 60,

[2015] 3 S.C.R. 801, at para. 178.

[14]

Mr.
    Yips statutory tort claim is based on s. 138.3, which is also found in Part
    XXIII.1. It gives investors a statutory cause of action against a responsible
    issuer for a misrepresentation in a "document" released by it (or by
    a person with authority to act on its behalf) or contained in a public oral
    statement. Section 138.1 defines a responsible issuer to mean (a) a reporting
    issuer, or (b) any other issuer
with a real and
    substantial connection to Ontario
, any securities of which are publicly
    traded (emphasis added). The emphasized words are critical to this decision. It
    is common ground that HSBC Holdings is not a reporting issuer.

[15]

Mr.
    Yip argues that even though HSBC Holdings is not a reporting issuer, as an
    issuer whose securities are publicly traded (although not in Canada), it is a responsible
    issuer under paragraph (b) of the definition in s.138.1 and in light of this
    courts ruling in
Abdula v. Canadian Solar Inc
.
, 2012 ONCA 211,
    110 O.R. (3d) 256, leave to appeal refused, [2012] S.C.C.A. No. 246. He urges
    this court to find specifically that: An issuer that knows or ought to know
    that its investor information is being made available to Canadian investors has
    a securities regulatory
nexus
 with Ontario sufficient to establish the
    real and substantial connection under part (b) of the definition for a
    responsible issuer in s.138.1. Mr. Yip submits that this would be a purposive
    interpretation consistent with the
Securities Act
s goal of protecting
    investors from fraudulent practices. In the alternative, the appellant submits
    that this court should identify a new presumptive connecting factor for cases
    of secondary market misrepresentation.

[16]

The
    appellants proposed wording deliberately tracks the language of
Moran v.
    Pyle National (Canada) Ltd.
, [1975] 1 S.C.R. 393, a products liability
    tort action, in which the expression, real and substantial connection, was
    first used by the Supreme Court of Canada. Justice Dickson formulated a rule
    Mr. Yip argues should apply to his case, with necessary modifications. To
    paraphrase
Moran
,
at p. 409: Where the misrepresentation made in
    a foreign jurisdiction then enters into the normal channels of trade in
    circumstances and the issuer knows or ought to know both that an investor may
    well be injured and it is reasonably foreseeable that the misrepresentation
    will be acted upon, then the forum in which the plaintiff suffered damage is
    entitled to exercise judicial jurisdiction over that foreign defendant.

[17]

The
    evidence upon which Mr. Yip relies to meet his proposed test is that HSBC
    Holdings released documents containing misrepresentations, authorized its
    subsidiary HSBC Canada to make available on its website the HSBC Holdings documents,
    and authorized Mr. Bagley to make public oral misrepresentations. Mr. Yip
    asserts that HSBC Holdings must have known that people like him and the
    putative class members would access the information and use it to their
    detriment.

[18]

Accordingly,
    Mr. Yip argues that the motion judge erred in declaring that HSBC Holdings is
    not a responsible issuer as defined in s.138.1 of the
Securities Act
because it does not have a real and substantial connection to Ontario. The
    case, he says, is a short step away from
Kaynes v. BP, PLC
, 2014 ONCA
    580, 122 O.R. (3d) 162, at paras. 31-34, leave to appeal refused, [2014]
    S.C.C.A. No. 452, in which this court found BP to be a responsible issuer.

[19]

In
    oral argument, counsel conceded that his proposed formulation of the test might
    make Ontario a universal jurisdiction for secondary market misrepresentations
    made anywhere in the world. That is precisely the problem that leads us to
    reject his argument, as we will explain.

Analysis

[20]

It
    is trite law that the words of an Act are to be read in their entire context
    and in their grammatical and ordinary sense harmoniously with the scheme of the
    Act, the object of the Act, and the intention of the Legislature. See
Bell
    ExpressVu Limited Partnership v. Rex
,
2002 SCC 42
,
[2002] 2 S.C.R. 559
,
    at para. 26; and
Rizzo &
    Rizzo Shoes Ltd. (Re)
,
[1998] 1 S.C.R. 27
,
    at para. 21, quoting Elmer A. Driedger,
Construction of Statutes
,
2nd
    ed. (Toronto: Butterworths, 1983), at p. 87.

[21]

What
    was the Legislatures intention in adopting a definition of responsible
    issuer that requires the issuer to have a real and substantial connection to
    Ontario? We consider first the legislative, and then the judicial histories of
    the expression real and substantial connection.

The Legislative History

[22]

The
    legislative history of paragraph (b) of the definition in s. 138.1 of the
Securities
    Act
was reviewed by Hoy J.A. in
Abdula
.
That case
    concerned the interpretation of the phrase within paragraph (b) that states: any
    other issuer , any securities of which are publicly traded. She rejected the
    argument that there was an implicit requirement that the securities must be
    "publicly traded in Canada": at para. 72. She noted: The concept of
    restricting a responsible issuer to an issuer whose securities were publicly
    traded in the jurisdiction in question was flagged by the Allen Committee, but
    not included in Bill 149, at para. 68. She concluded from the legislative
    history that the enacted language: reflects a conscious decision on the part
    of the legislature not to restrict the definition to issuers whose securities
    traded in Canada.

[23]

Omnibus
    Bill 198 was introduced in the Ontario Legislature in October 2002. Part XXVII,
    of the original Bill 198, proposed amendments to the
Securities Act
to
    provide for civil liability for secondary market disclosure through the
    addition of Part XXIII.1. The proposed definition for responsible issuer was
    "any other issuer with a substantial connection to Ontario, any securities
    of which are publicly traded". This wording was retained in the enacted
    version of Bill 198, which was never proclaimed.

[24]

Omnibus
    Bill 149 was introduced in the Ontario Legislature in November 2004. It came
    into force on December 31, 2005. Schedule 34 amended the
Securities Act
and enacted the current definition of responsible issuer, which changed the
    wording in the definition from that in Bill 198. Bill 149 added the words,
    "real and" before the word "substantial", resulting in the
    expression a real and substantial connection to Ontario.

[25]

In
    our view, Bill 149s addition of the words, real and, to the words,
    substantial connection to Ontario originally found in Bill 198, reinforces
    the inference that, by introducing civil liability for secondary market misrepresentations,
    the Legislature did not intend that Ontario would become the default
    jurisdiction for issuers around the world whose securities were purchased by
    residents of Ontario.

[26]

Nor
    do we consider it likely that the Legislatures adoption of the very language
    in which the common law jurisdiction
simpliciter
test is framed was
    accidental. By 2005, when Part XXIII.1 of the
Securities Act

was
    enacted, which included the definition of responsible issuer, the common law
    test for jurisdiction
simpliciter
was well entrenched, and it was specifically
    aimed at preventing jurisdictional overreach. We observe that the concern about
    jurisdictional overreach is so strong that it affects the assessment at three
    levels of the common law test for determining whether a Canadian court will
    assume jurisdiction: (i) requiring the presence of a presumptive connecting
    factor; (ii) determining whether the factor has been rebutted; and (iii) in
    applying the
forum non conveniens
doctrine.

The Judicial History

[27]

We
    turn next to the judicial history. Justice Binnie gave a brief summary
    statement of the governing principle underlying the real and substantial
    connection test in
Society of Composers, Authors and Music Publishers of
    Canada v. Canadian Assn. of Internet Providers
, 2004 SCC 45, [2004] 2 S.C.R.
    427, at para. 60:

From the outset, the real and substantial connection test has
    been viewed as an appropriate way to "prevent overreaching ... and [to
    restrict] the exercise of jurisdiction over extraterritorial and transnational
    transactions" (La Forest J. in
Tolofson
[
v. Jensen
, [1994] 3 S.C.R. 1022], at p.
    1049). The test reflects the underlying reality of "the territorial limits
    of law under the international legal order" and respect for the legitimate
    actions of other states inherent in the principle of international comity (
Tolofson
,
    at p. 1047).

[28]

The
    origin of the expression real and substantial connection was explained by
    Sharpe J.A. in
Muscutt v. Courcelles
(2002), 60 O.R. (3d) 20, at paras.
    30-44. Justice Dickson, in
Moran
, derived the expression from
Indyka
    v. Indyka
, [1969] 1 A.C. 33 (U.K. H.L.), at p. 105, in relation to the recognition
    of a foreign divorce decree. After Dickson J. referred to it in
Moran
,
    it was adopted as part of the jurisdiction
simpliciter
test in
Morguard
    Investments Ltd. v. De Savoye
, [1990] 3 S.C.R. 1077, and has since
    consistently been used.

[29]

The
    test was simply intended to capture the idea that there must be some limits on
    the claims to jurisdiction, said La Forest J. in explaining his
Morguard
decision in
Hunt v. T&N plc,
[1993] 4 S.C.R. 289, at p. 325. He then
    added in
Tolofson
, at p. 1049: This test has the effect of preventing
    a court from unduly entering into matters in which the jurisdiction in which it
    is located has little interest. Other courts, including this court, have made
    similar observations. Justice Sharpe referred to the need for jurisdictional restraint
    in
Muscutt
, at paras. 34 and 38. He used the same words in
Currie
    v. McDonalds Restaurants of Canada Limited
(2005), 74 O.R. (3d) 321, at
    para. 10.

[30]

The
    governing precedent for determining whether a real and substantial connection
    exists is still the Supreme Courts decision in
Club Resorts Ltd. v. Van
    Breda
, 2012 SCC 17, [2012] 1 S.C.R. 572. Justice LeBel expressed similar
    concerns in his formulation of the factors a court is to consider in
    determining whether a real and substantial connection exists in a tort case. He
    repeatedly expressed one of the primary aims of the test: to reduce the risk
    of jurisdictional overreach (at para. 22); to prevent improper assumptions of
    jurisdiction (at para. 26); to prevent courts from overreaching by entering into
    matters in which they had little or no interest (at para. 38); and to reduce
    the risk of sweeping into that jurisdiction [,] claims that have only a
    limited relationship with the forum (at para. 89). In his view, a judicial
    approach that leads to universal jurisdiction should be avoided.

The proper interpretation of the
    real and substantial connection test in the definition of responsible issuer

[31]

The
    legislative and judicial histories lead us to conclude that the Legislature
    fully intended to prevent jurisdictional overreach. The Legislature did not
    intend to create universal jurisdiction.

[32]

We
    infer from the legislative and judicial histories that the Legislature made a
    conscious decision to use the language of the common law test to determine
    whether a real and substantial connection exists for the purposes of s. 138.1
    of the
Securities Act
. We also infer that the Legislature was content
    to allow the common law to develop in the ordinary course, as it did with
Van
    Breda
, which is still the governing authority. In our view, the Legislature
    had no expectation that the test for a real and substantial connection, in
    relation to securities matters, would diverge over time from the common law
    test. The Legislatures deliberate use of the same common law language that
    governed at the time compels the opposite conclusion.

[33]

Accordingly,
    we reject the appellants argument that, on purposive grounds, the
    interpretation of the expression must be different than its common law meaning
    in the jurisdiction
simpliciter
cases. To the contrary, a purposive
    interpretation leads us to reject the appellants proposed test and the
    appellants alternative argument that this court should recognize a new
    presumptive connecting factor for this type of statutory claim. We do not agree
    that an issuer that knows or ought to know that its investor information is
    being made available to Canadian investors, by that level of engagement alone, has
    a securities regulatory
nexus
sufficient to establish a real and
    substantial connection to Ontario.

[34]

In
    determining whether an issuer is a responsible issuer under the
Securities
    Act
, courts are generally to apply the common law test for a real and
    substantial connection.

(2)

The Appellants Second Challenge: The proper application of the common law
    test for a real and substantial connection

[35]

The
    Ontario Superior Court has jurisdiction over a foreign defendant in a tort
    action if the plaintiff establishes that a real and substantial connection
    exists between the subject matter of the litigation and Ontario. In
Van
    Breda
, the Supreme Court formulated four rebuttable presumptive connecting
    factors, at para. 90:

[I]n a case concerning a tort, the following factors are
    presumptive connecting factors that,
prima facie
, entitle a court to
    assume jurisdiction over a dispute:

(a) the defendant is domiciled or
    resident in the province;

(b) the defendant carries on business
    in the province;

(c) the tort was committed in the
    province; and

(d) a contract connected with the
    dispute was made in the province.

[36]

The
    appellant asserts that HSBC Holdings is caught by two of the presumptive
    connecting factors: it committed a tort in Ontario; and it carries on business
    in Ontario.

Analysis

[37]

The
    motion judge concluded that HSBC Holdings does not carry on business in
    Ontario, even though it has and must comply with Canadian banking regulations
    under the
Bank Act
, S.C. 1991, c. 46, and even though its subsidiary,
    HSBC Canada, does carry on business in Ontario.

[38]

The
    appellant contends that the motion judge erred by requiring HSBC Holdings to
    have a physical presence in Ontario.

[39]

We
    disagree. The motion judge found
that HSBC Holdings business
, as distinct from the businesses of the corporations
    that it owns directly or [in]directly,
is that of
    managing a global enterprise of a group of commonly bannered banks to the
    extent of setting global standards for a global enterprise (
para. 189).
This is not only a factual finding

that is
    entitled to deference; it is also a finding with which we agree.

[40]

In
Van Breda
, LeBel J. made several pertinent observations about the
    presumptive connecting factor of carrying on business in the jurisdiction, at
    para. 87, that apply to this case:

Carrying on business in the jurisdiction may also be considered
    an appropriate connecting factor. But considering it to be one may raise more
    difficult issues.
Resolving those issues may require some
    caution in order to avoid creating what would amount to forms of universal
    jurisdiction in respect of tort claims arising out of certain categories of
    business or commercial activity.

Active advertising in the
    jurisdiction or, for example,
the fact that a Web site
    can be accessed from the jurisdiction would not suffice to establish that the
    defendant is carrying on business there
. [Emphasis added.]

[41]

HSBC
    Holdings could not be said to be carrying on business in Ontario simply because
    the appellant could access a non-reporting issuers disclosure information
    using his home computer in Ontario. This would give rise to the universal
    jurisdiction that LeBel J. explicitly rejected in
Van Breda
.

[42]

The
    motion judge held that HSBC Holdings does have a presumptive real and
    substantial connection to Ontario by virtue of possibly committing a misrepresentation-based
    tort in Ontario. Despite this holding, he concluded that this presumptive
    connecting factor was rebutted because downloading materials from an issuer is
    an extremely weak connection and  does not point to any real relationship
    between the subject-matter of the litigation and Ontario.

[43]

The
    appellant submits that the motion judge erred in concluding that the presumptive
    connecting factor had been rebutted. He states that it is very difficult to rebut
    the presumptive connecting factor of a tort that is committed in the province
    and that the motion judge did not refer to any case law to support his analysis.

[44]

We
    disagree.

[45]

A
    defendant can rebut a presumptive connecting factor by establishing facts
    which demonstrate that the presumptive connecting factor  points only to a
    weak relationship between them:
Van Breda
, at para. 95. Justice LeBel
    added that a weak relationship exists where it would  not be reasonable to
    expect that the defendant would be called to answer proceedings in that
    jurisdiction:
Van Breda
,
at para. 97. The Supreme Court has
    repeatedly cautioned against creating an irrebuttable presumption of jurisdiction:
Van Breda
,
at para. 95; and
Haaretz.com v. Goldhar
,
    2018 SCC 28, at para. 42.

[46]

The
    motion judge concluded that downloading HSBC Holdings material from a website
    was an extremely weak connection and that HSBC Holdings had no reason to
    believe that it was obliged to comply with or would be subject to securities
    regulation in Ontario (at para. 212).

[47]

The
    motion judge did not explicitly name a case in the four paragraphs in which he
    concluded that this presumptive connecting factor had been rebutted. However,
    the motion judge did refer to LeBel J. and articulated the correct test as laid
    out in
Van Breda
.

[48]

The
    appellant invokes
Abdula
, but it

does not assist him. The
    question in
Abdula

was whether a non-reporting issuer could be
    a responsible issuer under Part XXIII.1 of the
Securities Act
. In that
    case, this court held: The definition of responsible issuer is not confined
    to persons who are reporting issuers in Ontario and therefore have a continuous
    disclosure obligation in Ontario: at para. 88. The issue was not, like in this
    case, whether there is a real and substantial connection to Ontario.

[49]

In
Abdula
,
the issuer was found to be a responsible issuer because
    there was a real and substantial connection to Ontario, at para. 88. The issuer
    had been incorporated in Ontario; its executive offices as well as some
    business and governance operations were in Ontario; and it had held its annual
    meeting in Ontario. Here, HSBC Holdings management business is distinct from
    the businesses it manages. Very few, if any, activities of HSBC Holdings
    business have ever occurred in Ontario; it has no fixed place of business in
    Canada; and there is no agent of HSBC Holdings doing its management business in
    Ontario.

[50]

We
    agree with the motion judges analysis of this presumptive connecting factor and
    his conclusion that it was rebutted on the evidence.

Conclusions on the definition of responsible
    issuer


[51]

The
    motion judge accurately articulated and applied the proper test. HSBC Holdings
    is not a responsible issuer under the
Securities Act
because it has no
    real and substantial connection to Ontario.

(3)

The Appellants Third Challenge: The proper application of the
forum
    non conveniens
doctrine

[52]

A
    court may decline jurisdiction on the basis that there is another more appropriate
    forum under the
forum non conveniens
doctrine, even if it finds it has
    jurisdiction
simpliciter
. Given our conclusion that Ontario courts do
    not have jurisdiction
simpliciter
, it is, strictly speaking,
    unnecessary to consider the
forum non conveniens

doctrine.
    However, the appellants arguments about the interaction between this courts
    decisions in
Kaynes

(2014) and
Kaynes v. BP P.L.C.
,
    2016 ONCA 601, 133 O.R. (3d) 29, suggest that a response would be helpful.

[53]

In
    our view, the motion judge accurately expressed and applied the principles in
    the
forum non conveniens
analysis. His discretionary determination
    that Ontario is
forum non conveniens
attracts deference: see
Van
    Breda
,

at para. 112,
Goldhar
, at paras. 49, 177.

[54]

The
    motion judge agreed with Mr. Yip that there is no place of trading requirement
    under Part XXIII.1 of the Ontario
Securities Act

(at para. 114). His
    purchase of securities on the Hong Kong exchange did not preclude relief. However,
    the motion judge did conclude that, in secondary market claims, courts should
    generally favour the forum where the trade took place. He stated: The place of
    trading qualification for actions for misrepresentations in a prospectus
    reflects the prevailing international standard that securities litigation
    should take place in the forum where the securities transaction took place (at
    para. 271) He considered this point to be of influence to his holding, at para.
    273:

In the case at bar, the
forum non conveniens
factors
    and the comity factors overwhelmingly favour Mr. Yip bringing his
    misrepresentation claim in England or Hong Kong, which is the jurisdiction in
    which he purchased his shares. In the case at bar, even if there was
    jurisdiction
simpliciter
to open the door to an Ontario court to reach
    across the world to protect Canadian and non-Canadians investors, there is
    nothing unfair to expect Mr. Yip and all of the putative Class Members who used
    foreign exchanges to look to the foreign courts to litigate their claims where
    the defendant is a foreign corporation whose securities do not trade on a
    Canadian stock exchange.

[55]

The
    appellant challenges this holding. He submits that the motion judge placed too
    much emphasis on the place of the trade in identifying the United Kingdom or
    Hong Kong as the better forum. In particular, the appellant submits that this
    courts statement in
Kaynes
(2014)  the prevailing international
    standard tying jurisdiction to the place where the securities were traded (at
    para. 52)  is wrong. He submits that the correct approach is set out in
Kaynes

(2016): a plaintiff should not be deprived of the right to have his or her
    claim asserted as part of a class action.

[56]

The
    appellant also submits that the motion judge failed to take due account of the
    factor of juridical advantage in his
forum non conveniens
analysis.

Analysis

[57]

Van
    Breda
sought to reduce the exercise of case-by-case and on the fly judicial
    discretion on whether to assume jurisdiction; the Supreme Court recognized the
    need for certainty and predictability and security, stability and
    efficiency in private international law: see paras. 70, 73, and 93-94. We
    address first the appellants argument on
Kaynes
(2014), and then the
    argument on juridical advantage.

The
Kaynes

holdings

[58]

Kaynes

(2014) and
Kaynes

(2016) involved a proposed class action
    against BP under Part XXIII.1 of the
Securities Act

for
    misrepresentations that were allegedly made by BP before and after the April
    2010 Deep Water Horizon explosion and oil spill in the Gulf of Mexico
.

[59]

In
Kaynes

(2014), this court held that Ontario did have
    jurisdiction
simpliciter

because there was a real and
    substantial connection. BP had undertaken to continue to make disclosure to its
    Ontario shareholders. However, this court declined to exercise its jurisdiction
    under the
forum non conveniens

doctrine. BP had demonstrated
    that there was clearly another more appropriate forum. There was a a pending
    class action in the US based upon very similar allegations, covering
    substantially the same period, and embracing the claims of all BP shareholders,
    including the plaintiff, who purchased their shares on a US exchange: at para.
    40.

[60]

In his analysis of the various factors, in
Kaynes
(2014) Sharpe J.A. emphasized the role of comity and suggested that courts
    generally favour the forum

where the trading took place. He
noted, at paras. 37,47-48, and 52-53:

In
Prince v. ACE Aviation Holdings Inc
.
,
    2014 ONCA 285, 120 O.R. (3d) 140 (Ont. C.A.), at para. 63, Strathy J.A. observed
    that "the principle of comity...underlies the
forum non conveniens

analysis."



By statute, both the US and the UK regimes assert jurisdiction
    on the basis of the exchange where the securities are traded.



Asserting Ontario jurisdiction over the plaintiff's claim would
    be inconsistent with the approach taken under both US and UK law with respect
    to jurisdiction over claims for secondary market misrepresentation. [T]he
    principle of comity strongly favours declining jurisdiction  [and] requires the
    court to consider [the] implications of departing from the prevailing
    international norm or practice, particularly in an area such as the securities
    market.



Order and fairness will be achieved by adhering to the
    prevailing international standard tying jurisdiction to the place where the
    securities were traded and a multiplicity of proceedings  will be avoided.

[Comity] will often prevail over any
    perceived loss of juridical advantage
. [Emphasis added.]

[61]

Justice
    Sharpe added, at para. 50:

It would surely come as no surprise to purchasers who used
    foreign exchanges that they should look to the foreign court to litigate their
    claims.
Van Breda
recognizes fairness to the parties as a relevant
    factor bearing upon the
forum non conveniens
analysis. As this court
    stated in
obiter
in [
Currie v. McDonald's Restaurants of Canada
    Ltd.
(2005), 74 O.R. (3d) 321, (C.A.)], at para. 18:

[A]n Ontario resident...who buys
    securities on a foreign stock exchange...has engaged in a cross-border
    transaction with a foreign entity. The cause of action arises at least in part
    in the foreign jurisdiction. It would not be unreasonable, from the perspective
    of the Ontario resident, to expect that legal claims arising from the
    transaction could be properly litigated in the foreign jurisdiction.

[62]

For
    these reasons, this court stayed the plaintiffs claim in
Kaynes
(2014).

[63]

After
    that decision, Mr. Kaynes commenced a class proceeding in the U.S. District
    Court asserting a claim under the Ontario
Securities Act
for
    pre-explosion misrepresentations. The U.S. District Court judge dismissed Mr.
    Kaynes Ontario
Securities Act

claim  but not on the merits. Mr.
    Kaynes brought a motion before this court to lift the stay because of these new
    circumstances.

[64]

In
Kaynes
(2016), the same panel of this court lifted the stay it imposed
    in
Kaynes

(2014) in order to allow the appellant to have his
    claim adjudicated on its merits. The panel did not suggest that the framework
    it set out in
Kaynes

(2014) was wrong. The law did not change
    in
Kaynes

(2016); the facts changed. The court in
Kaynes
(2016) stated, at para. 16:

In our view, these developments, taken as a whole, are
    sufficient to justify lifting the stay. It was certainly not brought to our
    attention or in our contemplation that the moving party's claim would be
    dismissed in the U.S. District Court simply because it had not been advanced by
    the lead plaintiffs in the U.S. class action. That is a purely procedural
    barrier that prevents the moving party from having his claim heard on the
    merits.

[65]

We
    reject the appellants argument that there is any inconsistency between this
    courts decisions in
Kaynes

(2014) and
Kaynes

(2016).

The role of juridical advantage

[66]

The
    appellant submits that the motion judge failed to give due weight to the loss
    of juridical advantage he would suffer if Ontario declined jurisdiction, and he
    asserts: There is no authority for the proposition relied on by the motions
    judge that juridical advantage should be viewed as a
weak
and
problematic
factor (emphasis in original). This is incorrect.

[67]

The
    Supreme Court noted that the juridical advantage factor is problematic in the
forum
    non conveniens
analysis, both as a matter of comity and as a practical
    matter:
Breeden v. Black
, 2012 SCC 19, [2012] 1 S.C.R. 666, at para.
    27;
Van Breda
, at para. 112; and
Haaretz.com
, at para. 76.

[68]

As
    a matter of comity, secondary market trading is international and involves
    numerous jurisdictions. Comity is particularly important to maintain an orderly
    and predictable regime for dispute resolution. As stated by LeBel J. in
Van
    Breda
: Comity cannot subsist in private international law without order,
    which requires a degree of stability and predictability in the development and
    application of the rules governing international or interprovincial
    relationships (at para. 74).

[69]

As
    a practical matter, the Supreme Court stated in
Amchem Products Incorporated
    v. British Columbia (Workers Compensation Board)
, [1993] 1 S.C.R. 897, at
    p. 933: Any loss of advantage to the foreign plaintiff must be weighed as
    against the loss of advantage, if any, to the defendant in the foreign
    jurisdiction if the action is tried there rather than in the domestic forum.

[70]

Comity
    was central in
Kaynes
(2014). The importance of comity did not change
    in
Kaynes
(2016). In
Kaynes
(2014), this court showed respect
    for the U.S. court, which was already adjudicating similar claims. When the
    U.S. District Court judge dismissed the claim on a purely procedural barrier,
    there was no decision on the merits that this court could recognize:
Kaynes
(2016), at para. 16. In addition, given that Mr. Kaynes had commenced his claim
    in Ontario in time, it was unfair that this be a basis for preventing the claim
    from being heard on its merits.

[71]

Thus,
    in
Kaynes
(2016), this court did not elevate the juridical advantage
    of asserting a claim as a class action to the status of an inviolable right.
    Rather, it applied the
Kaynes
(2014) framework to a new set of facts.

[72]

In
    this case, the motion judge properly expressed and applied the
forum non
    conveniens
principles. HSBC Holdings could not reasonably have expected that
    it would be subject to the regulation of the law of Ontario. The motion judge was
    right to conclude that Ontario was
forum non conveniens
.

(4)

Conclusions on the Jurisdiction Appeal

[73]

First,
    the legislative and judicial histories of the expression real and substantial
    connection in paragraph (b) of the definition of responsible issuer
    demonstrate the desire to avoid jurisdictional overreach. There was no
    legislative intention to create universal jurisdiction for Ontario in secondary
    market liability. An Ontario courts jurisdiction for a claim under Part
    XXIII.1 of the
Securities Act
against a responsible issuer is
    circumscribed by the common law real and substantial connection test.

[74]

Second,
    where it is unreasonable to expect a defendant to be called to answer a
    proceeding in a jurisdiction, then a weak relationship exists. There is no
    irrebuttable presumption of jurisdiction.

[75]

Third,
    the framework in
Kaynes
(2014) for the
forum non conveniens
analysis in the context of secondary market liability was not reversed by
Kaynes
(2016). Comity continues to underlie the
forum non conveniens
analysis.
    Other factors in the
forum non conveniens
analysis must be considered,
    but comity is a key consideration. As such, the more appropriate forum for
    secondary market claims will often favour the forum of the exchange(s) where
    the securities trade.

B.

The Costs Appeal

[76]

The
    appellant seeks leave to appeal the costs award of $1,000,455.22 made against
    him by the motion judge. He submits that there should have been no award of
    costs or that the costs awarded should have been substantially reduced
    ($150,000 was suggested) because this is public interest litigation and/or
    because the action raises a novel point of law. These are considerations
    expressly contemplated by s. 31(1) of the
Class Proceedings Act
,
    2002
.

[77]

The
    motion judge accurately set out the law on these points and properly considered
    them. We agree with the conclusions that he reached that neither of those factors
    apply to the case here.

[78]

First,
    we do not accept that this litigation is appropriately characterized as public
    interest litigation, as that term is used in the costs context. As Rosenberg
    J.A. said in
Pearson v. Inco Ltd.
(2006), 79 O.R. (3d) 427 (C.A.), an
    action constitutes public interest litigation within the meaning of s. 31(1)
    if the class proceeding has some specific, special significance for, or
    interest to, the community at large beyond the members of the proposed class":
    at para. 9. There is no such specific or special significance of this case
    beyond the putative class members. Ontarios investors, capital markets, and
    the financial system will not likely benefit from creating a universal
    jurisdiction for secondary market misrepresentations.

[79]

Second,
    we do not accept that this litigation raised a novel issue. The central issues were
    jurisdictional. The proper jurisdiction for Ontario residents to seek relief
    arising from their purchase of shares in foreign companies on foreign exchanges
    was directly addressed by this courts decision in
Kaynes

(2014).
    As discussed above,
Kaynes
(2016) did not change the framework set out
    in
Kaynes
(2014). Moreover, in
Airia Brands Inc. v. Air Canada
,
    2017 ONCA 792, 11 C.P.C. (8th) 35, this court treated
Kaynes
(2014) as
    good law, even though it was distinguished on its facts. Whatever variations on
    the jurisdictional issues that might be raised by this case, and we do not
    immediately see any, they would not constitute novel issues.

[80]

All
    of that said, we do disagree with the motion judge where, in considering these
    issues, he drew a distinction between altruistic litigation and entrepreneurial
    litigation. Class actions are generally entrepreneurial litigation:
Fantl
    v. Transamerica Life Canada
, 2009 ONCA 377, 95 O.R. (3d) 767, at para. 66.
    That aspect of class proceedings is part of ensuring access to justice, especially
    where the individual claims are for relatively small amounts. The fact that the
    litigation is entrepreneurial is not a proper basis to impose different costs
    consequences. The existing principles applicable to the awarding of costs are
    sufficient without adding this issue as another element.

[81]

In
    terms of the quantum of costs awarded, it is important to remember that fixing
    costs is a matter of discretion, and a judges exercise of that discretion is
    entitled to significant deference:
Feinstein v. Freedman
, 2014 ONCA
    205, 119 O.R. (3d) 385, at para. 52. It is important to recognize that almost
    half of the award reflected disbursements, principally fees paid to experts.

[82]

We
    do not see any basis to interfere with the motion judges conclusion that the
    fees sought by the respondent were fair and reasonable in the circumstances. We
    agree with the motion judges point that the appellant ought to have expected
    that a claim of this size would be vigorously contested by the respondent,
    especially the issue of jurisdiction. Given what was involved leading up to the
    hearing of the motion and cross-motion, including the volume of material filed,
    the number of cross-examinations, and the expert evidence, we are not prepared
    to interfere with the motion judges conclusion that [t]he Defendants did not
    commit more resources than were necessary to reasonable and fairly test and
    challenge the Ontario courts jurisdiction. We would caution, however, that
    costs awards of this magnitude should be exceptional.

[83]

In
    terms of the expert fees, the motion judge correctly identified that the
    approach to determining the reasonableness of expert fees is similar to the
    approach to counsel fees,
in the sense that expert
    fees must be fair and reasonable
.

[84]

The
    motion judge plainly found that the expert evidence produced by the respondent
    was necessary for the motion. There is no basis for this court to interfere
    with his conclusion.

[85]

What
    is not clear, however, is whether the motion judge considered the
    reasonableness of the expert fees charged in terms of hours spent and hourly
    rates imposed. In our review of the experts accounts, it appears that they
    were simply charged at the amount that the expert billed. We also note that
    there does not appear to be any information provided for three of the six experts
    in terms of the hours spent or the rates charged. That significantly constrains
    a review of the fees charged.

[86]

In
3664902 Canada Inc. v. Hudsons Bay Co.
(2003), 169 O.A.C. 283 (C.A.),
    this court noted that: reasonably necessary experts fees should not be
    reduced to reflect the fact that the award is intended to be only partial
    indemnification: at para. 15. This court drew a distinction between
    disbursements, of which expert fees are a part, and legal fees, which are to be
    treated differently: at paras. 20-21.

[87]

The
    court noted, at para. 17:

To be explicit, it is our experience that both under the
    party-and-party costs regime and the newer partial indemnity regime,
    disbursements, including witness fees, are assessed upon the basis of what was
    actually spent, reduced if appropriate to what is reasonably spent.

[88]

In
    doing so, the court invoked the language of para. 26 of Part II of Tariff A-
    Disbursements, which currently provides:

For experts reports that were supplied to the other parties as
    required by the
Evidence Act
or these rules and that were reasonably
    necessary for the conduct of the proceeding, a reasonable amount.

[89]

In
3664902 Canada Inc.

this court disapproved part of the approach
    in

Pearson v. Inco Ltd
.
, [2002] O.J. No. 3532, 27 C.P.C (5th)
    171 (S.C.), which used a partial indemnity rationale for reducing expert fees, but
    this court did not reject the idea that a reviewing court should consider what
    is fair in terms of hours and rates as well as the overall amount in fixing an
    award that it is reasonable for the losing party to pay with respect to
    experts fees:
Pearson
, at para. 20. This includes experts fees.

[90]

Several
    Superior Court decisions have taken this approach. See
Hamfler v. 1682787
    Ontario Inc
.
, 2011 ONSC 3331, 38 C.P.C. (7th) 398, approved in
R
    & G Draper Farms (Keswick) Ltd. v. Natures Finest Produce Ltd
.
,
    2016 ONCA 626, 133 O.R. (3d) 395,

at para. 20;
Andersen v. St. Jude
    Medical Inc.
(2004),
28

C.P.C. (6th)
    199
(Ont. S.C.);
Roberts v. Morana
, [1997] O.J. No. 4999 (S.C.);
    and
Eastwalsh Homes Ltd. v. Anatal Development Corp
.
(1995), 37
    C.P.C. (3d) 374 (Ont. Gen. Div.).

[91]

In
    our view, a class action defendant does not have carte blanche to unreasonably
    spend money on experts; we see this obligation of reasonableness in the
    expenditure of funds on experts as an aspect of ensuring access to justice, one
    of the principle purposes of class actions.

[92]

While
    we could remit this matter back to the motion judge for reconsideration, we
    believe it would be fairer and more expeditious for us to directly address the
    matter, especially since we have the same material as the motion judge had.

[93]

While experts fees are not to be arbitrarily reduced to reflect
    partial indemnity costs (see:

3664902 Canada Inc
.),

proportionality is a matter of general principle in applying
    the
Rules of Civil Procedure
: see r. 1.04(1.1).
    The fees allowed must still be reasonable in terms of hours and rates charged
    in proportion to the matter at issue. The motion judge referred to, but
    did not apply, this test. Having reviewed the record available to us,
we
    reduce the costs award from $1,000,455.22 to $800,000 to reflect these
    considerations
as they relate to the disbursements
.

C.

Disposition

[94]

For
    the foregoing reasons: we dismiss the appeal on jurisdiction; we grant leave to
    appeal the costs award, and vary it by reducing it from $1,000,455.22 to $800,000.
    We fix the costs of the appeal payable by the appellant to the respondents at
    $40,000 all-inclusive.

Released:

PL                                                   P.
    Lauwers J.A.

JUL 11 2018                                    M.L.
    Benotto J.A.

I.V.B.
    Nordheimer J.A.


