Ash et al. v. Lloyd's Corp. et al., (1992) 60 O.A.C. 241 (CA)

• Judge: Carthy, Osborne and Abella, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: July 28, 1992
• Jurisdiction: Ontario
• Citations: (1992), 60 O.A.C. 241 (CA)

Ash v. Lloyd's Corp. (1992), 60 O.A.C. 241 (CA)

MLB headnote and full text

C. William Ash et al. (plaintiffs/appellants) v. Corporation of Lloyd's and Bank of Nova Scotia, Canada Trust, Canadian Imperial Bank of Commerce, Citibank Canada, Hongkong Bank of Canada, Royal Bank of Canada, Toronto-Dominion Bank and CT Credit Corporation (defendants/respondents)

(Nos. C12100; C9113)

Indexed As: Ash et al. v. Lloyd's Corp. et al.

Ontario Court of Appeal

Carthy, Osborne and Abella, JJ.A.

July 28, 1992.

Summary:

The plaintiffs were underwriting members of Lloyd's Corp. who resided in Ontario. The plaintiffs sued Lloyd's for a declaration that the agreements between the plaintiffs and Lloyd's were void ab initio because of fraud on the part of Lloyd's. The plaintiffs also claimed against several banks and financial institutions for interlocutory and permanent injunctions preventing payment to Lloyd's under certain letters of credit. Lloyd's and the defendant banks and financial institutions applied to dismiss or stay the plaintiffs' actions.

The Ontario Court (General Division), per McKeown, J., in a decision reported (1991), 6 O.R.(3d) 235; 87 D.L.R.(4th) 65, allowed the applications in part. The court granted a permanent stay of the action against Lloyd's, holding that the English courts had exclusive jurisdiction pursuant to clauses in the underwriting agreements. The court also granted a permanent stay of the action against Citibank Canada, Hongkong Bank of Canada and CT Credit Corp. (the financial institutions) on the basis that an injunction granted in Ontario would not be effective to prevent Lloyd's from calling for payment on the letters of credit issued by those institutions. The court refused to stay the action against the other defendants (the chartered banks), holding that since both the plaintiffs and these banks were residents of Ontario, an interlocutory injunction, if granted, would have the desired effect of preventing Lloyd's from receiving the benefits of its alleged fraud. The plaintiffs appealed the stay of their action against Lloyd's and the financial institutions. The chartered banks appealed the refusal to grant the stay of the action against them.

The Ontario Court of Appeal dismissed the plaintiffs' appeal but allowed the chartered banks' appeal, holding that the action against the banks should be stayed.

Conflict of Laws - Topic 7286

Contracts - Jurisdiction - Choice of forum by parties - The plaintiffs entered underwriting agreements with Lloyd's Corp. - The contracts contained clauses giving exclusive jurisdiction over disputes to the courts in England - The plaintiffs sued Lloyd's Corp., alleging that the agreements were void ab initio because of fraud - Lloyd's sought to stay the action, arguing that the English courts had exclusive jurisdiction - The plaintiffs argued that the exclusive jurisdiction clauses should be ignored and were of no effect because the contracts were void ab initio - The motions judge rejected the plaintiff's argument and stayed the Canadian action - The Ontario Court of Appeal affirmed the decision - See paragraphs 1 to 10.

Conflict of Laws - Topic 9284

Practice - Stay of proceedings - Where court lacks or declines jurisdiction - [see Conflict of Laws - Topic 7286 and first Conflict of Laws - Topic 9286 ].

Conflict of Laws - Topic 9286

Practice - Stay of proceedings - Where action should not be tried in Canada - The plaintiffs sued Lloyd's for a declaration that their underwriting agreements were void ab initio - The plaintiffs also claimed injunctive relief against several chartered banks to prevent payment to Lloyd's on certain letters of credit - A motions judge stayed the action against Lloyd's because the English courts had exclusive jurisdiction under the underwriting agreements - The stay respecting the chartered banks was refused because an Ontario injunction would prevent Lloyd's from being paid on the letters of credit and Ontario was the forum conveniens since the plaintiff and the banks were Ontario residents - The Ontario Court of Appeal held that the claim against the chartered banks should be stayed - See paragraphs 11 to 17.

Conflict of Laws - Topic 9286

Practice - Stay of proceedings - Where action should not be tried in Canada - [See Conflict of Laws - Topic 7286 ].

Cases Noticed:

Bank of Nova Scotia v. Angelica-Whitewear Ltd. and Angelica Corp., [1987] 1 S.C.R. 59; 73 N.R. 158, dist. [paras. 13-16].

Statutes Noticed:

Courts of Justice Act, S.O. 1984, c. 11, sect. 119 [para. 2].

Counsel:

Alan J. Lenczner and Glenn A. Smith, for Ash et al., plaintiffs as appellants and respondents;

R. Bruce Smith and Douglas Alderson, for Canadian Imperial Bank of Commerce, Royal Bank of Canada and the Toronto Dominion Bank as appellants and for Citibank Canada, Hongkong Bank of Canada, and CT Credit Corporation as respondents;

Martin Sclisizzi, for the Bank of Nova Scotia, appellant;

Peter Howard and Marjo MacMullin, for Corporation of Lloyd's, respondent.

These appeals were heard on June 9, 10 and 11, 1992, before Carthy, Osborne and Abella, JJ.A., of the Ontario Court of Appeal. The judgment of the Court of Appeal was delivered by Carthy, J.A., and released on July 28, 1992, with supplementary reasons released on October 6, 1992.