Babey et al. v. Greer et al., (2015) 473 Sask.R. 119 (QB)

• Judge: Gunn, J.
• Court: Court of Queen's Bench of Saskatchewan (Canada)
• Case Date: July 15, 2015
• Jurisdiction: Saskatchewan
• Citations: (2015), 473 Sask.R. 119 (QB);2015 SKQB 219

Babey v. Greer (2015), 473 Sask.R. 119 (QB)

MLB headnote and full text

Temp. Cite: [2015] Sask.R. TBEd. AU.001

Darryl Babey, Babco Properties Ltd. and Babco Soil Services Ltd. (plaintiffs) v. Kenneth Greer, Western AG Global Inc. and Western AG Innovations Inc. (defendants)

(2015 Q.B.G. No. 120; 2015 SKQB 219)

Indexed As: Babey et al. v. Greer et al.

Saskatchewan Court of Queen's Bench

Judicial Centre of Regina

Gunn, J.

July 15, 2015.

Summary:

The plaintiffs' action encompassed two claims. One claim related to a share subscription agreement and alleged oppression within a Saskatchewan corporation. The other related to a franchise agreement between the plaintiff Babco Soil, a North Dakota corporation, and the Saskatchewan corporation (the North Dakota claim). In the North Dakota claim, Babco Soil alleged that it relied on certain representations by the Saskatchewan corporation in a Licensed Business Partner Agreement (LBPA) and otherwise to purchase a North Dakota franchise. Asserting that the representations were not true, Babco Soil took the position that the LBPA was void ab initio and claimed damages. The defendants applied for a stay of proceedings regarding the North Dakota claim, asserting that it should be adjudicated in North Dakota. Alternatively, the defendants applied to stay the North Dakota claim under the International Commercial Arbitration Act in accordance with the arbitration agreement in clause 16.3 of the LBPA.

The Saskatchewan Court of Queen's Bench dismissed the applications.

Arbitration - Topic 2504

Stay of proceedings - Arbitration clause - Enforcement of - The plaintiffs' action encompassed two claims - One claim related to a share subscription agreement and alleged oppression within a Saskatchewan corporation - The other related to a franchise agreement between the plaintiff Babco Soil, a North Dakota corporation, and the Saskatchewan corporation (the North Dakota claim) - In the North Dakota claim, Babco Soil alleged that it relied on certain representations by the Saskatchewan corporation in a Licensed Business Partner Agreement (LBPA) and otherwise to purchase a North Dakota franchise - Asserting that the representations were not true, Babco Soil took the position that the LBPA was void ab initio and claimed damages - The defendants applied to stay the North Dakota claim under the International Commercial Arbitration Act in accordance with the arbitration agreement in clause 16.3 of the LBPA - The Saskatchewan Court of Queen's Bench dismissed the application - Where parties had freely entered into arbitration agreements, the court should generally give effect to the agreement - However, here, to give effect to the agreement would necessarily entail a multiplicity of proceedings - An added complication was the plaintiffs' claim that the LBPA was void ab initio - The prospect of inconsistent findings was real as was the prospect that this could delay resolution of the entire matter - See paragraphs 58 to 66.

Arbitration - Topic 2507

Stay of proceedings - When available - [See Arbitration - Topic 2504 ].

Arbitration - Topic 2514

Stay of proceedings - Arbitration clause - Bar to stay - Multiplicity of proceedings - [See Arbitration - Topic 2504 ].

Conflict of Laws - Topic 603

Jurisdiction - General principles - Jurisdiction simpliciter (territorial competence) - The plaintiff Babco Soil, a North Dakota corporation, alleged that it relied on certain representations by the defendant Western AG in a Licensed Business Partner Agreement (LBPA) and otherwise to purchase a North Dakota franchise - Asserting that the representations were not true, Babco Soil took the position that the LBPA was void ab initio and claimed damages - The defendants applied for a stay of proceedings, asserting that the claim should be adjudicated in North Dakota - The Saskatchewan Court of Queen's Bench dismissed the application - As the individual defendant was a Saskatchewan resident and each of the corporate defendants had registered offices in Saskatchewan, the court had territorial competence - The forum selection clause in the LBPA stated that the agreement was to be "governed and construed" in accordance with North Dakota law - It did not state that claims had to be brought in North Dakota and did not point exclusively to North Dakota - North Dakota did not have exclusive jurisdiction over the claims - See paragraphs 12 to 24.

Conflict of Laws - Topic 721

Jurisdiction - Jurisdiction excluded by contract - General - [See Conflict of Laws - Topic 603 ].

Conflict of Laws - Topic 7230

Contracts - Choice of law - By parties - The plaintiff Babco Soil, a North Dakota corporation, alleged that it relied on certain representations by the defendant Western AG in a Licensed Business Partner Agreement (LBPA) and otherwise to purchase a North Dakota franchise - Asserting that the representations were not true, Babco Soil took the position that the LBPA was void ab initio and claimed damages - The defendants applied for a stay of proceedings, asserting that the claim should be adjudicated in North Dakota - At issue in the determination of whether the Saskatchewan court should decline jurisdiction in favour of North Dakota was the effect of the LBPA's forum selection clause, which stated that the agreement was to be "governed and construed" in accordance with North Dakota law - The Saskatchewan Court of Queen's Bench was not satisfied that the forum selection clause was "valid, clear and enforceable" or that it applied to all causes of action before the court - The principle of contra proferentum applied - If these sophisticated parties had intended the forum selection clause to govern any and all disputes between them, the reasonable course of action would have been to include language that made the parties' intention clear - A reading of the LBPA in its entirety suggested that the clause was not intended to apply to every potential dispute between the parties - See paragraphs 25 to 33.

Conflict of Laws - Topic 7230

Contracts - Choice of law - By parties - The plaintiff Babco Soil, a North Dakota corporation, alleged that it relied on certain representations by the defendant Western AG in a Licensed Business Partner Agreement (LBPA) and otherwise to purchase a North Dakota franchise - Asserting that the representations were not true, Babco Soil took the position that the LBPA was void ab initio and claimed damages - The defendants applied for a stay of proceedings, asserting that the claim should be adjudicated in North Dakota - At issue in the determination of whether the Saskatchewan court should decline jurisdiction in favour of North Dakota was the effect of the LBPA's forum selection clause, which stated that the agreement was to be "governed and construed" in accordance with North Dakota law - The Saskatchewan Court of Queen's Bench, having found that the forum selection clause was not "valid, clear and enforceable", indicated that even if it was, the court would not have given effect to it - A Saskatchewan judge would be able to understand and apply North Dakota law - The desirability of avoiding multiple proceedings and conflicting decisions militated against enforcing the forum selection clause - The parties all had a substantial connection to Saskatchewan - The potential witnesses in Saskatchewan far exceeded those in North Dakota - Further, the forum selection clause did not apply to all of the causes of action before the court - See paragraphs 34 to 56.

Conflict of Laws - Topic 7286

Contracts - Jurisdiction - Choice of forum by parties (incl. internet contracts, domain names, etc.) - [See first Conflict of Laws - Topic 7230 ].

Conflict of Laws - Topic 7608

Torts - Jurisdiction - Choice of forum by parties - [See first Conflict of Laws - Topic 7230 ].

Contracts - Topic 7407

Interpretation - General principles - Whole contract to be considered - [See first Conflict of Laws - Topic 7230 ].

Contracts - Topic 7433

Interpretation - Ambiguity - Contra proferentem rule - [See first Conflict of Laws - Topic 7230 ].

Cases Noticed:

Willick v. Watkins Inc. (2009), 344 Sask.R. 33; 2009 SKQB 375, refd to. [para. 18].

Old North State Brewing Co. v. Newlands Services Inc., [1997] B.C.T.C. Uned. G71; 47 B.C.L.R.(3d) 254 (S.C.), refd to. [para. 20].

Pompey (Z.I.) Industrie et al. v. Ecu-Line N.V. et al., [2003] 1 S.C.R. 450; 303 N.R. 201; 2003 SCC 27, refd to. [para. 22].

Hudye Farms Inc. v. Canadian Wheat Board (2011), 377 Sask.R. 146; 528 W.A.C. 146; 2011 SKCA 137, refd to. [para. 23].

Barber et al. v. Height of Excellence Financial Planning Group Inc. et al. (2001), 213 Sask.R. 302; 260 W.A.C. 302; 2001 SKCA 135, refd to. [para. 31].

Yara Belle Plaine Inc. v. Ingersoll- Rand Co. et al., [2014] 11 W.W.R. 140; 453 Sask.R. 79; 2014 SKQB 254, refd to. [para. 32].

Walling v. Walling (2007), 294 Sask.R. 256; 2007 SKQB 43 (Fam. Div.), refd to. [para. 47].

Morton et al. v. Asper et al. (1988), 55 Man.R.(2d) 61 (Q.B.), refd to. [para. 63].

Chappelle v. Watt, [1947] 1 W.W.R. 349 (Alta. S.C.), affd. [1947] 2 W.W.R. 240 (Alta. C.A.), refd to. [para. 64].

Seidel v. Telus Communications Inc., [2011] 1 S.C.R. 531; 412 N.R. 195; 301 B.C.A.C. 1; 510 W.A.C. 1; 2011 SCC 15, refd to. [para. 65].

Counsel:

Deron A. Kuski, Q.C., for the plaintiffs;

Kimberly D. Visram, for the defendants.

These applications were heard by Gunn, J., of the Saskatchewan Court of Queen's Bench, Judicial Centre of Regina, who delivered the following judgment on July 15, 2015.