Loat v. Howarth et al., 2011 ONCA 509

• Jurisdiction: Ontario
• Judge: O'Connor, A.C.J.O., Cronk and Rouleau, JJ.A.
• Court: Court of Appeal (Ontario)
• Citation: 2011 ONCA 509,(2011), 282 O.A.C. 264 (CA)
• Date: 05 July 2011

Loat v. Howarth (2011), 282 O.A.C. 264 (CA)

MLB headnote and full text

Temp. Cite: [2011] O.A.C. TBEd. JL.021

David Loat (appellant/respondent by cross-appeal) v. Andrew Howarth, Storetech Solutions Inc. and Storetech Limited (respondents/appellants by cross-appeal)

(C53325; 2011 ONCA 509)

Indexed As: Loat v. Howarth et al.

Ontario Court of Appeal

O'Connor, A.C.J.O., Cronk and Rouleau, JJ.A.

July 12, 2011.

Summary:

The plaintiff was a former director, officer and employee of Storetech Solutions Inc. ("Storetech Ontario") and a minority shareholder of Storetech Limited ("Storetech UK"). The Storetech companies were founded by Howarth. The plaintiff had entered a Service Agreement which stipulated that the Agreement was governed by the laws of the Province of Ontario and "the parties agree to submit to the non-exclusive jurisdiction of the courts of the Province of Ontario in relation to any claim or matter arising under this Agreement". A Shareholders' Agreement also contained governing law and forum selection clauses which provided that any disputes "arising out of or in connection with this Agreement" were to be resolved exclusively in England under English law. Storetech Ontario terminated the plaintiff's employment. The plaintiff commenced an action in Ontario against Howarth, Storetech Ontario and Storetech UK, claiming various relief. The defendants defended the Ontario action and counterclaimed against the plaintiff. The plaintiff moved for partial summary judgment in relation to his claims for unpaid wages and termination pay. The defendants brought a cross-motion seeking leave to amend their pleading to invoke the forum selection clause in the Shareholders' Agreement and to dismiss or stay the Ontario action by reason of that clause.

The Ontario Superior Court of Justice, in a decision reported at [2011] O.T.C. Uned. 460, dismissed the plaintiff's motion for partial summary judgment. The motions judge granted the defendants' stay motion, directing that the Ontario action be stayed "to permit the [p]laintiff to pursue all relief claimed if so advised in the Courts of England". The motions judge, in a decision reported at [2011] O.T.C. Uned. 1558, declined to award any costs in respect of either motion. The plaintiff appealed the stay order and the denial of partial summary judgment on his unpaid wages claim. The defendants cross-appealed from the refusal to award them their costs of both motions.

The Ontario Court of Appeal allowed the appeal in part. The court dismissed the plaintiff's challenge to the dismissal of his partial summary judgment motion. However, the court set aside the stay order. Given the disposition of the appeal, the Ontario action would proceed to trial. It was appropriate that the costs of the motions before the motions judge be addressed by the judge presiding at the trial.

Conflict of Laws - Topic 7286

Contracts - Jurisdiction - Choice of forum by parties - The plaintiff was a former director, officer and employee of Storetech Solutions Inc. ("Storetech Ontario") and a minority shareholder of Storetech Limited ("Storetech UK") - The Storetech companies were founded by Howarth - The plaintiff had entered a Service Agreement, which stipulated that the Agreement was governed by the laws of the Province of Ontario and "the parties agree to submit to the non-exclusive jurisdiction of the courts of the Province of Ontario in relation to any claim or matter arising under this Agreement" - A Shareholders' Agreement also contained governing law and forum selection clauses which provided that any disputes "arising out of or in connection with this Agreement" were to be resolved exclusively in England under English law - Storetech Ontario terminated the plaintiff's employment - The plaintiff brought an action in Ontario against Howarth, Storetech Ontario and Storetech UK, claiming various relief - The defendants defended the Ontario action and counterclaimed against the plaintiff - The plaintiff moved for partial summary judgment in relation to his claims for unpaid wages and termination pay - The defendants moved to dismiss or stay the Ontario action by reason of the forum selection clause in the Shareholders' Agreement - The motions judge stayed the Ontario action "to permit the [p]laintiff to pursue all relief claimed if so advised in the Courts of England" - The Ontario Court of Appeal set aside the stay order - The motions judge failed to address the implications of the forum selection clause in the Service Agreement and the resultant contractual attornment to Ontario's non-exclusive jurisdiction over disputes arising from the plaintiff's employment relationship with Storetech Ontario - The plaintiff's claims were focused primarily on the incidents of his employment with Storetech Ontario and the termination of his relationship with the Storetech companies - Those matters clearly engaged the Service Agreement, even if the Shareholders' Agreement was also implicated in connection with some issues - The defendants had also attorned to Ontario's jurisdiction over the plaintiffs' claims by defending the Ontario action on the merits without invoking the forum selection clause in the Shareholders' Agreement - Moreover, the defendants advanced their own claims in the Ontario action by initiating a counterclaim and they delayed for almost one year after the commencement of the Ontario action before moving to amend their pleading to rely on the forum selection clause in the Shareholders' Agreement - The forum selection clause in the Shareholders' Agreement did not operate to preclude the Ontario action - See paragraphs 25 to 42.

Conflict of Laws - Topic 9284

Practice - Stay of proceedings - Where court lacks or declines jurisdiction - [See Conflict of Laws - Topic 7286 ].

Practice - Topic 5209

Trials - General - Trial of issues directed by court - The plaintiff appealed from the dismissal of his application for partial summary judgment - He argued that there was no genuine factual issue requiring a trial in respect of his claim for unpaid wages - The Ontario Court of Appeal dismissed this part of the plaintiff's appeal - The plaintiff's entitlement to unpaid wages raised a genuine issue requiring a trial - Many of the material facts were disputed and resolution of the issue would require credibility based findings based on viva voce evidence - The motions judge did not err in failing to order or conduct the trial of an issue to resolve the unpaid wages claim - The decision to order or conduct the trial of an issue was a discretionary one - The defences raised to the claim involved wide-ranging factual issues implicating both a Shareholders' Agreement and a Service Agreement, in the context of the entirety of the parties' commercial business relationship - In those circumstances, it was well within the motions judge's discretion to decline to direct or conduct the trial of an issue on the unpaid wages claim - See paragraphs 18 to 24.

Practice - Topic 5708

Judgments and orders - Summary judgments - Bar to application - Existence of issue to be tried - [See Practice - Topic 5209 ].

Cases Noticed:

Sugar v. Megawheels Technologies Inc., [2006] O.T.C. 1146; 2006 CanLII 37880 (Sup. Ct.), refd to. [para. 29].

Blue Note Mining Inc. v. CanZinco Ltd. et al., [2008] O.T.C. Uned. I0; 297 D.L.R.(4th) 640 (Sup. Ct.), refd to. [para. 29].

Expedition Helicopters Inc. v. Honeywell Inc. (2010), 262 O.A.C. 195; 100 O.R.(3d) 241 (C.A.), refd to. [para. 31].

Momentous.ca Corp. et al. v. Canadian American Association of Professional Baseball Ltd. et al. (2010), 270 O.A.C. 36; 103 O.R.(3d) 467 (C.A.), refd to. [para. 31].

Stubbs v. ATS Applied Tech Systems Inc. et al. (2010), 272 O.A.C. 386 (C.A.), refd to. [para. 31].

Counsel:

Elliot S. Birnboim and Alastair J. McNish, for the appellant;

Owen Rees and Justin Safayeni, for the respondents.

This appeal and cross-appeal were heard on July 5, 2011, before O'Connor, A.C.J.O., Cronk and Rouleau, JJ.A., of the Ontario Court of Appeal. The following judgment of the Court of Appeal was released on July 12, 2011.