IN THE SUPREME COURT OF BRITISH COLUMBIA
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Citation: |
Imagis Technologies v. Red Herring et al., |
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2003 BCSC 366 |
Date: 20030312
Docket: S025040
Registry: Vancouver
Between:
Imagis Technologies Inc.
Plaintiff
And
Red Herring Communications, Inc.
and Christopher Byron
Defendants
Before: The Honourable Mr. Justice Pitfield
REASONS FOR JUDGMENT
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Counsel for the Plaintiff: |
Howard Shapray, Q.C. |
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Counsel for the Defendants: |
David F. Sutherland |
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Date and Place of Hearing: |
February 20, 21, 2003 |
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Vancouver, B.C. |
[1] At the close of submissions by counsel, I dismissed the defendants’ application for a stay of the plaintiff’s action based on the claim that British Columbia was not the proper forum for the plaintiff’s action. I advised the parties these written reasons would follow.
[2]
Imagis is a public company incorporated in British Columbia. Its
shares trade on the TSX Venture Exchange and on the “Over the Counter Bulletin
Board”
in the
[3] Red Herring is a California company which publishes a magazine in print form and on the Internet. The magazine is principally concerned with business and financial topics of interest to the technology sector. Byron is a freelance writer who resides in the State of Connecticut.
[4] The Imagis statement of claim alleges that Byron wrote, and Red Herring published, an article that defamed Imagis. The defendants entered an appearance in the action on October 9, 2002 and filed a statement of defence directed at the issue of jurisdiction as well as the merits of the case on October 23, 2002. The defence and a demand for the production of documents were delivered to Imagis that same date. Imagis filed a reply to the defence on October 31, 2002. Red Herring and Byron filed their application for a stay on November 8, 2002.
[5] The defendants’ application for a stay was based on Rules 14(6)(c) and (8) which provide as follows:
(6) Where a person served with an originating process has not entered an appearance and alleges that
(a) the process is invalid or has expired,
(b) the purported service of the process was invalid, or
whether or not the person has entered an appearance, alleges that
(c) the court has no jurisdiction over him or her in the proceeding or should decline jurisdiction,
the person may apply to the court for a declaration to that effect.
...
(8) an application made under Rule 13(10) or subrule (6) of this rule does not constitute acceptance of the jurisdiction of the court.
[6] While Red Herring and Byron do not allege that the court lacks jurisdiction simpliciter, they say a proper consideration of the factors relevant in the determination of forum non conveniens leads to the conclusion that British Columbia is not the appropriate forum in which to conduct the litigation. They say the action should have been commenced in either the State of California or New York where Red Herring has its offices, or in the State of Connecticut where Byron resides.
[7] Imagis says the defendants’ application should be dismissed for the reason that by entering an appearance, filing and serving a defence, and serving a demand for the production of documents, the defendants attorned to the jurisdiction of this court. In the alternative, Imagis says the allegedly defamatory statements were published in British Columbia, Imagis has suffered damage in British Columbia, and it should not be deprived of its right to bring an action based on the tort of defamation in this court.
[8] In my opinion, Red Herring and Byron attorned to the jurisdiction of this court and their application must be dismissed. In that regard, the law in British Columbia was settled by the Court of Appeal in Mid-Ohio Imported Car Co. v. Tri-K Investments Ltd. (1995), 13 B.C.L.R. (3d) 41. Because of Rule 14(8), a party who challenges the assumption of jurisdiction by this court does not attorn to its jurisdiction upon filing an appearance. However, in the absence of duress, any conduct in an action for purposes other than challenging jurisdiction will be regarded as voluntary acceptance of the court’s jurisdiction.
[9] In this case, the filing of an appearance followed by the filing of an exhaustive statement of defence directed at jurisdiction and the merits, and the subsequent delivery of the defence and a demand for the discovery and production of documents to the plaintiff, resulted in acceptance of this court’s jurisdiction in the action. Attornment has not been avoided because the defendants pleaded a challenge to the assumption of jurisdiction in the defence or because counsel for the defendants advised Imagis upon delivery of the defence and demand for production that it intended to bring the Rule 14(6)(c) application. The defendants pleaded to the merits independently of the issue of jurisdiction and not as an alternative defence. In that regard, the defendants pleaded that the statements complained of were not defamatory, but if they were, publication occurred with the consent of Imagis. Alternatively, the statements were fair comment on a matter of public interest, made with the protection of qualified privilege, or true. The prayer for relief sought dismissal of the action with special costs, or in the alternative, increased costs, or, in the further alternative, costs on an elevated scale.
[10] In relation to attornment, conduct supersedes intention. By taking the steps they did, the defendants voluntarily accepted the jurisdiction of this court. While that is sufficient to dispose of the application, I would have concluded that the defendants’ application should be dismissed in any event.
[11] A non-resident defendant served ex juris by a plaintiff who relies on Rule 13 may challenge the jurisdiction of a British Columbia court on either of two bases. The defendant may assert that service ex juris is not authorized or that the principle of forum non conveniens favours some other jurisdiction.
[12] With respect to the propriety of service ex juris, Rule 13(10) provides as follows:
(10) Application may be made to set aside service of an originating process or other document served outside British Columbia without entering an appearance, and if it appears that service should not have been made outside British Columbia, the court may
(a) set aside service of the originating process or other document, and
(b) order the person initiating the proceeding to pay the costs of the applicant as special costs.
[13] In the event a defendant asserts that the court should not assume jurisdiction by means of service ex juris, the onus is on the plaintiff to prove, on a balance of probabilities, that the court can assume jurisdiction: Bushell & T&N, plc (1992), 92 D.L.R. (4th) 228 (B.C.C.A.). Even if the threshold test imposed by Rule 13 is satisfied, the plaintiff is still required to persuade the court that “a reasonable measure of fairness and justice sufficient to meet the reasonable expectations of the national and international legal communities will be preserved if the court exercises jurisdiction”: Bushell, supra.
[14] In context, the question to be determined is whether the court can lawfully assume jurisdiction. In that regard, a British Columbia court can assume jurisdiction when there is a “real and substantial connection between the court and the defendant or the subject matter of the litigation”: Furlan v. Shell Oil Co., 2000 BCCA 404.
[15] If the plaintiff has established that the court can assume jurisdiction or that issue is not in dispute, the onus is on the defendant applicant to persuade the court that it should exercise its discretion and refuse jurisdiction on the basis of forum non conveniens: Bushell, supra.
[16] In the present case, the defendants do not dispute that the Imagis action is founded on a tort committed in British Columbia or that the plaintiff may effect service ex juris without leave by virtue of Rule 13(1)(h) of the Rules of Court. That being the case, the defendants have conceded jurisdiction simpliciter. However, the defendants say that the court should exercise its discretion to decline jurisdiction in favour of New York, Connecticut or California in accordance with the doctrine of forum non conveniens, principally for the reason that any judgment Imagis may obtain in British Columbia will not be enforceable in any of those states, a point I will address in due course.
[17] In Stern v. Dove Audio Inc., [1994] B.C.J. No. 863 (S.C.), Low J., as he then was, described the factors the court should consider when exercising the discretion conferred by Rule 14(6)(c) to stay an action on the basis of forum non conveniens as follows:
1. Where each party resides;
2. Where each party carries on business;
3. Where the cause of action arose;
4. Where the loss or damage occurred;
5. Any juridical advantage to the plaintiff in the jurisdiction of suit;
6. Any juridical disadvantage to the defendant in the jurisdiction of suit;
7. Convenience or inconvenience to potential witnesses;
8. Cost of conducting the litigation in the jurisdiction of suit;
9. Applicable substantive law;
10. Difficulty and cost of proving foreign law, if necessary; and
11. Whether there are parallel proceedings in any other jurisdiction.
[18] Imagis resides in British Columbia where it is incorporated and has its head office, and where meetings of its directors are held. It employs approximately 35 individuals at its development office in Victoria. Although the chairman of the board resides in Dallas, Texas, the president and chief executive officer resides in Vancouver as do the corporate secretary and two other directors. The remaining director resides in Toronto. Its solicitors are based in Vancouver as is the branch of the Bank of Montreal with which it deals. Its transfer agent and auditors are also based in Vancouver.
[19]
The
evidence on the application indicates that Imagis has
customers in
[20] As I have previously stated, Red Herring resides in California. Byron resides in Connecticut. There is no evidence on this application to suggest that Imagis has any business or financial relationship with any party in Connecticut where Byron resides, or in New York where Red Herring appears to maintain an office. The connection between the defendants and British Columbia may be limited, but it is nonetheless real in that the magazine “Red Herring” is distributed and sold in the province.
[21] In so far as residence and place of business are concerned, British Columbia is the preferred jurisdiction for the conduct of this litigation.
[22] The cause of action on which Imagis sues arose in British Columbia. “Red Herring” was distributed and sold in British Columbia. The allegedly defamatory statements therein were repeated and republished by the Vancouver Sun newspaper, a Vancouver publication known as Stockwatch, and by the National Post, another Canadian newspaper circulated in British Columbia. The fact of publication in British Columbia means that if the published statements were defamatory, there is a cause of action on which to proceed in British Columbia, notwithstanding that separate causes of action may have arisen in other jurisdictions by virtue of publication in those jurisdictions.
[23] If the statements were defamatory, Imagis may have sustained loss or damage in British Columbia, a factor that favours an action being pursued in this court. The evidence on this application indicates that Imagis has a reputation with customers as well as regulatory and financial institutions in the province. While it may also have a reputation with customers and financial or regulatory institutions in other jurisdictions, there is no evidence to suggest that such other reputations are disproportionately more significant than its reputation in British Columbia.
[24] The fact of publication in British Columbia and the claim that Imagis suffered damage here favour British Columbia as the forum conveniens.
[25] There is a juridical advantage to Imagis in this jurisdiction and a corresponding juridical disadvantage to Red Herring and Byron in connection with the British Columbia action. The advantage is that once Imagis has proved a statement to be defamatory, the onus shifts to the defendants, Red Herring and Byron, to show that they are not liable by reference to one or more of the defences of justification, fair comment or qualified privilege. Red Herring and Byron claim that in California, Connecticut and New York, Imagis bears the burden of proving, on a balance of probabilities, fault and malice on the part of the defendants.
[26]
It may
be easier for Imagis to make its case in British Columbia than
in any of California, Connecticut, or New York. That fact
does not mean that Imagis should be obliged to sue in
a jurisdiction where the defendants reside in order to permit the defendants to
avail themselves of law more favourable to their position than the law that
applies in
[27] To the extent the convenience of witnesses is a factor in the consideration of this application, once again, British Columbia is the favoured jurisdiction. The fact of publication will be proved by witnesses in British Columbia. Imagis will be obliged to call witnesses resident in British Columbia to prove loss or damage in the event it is able to persuade the court that the statements complained of were defamatory. While it is true that the defendants will be obliged to attend any trial in British Columbia, that is a consequence that naturally flows from their choice to carry on a portion of their business in this province.
[28] There is insufficient evidence to indicate that the cost of litigating this claim in British Columbia will be more expensive than the cost of litigating in other possible jurisdictions. Indeed, there is some evidence that the contrary is true.
[29] Finally, there is no reason to prove foreign law and there are no parallel proceedings in any foreign jurisdiction.
[30] Having regard for all the circumstances and the criteria enunciated in Stern, there is every reason for Imagis to bring its application in British Columbia and to refrain from bringing it anywhere else. Imagis claims that a defamatory statement was published by the defendants in British Columbia where it has a reputation to protect. The protection of reputation is the very thing upon which a defamation action is founded. Both by virtue of the defendants’ connection with British Columbia where the magazine is sold, and the plaintiff’s connection with, and reputation in, British Columbia, this province is the forum in which the action should be pursued.
[31] To borrow from the judgment of Sopinka J. in Amchem Products Inc. v. British Columbia (Worker’s Compensation Board) (1993), 77 B.C.L.R. (2d) 62 at 86 (S.C.C.), British Columbia is the forum that has, on the basis of the relevant factors, the closest connection with the action and the parties. That being the case, the court must determine whether there is another forum that is clearly more appropriate in which to bring the action. The onus is on the applicant who opposes the assumption of jurisdiction by this court to adduce evidence that would identify such other jurisdiction. That, the defendants have not done.
[32] It remains to consider the import of the defendants’ argument in respect of enforceability.
[33]
I will
assume there are differences in the substantive law of defamation as between British
Columbia and any
jurisdiction in the United Stated in which Imagis might
possibly have commenced a defamation action against the defendants. To
the extent there are differences, the enforceability of any judgment Imagis might obtain could be compromised. However,
I
am not persuaded by the law that has been cited to me that an inability to
enforce the judgment in the
[34]
It may
be, as the defendants suggest, that a
[35] Regardless, where it is alleged that a defamatory statement was published in British Columbia and a plaintiff has a reputation to protect in the province, the plaintiff is at liberty to decide whether it wishes to pursue judgment in this jurisdiction in order to have the benefit of a finding in its favour, whether or not any monetary damages may be recovered as a consequence of that judgment. Frequently, financial compensation is but one benefit to be derived by a plaintiff from judgment in a defamation action.
[36] The defendants’ argument in relation to enforceability is problematic. The fact of its assertion suggests that the defendants do not intend to discharge any judgment that may be obtained in this jurisdiction where they have chosen to carry on business. Counsel on their behalf says that is not the case and the defendants will respect any judgment Imagis might obtain. In those circumstances, the issue of enforceability is irrelevant except to the extent that it amounts to an assertion that a plaintiff should be obliged to sue in a jurisdiction that has a connection to the cause of action where the law is most favourable to the defendants rather than in a jurisdiction that has a connection with the cause of action where the law is most favourable to the plaintiff. That proposition is untenable.
[37]
I am
not persuaded that enforceability should be a factor in the context of forum
non conveniens. The defendants’
submission is based on the decision of the Ontario Court of Appeal in Muscutt v. Courcelles,
[2002] O.J. No. 2128. In Muscutt,
the court was concerned with the question of whether the Ontario court could
assume jurisdiction in an action naming a defendant resident in another province
or
another country. The court concluded that enforcement should be a factor
in deciding whether the court could assume jurisdiction in respect of a
defendant who was not a resident of
Very often there is more than one forum capable of assuming jurisdiction and it is necessary to determine where the action should be litigated. As Sopinka J. explained in Amchem, supra, at p. 912, “frequently there is no single forum that is clearly the most convenient or appropriate for the trial of the action but rather several which are equally suitable alternatives.” When more than one forum is capable of assuming jurisdiction, the most appropriate forum is determined through the forum non conveniens doctrine, which allows a court to decline to exercise its jurisdiction on the ground that there is another forum more appropriate to entertain the action.
[38] In Muscutt, the court described three ways in which jurisdiction could be asserted against an out-of-jurisdiction defendant: presence-based jurisdiction derived from the fact the defendant was served in the jurisdiction; consent-based jurisdiction derived from the defendant’s consent to be sued in, or attornment to, the jurisdiction; and assumed jurisdiction initiated by service of process outside the jurisdiction of the court. The court cited Morguard Investments Ltd. v. DeSavoye, [1990] 3 S.C.R. 1077 as support for the proposition that while the fact damage was sustained in the jurisdiction was material in relation to jurisdiction, there was a need for a real and substantial connection of the defendant or the action to the jurisdiction and a court considering the question of jurisdiction should be mindful of the need for order, fairness and jurisdictional restraint.
[39] The court observed that a real and substantial connection between a defendant and the jurisdiction might be demonstrated on a narrow basis by the fact that the defendant, through activity in the jurisdiction, voluntarily submitted to the risk of litigation in the jurisdiction, or on a broader basis, by reference to fairness from the perspective of both the plaintiff and defendant.
[40] With respect to the latter point, the court endorsed the view that connection either between the forum and the defendant or between the forum and the subject matter of the action should be a requirement for the assumption of jurisdiction. In that regard, the views expressed in Muscutt are consistent with the views of the British Columbia Court of Appeal in Furlan, supra.
[41] Muscutt provides a very helpful compendium of the factors that might be taken into account in assessing the sufficiency of the connection required in order to warrant the assumption of jurisdiction. The factors were described as the following: the connection between the forum and the plaintiff’s claim; the connection between the forum and the defendant; unfairness to the defendant in assuming jurisdiction; unfairness to the plaintiff in not assuming jurisdiction; the involvement of other parties to the suit; the court’s willingness to recognize and enforce an extra-provincial judgment rendered on the same jurisdictional basis; whether the case is inter-provincial or international in nature; and comity and the standards of jurisdiction, recognition and enforcement prevailing elsewhere.
[42] Of the last factor, the court said the following at ¶102:
One
aspect of comity is that in fashioning jurisdictional rules, courts should
consider the standards of jurisdiction, recognition and enforcement that
prevail elsewhere. In interprovincial cases, this
consideration is unnecessary, since the same standard necessarily applies to
assumed jurisdiction, recognition and enforcement within
[43] The defendants adduced no evidence to suggest that any of California, New York or Connecticut would not assume jurisdiction in an action naming a Canadian defendant who had caused damage when doing business in one of those states. That being the case, it is unlikely that any judgment obtained in British Columbia would not be recognized in any of those states as having been rendered by a court properly exercising its jurisdiction.
[44] The residual issue is that of enforcement which brings me full circle. I am not persuaded that any judgment obtained by Imagis would necessarily be unenforceable in any of California, New York, or Connecticut and Imagis has reason for wanting to obtain a judgment in British Columbia, whether or not it is enforceable elsewhere. In the circumstances, a possible limitation on enforcement is not a factor that should cause the court to conclude that it cannot assume jurisdiction in relation to the defendants. Once the court has concluded it can assume jurisdiction, enforcement of the judgment is not a factor to be considered again in the context of forum non conveniens.
[45] The defendants’ application is dismissed. Imagis is entitled to the costs of the application in any event of the cause to be paid forthwith following taxation.
“I.H. Pitfield, J.”
The Honourable Mr. Justice I.H. Pitfield