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David Title v. Canadian Asset Based Lending, 2011 ONSC 922


CITATION: David Title v. Canadian Asset Based Lending

                                                                                 Enterprise (Cable) Inc.,et al,  2011 ONSC 922

COURT FILE NO.:  CV-10-401688

DATE:  20110209






RE:                     DAVID TITLE, plaintiff






BEFORE:            Justice Newbould


COUNSEL:         Jeffery A.L.Kriwetz for, Canadian Asset Based Lending Enterprise (Cable) Inc.  and Allen Rubin, defendants/applicants


                              François Sauvageau for7178255 Canada Inc., 9208-9945 Québec Inc., Michael Lieberman, Fred Lieberman and Joe Lieberman, defendants/applicants


                              Howard B. Borlack for Druker & Associates Inc., defendant/applicant


                              Michael Gayed for the plaintiff/respondent




DATE HEARD:   February 1, 2011






[1]          The defendants move to have the action dismissed on the grounds that Ontario does not have jurisdiction over the claims or, in the alternative, that the province of Quebec is the more appropriate forum for this action. The defendant Druker & Associates Inc., a trustee in bankruptcy, also seeks an order dismissing the action on the basis that the plaintiff has failed to obtain leave prior to commencing the action required by section 215 of the Bankruptcy and Insolvency Act.  The personal defendants are all residents in Quebec.  The corporate defendants all have their head offices in Quebec.  Mr. Druker carries on his business as a trustee in bankruptcy in Quebec.

[2]          In this action commenced on April 23, 2010, the plaintiff, an Ontario resident, claims that each of the defendants conspired to take fraudulent bankruptcy proceedings with respect to two numbered companies 6048668 Canada Inc. ("Sistek Data") and 2924218 Canada Inc. ("Premier Impressions") with the intention to cause damage to him.  The plaintiff owned one-third of the shares of Sistek Data and was its president and a director.  Fred Lieberman and Joe Lieberman each owned one-third of the shares of Sistek Data and all of Premier Impressions and were also directors of each.

[3]          The plaintiff previously commenced an action in the Superior Court of Ontario, Commercial List, on February 3, 2009 against Fred and Joe Lieberman, Sistek Data and Premier Impressions in which claims for breach of contract and oppression were made and various forms of relief were sought, including a claim to have one-third of the shares of Premier Impressions issued to him,.  The defendants in this first action did not initially defend it and the plaintiff scheduled a motion for partial default judgment returnable May 7, 2009.  The motion also requested the appointment of a receiver of Sistek Data as Canadian Asset Based Lending Enterprise (Cable) Inc. ("Cable"), a lender to Sistek Data, was entitled to enforce its security on the following day. As a courtesy, two days prior to the motion, on May 5, 2009, the plaintiff e-mailed the notice of motion to the defendants’ then counsel Andrew McKenna of Ottawa.

[4]          On the following day, May 6, 2009, without any notice to, or participation by, the plaintiff, Sistek Data and Premiere Impressions made assignments in bankruptcy.  Druker & Associates Inc.  ("Druker") was appointed trustee in bankruptcy.  Within three weeks 9208-9945 Quebec Inc. ("9208") purchased the assets of Sistek Data and Premier Impressions for $2.26 plus the assumption of Cable's debt.  9208 was a company formed by Michael Lieberman, the brother of Fred and Joe Lieberman. All three brothers are principals of 9208 and 7178255 Canada Inc. (“7178”). 7178 is now apparently running the business acquired by 9208 from the trustee.

[5]          In December 2008 the plaintiff and Fred and Joel Lieberman had retained Gordon Consulting to prepare a marketing plan for the sale of Sistek Data and Premier Impressions.  The marketing plan contained a great deal of financial information regarding the businesses provided to the consultants by Fred Lieberman.  It disclosed EBITDA of $863,593 in 2006, $690,199 in 2007 and $1,146,135 in 2008 and net income of $687,856 in 2006, $564,356 in 2007 and $645,005 in 2008.  The plaintiff asserts that the businesses were put into bankruptcy fraudulently and sold for far less than they were worth as result of the unlawful activities pleaded against the defendants.

[6]          On January 24, 2010, long after the bankruptcies of Sistek Data and Premier Impressions, Fred and Joel Lieberman delivered a statement of defence and counterclaim in the first action.  They pleaded, amongst other things, that the did everything they could to save Sistek Data And Premier Impressions from bankruptcy.  Thus they put in issue the legitimacy of the bankruptcies.

[7]          The plaintiff claims in the second action that all the defendants in various ways unlawfully participated in the bankruptcy proceedings leading to the sale of the businesses involved and that the acquiring corporations were able to benefit by obtaining the assets for nothing and collecting substantial receivables of the businesses outstanding at the time of the bankruptcies.

Jurisdiction Simpliciter

[8]          The factors to be considered for jurisdiction simpliciter are different and distinct from those to be considered for forum non conveniens.

[9]          In order for an Ontario court to assume jurisdiction over out of province defendants there must be be a real and substantial connection with Ontario.  See Van Breda v. Village Resorts Limited (2010), 98 O.R. (3d) 721 (C.A.) at para.109 in which Sharpe J.A. summarized the clarification and reformulation of the Muscutt test.

[10]      In this case, the claims made do not fall under rule 17.02 (excepting sub rules (h) and (o)) and thus there is no presumption of a real and substantial connection to Ontario. Although in his statement of claim the plaintiff asserted that there was a tort committed in Ontario, in argument Mr. Gayed conceded that there was no basis to claim that a tort had been committed in Ontario. In further written submissions, Mr. Gayed changed his position and said that Druker gave advice to Sistek Data which operated in Ontario and thus there was a tort committed in Ontario. I do not accept that. The advice of Druker, whatever it was, was given in Quebec.

[11]      It is necessary therefore to analyze the case to determine if there is a real and substantial connection with Ontario.  The core of the analysis rests upon the connection between Ontario and the plaintiffs claim and the defendants.  The remaining Muscutt considerations should not be treated as having independent factors having more or less equal weight when determining whether there is a real and substantial connection but as general legal principles that bear upon the analysis.  See Van Breda at para. 109.

[12]      The plaintiff at all material times has resided in Ontario.  When he was employed by Sistek Data he worked from his home in Toronto. The analysis, therefore, requires a consideration of the action and the connection by the defendants with  Ontario.

(a)   Michael Lieberman, Fred Lieberman, Joel Lieberman, 9208-9945 Quebec Inc. and 7178255 Canada Inc.

[13]      The Liebermans are brothers who reside in Montreal.  They are all involved in 9208 and 7178.  It is alleged that 9208 and 7178 wrongfully acquired the assets of the bankrupt corporations.

[14]      So far as Fred and Joel Lieberman are concerned, they have defended the first action and thus attorned to the jurisdiction of the Ontario court.  They have also made a counterclaim in action.  They, along with their brother Michael, are the principals of 9208 and 7178.  On his cross-examination on August 18, 2010, Fred Lieberman asserted that 9208 is not an operating company.

[15]      7178 operates under the trade name Sistek Data, which was formerly the trade name of the bankrupt 6048668 Canada Inc. Fred Lieberman is its president.  7178 sells its products throughout Canada.  It conducts business in Ontario and has a Toronto telephone number.  Its vice-president of sales resides in Ontario and works from his home.  The person responsible for inside sales resides in Ontario.  7178 has customers in Ontario.  Approximately 85% of the Sistek Data’s sales before it went bankrupt were to customers located in Toronto. On cross-examination Mr. Lieberman refused to disclose the head office of the current customers.  He undertook to find out the percentage of annual sales of 7178 to customers in Ontario, but no answer was provided.  In light of these refusals, it is a fair inference to be drawn that 7178 conducts a substantial business in Ontario.

[16]      I am satisfied that these defendants all have a real and substantial connection to Ontario.  Fred and Joel Lieberman are plaintiffs in a counterclaim against Mr. Title in the first Ontario action and have put in issue in that action the legitimacy of the bankruptcies of Sistek Data and Premier Impressions. 7178 conducts business in Ontario.  It acquired the assets of the old business from the trustee in bankruptcy in conjunction with 9208, both of which companies are controlled by the three Lieberman brothers.  Exactly what Michael Lieberman does in Ontario is not apparent.  However he incorporated 9208 one day before it made its bid to the trustee in bankruptcy to acquire the assets and it is alleged that he participated in the alleged conspiracy by which 9208 and 7178 acquired the assets of Sistek Data and Premiere Impressions from the trustee at an improvident price. One of the factors that may be considered is the involvement of other parties to the suit. In this case Michael Lieberman is a necessary party to the action against his brothers and his companies. The same applies to 9208.

(b)   Druker & Associates Inc.

[17]      Druker does no business in Ontario.  Its business is in Montreal where Mr. Druker resides.  The bankruptcy proceedings were conducted in Quebec.

[18]      It is asserted on behalf of the plaintiff that Druker carried on business in Ontario because it sent out notices of the bankruptcy to creditors of the bankrupt corporations that carried on business in Ontario.  I do not accept that.  The notices were sent from Quebec.

[19]      It is also asserted that it was foreseeable that the actions of the trustee would harm the plaintiff in Ontario. Reliance is placed on the statement of Sharpe J.A. in Muscutt v, Courcelles 2002 44957 (ON CA), (2002), 60 O.R. (3d) 20 at para. 83 in which he stated:

                        [83] Moran v. Pyle holds that conduct outside the territory may render the defendant subject to the jurisdiction of the forum where it was reasonably foreseeable that the defendant's conduct would result in harm within the jurisdiction.


[20]      Moran v. Pyle was concerned with a case in which a manufacturer made a product in one province and then put it into the normal channels of trade where it ended up in another province in which the plaintiff was harmed. This is not at all the situation with Druker and I would be very reluctant to give foreseeability a great deal of weight in analyzing whether Druker had a real and substantial connection to Ontario. The fact that the plaintiff was a shareholder and the president of Sistek Data over which Druker became the trustee in bankruptcy and resided in Ontario might have made it foreseeable that the alleged wrongdoing of Druker would harm the plaintiff in Ontario, but I would be reluctant on that basis alone to say Ontario has jurisdiction over Druker.

[21]      There is, however, in my view a connection between Druker and Ontario. The connection is that Druker has been sued for conspiring with other defendants who are properly party defendants to this action, and the facts pleaded against Druker are inextricably bound to the facts pleaded against these other defendants.

[22]      Mr. Druker met with Fred and Joel Lieberman prior to the bankruptcies to discuss strategy as to what to do with Sistek Data and Premier Impressions in light of their then existing circumstances, including the motion brought by the plaintiff to appoint a receiver of Sistek Data and the opposition to that appointment by Cable, the lender to that company. Mr. Druker advised that bankruptcy was a viable option.

[23]      Eight days after the bankruptcies on May 6, 2009, Druker sent out notices requesting tenders for the sale of the assets of the two bankrupt corporations. The plaintiff’s evidence is that the notices were sent to three auctioneers, to 9208, the company recently incorporated and controlled by the three Liebermans, and to the plaintiff. There must have been some communication between Druker and someone on behalf of 9208 before this occurred. The plaintiff’s evidence is that he attempted to contact the three auctioneers. The phone number of one was not in service, and the other two informed the plaintiff they had nothing to do with computer supplies. The tender by 9208 was for $1 plus tax for each company, for a total of $2.26, and assumption of the Cable debt. The receivables of the two companies were a little over $1 million which the plaintiff alleges 9208 obtained for nothing. The plaintiff alleges Druker failed to properly market the companies.

[24]      The plaintiff alleges that the amounts owed by the two bankrupt companies were overstated in the notices of bankruptcy sent out by Druker. His evidence is that he contacted a handful of Sistek Data’s unsecured creditors and learned that the amounts said to be owing to these creditors were less than 10% of the amounts listed for those creditors in the bankruptcy notices. He suspects that other listed debts will have been similarly overstated. He alleges Druker did not properly investigate the matter.

[25]      In these circumstances it would make no sense to have the action proceed against the Lieberman interests in Ontario and against Druker in Quebec. In light of the allegations, Druker is a proper and necessary party to the action against the Liebermans and their corporations 7178 and 9208. The evidence of all of these parties will be required to deal with the allegations. That will be true for both the plaintiff and Druker and the other defendants as well.

[26]      To require the plaintiff to sue Druker in Quebec while suing the others in Ontario would not be fair to the plaintiff. I do not consider Druker to be unfairly treated in this regard, at least not so much as the plaintiff. The plaintiff has sworn that he cannot afford to retain new counsel in Quebec and get such new counsel up to speed and prosecute the action in Quebec. He has sworn that his dismissal from employment, which is the subject of the first action in Ontario, has caused a financial hardship which he has not yet overcome. While he was cross-examined on his affidavit, he was not cross-examined on these allegations at all.

[27]      For the reasons given, I conclude that Druker has a real and substantial connection to Ontario for the purposes of this action and that Ontario has jurisdiction over Druker

[28]      Even if that were not the case, in my view Druker has attorned to the jurisdiction of this Court. In its motion, Druker has requested (1) that the action be dismissed and (2) in the alternative, and if necessary, an order staying the action and requiring the plaintiff to seek a remedy under sections 37 and 215 of the BIA. In its factum, Druker contends that the action should be dismissed or stayed on the basis (i) that the plaintiff has failed to obtain leave of the court prior to commencing the action as required by section 215 of the BIA, (ii) Ontario lacks jurisdiction and (iii) even if Ontario had jurisdiction it should decline to assume it on the basis of forum non conveniens.

[29]      Section 37 of the BIA provides that a person aggrieved by an act of a trustee may apply to the court and the court may confirm, reverse or modify the act complained of. Section 215 of the BIA provides that no action lies against a trustee except by leave of the court. The plaintiff did not obtain leave before he commenced this action against Druker, who contends that as a result the action is a nullity and should be stayed. Druker relies on Re Pelee Motor Inn Ltd (no. 2) (1979), 30 C.B.R. (N.S.) 216 in which Henry J. stated that an action started against a trustee without leave was a nullity and that leave could not be obtained nunc pro tunc. This case was effectively overruled however in New Alger Mines Ltd. v. Thorne Riddell Inc. reflex, (1986), 54 O.R. (2d) 562 (C.A.) in which MacKinnon A.C.J.O. held that the predecessor section to section 215 of the BIA did not contain an absolute prohibition against a nunc pro tunc order. He stated further:

                        I conclude, accordingly, that the institution of the action against the trustee in bankruptcy was not a nullity and, depending on the facts, the interests of a trustee can be as well protected on an application for leave nunc pro tunc as on an application prior to the institution of proceedings.


[30]      To ask for an order staying the action against the trustee because leave was first not obtained under section 215 of the BIA is to ask the Ontario court to exercise jurisdiction over the case. Either the Ontario court has jurisdiction or it does not. If it does, it can make an order effectively enforcing section 215 including making an order nunc pro tunc permitting the action to succeed. If the Ontario court does not have jurisdiction over the action, there is no basis for it to make an order enforcing section 215 of the BIA.

[31]      In Sauer v. Canada (Attorney General) 2006 74 (ON SC), (2006), 79 O.R. (3d) 19, Ridley Australia sought to set aside service on the grounds that service was not authorized on it in Australia and that there was no real and substantial connection between it and the Ontario court. Alternatively Ridley Australia sought to strike out the statement of claim under rule 21.01 (1)(b) on the grounds that it disclosed no reasonable cause of action against it. Winkler J. (as he then was) held that by bringing the alternative motion Ridley Australia had attorned to the jurisdiction of the court. He stated:

                        [87] In respect of its alternative argument under rule 21.01(1)(b), Ridley Australia contended that it could advance such an argument without attorning to the jurisdiction of the court. I cannot accede to this proposition. Certain rules specifically permit a party to challenge jurisdiction without attornment to the court but such is not the case with respect to rule 21.01(1)(b). An argument based on this particular rule is, by logical extension, an engagement on the merits of the action, which, it is well settled, constitutes attornment to the jurisdiction of the court. As noted by Lang J.A. in M.J. Jones Inc. v. Kingsway General Insurance Co. 2004 6211 (ON CA), (2004), 72 O.R. (3d) 68, [2004] O.J. No. 3286 (C.A.), at paras. 19-20 and 22:


                                                         ... a foreign defendant ... may be taken to have attorned to Ontario's jurisdiction if it engages on the merits of the litigation. By engaging on the merits, such a defendant is seen to have consented to or submitted to Ontario's jurisdiction. In that case, such a defendant will be precluded from disputing jurisdiction simpliciter.


                                                         A foreign defendant is also precluded from contemporaneously disputing jurisdiction simpliciter and defending on the merits. Otherwise, litigants would incur unnecessary litigation costs in a claim which, as it may turn out, the court did not have the jurisdiction to determine in the first place.



                                                         Accordingly, it is well-accepted law that a foreign defendant that engages on the merits of the action will be taken to have "attorned" to the domestic court's jurisdiction. . . .


[32]      Druker contends that its motion is different from Sauer in that Druker has not sought to have the case determined on the merits. I do not see the distinction and frankly I am not sure what all is encompassed in the phrase “defending on the merits”. In Sauer, it was contended that the statement of claim disclosed no reasonable cause of action, which was a legal argument, and which Winkler J. said was by logical extension an engagement on the merits of the action. In our case, it was contended that leave was not granted under section 215 of the BIA and thus the action should be stayed. That to me is just as much an engagement on the merits as in Sauer.

[33]      In a very similar case, National Utility Service (Canada ) Ltd. v. Roseki Holdings Ltd. [2006] No. 5125 the defendant moved to set aside service in Ontario on jurisdictional grounds and also moved in the alternative to stay the action because it was statute-barred under the applicable limitation period. Brown J. held that the reasoning of Lang. J.A. in M.J. Jones Inc. v. Kingsway General Insurance Company and of Winkler J. in Sauer applied equally to the motion before him and that by raising the question of law of the limitation period, the defendant had engaged the merits of the action and thus had attorned to the jurisdiction of the Ontario court. In my opinion, raising section 215 of the BIA is as much an engagement of the merits of the action as raising the legal issues involved in Sauer and M.J. Jones.

[34]      To my mind, I would prefer to state the issue a little differently. The fundamental reason why in each case the foreign defendant was held to have attorned to the jurisdiction is that the defendant asked the court to assume jurisdiction over the case and to make an order dismissing the case on some ground other than on jurisdictional grounds. Saying as Druker does that by asking for an order under section 215 of the BIA it is not asking the Ontario court to engage the case on the merits is splitting hairs as to what the word “merits” encompasses and misses the point. Druker is asking the Court to assume jurisdiction to the extent necessary to enforce section 215 of the BIA. It is inconsistent to do that and at the same time assert that the Court has no jurisdiction over the case.

[35]      The fact that Druker requested the relief in the alternative in its notice of motion does not assist it. That argument was rejected in M.J. Jones and in Sauer. In the latter case, Winkler J. stated:

                        [88] The engagement on the merits renders the jurisdiction simpliciter argument of Ridley Australia moot. Similarly, although Ridley Australia attempted to preserve "conditional" status for its appearance before this court by arguing under rule 17.06 at the same time it was advancing the argument under rule 21.01(1)(b), as Lang J.A. notes, a foreign defendant is precluded from contemporaneously disputing jurisdiction while at the same time engaging jurisdiction by seeking a ruling in its favour on the merits. In my view, such a combined approach is akin to an unconditional appearance that negates the protections of rule 17.06 of the Rules of Civil Procedure.


[36]      In summary, in my view the Court should assume jurisdiction over Druker for the reasons earlier given and in any event Druker has attorned to the jurisdiction.

(c)   Cable and Allen Rubin

[37]      Cable is a corporation incorporated under the CBCA.  Its head office is in Montreal.  Allen Rubin resides in Montreal and is its president.  Cable is an asset based lender.  In 2004 it lent $500,000 to Sistek Data and Premier Impressions.  The plaintiff and his wife guaranteed the loan and a mortgage was registered against their home in Thornhill, Ontario.

[38]      In his affidavit, Mr. Rubin states that the principal place of business of Cable is in Montreal.  On cross-examination he acknowledged that Cable lends money outside of Quebec, which he said was less than 1% of its loans.  He refused, however, to provide information as to the number of loans Cable makes to companies or individuals in Ontario or the monetary value of those loans. It is the case that Cable took security over the plaintiff's property in Ontario to secure the loan to Sistek Data and Premier Impressions. I am asked to draw an inference that Cable does significant business in Ontario.  I think it a fair inference that Cable does business in Ontario, but it is an open question what the amount of its loans in Ontario is. 

[39]      The evidence establishes, therefore, that there is some connection between Cable and Ontario so far as the business of Cable is concerned.  Further, like Druker, there is a connection between Cable and Mr. Rubin in that they are defendants in this action with other defendants properly served with whom they are alleged to have conspired. 

[40]      The plaintiff alleges that Cable and Mr. Rubin conspired with the Liebermans in the steps taken that led to the bankruptcy and sale of the businesses.  There is evidence that they were close.  On January 29, 2009 Fred Lieberman e-mailed the plaintiff to say that he was meeting that day with Mr. Rubin to discuss selling the business to Mr. Rubin.  The plaintiff was dismissed by Sistek Data on February 16, 2009.  On March 26, 2009 Fred Lieberman e-mailed Mr. McKenna, the lawyer in Ottawa defending the first action started by the plaintiff, saying that Mr. McKenna should contact Mr. Rubin immediately as Mr. Rubin had some questions to ask him.  On March 27, 2009 Mr. Rubin asked Fred Lieberman to send a copy of the Cable loan agreement to Mr. McKenna.  Why Mr. Rubin was interested in the first action is not before me, but it would appear that he was not solely a disinterested by-stander.

[41]      On April 28, 2009 Cable issued to Sistek Data and Premier Impressions a notice of intention to enforce security with respect to its outstanding loans.  The notice was made under section 244(11) of the BIA and stated that Sistek Data and Premier Impressions were insolvent.  When and if the companies stopped paying the loan to Cable or what information Cable had to assert that the two companies were insolvent is not before me.  The plaintiff moved for default judgment in his first action and for the appointment of a receiver returnable on May 7, 2009, two days prior to a deadline to pay Cable, which led to the two companies filing for bankruptcy on May 6, 2009.  Three weeks later when 9208 purchased the businesses of Sistek Data and Premier Impressions for $2.26, 9208 assumed the Cable loan and in July 2009 Cable took security from Joel Lieberman for $900,000, which is some indication that it supported the business acquired by 9208.

[42]      In these circumstances it would make no sense to have the action proceed against the Lieberman interests in Ontario and against Cable and Mr. Rubin in Quebec. In light of the allegations, Cable and Mr. Rubin are proper and necessary parties to the action against the Liebermans and their corporations 7178 and 9208. The evidence of all of these parties will be required to deal with the allegations. That will be true for both the plaintiff and the other defendants as well.

(d)   Summary

[43]      For the reasons given, I conclude that Ontario has jurisdiction over all of the defendants in this action.

Forum non conveniens

[44]      The forum non conveniens test is a discretionary test. See Muscutt v, Courcelles 2002 44957 (ON CA), (2002), 60 O.R. (3d) 20 (C.A.) at para.43. As for the factors usually considered Sharpe J.A. in Muscutt stated:

                        [41] Courts have developed a list of several factors that may be considered in determining the most appropriate forum for the action, including the following:


-- the location of the majority of the parties

-- the location of key witnesses and evidence

-- contractual provisions that specify appliCable law or accord jurisdiction

--  the avoidance of a multiplicity of proceedings

-- the appliCable law and its weight in comparison to the factual questions   to be decided  

-- geographical factors suggesting the natural forum  

--whether declining jurisdiction would deprive the plaintiff of a legitimate juridical advantage available in the domestic court.


[45]      In considering these factors, the exercise is not mathematical. The court's exercise of its discretion to decline jurisdiction must be guided by the mandates of order and fairness, not a mechanical counting of contacts or connections. On a forum non conveniens motion, the standard to displace the plaintiff's chosen jurisdiction is high. In order for an Ontario judge to decline jurisdiction, the existence of a more appropriate forum must be clearly established to displace the forum selected by the plaintiff. The balancing of the relevant factors should aim to achieve the twin goals of efficiency and justice, including fairness to the parties. See Young v Tyco International of Canada Ltd. 2008 ONCA 709 , (2008), 92 O.R. (3d) 161 (C.A.) at paras. 28 to 30, per Laskin J.A. See also Van Breda at para. 148, in which Sharpe J.A. referred to the necessity of a moving party to establish that the foreign jurisdiction was clearly a more appropriate forum than Ontario.

[46]      The majority of the parties are located in Quebec. However the defendant 7178 operates in Ontario (6028 is not apparently an operating company), as does Cable to some extent. Druker does not operate in Ontario. However, Mr. Druker is a professional man and the hardship in travelling to Toronto would not be overly burdensome. He refused on cross-examination to disclose whether he had liability insurance, and the inference I draw is that he has, which is an alleviating factor. See Van Breda at para. 99.

[47]      Regarding witnesses, it is unclear at this stage who will be key witnesses.  Based upon the evidence before me, I cannot conclude that is more likely that a majority of the important witnesses will come from Quebec.

[48]      The plaintiff asserts that amounts said to have been owing by Sistek Data And Premier Impressions in the bankruptcy filings were considerably overstated and in his supplementary affidavit he described having spoken to five of these creditors, all of whom carry on business in Ontario, who provided him with information regarding what they were owed, which was less than 10% of the amounts indicated in the bankruptcy filings.  The plaintiff says he intends to call these and other creditors to establish what their true claims were. Nearly half of the creditors listed on the notice of bankruptcy are based in Ontario.  Whether it will be necessary to call these creditors may depend upon whether the defendants admit the true amounts that were owing to these creditors, but it is certainly foreseeable that such witnesses may need the be called.

[49]      The plaintiff also asserts that the trustees should have sent invitations to tender to a number of major corporations identified by him who may have had an interest in purchasing the assets from the trustee, including corporations who expressed an interest when the company was being marketed in late December 2008.  The evidence indicates that 18 of 20 of these prospective purchasers have their head offices in Ontario. Some of these persons may be called as witnesses although at this stage the plaintiff has not identified all of those who would say they would have been interested in the business.

[50]      The plaintiff also identified a large number of customers of Sistek Data and Premier Impressions with purchasing departments in Ontario.  He asserts that the Lieberman interests were able after the bankruptcy to collect a large amount of receivables from these customers, giving them a windfall based upon their purchase price of $2.26.  Whether any such witnesses will need to be called remains to be seen as it is not known what will be admitted as to the amounts collected.

[51]      The plaintiff obtained the file of the previous solicitor who defended the first action, Andrew McKenna, which includes advice given by him to Fred and Joe Lieberman. This was possible because the Liebermans waived their privilege due to evidence given by them in proceedings in that action. The plaintiff may need to call Mr. McKenna, who is an Ontario lawyer in Ottawa, regarding that advice as well as to establish conversations which he had with Mr. Rubin, some of which I have earlier referred to.

[52]      In his affidavit, Mr. Fred Lieberman said that the accountant for the companies who reside in practises in Montreal will very likely be called to testify, although as to what he did not the state.  He said the same thing about the companies’ lawyer who practises in Montreal, although he did not say whether privilege will be waived.  He also said that the large majority of employees for 9208 and 7178 reside and work in Montreal and that they will likely be called to testify.  On cross-examination he said that 9208 does not operate.  In argument, Mr. Sauvageau said that there were about 15 employees but the only one who likely would be called was the comptroller who could speak  to amounts owing by the companies that filed for bankruptcy.

[53]      Mr. Druker did not in his affidavit identify any persons whom he wishes to call as witnesses.  Mr. Borlack in his factum said that the key witnesses will be the parties, the majority of whom reside in Quebec.  Whether the parties are the only key witnesses remains to be seen, but at this stage it is quite foreseeable that several other persons may be key witnesses as well.

[54]      Cable points out that the lending agreement it had with Sistek Data and Premier Impressions provided that it was to be governed and interpreted in accordance with the laws of Quebec. The defendants assert that this factor favours Quebec as the convenient forum. I do not give much weight to this argument. I do not see in the statement of claim, even on the broad reading of it given by the defendants, any issue that would require an interpretation of any particular provision of the lending agreements. The defendants do not point to any particular provision of the lending agreements that will be material. Moreover, no evidence was led indicating any material differences in how the lending agreements would be interpreted under Quebec or Ontario law. Even if there were such an issue arising, it is not uncommon to have foreign law introduced as evidence at a trial in Ontario.

[55]      Cable and Druker point out that the plaintiff commenced proceedings in Quebec in June 2009 for a declaratory judgment against Cable and suggest that there will be a multiplicity of proceedings if the action against them is held in Ontario. However, the proceeding in Quebec was a request for a declaratory judgment discharging the mortgage that had been given by the plaintiff to Cable, and it has long been ended.

[56]      If this action is stayed and the plaintiff is required to sue in Quebec, it will result in a multiplicity of proceeding. There will be the first action by the plaintiff in Ontario with its counterclaim by Fred and Joel Lieberman, in which they have pled that they did all they could to avoid a bankruptcy of Sistek Data and Premier Impressions, and there will be the second action in Quebec in which the validity of the bankruptcy and the role of the Liebermans with the other defendants will be in issue. Such a multiplicity of proceedings should be avoided. The plaintiff says that he will request that the two actions be heard together in some fashion. While such a motion is not before me, it would appear to have merit as the preferable way for these two actions to proceed.

[57]      I do not think geographical factors suggest Quebec as a natural forum in this case. The distance between Toronto and Montreal is not great and it is common for people to travel back and forth without difficulty. It cannot be said that the majority of the witnesses will come from Quebec.

[58]      I conclude that the defendants have not met their onus of establishing that Quebec is clearly a more appropriate forum for this case to be heard.


[59]      The motions by the defendants are dismissed. The plaintiff is entitled to his costs. If costs cannot be agreed, the plaintiff may make brief written submissions with an outline of costs in accordance with the rules within 10 days and the defendants shall have 10 days to respond with brief written submissions.



Newbould J.



DATE:            February 9, 2011

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