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Naccarato v Brio Beverages Inc (1998) 57 Alta LR (3d) 206 (QB) BACKGROUND AND FACTS JOHNSTONE J.:-- The Plaintiff, Steven Louis Naccarato ("Naccarato"), has commenced an action against the Defendants, Brio Beverages Inc. ("Brio Beverages") and Brio Industries Inc. ("Brio Industries") for wrongful dismissal and breach of an Incentive Stock Option Agreement. Brio Industries is a publicly traded company incorporated in British Columbia and extra-provincially registered in Alberta. Brio Beverages is a wholly owned subsidiary of Brio Industries. As such both Brio Industries and Brio Beverages were served with a Statement of Claim in Alberta. Prior to May 31, 1994, Naccarato was a shareholder of 359198 Alberta Ltd. which wholly owned J.B. Foods Industries (Western) Inc. ("J.B. Foods"). J.B. Foods carried on the business of manufacturing and sale of juice and juice products in Alberta and elsewhere. Naccarato was the General Manager of J.B. Foods. On or about May 31, 1994, Brio Industries purchased all the outstanding shares of 359198 Alberta Ltd. and took over the operation of J.B. Foods. On or about June 13, 1994, Naccarato entered into a Letter Agreement with Brio Industries to act as General Manager of J.B. Foods. Naccarato was to report to the President of Brio Industries. The Letter Agreement in which Brio Industries hired Naccarato to act as General Manager of J.B. Foods was effective as at May 31, 1994. J.B. Foods changed its name to Brio Juices Inc. in 1995. On or about November 1, 1996, as a result of an amalgamation with Brio Beverages and Brio Juices (Holdings) Inc., it continued its operation under the name of Brio Beverages. Naccarato's salary was at all material times paid by Brio Beverages. Naccarato participated in the Brio Industries group health and benefits plan. Naccarato reported to and received direction from various officers of Brio Industries. These individuals were also officers of Brio Beverages. Naccarato entered into a Incentive Stock Option Agreement dated July 5, 1995 ("the Incentive Agreement") which was amended twice by way of two amending agreements dated April 18, 1996 and August 30, 1996 (collectively referred to as "the Amending Agreements"). The Incentive Agreement contains the following jurisdiction clause: The Amending Agreements contained identical jurisdiction clauses as follows: Naccarato was terminated from his employment with Brio Industries and Brio Beverages on or about December 13, 1996. Naccarato commenced the within action on December 20, 1996. Both Brio Beverages and Brio Industries were served with the Statement of Claim in Alberta. The Statement of Claim alleges wrongful dismissal and constructive dismissal of Naccarato's employment by Brio Beverages and Brio Industries. The allegations in support of Naccarato's constructive dismissal claim include allegations that the Incentive Agreement with Brio Industries was a fundamental term of Naccarato's employment contract and that the breach of the Incentive Agreement by Brio Industries constitutes Naccarato's constructive dismissal from his employment. The Statement of Claim also claims damages arising from Brio Industries alleged breach of the Incentive Agreement in and of itself and apart from the allegations raised pursuant to the constructive dismissal claim. Brio Industries has applied for a stay of proceedings with respect to the claim for damages advanced in the Statement of Claim relating to the alleged breach of the Incentive Agreement in and of itself, and a direction that this particular issue should be dealt with in the Province of British Columbia. No stay is sought with respect to the constructive dismissal claim based on a breach of the Incentive Agreement which remains a live issue and there is no challenge to the Alberta Court's jurisdiction over this issue. On September 10, 1997, an action was commenced by Brio Industries and Brio Beverages in British Columbia as against Denis E. Denomme, Monica M. Denomme, Juliette Salley, Valley Stone Holdings Ltd. and Naccarato. This action relates to the agreement made as between the parties involving the sale of shares of 359198 Alberta Ltd. in May of 1994 and an alleged breach of certain representations and warranties which form part of that transaction. This British Columbia lawsuit does not relate to the terms and conditions of Naccarato's employment with Brio Industries and Brio Beverages nor does this British Columbia action raise any issues relating to the Incentive Agreement between Naccarato and Brio Industries. ISSUE This interlocutory application comes before me as part of the case management process. There is only one issue that requires my determination: Is Alberta an appropriate forum with respect to Naccarato's claim against Brio Industries for the alleged breach of the Incentive Agreement? RELEVANT PROVISION OF THE CONTRACT By virtue of the Amending Agreements the governing contractual provision regarding jurisdiction is as follows: ANALYSIS A. Plaintiff's Argument Naccarato argues that Brio bears the onus of proving that the above clause is an exclusive (as opposed to concurrent) jurisdiction clause. Brio, he says, has failed to do so. Thus, Volkswagen Canada Inc. v. Auto Haus Frohlich Ltd. (1985), 41 Alta. L.R. (2d) 5 (C.A.) does not apply. In Volkswagen, supra, the court held that it should honor an exclusive jurisdiction clause unless the balance of convenience massively favours another jurisdiction. The proper test, rather, to determine forum, is that of forum conveniens, as set out in United Oil Seed Products Ltd. v. Royal Bank of Canada, [1988] 5 W.W.R. 181 (Alta. C.A.). If a forum possesses jurisdiction over a defendant as of right, the defendant must show that another available forum is clearly or distinctly more suitable. Here, Alberta has jurisdiction as of right over Brio Industries and Brio Beverages, since both were served in Alberta. Brio Industries then bears the onus of showing that British Columbia is clearly or distinctly more suitable. Since all or most of the witnesses in the breach of the Incentive Agreement claim will already be required to attend in Alberta for the wrongful dismissal claim, Brio Industries has failed to demonstrate that British Columbia is clearly or distinctly a better forum for the breach of the Incentive Agreement claim. B. Defendants' Argument The clause in question confers exclusive jurisdiction on the British Columbia courts to deal with the breach of the Incentive Agreement claim. As such, under Volkswagen, supra, unless Naccarato can prove that the balance of convenience massively favors Alberta, this Court should honor the parties' contract. The mere fact that Naccarato is bringing a different claim against Brio Industries in Alberta is not unusual or significant enough to warrant overriding the clear contract between the parties. As well, there is other litigation between the parties pending in British Columbia, so hearing the breach of the Incentive Agreement claim in British Columbia is not unreasonable. Naccarato has failed to meet his "heavy onus", under Volkswagen, supra, of proving that the balance of convenience massively favors Alberta. C. Determination 1.Is it an exclusive jurisdiction clause? In Can-Am Produce and Trading Ltd. v. Senator (The), [1996] F.C.J. No. 550 (T.D.) (QL), which was subsequently referred to in Lehner v. Keller, [1997] B.C.J. No. 2303 (B.C.S.C.) (QL), Hargrave, Prothonotary explains, beginning at para. 19 what constitutes an exclusive jurisdiction clause: I do not believe that it is necessary to use the word"exclusive" in a jurisdiction clause in order to prevent the clause from being construed as a concurrent jurisdiction provision, as opposed to an exclusive jurisdiction. In the present instance the clause on the face of the Bill of Lading specifies the law that is to be applied and then goes on to set out that disputes be determined in the Courts in Buenos Aires "and no other courts". Clause 22, on the reverse of the Maruba Bill of Lading, is equally clearly an exclusive jurisdiction clause in that as well as dealing with a choice of law, it provides that disputes "shall be decided in the country where the carrier has his principal place of business", a mandatory provision (emphasis added). The jurisdiction clause in the case at bar, set out in full above, states that "any proceeding in respect of this Amending Agreement will be commenced and maintained in ... British Columbia". As such, it too is mandatory. It is to be contrasted with clauses such as that in Khalig Commercial Bank Ltd. v. Woods (1985), 50 O.R. (2d) 446 (High Court of Justice). In that case, the clause read "each of the parties hereto hereby submits to the jurisdiction of the Civil Court of Duabi". The court held that this granted concurrent, as opposed to exclusive, jurisdiction on Duabi. In the case at bar, the clause goes beyond stating that the claim may be brought in British Columbia to say that it will be. This is clearly an exclusive jurisdiction clause and regard ought to be given to the plain meaning of its words. 2.What is the effect of an exclusive jurisdiction clause? The Alberta Court of Appeal in Volkswagen, supra, clearly defines the import of such a clause (at p. 6): "In our view, the court should honour terms of that sort and give effect to them unless the balance of convenience massively favours an opposite conclusion." 3.Does the balance of convenience massively favour Alberta such that British Columbia's exclusive jurisdiction should be overridden? The Court in Volkswagen, supra, at p. 6, states that "the onus of showing that the balance of convenience does not favour Ontario [the place agreed to in the contract] rests with the plaintiff, and ... it is a heavy onus". Naccarato argues that Alberta is the more convenient jurisdiction since most, if not all, witnesses in the breach of the Incentive Agreement claim will already be in Alberta for the related wrongful dismissal claim. Balance of convenience is a question of fact for the Court to decide. I am fully cognizant of the fact that only in unusual circumstances would it be appropriate for a court to use its discretion to effectively override a contract between two equal parties. However, I find that such unusual circumstances arise in this case. The thrust of Naccarato's argument is that the Incentive Agreement is a fundamental term of his employment contract and thereby material to the constructive dismissal action which is being advanced by Naccarato. Therefore, I can only conclude that these two issues are so inextricably intertwined that they must be heard together in the same forum. Failure to do so would result in a duplicity of actions, witnesses having to testify twice on the same issues and the resultant unnecessary costs and inconvenience to all parties. However, the most determinate factor is the unfortunate possibility that two courts could reach two different determinations on a essentially the same issue, that is, whether there was a breach of the Incentive Agreement; the Alberta court having decided the issue in the context of a constructive dismissal claim, and the B.C. court in the context of the breach of the Incentive Agreement in and of itself. In Fairfield v. Low (1990), 71 O.R. (2d) 599 at 603, holds that the court should give effect to a jurisdiction clause unless "the party seeking to have the case heard in another jurisdiction can show that the interests of the parties and the interests of justice" favour another jurisdiction. I find that it is in the best interest of the parties and the administration of justice that my intervention is required. The exclusive jurisdiction clause must be overridden and both causes of action tried in Alberta. COSTS Costs shall be in the cause.
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