BRAINTECH, INC. V. KOSTIUK
Braintech, Inc. v. Kostiuk
Citation: Braintech, Inc. v. Kostiuk Date: 19990318
1999 BCCA 0169 Docket: CA024459
Registry: Vancouver
COURT OF APPEAL FOR BRITISH COLUMBIA
BETWEEN: BRAINTECH, INC.
PLAINTIFF
(RESPONDENT)
AND:
JOHN C. KOSTIUK
DEFENDANT
(APPELLANT)
Before: The Honourable Mr. Justice Goldie
The Honourable Mr. Justice Donald
The Honourable Madam Justice Newbury
J. P. Scouten Counsel for the Appellant
Michael Wilhelmson Counsel for the Respondent
Place and Date of Hearing Vancouver, British Columbia
February 1 and 2, 1999
Place and Date of Judgment Vancouver, British Columbia
March 18, 1999
Written Reasons by:
The Honourable Mr. Justice Goldie
Concurred in by:
The Honourable Mr. Justice Donald
The Honourable Madam Justice Newbury
Reasons for Judgment of the Honourable Mr. Justice Goldie:
[1] On 7 May 1997 the respondent (“Braintech”) obtained a default judgment in the District Court of Harris County in the
State of Texas against the appellant (“Kostiuk”). On 9 May 1997 Braintech commenced an action on this judgment in the
Supreme Court of British Columbia. On 2 April 1998, after a summary trial Braintech obtained a judgment in its favour from which the present appeal is taken.
ISSUES
[2] The issues may be grouped as follows:
1. Whether, in the circumstances, the trial judge erred in proceeding to summary trial under the provisions
of Rule 18A of the Rules of the Supreme Court of British Columbia.
2. Whether a fraud was practised on the Texas court of which cognizance should be taken in the courts of
British Columbia.
3. Whether there was a real and substantial connection between Texas and the wrongdoing alleged to have
taken place in that state.
Issue 1
The mode of trial in the Supreme Court
[3] The writ was issued and the statement of claim filed on 9 May 1997. Kostiuk was alleged to reside at 602 – 195 West 21st Street, West Vancouver. (The first “West” is incorrect.) The proceeding in Texas was recited and judgment was sought in the amount of $409,680, as the equivalent in Canadian currency of the judgment awarded by the Texas court of US$300,000.
[4] Kostiuk in his statement of defence filed 8 August 1997 denied service on him of any process in the Texas action; denied any connection of his or the plaintiff with Texas; denied he had attorned to the foreign jurisdiction and alleged circumstances amounting to fraud on the Texas court, principally related to service of process. The relief sought was a declaration that the Texas court acted without jurisdiction and for an order dismissing Braintech’s claim.
[5] A reply was filed on 14 November 1997. The rules of the Supreme Court require leave of the court to file any subsequent pleading, and where the reply is the final pleading (as it was here) all material facts alleged in it are deemed to have been denied and are in issue.
[6] The reply alleged the source of jurisdiction as s. 17.042(2) of the Texas Civil Practice and Remedies Code and the nature of service effected thereunder. In the alternative, jurisdiction of Texas was claimed by reason of a real and substantial connection between the Texas action and Texas, particulars of which were alleged. Among the particulars were the following:
3. …
(a) the Defendant defamed the Plaintiff and disparaged the business of the Plaintiff by the transmission and publication in the State of Texas of untruths and false and disparaging words, as alleged in the Plaintiff’s Original Petition and First Amended Petition filed in the District Court of Harris County;
(b) at the time of the aforesaid publication, shareholders of the Plaintiff resided in the Texas;
(c) at the time of the aforesaid publication, the Plaintiff maintained an office in Texas, its director of research and development resided in Texas and its research and development activities were carried on in Texas Furthermore, the Plaintiff’s head office had been located in Texas until 1995;
…
(e) it was reasonably foreseeable to the Defendant that the Plaintiff’s reputation stood to be injured in Texas by the publication of untruths by the Defendant in Texas;
[7] There was thus put in issue in the British Columbia courts the nature and effect of service; the application of the Texas
long arm statute; and whether Kostiuk had committed a tort in Texas, in whole or in part, by transmission and publication in Texas of defamatory and disparaging untruths.
[8] On 24 March 1998 Braintech filed notice of a motion for judgment under Rule 18A. Kostiuk by motion filed 1 April 1998 moved for an order adjourning the summary trial application until such time as he had an opportunity to conduct an examination for discovery of a representative of Braintech and to cross examine the makers of the affidavits filed by Braintech in support of its Rule 18A application.
[9] Kostiuk’s application was dismissed by Mr. Justice Thackray on 26 March without reasons. We were advised he did
so in order to leave the matter to the judge who would be hearing the Rule 18A application – then apparently set down to be heard on 31 March.
[10] Sub-rule (11) of Rule 18A provides in part that upon the hearing of the application for an order for a summary trial the court may:
(11) …
(a) grant judgment in favour of any party, either on an issue or generally, unless
(i) the court is unable, on the whole of the evidence before the court on the application, to find the facts necessary to
decide the issues of fact or law, or
(ii) the court is of the opinion that it would be unjust to decide the issues on the application,
(b) …
(c) …
[11] The trial judge had before him the pleadings I have outlined and affidavits filed in the Supreme Court by both parties, the last one of which was filed on behalf of Kostiuk on 25 March 1998. In retrospect, it is clear pre-trial discovery and examination of the makers of some of the affidavits would have been of assistance. Nevertheless, the decision whether to proceed to trial on the affidavit material is a matter within the discretion of the trial judge. The motion to adjourn was not made in a timely way. In my view it has not been demonstrated that his decision to proceed with the summary trial amounts to a failure to exercise a discretionary power judicially. I would not give effect to the appellant’s contention in this Court that the cause should be remitted to the Supreme Court to be placed on the regular trial list.
Issue 2
The Texas long arm statute and service thereunder
[12] Section 17.042 of “Subchapter C. Long-Arm Jurisdiction in suit on Business Transaction or Tort” of the Texas Civil
Practice and Remedies Code provides: 17.042. Acts Constituting Business in This State In addition to other acts that may constitute doing business, a nonresident does business in this state if the nonresident:
(1) contracts by mail or otherwise with a Texas resident and either party is to perform the contract in whole or in part in this state;
(2) commits a tort in whole or in part in this state; or
(3) recruits Texas residents, directly or through an intermediary located in this state, for employment inside or outside this state.
[Emphasis added.]
