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Case Comment: Expedition Helicopters Reversed

Published in the June 2010 issue of Transportation Notes - View Article

In this month’s End of the Line, we report on the Ontario Court of Appeal’s reversal of a motions judge’s decision that we summarized in the February 2010 edition of Transportation Notes.

While it is possible that the matter will be further appealed to the Supreme Court of Canada, a search of that Court’s online database has revealed that an appeal has yet to be launched as of press time.

Expedition Helicopters is based in Cochrane, Ontario. It operates a fleet of eleven helicopters for charter.

In July 2007, one of its helicopters crashed in northern Saskatchewan, resulting in the death of the pilot and a complete hull loss. An action was commenced by Expedition in Ontario against the Honeywell Inc., the Arizona-based manufacturer of the leased engine. The agreement between Expedition and Honeywell contained a forum selection clause providing that any disputes were to be litigated in Phoenix, Arizona, with the law of Arizona applying.

The Ontario Superior Court determined earlier this year that, notwithstanding the clear language of the forum selection clause, the case could proceed in Ontario for several reasons, including the fact that nearly all of the evidence surrounding the case was in Ontario, that Expedition had no connection to Arizona and that there were significant procedural disadvantages to Expedition, if the matter were to be tried in Arizona.

The Ontario Court of Appeal was extremely critical of the motions judge’s approach in refusing to stay the Ontario action.

It held that she “regarded the forum selection clause as but one factor to be considered, and a subsidiary one at that. … for example, she did not … take into account that Expedition, by agreeing to the clause, had accepted at the time it entered into the contract that it would have to transport witnesses to Arizona and resolve any claim it might bring according to the law and procedures of Arizona.”

In essence, the Court of Appeal held that the motions judge ignored the Canadian jurisprudence on point which strongly encourages the enforcement of forum selection clauses, including the Supreme Court of Canada’s decision in Z.I. Pompey Industrie v. ECU-Line N.V., 2003 SCC 27.

In Z.I. Pompey, the Supreme Court of Canada held that forum selection clauses “are generally to be encouraged by the courts as they create certainty and security in transaction, derivatives of order and fairness, which are critical components of private international law” and “[i]t is essential that courts give full weight to the desirability of holding contracting parties to their agreements”.

In reversing the motions judge’s ruling, the Ontario Court of Appeal held that she erred by misunderstanding some of the procedural obstacles that would be in play, should the matter be tried in Arizona; by failing to conduct a proper comparison of the factors that arise in choosing between Ontario and Arizona as the best place for the trial to be heard (noting, for example, that a crash in Saskatchewan “provides little support for trying the case in Ontario); and by failing to consider whether the plaintiff could get a fair trial in Arizona.

In the end, the Court held that the circumstances in which a litigant should be able to depart from the terms of a forum selection clause are very few. Examples of these scenarios were cited as where:

a contractual party agreed to the provision as a result of fraud or improper inducement;
the contract in question is unenforceable for other reasons;
the selected forum does not accept jurisdiction of the dispute or is otherwise unable to deal with the claim;
the circumstances that have arisen are outside of what was reasonably contemplated by the parties when they agreed to the clause;
the plaintiff can no longer expect a fair trial in the selected forum due to subsequent events that could not have been reasonably anticipated; or
enforcing the clause in the particular case would frustrate some clear public policy.

After deciding that none of these factors applied, the Court overturned the motions judge’s decision and stayed the proceedings in Ontario. Costs of the original motion and the appeal were awarded to Honeywell.

Expedition Helicopters v. Honeywell Inc.,
2010 ONCA 351