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Case Comment: Jurisdiction/forum for package tour claims
Published in the November 2010 issue of Transportation Notes - View Article
Before getting to this month’s feature End of the Line case, we note that the Supreme Court of Canada has dismissed the leave to appeal application from the Ontario Court of Appeal’s decision in Expedition Helicopters Inc. v. Honeywell Inc., a case that we have reported previously.
We welcome the fact that the Court of Appeal overturned the motions judge’s refusal to enforce the forum selection clause and that the Supreme Court will not reconsider the issues. In making its decision, the Ontario Court of Appeal relied heavily on the 1969 British decision in The Eleftheria. Our summary of the Court of Appeal ruling in Expedition Helicopters appears in the May 2010 edition of Transportation Notes. The original motions court ruling is summarized in the February 2010 edition.
This month’s End of the Line case arises from another decision of the Ontario Court of Appeal (no leave to appeal application to the Supreme Court of Canada has been registered on that Court’s website at press time).
The case involves a single vehicle accident that occurred in January 2005 in Cancun, Mexico where at least three Canadian package tourists (named Dilkas and May) were seriously injured aboard an airport-bound bus, operated by Best Day Tours. Best Day had subcontracted the service to the more aptly named Autobus Rapidos de Zacatlan (also known as AutoTur). A police investigation revealed that the accident was solely caused by the driver operating the bus at an unsafe speed.
Best Day’s airport transfer was part of a package holiday offered by Red Seal Tours (operating as Sunwing Vacations).
Three days after the accident, Sunwing and Best Tours entered into an agreement providing, among other things, that Best Tours would retain a Toronto law firm to defend itself and Sunwing from any claims arising from the accident. This agreement also stated that “[t]he parties agree that this Agreement shall be interpreted in the Courts with the law of the Province of Ontario and that the Courts of the Province of Ontario shall have exclusive jurisdiction over any dispute arising from this agreement.”
Four months later, Best Day entered into an indemnity agreement with Sunwing which, among other things, provided for an indemnity, in favour of Sunwing, from claims arising from the accident. The agreement also stipulated that any dispute arising from it would be subject to the law of Ontario.
About 1½ years later, the injured tourists commenced legal proceedings in Ontario against Sunwing and Best Day. Sunwing crossclaimed against Best Day, based primarily on the indemnification agreement.
Best Day brought a motion challenging both the jurisdiction of the Ontario Court and the convenience of the Ontario forum, insofar as the claim applied to Best Day. The plaintiffs and Sunwing opposed.
The original motions judge dismissed both aspects of the motion, applying the tests emanating from a series of decisions in Ontario often referred to as the Muscutt quintet. In opposing the motion, the plaintiffs and Sunwing relied on two cases from this ‘quintet’ with somewhat similar facts. In both cases, the Ontario courts did not permit the disputes to proceed in Ontario because there was an insufficient connection between the jurisdiction and the defendants.
The first was Leufkens v. Alba Tours (2002), 60 O.R. (3d) 84 (C.A.), where the plaintiffs purchased a vacation package to Costa Rica from Alba Tours, an Ontario company, which then contracted with a Costa Rican company for the provision of local services. The plaintiff, in that case, was injured on a treetop excursion purchased directly from the same Costa Rican company, while in Costa Rica.
The second case relied upon by the plaintiffs was Lemmex v. Bernard (2002), 60 O.R. (3d) 54 (C.A.) where the plaintiffs contracted with a Canadian package tour operator for a Caribbean cruise. While aboard the cruise ship, the plaintiff was offered a side trip to Grenada through a Grenadian company. In the course of that side trip, the plaintiff suffered carbon monoxide poisoning while riding in a defective taxicab.
The Ontario Court of Appeal distinguished both Leufkins and Lemmex in the matter at hand — and permitted the Dilkas and May claims to proceed in Ontario. The Court found three main differences in this case.
First, in the Dilkas/May claims, the packages contracted for in Ontario explicitly included the airport transfer that lead to the accident.
Second, Best Day’s ground transportation agreement with Sunwing was explicitly governed by the law of Ontario, contrasted with Leufkens where the agreement between the Ontario tour operator and the Costan Rican provider of local services was governed by the law of Costa Rica.
Finally, and most significantly, the Court noted that Best Day entered into indemnity agreements with Sunwing following the accident that contemplated actions which might be commenced in Ontario. The Court further noted that Best Day had agreed that if Sunwing were to be sued as a result of the accident, Best Day would indemnify Sunwing and save it harmless, including lawyers’ costs. Moreover, the indemnity agreement provided that Ontario courts would have exclusive jurisdiction and that Ontario law would apply with respect to the indemnity agreement.
On the issue of forum selection, the Court also found in favour of the plaintiffs and Sunwing. Although it acknowledged that most of the liability witnesses are in Mexico, it held that the major issue in the case would be the quantification of damages. May had seen twelve medical practitioners in Ontario and Dilkas has seen 39. In addition, key loss of income and collateral benefits witnesses would be in Ontario as well.
The Court of Appeal also found that the plaintiffs would be at a juridical disadvantage if the matter were transferred to Mexico because the limitation period in that jurisdiction had expired.
Additionally, the Court noted that if the claim against Best Day would proceed in Mexico, there would be a multiplicity of proceedings because the claim against Sunwing would remain in Ontario.
Finally, the Court of Appeal made mention of the motions judge’s comment that the plaintiffs and Sunwing were willing to take on the burden of enforcing any judgment in Mexico.
The Court found that Ontario had jurisdiction to hear this case and that Mexico is not a more convenient forum for the trial. Costs were awarded to the plaintiffs and Sunwing.
Dilkas v. Red Seal Tours; May v. Red Seal Tours,
2010 ONCA 634