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Forum Selection Upheld Again
Published in the December 2007 issue of Transportation Notes - View Article
The Ontario Court of Appeal recently upheld a forum selection clause and declined jurisdiction over an action started in Ontario. This is one of a number of recent cases which highlight the courts’ willingness to hold commercial parties to the terms of their contract. Furthermore, it is particularly instructive respecting the care which should be taken to review each factor in the real and substantial connection test which will determine whether jurisdiction exists before dealing with the alternative of a stay based on the inconvenience of the forum.
The parties entered into a contract in British Columbia relating to website services. The alleged breach of contract occurred in British Columbia and at the time of the contract, the plaintiff resided in that province. The plaintiff then moved to Ontario and initiated the action.
At the motion challenging jurisdiction, the defendant relied upon a clause that stated the agreement would be governed by the laws of British Columbia, that any litigation or arbitration between the parties would take place in British Columbia and that the parties “consent to personal jurisdiction and venue in that province.” The defendant relied on the Supreme Court case of Z.I. Pompey Industrie which stipulates that parties should be held to such forum selection clauses unless the party resisting the clause is able to show “strong cause” to depart from the terms of the contract. The plaintiff argued that this was a case involving internet breaches where the damages went beyond British Columbia. It noted that the defendant is an international corporation and could easily travel to Ontario to defend the action.
The motions judge refused to uphold the forum selection clause. Although the facts are not set out in great detail in either decision, it is clear that the jurisdiction clause which was at the centre of the debate appeared in an electronic document whereby the plaintiff purported to define the contractual position, probably as part of “click-wrap” procedure. The motions judge concluded there was no evidence to indicate the plaintiff accepted the term or was aware of the “small print”. Furthermore, the motions judge held that Ontario was the convenient forum on the basis that the plaintiff resided in Ontario, held property there and, although the contract may have been breached in British Columbia, the damages flowed to Ontario and other jurisdictions. The judge also accepted the plaintiff’s arguments regarding the ease of travel between the two provinces and the limited amount of witnesses. As a result, he concluded that Ontario was the convenient forum.
On appeal, the Court held that the motions judge erred by holding that the forum selection clause was not part of the contract and by failing to apply the real and substantial connection test to determine whether Ontario should assume jurisdiction. The Court held that the only evidence on the record was that the terms of service, including the jurisdiction clause, were part of the contract. The Court then went through all of the factors in the real and substantial connection test to conclude that the claim was not sufficiently connected to Ontario. These factors include: the connection between the forum and the plaintiff’s claim; the connection between the forum and the defendant; unfairness to either party in assuming or not assuming jurisdiction; involvement of other parties to the suit; the court’s willingness to recognize and enforce an extra-provincial judgment rendered on the same jurisdictional basis; whether the case is inter-provincial or international in nature. The only possible connection to Ontario, being any damages flowing to Ontario where the plaintiff voluntarily moved, was outweighed by the fact that the contract was made, performed and breached in British Columbia.
The present trend in Ontario seems to very firmly favour the recognition and enforcement of jurisdiction clauses, especially in commercial agreements.
Pisu.Labs Media Inc.,
2007 ONCA 782,
overturning 2007 CanLII 923 (ON S.C.)