Monday, April 30, 2012

Supreme Court of Canada Enforces Choice of Forum Clause

Momentous.ca Corp. v. Canadian American Association of Professional Baseball Ltd., 2012 SCC 9

Shortly after filing a statement of defence, the respondents Canadian American Association of Professional Baseball Ltd., and others moved under Rule 21.01(3)(a) of the Ontario Rules of Civil Procedure, R.R.O. 1990, to dismiss a claim against them on the ground that Ontario Courts had no jurisdiction because the appellants had signed agreements providing that disputes would be arbitrated or litigated in North Carolina. The motion judge dismissed the action against all the respondents on the basis of these arbitration and forum selection clauses and the Ontario Court of Appeal for Ontario upheld the decision.
The issue before the Supreme Court of Canada was whether the defendants could move under Rule 21.01(3)(a) to seek dismissal of the action based on the arbitration and forum selection clauses in the agreements, notwithstanding the delivery of a statement of defence. The appellants argued that a party that delivers a statement of defence on the merits is precluded from relying upon a forum selection clause, even where the statement of defence explicitly seeks to enforce the clause.

The Supreme Court dismissed the appeal and held that the defendants were entitled to bring a motion to dismiss the action because the parties had agreed to arbitrate and litigate disputes in another forum. Although the motion must be brought promptly, there is nothing in Rule 21.01(3)(a) that requires it to be brought before delivery of a statement of defence. Within the framework provided by the Ontario Rules of Civil Procedure, a statement of defence that specifically pleads a foreign forum selection clause does not amount to consent that Ontario assume jurisdiction so as to preclude consideration on the merits of whether to enforce the clause.

The appellants did not argue that there was any reason, apart from the delivery of a statement of defence, for the court to determine that there was “strong cause” for Ontario to displace the forum that the parties have agreed should resolve their disputes.

Regards,

Blair

Friday, April 20, 2012

Supreme Court Rules on Ontario's Jurisdiction to hear Foreign Proceedings

Jurisdiction of Canadian Courts to hear Actions against Foreign Travel Companies

In this decision released this morning the Supreme court of Canada held that Ontario had jurisdiction to hear two cases against tour companies offering vacations in Cuba in circumstances where the tourists were injured in Cuba.

Here is an extract from the decision.

Club Resorts Ltd. v. Van Breda, 2012 SCC 17

In separate cases, two individuals were injured while on vacation outside of Canada. Morgan Van Breda suffered catastrophic injuries on a beach in Cuba. Claude Charron died while scuba diving, also in Cuba. Actions were brought in Ontario against a number of parties, including the appellant, Club Resorts Ltd., a company incorporated in the Cayman Islands that managed the two hotels where the accidents occurred. Club Resorts sought to block those proceedings, arguing that the Ontario courts lacked jurisdiction and, in the alternative, that a Cuban court would be a more appropriate forum on the basis of the doctrine of forum non conveniens. In both cases, the motion judges found that the Ontario courts had jurisdiction with respect to the actions against Club Resorts. In considering forum non conveniens, it was also held that the Ontario court was clearly a more appropriate forum. The two cases were heard together in the Court of Appeal. The appeals were both dismissed.
Held: The appeals should be dismissed.

This case concerns the elaboration of the “real and substantial connection” test as an appropriate common law conflicts rule for the assumption of jurisdiction. In determining whether a court can assume jurisdiction over a certain claim, the preferred approach in Canada has been to rely on a set of specific factors which are given presumptive effect, as opposed to a regime based on an exercise of almost pure and individualized judicial discretion. Given the nature of the relationships governed by private international law, the framework for the assumption of jurisdiction cannot be an unstable, ad hoc system made up on the fly on a case‑by‑case basis – however laudable the objective of individual fairness may be. There must be order in the system, and it must permit the development of a just and fair approach to resolving conflicts.

To meet the common law real and substantial connection test, the party arguing that the court should assume jurisdiction has the burden of identifying a presumptive connecting factor that links the subject matter of the litigation to the forum. Jurisdiction must be established primarily on the basis of objective factors that connect the legal situation or the subject matter of the litigation with the forum. Abstract concerns for order, efficiency or fairness in the system are no substitute for connecting factors that give rise to a “real and substantial” connection for the purposes of the law of conflicts. In a case concerning a tort, the following factors are presumptive connecting factors that, prima facie, entitle a court to assume jurisdiction over a dispute:

(a) the defendant is domiciled or resident in the province;

(b) the defendant carries on business in the province;

(c) the tort was committed in the province; and

(d) a contract connected with the dispute was made in the province.

Although the factors set out in the list are considered presumptive, this does not mean that the list of recognized factors is complete, as it may be reviewed over time and updated by adding new presumptive connecting factors. When a court considers whether a new connecting factor should be given presumptive effect, the values of order, fairness and comity can serve as useful analytical tools for assessing the strength of the relationship with a forum to which the factor in question points. These values underlie all presumptive connecting factors, whether listed or new. In identifying new presumptive factors, a court should look to connections that give rise to a relationship with the forum that is similar in nature to the ones which result from the listed factors. Relevant considerations include:

(a) Similarity of the connecting factor with the recognized presumptive connecting factors;

(b) Treatment of the connecting factor in the case law:

(c) Treatment of the connecting factor in statute law; and

(d) Treatment of the connecting factor in the private international law of other legal systems with a shared commitment to order, fairness and comity.

The presumption of jurisdiction that arises where a recognized connecting factor — whether listed or new — applies is not irrebuttable. The burden of rebutting the presumption of jurisdiction rests, of course, on the party challenging the assumption of jurisdiction. That party must negate the presumptive effect of the listed or new factor and convince the court that the proposed assumption of jurisdiction would be inappropriate. This could be accomplished by establishing facts which demonstrate that the presumptive connecting factor does not point to any real relationship between the subject matter of the litigation and the forum or points only to a weak relationship between them.

If the court concludes that it lacks jurisdiction because none of the presumptive connecting factors — whether listed or new — apply or because the presumption of jurisdiction that flows from one of those factors has been rebutted, it must dismiss or stay the action, subject to the possible application of the forum of necessity doctrine. If jurisdiction is established, the claim may proceed, subject to the court’s discretion to stay the proceedings on the basis of the doctrine of forum non conveniens.

In Van Breda, a contract was entered into in Ontario. The existence of a contract made in Ontario that is connected with the litigation is a presumptive connecting factor that, on its face, entitles the courts of Ontario to assume jurisdiction in this case. Club Resorts has failed to rebut the presumption of jurisdiction that arises where this factor applies. Therefore, there was a sufficient connection between the Ontario court and the subject matter of the litigation. Club Resorts has not discharged its burden of showing that a Cuban court would clearly be a more appropriate forum. While a sufficient connection exists between Cuba and the subject matter of the litigation to support an action there, issues related to the fairness to the parties and to the efficient disposition of the claim must be considered. A trial held in Cuba would present serious challenges to the parties. All things considered, the burden on the plaintiffs clearly would be far heavier if they were required to bring their action in Cuba.

In Charron, the facts supported the conclusion that Club Resorts was carrying on a business in Ontario which is a presumptive connecting factor. Club Resorts’ commercial activities in Ontario went well beyond promoting a brand and advertising. Its representatives were in the province on a regular basis and it benefitted from the physical presence of an office in Ontario. It therefore follows that it has been established that a presumptive connecting factor applies and that the Ontario court is prima facie entitled to assume jurisdiction. Club Resorts has not rebutted the presumption of jurisdiction that arises from this connecting factor and therefore the Ontario court has jurisdiction on the basis of the real and substantial connection test. Furthermore, Club Resorts failed to discharge its burden of showing that a Cuban court would clearly be a more appropriate forum in the circumstances of this case. Considerations of fairness to the parties weigh heavily in favour of the plaintiffs.

Here is a link to the decision http://scc.lexum.org/en/2012/2012scc17/2012scc17.html


Regards,

Blair

Monday, April 16, 2012

Court overturns racial profiling decision

Peel Law Association v. Pieters, 2012 ONSC 1048 (Div Ct.)
The Divisional Court of Ontario (Justices Chapnik, Hockin and Hoy) released a decision on February 13, 2012 which overturned an award of Vice-Chair Eric Whist, of the Human Rights Tribunal of Ontario ("HRTO"). In its award, the Tribunal ("Tribunal") found that the Peel Law Association ("PLA") and its librarian, Melissa Firth, had discriminated against the respondents, Selwyn Pieters and Brian Noble in the provision of services, goods and facilities on the basis of their race and colour, contrary to section 1 of the Human Rights Code (the "Code"). Both Pieters and Noble are black, of ethnic African descent.
The Tribunal awarded Pieters and Noble compensatory damages of $2,000 each for the PLA's violation of their rights to be free from discrimination and for injury to their dignity, feelings and self-respect. PLA and Firth appealed that decision to the Divisional Court.
Facts
The background facts are summarized as follows:
On May 16, 2008, Pieters, Noble and a law student who worked for Pieters, were using the lawyers lounge of the PLA in the Brampton court house. PLA policy states that only lawyers and law students can use the lounge and the library. Paralegals and the public are not permitted to use these facilities.
Both respondents and the law student are black. All three individuals were dressed in business suits but none were gowned. Firth, as the PLA's librarian, has primary responsibility to ensure compliance with the policy. Firth approached the respondents in an aggressive manner asked them to confirm that they were lawyers. The vice-chair found that race factored into Firth's decision to approach the respondents. Firth did not approach anyone else in the lounge or ask anyone else the same question.
At the time, others were using the lounge, some of whom were "racialized" (South East Asian), none of whom were black. The South Asian lawyers volunteered to produce their identification to Firth, but she did not check their identification. The Tribunal concluded that these facts constituted a sufficient basis to require an explanation from Firth as to why her decision to question Pieters and Noble was not tainted by their race or colour. The Tribunal found that there was no credible and rational explanation for Firth's decision to abruptly interrupt a trip to the courthouse robing room to stop and question the respondents and found that the decision was "in some measure, because of their race and colour".
At the hearing, Firth testified that she had approached the respondents because she knew everyone else in the lounge at the time was a lawyer. However, that statement was proven false given that one individual in the lounge was not a lawyer and one lawyer in the lounge had never been there before.
Divisional Court Decision
Justice Chapnik, writing for the Court, held that that applicable standard of review of the Trigbunal's decision under the Code was one of "reasonableness". She also found that within the reasonableness standard, "the highest degree of deference should be awarded to the Tribunal in respect of determinations of fact and the interpretation of human rights law". Decisions of a tribunal of the HRTO are required to be rationally supported and to fall within a range of possible, acceptable outcomes that are defendable in fact and law.
Justice Chapnik found that with complaints under the Code the complainant bears the burden of proving a prima facia case of discrimination. A prima facia case of discrimination is one "which covers the allegations made and which, if they are believed, is complete and sufficient to justify a verdict in the complainant's favour, in the absence of an answer from the respondent.". In order to prove a prima facia case of discrimination there must be evidence to support the following findings:
(a) a distinction or differential treatment;
(b) arbitrariness based on a prohibited ground;
(c) a disadvantage; and
(d) a causal nexus between the arbitrary distinction based on a prohibited ground and the disadvantage suffered.
The key is the arbitrary nature of the treatment. The complainant need not prove an intention to discriminate.
In overturning the decision of the Tribunal, the Divisional Court inexplicably held that there had been no evidence adduced at the hearing that was capable of supporting the finding of a distinction or differential treatment or that any such treatment was motivated by race or colour. Accordingly, the court found that the Tribunal had erred in determining that there had been a prima facie case of discrimination.
In so doing, rather than giving the Tribunal "the highest deference" in respect of findings of fact, the court appears to have given no deference whatsoever to the Tribunal. The court noted that the respondents had been closest to the door of the lounge when Firth abruptly interrupted her trip to the robing room to ask them for identification and that was a sufficient reason why she had "singled them out". It also found that it was within Firth's job responsibilities to ask people for identification. The court found that in the circumstances, there was insufficient evidence for the Tribunal to determine that Firth, by questioning the respondents alone, had treated them differently from others in the lounge.
Curiously, it also found that because Firth had had "run ins" in the past with others whom she had asked for identification (some of whom were not black) that there was no evidence of differential treatment of the respondents.
Finally, the court found that because Firth was not a police officer with the power and authority to arrest and detain the respondents, there was no nexus between the alleged arbitrary conduct and the disadvantage suffered by the respondents.
The respondents were ordered to pay an all inclusive sum of $20,000 in costs to the PLA and Firth.
The problem with the Divisional Court's decision is that in finding there was "no evidence" to support the award it appears to arbitrarily "pick and choose" only the evidence to support its findings rather than to consider the evidence as a whole. In addition, the court mischaracterizes the evidence it did consider as not being arbitrary. For example, the court ignored the evidence that at the time of the incident there were a number of persons in the lounge that were unknown to Firth. The respondents were the only black men in the lounge and the only persons who Firth chose to question. It also ignores Firth's own statement, which was later discredited, that she knew everyone else in the lounge at the relevant time was a lawyer.
The court places undue emphasis on the location of Pieters and Noble, i.e. that they were situated nearest to the door from which Firth entered the lounge which seems in and of itself to be arbitrary in determining who to question. There was no credible explanation given at the hearing as to why Firth's focus was on Pieters, as opposed to any other individual in the lounge, why she did not check the identification of other persons in the lounge, even after they offered to provide it and why Firth abruptly interrupted her trip to the robing room to confront the respondents.
Moreover, the court places undue emphasis on the fact that policing the use of the lounge to ensure that the PLA policy was complied with was within Firth's job description. Simply because it was her responsibility to check identification, does not give her a licence to perform such duties arbitrarily. The fact that she may have stopped and questioned non-black people in the past is completely irrelevant. It was in her job to do so and, in any event, such behaviour would have been unknown to the respondents.
The Divisional Court decision is poorly reasoned and bad law. Pieters and Noble have appealed to the Ontario Court of Appeal. Stay tuned.

Regards,

Blair