2249659 Ontario Ltd. et al. v. Sparkasse Siegen et al.

[Indexed as: 2249659 Ontario Ltd. v. Sparkasse Siegen]

Ontario Reports

Court of Appeal for Ontario,

Doherty, Laskin and Blair JJ.A.

May 31, 2013

115 O.R. (3d) 241 | 2013 ONCA 354

Case Summary

Conflict of laws — Forum conveniens — Plaintiff entering into agreement with TMG in form of purchase order to manufacture and install assembly lines for TMG in Ontario — Plaintiff agreeing to substitute TMG's wholly owned subsidiary TMC in purchase order after TMG and bank allegedly provided assurances that they would pay plaintiff if TMC was unable to do so — Plaintiff bringing action in Ontario against TMG and bank for breach of contract and negligent misrepresentation based on that alleged guarantee — Neither Ontario nor Germany being clearly more appropriate forum — Motion judge erring in staying action on basis of forum non conveniens.

Conflict of laws — Jurisdiction — Plaintiff entering into agreement with TMG in form of purchase order to manufacture and install assembly lines for TMG in Ontario — Plaintiff agreeing to substitute TMG's wholly owned subsidiary TMC in purchase order after TMG and bank allegedly provided assurances that they would pay plaintiff if TMC was unable to do so — Plaintiff bringing action in Ontario against TMG and bank for breach of contract and negligent misrepresentation based on that alleged guarantee — Defendants carrying on business in Ontario — Alleged negligent misrepresentation made in Ontario and contract relied on by plaintiff entered into in Ontario — Ontario having jurisdiction simpliciter — Choice of forum clause in purchase order not applying to alleged guarantee.

The plaintiff RCI entered into an agreement with the defendant TMG (the purchase order) under which RCI was to manufacture and install assembly lines for TMG in Ontario. TMG then incorporated TMC in Ontario and approached the defendant bank to provide TMC financing for the purchase of the assembly lines from RCI. The bank refused to provide financing unless TMC was the legal owner of the assembly lines. TMG asked RCI to substitute TMC for TMG in the purchase order. RCI asked TMG and the bank to provide written assurances that they would pay RCI any amount owing to it under the purchase order if TMC were unable to make payments. RCI alleged that it was provided these assurances in a December 2007 letter. After receiving that letter, RCI agreed to substitute TMC for TMG in the purchase order. TMC was ultimately unable to pay RCI. RCI brought an action in Ontario against TMG and the bank for breach of contract and negligent misrepresentation based on the December 2007 letter. The motion judge granted the defendants' motion for an order dismissing the action on the grounds that the Ontario court had no jurisdiction to entertain the claims and, alternatively, that Ontario was forum non conveniens. RCI appealed.

Held, the appeal should be allowed.

The motion judge made three errors in reaching her conclusion that Ontario did not have jurisdiction simpliciter. First, she appeared to have accepted TMG's argument that the existence of a forum selection clause in favour of Germany in the purchase order was central to the question of jurisdiction simpliciter. A forum [page242] selection clause is relevant to whether Ontario should exercise its jurisdiction, not whether Ontario has jurisdiction. Second, the motion judge erred in considering the adequacy of RCI's pleadings in determining whether Ontario had jurisdiction simpliciter. Whatever deficiencies might exist in the pleadings did not prevent a proper assessment of the connection of the claims to Ontario. Third, the motion judge erred in focusing on the purchase order and not the agreement alleged in the statement of claim, which was that allegedly contained in the December 2007 letter. There were three presumptive connecting factors in this case that prima facie entitled Ontario to assume jurisdiction simpliciter over the claim: the defendants carried on business in Ontario, the alleged negligent misrepresentations were made in Ontario and the contract relied on by RCI was entered into in Ontario. The presumption that Ontario had jurisdiction simpliciter was not rebutted by the defendants.

Neither of the two forum selection clauses relied on by the defendants, one in a confidentiality agreement between TMG and RCI, and the other in the purchase order, applied to this litigation. The clause in the confidentiality agreement applied to "all disputes arising from or in connection with this Agreement". The "Agreement" related to the mutual duty of confidentiality owed by TMC and RCI of all information acquired either directly or indirectly during the course of the assembly line project. The claims advanced by RCI did not arise from and were not connected to that agreement. The forum selection clause in the purchase order could not be extended to disputes based on claims that were outside of the terms of the purchase order, such as this claim against the alleged guarantors of the payments required under the purchase order.

Neither Ontario nor Germany was clearly a more appropriate forum. The commercial activities that gave context to the litigation could be described as business decisions made by Germans in Germany about doing business in Ontario. Both jurisdictions had meaningful connections to that commercial activity. The defendants, as the parties seeking a stay on the basis that Ontario was forum non conveniens, had the onus of showing that a German court was in a better position to fairly and efficiently dispose of the claim than an Ontario court. They failed to do so. The action should not have been stayed on the basis of forum non conveniens.

Club Resorts Ltd. v. Van Breda, [2012] 1 S.C.R. 572, [2012] S.C.J. No. 17, 2012 SCC 17, 291 O.A.C. 201, 2012EXP-1452, J.E. 2012-788, EYB 2012-205198, 429 N.R. 217, 343 D.L.R. (4th) 577, 212 A.C.W.S. (3d) 712, 91 C.C.L.T. (3d) 1, 10 R.F.L. (7th) 1, 17 C.P.C. (7th) 223, apld

Other cases referred to

Cannon v. Funds for Canada Foundation, [2010] O.J. No. 3486, 2010 ONSC 4517 (S.C.J.); Eastern Power Ltd. v. Azienda Communale Energia and Ambiente, 1999 CanLII 3785 (ON CA), [1999] O.J. No. 3275, 178 D.L.R. (4th) 409, 125 O.A.C. 54, 50 B.L.R. (2d) 33, 39 C.P.C. (4th) 160, 90 A.C.W.S. (3d) 862 (C.A.); Expedition Helicopters Inc. v. Honeywell Inc. (2010), 100 O.R. (3d) 241, [2010] O.J. No. 1998, 2010 ONCA 351, 70 B.L.R. (4th) 60, 262 O.A.C. 195, 319 D.L.R. (4th) 316, 87 C.P.C. (6th) 210; Loat v. Howarth, [2011] O.J. No. 3166, 2011 ONCA 509, 338 D.L.R. (4th) 644, 204 A.C.W.S. (3d) 800, 282 O.A.C. 264, 89 B.L.R. (4th) 177; Matrix Integrated Solutions Ltd. v. Naccarato (2009), 97 O.R. (3d) 693, [2009] O.J. No. 3187, 2009 ONCA 593, 60 B.L.R. (4th) 39, 75 C.P.C. (6th) 17, 252 O.A.C. 222, 179 A.C.W.S. (3d) 584; Momentous.ca Corp. v. Canadian American Assn. of Professional Baseball Ltd., [2012] 1 S.C.R. 359, [2012] S.C.J. No. 9, 2012 SCC 9, 290 O.A.C. 202, 428 N.R. 141, EYB 2012-203609, 2012EXP-1107, J.E. 2012-605, 342 D.L.R. (4th) 1, 15 C.P.C. (7th) 227, 211 A.C.W.S. (3d) 850, affg (2010), 103 O.R. (3d) 467, [2010] O.J. No. 4595, 2010 ONCA 722, 270 O.A.C. 36, 325 D.L.R. (4th) 685; [page243] Stubbs v. ATS Applied Tech Systems Inc., [2010] O.J. No. 5571, 2010 ONCA 879, 272 O.A.C. 386, 87 C.C.E.L. (3d) 170, 97 C.P.C. (6th) 269, 78 B.L.R. (4th) 163; Z.I. Pompey Industrie v. ECU-Line N.V., [2003] 1 S.C.R. 450, [2003] S.C.J. No. 23, 2003 SCC 27, 224 D.L.R. (4th) 577, J.E. 2003-892, 30 C.P.C. (5th) 1, 121 A.C.W.S. (3d) 793

Rules and regulations referred to

Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 21.01(1) (b)

APPEAL by the plaintiff from the order of C.J. Brown J., [2012] O.J. No. 3263, 2012 ONSC 3128 (S.C.J.) dismissing the action.

Jonathan Lisus and James Renihan, for appellants.

Evan L. Tingley, for respondent Sparkasse Siegen.

P.A. Neena Gupta, for respondent Thomas Magnete GmbH.

The judgment of the court was delivered by

DOHERTY J.A.: —

I

[1] The appellants appeal from an order dismissing their claims against the respondents. The motion judge held that the Ontario Superior Court of Justice had no jurisdiction to entertain the claims and, alternatively, that Ontario is forum non conveniens. I would allow the appeal. The Superior Court does have jurisdiction, the choice of forum provisions relied on by the respondents have no application and Ontario is forum conveniens.

II

[2] The respondent Thomas Magnete GmbH ("TMG") is a German company in the business of manufacturing and selling solenoids used in the production of automotive transmission systems. TMG is a subsidiary of Thomas Holding Deutschland GmbH ("THD"). TMG, THD and other related companies are all controlled by the Thomas family from Germany.

[3] The respondent Sparkasse Siegen ("Sparkasse") is a bank incorporated and carrying on business in Germany. Sparkasse is the banker for TMG and other companies under the control of the Thomas family.

[4] The appellant Rohwedder Canada Inc. ("RCI") is a company incorporated in Ontario. RCI manufactures and sells automated assembly lines to automotive parts manufacturers. Until July 2010, RCI was a wholly owned subsidiary of Rohwedder A.G., a German company. Rohwedder A.G. declared bankruptcy in 2010. [page244] The appellant 2249659 Ontario Ltd. acquired all of the shares of Rohwedder North America, a wholly owned subsidiary of Rohwedder A.G. RCI was a wholly owned subsidiary of Rohwedder North America, making 2249659 Ontario Ltd. the parent company of RCI. 2249659 Ontario Ltd. had nothing to do with the events underlying this litigation.

III

[5] There has, of course, been no trial of the merits. The summary below is taken from the statement of claim and motion material.

[6] In February 2006, GETRAG, one of Chrysler's suppliers, approached TMG to manufacture solenoids to be used in Chrysler transmissions. The solenoids would be manufactured by TMG at a plant in Cambridge, Ontario. TMG and RCI entered into negotiations with a view to RCI manufacturing and installing the assembly lines in the Cambridge plant needed to produce the solenoids.

[7] In June 2007, TMG and RCI entered into a confidentiality agreement covering all of the information "acquired either directly or indirectly in the course of the [assembly line] Project". Paragraph 10 of the agreement is a choice of forum clause:

Unless otherwise expressly prescribed by law, the sole place of jurisdiction for all disputes arising from this Agreement is Betzdorf, Germany. All disputes arising from or in connection with this Agreement shall be subject to the law of the Federal Republic of Germany.

[8] In September 2007, TMG and RCI entered into an agreement with respect to the purchase and installation of the assembly lines at the Cambridge plant. TMG agreed to pay RCI $6,750,000 and made an initial payment of $675,000. The agreement was negotiated by Joachim Rohwedder, the chairman of Rohwedder A.G., and Patrick Meyer of TMG. Both men were based in Germany. RCI signed and accepted the agreement in Markham, Ontario.

[9] The agreement took the form of a purchase order. That purchase order incorporated by reference TMG's general business conditions. The English translation of the general business conditions provided to RCI at the time it signed the agreement included these two terms:

-- If the parties have not agreed otherwise the laws of the Federal Republic of Germany shall exclusively apply.

-- The court at the place where the plaintiff is domiciled is Herdorf [Germany]. [page245]

[10] The English translation of the general business conditions filed by the respondents on the motion worded the second of these two terms differently:

-- The place of jurisdiction is Betzdorf [Germany].

[11] The respondents contend that the second condition outlined above is a choice of forum provision that applies to this claim.

[12] In the fall of 2007, TMG incorporated Thomas Magnete Canada Inc. ("TMC") in Ontario. TMC was a wholly controlled subsidiary of TMG. TMG approached Sparkasse to provide financing to TMC for the purchase of the assembly lines from RCI. Sparkasse advised that before it could provide that financing, TMC would have to be the legal owner of the assembly lines so that the assembly lines could be included in Sparkasse's security for its loan to TMC. Sparkasse agreed to make the loan on that condition and TMG agreed to guarantee the loan.

[13] TMG then asked RCI to substitute its subsidiary TMC for TMG as the purchaser of the assembly lines. TMG explained to RCI that the change would assist TMG in tax planning issues. Some of these discussions occurred in Ontario.

[14] RCI initially declined to make the substitution because TMC, a new company, did not appear to have any assets. RCI, however, did eventually offer to allow the substitution of TMC as the purchaser if TMG and Sparkasse agreed to provide written assurances that they would pay RCI any amount owing to it under the purchase order if TMC was unable to make the payments.

[15] In December 2007, Sparkasse prepared a letter addressed to RCI entitled "Confirmation of Project Funding". The letter was sent to TMG and forwarded by TMG to RCI by e-mail in Ontario. It read in part:

[T]he project of setting up a new production site by our client Thomas Magnete Group in Cambridge/ Ontario is financially supported by Sparkasse Siegen.

We herewith confirm, that -- in line with the project plan -- the necessary funds including expenses for the purchase of production lines and machinery are in place.

Thomas Magnete GmbH, Herdorf, provided a guarantee in our favour regarding the project's financing scheme, thus accepting financial liability for the project.

[16] After receiving the letter, RCI agreed to substitute TMC for TMG. A second purchase order on the same terms and conditions as the first, but identifying TMC as the purchaser, was [page246] signed by RCI in Markham in January 2008. Neither respondent is a party to the second purchase order.

[17] RCI delivered the assembly lines to the Cambridge, Ontario plant in October and November 2008. Unfortunately, GETRAG, the company to whom TMC was to provide the solenoids, went bankrupt. TMC advised RCI that the project was "on hold", and acknowledged that RCI was owed $1,489,617.

[18] In 2009, TMG wound up TMC and litigation among TMC's creditors ensued. Both RCI and Sparkasse claimed to be entitled to the proceeds of the sale of the assembly lines. The issue was litigated in Ontario and RCI was ultimately successful.

IV

The Nature of RCI's Claim

[19] RCI commenced this lawsuit in September 2010. The claims against TMG and Sparkasse sound in contract and tort. RCI does not, however, rely on the terms of the agreements set out in the purchase orders, but instead relies on an agreement that it alleges the respondents made in December 2007, whereby they promised to guarantee payment to RCI of any amounts not paid by TMC in connection with the manufacture and installation of the assembly lines. Paragraphs 31 and 32 of the statement of claim advance the contract claim, and paras. 33 through 36 advance the claim for negligent misrepresentation:

31. In consideration of RCI accepting the Magnete Canada purchase order, the Defendants promised in the December correspondence that funds necessary to pay RCI under the purchase order were in place and would be paid to RCI. The Defendants promised that they guaranteed the project's financing scheme and accepted financial liability for the project.

32. Furthermore, in response to RCI's request for a commitment that in the case of the illiquidity of Magnete Canada, RCI would be paid, the Defendants expressly or impliedly accepted that obligation to pay by the December correspondence wherein they advised among other things, of Sparkasse's financial support of the project, Magnete GmbH's acceptance of financial liability for the project and the fact that funds for the purchase of the three assembly lines are in place.

33. In addition, in order to induce RCI to accept the Magnete Canada purchase order, the Defendants made statements to RCI in the December correspondence regarding the financing of the project and regarding payment to RCI which were untrue, inaccurate and misleading and thus were misrepresentations by reason of the information given and by reason of information that was not given and not disclosed. Particulars are as follows:

34. At the time of the making of the representations, the Defendants intended and knew or ought to have known that RCI would rely thereon and [page247] would be induced to accept the replacement purchase order from Magnete Canada.

35. In the circumstances, the Defendants were under a duty to take care in the making of said representations to RCI. In breach of that duty, the Defendants were guilty of negligence in making said representations.

36. Acting on the faith of said representations and induced thereby, RCI accepted the replacement purchase order from Magnete Canada Inc. in replacement for the purchase order of Magnete GmbH and manufactured and delivered the three assembly lines in exchange for a promise of payment instalments.

V

My Approach to the Issues Raised on the Appeal

[20] The appeal raises issues pertaining to jurisdiction simpliciter, the effect of forum selection clauses relied on by the respondents and the determination of whether Ontario is forum non conveniens. Jurisdiction simpliciter is a threshold question and I will address it first. If the motion judge did not err in finding that Ontario had no jurisdiction simpliciter, there is no need to address the other issues.

[21] As I would hold that Ontario has jurisdiction simpliciter, I will next consider the motion judge's treatment of the forum selection clauses in the confidentiality agreement and purchase orders. An applicable forum selection clause designating a forum other than Ontario places a heavy onus on the plaintiff to justify Ontario as forum conveniens. Finally, as I would hold there is no applicable forum selection clause, I will consider whether, in the absence of any forum selection clause, the trial judge erred in concluding that Ontario was forum non conveniens.

VI

Jurisdiction Simpliciter

[22] The motion judge referred to the controlling test for determining jurisdiction simpliciter set out in Club Resorts Ltd. v. Van Breda, [2012] 1 S.C.R. 572, [2012] S.C.J. No. 17, 2012 SCC 17, at para. 90. The motion judge recognized, at para. 15, that under the Van Breda test, certain factors are presumed to prima facie entitle a court to assume jurisdiction. Those factors include:

-- the defendant carries on business in the province;

-- the tort was committed in the province; and

a contract connected with the dispute was made in the province. [page248]

[23] The motion judge ultimately held, at para. 36:

The defendants argue that there is no jurisdiction simpliciter, as the claim does not fall under any of the provisions of R. 17.02. I have considered all of the materials before me, including the claims, the evidence, case law, and the submissions of the parties, and agree with the submissions of the defendants. I find there is no jurisdiction simpliciter with respect to the claims made by the plaintiffs against the defendants and that there is no real and substantial connection with Ontario.

[24] With respect, I think the motion judge made three errors in reaching her conclusion that Ontario did not have jurisdiction simpliciter. First, the motion judge appears to have accepted TMG's argument that the existence of a forum selection clause in favour of Germany was central to the question of jurisdiction simpliciter. I say this having regard to her description of the jurisdiction simpliciter issue as encompassing a consideration of the forum selection clauses (para. 13), and her indication in arriving at her conclusion that Ontario was without jurisdiction simpliciter that she had been "guided by" (para. 37) the forum selection clause jurisprudence.

[25] A forum selection clause applicable to the relevant litigation identifying a forum other than Ontario as the forum of choice cannot deprive Ontario of jurisdiction simpliciter. A forum selection clause is relevant to whether Ontario should exercise its jurisdiction and not whether Ontario has jurisdiction:[^1] see Momentous.ca Corp. v. Canadian American Assn. of Professional Baseball Ltd. (2010), 103 O.R. (3d) 467, [2010] O.J. No. 4595, 2010 ONCA 722, at paras. 33-40, affd [2012] 1 S.C.R. 359, [2012] S.C.J. No. 9, 2012 SCC 9. The motion judge should have considered the question of jurisdiction simpliciter before examining the forum selection clauses. Those clauses, even if applicable to this litigation, could not assist in determining jurisdiction simpliciter.

[26] Second, the motion judge also erred in considering the adequacy of the appellants' pleadings in determining whether Ontario had jurisdiction simpliciter. Sparkasse submitted that the claim of negligent misrepresentation against Sparkasse advanced in the statement of claim did not properly plead the essential elements of that tort. Sparkasse argued that because the claim was not properly pleaded, it could not provide a basis [page249] for a finding of jurisdiction simpliciter. The motion judge accepted this submission (para. 32).

[27] Where a defendant seeks an order dismissing a claim for want of jurisdiction, the adequacy of the pleadings must be assessed in the context of that challenge. A jurisdictional motion is not the time or place to consider the adequacy of the pleadings for the purpose of a trial. That is the function of a rule 21.01(1)(b) [of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194] motion.

[28] It is open to a party bringing a jurisdictional challenge to argue that the pleadings are so inadequate as to preclude an accurate characterization of the nature of the claims advanced in the pleading. A pleading that falls into that category would provide considerable support for the submission that the pleadings do not show an adequate connection between Ontario and the claim to warrant a finding of jurisdiction. However, whatever may be said about any deficiencies in the negligent misrepresentation pleadings in this case, they do not prevent a proper assessment of the connection of that claim to Ontario. Any further inquiry into the adequacy of the pleadings had no relevance on the motion challenging the jurisdiction of the Ontario court.

[29] The motion judge's third error arose through her failure to focus on the nature of the contractual claim advanced in the statement of claim. That claim did not rely on the payment terms in the purchase orders, but rather on the alleged promise by Sparkasse and TMG to make the payments if TMC, the substituted purchaser, did not pay as required under the purchase orders. To the extent that the motion judge examined the contractual relationship of the parties (paras. 33-34), she focused on the purchase orders and not the agreement alleged in the statement of claim. In doing so, she failed to consider whether the agreement alleged in the statement of claim, as opposed to the purchase orders, was entered into in Ontario, thereby providing a presumptive connecting factor that prima facie entitled Ontario to assume jurisdiction simpliciter over the claim.

[30] Having concluded that the motion judge erred in her jurisdiction simpliciter analysis in the foregoing respects, I turn to a consideration of the Van Breda factors. The appellants rely on three presumptive connecting factors:

-- the respondents were carrying on business in Ontario;

the tort of negligent misrepresentation was committed in Ontario; and [page250]

the contracts relied on in the statement of claim were made and breached in Ontario.

[31] There is a strong argument that all three factors exist, although any one factor will give rise to a presumption of jurisdiction under the Van Breda analysis. Perhaps the strongest of the three factors relied on by the appellants is its contention that the negligent misrepresentation occurred in Ontario. The tort of negligent misrepresentation occurs where the misinformation is received or acted upon: Cannon v. Funds for Canada Foundation, [2010] O.J. No. 3486, 2010 ONSC 4517 (S.C.J.), at para. 52. RCI received the alleged misrepresentations via the e-mail sent to its place of business in Markham, Ontario. Based on this allegation, the tort of negligent misrepresentation occurred in Ontario.

[32] It is arguable that the allegation of a commission of tort in Ontario is enough to give Ontario jurisdiction simpliciter over both the tort claim and the closely related contract claim: see Cannon, at paras. 80-91. I need not decide that issue, as in my view the claim as pleaded also alleges a contract entered into and/or broken in Ontario.

[33] The representations by the respondents relied on by the appellants as constituting the guarantee of TMC's indebtedness were made in response to RCI's offer to substitute TMC as the purchaser if the respondents agreed to provide the guarantees. RCI received notification of the respondents' acceptance of that offer at its office in Markham. As a general rule, a contract is made where the offeror (RCI) receives notification of the offerees' (the respondents) acceptance of the offer: Eastern Power Ltd. v. Azienda Communale Energia and Ambiente, 1999 CanLII 3785 (ON CA), [1999] O.J. No. 3275, 178 D.L.R. (4th) 409 (C.A.), at paras. 21-22.

[34] On the facts as alleged, the contract RCI relies on in advancing its contract claim was made in Ontario. For the reasons explained in connection with the negligent misrepresentation pleadings, a jurisdiction motion is neither the time nor the place to consider arguments that the allegations in the statement of claim are insufficient to establish a contract between RCI on the one hand, and TMG and Sparkasse on the other.

[35] As I am satisfied that the alleged negligent misrepresentations were made in Ontario and the contract relied on by RCI was entered into in Ontario, I need not examine the appellants' argument that the respondents were carrying on business in Ontario. I say only that, having regard to TMC's status as a fully controlled subsidiary of TMG, there is a formidable argument that TMG was carrying on business in Ontario: [page251] Stubbs v. ATS Applied Tech Systems Inc., [2010] O.J. No. 5571, 2010 ONCA 879, at paras. 45-48.

[36] My conclusion that the allegations are sufficient to establish connecting factors that create a presumption of jurisdiction does not end the Van Breda analysis. The presumption can be rebutted by the respondents. As explained in Van Breda, at para. 95:

The burden of rebutting the presumption of jurisdiction rests, of course, on the party challenging the assumption of jurisdiction. That party must establish 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.

[37] The respondents challenged jurisdiction simpliciter claiming first that the forum selection clauses were determinative and, second, that under the Van Breda test, there were no presumptive connecting factors. I have rejected both of those arguments for the reasons set out above. The respondents did not suggest that if there were presumptive connecting factors, the respondents had rebutted the presumption of jurisdiction flowing from those factors. There is nothing in this record that could support that argument.

[38] Ontario has jurisdiction simpliciter.

VII

The Effect of the Purported Forum Selection Clauses

[39] Forum selection clauses in an agreement between parties, particularly sophisticated commercial parties, will normally be enforced by Ontario courts. A plaintiff who seeks to litigate in Ontario, having agreed that the dispute would be litigated in another forum, carries a heavy burden and must show a "strong cause" for departing from the terms of the agreement: Z.I. Pompey Industrie v. ECU-Line N.V., [2003] 1 S.C.R. 450, [2003] S.C.J. No. 23, 2003 SCC 27, at para. 20; Expedition Helicopters Inc. v. Honeywell Inc. (2010), 100 O.R. (3d) 241, [2010] O.J. No. 1998, 2010 ONCA 351.

[40] In Expedition Helicopters Inc., this court described the burden in these terms, at para. 11:

Rather, the forum selection clause pervades the [forum non conveniens] analysis and must be given full weight in the consideration of other factors. It is not enough for the plaintiff to establish a "strong" case that Ontario is the more convenient forum. The plaintiff must show "strong cause" that the case is exceptional and the forum selection clause should not be enforced.

[41] The requirement that the plaintiff show "strong cause" for litigating in a forum other than the forum agreed upon [page252] presumes that there is an agreement that contains a clear forum selection clause, and that the forum selection clause, by its terms, applies to the litigation that the plaintiff seeks to bring in Ontario: Loat v. Howarth, [2011] O.J. No. 3166, 2011 ONCA 509, 338 D.L.R. (4th) 644, at para. 35; Matrix Integrated Solutions Ltd. v. Naccarato (2009), 2009 ONCA 593, 97 O.R. (3d) 693, [2009] O.J. No. 3187 (C.A.), at paras. 10-11. The appellants argue that neither of these preconditions is met.

[42] The respondents rely on two different forum selection clauses. They point first to the confidentiality agreement between TMG and RCI. That agreement contains a clear choice of forum clause (supra, para. 7). However, the clause applies to "all disputes arising from or in connection with this Agreement". The "Agreement" relates to the mutual duty of confidentiality owed by TMG and RCI in respect of all information acquired either directly or indirectly during the course of the assembly line project.

[43] The claims advanced by the appellants have nothing to do directly or indirectly with any alleged breach of the confidentiality agreement. They do not arise from and are not connected to that agreement. The forum selection clause in the confidentiality agreement has no application to this litigation.

[44] The respondents rely more heavily on what they claim is a forum selection clause in the purchase orders. As set out above, two versions of the relevant clause were before the motion judge. She relied on the version provided to RCI by TMG at the time of the first purchase order. The alleged forum selection clause in that version read:

The court at the place where the plaintiff is domiciled is Herdorf.

[45] The motion judge described this clause as providing "that the place of jurisdiction is Herdorf, Germany" (para. 6). I seriously doubt that the clause as worded in the version provided to RCI at the time it entered into the first purchase order has the clarity needed to create an effective forum selection clause. The alternate version put forward by the affiant for the respondents on the motion which declares that "the place of jurisdiction is Betzdorf" is clearer and could, in my view, be construed as a forum selection clause applicable to disputes arising out of the purchase order.

[46] I need not decide whether either version is sufficiently clear to justify interpreting the term as a forum selection clause. I will assume that there is a forum selection clause in favour of Germany in the purchase orders. Even on that assumption, however, the respondents must still demonstrate that the claims [page253] advanced against them fall within the ambit of the language in the forum selection clause. The bald language in either version of the clause cannot be extended to disputes based on claims that are outside of the terms of the purchase orders. The appellants' claims, properly characterized, do not claim relief for non-compliance with the payment terms of the purchase orders. The claims are against the alleged guarantors of the payments required under the purchase orders.

[47] The commercial interchange leading up to the purchase orders and the terms of the purchase orders are central features of the factual context in which the appellants' claims are advanced. The claims are, however, distinct from obligations arising under the purchase orders. As counsel for the appellants persuasively argues, the appellants do not seek an interpretation or implementation of any provision of the purchase orders. Rather, they seek enforcement of the respondents' guarantees. Assuming there is a forum selection clause in the purchase orders, it does not apply to these claims.

[48] I would add that neither respondent is a party to the second purchase order. I do not see how, on their theory of the case, either could enforce the terms of the second purchase order.

VIII

Is Ontario Forum Non Conveniens?

[49] Unlike the determination of jurisdiction simpliciter, the forum conveniens inquiry engages judicial discretion. Different judges can reasonably and properly come to different conclusions on whether Ontario is forum non conveniens in a given set of circumstances. This court will defer to the findings made at first instance absent an error in law or principle, or a clear and serious factual error: Van Breda, at para. 112.

[50] In her relatively brief forum non conveniens analysis, the motion judge referred to various connections that the litigation had to Germany and Ontario. In the course of doing so, she said, at para. 39:

The plaintiffs have agreed that the laws of Germany apply, and that the place of performance and the court at the place where the plaintiffs are domiciled is Herdorf.

[51] In referring to the plaintiffs (now appellants) as having agreed that the law of Germany applied, the motion judge was referring to the terms of the purchase orders. For the reasons set out above, the purchase orders do not govern these claims. There was no agreement by the plaintiffs (now appellants) that the law of Germany would apply to these claims. [page254]

[52] Clearly, the negligent misrepresentation claim would be governed by the law of Ontario. Insofar as the contract-based allegations are concerned, the most that could be said at this stage is that there is an argument that the law of Germany should apply. With respect, the motion judge erred in holding that by virtue of the terms of the purchase orders German law would apply to this litigation.

[53] The motion judge's erroneous determination that German law would govern the claims was part of her forum non conveniens analysis. That error amounts to an error in law, removing the requirement that this court defer to the motion judge's decision and requiring this court to make its own assessment of whether Ontario is forum conveniens. In making that assessment, I bear in mind that the respondents have the burden of showing that Ontario is forum non conveniens. To meet that burden, the respondents must demonstrate that fairness to the parties and the efficient resolution of these claims makes Germany clearly a more appropriate forum for resolving these claims than is Ontario: Van Breda, paras. 103-11.

[54] On my review of the relevant facts, neither Ontario nor Germany is clearly a more appropriate forum. The location of potential witnesses, and the physical location of documentary evidence, seems to me, in a commercial dispute like this, to offer little reason for preferring either Germany or Ontario. The witnesses are distributed between the jurisdictions, and other jurisdictions, and none should be particularly surprised that international commercial activities might take them to court in a foreign jurisdiction. The documents are presumably easily portable.

[55] The application of Ontario law to at least part, and perhaps all of the claims advanced by the appellants, is a relevant factor favouring Ontario. Here, too, however, I do not think undue weight should be attached to this factor. Presumably, a German court will have no difficulty applying Ontario law to the misrepresentation allegation.

[56] Ultimately, the forum conveniens inquiry comes down to a characterization of the commercial activity giving rise to this litigation. By commercial activity, I include not only the alleged guarantees giving rise to the claims, but also the course of commercial activity that gave rise to the guarantees. That activity was German in the sense that the controlling corporations and the individuals making the decisions on behalf of the controlling corporations operated out of Germany and viewed Germany as the place to litigate disputes arising out of the confidentiality agreement and probably the purchase orders. [page255]

[57] In another sense, however, the underlying commercial activity is Canadian in that it represents the expansion of German business interests into the automobile parts manufacturing industry in Ontario. Presumably, the Thomas-controlled companies saw significant potential business through active participation in that industry in Ontario. The end product of the commercial relationship -- the assembly lines -- were to be manufactured and installed in Ontario.

[58] At the risk of oversimplifying the situation, the commercial activities that give context to this litigation can be described as business decisions made by Germans in Germany about doing business in Ontario. I think both jurisdictions have meaningful connections to that commercial activity.

[59] The respondents, as the parties seeking a stay based on the argument that Ontario was forum non conveniens, had the onus of showing that a German court was in a better position to fairly and efficiently dispose of this claim than was an Ontario court. I think the respondents demonstrated that Germany was a forum conveniens, but I do not think the respondents demonstrated that Germany was "clearly more appropriate for disposing of the litigation" than was Ontario: see Van Breda, para. 109. The Ontario proceedings should not have been stayed on the basis of forum non conveniens.

IX

Conclusion

[60] I would allow the appeal, set aside the order of the motion judge and substitute an order dismissing the motions brought by the respondents for orders dismissing or permanently staying this action.

[61] The parties may make written submissions as to costs. The appellants' submissions of less than ten pages should be served on the respondents and filed within 30 days of the release of these reasons. The respondents' submissions should be served and filed within 15 days of the receipt of the appellants' submissions.

Appeal allowed.

[^1]: The situation is quite different where the forum selection clause identifies Ontario as the forum of choice. In that situation, the clause arguably gives Ontario jurisdiction through the consent of the parties.

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