Sinclair et al. v. Cracker Barrel Old Country Store, Inc.

[Indexed as: Sinclair v. Cracker Barrel Old Country Store, Inc.]

60 O.R. (3d) 76

[2002] O.J. No. 2127

Docket No. C35699

Court of Appeal for Ontario,

Rosenberg, Feldman, and Sharpe JJ.A.

May 29, 2002

Conflict of law -- Stay of proceedings -- Service ex juris -- Assumed jurisdiction -- Forum non conveniens -- Plaintiff claiming damage sustained in Ontario as a result of tort committed elsewhere -- Plaintiff being Ontario resident -- Out-of-province defendant -- Real and substantial connection test -- Multiple factors relevant to determining whether forum has real and substantial connection -- Motion to stay allowed -- Courts of Justice Act, R.S.O. 1990, c. 43, s. 106 -- Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 17.02, 17.06.

In 1998, the plaintiff MS slipped and fell in a washroom of a restaurant in the Town of Blasdell, New York. The restaurant was owned and operated by the defendant, a Tennessee corporation, which carried on business in various states in the United States. The plaintiff, her husband, and her daughter brought action [page77] in Ontario against the defendant alleging negligence. The defendant moved to set aside the service of the statement of claim and to dismiss the action or stay the proceedings pursuant to rules 17.02 and 17.05 of the Rules of Civil Procedure and s. 106 of the Courts of Justice Act. Master Clark dismissed the motion, but Matlow J. allowed the appeal and stayed the action. The plaintiffs appealed to the Court of Appeal.

Held, the appeal should be dismissed.

In the simultaneously released judgment in Muscutt v. Courcelles, the court sets out the legal principles relating to assumed jurisdiction in cases involving damages sustained in Ontario as a result of a tort committed elsewhere. The judgment in Muscutt identifies eight factors to be considered when determining whether the real and substantial connection test and the principles of order and fairness have been satisfied for a court to assume jurisdiction. Applying the Muscutt analysis to the circumstances of this case indicated that the Ontario courts cannot assume jurisdiction against the defendant. Accordingly, the appeal should be dismissed.

APPEAL from a judgment of Matlow J. (2000), 13 C.P.C. (5th) 165 (S.C.J.) staying an action.

Cases referred to Brokemond v. Marshall Field & Co., 612 N.E.2d 143 (Ind. App. 3 Dist. 1993); Hunt v. T & N plc, [1993] 4 S.C.R. 289, 85 B.C.L.R. (2d) 1, 109 D.L.R. (4th) 16, [1994] 1 W.W.R. 129, 21 C.P.C. (3d) 269; Leufkens v. Alba Tours International Inc. (2001), 53 O.R. (3d) 112, 4 C.C.L.T. (3d) 300 (S.C.J.); Moran v. Pyle National (Canada) Ltd., [1975] 1 S.C.R. 393, [1974] 2 W.W.R. 586, 43 D.L.R. (3d) 239, 1 N.R. 122, revg [1972] 5 W.W.R. 456 (Sask. C.A.), revg [1972] 3 W.W.R. 161 (Sask. Q.B.); Morguard Investments Ltd. v. De Savoye, [1990] 3 S.C.R. 1077, 52 B.C.L.R. (2d) 160, 76 D.L.R. (4th) 256, 122 N.R. 81, [1991] 2 W.W.R. 217, 46 C.P.C. (2d) 1, 15 R.P.R. (2d) 1; Rye v. Atlas Hotels, Inc., 566 N.E.2d 617 (Mass. App. Ct. 1991)

Statutes referred to Family Law Act, R.S.O. 1990, c. F.3 Courts of Justice Act, R.S.O. 1990, c. C-43, s. 106

Rules and regulations referred to Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 17.02, 17.06

Tricia J. McAvoy, for appellants. Peter J. Pliszka and Tate E. McLeod, for respondent.

The judgment of the court was delivered by

[1] SHARPE J.A.: -- This appeal, argued together with four other appeals, [See Note 1 at end of document] involves the important issue whether the Ontario [page78] courts should assume jurisdiction over out-of-province defendants in claims for damage sustained in Ontario as a result of a tort committed elsewhere.

Facts

[2] On October 4, 1998, the plaintiff Marion Sinclair slipped and fell in the ladies' restroom of a restaurant in the Town of Blasdell, New York, just outside of Buffalo. The restaurant was owned and operated by the defendant Cracker Barrel Country Store Inc. ("Cracker Barrel").

[3] The plaintiffs Marion Sinclair, her husband Charles Sinclair and her daughter Cynthia Kaufman brought an action in Ontario alleging negligence by Cracker Barrel. Marion Sinclair claimed general and special damages for the injuries she sustained. Charles Sinclair and Cynthia Kaufman claimed damages at common law and pursuant to the Family Law Act, R.S.O. 1990, c. F.3 for, inter alia, loss of guidance, care and companionship.

[4] The plaintiffs are residents of Ontario. Cracker Barrel is incorporated in Tennessee and has its head office in Tennessee. Cracker Barrel carries on business in various states in the United States, including New York, but has no business operations or assets in Canada.

[5] The plaintiffs issued their statement of claim on September 3, 1999. According to the statement of claim, Mrs. Sinclair slipped on a pool of water on the floor of the ladies' restroom in Cracker Barrel's restaurant and sustained serious personal injuries, including a fracture to her right femur. There do not appear to have been any witnesses to her fall. After she fell, her husband found her on the restroom floor. She was taken by ambulance to a nearby hospital in Lackawanna, New York. Doctors determined that orthopedic surgery was required, but the necessary surgery could not be performed at that hospital. Within five hours, Mrs. Sinclair was transported to a hospital in Toronto, Ontario, where the necessary surgery was performed. She remained in hospital for over eight months as a result of the surgery and related complications and infections.

[6] On September 21, 1999, Cracker Barrel was served with the statement of claim at its Tennessee head office. Cracker Barrel moved to set aside the service of the statement of claim and to dismiss the action or stay the proceeding pursuant to rules 17.02 and 17.06 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 and s. 106 of the Courts of Justice Act, R.S.O. 1990, c. C.43. [page79]

[7] On November 9, 2000, Master Clark dismissed Cracker Barrel's motion. He held that there was a real and substantial connection between the action and Ontario and found that requiring the plaintiffs to bring the action in New York would cause them a "very severe juridical disadvantage" because of the location of their medical witnesses:

Considering the very able arguments made by counsel, and the evidence regarding the likely caliber and number of witnesses, it seems clear that the plaintiffs will be put at a very severe juridical disadvantage if they are required to sue in New York state. The risk of not having the doctors and other medical witnesses attend, is considerable and these witnesses cannot individually be replaced or overlooked.

The weight of evidence and the number of witnesses so overwhelmingly favours Ontario, that one must conclude that the real and substantial connection is between the action brought and the province of Ontario to the exclusion of the state of New York.

[8] Cracker Barrel appealed and Matlow J. allowed the appeal, set aside the Master's order and stayed the action. The motions court judge held that New York was the convenient forum for the action and that the Master had erred in failing to reach that conclusion. In his view, it would be "unjust in the extreme, absent unusual circumstances, for the defendant to be drawn into litigation in foreign places as a result of alleged torts which occurred at its place of business in New York. The fact that the plaintiffs reside in Ontario should not lead to an exception." In addition, he held that as a practical matter, the parties' reasonable expectations favoured New York as the convenient forum:

As a practical matter, it seems clear to me that the reasonable expectation of the parties involved in a dispute such as this would be that their dispute would be litigated in New York. If the plaintiffs had, for example, resided in a far away place such as Australia, it would be absurd to require the defendant to litigate in Australia.

[9] The motions court judge also held that issues of convenience supported New York as the convenient forum. For instance, the parties had recognized that New York law would govern the action. Finally, the motions court judge held that evidence regarding the attendance of witnesses supported New York rather than Ontario as the more convenient forum.

[10] The plaintiffs appealed to this court. The appeal was first heard on October 10, 2001, at which time we also heard argument in Leufkens v. Alba Tours International Inc. (C36006). [page80] Shortly thereafter, another appeal dealing with similar issues came before a different panel: Muscutt v. Courcelles (C35934). However, the appeal in Muscutt, together with appeals in Lemmex v. Sunflight Holidays Inc. (C37455) and Gajraj v. DeBernardo (C36992), were rescheduled to be argued before the same panel that initially heard this appeal. When the appeals in Muscutt, Gajraj and Lemmex were heard on February 7 and 8, 2002, the parties to this appeal and the Leufkens appeal were afforded the opportunity of presenting further argument. At that time, the defendant Cracker Barrel joined the appellant in Muscutt in submitting that rule 17.02(h) of the Rules of Civil Procedure is ultra vires the province of Ontario.

Issues

[11] This appeal raises the following issues:

(1) Is rule 17.02(h) ultra vires the province?

(2) Did the motions court judge err in finding that the Ontario Superior Court could not assume jurisdiction against the out-of-province defendant?

(3) Did the motions court judge err in reversing the Master's decision that jurisdiction should not be refused on the ground of forum non conveniens?

Analysis

[12] This judgment is being released at the same time as the judgment in Muscutt v. Courcelles and the judgments in the three other related appeals. In Muscutt, I discussed the constitutionality of rule 17.02(h), the legal principles relating to assumed jurisdiction on the basis of damages sustained within Ontario as a result of a tort committed elsewhere, and the doctrine of forum non conveniens. Rather than repeating the discussion of those issues, I will proceed directly to apply the analysis in Muscutt to the issues raised on this appeal.

Issue 1: Is rule 17.02(h) ultra vires the province?

[13] For the reasons given in Muscutt, it is my view that rule 17.02(h) is not ultra vires the province.

Issue 2: Did the motions court judge err in finding that the Ontario Superior Court could not assume jurisdiction against the out-of-province defendant?

[14] The plaintiffs submit that the defendant did not raise the issue of assumed jurisdiction before the Master and the motions [page81] court judge and that the defendant therefore should not be permitted to argue the issue on appeal. I do not agree with this submission. In light of subsequent jurisprudence, the issue was perhaps not raised as precisely as it might have been: see especially Leufkens v. Alba Tours International Inc. (2001), 53 O.R. (3d) 112, 4 C.C.L.T. (3d) 300 (S.C.J.). However, the defendant's factum did raise the issue whether there was a real and substantial connection between Ontario and the subject matter of the action, and this issue was also addressed in the reasons of both the Master and the motions court judge. In my view, it is appropriate to consider the issue on appeal.

[15] In Muscutt, I identified eight factors to be considered when determining whether the real and substantial connection test and the principles of order and fairness articulated in Morguard Investments Ltd. v. De Savoye, [1990] 3 S.C.R. 1077, 76 D.L.R. (4th) 256 and Hunt v. T & N plc., [1993] 4 S.C.R. 289, 109 D.L.R. (4th) 16 have been satisfied. In my view, the application of those factors to the facts of this case indicates that Ontario courts cannot assume jurisdiction against the out-of-province defendant Cracker Barrel.

(1) The connection between the forum and the plaintiff's claim

[16] The plaintiff Marion Sinclair is a permanent resident of Ontario. After the fall giving rise to this action, she was taken to a Toronto hospital for surgery and she spent several months in hospital thereafter. Mrs. Sinclair's claim includes damages for pain and suffering in Ontario. The medical treatment she received and the pain and suffering she sustained represent a significant connection with Ontario. However, this is only one of the relevant factors to be considered.

(2) The connection between the forum and the defendant

[17] There is no connection between Ontario and the defendant. Cracker Barrel is a Tennessee corporation and does not carry on business in Ontario. There is no evidence of any acts or conduct by Cracker Barrel in Ontario. As the owner and operator of a restaurant near the Canadian border, Cracker Barrel might well have foreseen that it would attract customers from Ontario and that an Ontario resident injured on its premises would likely return home and suffer consequential damage. However, as explained in Muscutt, the fact that it was foreseeable that the plaintiff would return home after sustaining an injury does not bring the case within the principle enunciated in [page82] Moran v. Pyle National (Canada) Ltd., [1975] 1 S.C.R. 393, 43 D.L.R. (3d) 239. In my view, there is nothing in the defendant's conduct that would amount to personal subjection or submission to the jurisdiction of Ontario courts.

(3) Unfairness to the defendant in assuming jurisdiction

[18] In my view, the assumption of jurisdiction would be unfair to the defendant. I agree with the motions court judge that a restaurant owner and operator should not be expected to litigate claims at the place of residence of all of its customers. As in Muscutt, the defendant was engaged in an activity that involves an inherent risk of harm to parties who live outside the jurisdiction. However, unlike in Muscutt, the activity in question did not involve reciprocal risks of harm with mandatory insurance arrangements to protect parties against those very risks. Unfairness to the defendant could be mitigated if the defendant had insurance coverage to indemnify it against any Ontario judgment, but there is no evidence to that effect in this case.

(4) Unfairness to the plaintiff in not assuming jurisdiction

[19] If jurisdiction is not assumed, the plaintiff will be compelled to litigate in New York. This would undoubtedly be inconvenient to the plaintiff. However, as in Leufkens, Lemmex and Gajraj, I am not persuaded that compelling the plaintiff to litigate this claim in the foreign jurisdiction is unfair to any significant degree. To the extent that the parties' reasonable expectations are relevant, I agree with the finding of the motions court judge that "the reasonable expectation of the parties involved in a dispute such as this would be that their dispute would be litigated in New York".

(5) The involvement of other parties to the suit

[20] Since there are no other named defendants in this action, this factor is not relevant.

(6) The court's willingness to recognize and enforce an extra-provincial judgment rendered on the same jurisdictional basis

[21] In my view, Ontario courts would not be prepared to recognize and enforce an extra-provincial judgment rendered on the same jurisdictional basis as in the present case. Restaurant owners and operators deal with customers who are travelling away from home on a regular and routine basis. To require restaurant owners and operators to litigate the claims of customers [page83] wherever they reside would impose a heavy burden that is difficult to justify under the principles of order and fairness expressed in Morguard and Hunt. Travellers from all corners of the earth might choose to dine in any Ontario restaurant. Absent special circumstances, to require Ontario restaurant owners and operators to defend their conduct in the home jurisdictions of their customers would impose an undue and unreasonable burden on them. If Ontario courts are not prepared to impose that burden on Ontario restaurant owners and operators, we should also refuse to assume jurisdiction against foreign restaurant owners and operators sued by Ontario residents for consequential damages resulting from a tort committed outside the province.

(7) Whether the case is interprovincial or international in nature

[22] Since this is an international case rather than an interprovincial case, assumed jurisdiction is more difficult to justify. Further, as discussed below, considerations of comity and respect for generally accepted principles of private international law do not favour the assumption of jurisdiction in the present case.

(8) Comity and the standards of jurisdiction, recognition and enforcement prevailing elsewhere

[23] As explained in Muscutt, under international standards, it is only in certain limited circumstances that damages sustained within the jurisdiction are accepted as a basis for assumed jurisdiction. Of particular relevance to the present appeal is the minimum contacts doctrine that governs jurisdiction in the United States. Under that doctrine, there must be an act or conduct by the defendant amounting to personal subjection to the jurisdiction. In cases concerning jurisdiction over claims in negligence for damages resulting from injuries sustained in out-of-state hotels or restaurants, courts of the plaintiff's home state have refused jurisdiction. See e.g., Brokemond v. Marshall Field & Co., 612 N.E.2d 143 (Ind.App. 3 Dist. 1993) and Rye v. Atlas Hotels, Inc., 566 N.E.2d 617 (Mass.App.Ct. 1991). If an Ontario judgment would not be enforceable in New York, there would be little or no advantage in allowing the Ontario plaintiffs to litigate their claims here. Further, the generally prevailing international standards explained in Muscutt also militate against assuming jurisdiction in this case. Since assumed jurisdiction would accord neither with the law of the foreign jurisdiction implicated nor with international standards, this factor weighs against assuming jurisdiction. [page84]

Conclusion

[24] In my view, a fair consideration of the factors I have outlined does not favour assuming jurisdiction in the present case. While the fact that the plaintiff has sustained significant damages in Ontario weighs in favour of assumed jurisdiction, the other factors weigh against assumed jurisdiction. This leads me to conclude that the real and substantial connection test has not been satisfied and that assuming jurisdiction against the out-of-province defendant would violate the principles of order and fairness. Accordingly, the motions court judge did not err in finding that the Ontario Superior Court could not assume jurisdiction against Cracker Barrel.

Issue 3: Did the motions court judge err in reversing the Master's decision that jurisdiction should not be refused on the ground of forum non conveniens?

[25] Since I have concluded that Ontario courts cannot assume jurisdiction against Cracker Barrel, it is unnecessary to consider this issue.

Disposition

[26] For the foregoing reasons, I would dismiss the appeal. In order to fix costs of the appeal, the court will entertain brief written submissions dealing with all aspects of the award of costs. Counsel for the respondent shall deliver submissions and a bill of costs no later than seven days from the date of this judgment. Counsel for the appellants may deliver a response, if any, within seven days thereafter.

Appeal dismissed.

Notes

Note 1: Muscutt v. Courcelles (C35934); Leufkens v. Alba Tours Internation Inc. (C36006); Lemmex v. Sunflight Holidays Inc. (C37455); Gajraj v. DeBernardo (C36992).