Gajraj et al. v. DeBernardo et al. [Indexed as: Gajraj v. DeBernardo]

60 O.R. (3d) 68

[2002] O.J. No. 2130

Docket No. C36992

Court of Appeal for Ontario,

Rosenberg, Feldman, and Sharpe JJ.A.

May 29, 2002

Conflict of laws -- 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 DG was in a motor vehicle that collided with two other vehicles. The collision occurred on an expressway in Queens, New York City. DG suffered personal injuries, and he and the other plaintiffs, who all were residents of Brampton, Ontario, commenced an action in Ontario against KD and RM, both residents of New York. The action also named DG's insurer as a defendant pursuant to an underinsured motorist coverage endorsement.

The defendant KD moved to set aside the service of the statement of claim ex juris or for a stay of the proceedings. Kruzick J. granted the motion, severing the action against the insurer and staying the action against KD and RM. The plaintiffs appealed.

Held, the appeal should be dismissed. [page69]

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 out-of- province defendants KD and RM. Accordingly, the appeal should be dismissed.

APPEAL from a judgment of Kruzick J., [2001] O.J. No. 3655 staying an action.

Cases referred to Hunt v. T & N plc, 1993 43 (SCC), [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; McNichol Estate v. Woldnik (2001), 2001 5679 (ON CA), 13 C.P.C. (5th) 61, 150 O.A.C. 68 (C.A.), affg (2000), 2000 26983 (ON SC), 52 O.R. (3d) 49, 5 C.P.C. (5th) 333 (S.C.J.); Moran v. Pyle National (Canada) Ltd., 1973 192 (SCC), [1975] 1 S.C.R. 393, [1974] 2 W.W.R. 586, 43 D.L.R. (3d) 239, 1 N.R. 122; Morguard Investments Ltd. v. De Savoye, 1990 29 (SCC), [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; World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980) Statutes referred to Family Law Act, R.S.O. 1990, c. F.3, s. 61 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 17.06(1), R.R.O. 1990, Reg. 676 ("Insurance Act"), Sched., s. 4

Stewart C.E. Gillis, for appellants. John D. Strung and Julie A. Dabrusin, for respondent Karla Jo DeBernardo. John D. Dean, for respondent Allstate Insurance Company of Canada. Colin S. Jackson, for respondent Rafeek Manusami.

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 courts should assume jurisdiction over out-of-province defendants in claims for damage sustained in Ontario as a result of a tort committed elsewhere. [page70]

Facts

[2] On October 10, 1998, the plaintiff Daneshwar Gajraj was involved in a motor vehicle accident on an expressway in Queens, New York City. Gajraj alleges that the defendant Karla Jo DeBernardo struck his car from behind and that his car then struck a third vehicle driven by the defendant Rafeek Manusami.

[3] The plaintiffs Daneshwar Gajraj, Bibi Kamroon Nesha Gajraj and Trisha Sharmela commenced an action in Ontario alleging negligence by DeBernardo and Manusami. Daneshwar Gajraj claimed general and special damages for personal injuries sustained to his neck, back, shoulder and left arm. Bibi Kamroon Nesha Gajraj and Trisha Sharmela claimed damages for loss of care, guidance and companionship pursuant to s. 61 of the Family Law Act, R.S.O. 1990, c. F.3. The action also named Daneshwar Gajraj's insurer, Allstate Insurance Company of Canada ("Allstate"), as a defendant pursuant to the underinsured motorist coverage endorsement.

[4] The plaintiffs are residents of Brampton, Ontario. Both DeBernardo and Manusami are residents of New York.

[5] DeBernardo moved to set aside the service of the statement of claim pursuant to rule 17.06(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. In the alternative, DeBernardo moved for a stay of proceedings pursuant to rule 17.06(1) or s. 106 of the Courts of Justice Act, R.S.O. 1990, c. C.43. She also moved to sever the action against Allstate from the action against herself and Manusami. Manusami supported DeBernardo's motion. Allstate supported the plaintiffs' position and argued that DeBernardo's motion should be dismissed.

Judgment Below

[6] On August 24, 2001, Kruzick J. granted DeBernardo's motion, severing the action against DeBernardo and Manusami from the action against Allstate and staying the action against DeBernardo and Manusami.

[7] The motions court judge held that the preferable approach to jurisdiction is a two-step inquiry that first considers jurisdiction simpliciter and then considers whether Ontario is the most convenient forum for the action. On the issue of jurisdiction simpliciter, he held that for an Ontario court to exercise jurisdiction, the facts of the case must satisfy the "real and substantial connection" test. He also held that "[t]he case law seems to support the proposition that an Ontario Court should decline jurisdiction with respect to a foreign defendant unless the foreign defendant and the cause of action have a real and substantial connection with Ontario." [page71]

[8] The motions court judge held that the plaintiffs failed to meet the real and substantial connection test. The reasonable expectations of the parties indicated that New York was the appropriate jurisdiction, since the accident occurred in New York, the defendants are from New York, and the defendants had no contractual link with the plaintiffs that would bring them to Ontario.

[9] The motions court judge further held that Ontario was not the convenient forum for the action. He found that the key witnesses and evidence would come from both New York and Ontario and that it was difficult to assess where the bulk of the evidence would come from. However, he also found that the place of the accident was New York and that the applicable law was New York law. Further, there would be a loss of juridical advantage for DeBernardo and Manusami if the matter proceeded in Ontario, and the factual questions weighed in favour of New York since New York law applied.

[10] The motions court judge found that the action against DeBernardo and Manusami should be severed from the action against Allstate. In his view, there was no need for DeBernardo and Manusami to be parties to the action in order for the plaintiffs to pursue remedies against Allstate. Further, there need not be multiple court proceedings, since Gajraj's underinsured policy with Allstate provided for alternate dispute resolution. Finally, including Allstate in the action could prejudice DeBernardo and Manusami by preventing a fair trial against them, since the trier of fact would become aware of their coverage limits.

Issues

[11] This appeal raises the following issues:

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

(2) Did the motions court judge err in finding that jurisdiction should be refused on the ground of forum non conveniens?

(3) Did the motions court judge err in severing the action against Allstate from the action against the out-of- province defendants?

Analysis

[12] This appeal was heard together with Muscutt v. Courcelles and this judgment is being released at the same time as the judgment in Muscutt and the three other related appeals, [page72] Sinclair v. Cracker Barrel Old Country Store, Inc., Leufkens v. Alba Tours International Inc. and Lemmex v. Sunflight Holidays Inc. In Muscutt, I discussed the legal principles relating to assumed jurisdiction on the basis of damages sustained within Ontario as a result of a tort committed elsewhere. I also discussed 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: Did the motions court judge err in finding that the Ontario Superior Court could not assume jurisdiction against the out-of-province defendants?

[13] 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 29 (SCC), [1990] 3 S.C.R. 1077, 76 D.L.R. (4th) 256 and Hunt v. T & N plc., 1993 43 (SCC), [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 defendants DeBernardo and Manusami.

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

[14] The plaintiff Daneshwar Gajraj is a resident of Ontario. In the affidavit he filed on DeBernardo's motion to stay the action for lack of jurisdiction, he deposed that he has undergone extensive treatment in Ontario from several medical practitioners as well as other health care and vocational advisers. He states that he has suffered ongoing pain as a result of the accident and that he has been unable to return to work. Gajraj's allegations represent a significant connection with Ontario. However, this is only one of the relevant factors to consider.

(2) The connection between the forum and the defendant

[15] Neither the defendant DeBernardo nor the defendant Manusami has any contact or connection with Ontario. There is nothing in their conduct that could amount to subjection or submission to the jurisdiction of Ontario courts. As motorists, these defendants might well have foreseen that negligence on their part could cause an injury to an out-of-state motorist who would return home and assert a claim for damages. However, as explained in Muscutt, the fact that it was foreseeable that the plaintiff would return home after sustaining an injury does not [page73] bring the case within the principle enunciated in Moran v. Pyle National (Canada) Ltd., 1973 192 (SCC), [1975] 1 S.C.R. 393, 43 D.L.R. (3d) 239.

(3) Unfairness to the defendant in assuming jurisdiction

[16] In my view, there would be an element of unfairness to DeBernardo and Manusami if jurisdiction were assumed in this case. In this regard, I would distinguish this case from Muscutt, in which the accident occurred in another Canadian province. I agree with the motions court judge that since the accident occurred in New York and the defendants had no connection with Ontario, the parties' reasonable expectations would be that the action would be tried in New York.

[17] I note that there is no evidence of the nature or existence of the defendants' insurance arrangements or of any applicable Power of Attorney and Undertaking obliging the insurer to attorn to Ontario jurisdiction. Nor is there evidence regarding standard terms of motor vehicle insurance coverage in the United States. I have no reason to doubt the submission of counsel for DeBernardo that the nature and terms of insurance vary widely from state to state.

(4) Unfairness to the plaintiff in not assuming jurisdiction

[18] If the order of the motions court judge refusing jurisdiction is affirmed, the plaintiff will be compelled to litigate in New York. This would undoubtedly be inconvenient to the plaintiff. However, as in Sinclair, Leufkens and Lemmex, I am not persuaded that forcing the plaintiff to litigate this claim in New York would cause any significant degree of unfairness. The reasonable expectations of the parties are relevant to some degree, and I agree with the finding of the motions court judge that where a party travels to another country and is involved in a motor vehicle accident there, it is reasonable to expect that a dispute with a local driver will be litigated in the foreign jurisdiction.

(5) The involvement of other parties to the suit

[19] The plaintiff Daneshwar Gajraj has joined his insurer Allstate as a defendant pursuant to the underinsured motorist coverage endorsement. Section 10 of OPCF 44R -- Family Protection Coverage provides that issues of quantum are to be determined in accordance with the law of Ontario, while issues of liability are to be determined in accordance with the law of the place where the accident occurred. Pursuant to s. 4 of Regulation 676 -- Uninsured Automobile Coverage, R.R.O. 1990, liability and damages are to be determined by agreement of the parties, by [page74] arbitration, or by "a court of competent jurisdiction in Ontario". The plaintiffs submit that since the action against Allstate must proceed in Ontario, jurisdiction should be assumed against the New York defendants to avoid a multiplicity of proceedings.

[20] In my view, on the facts of this case, the claim against Allstate does not fortify the case for assuming jurisdiction against the New York defendants. At this stage of the proceedings, the claim against Allstate is entirely speculative in nature. Counsel for the plaintiffs conceded that joining Allstate was a purely precautionary measure and that the plaintiffs do not at present know whether or not the New York defendants have adequate insurance coverage. It seems to me that this situation is very different from the situation in McNichol Estate v. Woldnik (2001), 2001 5679 (ON CA), 150 O.A.C. 68. In McNichol, the core of the plaintiff's claim was against the domestic defendants and adding the foreign defendant was necessary to avoid a multiplicity of proceedings. By contrast, here the core of the claim is against the New York defendants and the claim against the Ontario defendant is entirely secondary and contingent. Jurisdiction over claims against extra-provincial defendants should not be bootstrapped by such a secondary and contingent claim against a provincial defendant.

[21] Accordingly, the involvement of Allstate does not favour assuming jurisdiction against DeBernardo and Manusami.

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

[22] To assume jurisdiction in the present case would create a rule requiring Ontario courts to recognize and enforce judgments of foreign courts for damages arising from Ontario motor vehicle accidents. In my view, Ontario courts should hesitate to adopt a jurisdictional rule requiring Ontario motorists to defend themselves in foreign courts against suits for damages arising from accidents in Ontario or face enforcement of a default judgment against them. I do not think that by engaging in the everyday act of driving a motor vehicle in Ontario, a driver should be taken to have assumed the risk of defending his or her conduct in a foreign court. As explained below, I would distinguish this case from Muscutt, which involved a motor vehicle accident in another Canadian province.

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

[23] This is an international case. In my view, foreign motor vehicle accidents should be distinguished from accidents that [page75] occur in one Canadian province and result in consequential damage in another province. For the reasons given in Muscutt, it seems to me entirely appropriate for the Canadian legal system to provide motor vehicle accident victims ready access to the courts of their home province. However, the problems created by foreign accidents are more complex, since the issue cannot be governed entirely by Canadian jurisdictional standards. Consideration must be given to the norms that prevail elsewhere, a factor to which I now turn.

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

[24] 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. The minimum contacts doctrine that governs jurisdiction in the United States is particularly relevant to this appeal. Under the minimum contacts doctrine, the assumption of jurisdiction requires an act or conduct by the defendant that amounts to personal subjection to the jurisdiction. It is virtually certain that New York courts would not recognize or enforce an Ontario judgment against a New York defendant for damages sustained in Ontario as a result of a motor vehicle accident in New York unless the defendant voluntarily attorned to Ontario's jurisdiction: World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980). 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.

Conclusion

[25] 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 are either neutral or 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 defendants 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 DeBernardo and Manusami. [page76]

Issue 2: Did the motions court judge err in finding that jurisdiction should be refused on the ground of forum non conveniens?

[26] Since I have concluded that Ontario courts cannot assume jurisdiction against DeBernardo and Manusami, it is unnecessary to consider this issue.

Issue 3: Did the motions court judge err in severing the action against Allstate from the action against the out-of- province defendants?

[27] It is common ground that this issue need only be addressed if Ontario courts can assume jurisdiction against DeBernardo and Manusami. Since I have concluded that they cannot do so, it is unnecessary to consider this issue.

Disposition

[28] 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 respondents 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: Sinclair v. Cracker Barrel Old Country Store, Inc. (C35699); Muscutt v. Courcelles (C35934); Leufkens v. Alba Tours International Inc. (C36006); Lemmex v. Sunflight Holidays Inc. (C37455).