DATE: 20040720

DOCKET: C40736

COURT OF APPEAL FOR ONTARIO

RE: MOBILE MINI INCORPORATED (Plaintiff) (Defendant by Counterclaim/Appellant in Appeal) – and – CENTRELINE EQUIPMENT RENTALS LIMITED (Defendant) (Plaintiff by Counterclaim/Respondent in Appeal)

BEFORE: DOHERTY, ARMSTRONG and LANG JJ.A.

COUNSEL: Steven F. Rosenhek and Erik S. Knutsen

for the appellant

Wayne S. Novak

for the respondent

HEARD: May 19, 2004

On appeal from the order of Justice Harry J. Keenan of the Superior Court of Justice dated September 11, 2003.

E N D O R S E M E N T

[1] In May 2000, the Arizona supplier of goods (the appellant) sued its Ontario dealer (the respondent) for non-payment. The dealer counterclaimed alleging that, when delivered, the goods were defective. The arrangements between the supplier and the dealer were governed by a Dealership Appointment Agreement. In July 2001, both the supplier and dealer became aware that the agreement contained a clause which provided that claims could “only be litigated” in Arizona. In September 2003, on the basis of that forum selection clause, the Windsor dealer successfully moved to stay the action. The Arizona supplier appeals.

[2] Under the Courts of Justice Act, R.S.O. 1990, c.C.43, s. 106, a stay is a discretionary remedy. As such, it will not be set aside unless the motions judge exercised his discretion based upon a wrong principle, failed to consider a relevant principle or misapprehended the evidence.

[3] There is no disagreement as to the applicable law. Forum selection clauses are properly recognized as important components of international commercial contracts. They give the parties certainty and security as to where and under what law a contractual dispute will be adjudicated. This purpose is only served if the courts give full force and effect to forum selection clauses.

[4] When a defendant moves to stay a proceeding brought in Ontario relying on a forum selection clause which designates another jurisdiction as the appropriate forum, the Ontario court will stay the Ontario proceedings unless the plaintiff can show “strong cause” for not giving effect to the clause. The plaintiff must show that on a consideration of the totality of the circumstances, it would be unreasonable or unjust to stay the Ontario proceedings: See Z.I. Pompey Industrie v. ECI-Line N.V., 2003 SCC 27, [2003] S.C.J. No. 23 (S.C.C.).

[5] Although a forum selection clause will play a dominant role in deciding the appropriate forum, it is not determinative of that issue. We read the motion judge’s endorsement as holding that the clause was determinative in this case absent waiver of the clause by the defendant. In so holding, he erred in principle in the exercise of his discretion under s. 106 of the Courts of Justice Act.

[6] Having found an error in principle, it falls to this court to exercise the discretion found in s. 106 of the Courts of Justice Act.

[7] In exercising that discretion, we acknowledge and agree with counsel for the appellant’s concession that had this motion been brought at the outset of the proceedings in Ontario, those proceedings would have been stayed in favour of proceedings in Arizona. The motion was not brought at the outset of the proceedings. Instead, it was brought immediately before the case was set to be scheduled for trial some three and a half years after the proceedings were commenced and some two and a half years after the respondent had been made aware of the forum selection clause in the agreement.

[8] In addition to this inordinate delay, the respondent took several steps in the Ontario proceedings before it brought the motion to stay those proceedings. The respondent filed a statement of defence, commenced a counterclaim, and provided an affidavit of documents. The appellant also examined the representative of the respondent for discovery.

[9] In these exceptional circumstances, we think it would be unjust to require the appellant to stop the proceedings in Ontario on the eve of trial and move them to Arizona to begin the proceedings afresh some three and a half years after the statement of claim was issued.

[10] We also note that the litigation is more closely tied to Ontario than Arizona. Most of the witnesses reside in Ontario, most of the documents are found in Ontario, and all of the relevant events occurred in Ontario. While the close connection between Ontario and the subject matter of the litigation would not by itself trump the forum selection clause, it does make it easier to come to the conclusion that given the delay and the defendant’s conduct in the proceedings, justice requires that the Ontario proceedings continue.

[11] The appeal is allowed and the order of the motions judge is set aside. As the parties agree, as alternatively suggested in the motions judge’s reasons, an order will go changing the place of trial from Toronto, Ontario to Windsor, Ontario. The issue of security for costs is remitted to a motions court for consideration.

[12] The supplier is entitled to costs of the appeal and of the motion below, which we fix at $12,000 inclusive of disbursements and GST.

“Doherty J.A.”

“Robert P. Armstrong J.A.”

“Susan Lang J.A.”