Roy et al. v. North American Leisure Group Inc. et al. [Indexed as: Roy v. North American Leisure Group Inc.]

73 O.R. (3d) 561

[2004] O.J. No. 4767

Docket: C41286

Court of Appeal for Ontario,

Goudge, Feldman and Lang JJ.A.

November 23, 2004

Conflict of laws -- Choice of law -- Plaintiffs entering into contract with cruise provider which specified that law of England governed contract -- Plaintiffs bringing action in Ontario for damages after allegedly being infected by airborne virus on board cruise ship -- Law of England applying to issues between plaintiffs and cruise provider -- Fact that action against cruise provider would be precluded by two-year limitation period in Athens Convention not constituting type of injustice that justified exception to principles informing choice of law.

The plaintiffs arranged a vacation through the defendant N Inc., which included flights to and from the Dominican Republic and a seven-day cruise on a ship registered in the Bahamas and owned by a related company, the defendant Airtours, which had its head office in and operated from England. The vacation literature sent to the plaintiffs specified separate contracts with N Inc. and Airtours. The brochure stated that the law of England governed the cruise contract. The plaintiffs allegedly contracted an airborne virus from unsafe conditions on board the cruise ship. More than three years after their return from the cruise, they sued the defendants in contract and in tort. The motion judge held that Ontario law applied rather than the law of England or the Bahamas, so that the action against Airtours was not barred by the two-year limitation period in the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea, 1974, to which England and the Bahamas, but not, at the time o f the cruise, Canada, were signatories. Airtours appealed.

Held, the appeal should be allowed.

The motion judge erred in his determination that, because the parties would otherwise suffer an injustice by operation of the limitation period, Ontario law applied. The fact that the plaintiffs' action would be precluded by the operation of the Athens Convention limitation was not the type of injustice that justified an exception to the principles informing the choice of law. The contract between the parties, reflected in the cruise brochure, specified England as the choice of law in any action arising out of the contract. The claim against Airtours was such an action. The mere fact that the plaintiffs failed to read the term was not determinative of the result.

APPEAL from an order of Forget J., [2003] O.J. No. 5179, [2003] O.T.C. 1098 (S.C.J.) on the issue of a choice of law.

Tolofson v. Jensen, 1994 44 (SCC), [1994] 3 S.C.R. 1022, 100 B.C.L.R. (2d) 1, 120 D.L.R. (4th) 289, 175 N.R. 161, [1995] 1 W.W.R. 609, 22 C.C.L.T. (2d) 173, 32 C.P.C. (3d) 141, 7 M.V.R. (3d) 202, consd. Other cases referred to Craven v. Strand Holidays (Canada) Ltd. (1982), 1982 1859 (ON CA), 40 O.R. (2d) 186, 142 D.L.R. (3d) 31 (C.A.); Somers v. Fournier (2002), 2002 45001 (ON CA), 60 O.R. (3d) 225, 214 D.L.R. (4th) 611, 22 C.P.C. (4th) 264, 27 M.V.R. (4th) 165, 12 C.C.L.T. (3d) 68 (C.A.); Tilden Rent-A-Car Co. v. Clendenning (1978), 1978 1446 (ON CA), 18 O.R. (2d) 601, 83 D.L.R. (3d) 400 (C.A.). Authorities referred to Athens Convention Relating to the Carriage of Passengers and their Luggage by Sea, 1974 [page562]

Helmut R. Brodmann, for respondents. Danièle Dion, for appellants.

The judgment of the court was delivered by

[1] LANG J.A.:-- This appeal concerns the choice of law governing the plaintiffs' action against one of the defendants, Airtours PLC ("Airtours"). The choice of law issue is critical because, unless Ontario law applies, as it was held to apply by the motion judge, the plaintiffs' action against Airtours is said to be statute-barred.

[2] On appeal, Airtours argues that the trial judge erred in holding the law of Ontario to be the applicable law rather than the law of England, as specified contractually, or of the Bahamas, where the injury is said to have occurred -- the lex loci delicti.

[3] Both England and the Bahamas are signatories to the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea, 1974 (the "Athens Convention"), which imposes a two-year limitation period on causes of action such as the plaintiffs'. While Canada is now a signatory to the Athens Convention, it was not when this action was commenced. If the law of Ontario, as it was when the events of this case occurred, governs the action against Airtours, the plaintiffs' action survives even though it was initiated more than three years after the tour ended. If the law of England or the Bahamas governs, the plaintiffs' action against Airtours is barred by the Athens Convention limitation period, although their action against the other defendant is not, because all agree that Ontario law governs that action.

[4] The plaintiffs' vacation, organized by the Ontario company North American Leisure Group Inc., known as Sunquest Vacations ("Sunquest"), included flights to and from the Dominican Republic, a seven-day hotel stay in the Dominican Republic, and a seven-day Caribbean cruise on a ship registered in the Bahamas and owned by a related company, Airtours, which had its head office in and operated from England.

[5] The vacation literature sent to the plaintiffs specified separate contracts with Sunquest, the tour operator, and with Airtours, the cruise provider. Allegedly resulting from unsafe conditions on board the cruise ship, and from a failure to warn about those conditions, both plaintiffs contracted an airborne virus, the results of which were chronic and disabling for Mrs. Roy. [page563] More than three years after their return from the cruise, the plaintiffs sued Sunquest and Airtours both in contract and in tort.

[6] The contract between the parties was defined in various brochures provided to the plaintiffs. In particular, the brochures distinguished between the tour operator and the service providers. The cruise brochure was provided to all passengers, about 50 per cent of whom were of British nationality. The brochure specified that the law of England governed the cruise contract. The brochure referenced the Athens Convention and alerted the reader that a copy of this Convention was available on request.

[7] On an earlier motion in this action, decided March 14, 2002, and on the basis of the real and substantial connection test, Métivier J. concluded that Ontario both had jurisdiction over the action and was the forum conveniens. On this subsequent motion, Forget J., in concluding that Ontario was also the appropriate choice of law, found that Ontario had the "most real and substantial connection" (at para. 8). He distinguished Tolofson v. Jensen 1994 44 (SCC), [1994] 3 S.C.R. 1022, 120 D.L.R. (4th) 289 on the basis that it dealt primarily with an interprovincial conflict of law rather than an international conflict of law. In an international conflict, he interpreted Tolofson as holding that "there is some merit in allowing the judge to apply the law of his or her jurisdiction" (at para. 13). He found that applying the law of England or the Bahamas would result in injustice to the plaintiffs because the Athens Convention limitation period would preclude the plaintiffs' action. In n egating the application of the contractual provision stipulating the law of England, the motion judge noted that the plaintiffs "did not read the fine print and that the defendants did not explain it" (at para. 11).

[8] On the question as to the relevance of a limitation period to choice of law, in our view, Tolofson is determinative. Tolofson, although addressing interprovincial conflicts of laws held that, as a general rule in tort actions, the choice of substantive law is the law of the jurisdiction where the activity occurred: the lex loci delicti. Tolofson noted that the general rule in favour of the lex loci delicti provides three advantages to the parties to litigation: certainty, ease of application and predictability.

[9] Tolofson considered the application of this rule in two motor vehicle cases where the lex loci delicti would, either by operation of a limitation period or by a limitation on damages, preclude relief for injuries suffered. Nonetheless, Tolofson determined the choice of law to be the lex loci delicti.

[10] While recognizing that a rigid application of such a rule could lead to injustice, La Forest J. cautioned that any exceptions to the general rule required careful definition. The court left open [page564] the delineation of any such exceptions, particularly in cases involving international law. In doing so, La Forest J. recognized that, in certain cases, an act that occurs in one jurisdiction may result in direct consequences in another jurisdiction, or a situation may inherently involve transnational activity or consequences. In such circumstances, he held it may be appropriate to delineate exceptions. However, he also held that he could "imagine few cases where this would be necessary" (at p. 1054 S.C.R.). On the facts of Tolofson, which included the very issue of a limitation period, the court held that such an exception was not available.

[11] As Cronk J.A. said in Somers v. Fournier (2002), 2002 45001 (ON CA), 60 O.R. (3d) 225, 214 D.L.R. (4th) 611 (C.A.), at para. 42:

As Tolofson illustrates, denial of the opportunity to claim damages by reason of the expiration of a limitation period does not constitute injustice sufficient to support an exception to the lex loci delicti rule.

[12] Similarly, in the case before us, the choice of England or the Bahamas as the applicable law would, by the operation of the Athens Convention limitation, preclude the plaintiffs' action. As in Tolofson, however, this is not the type of injustice that justifies an exception to the principles informing the choice of law. Accordingly, we are of the view that the motion judge, while understandably sympathetic to the result for the plaintiffs, erred in his determination that, because the parties would otherwise suffer an injustice by operation of the limitation period, Ontario law applied.

[13] On the question of the inconvenience of applying Ontario law to one defendant, Sunquest, while applying the law of England or the Bahamas to the other defendant, Airtours, the fact that different laws might apply to different defendants does not, in and of itself, create sufficient reason to depart from the general rule regarding choice of law. In any event, the application of different laws would not render the trial of this action complex. Indeed, the application of the law of England or the Bahamas may preclude the Airtours action so that the balance of the action against Sunquest would continue with the application only of Ontario law.

[14] The last issue involves the applicability of the contractual term selecting the choice of law. The contract between the parties, reflected in the cruise brochure, specified England as the choice of law in any action arising out of the contract. The claim against Airtours is such an action. The mere fact that the plaintiffs failed to read the term is not determinative of the result. Any other finding would encourage parties to ignore contractual provisions with impunity. [page565]

[15] Moreover, the test is not whether the plaintiffs read the terms, but whether reasonable measures were taken to draw any unusually onerous provisions to their attention: Tilden Rent-A-Car Co. v. Clendenning (1978), 1978 1446 (ON CA), 18 O.R. (2d) 601, 83 D.L.R. (3d) 400 (C.A.), at pp. 608-09 O.R.; Craven v. Strand Holidays (Canada) Ltd. (1982), 1982 1859 (ON CA), 40 O.R. (2d) 186, 142 D.L.R. (3d) 31 (C.A.), at p. 194 O.R.

[16] The first paragraph of the Sunquest brochure alerted the reader to the distinction between the responsibilities of the tour organizer and the responsibilities of those who provided tour services. The plaintiffs received cruise materials specifically cautioning them in large bold letters as to the importance of the documents and asking them to read them carefully. Those materials clearly advised the plaintiffs of the application of the law of England and of the two-year limitation on any causes of action. These contractual provisions did not contain any unusual or onerous terms. They did not, for example, provide an exclusion of liability. The included terms as to applicable law and limitation period were consistent with the purpose of the contract. As such, it was not necessary that they be specifically brought to the plaintiffs' attention. Further, the reasonable expectations of the parties would not have included the expectation that Ontario law would apply to a Caribbean cruise supplied by a British cruise company. In the circumstances of this case, the plaintiffs' failure to read this term is not sufficient to negate its application. Thus, by contract, the applicable law is that of England.

Disposition

[17] For these reasons, the appeal is allowed, the decision below is set aside, and a declaration will go providing that the law of England applies to the issues between the plaintiffs and Airtours.

Costs

[18] The parties have agreed that, with this result, the costs awarded by the motion judge to the plaintiffs should be set aside. Instead, costs of the motion below are awarded to Airtours payable by the plaintiffs fixed in the agreed upon amount of $6,000 inclusive of disbursements and GST. As well, costs of the appeal are awarded to Airtours also in the amount of $6,000 inclusive of disbursements and GST.

Appeal allowed. [page566]