CITATION: Sault College of Applied Arts and Technology v. Agresso Corporation, 2007 ONCA 525

DATE: 20070710

DOCKET: C46134

COURT OF APPEAL FOR ONTARIO

FELDMAN, GILLESE AND MACFARLAND JJ.A.

BETWEEN:

SAULT COLLEGE OF APPLIED ARTS AND TECHNOLOGY

Plaintiff (Respondent)

And

AGRESSO CORPORATION and UNIT 4 AGRESSO NV and AGRESSO AS

Defendant (Appellant)

Daniel J. MacKeigan for the (defendant) appellant Agresso Corporation

Glenn Smith and Orlando M. Rosa for the (plaintiff) respondent Sault College of Applied Arts and Technology

Heard and released orally: June 22, 2007

On appeal from the order of Justice Robert A. Riopelle of the Superior Court of Justice dated September 29, 2006.

ENDORSEMENT

[1] The defendants appeal the order of Riopelle J. made at Sault Ste. Marie on September 29, 2006, wherein he dismissed the defence motion for a stay of proceedings.

[2] The appellants and respondent are parties to three contracts in relation to certain software provided by the appellants to the respondent College. One of those contracts, the Software Implementation Services Agreement, provides in Article 11 that the Agreement is to be construed with and governed by the laws of B.C. and that any dispute which may arise between the parties concerning the agreement will be referred to dispute resolution and arbitration in accordance with Article 13. Article 13 provides that any dispute which cannot be resolved by mediation is to be submitted to binding arbitration in accordance with the Commercial Arbitration Act of B.C.

[3] The respondent issued a statement of claim on July 27, 2004 and the appellant brought the motion to stay, initially returnable January 2006, on the basis of the choice of forum clause referenced above. That motion was made after the appellants had entered an unconditional notice of appearance, filed their lengthy and detailed statement of defence in which the jurisdiction of the Ontario courts was disputed only in the last paragraph, and delivered an affidavit of documents.

[4] The appellants say the motion judge, although properly stating the test for a stay at the outset of his reasons, failed to apply that test properly on the facts of this case.

[5] The Supreme Court of Canada in Pompey v. Ecu-Line N.V. (2003), 2003 SCC 27, 1 S.C.R. 450 stated that the test to be applied where a stay is sought on the basis of a forum selection clause is the “strong cause” test which imposes the burden on the plaintiff to satisfy the count that there is good reason it should not be bound by the forum selection clause. (para. 20) At paragraph 25 of the judgment, the Court stated:

There are also compelling public policy reasons in favour of upholding the “strong cause” test. If the tripart [for interlocutory injunction as set out in R. J. R.- MacDonald Inc. v. Canada, [1994] 1 S.C.R. 311 at 334] test were employed to deal with situations like the case at bar, most forum selection clauses would be rendered unenforceable, creating commercial uncertainty by unduly minimizing the importance of contractual undertakings. Instead of requiring a plaintiff to demonstrate a “strong cause” to not enforce a forum selection clause, the burden would be on the applicant to establish the elements of the tripartite test. The “strong cause” test rightly places the onus on the plaintiff who commences suit contrary to the terms of a forum selection clause.

[6] As this court noted in Mobile Mini Inc. v. Centreline Equipment Rentals Ltd., [2004] O.J. No. 3659:

… 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.

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.

[7] While the motion judge recognized at the outset of his reasons the importance of the forum selection clause, he omitted any reference to that clause or to the “strong cause” test in his stay analysis. He erred in so doing.

[8] In our view, this appeal is very similar to Mobile Mini, recently decided by this court. In Mobile Mini, the court reiterated the test on a motion to stay in reliance in a forum selection clause which is set out above. As in this case, an error in principle was found with the result that it fell to this court to exercise the discretion found in s. 106 of the Courts of Justice Act.

[9] In declining to grant a stay, this court noted in Mobile Mini that had the motion for a stay been brought at the outset of proceedings in Ontario, it is likely that the proceedings would have been stayed. However, in light of the delay and the steps already taken by the respondent in the Ontario proceedings, this court found in Mobile Mini that it would be unjust to require the plaintiffs to stop the Ontario proceedings and begin afresh in the other forum.

[10] The same concerns move the court in the instant appeal to exercise our discretion and refuse the stay. Although the delay in the present case was approximately two years from the time the statement of claim was issued, rather than the three and one-half years in Mobile Mini, at the time of the motion for stay in this matter, it was ready to be set for trial.

[11] To grant a stay at this stage of the litigation would result, as the appellants concede, in the respondent having to begin arbitration proceedings in B.C. It would be unjust in the circumstances to require the respondent to stop the proceedings here in Ontario and to incur the delay and expense associated with commencing arbitration proceedings in B.C.

[12] Accordingly, the appeal is dismissed.

[13] Costs to the respondent fixed in the sum of $15,000 inclusive of disbursements and GST.

“K. Feldman J.A.”

“E.E. Gillese J.A.” “J. MacFarland J.A.”