Red Seal Tours Inc. v. Occidental Hotels Management B.V., 2007 ONCA 620

CITATION: Red Seal Tours Inc. v. Occidental Hotels Management B.V., 2007 ONCA 620

DATE: 20070912

DOCKET: C46081

COURT OF APPEAL FOR ONTARIO

SHARPE, CRONK and LANG JJ.A.

BETWEEN:

RED SEAL TOURS INC.

Plaintiff (Respondent)

and

OCCIDENTAL HOTELS MANAGEMENT B.V., carrying on business as OCCIDENTAL HOTELS & RESORTS and SLAM INC., carrying on business as VOX TRAVEL MANAGEMENT, ALLEGRO RESORTS MARKETING CORPORATION, ALLEGRO MARKETING DE ESPANA, S.L.U., HORECA INTERSERVICES N.V., and THE JACK TAR PUERTO PLATA BY OCCIDENTAL RESORT

Defendants (Appellants)

John Kingman Phillips and Fred S. Fischer for the appellants

Kenneth A. Dekker for the respondent

Heard: August 27, 2007

On appeal from the order of Justice Janet M. Wilson of the Superior Court of Justice dated September 19, 2006, with reasons reported at 2005 31582 (ON SC), [2005] O.J. No. 3724.

Reasons for Decision

SHARPE J.A.:

[1] This appeal concerns the applicability of forum selection clauses in a series of commercial agreements involving the international tourism industry. The issue is whether the forum selection clauses, found in a series of “tour operator” agreements, apply to the respondent’s claims against the appellants. The respondent’s claims are based on a separate document (entitled “Guarantee/Special Rates/Contract Addendum”) that does not contain a forum selection clause.

[2] The motion judge found the “Guarantee/Special Rates/Contract Addendum” to be one of three guarantees involving different parties than the tour operator agreements and therefore constituting entirely separate and distinct agreements. Given this finding, she held that the forum selection clauses in the tour operator agreements did not apply. For the following reasons, I conclude that the motion judge erred, that the “Guarantee/Special Rates/Contract Addendum” forms part and parcel of the tour operator agreements, and that the forum selection clauses apply to this action.

[3] The appellants Occidental Hotels Management B.V., Allegro Resorts Marketing Corporation, Allegro Marketing de Espana, S.L.U., and Horeca Interservices N.V. are separately incorporated in various jurisdictions and are members of the “Occidental Group”. The Occidental Group has no corporate status of its own; rather, it is a conglomerate of separately incorporated entities that facilitates the management and marketing of resort properties. The appellant Slam Inc., carrying on business as VOX Travel Management, acted throughout as the Occidental Group’s Canadian representative. In particular, VOX negotiates with Ontario tour operators, such as Red Seal Tours Inc., tour operator agreements for room allotments and pricing at Occidental Group hotels. These negotiations occur on a global basis; thereafter, the operators sign separate tour operator agreements with the individual resorts or hotels. These agreements are standard form contracts based on the global negotiations.

[4] By April 28, 2003, Red Seal and Vox had negotiated and agreed to the terms of the tour operator agreements. Draft written agreements between Red Seal and each of the hotels were then sent to Red Seal. The draft agreements contained standard terms relating to room allotments, number of rooms, pricing, reservations, limitation of liability, payment, and no-shows. All but one of these agreements contain the following choice of forum clause:

Each party hereto irrevocably agrees to refer over the jurisdiction of the Aruba courts any matters arising this agreement [sic], where each party irrevocably waives any applicable law.

[5] For reasons specific to Cuban law, the other tour operator agreement, which involves a hotel in Cuba, contains a similar clause naming Cuba as the selected forum.

[6] However, before the April 28, 2003 agreements were executed, the respondent sought better terms and there were further negotiations between April and October. These negotiations led to three documents providing Red Seal with additional guarantees at particular resorts. These three iterations of the agreement were signed, and are the focus of this appeal. After the second document was finalized, the tour operator agreements were executed on October 29, 2003. The final iteration was entitled “Guarantee/Special Rates/Contract Addendum”. This document, executed on November 21, 2003, contains, in point form, certain specific terms relating to six of the eight hotels for which there are tour operator agreements. Those terms include changes to the room rates and allotments contained in the tour operator agreements, a “no-bumping” term, and a rental guarantee on the part of the respondent for a certain percentage of the allotted rooms. The final version was signed on behalf of the Occidental Group by “Fernando Robles” whose signature appears to be the same as that on each of the tour operator agreements.

[7] The motion judge found that there were three operative guarantee agreements and that the “Guarantee/Special Rates/Contract Addendum”, as well as the two earlier iterations of that document, were enforceable. With respect, this finding ignores the following clause in the final version: “This agreement supersedes all previous agreements”. In my view, in the light of this language, the November 21, 2003 document is the final version and the only version that governs.

[8] The final version contains several significant features not found in the earlier iterations and not mentioned in the motion judge’s reasons. These features strongly support the appellants’ position that any obligations created under this document are part and parcel of the tour operator agreements. First, it is described as a “Contract Addendum”. Second, while the earlier iterations were on the letterhead of “Occidental Hotels and Resorts”, the final version is framed as a grant of rights by six of the Hotels that are parties to the tour operator agreements. It begins: “The ‘Hotel’ as listed below grants the Tour Operator Sunwing by Red Seal Vacations Special Offers applicable during the following dates:”. Third, under the heading “Conditions” at the end of the document, the final version specifies that certain matters (Payment and No shows) are as “Per Contract” while others (Release and Allotment) are as “Per Guarantee Agreement”.

[9] Another significant feature of the “Guarantee/Special Rates/Contract Addendum” is the fact that it simply cannot be read as a stand-alone agreement. Its terms deal with specific aspects of matters governed by the tour operator agreements.

[10] In my view, in the light of these features and terms of the “Guarantee/Special Rates/Contract Addendum”, the motion judge’s finding that the “Guarantee Agreements are independent, separately enforceable contracts” cannot be sustained. There is only one Guarantee Agreement, not three, and on the language of the relevant document, the conclusion that it is a contract entirely independent from the tour operator agreements is not supportable.

[11] Nor do I accept the submission that the parties to the tour operator agreements and the “Guarantee/Special Rates/Contract Addendum” must be different because there are individual agreements with the hotels but only one “Guarantee/Special Rates/Contract Addendum”. In my view, that submission ignores the fact that according to its terms, it is the named hotels that grant the appellant the rights conferred.

[12] Whether any of the appellants are liable under the terms of this document or for alleged misrepresentations in its negotiation is a matter to be determined at trial, not on this motion or appeal. However, at this stage of the proceedings, the respondent cannot escape the application of the choice of forum clauses by framing its claims as only being against the appellants, not against the hotels, and under the “Guarantee/Special Rates/Contract Addendum”, not the tour operator agreements. See Janet Walker, Castel and Walker: Canadian Conflict of Laws, looseleaf (Toronto: Butterworths, 2005) at 13.58: “Parsing jurisdiction clauses to determine whether they apply to claims as they are framed could foster dubious efforts to evade legitimate agreements for dispute resolution, which can be of considerable significance in international commercial dealings.”

[13] It is well-established that the law strongly favours the enforcement of choice of forum clauses and that special deference is owed to forum selection clauses found in international agreements involving sophisticated parties. I do not accept the submission that there is “strong cause” to displace the forum chosen by the parties or that Ontario jurisdiction should be assumed on the basis that Aruba is not the forum conveniens. As the Supreme Court of Canada put it in Z.I. Pompey Industrie v. ECU-Line N.V., 2003 SCC 27, [2003] 1 S.C.R. 450 at para. 20, “[i]t is essential that the courts give full weight to the desirability of holding contracting parties to their agreements”. The strong cause test imposes a “burden on the plaintiff to satisfy the court that there is good reason it should not be bound by the forum selection clause”. The court held, at para. 21: “the starting point is that the parties should be held to their bargain” and “that the parties’ agreement is given effect in all but exceptional circumstances” [emphasis added]. This is a dispute involving many parties from many different jurisdictions. These parties are sophisticated actors familiar with the tourist industry. It was open to those parties to select a neutral forum for the resolution of their disputes. While undoubtedly it would be more convenient for the respondent to pursue its claims in Ontario, there are no “exceptional circumstances” to justify a departure from the forum selected in the agreements. The respondent has failed to discharge its burden that the choice of forum clauses should be set aside.

[14] Accordingly, I would allow the appeal, set aside the motion judge’s order, and substitute an order permanently staying the action. Costs to the appellant fixed at $7,500, inclusive of disbursements and GST.

“Robert J. Sharpe J.A.”

“I agree E.A. Cronk J.A.”

“I agree S.E. Lang J.A.”

RELEASED: September 12, 2007