CITATION: Linamar Holdings Inc. v. IGM U.S.A. Inc., 2008 ONCA 256
DATE: 20080408
DOCKET: C47829
COURT OF APPEAL FOR ONTARIO
MACPHERSON, ROULEAU and EPSTEIN JJ.A.
BETWEEN:
INVAR MANUFACTURING, a division of LINAMAR HOLDINGS INC. and LINAMAR CORPORATION
Plaintiffs (Respondents)
and
GIULIANI division of IGM U.S.A. INC. now BUCCI INDUSTRIES U.S.A. INC. and IGMI S.p.A.
Defendants (Appellants)
Nairn Waterman and Brent McPherson for the appellants
Joel Richler and Parvez Khan for the respondents
Heard: April 2, 2008
On appeal from the judgment of Justice Alison Harvison Young of the Superior Court of Justice dated September 20, 2007.
MACPHERSON J.A.:
A. INTRODUCTION
[1] The appellants appeal the judgment of Harvison Young J. in which she dismissed their motion for an order setting aside service of the statement of claim and staying this action. The appellants contend that their prior action, commenced in Italy, is an appropriate action and that the respondents’ subsequent action, commenced in Ontario, should be stayed, on the basis of either jurisdiction simpliciter or forum non conveniens.
B. FACTS
[2] The appellant IGMI’s Giuliani Division manufactures and sells manufacturing equipment for use in the automotive industry. All of Giuliani’s manufacturing facilities are in Italy.
[3] The dispute between the parties arises from equipment sold by IGMI to the respondent Invar Manufacturing Ltd., a member of the Linamar Group, a large worldwide enterprise with operations in Europe and North America. The equipment consists of three custom machines designed and manufactured by IGMI in Italy and installed in the respondents’ plant in Batawa, Ontario.
[4] Soon after the machines were installed, problems arose. Extensive efforts were made to repair them. Ultimately, however, the respondents declined to make the final payment of $688,500 U.S. on the contract price of $4,590,000 U.S.
[5] In October 2006, IGMI sued the respondents in Italy for payment of the sum of $688,500 U.S. In November 2006, the respondents brought an action in Ontario against the appellants claiming damages for breach of contract, negligence and misrepresentations arising from the alleged inability of the equipment to operate at required speeds.
[6] The appellants brought a motion seeking an order setting aside the statement of claim and staying the action. In a decision released on September 20, 2007, Harvison Young J. dismissed the motion. She concluded that the Ontario Superior Court of Justice had jurisdiction simpliciter to hear the action brought by the respondents. She also held that the action should not be stayed on the basis of forum non conveniens because of the existing proceedings in Italy involving the same parties.
[7] The appellants appeal the motion judge’s decision.
C. ISSUES
[8] The appellants advance four issues on the appeal:
(1) Did the motion judge err by concluding that the parties formed their contract in March 2004 rather than in September 2004?
(2) Did the motion judge err by concluding that the parties had not agreed on the appropriate forum for disputes under their contract?
(3) Did the motion judge err by concluding that there was a real and substantial connection between this action and Ontario?
(4) Did the motion judge err by failing to exercise her discretion to stay this action on the basis of forum non conveniens?
D. ANALYSIS
[9] I begin with an important contextual observation: the four issues on this appeal are closely linked. Indeed, the reality is that resolution of the first issue comes very close to resolving the other three issues; there is a real cascading effect among the four issues.
(1) Contract formation
[10] The appellants contend that the motion judge erred in fact and in law by concluding that the sale contract had been completed in March 2004. They submit that by mid-March 2004 the state of play was that the parties had reached only “an agreement to agree” and that until the detailed specifications for the equipment had been agreed to, there remained uncertainty with respect to a number of fundamental issues, precisely what the appellants were to supply.
[11] I disagree. The motion judge comprehensively reviewed the evidentiary record. It strongly supports her conclusion that the contract was formed by mid-March 2004. By March 2004, the parties had agreed to the precise Giuliani machines, the purchase price, delivery dates, performance specifications and other matters.
[12] Moreover, the parties’ conduct in March 2004 and shortly thereafter confirmed their shared view that an agreement had been reached. Invar paid 30 per cent of the contract price and IGMI started design and fabrication.
(2) Dispute resolution forum
[13] The appellants submit that Italy is the only forum for resolving disputes arising out of the contract. The foundation for this submission is an article in the three order confirmation forms sent to the respondents by IGMI in September 2004:
- Arbitration
For every dispute regarding the interpretation and execution of the present contract the Court of Ravenna, Subsection of Faenza, will be the only and exclusive competent court.
[14] The problem with this submission is that it is premised on the appellants’ contention that the contract was not formed until September 2004 when the order confirmation forms were sent to the respondents. However, I have concluded that there was no error in the motion judge’s conclusion that the contract was formed in March 2004. The motion judge observed: “None of the parties alleges that there was any discussion of the choice of law or jurisdiction issue during the spring of 2004.” She then reviewed the evidence relating to documents exchanged and negotiations conducted over several months (March to September 2004) and concluded:
Having reviewed the evidence in this case, it appears that the plaintiffs and defendants each intended that there should be choice of jurisdiction provisions stipulating Ontario and Italy respectively. I cannot conclude, however, that there was any meeting of the minds on this issue at the time that the contract was formed in March, 2004, or that such terms later became part of the terms of this contractual relationship.
I see no basis for disagreeing with this analysis and conclusion.
(3) Jurisdiction simpliciter
[15] The motion judge set out the correct test on this issue, namely, whether there was a real and substantial connection between the action and Ontario. She also carefully considered the eight factors this court suggested are relevant under the test in Muscutt v. Courcelles (2002), 2002 CanLII 44957 (ON CA), 60 O.R. (3d) 20 (C.A.) and concluded:
In my view, that test is clearly met on the facts before the court. The plaintiffs’ connection with Ontario is very substantial. The machines, designed and built in Italy, were constructed for installation and use in the plaintiffs' Ontario plant. The contract contemplated that the defendants would spend time in Ontario, which they did. This is not a case where the defendant had no presence in Ontario.
[16] The only argument advanced by the appellants on this issue is that the motion judge’s errors about the time when the contract was formed and the effect of the Italy jurisdiction provision in the order confirmation forms were carried into her analysis of the jurisdiction simpliciter issue. Since I have concluded that the motion judge did not err on the first two issues, it follows that I see no error in her conclusion that the Ontario courts have jurisdiction over the respondents’ action.
(4) Forum non conveniens
[17] On a motion to stay a proceeding on the basis of forum non conveniens, the test is whether there is clearly a more appropriate jurisdiction in which the case should be tried than the domestic forum chosen by the plaintiff: see Amchem Products Inc. v. British Columbia (Workers’ Compensation Board), 1993 CanLII 124 (SCC), [1993] 1 S.C.R. 897 at 921 and 931; and Frymer v. Brettschneider (1994), 1994 CanLII 1685 (ON CA), 19 O.R. (3d) 60 (C.A.).
[18] The motion judge applied this test and the various factors relevant to its application. Once again, the appellants’ main quarrel with her analysis is that she did not give effect to the alleged contractual provision specifying Italy as the dispute resolution forum. Since I have concluded that the motion judge did not err on this issue, it follows that the appellants’ reliance on it on the forum non conveniens issue must also fail.
[19] The appellants’ other submission on this issue is that the existence of prior proceedings pending in Italy dealing with the same dispute should have counted for more in the motion judge’s analysis.
[20] I disagree. The Ontario action is an entirely appropriate action. The factors connecting the parties, their contract, and the dispute concerning it all have a strong connection with Ontario. They clearly support the motion judge’s conclusion, per Amchem Products, that Italy is not “clearly a more appropriate jurisdiction in which the case should be tried than the forum chosen by the plaintiff.”
[21] I make two final points.
[22] First, the respondents contended before the motion judge that there would be a loss of juridical advantage if they were forced to pursue their claim in Italy. The motion judge rejected this submission: “I am reluctant to find that differences between Italian procedures and those of Ontario constitute losses of juridical advantages.” I agree.
[23] Second, the respondents submit that the appellants’ action in Italy seeking recovery of the unpaid $688,500 U.S. under the contract was a so-called ‘torpedo action’ designed to forestall or trump proceedings by the respondents in Ontario. I disagree. On its face, the appellants’ action commenced in Italy seems as appropriate as the respondents’ action commenced in Ontario. In any event, whether the appellants’ action is appropriate or not, on ‘torpedo action’ or other grounds, is before the Italian court by virtue of a motion brought by the respondents and scheduled to be heard by the Italian court on April 9, 2008. The Italian court is much better placed than this court to determine the bona fides of the appellants’ action in Italy.
E. DISPOSITION
[24] I would dismiss the appeal. The respondents are entitled to their costs of the appeal which I would fix at $20,000 inclusive of disbursements and G.S.T.
RELEASED: April 8, 2008 (“PR”)
“J.C. MacPherson J.A.”
“I agree Paul Rouleau J.A.”
“I agree G. Epstein J.A.”