Dilkas et al. v. Red Seal Tours Inc., operating as Sunwing Vacations, et al. May et al. v. Red Seal Tours Inc., operating as Sunwing Vacations, et al. [Indexed as: Dilkas v. Red Seal Tours Inc. (Sunwing Vacations)]
104 O.R. (3d) 221
2010 ONCA 634
Court of Appeal for Ontario,
Feldman, MacFarland and Karakatsanis JJ.A.
October 4, 2010
Conflict of laws -- Forum conveniens -- Ontario plaintiffs purchasing Mexican vacation packages from S in Ontario -- S contracting B to provide transportation between Mexican resort and airport -- Plaintiffs suffering serious injuries en route from resort to airport in accident caused entirely by negligence of driver -- Plaintiffs suing S and B in Ontario and S cross-claiming against B -- B moving unsuccessfully to dismiss or stay actions -- Motion judge not erring in exercise of her discretion by concluding that Ontario was more convenient forum.
Conflict of laws -- Jurisdiction -- Ontario plaintiffs purchasing Mexican vacation packages from S in Ontario -- Packages explicitly including ground transportation services -- S contracting B to provide transportation between Mexican resort and airport and B subcontracting A -- Contract between S and B governed by Ontario law -- Plaintiffs suffering serious injuries en route from resort to airport in accident caused entirely by negligence of driver -- B entering into indemnity agreements with S and A following accident in which it agreed that it would indemnify S if S were sued as result of accident and that Ontario courts would have exclusive jurisdiction -- Plaintiffs suing S and B in Ontario and S cross-claiming against B -- Real and substantial connection existing between plaintiffs' claim, B and Ontario forum that warranted assumption of jurisdiction.
The Ontario-resident plaintiffs purchased Mexican vacation packages from the defendant Sunwing, a company headquartered in Toronto. The packages, which explicitly included ground transportation services, were purchased in Ontario. Sunwing had a contract with Best, a company that operated exclusively in Mexico, for the provision of transportation between a Mexican resort and the airport, and Best subcontracted the bus service to another Mexican corporation, AutoTur. The plaintiffs suffered serious injuries in a single-vehicle bus accident on the way to the airport from the resort, caused entirely by the negligence of the driver. Shortly after the accident, Best entered into agreements with Sunwing and AutoTur in which it agreed to indemnify Sunwing if Sunwing were sued as a result of the accident and that Ontario courts would have exclusive jurisdiction. The plaintiffs sued Sunwing and Best in Ontario, and Sunwing cross-claimed against Best. Best brought a motion to dismiss or stay the action, challenging the jurisdiction of the Ontario court and the convenience of the Ontario forum. The motion was dismissed. Best appealed.
Held, the appeal should be dismissed.
It was significant that the vacation packages -- which explicitly included ground transportation services -- were purchased in Ontario and that Best's [page222] Ground Transportation Agreement with Sunwing was to be governed by Ontario law. The indemnity agreements entered into after the accident were even more significant. By voluntarily entering into the two indemnity agreements with Sunwing and AutoTur, Best effectively acknowledged the expectation that claims arising out of the accident would or could be brought in Ontario and that those claims would have to be litigated in Ontario. Even if an Ontario action did not name Best, Best would be brought into it as a third party by Sunwing for indemnity under its indemnity agreement, and as agreed, Ontario would have the exclusive jurisdiction to determine any indemnity issues applying Ontario law. The effect of those factors, taken together, was to establish a real and substantial connection between the plaintiffs' claims, Best and the Ontario forum that warranted the assumption of jurisdiction. Any unfairness to Best in Ontario assuming jurisdiction was overridden by the terms of the indemnity agreements.
The motion judge did not err in the exercise of her discretion in concluding that Ontario was the more convenient forum.
APPEAL from the judgment of Bellamy J., [2009] O.J. No. 5230 (S.C.J.) dismissing a motion to dismiss or stay an action.
Cases referred to Van Breda v. Village Resorts Ltd. (2010), 98 O.R. (3d) 721, [2010] O.J. No. 402, 2010 ONCA 84, 264 O.A.C. 1, 316 D.L.R. (4th) 201, 81 C.P.C. (6th) 219, 185 A.C.W.S. (3d) 68, 71 C.C.L.T. (3d) 161, 77 R.F.L. (6th) 1, apld Lemmex v. Bernard (2002), 2002 CanLII 44962 (ON CA), 60 O.R. (3d) 54, [2002] O.J. No. 2131, 213 D.L.R. (4th) 627, 160 O.A.C. 31, 13 C.C.L.T. (3d) 203, 26 C.P.C. (5th) 259, 114 A.C.W.S. (3d) 638 (C.A.); Leufkens v. Alba Tours International Inc. (2002), 2002 CanLII 44958 (ON CA), 60 O.R. (3d) 84, [2002] O.J. No. 2129, 213 D.L.R. (4th) 614, 160 O.A.C. 43, 13 C.C.L.T. (3d) 217, 26 C.P.C. (5th) 247, 114 A.C.W.S. (3d) 637 (C.A.), distd Other cases referred to Craven v. Strand Holidays (Canada) Ltd. (1982), 1982 CanLII 1859 (ON CA), 40 O.R. (2d) 186, [1982] O.J. No. 3599, 142 D.L.R. (3d) 31, 17 A.C.W.S. (2d) 356 (C.A.); Gajraj v. DeBernardo (2002), 2002 CanLII 44959 (ON CA), 60 O.R. (3d) 68, [2002] O.J. No. 2130, 213 D.L.R. (4th) 651, 160 O.A.C. 60, 40 C.C.L.I. (3d) 163 (C.A.); Muscutt v. Courcelles (2002), 2002 CanLII 44957 (ON CA), 60 O.R. (3d) 20, [2002] O.J. No. 2128, 213 D.L.R. (4th) 577, 160 O.A.C. 1, 13 C.C.L.T. (3d) 161, 26 C.P.C. (5th) 206, 114 A.C.W.S. (3d) 634 (C.A.); Sinclair v. Cracker Barrel Old Country Store Inc. (2002), 2002 CanLII 44955 (ON CA), 60 O.R. (3d) 76, [2002] O.J. No. 2127, 213 D.L.R. (4th) 643, 160 O.A.C. 54, 13 C.C.L.T. (3d) 230, 26 C.P.C. (5th) 239, 114 A.C.W.S. (3d) 635 (C.A.) Statutes referred to Negligence Act, R.S.O. 1990, c. N.1 [as am.] Rules and regulations referred to Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 17.02, (f), (h), (o)
Timothy J. Law and Assunta Mazzota, for defendant (appellant) Viajes Beda S.A. de C.V. o/a Best Day Tours. Wendy Moore Johns, for plaintiffs (respondents) John May et al. Eugene G. Mazzuca, for defendant (respondent) Red Seal Tours Inc. o/a Sunwing Vacations. [page223]
The judgment of the court was delivered by
[1] FELDMAN J.A.: -- Best Day Tours is a bus transportation company that operates exclusively in Mexico. It had a contract with Sunwing, a company headquartered in Toronto, to provide transport between a Cancun resort and the Cancun airport for Sunwing tour guests. The plaintiffs in the two actions were on a Sunwing tour package from Ontario. On the way from the resort to the airport for the flight home, the bus was in a one- vehicle accident. The travelling plaintiffs suffered serious injuries. The accident was investigated by local police in Mexico, who reported that it was caused solely by the negligence of the bus driver.
[2] The plaintiffs brought an action in Ontario for damages against Sunwing and Best Day. Sunwing cross-claimed against Best Day for contribution and indemnity, based primarily on the indemnification agreement they signed following the accident to deal with claims arising out of the accident. Best Day challenged both the jurisdiction of the Ontario court and the convenience of the Ontario forum. The motion judge dismissed both aspects of the motion, applying the test from the "Muscutt quintet". [See Note 1 below] Following the decision on the motion, this court released its decision in Van Breda v. Village Resorts Ltd. (2010), 2010 ONCA 84, 98 O.R. (3d) 721, [2010] O.J. No. 402 (C.A.), which reconsidered and revised the Muscutt test. This appeal was argued based on the law as now set out in Van Breda. For the reasons that follow, I would dismiss the appeal.
Facts
[3] The travelling plaintiffs, who all resided in Ontario, purchased vacation packages from Sunwing in Ontario for week- long vacations at a resort in Cancun, Mexico for the week of January 7-14, 2005. The packages included ground transportation from the airport to the resort and back. On January 14, 2005, while transporting the plaintiffs from the resort to the airport, the bus was in a single-vehicle collision, which the Mexican police concluded was caused by the driver's unsafe speed. Three [page224] of the plaintiffs were injured, were treated in hospital in Mexico and in Ontario, and suffered significant damages as claimed.
[4] At the time of the accident, Sunwing had a "Ground Transportation Agreement" for the bus transportation with Best Day. The agreement contained a choice of Ontario law clause. Best Day subcontracted the bus service to another Mexico corporation, Autobus Rapidos de Zacatlan S.A. de C.V., known as AutoTur.
[5] Three days after the accident, Best Day and Sunwing entered into an agreement with AutoTur wherein, inter alia, AutoTur released both Best Day and Sunwing for claims under the Negligence Act, R.S.O. 1990, c. N.1, and Best Day acknowledged that it would retain and pay the Toronto law firm Berkow, Cohen LLP to defend Best Day and Sunwing against any claims stemming from the accident. This agreement stated further that "[t]he parties agree that this Agreement shall be interpreted in the Courts with the law of the Province of Ontario and that the Courts of the Province of Ontario shall have exclusive jurisdiction over any dispute arising from this agreement".
[6] On April 28, 2005, Best Day entered into an indemnity agreement with Sunwing, wherein it agreed, inter alia, to indemnify Sunwing for any claims arising out of the accident, to retain the law firm of Berkow Cohen LLP in Toronto to represent both Best Day and Sunwing in respect of any claims arising out of the accident, that the Ontario courts would have exclusive jurisdiction over any dispute arising out of the indemnity agreement and that the law of Ontario would apply to the interpretation of the indemnity agreement.
[7] Both sets of plaintiffs commenced their actions in Ontario on January 12, 2007. Sunwing defended the actions and cross-claimed against Best Day. Best Day did not defend but brought its motion to dismiss or stay the actions returnable December 19, 2008.
The Motion Judge's Reasons
[8] The motion judge used the Muscutt analysis to address first the issue of jurisdiction, then the issue of forum. Applying the eight factors to determine jurisdiction, she concluded that there is a real and substantial connection between Ontario and the plaintiffs' claims. First, she found a strong connection between the plaintiffs' claims and Ontario because of the connections of the plaintiffs and their witnesses to Ontario, the Ground Transportation Agreement between Best Day and Sunwing that was governed by Ontario law, as well as the presumed expectation of Best Day from transporting Ontario visitors. [page225]
[9] Although there would be some unfairness to Best Day to have to litigate in Ontario, that unfairness was mitigated by the indemnity agreements with Sunwing as well as with AutoTur, which the motion judge found was likely to have insurance. On the other hand, there would be significant unfairness to the plaintiffs if the claims had to be brought in Mexico, including the juridical impediment of a limitation period that had already passed. Also, because the main issue would be damages, there would be unfairness because most of the witnesses are in Ontario. Regarding other involved parties, Sunwing preferred to litigate in Ontario and to enforce its indemnity agreement according to its terms. The motion judge found that Ontario has recognized judgments from other jurisdictions in similar circumstances. Only the last two factors militated against finding a real and substantial connection: that assuming jurisdiction in Ontario was more difficult to justify because this is an international case, and enforcement in Mexico would be difficult. Considering all the factors together, the motion judge concluded that there was a real and substantial connection that warranted the assumption of jurisdiction by the Ontario court.
[10] Turning to the question of forum conveniens, the motion judge recognized several factors that were either neutral or tilted in favour of Mexico as the convenient forum. These factors included that the law of Mexico applies to the plaintiffs' tort claim against Best Day; that there may be difficulties enforcing an Ontario judgment in Mexico; and that witnesses in both jurisdictions could testify by video conference. However, she concluded that all the factors she considered on the jurisdiction question supported her conclusion that Ontario was the convenient forum for hearing the actions, and on that basis, she declined to order a stay.
Issues on Appeal
[11] Applying the new test from Van Breda, did the motion judge err in concluding that Ontario should assume jurisdiction over the claim? If not, did the motion judge err in concluding that Ontario was the convenient forum?
Analysis
(1) Jurisdiction simpliciter
[12] Under the revised Van Breda analysis, the first issue is whether there is presumed jurisdiction because of the application of rule 17.02 (other than ss. (h) and (o)) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, which governs service out of [page226] the jurisdiction. With respect to the defendant Best Day, no subsection of the rule applies other than ss. (h) and (o). [See Note 2 below] Therefore, the focus of the jurisdiction analysis shifts to the key connecting factor identified in Van Breda, which is the connection of the claims and of the defendants to Ontario.
[13] As these appeals involve international travel on a tour package by Ontario residents, they are very factually reminiscent of two of the cases that were decided with Muscutt, Leufkens v. Alba Tours and Lemmex v. Bernard. Because this court concluded in both those cases that Ontario should not assume jurisdiction, it is important to identify any relevant factors in these appeals that would distinguish them from Leufkens and Lemmex and then analyze whether those factors are sufficient to cause the court to conclude that Ontario ought to assume jurisdiction.
[14] In Leufkens, the Ontario plaintiffs purchased a vacation package to Costa Rica from Alba Tours, an Ontario company, which then contracted with a Costa Rican company, Swiss Travel, to provide the tour services locally. One of the plaintiffs was injured on the treetop rope excursion that they purchased from Swiss Travel while in Costa Rica.
[15] This court concluded, at para. 26, that the Ontario court lacked jurisdiction, largely because there was an insufficient connection between the jurisdiction and the defendant:
As a company offering services specifically designed for tourists, Swiss Travel Service could certainly foresee the risk that negligence on its part could lead to injury to foreign tourists who would return home and suffer consequential damages. Moreover, given its contractual relationship with Canadian tour companies, Swiss Travel Service could foresee that residents of Ontario could be the foreign tourists in question. However, for the reasons given in Muscutt, I agree with the finding of the motions court judge that the foreseeability of a claim being made in an injured tourist's jurisdiction does not bring the case within the principle articulated in Moran v. Pyle National (Canada) Ltd., 1973 CanLII 192 (SCC), [1975] 1 S.C.R. 393. As the motions court judge explained, "the proper question is not whether it was reasonably foreseeable to the Costa Rican defendants that they would be sued in Ontario" but rather "whether it was reasonably foreseeable that the services provided [page227] would cause an injury in Ontario". Accordingly, I conclude that there is no significant connection between the defendant and the forum.
[16] In Lemmex, the Ontario plaintiffs purchased a cruise package from Sunflight, which contracted with Premier, an American company, to provide the cruise. On board [the] ship, the passengers were offered various shore excursions. The plaintiffs chose a trip to Grenada, which was provided by the Grenadian company Huggins Ltd. While on the excursion, because the local taxi that provided ground transportation was defective, one of the plaintiffs suffered carbon monoxide poisoning. The plaintiffs included the local taxi driver and Huggins Ltd. as defendants in their suit in Ontario against Sunflight and Premier.
[17] Again this court found that the connection between the claim and the defendants with Ontario was not sufficiently real and substantial for Ontario to assume jurisdiction. The defendants carried on business only in Grenada, and while Huggins Ltd. targeted foreign tourists, the court concluded that it would be unfair for a tourist's home forum to assume jurisdiction based only on the foreseeability that the tourist might possibly be injured in the taxi. At para. 38, the court adopted the following rhetorical question posed by the Divisional Court judge when granting leave to appeal to that court:
Lemmex, his wife and his daughter chose to leave Ontario and travel to Grenada for a vacation. They chose to take a tour on Grenada offered by a Grenadian company. They were aware that injuries could be sustained in Grenada, just like they could be anywhere else one goes. Was it reasonable for them to expect that if one of them was injured through the negligence of a Grenadian, an action would be heard in Ontario, the law of Grenada would have to be proven in the Ontario court, and Grenadian witnesses might have to travel to Ontario to give their evidence?
Do Ontario courts foster order and fairness by assuming jurisdiction in the first action where Huggins and Bernard are defendants? Is it fair to expect Bernard, a local taxi driver in Grenada, to come to Ontario to defend this action?
[18] To repeat, as the connection of both the claim and the defendant to the Ontario forum is the key factor in the jurisdiction analysis, it is important to address what, if any, are the factual distinctions between this case and the Leufkens and Lemmex cases, where the lack of sufficient connection caused jurisdiction to be denied.
[19] There are three key differences. First, the vacation packages -- which explicitly included ground transportation services -- were purchased in Ontario. Second, Best Day's Ground Transportation Agreement with Sunwing was agreed to be governed by Ontario law. This can be contrasted with the situation [page228] in Leufkens, where the agreement between the Ontario tour operator and the Costa Rican Swiss Travel company was made in Costa Rica and had no Ontario aspect.
[20] Finally, and most significantly, Best Day entered into indemnity agreements with Sunwing and AutoTur following the accident. Both agreements were made in respect of any lawsuit that might be brought in Ontario by one of the tourists who was injured in the bus accident, the very type of lawsuit that was brought by the plaintiffs in these two cases. In the agreement with Sunwing, Best Day agreed that if Sunwing were to be sued as a result of the accident, that Best Day would indemnify Sunwing and save it harmless, including in respect of costs claimed and its own solicitor's costs. Best Day also agreed that in interpreting the indemnity agreement, Ontario courts would have exclusive jurisdiction and that Ontario law would apply.
[21] In my view, these factors are significant and distinguish the Leufkens and Lemmex cases from these appeals in respect of the connection between the defendant and Ontario. By voluntarily entering into the two indemnity agreements with Sunwing and with AutoTur, Best Day has effectively acknowledged the expectation that claims arising out of the accident would or could be brought in Ontario, certainly against Sunwing, and that those claims would have to be litigated in Ontario. Even if an Ontario action did not name Best Day, Best Day would be brought into it as a third party by Sunwing for indemnity under its indemnity agreement, and as agreed, Ontario would have the exclusive jurisdiction to determine any indemnity issues applying Ontario law.
[22] Therefore, in respect of claims such as those brought by the plaintiffs in these two actions, Best Day expected and contemplated that they would be litigated in Ontario, and in respect of an essential party to the actions, Sunwing, Best Day has agreed to litigate in Ontario.
[23] In my view, the effect of these factors, taken together, is to establish the necessary real and substantial connection between the plaintiffs' claims, the defendant Best Day and the Ontario forum. It also overcomes the factors that would otherwise speak against a connection between Ontario and Best Day, despite circumstances that are otherwise factually similar to those in the Leufkens and Lemmex cases.
[24] Van Breda instructs that other considerations in the jurisdiction simpliciter analysis are no longer to be treated as independent factors, but rather as principles that bear upon the analysis, including the fairness to each party of assuming or refusing to assume jurisdiction, the involvement of other parties [page229] in the action, the willingness to recognize and enforce an extra-provincial judgment with similar jurisdictional connections to the forum, comity and the standards of enforcement in the other jurisdiction.
[25] In this case, any unfairness to Best Day in Ontario assuming jurisdiction is overridden by the terms of the indemnity agreement already discussed. The motion judge found that Ontario has enforced judgments where jurisdiction was assumed by the foreign court in similar circumstances. Although the record suggests that there may be problems enforcing a judgment in Mexico, the plaintiffs have elected to proceed in the face of any such potential difficulties. In any event, if liability is established at trial on a joint and several basis, as is pleaded in the statements of claim, the plaintiffs will be able to enforce their judgments against Sunwing in Ontario. [See Note 3 below] As discussed above, the involvement of Sunwing as a necessary party in the Ontario actions is a critical connecting factor, because of the indemnity agreement.
[26] In my view, weighing all of the independent factors and other relevant considerations, the motion judge did not err in her conclusion that the balance favours Ontario assuming jurisdiction in these actions.
(2) Forum conveniens
[27] Unlike the issue of jurisdiction, which is a question of law although it involves the weighing of factors and the application of overarching principles, the decision on whether there is a more convenient and appropriate forum is an exercise of judicial discretion and is subject to deference on appeal.
[28] The motion judge recognized factors that made both Ontario and Mexico potentially available fora in these cases. However, she declined to exercise her discretion to move the actions from Ontario. She referred to factors she had considered [page230] in her jurisdiction simpliciter analysis. One of these factors was the location and convenience of many medical witnesses in Ontario. As Sharpe J.A. reiterated in Van Breda, this factor is relevant only to the forum conveniens analysis and is not to be considered when deciding whether there is jurisdiction simpliciter.
[29] The appellant relies on the fact that all the liability witnesses are in Mexico. However, as the motion judge pointed out, the major issue in these cases will be the extent and quantification of damages. She also noted that, if necessary, witnesses could appear via video conference. Having said that, the plaintiff May saw 12 medical practitioners in Ontario, while the plaintiff Dilkas saw 39 medical service providers here. The key loss of income and collateral benefits witnesses are here as well.
[30] Two other significant factors that are very relevant to the forum conveniens issue are the juridical disadvantage that the plaintiffs may suffer in Mexico because of the passage of the limitation period in that jurisdiction, and the issue of multiplicity of actions, as the actions against Sunwing will proceed in Ontario. Finally, the motion judge noted that the plaintiffs and Sunwing were willing to take on the burden of enforcing any judgment in Mexico.
[31] I see no error in the conclusion reached by the motion judge that Mexico is not a more convenient forum for the trial of these actions and find no basis to interfere with her determination.
Conclusion
[32] The appeals are dismissed with costs to the respondents fixed at $12,000 to the plaintiffs and $12,000 to Sunwing, inclusive of disbursements and taxes.
Appeal dismissed.
Notes
Note 1: Muscutt v. Courcelles (2002), 2002 CanLII 44957 (ON CA), 60 O.R. (3d) 20, [2002] O.J. No. 2128 (C.A.); Leufkens v. Alba Tours International Inc. (2002), 2002 CanLII 44958 (ON CA), 60 O.R. (3d) 84, [2002] O.J. No. 2129 (C.A.); Lemmex v. Bernard (2002), 2002 CanLII 44962 (ON CA), 60 O.R. (3d) 54, [2002] O.J. No. 2131 (C.A.); Sinclair v. Cracker Barrel Old Country Store Inc. (2002), 2002 CanLII 44955 (ON CA), 60 O.R. (3d) 76, [2002] O.J. No. 2127 (C.A.); Gajraj v. DeBernardo (2002), 2002 CanLII 44959 (ON CA), 60 O.R. (3d) 68, [2002] O.J. No. 2130 (C.A.).
Note 2: When serving Best Day in Mexico, the plaintiffs relied on rules 17.02(h), (o) and (f) (contracts made in Ontario). The reference to rule 17.02(f) was, presumably, based on a theory of the case where Best Day was a foreign agent of Sunwing, and the contract between the plaintiffs and Sunwing was entered into in Ontario. However, this would not trigger a jurisdictional presumption. In Van Breda, Sharpe J.A. held that the jurisdictional presumption under rule 17.02(f) did not arise regarding the foreign agent of the Ontario defendants, even though the foreign agent was involved in the promotion and execution of the Ontario contract: Van Breda v. Village Resorts Ltd., supra, at para. 113 (C.A.).
Note 3: The appellant submits that, based on the case of Craven v. Strand Holidays (Canada) Ltd. (1982), 1982 CanLII 1859 (ON CA), 40 O.R. (2d) 186, [1982] O.J. No. 3599 (C.A.), Best Day cannot be found jointly and severally liable with Sunwing. In that case, the court found that there was no implied agreement by the tour operator with the tourists for safe transportation and therefore there could be no liability on the tour operator for negligence by a tour bus driver as their relationship was one of independent contractor. In these actions, the issue of the relationships among the parties and the basis for liability is pleaded and will depend in part on findings of fact and on the interpretation of any relevant agreements, and is an issue that is open for determination in the actions. Moreover, even if the plaintiffs are ultimately unsuccessful against Sunwing, Best Day has a real and substantial connection to Ontario, in large part because it chose to sign the indemnification agreement.