Court of Appeal for Ontario

Date: 2025-04-22
Docket: COA-24-CV-0876
Panel: Tulloch C.J.O., Pepall and Pomerance JJ.A.

Between

Integrated Team Solutions PCH Partnership, LED (ITS) PCH Inc. and LED (ITS) PCH Limited Partnership
Plaintiffs (Respondents)

and

Mitsubishi Heavy Industries, Ltd., S.D.M.O. Industries carrying on business as Kohler-SDMO, Kohler Co., G.A.L. Power Systems Ottawa Ltd., G.A.L. Power Systems (1992) Ltd., Total Power Limited, Univex (Ontario) Limited, Mulvey & Banani International Inc., and EllisDon Design Build Inc.
Defendants (Appellants/Respondents)

Appearances:

• Thomas G. Conway, Julie Mouris, and Mohammed Elshafie, for the appellants
• John C. Teal and Kylie Campbell, for the respondents, Integrated Team Solutions PCH Partnership, LED (ITS) PCH Inc., and LED (ITS) PCH Limited Partnership
• Nadia J. Authier, for the respondent, Mulvey & Banani International Inc.
• Thomas Macmillan and Farid Mahdi, for the respondents, G.A.L. Power Systems Ottawa Ltd. and G.A.L. Power Systems (1992) Ltd.
• Kurt Pereira and Landan E. Peleikis, for the respondent, Total Power Limited
• Alycia Young, for the respondent, Univex (Ontario) Limited
• Shawn O’Connor, for the respondent, Mitsubishi Heavy Industries, Ltd.
• Jason P. Mangano, for the respondent, EllisDon Design Build Inc.

Heard: March 17, 2025

On appeal from the order of Justice Ian M. Carter of the Superior Court of Justice, dated July 3, 2024, with reasons reported at 2024 ONSC 3791.

A. Introduction

[1] This appeal arises from a motion by the appellants, S.D.M.O. Industries carrying on business as Kohler-SDMO (“S.D.M.O.”) and Kohler Co. (“Kohler”), seeking an order staying the proceedings against them on the basis that the Ontario Superior Court of Justice either lacks jurisdiction or should decline to exercise jurisdiction because of a forum selection clause. In the alternative, they argued that Ontario is not the appropriate forum for the litigation.

[2] The motion judge dismissed the motion, holding that Ontario has jurisdiction over the claims, that no clear and enforceable forum selection clause applies, and that the appellants failed to establish that another jurisdiction is clearly more appropriate. The appellants appeal his ruling on jurisdiction and the forum selection clause, but do not challenge his decision that Ontario is the most appropriate forum.

[3] For the following reasons, I conclude that the motion judge made no reviewable error and, as such, his decision is entitled to deference. Accordingly, I would dismiss the appeal.

B. Factual Background

[4] The dispute arises from the alleged catastrophic failure of two emergency generators at Providence Care Hospital in Kingston, Ontario. The respondent plaintiffs, Integrated Team Solutions PCH Partnership, LED (ITS) PCH Inc. and LED (ITS) PCH Limited Partnership, were responsible for designing, building, financing, and maintaining the hospital. They brought an action seeking damages from the appellants, who allegedly supplied the generators, and various other parties involved in the design, manufacture, supply, installation, testing, commissioning, and maintenance of the generators.

[5] The appellants, both foreign corporations, challenged the Ontario court’s jurisdiction. As well, they sought to enforce an exclusive forum selection clause in favour of a French commercial court, which they claimed formed part of S.D.M.O.’s contract to sell the generators to the respondent co-defendants G.A.L. Power Systems Ottawa Ltd. and G.A.L. Power Systems (1992) Ltd. (collectively, “GAL Power”).

C. Issues

[6] This appeal raises three issues:

a. What is the standard of review?
b. Does Ontario have jurisdiction over the claims against the appellants?
c. If so, should the court have stayed those claims based on the forum selection clause?

D. Analysis

(1) Standard of Review

[7] Absent an extricable error of law, the motion judge’s application of the test for jurisdiction and interpretation of the forum selection clause is reviewable for palpable and overriding error. See Kyko Global Inc. v. M/S Crawford Bayley & Co., 2021 ONCA 736, para 13; Savanta v. Hilditch, 2022 ONCA 890, para 11, citing Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, para 52.

(2) Jurisdiction

[8] An Ontario court has jurisdiction if the plaintiff establishes a good arguable case to assume it, based either on the allegations in the statement of claim or a combination of the pleadings and jurisdiction motion evidence. The plaintiff need not call evidence unless the defendant adduces evidence to challenge the allegations, the pleaded claim appears to be devoid of merit, or it fails to establish that a presumptive connecting factor has an air of reality. See Ontario (Attorney General) v. Rothmans Inc., 2013 ONCA 353, para 54; Kyko, at paras. 31-32.

[9] The following four presumptive connecting factors prima facie entitle a court to assume jurisdiction over a dispute concerning a tort:

1. The defendant is domiciled or resident in the province;
2. The defendant carries on business in the province;
3. The tort was committed in the province; or
4. A contract connected with the dispute was made in the province.

See Club Resorts Ltd. v. Van Breda, 2012 SCC 17, para 90.

[10] The motion judge found that he had jurisdiction under the third factor because the alleged torts occurred in Ontario. He determined that the claims were primarily grounded in tort, not in contract, and that they were sufficiently pleaded and not merely conclusory. Next, relying on the principle from Moran v. Pyle National (Canada) Ltd., [1975] 1 S.C.R. 393, he concluded that the alleged torts occurred in Ontario because the damage to the generators did too.

[11] The appellants argue that the motion judge erred in law by applying an incorrect and unduly low threshold to establish jurisdiction. Relying on Abaxx Technologies Inc. v. Pasig and Hudson Private Limited, 2024 ONCA 164, they submit that the respondent plaintiffs needed to plead sufficient material facts to establish all the elements of negligence.

[12] I disagree. A jurisdictional analysis does not assess pleadings for trial purposes. Rather, the statement of claim must only (1) assert the core elements of a cause of action known to law; (2) enable the court to accurately characterize the claims and properly assess their connection to Ontario; and (3) if it contains deficiencies, be capable of amendment to cure them. See Vahle v. Global Work & Travel Co. Inc., 2020 ONCA 224, para 13; 2249659 Ontario Ltd. v. Sparkasse Siegen, 2013 ONCA 354, paras 27-28.

[13] These conditions are met. The motion judge found that the respondent plaintiffs pleaded all elements of negligence and sufficient facts to assess the claims’ connection to Ontario. As well, he found that the pleadings were not deficient, so he did not need to consider whether they were capable of amendment.

[14] The decision in Abaxx does not assist the appellants because that case is factually distinguishable. In that case, the defendants rebutted the presumptive connecting factor with evidence, which the plaintiffs failed to counter. Here, no such evidence was introduced by the appellants.

[15] We also reject the argument that the motion judge failed to consider the jurisdictional question from Kohler’s perspective. The appellants are, of course, correct that the respondent plaintiffs were required to establish jurisdiction against Kohler as well as S.D.M.O. See Sinclair v. Amex Canada Inc., 2023 ONCA 142, para 19. But they did so by pleading that Kohler “carried on business” and acted “collectively” with S.D.M.O., an allegation which the appellants called no evidence to rebut. As well, the appellants brought the jurisdiction motion jointly and did not distinguish their positions, except with respect to the contract with GAL Power. While Kohler does not appear to be a party to this contract, that does not make the respondent plaintiffs’ allegations patently ridiculous or incapable of proof because, as the motion judge found, their claims were grounded primarily in tort rather than contract.

(3) The Forum Selection Clause

[16] To rely on a forum selection clause, the moving party must prove that it is valid, clear, enforceable, and applicable to the cause of action before the court. The burden then shifts to the opposing party to show “strong cause” for non-enforcement. See Douez v. Facebook, Inc., 2017 SCC 33, paras 28-29.

[17] The appellants rely on a clause in the General Terms and Conditions that they assert form part of S.D.M.O.’s contract with GAL Power that assigns exclusive jurisdiction to a French commercial court. The appellants argue that it applies to the entire dispute and requires a stay of the claims and crossclaims against them.

[18] I do not accept this argument because, as the motion judge found, the appellants did not meet their burden to prove that a valid, clear, and enforceable forum selection clause applies. Instead of attaching the General Terms and Conditions to an affidavit or otherwise presenting them in an admissible form, the appellants filed them in a Motion Record and claimed that the pleadings incorporated them by reference. But as the motion judge determined, the General Terms and Conditions were neither incorporated by reference into the pleadings nor properly introduced into evidence by the appellants.

[19] The motion judge was right. A statement of claim only incorporates documents by reference if (1) it refers to them, and (2) they form an integral part of the plaintiff’s claim. See Del Giudice v. Thompson, 2024 ONCA 70, para 18. The first condition is not met in the present case. The statement of claim, although it briefly mentioned the S.D.M.O.-GAL Power contract, did not reference the General Terms and Conditions themselves. While that might not have defeated incorporation by reference if it was undisputed that those terms formed part of the contract, it does in this case because the respondents did properly dispute this point. Unlike in Del Giudice, where the responding parties failed to make a timely objection to the documents included in the moving parties’ materials and called no evidence (at para. 26), the respondents here timely objected to the inclusion of the General Terms and Conditions and called evidence to support their position. Specifically, GAL Power denied that the General Terms and Conditions applied, and the respondent plaintiffs’ affiant deposed that they had no knowledge of the contract. Thus, the appellants’ reliance on Del Giudice is misplaced.

[20] Accordingly, the appellants failed to meet their burden to prove the forum selection clause’s existence by calling evidence to establish that the contract included it. After all, “[i]t is the practice in Ontario for the motions court to receive evidence pertinent to the jurisdictional issue, such as a copy of the [] agreement … or other affidavit evidence,” including where, as here, the moving party alleges that the claims should be stayed in favour of another forum. See Goudie v. Ottawa (City), 2003 SCC 14, para 32, citing Leufkens v. Alba Tours International Inc.. Parties who do not follow this sound practice run the risk that, if their incorporation by reference arguments fail, the court will not be able to consider the material they included in an unsworn book of documents, which does not constitute evidence. See Hunks v. Hunks, 2017 ONCA 247, para 41.

[21] I would further defer to the motion judge’s finding that the clause neither applied to GAL Power’s crossclaim nor bound the respondent plaintiffs, the other respondent defendants, or Kohler.

[22] To begin with, I agree with the motion judge that the clause did not apply to GAL Power’s crossclaim because it is ambiguous. The clause confers jurisdiction over disputes “related to a supply or the payment for this supply”. As the respondents submit, the General Terms and Conditions use the word “supply” inconsistently, sometimes to describe the product provided, and elsewhere to reference the act of supplying the product to the buyer. As the motion judge reasoned, it would not cover the manufacturing defects that GAL Power alleged if it meant the latter. Because the clause is ambiguous, it could not confer exclusive jurisdiction on the French commercial court. See Savanta v. Hilditch, 2022 ONCA 890, paras 5, 9-11.

[23] I also agree with the motion judge that the appellants failed to show that the respondent plaintiffs, the other respondent defendants aside from GAL Power, and even the appellant Kohler had agreed to be bound by the clause. After all, they did not appear to be parties to the S.D.M.O.-GAL Power contract. See Aldo Group Inc. v. Moneris Solutions Corporation, 2013 ONCA 725, para 44. I need not consider the appellants’ submission that the respondent plaintiffs are bound to the clause as third-party beneficiaries because, as the motion judge found, they did not argue this or any other exceptions to the privity of contract rule before him. They did not explain their failure to do so before this court. See Kaiman v. Graham, 2009 ONCA 77, para 18.

[24] For the above reasons, I see no error in the motion judge’s finding that the forum selection clause should not be enforced.

E. Conclusion

[25] The motion judge made no error warranting appellate intervention in concluding that Ontario has jurisdiction over the claims against the appellants and that the claims should not be stayed based on the forum selection clause.

[26] Accordingly, I would dismiss the appeal with costs as agreed as follows: $15,000 to the respondent plaintiffs; $10,000 to the respondents G.A.L. Power Systems Ottawa Ltd. and G.A.L. Power Systems (1992) Ltd.; and $7,500 to the cross-claiming respondent defendants combined.

Released: April 22, 2025

“M. Tulloch”
“I agree. S.E. Pepall”
“I agree. R. Pomerance”