SUPERIOR COURT OF JUSTICE – ONTARIO

COMMERCIAL LIST

RE: Aldo Group Inc., Plaintiff

AND:

Moneris Solutions Corporation and MasterCard International Inc., Defendants

BEFORE: D. M. Brown J.

COUNSEL: S. Sood and D. Reiter, for the Defendant/Moving Party, MasterCard International Inc.

G. Pollack, S. Frankel and M. Lubetsky, for the Plaintiff, Aldo Group Inc.

P. Griffin and M. Baird, for the Defendant, Moneris Solutions Corporation

HEARD: November 21, 2011 and February 3, 2012

REASONS FOR DECISION (corrected)

I. Overview: motion to stay Ontario action in favour of New York courts

[1] Can a forum selection clause bind a person who was not a signatory to the contract containing the clause? On this motion MasterCard International, Inc. contends that a merchant, Aldo Group Inc., must submit its claims to New York courts by reason of the nature of the claims pleaded by Aldo against MasterCard, notwithstanding that Aldo was not a party to either of the two contracts containing the New York forum selection clause.

[2] Aldo is a retailer of footwear in Ontario, Canada and internationally. Most purchases made at its stores use credit or debit cards, including MasterCard. In April, 2010, Aldo was told that some of its retail outlets had been identified by MasterCard as the point of purchase for legitimate transactions made with MasterCards, but which subsequently were used to make fraudulent transactions.

[3] An investigation ensued. Aldo disputed the ultimate finding that its failure to comply with certain data security standards mandated by MasterCard had facilitated, or contributed to, the subsequent fraudulent use of some MasterCard credit card data.

[4] Nonetheless, MasterCard imposed a financial assessment for that incident, an assessment which was passed down the contractual chain to Moneris Solutions Corporation, a processor with whom Aldo had contracted. Moneris debited Aldo’s account by the amount of the assessment, some U.S.$4 million.

[5] Aldo commenced this action against Moneris and MasterCard seeking to recover the assessment. MasterCard points to a choice of forum clause in a contract between it and a bank higher up the processing chain to argue that this action should be heard in the State of New York; Aldo was not a party to that contract. Pursuant to section 106 of the Courts of Justice Act, R.S.O. 1990, c. C.43, MasterCard seeks a stay of the causes of action asserted against it by Aldo in this proceeding.

[6] For the reasons set out below, I dismiss MasterCard’s motion.

II. Procedural history

[7] Aldo commenced this action on May 24, 2011. It made some minor amendments to its Statement of Claim on September 1, 2011. Moneris delivered a Statement of Defence dated August 11, 2011; Moneris did not cross-claim against MasterCard.

[8] MasterCard initiated this motion in August, 2011. The first day of the hearing was held on November 21, 2011. I was unable to conclude the hearing that day. Before the resumption of the hearing Aldo issued an Amended Amended Statement of Claim on January 5, 2012 (hereafter the “Claim”) to assert a plea of negligence against MasterCard. The hearing of the motion continued on February 3, 2012.

III. The factual matrix as disclosed by the pleadings and the evidence

A. The contractual hierarchy

[9] Conceptually the world of credit cards contains two sides: the card-issuing side of the business and the transaction-processing side. Simply put, a Card Association, such as MasterCard, enters into agreements with financial institutions to issue its credit cards. Those institutions are known as Issuing Banks. On the transaction side, MasterCard contracts with institutions, such as banks, to acquire merchants who will accept MasterCard as a method of payment for goods and services. Those banks are known as Acquiring Banks; they often are one and the same as the Issuing Banks.

A.1 The Licence Agreement between MasterCard and the Banks

[10] As a credit card association, MasterCard establishes standards governing the issuance and use of MasterCard-branded credit and debit cards. MasterCard enters into licence agreements with “members”, typically financial institutions, which it authorizes to use MasterCard trademarks and service marks on condition that the member complies with MasterCard’s standards.

[11] The defendant, MasterCard International Inc., is a Delaware corporation with its principal place of business in the State of New York. MasterCard has an office in Toronto, Ontario.[^1] Approximately 85 employees work at MasterCard’s Toronto regional office.[^2]

[12] In the present case MasterCard entered into License Agreements with two of its “Members”, the Bank of Montreal and Harris National Association, under which MasterCard licenced the use of the marks in connection with the Charge Card Business, a term which includes the issuance of credit cards, the establishment of agreements with merchants and the processing of credit card transactions.

[13] Section 2 of the License Agreement requires the Member to comply with the standards established from time to time by MasterCard “governing the manner in which the Licensee shall perform and conduct any part of its Charge Card Business in connection with which any of the Marks are used.” Those Standards include the MasterCard Rules, section 3.4 of which contains the following choice of law and choice of forum provision:

The substantive laws of the State of New York govern all disputes involving the Corporation, the Standards, and/or the Members and Activity without regard to conflicts. Any action initiated by a Member regarding and/or involving the Corporation, the Standards and/or any Member and Activity must be brought, if at all, only in the United States District Court for the Southern District of New York or the New York Supreme Court for the County of Westchester, and any Member involved in any action hereby submits to the jurisdiction of such courts and waives any claim of lack of personal jurisdiction, improper venue, and forum non conveniens. (hereafter the “Member New York Forum Clause”)

There is no dispute that this rule, or standard, was in force at the time of the events in respect of which Aldo grounds its claim against the defendants. Aldo was not a MasterCard Member, nor was it a party to the License Agreement.[^3]

[14] Chapter 5 of the Rules deals with the obligations between an Acquiring Member and a merchant. The Rules define a “merchant” as a “commercial entity or person that, pursuant to a Merchant Agreement, is authorized to accept Cards when properly presented”. A “Merchant Agreement” is defined as “an agreement between a Merchant and a Member that sets forth the terms pursuant to which the Merchant is authorized to accept Cards”. Section 5.1.2 of the MasterCard Rules requires that certain terms find their way into Merchant Agreements between a Member and a Merchant:

Each Merchant Agreement must contain the substance of each of the Standards set forth in Rules 5.6 through 5.12. The failure to include the substance of any one or more of such Standards in the Merchant Agreement or the grant of a variance by the Corporation with respect to any one or more such Standards does not relieve an Acquirer from responsibility for chargebacks or compliance.

Each Merchant Agreement may contain only such terms agreed to by the Acquirer and the Merchant, provide that no such term conflicts with any Standard.

Rules 5.6 through 5.12 make no reference to any choice of law/forum clause for the purpose of resolving disputes.

[15] Chapter 7 of the MasterCard Rules applies to Members who use Member Service Providers, such as Moneris, to provide program services. Section 7.4.1 imposes certain requirements on the content of any agreement between a Merchant and a Member/Member Service Provider. That section does not require the inclusion of any specific forum selection clause.

[16] Chapter 11 of the MasterCard Rules contains rules which apply only to the Canada Region. The chapter does not contain any choice of law/forum clause.

[17] At the relevant times the MasterCard Standards also included the Security Rules which obliged Members to cause their merchants to comply with certain standards for the security of account data known as the Payment Card Industry Data Security Standards (“PCI DSS”). Those standards require the implementation of security controls and the maintenance of processes which can identify and contain security breaches and security breach attempts. A copy of the Security Rules was not filed in evidence on this motion.

A.2 The “upstream” processing agreements entered into by Moneris

[18] Members, such as BMO and Harris, may not only issue MasterCard credit cards, but they may also acquire payment transactions made with MasterCard branded payment cards. In the present case BMO and Harris acted as Acquiring Members for MasterCard card transactions made between consumers and merchants, such as Aldo. MasterCard’s Standards permit a Member to use a service provider, such as the defendant Moneris, to support the Member’s MasterCard activity provided the service provider agrees to comply with the Standards.

[19] In this case the Acquiring Members entered into processing agreements with the defendant, Moneris, to support the Members’ MasterCard activity. In the contractual framework governing MasterCard transactions Moneris is not classified as a Member of MasterCard, rather it is a third party processor, or Member Service Provider. Moneris is based in Toronto, Ontario.

Moneris agreement with MasterCard

[20] Moneris entered into several agreements in order to carry-on business as the processor of transactions using MasterCards. First, Moneris submitted a Third Party Processor registration form to MasterCard on November 19, 2010 under which it confirmed “its commitment to operate in accordance with the applicable MasterCard and/or Maestro Member Service Provider (MSP) rules.” Under the MasterCard Member Service Provider Type I TPP Agreement Moneris contracted to:

[m]aintain continuous compliance, in all respects, with all applicable Standards, including those applicable to Type I TPP Program Service, as set forth in the Type I TPP Evaluation Program Manual, as such Standards may be amended from time to time at the sole discretion of MasterCard.

[21] The TPP Agreement between MasterCard and Moneris contained, in section 10, the following choice of law and choice of forum clause:

This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, United States of America. Any dispute between MasterCard and Processor arising in connection with this Agreement shall be resolved in federal or state court in New York court, or Westchester county, New York. (hereafter the “Moneris New York Forum Clause”)

Moneris agreement with BMO

[22] Moneris also entered into agreements with the Banks to act as the third-party processor of payment transactions made with MasterCard branded payment cards at the Banks’ participating merchants, such as Aldo.

A.3 The “downstream” processing agreement between Moneris/BMO and the merchant, Aldo

[23] Finally, Moneris contracted with Aldo, a retailer of footwear, with a substantial presence in Ontario. Aldo’s head office is located in Montreal, Quebec. In Canada Aldo’s largest retail presence is in Ontario with approximately 150 retail outlets.[^4] There are about 51 Aldo retail stores in New York State.[^5]

[24] Aldo and Moneris entered into a Moneris MasterCard National Account Merchant Agreement made January 1, 2008 (the “Processing Agreement”). Moneris entered into the agreement with Aldo for itself and on behalf of BMO; MasterCard was not a party to that agreement.[^6] Schedule A to the Processing Agreement is a detailed statement of conditions governing the processing relationship between Moneris and Aldo (the “Moneris Terms and Conditions”), including the method for processing customer transactions and seeking reimbursement from the Bank for the transactions. Section 3.6 of the Moneris Terms and Conditions dealt with Aldo’s data security obligations:

3.6 Data Security, Protection of Cardholder Information and Card Association Rules and Regulations

You are responsible for complying with the Data Security Standards and all applicable laws related to Cardholder and Transaction Information. It is your responsibility to ensure that you obtain and are in compliance with the most recent version of the PCI DSS …

You and any of your third party service providers will adhere to the Card Association Rules and Regulations from time to time in effect. You must obtain all publicly available Card Association Rules and Regulations…

You are responsible for any fines, fees, assessments, costs, including Card re-issuing costs and charges levied by the Card Associations, the Bank and/or us as a result of your non-compliance with the Data Security Standards and all other Card Association Rules and Regulations applicable to you.

The Moneris Terms and Conditions defined “Card Association Rules and Regulations” as the “rules and regulations, as amended from time to time of each applicable Card Association”, of which MasterCard International Inc. is one.[^7]

[25] The Moneris Terms and Conditions contained the following choice of law and choice of forum clause:

11.9 Governing Law

This Agreement will be governed by the laws of the province of Ontario. The parties agree that the courts of the province of Ontario will have exclusive jurisdiction over any matters arising from this agreement.

A.4 The security of account data

[26] As mentioned, the MasterCard Standards contain data security rules which Acquiring Banks must ensure their merchants follow.[^8] In its Claim Aldo pleaded how those rules impact the merchant:

29. The ostensible intent of the [Payment Card Industry Data Security Standards] PCI DSS, according to the card associations, is preventing Account Data from being stolen from merchants that handle such data through their computer systems, and then used to carry out fraudulent transactions, often through the creation of counterfeit Payment Cards.

30. To the extent that a merchant is found not to be compliant with PCI DSS, MasterCard holds the acquirer accountable. The acquirer then typically passes on liability to the merchant under the terms of its agreement with the merchant.

31. In order to establish compliance with PCI DSS, merchants such as Aldo must undergo an annual PCI DSS compliance assessment performed by an independent assessor, known as a Qualified Security Assessor (“QSA”) approved by MasterCard. At the conclusion of the PCI DSS compliance assessment, the QSA issues a report that identifies whether the merchant is PCI DSS compliant.

[27] The MasterCard Security Rules set down procedures for dealing with an Account Data Compromise Event, or an “ADC Event”, which is an occurrence that results, directly or indirectly, in unauthorized access to, or disclosure of, Account Data. Under those Security Rules an acquirer which is responsible for an ADC Event may be required to reimburse MasterCard’s issuers for costs incurred by them by reason of having monitored or reissued cards associated with an ADC Event and for fraud losses caused by the ADC Event.

[28] According to Aldo’s pleading, the principles for determining the liability of an acquirer for losses resulting from an ADC Event were altered at the start of January, 2010. Prior to 2010 an issuer was eligible for fraud losses if it submitted a claim demonstrating that the breached entity – the acquirer of the transaction – violated MasterCard’s rules regarding data storage and the fraud occurred as a result of the ADC Event. Under the new 2010 Rules, according to Aldo, an issuer need not demonstrate that their fraud losses occurred as a result of a violation of the MasterCard Rules concerning data storage standards, instead MasterCard employs a mathematical model to calculate an acquirer’s liability, rather than relying on filed claims of actual losses.

B. The September, 2008 “Intrusion”

[29] Aldo’s claim against the defendants concerns the consequences of certain transactions at Aldo stores which, it is contended, were used to effect fraudulent transactions. The basic sequence of events, as pleaded by Aldo, was as follows:

(i) In 2007 and 2008 Trustwave, a Qualified Security Assessor approved by MasterCard, conducted annual Payment Card Industry Data Security Standards compliance reviews of Aldo and found the company was PCI DSS compliant;

(ii) On April 9, 2010 Moneris contacted Aldo to inform it of a potential breach of its computer network used to process card transactions in its stores which led to subsequent fraudulent transactions. In its pleading Aldo did not identify the location of its stores which were the subject of the potential breach;

(iii) Visa and MasterCard required Aldo to retain a qualified incident response assessor to conduct a forensic investigation to determine whether its computer system had been breached. Aldo retained Verizon Business;

(iv) Verizon issued an initial report on June 2, 2010 stating that Aldo had been subjected to a sophisticated cybercrime attack through which an intruder had attempted to steal account data through a “packet sniffer” which captured data travelling over the port used by Aldo to transmit account data to Moneris. According to Aldo’s pleading, although Verizon concluded that Aldo had failed to comply with one PCI DSS requirement, Verizon had not found evidence that the intrusion had resulted in the actual theft of account data;

(v) Aldo alleges that Visa intervened in this investigation process to require Verizon to alter its report to arrive at conclusions about Aldo’s PCI DSS compliance which Verizon did not consider warranted;

(vi) Verizon issued further versions of its report which found that Aldo was not in compliance with a larger number of PCI DSS requirements;

(vii) On August 11, 2010 MasterCard informed the Banks that it considered the Intrusion to be a potential ADC Event and the Banks’ financial liability was U.S. $4.87 million, consisting of US $1.4 million in estimated operational reimbursement and $3.4 million in fraud recovery;

(viii) Aldo alleges that it sought information from MasterCard through Moneris about how these amounts were calculated, but received no response;

(ix) On October 8, 2010 Aldo sent MasterCard and Moneris comments on the Verizon report, contending that its conclusions were in error, as well as submissions that the Intrusion should not be considered an ADC Event with financial implications;

(x) On March 31, 2011 MasterCard wrote the Banks confirming its finding that the Intrusion constituted an ADC Event for which it held the Banks responsible and advising that it intended to debit the Banks’ accounts for the amount of the assessments on April 17, 2011;

(xi) Moneris wrote to Aldo on April 4, 2011 stating that it would debit Aldo’s account to reimburse the Banks the amounts charged by MasterCard;

(xii) MasterCard debited the Banks’ accounts on April 17, 2011.[^9] MasterCard debited a BMO bank account located in Toronto; it debited a Harris bank account in Illinois.[^10] Two days later Moneris debited Aldo’s account for US $4.929 million, the amount of the Assessment. As MasterCard stated in its evidence, it did not impose any assessments on or debit the account of Moneris in connection with any matter involving Aldo.[^11]

C. The allegations pleaded against the defendants

[30] Aldo commenced this action on May 24, 2011. Its claims against Moneris can be summarized as follows:

(i) Damages of US $4.929 million for breach of contract and breach of a duty to act in good faith;

(ii) A declaration that Moneris was not entitled under the Processing Agreement made January 1, 2008 to debit Aldo’s account in connection with the September 28, 2008 Intrusion;

(iii) A declaration that the debit made by Moneris constituted an illegal imposition of a penalty against Aldo;

(iv) A declaration that Moneris was not entitled to apply the 2010 MasterCard Security Rules in respect of the Intrusion; and,

(v) A declaration that the Intrusion did not constitute an ADC Event for which Moneris could impose any financial liability on Aldo.

[31] As against MasterCard Aldo pleaded the following claims:

(i) Damages of US $4.929 million for unjust enrichment, negligence, breach of a duty to act in good faith and intentional interference with Aldo’s contractual rights;

(ii) A declaration that MasterCard was not entitled to impose the Assessments on BMO and Harris under its 2010 Security Rules, as well as a declaration that specific sections of the 2010 Security Rules are illegal and constitute an unenforceable penalty clause;

(iii) A declaration that the Assessments constituted an illegal imposition of a penalty against the Banks;

(iv) A declaration that MasterCard could not apply retroactively the 2010 Security Rules in respect of the Intrusion;

(v) A declaration that the Intrusion was not an ADC Event; and,

(vi) “In the further alternative, in the event that Moneris is entitled to the Debit under the Processing Agreement, a declaration that Aldo is subrogated to the rights of the Banks and/or Moneris and is entitled to assert whatever causes of action that the Banks and/or Moneris have against MasterCard by reason of its having wrongfully debited the Banks as a result of the Intrusion.”[^12]

[32] As against both Moneris and MasterCard, Aldo also claims damages of U.S. $4.929 million for conspiracy, as well as punitive damages.

[33] In reading Aldo’s Claim it becomes apparent that the company is complaining, broadly speaking, about two acts. First, Aldo alleges that MasterCard “wrongfully imposed and collected from the Banks” assessments “in connection with the Intrusion”. Aldo contends that the Assessments were illegal, invalid and directly violated the MasterCard Standards and were not authorized by the MasterCard 2010 Security Rules.[^13] Second, the plaintiff contends that “Moneris, acting as processor, wrongfully imposed and collected from Aldo” such assessments “allegedly pursuant to terms of the Processing Agreement”[^14] and that “Moneris was not entitled under the Processing Agreement to debit Aldo…”[^15] That is to say, in its claim as pleaded Aldo seeks a judicial determination of the legality of the conduct of MasterCard in imposing the Assessments and the conduct of Moneris in collecting them. The primary thrust of Aldo’s claim is that both MasterCard and Moneris acted wrongfully in imposing and collecting the Assessments.

[34] However, Aldo makes an alternative plea in respect of MasterCard. Aldo contends that in the event it is found that Moneris was entitled under the Processing Agreement with Aldo to debit Aldo’s account with the Assessment, then:

Aldo is entitled to be subrogated to the position of the Banks and/or Moneris and to assert whatever causes of actions and rights that the Banks and/or Moneris may have against MasterCard by reason of MasterCard’s having, amongst other things, wrongfully imposed on and collected from the Banks the Assessments.[^16]

IV. Positions of the parties

MasterCard

[35] MasterCard’s argument in support of a stay of the claims asserted against it in the Claim runs along the following lines. MasterCard argues that regardless of how one characterises the claims asserted by Aldo, in its Claim Aldo pleads that MasterCard did not have the right to impose the Assessments on BMO and Harris pursuant to License Agreements to which Aldo is not a party. Since Aldo lacks any privity of contract with MasterCard, Aldo could only have standing to assert such claims against MasterCard as an equitable subrogee of BMO and/or Harris. As an equitable subrogee of BMO and/or Harris, Aldo would be subject to all contractual rights that MasterCard has against BMO and/or Harris, including MasterCard’s right to invoke the Member New York Forum Clause incorporated into the License Agreements.

[36] In addition, to the extent Aldo has any claim against MasterCard arising from the Assessments as an equitable subrogee of Moneris, Aldo is subject to all contractual rights that MasterCard has against Moneris, including MasterCard’s right to invoke the Moneris New York Forum Clause in the Moneris TPP Agreement requiring that claims against MasterCard arising from Moneris’ activities as processor of MasterCard Payment Card transactions for BMO and Harris be litigated only in the courts of New York.

[37] Accordingly, MasterCard seeks an order declaring that Aldo, as the putative equitable subrogee of BMO, Harris and/or Moneris, is not entitled to assert the causes of action advanced in the Claim against MasterCard in the Ontario Superior Court of Justice, and a further order staying such claims.[^17]

[38] Finally, MasterCard submitted that to the extent Aldo’s claims against it contained both subrogated and non-subrogated claims, this court should stay the subrogated claims.

Aldo

[39] Aldo opposed MasterCard’s motion on several grounds. First, Aldo submitted that its causes of action against MasterCard were grounded in tort and unjust enrichment, not in contract or as an equitable subrogee - they existed on a stand-alone basis and were not rooted in contracts to which Aldo was not a party.

[40] Second, Aldo contended that BMO and Harris, and therefore any of their equitable subrogees, were not bound by the Member New York Forum Clause.

[41] Next, Aldo argued that on its true construction the Member New York Forum Clause did not apply to claims initiated by equitable subrogees, but only to claims initiated by BMO, Harris or Moneris personally.

[42] Finally, Aldo submitted that the “strong cause” test did not apply when a forum clause is invoked against an equitable subrogee. Alternatively, if it did, this was an appropriate case for the Court to decline to enforce the forum clauses and maintain jurisdiction over the present case.

Moneris

[43] Moneris opposed the stay sought by MasterCard for several reasons. First, MasterCard has no contractual relationship with Aldo, so there can be no contractual limitation on Aldo’s choice of jurisdiction. Second, Aldo and Moneris agreed in their Processing Agreement that (i) the courts of the Province of Ontario have exclusive jurisdiction over any matters arising from the Processing Agreement, and (ii) the Processing Agreement is governed by the laws of the Province of Ontario. Third, the dispute focuses on an assessment levied by MasterCard based on a security breach suffered by Aldo which passed through Moneris and others to Aldo. MasterCard is a necessary and proper party for the resolution of the dispute in this action, and the issues cannot be finally resolved without MasterCard’s participation. Finally, all of the parties carry on business in Ontario, Moneris is headquartered in Ontario, this Court has jurisdiction simpliciter over all of the parties in this action, and Ontario is the most convenient forum.

V. The nature of the jurisdictional dispute

A. MasterCard does not dispute this Court’s jurisdiction simpliciter

[44] There is no dispute amongst the parties that in mid-April, 2011, Moneris debited Aldo’s bank account at the BMO in Toronto, Ontario for US $4.929 million. That debit originated in Assessments made by MasterCard which had concluded that an Intrusion into Aldo’s credit card processing system constituted an ADC Event. BMO and Moneris passed on those Assessments to Aldo pursuant to the terms of the Processing Agreement.

[45] Aldo disagreed with MasterCard’s conclusion about the occurrence of an ADC Event, the process it employed to reach that conclusion, and the resulting debit levied by Moneris as the financial liability cascaded down the contractual chain.

[46] Aldo thereupon sued Moneris in Ontario. Moneris was the only party with whom Aldo had entered into an agreement for MasterCard transactions. As noted, the forum selection clause in the Processing Agreement specified Ontario as the “exclusive jurisdiction over any matters arising from this agreement”. Moneris has its head office in Ontario, and Aldo operates a significant number of stores in Ontario.

[47] As Aldo’s Claim makes clear, Aldo thought that MasterCard also had committed wrongs against it in respect of the Assessments which ultimately led Moneris to debit Aldo’s bank account. So, Aldo sued MasterCard in tort and unjust enrichment; no privity of contract existed between MasterCard and Aldo. Although MasterCard has a business presence in Ontario, its head office is located in the State of New York. Aldo relied on three provisions in the Rules of Civil Procedure to justify its service ex juris of MasterCard. First, Aldo relied on Rule 17.02(g) which permits service ex juris “in respect of a tort committed in Ontario”. Aldo has pleaded three torts against MasterCard: negligence, intentional interference with Aldo’s contractual rights with Moneris and conspiracy. Second, Aldo pleaded Rule 17.02(h) which deals with service ex juris “in respect of damage sustained in Ontario arising from a tort, breach of contract, breach of fiduciary duty or breach of confidence wherever committed”. Aldo pleaded that it suffered damage in Ontario as a result of the tortious conduct of MasterCard and its unjust enrichment, and there is no dispute that the Assessments were debited from Aldo’s Toronto bank account. Finally, Aldo invoked Rule 17.02(o) which states that service ex juris may be made “against a person outside Ontario who is a necessary or proper party to a proceeding properly brought against another person served in Ontario”. Moneris has defended this action without challenging jurisdiction or the forum, so one can conclude that the proceeding was properly brought against it in Ontario.

[48] Although in its extensive submissions MasterCard only referred in passing to the issue of the jurisdiction simpliciter of this Court,[^18] those references, coupled with MasterCard’s singular reliance on the Member/Moneris New York Forum Clauses indicates that it does not dispute the jurisdiction simpliciter of this Court, but submits that this Court should decline to exercise such jurisdiction over MasterCard in the face of the New York Forum Clause.

[49] On the pleadings as they stand, and in light of the evidence filed on this motion, a number of connecting factors clearly entitle this Court to assume jurisdiction over the dispute advanced by Aldo: Moneris is resident in Ontario; MasterCard carries on business in Ontario; the harm about which Aldo complains – the debiting of its bank account – occurred in Ontario; and, the only contract in place between Aldo and any of the defendants requires the dispute to be adjudicated in Ontario.[^19]

[50] MasterCard takes no issue with Aldo continuing with its claims against Moneris in Ontario; it simply wants the claims pleaded against it stayed in favour of New York State.

B. Principles governing the enforcement of forum selection clauses

[51] Where a claim is otherwise within the jurisdiction of a court, the court may grant a stay of proceedings to give effect to a forum selection clause. Canadian courts generally give effect to such clauses because of the certainty and security they bring to commercial transactions. In considering whether to enforce a forum selection clause a Canadian court must apply the “strong cause” test:

This test rightly imposes the burden on the plaintiff to satisfy the court that there is good reason it should not be bound by the forum selection clause. It is essential that courts give full weight to the desirability of holding contracting parties to their agreements. There is no reason to consider forum selection clauses to be non-responsibility clauses in disguise. In any event, the "strong cause" test provides sufficient leeway for judges to take improper motives into consideration in relevant cases and prevent defendants from relying on forum selection clauses to gain an unfair procedural advantage. [^20]

[52] Although there is a similarity between the factors which are to be taken into account when considering an application for a stay based on a forum selection clause and those factors which are weighed by a court considering whether to stay proceedings in "ordinary" cases applying the forum non conveniens doctrine,[^21] as the Court of Appeal stated in Expedition Helicopters Inc. v. Honeywell Inc.:

[T]he forum selection clause pervades the analysis and must be given full weight in the consideration of other factors. It is not enough for the plaintiff to establish a "strong" case that Ontario is the more convenient forum. The plaintiff must show "strong cause" that the case is exceptional and the forum selection clause should not be enforced.[^22]

VI. The basis upon which MasterCard asserts Aldo is bound by the New York Forum Clauses

[53] It is a general rule of the common law that no one but the parties to a contract can be bound by it or entitled under it.[^23] MasterCard acknowledges that Aldo is not a privy to the License Agreements which contain the Member New York Forum Clause or the TPP Agreement which contained the Moneris New York Forum Clause.

[54] MasterCard did not take the position on this motion that the Member New York Forum Clause in the MasterCard Rules was incorporated by reference into the Processing Agreement. Section 3.6 of that Processing Agreement provided, in part, that Aldo would “adhere to the Card Association Rules and Regulations from time to time in effect”. That term was defined as “the rules and regulations, as amended from time to time of each applicable Card Association”. Certain difficulties associated with that term were recently canvassed by Kelly J. in her decision in Frankie Tomatto’s Woodbine Inc. v. Moneris Solutions Corp.[^24] Moreover, section 3.6 of the Processing Agreement dealt with data security issues, hardly an obvious place for a signatory such as Aldo to appreciate that some forum selection clause might be incorporated by reference. In any event, MasterCard did not argue that Aldo had bound itself to the Member New York Forum Clause by reason of any incorporation by reference in the Processing Agreement; MasterCard simply argued that “Aldo was at a minimum contstructively, if not actually, aware of the New York forum selection clause in Rule 3.4 when it entered into the Merchant Agreement”.[^25]

[55] Instead, the essence of MasterCard’s position was that notwithstanding the absence of privity of contract between itself and Aldo, when the plaintiff’s pleaded causes of action are viewed in their entirety, they really reduce down to one – a claim in equitable subrogation. As a subrogee, MasterCard argues, Aldo must step into the shoes of BMO, an acquiring bank, with whom privity of contract exists with MasterCard and, in so doing, Aldo becomes bound by the New York Forum Clause in the Licence Agreement or TPP Agreement.

[56] To examine MasterCard’s arguments on this motion, I propose to proceed in the following manner:

(i) To consider whether, when looked at in their entirety, Aldo’s claims against MasterCard reduce to a single claim of equitable subrogation;

(ii) To determine whether Aldo is bound by the Member New York Forum Clause in the Licence Agreement between MasterCard and BMO or the Moneris New York Forum Clause in the TPP Agreement; and,

(iii) In the event that Aldo is so bound, to consider whether Aldo has demonstrated strong cause why effect should not be given to the New York Forum Clause.

VII. When looked at in their entirety, do Aldo’s claims against MasterCard reduce to a claim of equitable subrogation?

A. How should a court examine Aldo’s claims against MasterCard for the purposes of a motion contesting the jurisdiction of the domestic court on the basis of a forum selection clause?

[57] In support of its contention that when viewed in their entirety Aldo’s claims against it are caught by the Member New York Forum Clause, MasterCard points to the decision of the Supreme Court of Canada in Weber v. Ontario Hydro which held that when determining whether a claim arises under a collective agreement - and therefore should be heard by a labour tribunal, not a court - one must ask “whether the dispute, viewed with an eye to its essential character, arises from the collective agreement”.[^26] To paraphrase Weber, let me consider whether the claim pleaded by Aldo against MasterCard, when regarded with “an eye to its essential character”, is based on equitable subrogation.

[58] Such an exercise, however, must take into account how this CJA s. 106 stay motion was brought. MasterCard has not filed a notice of intent to defend or a statement of defence. Consequently, two principles should guide the review of Aldo’s pleaded claims. First, the court should give the plaintiff’s pleading a fair and liberal reading, with the allegations of the plaintiff read in their entirety, in their most favourable light, and on the basis that the facts pleaded could be proved at trial. To the extent that evidence is filed on the motion, as LeBel J. stated in Club Resorts Ltd. v. Van Breda:

A particular challenge in this respect lies in the fact that court decisions dealing with the assumption and the exercise of jurisdiction are usually interlocutory decisions made at the preliminary stages of litigation. These issues are typically raised before the trial begins. As a result, even though such decisions can often be of critical importance to the parties and to the further conduct of the litigation, they must be made on the basis of the pleadings, the affidavits of the parties and the documents in the record before the judge, which might include expert reports or opinions about the state of foreign law and the organization of and procedure in foreign courts. Issues of fact relevant to jurisdiction must be settled in this context, often on a prima facie basis. These constraints underline the delicate role of the motion judges who must consider these issues.[^27]

[59] Second, the examination of the plaintiff’s pleading must recognize the limited scope of the arguments available to a moving party defendant on a motion to stay where it has not filed a statement of defence. MasterCard has not submitted to the jurisdiction of the Ontario court, although it has not challenged the Court’s jurisdiction simpliciter. MasterCard requests that the Ontario court decline jurisdiction to hear the claims against it on their merits, pointing to New York as the more appropriate forum for a merits-based adjudication of the dispute. Given that MasterCard’s standing at the present time is limited to requesting this Court to decline jurisdiction because of a forum selection clause, it is not open to MasterCard to ask this Court to pass judgment on the merits of the plaintiff’s pleaded claims. To do so would transform a jurisdiction-based analysis into a merits-based analysis.

[60] This is an important point for this motion. Upon the continuation of the motion this past February MasterCard filed extensive additional written submissions and authorities designed to show that some of the claims pleaded by Aldo, such as its claim sounding in negligence, were not tenable as a matter of law. For example, MasterCard submitted that (i) it owed no duty of care to Aldo given the terms of its License Agreement with BMO; (ii) Aldo could only assert a claim against it as subrogee of BMO; and, (iii) to give effect to Aldo’s negligence claim would impermissibly recognize a tort claim where the relationship between the parties was governed by contract.[^28] In effect, MasterCard sought to transform its motion for a stay based on a forum selection clause into a Rule 21 motion to strike parts of Aldo’s pleaded claims as disclosing no reasonable causes of action. In my view a defendant who requests that this Court decline jurisdiction to hear a case on the merits because of a forum selection clause cannot conflate its jurisdictional arguments with ones which call into question the merits of the plaintiff’s case. If an Ontario court assumes jurisdiction over a case and a defendant elects to defend in this forum, it then may take steps to challenge the merits of the plaintiff’s action; but not before.

[61] That said, when conducting an examination of a plaintiff’s claims for purposes of a forum selection clause stay motion, a court must remain alive to any attempt by the plaintiff to plead in a manner simply designed to get around the terms of a forum selection clause to which it had agreed. That is not this case. There is no dispute that Aldo is not a party to a contract with MasterCard which contains a forum selection clause, and the Member New York Forum Clause on which MasterCard relies on its face applies only to “any action initiated by a Member”, and Aldo is not a Member. Nevertheless, MasterCard contends that Aldo’s claim in its essential character is one seeking equitable subrogation and, as such, Aldo must step into the shoes of BMO or Moneris to assert such a claim, thereby becoming bound by the Member or Moneris New York Forum Clause.

B. Overview of Aldo’s pleaded claims against MasterCard

[62] Although in its Claim Aldo pleads several legal claims against MasterCard - negligence, intentional interference with Aldo’s contractual rights, unjust enrichment, breach of a duty of good faith, conspiracy and equitable subrogation – in its initial factum Aldo described the core of its claim as follows:

This case revolves around a decision by MasterCard to impose “operational reimbursement” and “fraud recovery” assessments upon BMO and Harris totalling $4,929,479.30 USD…arising out of an alleged breach of Aldo’s computer system through which credit card transactions are processed.

In this regard, MasterCard has alleged that the breach resulted in the theft of credit cardholder account data. Aldo disputes that this was the case.

Aldo contends that the imposition and collection of the Assessments was unlawful and has thus demanded, inter alia, the return of the money taken from it, along with interest and punitive damages, from both MasterCard and Moneris. BMO and Harris are not parties to this litigation.

MasterCard’s actions in collecting the Assessments and its reliance on the MasterCard Rules are at the heart of the present litigation.[^29]

A. Aldo’s pleaded tort claims

[63] Aldo’s claim against MasterCard in negligence focuses on the imposition of Assessments under the Standards. Aldo pleaded that (i) MasterCard could foresee that any failure to take care in applying the Standards when imposing assessments could result in a merchant ultimately paying unwarranted amounts; (ii) MasterCard had a legal duty to merchants in imposing and calculating any assessment; (iii) MasterCard owed a legal duty to Aldo to take reasonable care in determining whether the Intrusion constituted an ADC Event and in calculating any assessment; and, (iv) MasterCard breached that duty by imposing the Assessments.[^30]

[64] MasterCard argued that Aldo’s negligence claim in fact really was a contract claim predicated on an alleged violation by MasterCard of BMO’s rights under the License Agreements. Aldo contended that Canadian law has recognized many circumstances in which an injured third party may claim damages in negligence against a party who had breached a contract to which it was not party. As I observed earlier, I do not view the function of a court on a CJA s. 106 stay motion as ascertaining whether the plaintiff has pleaded reasonable causes of action at law. Suffice it to say that the cases relied upon by Aldo did not provide much assistance on the specific issue before me as none of them dealt with forum selection clauses.[^31] The cases primarily treated the issue of recoverability of damages for claims based on negligent misrepresentation or the existence of some special relationship existing between plaintiff and defendant; the cases did not consider the issue of negligence in the context of a contractual matrix such as characterizes the relationships amongst card issuer, acquiring bank, transaction processor and merchant.

[65] Under Canadian law the tort of interference with contractual relations lies where (i) a defendant knows about a contract between the plaintiff and a third party, (ii) the defendant intended the third party to break its agreement with the plaintiff, (iii) the defendant caused the plaintiff to break its contract with the plaintiff, and (iv) the plaintiff suffered a loss as a result of the third party’s breach of its contract with the plaintiff.[^32] Aldo has pleaded that by imposing the Assessments MasterCard wrongfully interfered with Aldo’s contractual rights arising under its Processing Agreement with Moneris.[^33] MasterCard submitted that any adjudication of this tort claim would require an inquiry into whether it had breached any contractual obligations contained in the License Agreement which led it to impose the Assessments.

[66] As to its conspiracy claim, Aldo provided few particulars, but did plead that “in imposing and collecting the Assessments, the Defendants conspired to violate Aldo’s rights and intentionally inflict economic harm on Aldo…”[^34]

B. Aldo’s pleaded unjust enrichment claim

[67] Canadian law recognizes unjust enrichment as a legal cause of action quite independent from claims under contract. That said, the existence of a contract may act as a juristic reason to justify the enrichment which the plaintiff contends is unjust.[^35]

[68] Aldo pleaded that MasterCard was not entitled to impose the Assessments and, by so doing, MasterCard wrongfully deprived Aldo of U.S.$4.929 million and, in turn, unjustly enriched itself to that extent.[^36]

[69] MasterCard submitted that the rights it enjoyed under the License Agreement pursuant to which it levied the Assessment constituted a juristic reason for its enrichment, even though Aldo was not a privy to that contract.

C. Aldo’s pleaded breach of a duty of good faith claim

[70] To date Canadian courts have not recognized a stand-alone duty of good faith that is independent from the terms expressed in a contract or from the objectives that emerge from those provisions. Instead, courts have implied a duty of good faith to secure the performance and enforcement of the contract made by the parties.[^37] Although Aldo, in its prayer for relief, sought damages against MasterCard in the amount of the Assessments for breach of its duty of good faith, the balance of Aldo’s Claim did not expand on the basis for this request.

D. Aldo’s requests for declaratory relief

[71] In its Claim Aldo sought five declarations against MasterCard: (i) MasterCard was not entitled under its rules, policies and operating procedures to impose the Assessments; (ii) certain provisions of the MasterCard Security Rules were illegal and constitute an unenforceable penalty clause; (iii) the Assessments constituted an illegal and unenforceable imposition of a penalty against the Banks; (iv) MasterCard was not entitled to apply retroactively the 2010 Security Rules in respect of the Intrusion; and, (v) the Intrusion did not constitute an ADC Event under the Standards.

[72] MasterCard pointed to the general rule of the common law that no one but the parties to a contract can be bound by it or entitled under it[^38] to argue that Aldo only had standing to seek the pleaded declaratory relief if it stood in the shoes of the Banks which were privies to the License Agreement containing or incorporating those rules and policies. While it is not for me to determine on this stay motion the availability of declaratory relief to the plaintiff, the terms and conditions of the Processing Agreement on their face arguably provide some contractual basis for Aldo to contend that it enjoys standing to seek certain declaratory relief. Section 3.6 of the Moneris Terms and Conditions required Aldo to comply with the Data Security Standards and to pay any assessment levied by a Card Association, such as MasterCard. Having agreed to be bound by the Data Security Standards and assessments, arguably it would be open to Aldo to challenge directly the manner in which those standards were applied or assessments determined and to seek declaratory relief in that respect. Section 6.1 of the Processing Agreement stated that Moneris and BMO were not responsible “for charged back Transactions but you may pursue a claim against the Cardholder directly”. Assessments are not “charged back Transactions” under the Processing Agreement, but the presence of section 6.1 indicates that the parties contemplated some prospects of direct claims by merchants against Card Associations. What effect, if any, that section might have on an overall interpretation of the Processing Agreement as a source for seeking declaratory relief will be a matter for the trial judge. I simply point to those provisions of the Processing Agreement to indicate that arguable issues exist as to whether that agreement provides Aldo with standing to seek some of its declaratory relief.

[73] In any event, in one of its factums Aldo explained its standing to seek declaratory relief in respect of the Rules and Standards as follows:

MasterCard has unilaterally created its rules, policies and operating procedures, while its Members and MSP’s are contractually obligated to ensure compliance from retailers like Aldo. As a directly-affected third party, Aldo has standing to seek in its own name the invalidity of any part of these rules, policies and operating procedures that directly affect it, even if it is not a contractual ‘party’ to them.[^39]

E. Aldo’s alternative claim for equitable subrogation

[74] In its Claim Aldo asserts an alternative plea sounding in subrogation. In its prayer for relief against MasterCard Aldo pleaded:

In the further alternative, in the event that Moneris is entitled to the Debit under the Processing Agreement, a declaration that Aldo is subrogated to the rights of the Banks and/or Moneris and is entitled to assert whatever causes of action that the Banks and/or Moneris have against MasterCard by reason of its having wrongfully debited the Banks as a result of the Intrusion.[^40]

In the body of its Claim Aldo pleaded:

Further or alternatively, and without prejudice to the other allegations made herein, in the event that it is held that Moneris was entitled under the Processing Agreement to debit Aldo’s account in connection with the Assessments, Aldo is entitled to be subrogated to the position of the Banks and/or Moneris and to assert whatever causes of actions and rights that the Banks and/or Moneris may have against MasterCard by reason of MasterCard’s having, amongst other things, wrongfully imposed on and collected from the Banks the Assessments.[^41]

[75] MasterCard argued that Aldo had no standing to challenge the imposition of the Assessments except as an equitable subrogee.[^42] Aldo argued that in this action it was not asserting any claims as an equitable subrogee, but merely sought to be declared subrogated to the rights of BMO and Moneris so that it could pursue remedies in subrogation in the event its claim against Moneris failed.[^43]

[76] On a plain reading of Aldo’s pleading the plaintiff seems to be seeking in this proceeding a declaration that it may later assert subrogated claims against MasterCard, but only if its present claim against Moneris fails. That is to say, Aldo does not plead that it is a subrogee asserting claims in that capacity against MasterCard. Instead, in the event it does not succeed against Moneris in this proceeding, Aldo seeks a declaration that it is a subrogee who may then assert subrogated claims against MasterCard. In its Claim Aldo does not particularize the subrogated claims it would wish to assert against MasterCard; instead, it seeks a declaration that it may assert “whatever causes of action that the Banks and/or Moneris have against MasterCard”.

[77] The parties placed before me cases involving subrogation in two circumstances – the determination of priorities amongst those with interests in land and the payment of an insured by an insurer, or, put another way, subrogation to prevent unjust enrichment and subrogation arising from contracts of indemnity. In the former circumstance a mortgage lender whose own security fails for some reason may be able to show that its monies were used, either in whole or in part, to discharge an earlier security. To the extent that its monies were so used, the mortgage lender may be able to be subrogated to the earlier security.[^44] Anglo-Canadian jurisprudence regards subrogation in such a circumstance as a remedy, not a cause of action.[^45] It is viewed as a discretionary equitable remedy designed to ensure fairness between affected parties having regard to all the circumstances, and it often operates to relieve against the consequences of a mistake or negligence regarding the registration of interests in land where no injury would be caused to the party against whom relief is sought. [^46] As succinctly stated by Millett L.J. in Boscawen v. Bajwa:

Subrogation, therefore, is a remedy, not a cause of action …It is available in a variety of different situations in which it is required in order to reverse the defendant's unjust enrichment. Equity lawyers speak of a right of subrogation, or of an equity of subrogation, but this merely reflects the fact that it is not a remedy which the court has a general discretion to impose whenever it thinks it is just to do so. The equity arises from the conduct of the parties on well-settled principles and in defined circumstances which make it unconscionable for the defendant to deny the proprietary interest claimed by the plaintiff. A constructive trust arises in the same way. Once the equity is established the court satisfies it by declaring that the property in question is subject to a charge by way of subrogation in the one case or a constructive trust in the other.[^47]

The discretionary nature of the remedy of equitable subrogation means that a court may deny the relief where there exists another source of compensation for the damage suffered.[^48]

[78] In the insurance context subrogation acts as “a legal device whereby one person, upon paying a debt or discharging a liability of another, is entitled to ‘stand in the shoes’ of the creditor and enforce against the debtor all rights which the creditor himself could have asserted”.[^49] In other words, in the context of insurance law subrogation creates a right of action.[^50]

[79] The distinction between contractual subrogation and subrogation designed to prevent unjust enrichment was explained by Lord Hoffman in Banque Financière De La Cité v. Parc (Battersea) Limited and Others:

[Subrogation] is also used to describe an equitable remedy to reverse or prevent unjust enrichment which is not based upon any agreement or common intention of the party enriched and the party deprived. The fact that contractual subrogation and subrogation to prevent unjust enrichment both involve transfers of rights or something resembling transfers of rights should not be allowed to obscure the fact that one is dealing with radically different institutions. One is part of the law of contract and the other part of the law of restitution. Unless this distinction is borne clearly in mind, there is a danger that the contractual requirement of mutual consent will be imported into the conditions for the grant of the restitutionary remedy or that the absence of such a requirement will be disguised by references to a presumed intention which is wholly fictitious.[^51]

F. Conclusion

[80] Stepping back, on the face of its pleading Aldo has asserted a claim in contract against its privy, Moneris, and also seeks declaratory relief in respect of Moneris’s conduct and certain provisions of the Processing Agreement. In addition, Aldo seeks a declaration that Moneris was not entitled to apply the 2010 Security Rules to the Intrusion. Those claims necessarily will require a consideration of the facts surrounding the imposition and collection of the Assessments, including whether the Intrusion constituted an ADC Event. Since the basis of Aldo’s claim against Moneris is the unlawfulness of the Assessments imposed by MasterCard, then MasterCard is a necessary and proper party to a proceeding properly brought against another person served in Ontario.[^52] As well, MasterCard is a necessary party by reason of Aldo’s claim that Moneris and MasterCard conspired to inflict economic harm on it.

[81] Drawing on the same events Aldo asserts several direct claims against MasterCard – tort, unjust enrichment and declaratory relief. I do not read those pleas as artful devices to circumvent a forum selection clause. They are causes of action sometimes asserted by a plaintiff who is a stranger to a contract between others. Moreover, Aldo was not a privy to any contract containing the New York Forum Clause, so there was no clause to which it had contracted that it had to circumvent.

[82] Aldo’s plea involving subrogation clearly is an alternative plea, not a primary one. As noted, I do not read the Claim as asserting, at this point of time, any subrogated claim by Aldo against MasterCard. The prayer for relief seeks a declaration that Aldo is subrogated to rights of Moneris and the Banks and is entitled to assert “causes of action” which they may have against MasterCard. This alternative plea appears to seek a declaration that Aldo can assert contractual subrogated claims at some later point against MasterCard. Whether Aldo’s Processing Agreement with Moneris and the Bank would support a finding that Aldo enjoyed rights of subrogation against MasterCard is an issue put in play by the Claim.[^53]

[83] In sum, I do not read Aldo’s Claim as reducing itself to claims by a subrogee against MasterCard. Quite the contrary. Aldo’s primary claims against MasterCard are made by it as a stranger to the License Agreement and TPP Agreement. Whether those claims as a stranger are tenable at law or on the facts is a matter for adjudication on the merits. I think it clear that Aldo has cast itself as a stranger to contracts to which MasterCard is privy and advances its direct claims against MasterCard on that basis.

[84] Aldo only seeks a declaration that it is a subrogee in the event it fails against Moneris. Of course, if Aldo succeeds at trial on its direct claims against MasterCard, then no practical purpose likely would be served by granting such a declaration. If, on the other hand, Aldo fails in its claims against Moneris and its direct claims against MasterCard, then a declaration that it is a subrogee may be of little assistance to Aldo given the doctrines of issue and cause of action estoppel.

[85] I therefore conclude that the “essential character” of the claims pleaded by Aldo is not one of equitable subrogation, but they are direct claims advanced by a stranger to the contracts to which MasterCard is privy, although some claims for declaratory relief arguably rest on the incorporation by reference of the Security Rules in the Processing Agreement.

VIII. Given the “essential character” of the claims pleaded by Aldo against MasterCard, is Aldo bound by the Member New York Forum Clause in the Licence Agreement between MasterCard and BMO or the Moneris TPP Agreement?

[86] That conclusion does not end the inquiry. MasterCard advanced several strands of case law in support of its argument that Aldo was bound by the Member or Moneris New York Forum Clause. Before turning to those cases, let me deal with one argument put forward by Aldo.

A. Aldo’s attempt to challenge to the validity of the New York Forum Clause

[87] Aldo submitted that the Member New York Forum Clause did not bind BMO or Harris because the clause went beyond the scope of the terms MasterCard was entitled to impose under the License Agreement as “standards” or “rules”. I give no effect to this argument: in its Claim Aldo did not challenge the validity of section 3.4 of the Rules; neither of the contracting counter-parties which are bound by section 3.4 – BMO and Harris – are parties to this action; nor, of course, did Aldo take the position that Rule 3.4 was incorporated by reference into its Processing Agreement.

B. The jurisprudence on foreign selection clauses binding non-signatories

[88] Aldo argued that section 3.4 of the Rules was limited by its terms to “any action initiated by a Member”, and since all parties agreed that Aldo was not a Member nor a signatory to the License Agreement, then the Member New York Forum Clause could not apply to its claims against MasterCard. That then brings us to the central issue on this motion. MasterCard submitted that the New York Forum Clause applied to Aldo by virtue of the nature of the claims Aldo has asserted against MasterCard notwithstanding that Aldo was not a signatory to the License Agreement which contained the choice of forum clause.

[89] The parties did not place before me any Canadian case which squarely had considered the issue of whether a non-signatory to a contract could be bound by its forum selection clause. They did refer me to several American authorities emanating from both federal and state courts. Although the Canadian and U.S. tests for the enforcement of forum selection clauses differ somewhat in their details, they rest on a similar policy rationale. In M/S Bremen v. Zapata Off-Shore Co. the United States Supreme Court noted the important role of forum selection and choice of law clauses in eliminating uncertainty in international commerce. In that case the U.S. Supreme Court held that such clauses are entitled to a presumption of enforceability unless enforcement would be unreasonable and unjust, or the clause was invalid for reasons such as fraud or overreaching.[^54]

[90] A similar policy rationale was articulated by our Supreme Court in ECU-Line N.V. v. Z.I. Pompey Industrie in support of a rule encouraging the enforcement of forum selection clauses in commercial contracts:

These clauses are generally to be encouraged by the courts as they create certainty and security in transaction, derivatives of order and fairness, which are critical components of private international law.

The "strong cause" test reflects the desirability that parties honour their contractual commitments and is consistent with the principles of order and fairness at the heart of private international law, as well as those of certainty and security of transaction at the heart of international commercial transactions.[^55]

[91] Given the similarities in the conceptual foundations for the Canadian and American rules enforcing forum selection clauses, I think that it is appropriate to consider how American courts have approached the issue of the applicability of a forum selection clause to a non-signatory to a contract.

B.1 Equitable subrogation cases

BKJRT v. Sovereign Bank

[92] In BKJRT, Inc. v. Sovereign Bank,[^56] the plaintiff, a restaurant owner located in Massachusetts, had entered into a processing agreement with Sovereign Bank, which, in turn as an acquiring bank, had a license agreement with MasterCard. The latter assessed a fine on Sovereign Bank for a data security breach by the plaintiff; Sovereign in turn withdrew the fine from the plaintiff’s account. Sovereign Bank’s license agreement with MasterCard contained a New York Forum Clause similar in language to that in issue in the present case; the forum selection clause in the agreement between Sovereign Bank and BKJRT also stipulated New York State as the venue for disputes, albeit a different county than that named in the license agreement. Since BKJRT had sued in a Connecticut court, MasterCard moved to dismiss the action against it for improper venue. It appears from the decision that the Connecticut court earlier had granted a similar stay motion brought by Sovereign Bank.

[93] In starting its analysis the Superior Court of Connecticut reviewed the plaintiff’s pleading and observed that “the basis for the plaintiff’s claims against the defendant is unclear”, and “the plaintiff has not indicated whether the basis of its claims against the defendant are based on the doctrine of equitable subrogation or based on another theory of liability.”[^57] This led that court to conclude: “[T]he court finds that the plaintiff’s claims against the defendants can be construed to be based on the doctrine of legal or equitable subrogation.”[^58] The court held that “if the plaintiff’s claims are based on the doctrine of equitable subrogation, the plaintiff is bound by the terms of the agreement between Sovereign and [MasterCard].”[^59]

[94] Two aspects of the BKJRT decision are note-worthy. First, unlike the present case, the forum selection clause between the merchant and the acquiring bank named the same venue – New York State – as did the clause in the licence agreement between the bank and MasterCard. Of course in the present case the Processing Agreement names Ontario, not New York State, as the selected forum. Second, the court’s analysis of the merchant’s claims concluded that they were advanced against MasterCard solely on the doctrine of equitable subrogation; I have not reached that conclusion regarding Aldo’s Claim.

Colonia Insurance Company v. Assuranceforeningen Skuld[^60]

[95] Aldo pointed to the decision of the Florida District Court of Appeal in Colonia Insurance for the proposition that a party making a claim as an equitable subrogee is not bound by a forum selection clause in the primary contract. The case involved a primary insurer, Skuld, and an excess carrier, Colonia. The insured sought coverage for a wrongful death claim brought against it. Skuld denied coverage; Colonia defended and settled the claim. Colonia then sued Skuld to recover the costs of the defence and the settlement amount. The contract between Skuld and the insured contained a forum selection clause naming Norway as the venue. The trial judge gave effect to that clause and dismissed Colonia’s Florida action. In a 2-1 decision the Florida District Court of Appeal reversed.

[96] As I read the decision the majority of the appeals court did not regard Colonia’s claim as a subrogated one; instead the majority held that the excess carrier enjoyed a “direct action” against a primary carrier who had refused to defend. The minority disagreed, characterizing Colonia’s claim as a subrogated one with the result that the excess carrier assumed both the rights and responsibilities of the insured against the primary carrier.

[97] The decision in Colonia, then, turned on whether as a matter of Florida law the claim advanced by the excess carrier was a direct or subrogated one. The court split on that issue. However, both the majority and minority appeared to agree that a party asserting a subrogated claim would be bound by the forum selection clause in the primary contract.[^61]

National Union Fire Insurance Company of Pittsburgh v. Williams

[98] In National Union Fire Insurance Company of Pittsburgh v. Williams the New York Appellate Court held that a subrogee who was the holder in due course of certain promissory notes was required to commence its action in the forum designated in those notes.[^62]

Commonwealth Insurance Co. v. American Home Assurance Co.[^63]

[99] Aldo submitted that this decision of the Manitoba Queen’s Bench stood for the proposition that a forum selection clause between an excess insurer and its insured naming England as the venue did not bind a primary insurer who sought to recover the costs of defending from the excess insurer. Certainly the following language from that decision would appear to support Aldo’s statement of principle:

The first is simple. Commonwealth is not a party to the contract between Hudbay and Coromin. The basis of Commonwealth's claim in this case is said to be equitable contribution. A claim for contribution is thus based in equity and not in contract: Legal and General Assurance Society Ltd. v. Drake Insurance Co. Ltd., [1992] 1 All E.R. 283 (C.A.).

That was also the conclusion of the Supreme Court of Canada in Family Insurance Corp. v. Lombard Canada Ltd., 2002 SCC 48, [2002] 2 S.C.R. 695 at para. 41, 212 D.L.R. (4th) 193, where the court stated:

¶ 41 It is trite law, however, to say that the provisions of a contract cannot unilaterally bind a person who is not a party to it. In the absence of privity between the two insurers, there is simply no basis for allowing Family to benefit from Lombard's provision on sharing by limits. The beneficial impact of that provision on Family does not compensate for the lack of privity between the insurers.

Thus, even if Coromin was entitled to enforce its choice of forum and law clause in a dispute with Hudbay, it does not have the right to insist that it be applied to Commonwealth. However, the existence of a binding choice of forum clause in a policy between Hudbay and Coromin would remain a significant factor to be considered when identifying the most convenient forum.[^64]

[100] However, two points must be made about the decision in Commonwealth Insurance. First, the cited decision of the Supreme Court of Canada in Family Insurance did not involve subrogated claims or forum selection clauses; at issue was the apportionment of liability between two insurers both of whom claimed they were the excess, not primary, insurers. It was in that context that the Supreme Court held that a sharing formula contained in one of the policies could not bind the other insurer. Moreover, the court in Commonwealth Insurance found that the England forum selection clause which the excess insurer contended was contained in its policy with the insured in fact was not present in the policy; on the contrary, the excess insurer was bound by a choice of forum clause naming Manitoba as the venue.

B.2 Successor in interest cases

[101] In Aguas Lenders Recovery Group LLC v. Suez, S.A. the United States Court of Appeals, Second Circuit, held that where an entity stands as a successor in interest to a contractual arrangement, even though it was not a signatory to the original contract, it is bound by any forum selection clause in the original contract. The court’s rationale for reaching this result was as follows:

Successorship doctrine prevents parties to contracts from using evasive, formalistic means lacking economic substance to escape contractual obligations…We see no reason to treat forum selection provisions differently from other contractual obligations…[A] forum selection clause is integral to the obligations of the overall contract, and a successor in interest should no more be able to evade it than any other obligation under the agreement.[^65]

In the present case, however, Aldo did not stand as a successor in interest to any contract with MasterCard.

B.3 The “closely related” cases

[102] MasterCard submitted that this Court should adopt the principle of New York law that a forum selection clause may be enforced against a non-signatory to a contract who is “closely related” to the dispute such that enforcement of the forum selection clause against it is foreseeable.[^66]

[103] In Kahala Corp. v. Holtzman the purchaser of certain franchise agreements which contained New York forum selection clauses sued an individual (the franchisee owner) who had signed a portion of each franchise agreement which bound him personally to comply with two stipulated provisions in the franchise agreement (the “Individual Provisions”). In enforcing that forum selection clause against the individual the court found, as a matter of contractual interpretation of the franchise agreements, that by signing the Individual Provisions of those agreements the individual had contracted to be bound by the forum selection clause. The court then went on to hold, in addition, that the individual was “closely related to the contract dispute” because by signing the Individual Provisions in each franchise agreement he had guaranteed the very provisions of the franchise agreements which were in dispute in the lawsuit.

[104] The next case, Lipcon v. Underwriters at Lloyd’s, London,[^67] involved a claim by U.S. “Names” of Lloyd’s London against that exchange. The U.S. “Names” had signed General Undertakings with Lloyd’s which contained a forum selection clause designating England as the venue for disputes. Joining the two “Names” as plaintiffs were their spouses who had signed letters of credit to provide collateral for their Name spouses, but who had not signed the General Undertaking. In holding that the collateral-providing spouses were bound by the forum selection clause in the General Undertaking, the United States Court of Appeals, Eleventh Circuit, found them to be closely related to the dispute such that it was foreseeable they would be bound by the clause because:

[T]he interests of the spouses in this dispute are completely derivative of those of the Name-plaintiffs and thus “directly related to, if not predicated upon” the interests of the Name plaintiffs.”[^68]

In that case the Names had become liable for “massive losses” on certain policies, thereby putting the collateral posted by their spouses at risk.

[105] Then, in Firefly Equities LLC v. Ultimate Combustion Co., Inc., the individual defendant, who was the president of the corporate defendant, contended that the New York forum selection clause in the MOU agreement between the plaintiff and the corporate defendant did not apply to him. The United States District Court, S.D. New York, rejected that argument, relying on the “closely related” doctrine. The court noted that the “closely related” doctrine exists “precisely because there are some situations where courts believe that parties who are not signatories to such a clause should nonetheless be bound by that clause”,[^69] and then went on to conclude:

Based on the fact that [the individual defendant] himself signed the MOU (albeit in his representative rather than individual capacity), it was, or should have been, foreseeable to him that the clause might have application to disputes arising under that agreement that also involved him.[^70]

Accordingly, the court enforced the forum selection clause against the individual defendant.

[106] Finally, in Coastal Steel Corporation v. Thilghman Wheelabrator Ltd.[^71] the plaintiff, Coastal, had contracted with Farmer Norton for the supply of a turn-key plant. Farmer Norton, in turn, contracted with Thilghman to supply a blast unit for the plant. The Farmer Norton – Thilghman contract contained a choice of forum clause naming England as the venue; the Coastal-Farmer Norton contract named New Jersey as the dispute venue. Coastal sued Farmer Norton and Thilghman in New Jersey for damages relating to alleged defects in the blast unit. Farmer Norton went bankrupt; Thilghman moved to enforce the English choice of forum clause. Although the appellate decision did not describe in detail the claims asserted by Coastal, that court did state that Coastal’s contract and tort theory claims both sought “money damages for the alleged malfunctioning of a machine.”[^72]

[107] The United States Court of Appeals, Third Circuit, observed that federal jurisprudence recognized forum selection clauses as presumptively valid and enforceable unless enforcement, inter alia, would be unreasonable. Coastal argued that it would be unreasonable to enforce the clause against it because it was not party to the Farmer Norton-Thilghman contract. The court rejected that argument:

The primary rationale of [the U.S. Supreme Court in The Bremen], however, and of others which have enforced forum selection clauses, is that those clauses promote stable and dependable trade relations…Introducing into the common law of enforceability of forum selection clauses a third-party beneficiary exception would be inconsistent with that rationale.[^73]

The court continued:

Coastal chose to do business with Farmer Norton, an English firm, knowing that Farmer Norton would be acquiring components from other English manufacturers. Thus it was perfectly foreseeable that coastal would be a third-party beneficiary of an English contract, and that such a contract would provide for litigation in an English court. Reliance on Coastal’s third-party benenficiary status as a reason for disregarding such a clause was an error of law.[^74]

[108] Coastal also had argued that since it asserted claims against Thilghman sounding in tort, as well as in contract, the forum selection clause was inapplicable to its tort claims. The appellate court rejected that argument:

The difficulty with this reasoning is that it ignores the reality that the Tilghman-Farmer Norton contract is the basic source of any duty to Coastal. There is no evidence suggesting that the clause was not intended to apply to all claims growing out of the contractual relationship. If forum selection clauses are to be enforced as a matter of public policy, that same public policy requires that they not be defeated by artful pleading of claims such as negligent design, breach of implied warranty, or misrepresentation. Coastal’s claims ultimately depend on the existence of a contractual relationship between Tilghman and Farmer Norton, and those parties bargained for an English forum. We agree with those courts which have held that where the relationship between the parties is contractual, the pleading of alternative non-contractual theories of liability should not prevent enforcement of such a bargain.[^75]

[109] Finally, counsel referred me to a recent decision of this Court – Harster Greenhouses Inc. v. Visser International Trade & Engineering B.V.[^76] - in which an Ontario equipment purchaser plaintiff sued both the Ontario equipment vendor and the Dutch equipment manufacturer alleging the equipment was defective. Although the supply contract between the Dutch manufacturer and the Ontario equipment vendor contained a forum selection clause naming Holland as the venue, the issue of the applicability of that clause to the forum for the plaintiff’s claim against the Dutch manufacturer did not arise because the Dutch manufacturer had filed a notice of intent to defend the plaintiff’s claim in Ontario.[^77]

C. Analysis

[110] I understand the policy rationale expressed in the U.S. cases which binds a subrogee advancing a contractual subrogated claim to the forum selection clause contained in the primary contract – the subrogee steps into the contractual shoes of its subrogor, enjoying the same rights, while laboring under the same obligations. Passages from the decision of the Manitoba Queens Bench in Commonwealth Insurance Co. v. American Home Assurance Co. could be read as questioning that proposition but, as I observed, that case was decided on the basis that the forum selection clause did not form part of the primary contract. In any event, I have concluded that Aldo’s claim, when read as a whole, is not one based on a claim of subrogation, so the subrogation cases have no application to the present case.

[111] Nor do the successor in interest cases; Aldo is not a successor in interest. Most of the “directly related” cases involved fact situations where a very close proximity existed between the party bound by the forum selection clause and the other plaintiff – the officer of a corporation, or a guarantor spouse. Such proximity does not exist in the present case.

[112] As to the decision of the United States Court of Appeals, Third Circuit, in Coastal Steel Corporation v. Thilghman Wheelabrator Ltd., I am not prepared to follow the holding in that case for several reasons. First, forum selection clause cases turn on their specific facts, yet the appellate decision in Coastal Steel did not provide a detailed description of the claims asserted by the plaintiff against both defendants.

[113] Second, in Coastal Steel the appellate court held there was no evidence suggesting that the foreign forum selection clause was not intended to apply to all claims growing out of the contractual relationship. I cannot reach a similar conclusion on the evidence filed before me. What I find determinative in this case is the contractual matrix in which the players operated. MasterCard, as the Card Association, exercised great control over the contractual terms upon which it would permit others to issue its cards and process transactions using them.[^78] The License Agreements used by MasterCard, together with the associated Standards and Rules, contemplated that Acquiring Banks would enter into contractual relationships with third-party processors, such as Moneris, and merchants, such as Aldo. MasterCard could reasonably contemplate that many of those merchants would be located outside of the State of New York. Indeed, the MasterCard Rules contained chapters setting out rules which would apply to specific geographic regions throughout the world in which MasterCards would be used.

[114] In two sections of its Rules MasterCard imposed obligations on Acquiring Banks to include specific terms in their contracts with those “below them” in the contractual chain, including Merchants – Rules 5.1.2 and 7.4.1.[^79] No doubt MasterCard did so to ensure uniformity in key terms in contracts between Acquiring Banks and Merchants. Yet MasterCard did not require its Acquiring Banks to include in their contracts with Merchants the Member New York Forum Clause. From that I infer that MasterCard was prepared to leave it to its Acquiring Banks to negotiate their own forum selection clauses with Merchants. (Section 5.1.2 of the MasterCard Rules stated that each merchant agreement could contain “only such terms agreed to by the Acquirer and the Merchant, provided that no such term conflict with any Standard”, but on this motion MasterCard did not take the position that the Ontario forum clause in the BMO/Moneris-Aldo Processing Agreement violated section 5.1.2 of the Rules.) If, as MasterCard argued on this motion, uniformity of the dispute venue is a critical aspect of its business operations, then it was always open to MasterCard to insist, through its Rules with Acquiring Banks, that Merchants adhere to a specified, uniform forum. MasterCard did not do so. That is a significant omission in light of the evidence that Merchants are presented with their agreements on a “take it or leave it” basis; Merchants have little or no ability to negotiate the terms of their agreements with Acquiring Banks or third-party processors.[^80]

[115] So, too, a recital in MasterCard’s TPP Agreement with Moneris stated that “MasterCard wishes to protect itself and its members from and against claims, demands, liabilities, losses, costs and/or expenses that could arise from Processor’s performance of Program Services” to Members, yet MasterCard did not require Moneris to include in its agreement with Merchants a New York Forum Clause.

[116] As matters transpired, the Processing Agreement entered into between Aldo, on the one part, and BMO and Moneris, on the other, contained an agreement by the parties “that the courts of the province of Ontario will have exclusive jurisdiction over any matters arising from this agreement”. That is very broad language, especially in light of the provisions in the Processing Agreement dealing with the payment of assessments and the adherence to MasterCard Data Security Standards. Given the breadth of that language I cannot conclude that it would be “foreseeable” to Aldo that some other forum selection clause would apply to any claims in initiated in court.

[117] In sum, Aldo was not a signatory to either the License Agreement or TPP Agreement containing the New York Forum Clause. The evidence disclosed that MasterCard exercised significant control over the contractual terms and conditions governing transactions using its cards. For whatever reason, it did not insist that its Acquiring Banks/third-party processors obtain a merchant’s agreement to a New York Forum Clause. Instead, in the present case BMO and Moneris bargained with Aldo for a broadly-worded Ontario forum clause. MasterCard does not argue that the New York Forum Clause is incorporated by reference into that Processing Agreement. Aldo is contractually bound to sue its privy, Moneris, in Ontario. I have found that in its Claim Aldo is not suing MasterCard as a subrogee; its claims are direct ones against MasterCard advanced on the basis that Aldo is a stranger to the agreements between MasterCard and its acquiring bank and third-party processor. On those facts, MasterCard has not demonstrated that Aldo is bound by the Member or Moneris New York Forum Clauses for the claims it is advancing against MasterCard in this action.

[118] I see no unfairness to MasterCard in this result. Judicial enforcement of forum selections clauses is premised on holding parties to their bargain. I have found that Aldo did not bargain for the New York Forum Clause. Further, as I have noted, MasterCard exerts significant control over the terms on which MasterCard transactions are made; it was open to MasterCard to require Acquiring Banks to include a specific forum selection clause in merchant agreements. Moreover, the MasterCard Rules disclosed that New York is not the universal forum in which to adjudicate disputes with Members. Regional variations exist – see, for example, section 3.4 of the Europe Region Rules. In addition, MasterCard filed no evidence on this motion describing the prejudice or inconvenience it might suffer were Aldo permitted to proceed with its claims in Ontario – MasterCard relied solely on its assertion that Aldo was bound by the New York Forum Clause. Finally, MasterCard carries on business in Ontario, with its regional office located in Toronto.

IX. After considering all relevant factors, should this Court decline to exercise jurisdiction over the claims asserted by Aldo against MasterCard?

[119] In its notice of motion MasterCard requested a declaration that Aldo “as the equitable subrogee” of BMO and Moneris “is not entitled to assert causes of action as set out in the Statement of Claim against MasterCard in the Ontario Superior Court of Justice”. I have found that Aldo is not bound by the Member or Moneris New York Forum Clauses.

[120] On this motion MasterCard did not advance an alternative argument based on forum non conveniens. As the Supreme Court of Canada recently noted in its decision in Club Resorts Ltd. v. Van Breda:

Once jurisdiction is established, if the defendant does not raise further objections, the litigation proceeds before the court of the forum. The court cannot decline to exercise its jurisdiction unless the defendant invokes forum non conveniens. The decision to raise this doctrine rests with the parties, not with the court seized of the claim.[^81]

And later in its decision the Supreme Court stated:

Regarding the burden imposed on a party asking for a stay on the basis of forum non conveniens, the courts have held that the party must show that the alternative forum is clearly more appropriate. The expression “clearly more appropriate” is well established…

The use of the words “clearly” and “exceptionally” should be interpreted as an acknowledgment that the normal state of affairs is that jurisdiction should be exercised once it is properly assumed.[^82]

[121] Since MasterCard sought an order that Aldo was not entitled to assert against it the causes of action set out in its Claim in this Court, and since I have found that no forum selection clause prevents Aldo from so doing, the absence of any argument by MasterCard that Ontario is not the convenient forum for this action means there is no basis for this Court to decline jurisdiction over this action against MasterCard.

X. Summary and Costs

[122] For these Reasons I dismiss MasterCard’s motion, and I order that if it wishes to file a statement of defence in this action, it must do so within 40 days of the date of these Reasons.

[123] I would encourage the parties to try to settle the costs of this motion. If they cannot, the responding parties may serve and file with my office written cost submissions, together with a Bills of Costs, by May 15, 2012. MasterCard may serve and file with my office responding written cost submissions by May 29, 2012. The costs submissions shall not exceed three pages in length, excluding the Bills of Costs.

(original signed by)____

D. M. Brown J.

Date: May 1, 2012

[^1]: Transcript of the cross-examination of Peter Lampasona conducted October 4, 2011, QQ. 146-7. [^2]: Undertaking/refusal responses from Lampasona cross-examination, Q. 167. [^3]: Affidavit of Peter Lampasona sworn August 11, 2011, para. 9 (the “First Lampasona Affidavit”). [^4]: Transcript of cross-examination of Robert Raven conducted October 5, 2011, QQ. 172-173; Answers to undertakings, QQ. 174-5. [^5]: Raven answers to undertakings, Q. 25. [^6]: Affidavit of Peter Lampasona sworn September 22, 2011, para. 4 (the “Second Lampasona Affidavit”); Lampasona cross-examination, Q. 139. [^7]: I would note that the defined term “Card Association Rules and Regulations” recently received extensive consideration by Kelly J. in Frankie Tomatto’s Woodbine Inc. v. Moneris Solutions Corp., [2009] O.J. No. 2284 (S.C.J.), paras. 33 to 40; affirmed 2010 ONCA 631. [^8]: Those data security standards, including the MasterCard 2010 Security Rules, were not filed in the evidence on this motion. [^9]: Lampasona cross-examination, Q. 63. [^10]: Undertaking responses from Lampasona cross-examination, Q. 90. [^11]: The Second Lampasona Affidavit, para. 5. [^12]: Aldo Claim, para. 1.g, as against MasterCard, supported by the pleading in paragraph 7 of the Claim. [^13]: Ibid., para. 78. [^14]: Ibid., para. 1. [^15]: Ibid., para. 82. [^16]: Ibid, para. 7. [^17]: MasterCard Initial Factum, paras. 5, 6 and 27. [^18]: In paragraph 113 of its November 17, 2011 Reply Factum MasterCard submitted: “The issue is not whether this court has personal jurisdiction over MasterCard or whether some of the events giving rise to this dispute arose in Ontario or whether MasterCard and Aldo have a presence in Ontario. The issue is whether Aldo has made a ‘strong showing’ that the forum selection clause in the License Agreement should be disregarded.” [^19]: See the presumptive factors set out in paragraph 90 of Club Resorts Ltd. v. Van Breda, 2012 SCC 17. [^20]: Z. I. Pompey Industrie v. ECU-Line N.V., 2003 SCC 27, [2003] 1 S.C.R. 450, paras. 19 and 20. The various factors a court should consider when applying the “strong cause” test were enumerated in paragraph 19 of the decision. See also Momentous.ca Corp. v. Canadian American Association of Professional Baseball Ltd., 2012 SCC 9, para. 9. [^21]: Ibid., para. 21. [^22]: 2010 ONCA 351, para. 11. [^23]: Greenwood Shopping Plaza Ltd. v. Neil J. Buchanan Ltd., 1980 CanLII 202 (SCC), [1980] 2 S.C.R. 228, para. 9. [^24]: [2009] O.J. No. 2284 (S.C.J.), paras. 33 to 40; affirmed 2010 ONCA 631. [^25]: MasterCard November 17, 2011 Reply Factum, para. 76. [^26]: Weber v. Ontario Hydro, 1995 CanLII 108 (SCC), [1995] 2 S.C.R. 929, para. 67. [^27]: 2012 SCC 17, para. 72. [^28]: See, for example, paragraphs 11 through 33 of MasterCard’s Supplementary Factum in Response to the Amended Amended Statement of Claim. [^29]: Factum of the Responding Party, Aldo Group Inc., November 4, 2011, paras. 6, 7, 11 and 102.. [^30]: Aldo Claim, paras. 81.1 to 81.5. [^31]: Haig v. Bamford, 1976 CanLII 6 (SCC), [1977] 1 S.C.R. 466; Edgeworth Construction Ltd. v. N.D. Lea & Assoc., 1993 CanLII 67 (SCC), [1993] 3 S.C.R. 206; Winnipeg Condo. Corp. No. 36 v. Bird Construction Co., 1995 CanLII 146 (SCC), [1995] 1 S.C.R. 85; White v. Jones, [1995] 1 All E.R. 691 (H.L.); National Bank of Canada v. Houle, 1990 CanLII 58 (SCC), [1990] 3 S.C.R. 122. [^32]: Solomon, McInnes, Chamberlain and Pitel, Cases and Materials on the Law of Torts, Eighth Edition (Toronto: Carswell, 2011), pp. 982-3; Lineal Group Inc. (c.o.b. Samsonite Furniture) v. Atlantis Canadian Distributors Inc. (1998), 1998 CanLII 4248 (ON CA), 42 O.R. (3d) 157 (C.A.), para. 6. [^33]: Aldo Claim, para. 81. [^34]: Aldo Claim, para. 83. [^35]: See the cases summarized in Brouilette Building Supplies v. 1662877 Ontario Inc., [2009] O.J. No. 92 (S.C.J.), paras. 17 to 22; Garland v. Consumers’ Gas Co., 2004 SCC 25, [2004] 1 S.C.R. 629, para. 38. [^36]: Aldo Claim, paras. 79 and 80. [^37]: Transamerica Life Canada Inc. v. ING Canada Inc. (2003), 2003 CanLII 9923 (ON CA), 68 O.R. (3d) 457 (C.A.), para. 53. [^38]: Greenwood Shopping Plaza Ltd. v. Neil J. Buchanan Ltd., 1980 CanLII 202 (SCC), [1980] 2 S.C.R. 228, para. 9. [^39]: Factum of the Responding Party Aldo Group Inc., November 4, 2011, para. 52. [^40]: Aldo Claim, para. 1.g, as against MasterCard, supported by the pleading in paragraph 7 of the Claim. [^41]: Aldo Claim, para. 7. [^42]: Reply Factum of Moving Party Mastercard International Incorporated, para. 10. [^43]: Aldo November 4 Factum, para. 54. [^44]: John McGhee (ed), Snell’s Equity, 32nd edition (London: Sweet & Maxwell, 2010), ¶41-012. [^45]: Boscawen v. Bajwa, [1995] 4 All E.R. 769 (C.A.), p. 777, quoted with approval, in his dissent, by Brooke J.A. in Armatage Motors Ltd. v. Royal Trust Corp. of Canada (1997), 1997 CanLII 1629 (ON CA), 34 O.R. (3d) 599 (C.A.), para. 49. [^46]: See, for example, Mutual Trust Co. v. Creditview Estate Homes Ltd. (1997), 1997 CanLII 1107 (ON CA), 34 O.R. (3d) 583 (C.A.), paras. 23, 27, 28 and 32; Armatage Motors, supra., para. 23. [^47]: [1995] 4 All E.R. 769 (C.A.), p. 777, quoted with approval in his dissent by Brooke J.A. in Armatage Motors, supra., para. 49. [^48]: Armatage Motors, supra., para. 22. [^49]: G. Fridman, Restitution (Toronto: Carswell, 1992), p. 398, quoted with approval in Ontario New Home Warranty Program v. Grant, 2001 CanLII 62794 (ON SC), [2001] O.J. No. 2972 (S.C.J.), para. 94; affirmed 2002 CanLII 45054 (ON CA), [2002] O.J. No. 3460 (C.A.) (although the Court of Appeal declined to address the motion judge’s discussion of the principles of equitable subrogation). [^50]: Ontario New Home Warranty Program, supra., para. 96. See the discussion of general principles in Barbara Billingsley, General Principles of Insurance Law, First Edition (Toronto: LexisNexis, 2008), pp. 331-344. [^51]: [1998] 1 All E.R. 737, 744, quoted with approval in Ontario New Home Warranty Program, supra., para. 95 (emphasis added). [^52]: Rules 17.02(o) and 5.03(1). [^53]: In the insurance context the doctrine of subrogation goes hand-in-hand with the principle of indemnity. If the contract is not one of indemnity, no right of subrogation arises. See Billingsley, supra., p. 333. [^54]: 407 U.S. 1, 15. [^55]: 2003 SCC 27, [2003] 1 S.C.R. 450, paras. 20 and 27; see also GreCon Dimter Inc. v. J.R. Normand Inc., 2005 SCC 46, [2005] 2 S.C.R. 401, para. 22; Momentous.ca Corp. v. Canadian American Association of Professional Baseball Ltd., 2010 ONCA 722, paras. 39 and 40; affirmed 2012 SCC 9. [^56]: 2011 WL 724779 (Conn. Super.) [^57]: Ibid., paras. 2 and 3. [^58]: Ibid., para. 4. [^59]: Ibid., para. 4. [^60]: 588 So. 2d 1009 (Fla. App. 3 Dis. 1991) [^61]: Other U.S. cases referred to by MasterCard applied the principle that in the case of claims under a policy of insurance a subrogee was bound by the forum selection clause to which its subrogor had contracted: Farrell Lines Incorporated v. Columbus Cello-Poly Corporation, 32 F. Supp. 2d 118 (1997, U.S.D.C., S.D.N.Y.), para. 10; [^62]: 223 A.D. 2d 395 (1996), para. 8. [^63]: 2008 MBQB 112, [2008] 11 W.W.R. 690 (Man. Q.B.) [^64]: Ibid., paras. 47 to 49. [^65]: 585 F. 3d 696 (2009), para. 8. [^66]: Kahala Corp. v. Holtzman, 2010 WL 4942221 (S.D.N.Y.), para. 3. [^67]: 148 F. 3d 1285 (1998) [^68]: Ibid., para. 15. [^69]: 736 F. Supp. 2d 797, 800 (U.S.D.C., S.D.N.Y.) [^70]: Ibid. [^71]: 709 F. 2d. 190 (1983)(U.S.C.A., 3rd Cir.) [^72]: Ibid, p. 194. [^73]: Ibid., pp. 202-203. [^74]: Ibid., p. 203. [^75]: Ibid., p. 203 (emphasis added). [^76]: 2011 ONSC 2608. [^77]: Ibid., para. 10. [^78]: See Lamposana cross-examination, QQ. 50-54. [^79]: See paragraphs 13 and 14 above. [^80]: Raven cross-examination, QQ. 80-86. [^81]: Van Breda, supra., para. 102. [^82]: Ibid., paras. 108 and 109.