Freshway Services Inc. v. CdEnviro Ltd., 2017 ONSC 6591

CITATION: Freshway Services Inc. v. CdEnviro Ltd., 2017 ONSC 6591

COURT FILE NO.: CV-16-5245-00

DATE: 2017 11 06

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Freshway Services Inc, Plaintiff (Responding Party)

AND:

CDEnviro Ltd., Defendant (Moving Party)

BEFORE: Barnes J.

COUNSEL: Matthew P. Gottlieb and Laura M. Wagner, for the Plaintiff

Paul J. Brett and Andrea R. Doyle, for the Defendant

HEARD: July 10, 2017

ENDORSEMENT

1Freshway Services Inc. (plaintiff) commenced an action on the basis of CDEnviro Ltd.’s (defendant) alleged failure to deliver and install equipment, relating to a waste recycling facility, within the alleged agreed upon time frame. The plaintiff’s claim is for breach of contract. The defendant seeks a stay of the action on the basis that this Court lacks jurisdiction or in the alternative, on the basis of the doctrine of forum non conveniens.

2The defendant has commenced its own action against the plaintiff in the Northern Ireland High Court. In that action, the defendant seeks damages on the basis of an alleged breach of contract by the plaintiff.

3I have concluded that this Court has jurisdiction. However, this Court declines to exercise its jurisdiction on the grounds of forum non conveniens. As a result, the action in Ontario is stayed. This order is without prejudice to the plaintiff should it seek leave of an Ontario Court to lift the stay, because the Northern Ireland Court declines to assume jurisdiction.

BACKGROUND FACTS

4The plaintiff is an Ontario corporation, incorporated on May 24, 2016. On September 9, 2016, the plaintiff changed its name to Freshway Soil Services Inc. (Freshway), which serves as the corporate vehicle for this joint venture between Ontario Excavac Inc. (Excavac) and Greenvac Inc. (Greenvac).

5The defendant is a corporation incorporated pursuant to the laws of Northern Ireland. The corporate head office, design and manufacturing departments are in Cookstown, County Tyrone, Northern Ireland.

6The plaintiff and the defendant agreed to an “Order Acknowledgment” (the contract), which is the contract governing the sale at issue in this matter. The contract included a clause stating the agreement was subject to CDEnviro Limited’s Standard Terms and Conditions of Sale. According to this contract, the defendant was to build a waste recycling facility and install it at the plaintiff’s facility in Ontario. The plaintiff had an arrangement with a third party to provide warranty coverage and servicing for components of the waste recycling plant, once it was built and delivered to Ontario.

7The total cost of the contract was $2,999,500. The plaintiff paid a deposit of $899,985.

8The defendant requested additional time to deliver the waste recycling facility. The plaintiff refused. The plaintiff asserted that the 18 week delivery schedule was an integral part of the contract between the parties. The defendant relied on its Standard Terms and Conditions of Sale (Standard Terms), which it says were a part of the contract signed by the parties, to assert that it was not bound by time estimates for delivery.

9After unsuccessful efforts to resolve the issue, the plaintiff commenced this action in the Ontario Superior Court of Justice on November 30, 2016. On February 3, 2017, the defendant commenced its own action, in the Northern Ireland High Court, against the plaintiff based on an alleged breach of contract.

10The defendant submits that the Standard Terms, at paragraph 38 contains a proviso that any disputes that arise out of the contract shall be decided “within the laws of Northern Ireland and the exclusive jurisdiction of the Courts of Northern Ireland….” The plaintiff submits that it was not aware of this proviso and did not agree to it; therefore, it is not bound by it. The defendant submits that the plaintiff is bound by the clause because the Standard Terms were incorporated into the contract and were available for the plaintiff to peruse at its request.

ISSUES

1. Can the Ontario Court assume jurisdiction?

2. If the Ontario Court has jurisdiction, should the Ontario Court exercise its jurisdiction?

Can the Ontario Court assume jurisdiction?

11This Court has jurisdiction simpliciter.

12A court can assert jurisdiction over a non-resident litigant in three ways: (1) where the litigant is present in the province at the time of service; (2) where the parties agree; and (3) where the non-resident litigant has a “real and substantial connection” to Ontario: Muscutt v Courcelles, 2002 CanLII 44957 (ON CA), [2002] O.J No. 2128; Club Resorts Ltd. v Van Breda, 2012 SCC 17, [2012] S.C.J. No. 17. The plaintiff relies on the “real and substantial connection” test.

13Under the “real and substantial connection” test, the plaintiff must establish that there are circumstances that create a relationship between the subject matter and the jurisdiction such that, it is reasonable to expect the defendant to answer to the action in the said forum. These factors are known as presumptive connecting factors. The framework for applying these connecting factors is described by LeBel J. in Club Resorts at para. 64 as follows:

In summary, the Van Breda-Charron approach offers a simplified test in which the roles of a number of the factors of the Muscutt test have been modified. In short, when one of the presumptive connecting factors applies, the court will assume jurisdiction unless the defendant can demonstrate the absence of a real substantial connection. If, on the other hand, none of the presumptive connecting factors are found to apply to the claim, the onus rests on the plaintiff to prove that a sufficient relationship exists between the litigation and the forum. In addition to the list of presumptive and non-presumptive factors, the parties, can rely on other connecting factors informed by the principles that govern the analysis.

14A connecting factor may be found where the contract was made in the jurisdiction: Leone v. Scaffidi, 2013 ONSC 1849; [2013] O.J.No.1428. It may also be found where the defendant is carrying on actual business in the jurisdiction. In today’s global and internet based economy, however, evidence that the defendant was carrying on a virtual business in the province is, on its own, insufficient: Club Resorts at paras. 86-88. Other examples of connecting factors include where; the defendant is resident in the province; or where the incidents that form the basis of the action took place in the province: Club Resorts Ltd. v. Van Breda, at para. 90.

15The defendant submits that it has no “real and substantial connection” to Ontario because: (1) the defendant is domiciled or resident in Northern Ireland; (2) the defendant does not carry on business in Ontario and does not have a presence in Ontario; and (3) the contract connected with the dispute was made in Northern Ireland.

16The plaintiff submits that the defendant has a real and substantial connection to Ontario because: the defendant carries on business in Ontario. This assertion is supported by these factors: (a) the defendant targeted Ontario companies and actively solicited their business through marketing; (b) as part of the project, the defendant performed lab testing on Ontario soil samples; (c) the defendant made repeated trips to Ontario to negotiate the deal with the plaintiff, to visit the project site and to discuss delays; (d) the defendant performed similar design work for another company based in Ontario; (e) the defendant agreed to maintain spare parts in Ontario in order, to meet its warranty obligations; and (f) the defendant agreed to be responsible for on-site maintenance throughout the warranty period.

17The plaintiff further argues that there is a real and substantial connection because the parties entered into an oral agreement for the sale at a meeting in Ontario on April 19, 2016.

18The parties’ relationship began when a representative of the defendant, Darren Eastwood, made unsolicited email contact with the Barry Wood, a representative of the plaintiff, to pitch the idea of designing a waste design facility for the plaintiff. Mr. Eastwood travelled to Ontario, between November 2015 and April 19, 2016. During this period, he had a series of meetings with representatives of Excavac and Greenvac to discuss the potential sale of the waste recycling facility to the plaintiff.

19On April 19, 2016, an important meeting took place in Mississauga, Ontario. It was attended by Darren Eastwood for the defendant, as well as Ashley Herman, Anthony Kerwin, Barry Wood, Malcolm Robertson and Brett Tye, who represented the plaintiff.

20The plaintiff submits that at this meeting the parties reached an oral agreement on the sale following several weeks of negotiation. The defendant submits that negotiations continued even after the April 19, 2016 meeting.

21The materials filed include an email trail that supports the defendant’s position that the parties continued to negotiate after the April 19, 2016, meeting. In addition, the following events, which occurred after the meeting, are consistent with a finding that the contract was not finalized at the Mississauga meeting.

22Firstly, on May, 25, 2016, Mr. Eastwood sent a finalized commercial contract, entitled “Order of Acknowledgment – CDEnviro General Conditions – February, 2014”, which is the contract in question, to Mr. Wood and Mr. Herman via email. He included an invoice for a deposit 30% of the total contract price. Secondly, the plaintiff’s representative signed the contract and on May 27, 2016, informed the defendant, via email, that they had accepted the contract. A copy of the contract was attached to the email. Thirdly, on June 1, 2016, the plaintiff sent the defendant the 30% deposit of $899,985.

23The general rule is that a contract is made where the offeror receives notification that the offeree will accept the offer: Eastern Power Ltd v. Azienda Communale Energia and Ambiente, [199] O.J. No. 3275(C.A.) at para. 22. The cumulative effect of all the activities that took place after the April 19, 2016 meeting, leads me to conclude that negotiations continued after that meeting and no contract was finalized on that date. The defendant received formal notification of the plaintiff’s acceptance of the terms of the contract in Northern Ireland and not in Mississauga. Therefore, in accordance with the general rule, the contact was finalized in Northern Ireland: Eastern Power Ltd., at para. 22.

24The defendant is not domiciled in Ontario and the contract connected with the dispute was made in Northern Ireland. Furthermore, a majority of the design functions relating to the equipment took place in Northern Ireland.

25However, there are a number of other factors that while insufficient on their own, cumulatively demonstrate that the defendant has a real and substantial connection to Ontario. In particular, : (1) the defendant made several business trips and conducted meetings in Ontario to facilitate this project and a project with another Ontario company; (2) pursuant to the contract, warranty coverage was to be provided by the defendant’s partner in Ontario, once the equipment was installed; (3) spares of sub components of the equipment were to be stored either at the plaintiff’s facility or the facility of the defendant’s partner in Ontario, throughout the warranty period; (4) due to the plaintiff’s familiarity with the weather conditions in Ontario, the plaintiff and the defendant jointly designed the component of the machine designed to facilitate delivery of material into the waste recycling machine; and (5) the equipment, once complete, was to be installed and operated in Ontario.

26For the above reasons, I find the defendant has a real and substantial connection to Ontario and this Court has jurisdiction.

If the Ontario Court has jurisdiction, should the Ontario Court exercise its jurisdiction?

27This Court declines to exercise its jurisdiction because there is an enforceable forum selection clause in place. I will issue a stay of these proceedings.

28Even where an Ontario Court has determined that it has jurisdiction it must determine whether there is another jurisdiction that is sufficiently connected with the matter where the aims of justice can be served with less inconvenience and expense to the parties: Bonaventure Systems Inc. v. Royal Bank, 1986 CanLII 2550 (ON SC), [1986] O.J. 1197.

29In determining the appropriate forum, a non-exhaustive list of factors to consider include: the location of the majority of the witnesses; location of key evidence; any contractual agreements on the applicable law and forum; the need to avoid a multiplicity of proceedings; impact of geographical considerations on the conduct of the proceedings; and whether the court’s decision to decline jurisdiction may prejudice the plaintiff etc.: Muscutt, supra, at paras. 41- 42.

30In this case, there is a forum selection clause. This clause is at the heart of the dispute between the parties. To promote certainty and predictability in commercial transactions courts will generally give effect to forum selection clauses, unless there are exceptional circumstances that militate against giving effect to the forum selection clause. Exceptional circumstances arise where: (1) the agreement is an unenforceable contract; (2) the plaintiff was induced to enter the contract by fraud; (3) the claim is outside the reasonable contemplation of the parties at the time of the contract; (4) unforeseen circumstances arise due to which the plaintiff can no longer obtain a fair trial; and (5) enforcement of the clause would be contrary to some clear public policy: Expedition Helicopters Inc. v. Honeywell Inc., 2010 ONCA 351, [2010] O.J. No. 1998 (Ont.C.A.); leave to appeal refused, [2010] S.C.C.A. No. 258.

31I find that the Order of Acknowledgment is the contract in this case. At the top of every page of the contract are the words, “Order of Acknowledgment – CDEnviro General Conditions – February, 2014”. Of greater significance is the fact that, the contract stipulated at page 13 that the “Order of Acknowledgement” is subject to the standard terms and conditions of CDEnviro, and these terms were available on request as, replicated below:

This Order Acknowledgment is subject to standard terms and conditions of sale of CDEnviro. A copy of our Standard Terms and Conditions of Sale are available upon request.

32The plaintiff never requested a copy of CDEnviro’s Standard Terms and Conditions until this dispute arose. It was only at that point that Mr. Woods requested a copy. The defendant’s Standard Terms and Conditions are set out in a document called “CDENVIRO general conditions – February 2014”.

33Paragraph 38 of the Standard Terms and Conditions states:

This Contract and any non-contractual obligations arising out of or in connection with it are governed by, and shall be construed in accordance with the laws of Northern Ireland and the exclusive jurisdiction of the Courts of Northern Ireland shall apply in relation to any dispute or claim arising out of or in connection with this contract, (including non-contractual disputes and claims).

34The defendant submits that the above is a forum selection clause that resolves the issue at hand. The defendant further submits that the parties agreed that the forum selection clause shall apply in the event of a dispute and that the Courts of Northern Ireland shall have exclusive jurisdiction over this matter.

35The plaintiff submits that it is not bound by the forum selection clause because it never saw the clause, never agreed to it, the defendant never brought it to its attention and the contract was never executed between the parties. I disagree. The cumulative effect of the email trail and attachments between the parties, leads me to the firm conclusion that the parties executed the contract.

36The emails provide evidence of the following: (1) the contract was sent to the plaintiff on May 25, 2016; (2) on May, 27, 2016, the plaintiff’s representative sent the defendant a scanned copy of the contract via email, which included initials on every page on behalf of the plaintiff; (3) the plaintiff acknowledged, sending a signed copy of the contract on May 27, 2016; and (4) on June 2, 2016, the plaintiff sent the defendant the required 30% deposit.

37The plaintiff submits that “Standard Terms and Conditions” were referred to in the contract. However, the document submitted as the “Standard Terms and Conditions” was titled “CDEnviro General Conditions – February 2014”. The contract specifically incorporated “Standard Terms and Conditions” and not “CDEnviro General Conditions – February 2014”. The reference to standard terms and conditions is ambiguous. It is not fair or reasonable to expect the plaintiff to infer from this reference that the “CDE General Conditions” were incorporated into the contract.

38Nevertheless, the defendant ensured that the provision incorporating the Standard Terms and Conditions into the contract was clear and visible to any person reading the contract. It was plain and obvious that the Standard Terms and Conditions were available for review on request. Importantly, there was no obligation on the defendant to draw the plaintiff’s attention to the clause.

39The plaintiff was careless and failed to request a copy of the Standard Terms and Conditions referred to in the clause. The plaintiff was so focused on, amongst other things, the technical aspects of the project and the project completion date that it did not request these items. These are legitimate concerns, however, the plaintiff’s representatives are experienced business persons. The plaintiff is expected to do its own due diligence and was simply careless. Carelessness is not a basis to avoid obligations under a contract: TFS RT Inc. v Dyck, 2017 ONSC 2780, at paras. 50 - 51

40Therefore, there is no reason, on the facts, to conclude that the plaintiff was unaware of this clause in the contract. The plaintiff is bound by this clause in the contract.

41The defendant company has its head office, design, and manufacturing departments in Northern Ireland. The defendant wishes to call at least five witnesses who reside in Northern Ireland. The contract was finalized in Northern Ireland. The design, revisions to the design and manufacturing components were also made in Northern Ireland.

42The plaintiff has strong ties to Ontario and no ties to Northern Ireland. As such, witnesses for the plaintiff who can provide evidence of the negotiation of the agreement are principally located in Ontario.

43It is clear both parties will incur significant expenses should proceedings take place outside the countries in which they are currently domiciled. The High Court in Northern Ireland has yet to make a decision on the issue of jurisdiction. The possibility of a multiplicity of proceedings is a legitimate concern.

44A majority of the Ontario Court of Appeal in Novatrax International Inc. v Hagele Landtechnik GmbH, 2016 ONCA 771, [2016] O.J. No. 5410, sets out the governing principles where there is a forum selection clause, stating at para. 5:

1. The law favors the enforcement of forum selection clauses in commercial contracts. Where the parties have agreed to a forum selection clause, the starting point of the forum non conveniens analysis is that the parties should be held to their bargain;

2. A stay of an action should be granted unless the plaintiff shows “strong cause” that the case is exceptional and the forum selection clause should not be enforced;

3. The requirement that the plaintiff show “strong cause” presumes that there is an agreement containing a clear forum selection clause and that clause, by its terms, applies to the claims the plaintiff seeks to bring in Ontario; and

4. The forum selection clause pervades the forum non conveniens analysis and must be given full weight and cost in the consideration of other factors.

45The plaintiff has failed to satisfy this court that there are exceptional circumstances in favour of not enforcing the forum selection clause. The plaintiff has failed to show “strong cause” why the forum selection clause should not be enforced.

46In the result, I find that the Ontario Court has jurisdiction simpliciter. However, I decline to exercise that jurisdiction and enter a stay of these proceedings. If the parties are unable to agree on costs, they may submit a two page cost outline to this Court within 20 days.

Barnes J.