and Fernand Campeau & Fils Inc.,2018 ONSC 7761

COURT FILE NO.: 60-2017

DATE: 2018/12/28

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: Ian Robert Wilson and Susan C. Wilson, Plaintiffs

AND

Fernand Campeau & Fils Inc. (also known as F. Campeau & Son, F. Campeau & Fils Inc., Machinery C. & H., or CH Machinery) and Machinerie C. & H. Inc. (also known as Machinery C. & H. and Fernand Campeau & Fils), Defendants

BEFORE: The Honourable Justice R. Pelletier

COUNSEL: Robert W. Scriven, for the Plaintiffs

Pierre Champagne, for the Defendants

HEARD: August 8, 2018 and December 17, 2018

REASONS FOR JUDGMENT

[1] The Defendants bring the present motion seeking an order that this litigation is improperly before the Superior Court of Justice in Ontario on jurisdictional grounds.

[2] The present Reasons are to be read in conjunction with the Court’s September 7, 2018 Endorsement. At that time, the Court found that the Plaintiffs had not established that the Defendants carried on business in Ontario.

[3] As to the issue of the location of the subject contract’s formation, the Court allowed for further evidence, by way of cross-examination of a former employee of the Defendants, a measure which had not previously been possible. Further submissions were also heard on December 17, 2018. I have concluded that the motion will be granted for the following reasons :

1. As set out in the Court’s preliminary findings on September 7, 2018, it cannot be concluded that the Defendants carry on business in Ontario within the meaning contemplated by the jurisprudence. Clearly, the Defendants rely heavily on the Ontario market, advertise actively in Ontario, and make sporadic incursions into Ontario to consult with clients on deliver equipment. These activities are not however the connecting factors required to establish the degree of commercial activity and presence establishing a justiciable link to Ontario, as set out in Club Resorts Ltd. V Van Breda 2012 SCC 17, [2012] S.C.R. 572. See paragraphs 72-75, 82-84

[72] What would be an appropriate framework? How should it be developed in the case of the assumption and exercise of jurisdiction by a court? 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.

[73] Given the nature of the relationships governed by private international law, the framework for the assumption of jurisdiction cannot be an unstable, ad hoc system made up “on the fly” on a case-by-case basis — however laudable the objective of individual fairness may be. As La Forest J. wrote in Morguard, there must be order in the system, and it must permit the development of a just and fair approach to resolving conflicts. Justice and fairness are undoubtedly essential purposes of a sound system of private international law. But they cannot be attained without a system of principles and rules that ensures security and predictability in the law governing the assumption of jurisdiction by a court. Parties must be able to predict with reasonable confidence whether a court will assume jurisdiction in a case with an international or interprovincial aspect. The need for certainty and predictability may conflict with the objective of fairness. An unfair set of rules could hardly be considered an efficient and just legal regime. The challenge is to reconcile fairness with the need for security, stability and efficiency in the design and implementation of a conflict of laws system.

[74] The goal of the modern conflicts system is to facilitate exchanges and communications between people in different jurisdictions that have different legal systems. In this sense, it rests on the principle of comity. But comity itself is a very flexible concept. It cannot be understood as a set of well-defined rules, but rather as an attitude of respect for and deference to other states and, in the Canadian context, respect for and deference to other provinces and their courts (Morguard, at p. 1095; R. v. Hape, 2007 SCC 26, [2007] 2 S.C.R. 292, at para. 47). Comity cannot subsist in private international law without order, which requires a degree of stability and predictability in the development and application of the rules governing international or interprovincial relationships. Fairness and justice are necessary characteristics of a legal system, but they cannot be divorced from the requirements of predictability and stability which assure order in the conflicts system. In the words of La Forest J. in Morguard, “what must underlie a modern system of private international law are principles of order and fairness, principles that ensure security of transactions with justice” (p. 1097; see also H. E. Yntema, “The Objectives of Private International Law” (1957), 35 Can. Bar Rev. 721, at p. 741).

[75] The development and evolution of the approaches to the assumption of jurisdiction reviewed above suggest that stability and predictability in this branch of the law of conflicts should turn primarily on the identification of objective factors that might link a legal situation or the subject matter of litigation to the court that is seized of it. At the same time, the need for fairness and justice to all parties engaged in litigation must be borne in mind in selecting these presumptive connecting factors. But in recent years, the preferred approach in Canada has been to rely on a set of specific factors, which are given presumptive effect, as opposed to a regime based on an exercise of almost pure and individualized judicial discretion.

[82] Jurisdiction must — irrespective of the question of forum of necessity, which I will not discuss here — be established primarily on the basis of objective factors that connect the legal situation or the subject matter of the litigation with the forum. The Court of Appeal was moving in this direction in the cases at bar. This means that the courts must rely on a basic list of factors that is drawn at first from past experience in the conflict of laws system and is then updated as the needs of the system evolve. Abstract concerns for order, efficiency or fairness in the system are no substitute for connecting factors that give rise to a “real and substantial” connection for the purposes of the law of conflicts.

[83] At this stage, I will briefly discuss certain connections that the courts could use as presumptive connecting factors. Like the Court of Appeal, I will begin with a number of factors drawn from rule 17.02 of the Ontario Rules of Civil Procedure. These factors relate to situations in which service ex juris is allowed, and they were not adopted as conflicts rules. Nevertheless, they represent an expression of wisdom and experience drawn from the life of the law. Several of them are based on objective facts that may also indicate when courts can properly assume jurisdiction. They are generally consistent with the approach taken in the CJPTA and with the recommendations of the Law Commission of Ontario, although some of them are more detailed. They thus offer guidance for the development of this area of private international law.

[84] I would not include general principles or objectives of the conflicts system, such as fairness, efficiency or comity, in this list of presumptive connecting factors. These systemic values may influence the selection of factors or the application of the method of resolution of conflicts. Concerns for the objectives of the conflicts system might rule out reliance on some particular facts as connecting factors. But they should not themselves be confused with the factual connections that will govern the assumption of jurisdiction.

[4] These principles were further elaborated upon in the concurrent ruling of Club Resorts Ltd. V Charron, where a sufficient connection in Ontario was found to exist in order to establish territorial jurisdiction. See paragraphs 119-122.

[119] In Charron, the existence of a sufficient connection with the Ontario court was hotly disputed. As in Van Breda, the accident itself happened in Cuba. On the other hand, Mrs. Charron returned to Ontario after her husband’s death and continued to reside in that province. The damage claimed by the respondents was sustained largely in Ontario. But these facts do not constitute presumptive connecting factors and do not support the assumption of jurisdiction on the basis of the real and substantial connection test.

[120] However, the evidence does support the presumptive connecting factor of carrying on business in the jurisdiction. The Superior Court of Justice assumed jurisdiction, and the Court of Appeal upheld its decision, mainly on the basis of an active commercial presence in Ontario that was not limited to advertising campaigns targeting the Ontario market. In the opinion of the courts below, Club Resorts had an active presence in Ontario even though its corporate head office was not in that province. Its presence was not limited to advertising activities or to contacts with travel package wholesalers or travel agents. The courts below concluded that the appellant had engaged in significant commercial activities in Ontario, especially through the office of the SuperClubs group, before the Charrons booked their holiday. The booking resulted at least in part from those activities in Ontario. After reviewing the evidence, Sharpe J.A. wrote the following for the Court of Appeal in respect of this factor:

The record reveals that CRL [Club Resorts Ltd.] was directly involved in activity in Ontario to solicit business for the resort. Unlike the defendants in Leufkens, Lemmex and Sinclair, CRL did not confine its activities to its home jurisdiction:

● pursuant to its contract with the Cuban hotel owner, CRL was required to and did promote and advertise the resort using the “SuperClubs” brand in Canada;

● CRL relies on maintaining a high profile for the SuperClubs brand in Ontario as residents of Canada and Ontario represent a high proportion of CRL’s target market;

● CRL was licenced to use the “SuperClubs” label and itself “created” the “SuperClubs Cuba” label and used these labels to market the resort in Ontario;

● CRL’s witness Abe Moore agreed on cross-examination:

● “that CRL was in the business of carrying out activities in countries such as Canada to generate paying guests of the resort”;

● that to do so CRL had to “either directly or engage others to undertake the activity of solicitation, promotion and advertising” in Canada;

● that CRL ensured that it had relationships with others to do so in Ontario to satisfy its contractual obligation to promote the resort;

● CRL representatives regularly travel to Ontario to further CRL’s promotional activity;

● CRL arranged for the preparation and distribution of promotional materials in Ontario; and

● as outlined in the following paragraph, CRL benefited from an office in Ontario that provided information and engaged in the promotion of the SuperClubs brand.

In my view, one can fairly infer from this body of evidence that although CRL itself maintained no office in Ontario, CRL is implicated in and benefits from the physical presence in Ontario of an office and contact person held out to the public as representing the same “SuperClubs” brand CRL uses to carry on its business of promoting and operating the resort. [paras. 117 and 119]

[121] The Superior Court of Justice considered this evidence at a preliminary stage on the basis of the parties’ pleadings. The nature and weight of this evidence has been challenged in this Court. But the courts below made findings about its content and about what it meant. The appellant has not demonstrated that the motion judge made any reviewable errors, and deference must be shown to his findings of fact.

[122] Although whether this factor applies was a very hard fought issue in these appeals, the motion judge’s findings of fact lead to the conclusion that Club Resorts was carrying on business in Ontario. Club Resorts’ commercial activities in Ontario went well beyond promoting a brand and advertising. Its representatives were in the province on a regular basis. It benefited from the physical presence of an office in Ontario. Most significantly, on cross-examination Club Resorts’ witness admitted that it was in the business of carrying out activities in Canada. Together, these facts support the conclusion that Club Resorts was carrying on business in Ontario. It follows that the respondents have established that a presumptive connecting factor applies and that the Ontario court is prima facie entitled to assume jurisdiction.

[5] I have concluded that despite a very clear presence in Ontario and significant reliance on its customer base in that province, the Defendants cannot be taken as carrying on business in Ontario for jurisdiction purpose.

[6] I have further concluded that the contract for the sale of the tractor, the principle subject of this litigation, was concluded in Quebec on the occasion of the representative of the Plaintiffs, Kevin Wilson, accepting the terms of the sale as communicated to the representative of the Defendants, Jean-Pierre Campeau, on December 16, 2015 by phone, at a time when Mr. Campeau was at the Defendants’ offices in Quebec.

[7] The cross-examination of Mr. Wilson on the conversation in question establishes very clearly that, by Mr. Wilson’s own evidence, the complete terms and conditions to the transaction were agreed upon and accepted by the Plaintiffs as communicated to the Defendants during the December 16, 2015 conversation. See cross-examination of Kevin Wilson, January 29, 2018, page 7, Question 26 to page 13, Question 62. Indeed, the hand-written additions to the contract made by Mr. Wilson on December 29, 2016, stipulating such matters as warranty coverage and certain credits, done in Mr. Campeau’s absence, would tend to confirm the fully agreed upon terms of the contract concluded during the telephone conference between the two on December 16, 2015.

[8] The same can be said of the round baler also subject of this litigation, as confirmed by Mr. Wilson in his cross-examination, page 26, Questions 140 to 145.

[9] The subsequently executed documents represent a memorandum of an agreement entered into verbally, such agreement being enforceable on its own quite agent from the written contracts executed at a later date. In this connection, the evidence as to the location of the contracts’ signing is contradictory and impossible to reconcile.

[10] Both the Plaintiffs and the Defendants are adamant as to the location of the execution of the December 29, 2015 agreements. They are, on their face signed at the Defendants business location in Quebec and subject to Quebec law in relation to consumer protection legislation. The Defendants representative has deposed and testified as to the contracts’ execution in Quebec, while the Plaintiffs representative asserts that the documents were signed at the Plaintiffs’ place of business.

[11] Be that as it may, the Court’s findings that the contract was executed and enforceable on the day of the meeting of the minds during the December 16, 2015 telephone conversation render the subsequent written confirmations of the terms agreed upon render the reconciliation of the competing evidence of no moment.

[12] Finally, it cannot be concluded that a breach of those terms on an action based on the fact of negligence were committed in Ontario. Neither the residence of the Plaintiffs nor the physical presence of the subject equipment in Ontario create a jurisdictional link in Ontario. In this regard, the pronouncement in Van Breda at paragraph 89 is very instructive on this issue.

[89] The use of damage sustained as a connecting factor may raise difficult issues. For torts like defamation, sustaining damage completes the commission of the tort and often tends to locate the tort in the jurisdiction where the damage is sustained. In other cases, the situation is less clear. The problem with accepting unreservedly that if damage is sustained at a particular place, the claim presumptively falls within the jurisdiction of the courts of the place, is that this risks sweeping into that jurisdiction claims that have only a limited relationship with the forum. An injury may happen in one place, but the pain and inconvenience resulting from it might be felt in another country and later in a third one. As a result, presumptive effect cannot be accorded to this connecting factor.

[13] Accordingly, I have concluded that the Plaintiffs have failed to establish a geographic connection to this Court’s jurisdiction, whether it be as a result of the Defendants carrying on business, the creator contractual obligations in Ontario, or an actionable cause in contract or that.

[14] The Defendants’ motion is accordingly granted.

[15] Unless the parties can agree otherwise, cost submissions in relation to all proceedings, with the exception of the Defendants’ motion, may be submitted, not to exceed 2 pages, in addition to supporting documents within thirty (30) days of the release of the Reasons for Judgment herein.

The Honourable Justice R. Pelletier

Released: December 28, 2018

COURT FILE NO.: 60-2017

ONTARIO

SUPERIOR COURT OF JUSTICE

RE: Ian Robert Wilson and Susan C. Wilson, Plaintiffs

AND

Fernand Campeau & Fils Inc. (also known as F. Campeau & Son, F. Campeau & Fils Inc., Machinery C. & H., or CH Machinery) and Machinerie C. & H. Inc. (also known as Machinery C. & H. and Fernand Campeau & Fils), Defendants

BEFORE: The Honourable Justice R. Pelletier

COUNSEL: Robert W. Scriven, for the Plaintiffs

Pierre Champagne, for the Defendants

REASONS FOR JUDGMENT

Pelletier, J.

Released: December 28, 2018