COURT FILE NO.: CV-18-00610487-0000 DATE: 20190605
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Infinite Media Ltd. Plaintiff – and – John Hancock Life Insurance Company (U.S.A.) Defendant
B. Na for the Plaintiff (Responding Party) S. Batner, S. D’Souza, and M. O’Brien, for the Defendant (Moving Party)
HEARD: April 15, 2019
O’brien, J.
REASONS FOR DECISION
[1] This is a motion for an order dismissing or staying the action on the basis that it was wrongly brought in Toronto. The Defendant, John Hancock Life Insurance Company (U.S.A.), (“John Hancock”) argues that a proper reading of the forum selection clause in the agreement between the parties leads to the conclusion that the Plaintiff, Infinite Media Ltd., was required to bring its claim in John Hancock’s “home” jurisdiction, which is Boston, Massachusetts. Infinite Media argues that the forum selection clause should be interpreted such that its claim was properly brought in Toronto.
Background
[2] Infinite Media is a corporation incorporated under the laws of Ontario, with its principal place of business in Toronto. Its primary asset is an integrated software application called the Infinite Media Knowledge Management Platform (“InfiniteKM”).
[3] In 2012, Infinite Media entered into a contract with John Hancock for a license to its InfiniteKM platform, which was branded as “Infonet”. John Hancock is a financial services company. It is based in the United States and, in particular, is headquartered in Boston, Massachusetts. It is a wholly-owned subsidiary of Manulife Financial Corp., based at 200-250 Bloor St. E., Toronto. John Hancock’s degree of connection to Ontario is part of the dispute between the parties and is discussed further below. Infonet was a service for the John Hancock Retirement Plan Services business and was intended to be a resource for John Hancock employees to access documents, onboarding, and training materials.
[4] The agreement between the parties dated May 27, 2012 (the “Agreement”) [^1] included the following forum selection clause:
These Terms shall be governed by, and construed and enforced in accordance with, the laws in force in the Province of Ontario and the laws of Canada applicable therein. The parties hereto irrevocably attorn to the exclusive jurisdiction of the courts of the Province of Ontario. Any suit or claim hereunder will be brought solely in the courts located in the city or county of the Responding Party, and each party hereby submits itself and its property to the exclusive personal jurisdiction and venue thereof.
[5] Prior to the current action, in 2017, John Hancock commenced a proceeding in this court against Infinite Media for an alleged breach of the Agreement. John Hancock sought an interim injunction against Infinite Media and the parties ultimately agreed to a consent order. Infinite Media subsequently brought this proceeding by Statement of Claim issued on December 10, 2018 (and subsequently amended). This claim was also brought in Toronto. John Hancock now brings this motion to stay or dismiss the proceeding for want of jurisdiction.
Does the forum selection clause govern the forum in this case?
[6] Although the parties have differing interpretations of the forum selection clause in this case, both parties agree that the forum selection clause should govern. They agree that forum selection clauses are enforced unless there is strong cause not to do so: See Z.I. Pompey Industrie v. ECU-Line N.V., 2003 SCC 27, [2003] 1 S.C.R. 450 at paras. 20-21; Expedition Helicopters Inc. v. Honeywell Inc., 2010 ONCA 351, 100 O.R. (3d) 241 at para. 11. They also each submit that the case is not exceptional, and that the other party has not shown “strong cause” that the forum selection clause should not govern. I agree that the case is not exceptional and that the forum selection clause should govern. The agreement between the parties was entered into by sophisticated commercial parties after months of negotiations. There is nothing about the claim or the circumstances that are outside of the reasonable contemplation of the parties. Therefore, the only issue for me to decide is where the forum selection clause required Infinite Media to bring this claim.
Where did the forum selection clause require Infinite Media to bring this claim?
[7] The core of the dispute between the parties is the meaning of the forum selection clause. John Hancock argues that the forum selection clause must be read in two parts. It submits that the first part, the sentence that reads “[t]he parties hereto irrevocably attorn to the exclusive jurisdiction of the courts of the Province of Ontario” is directed only to an agreement to attorn to jurisdiction, but does not address whether Ontario should assume jurisdiction in a given case. John Hancock submits that the second sentence, which reads “any suit or claim hereunder will be brought solely in the courts located in the city or county of the Responding Party…” addresses the proper forum in a given case. John Hancock submits that in a situation where it brings the claim, the proper forum would be Toronto, where Infinite Media is located. However, where Infinite Media brings the claim, the proper forum is Boston, where John Hancock’s home office is found.
[8] I agree that the forum selection clause in the Agreement could have been drafted more clearly. Still, in my view, it does not have the meaning claimed by John Hancock. Rather, for the reasons discussed further below, I conclude that the forum selection clause was intended to require all claims between the parties to be brought in Ontario, and specifically in the city or county of the responding party within Ontario.
Connections to Boston, MA
[9] John Hancock points to statements in the Agreement and the Amended Statement of Claim referencing Boston in support of its submission that Infinite Media was required to bring this claim in Boston. It submits that these statements are evidence that the parties considered Boston to be John Hancock’s home jurisdiction. For example, John Hancock points to the fact that the Agreement defines “Customer” for the purposes of the Agreement to be “John Hancock Life Insurance Company (U.S.A.) and its Affiliates based in 601 Congress Street, Boston, MA 02210” (emphasis added). It also relies on statements referencing its connections to Boston in the Amended Statement of Claim, such as the following (with the relevant portions underlined):
The Plaintiff…claims… a declaration that JH has breached its contractual obligations to Infinite in the Master Services Agreement (the “MSA”) dated March 27, 2012, by: (i) permitting third parties in jurisdictions outside Boston, Massachusetts, to access and use the “Deliverables” as defined in the MSA, without the written consent of Infinite;
JH is a financial services company with its registered office located at 601 Congress Street, Boston, Massachusetts. JH operates as a subsidiary of Manulife Financial Corp. (“Manulife”) and is the entity through which Manulife operates its life insurance business in the United States.
At all times during negotiations, JH represented to Infinite that users of InfiniteKM-Infonet would be employees of JH, based out of 601 Congress Street, Boston Massachusetts. The MSA defines “Customer” as “JH and its Affiliates based in 601 Congress Street, Boston MA.”
Infinite granted no right to any person other than JH and its affiliates based in Boston to use InfiniteKM-Infonet. Further, any rights granted to JH and its affiliates based in 601 Congress Street were limited to those explicitly granted in the Contract.
Connections to Toronto and Ontario
[10] However, on the other side, Infinite Media is able to point to connections to Toronto and Ontario in the Agreement. These include the following provisions of the Agreement (with the relevant portions underlined):
(a) S. 1: “Business Day” means any day other than a Saturday or Sunday or a statutory holiday in Toronto, Ontario, as outlined in any Statement of Work;
(b) S. 6.1: Customer [John Hancock] represents and warrants as of the Effective Date that: (a) it is a company, duly organized, validly existing and in good standing under the laws of Ontario;
(c) S. 6.2: Infinite represents, warrants and covenants as of the Effective Date that: (a) it is a company, duly organized, validly existing and in good standing under the laws of Ontario;
(d) S. 13.4 – Regulatory Compliance: (a) Infinite acknowledges that Customer [John Hancock] is a regulated financial services institution and is therefore required to comply with OSFI Guideline B-10 entitled “Outsourcing of Business Functions by FRFIs”, as amended from time to time, as well as rules, regulations and guidelines promulgated by various regulatory agencies, including all applicable provincial, state and federal legislation and guidelines in Canada and the United States. [^2]
(e) S. 19.1: Infinite Audit Obligations: Infinite agrees to allow OSFI or any other regulator and Customer’s auditors to conduct an independent and comprehensive audit of Infinite’s operations, controls and procedures used in the performance of the Services in connection with an audit or review of Customer’s compliance with its regulatory and audit requirements.
(f) S. 20.8: Compliance with Privacy Laws and Procedures: Infinite must (and must ensure that Infinite’s Personnel and subcontractors) comply with: (a) any applicable privacy or data protection laws (including those in any jurisdiction where the Licensed Services may be provided) (“Privacy Laws”) including all guidelines issued by OSFI and Other Regulators that are applicable to the Licensed Services and supplied in writing in advance to Infinite Customers.
(g) S. 27: Any notice, demand or other communication required or permitted to be given or made hereunder shall be in writing and addressed as follows:
(a) if to Customer, Customer Financial 200 Bloor St. E. Toronto, ON Attn: Manager, Global Expense Management and Sourcing Email: darroch_crewe@jhancock.com
I note that in the December 2016 Amending Agreement, the notice provision was changed slightly, providing that if notice was to be provided to the “Customer” (John Hancock), it would be provided to: The Manufacturers Life Insurance Company 200 Bloor Street East Toronto, ON M4W 1E5 Attention: Alison Hodge, Director, Operations Learning & Communications John Hancock Retirement Plan Services Email: alison_hodge@jhancock.com
(h) Schedule A – Dispute Resolution Procedures: S. 4: Mediation
(a) …The Parties must jointly appoint a mutually acceptable mediator within five (5) days after a Party has given notice of its desire to mediate a Dispute failing which, the Parties may agree to have one appointed by ADR Chambers Canada (“ADR”) or such other organization or person agreed to by the Parties.
(b) The Parties agree that any mediation pertaining to Canadian mediation requirements will be conducted in accordance with the Mediation Rules published by ADR, or such other rules as are recommended by the mediator and the Parties shall share the cost of mediation equally. Any settlement reached by mediation shall be resolved in writing, shall be signed by the Parties and shall be binding on them.
(i) Schedule A, S. 5: Arbitration:
(a) …Within twenty (20) days of receipt of the complaining Party’s notice, the respondent shall notify the complaining Party of its agreement or disagreement to proceed with arbitration and, if the respondent agrees to arbitration, the location in Toronto for conducting arbitration and the name of its appointed arbitrator.
(b) All arbitrations shall take place in Toronto, Ontario. All arbitration shall be conducted in the English language.
[11] In addition, the Agreement provides for a joint management committee, consisting of at least one management representative of each party, to supervise and manage the performance of obligations under the Agreement, including dealing with the first level of disputes. At all times, members of the joint management committee from both Infinite Media and John Hancock were located in Toronto.
[12] Finally, the forum selection clause itself states that “These Terms shall be governed by, and construed and enforced in accordance with, the laws in force in the Province of Ontario and the laws of Canada applicable therein.” The requirement that the Agreement be governed by Ontario and Canadian laws provides an additional connection to Ontario.
[13] The context at the time of the negotiation and execution of the Agreement also favours Toronto. The relationship between the parties was initiated by Darroch Crewe of John Hancock. Darroch Crewe’s title was Director, John Hancock Retirement Plan Services. In November 2010, he reached out to Infinite Media to explore Infinite redesigning John Hancock’s knowledge management system. Mr. Crewe set up an in-person meeting with Infinite Media. He confirmed by e-mail, stating: “Our office is at 250 Bloor Street East. My phone number is 416-852-7495. Just call me when you get here and I’ll meet you in the lobby.” On November 11, 2010, Brad Sellors (the Managing Director of Infinite Media) met with Mr. Crewe at the Bloor Street office. On February 8, 2011, Mr. Crewe organized another meeting at the Bloor Street office, for Infinite Media to give a demonstration showing other John Hancock employees the type of systems Infinite had worked on in the past. After the meeting, Mr. Crewe requested a proposal from Infinite Media. All of Infinite Media’s dealings during the course of the negotiations between the parties were with employees based in Toronto.
[14] In Securities Exchange Commission filings dated August 2013, John Hancock reported that it had 13 executives whose principal business office was at 200 Bloor Street, Toronto, Canada M4W 1E5. This included Cheryl Mallett, VP of John Hancock Retirement Plan Services Operations and the person to whom Darroch Crewe reported. John Hancock disputes the relevance of this evidence, as it is from the year after the Agreement was executed. However, John Hancock has not denied having executives whose principal business office was in Toronto the previous year and I infer that it had executives in Toronto in 2012.
Wording of Forum Selection Clause
[15] In my view, a proper reading of the forum selection clause did not require Infinite Media to bring this claim in Boston. Rather, according to the clause, the party bringing the claim was required to bring it in the city or county of the Responding Party within Ontario. For both parties, currently, this would be in Toronto. I come to this conclusion first based on the wording of the clause itself, and also considering the Agreement as a whole and the factual matrix at the time the parties entered into the Agreement.
[16] Starting with the wording of the clause, I do not accept John Hancock’s argument that the forum selection clause should be interpreted as having two components. As set out above, John Hancock submits the first component relates to attornment and the second relates to forum selection. The first sentence, in John Hancock’s submission, is intended to mean simply that the parties attorned to the jurisdiction of Ontario by agreeing that Ontario had jurisdiction simpliciter. The second sentence, meanwhile, was the forum selection clause, where the parties agreed to submit themselves and their property to the exclusive personal jurisdiction and venue of the Responding Party’s city or county.
[17] John Hancock relies in this submission on the legal distinction between attorning to jurisdiction and determining whether Ontario should exercise that jurisdiction. In particular, it relies on Momentous.ca Corp. v. Canadian American Association of Professional Baseball Ltd., 2010 ONCA 722, in which the Court of Appeal distinguished between a situation in which a court has jurisdiction, and the separate question of whether a court should take jurisdiction.
[18] In reviewing the clause as a whole, as well as within the context of the Agreement as a whole and the factual matrix, I do not agree with John Hancock’s interpretation. Rather, I accept Infinite Media’s interpretation that the parties intended that all claims would be brought in Ontario, and that the parties agreed to submit to the exclusive jurisdiction of Ontario courts. I find that the last sentence of the forum selection clause was intended to reference where in Ontario the claim would be brought. At the moment, this would mean bringing the claim in Toronto. However, it could mean bringing the claim in, for example, Brampton, Mississauga or Hamilton, if the party’s location within Ontario were to change.
[19] In my view, this interpretation best captures the objective intention of the parties. Most importantly, it gives effect to the entire clause. It gives effect to the first sentence by according meaning to the statement that the parties would attorn to the “exclusive jurisdiction of the courts of the Province of Ontario,” since all claims would need to be brought in Ontario. It gives effect to the second sentence, given that different counties and cities exist within Ontario.
[20] Meanwhile, in my opinion, the interpretation offered by John Hancock does not give any reasonable effect to the first sentence in the clause. In particular, I do not accept the proposed interpretation, which suggests the parties intended to address attornment and forum selection separately. The Momentous.ca case, relied on by John Hancock, is very different. There, the provisions in the agreements between the parties provided that (subject to arbitration) any dispute between the parties would be litigated only in the courts of North Carolina. However, the Defendants had attorned to the jurisdiction of Ontario by delivering a Statement of Defence. The issue was whether the forum selection clause prevailed when the Defendants had attorned to the jurisdiction of Ontario. In that context, the Court of Appeal distinguished between whether Ontario had jurisdiction and whether it should exercise that jurisdiction, given the forum selection clause. There was no issue about attornment and forum selection being addressed in the same clause. In addition, John Hancock has not provided me with any cases in which both are addressed in the same clause.
[21] There is no dispute that a distinction can exist between attornment and forum selection. However, in this case, I do not read the clause as intending to make such a distinction. First, on John Hancock’s theory, the only place John Hancock would be permitted to bring a claim against Infinite Media would be in Ontario. In that situation, there would be no need for an agreement to attorn to the courts of Ontario. Therefore, the attornment sentence could only be intended for situations in which Infinite Media brings a claim against John Hancock, and there is a dispute about forum. This is even though, according to John Hancock, the forum for such a claim clearly would have to be Boston. It is unlikely the parties intended to include the first sentence only for the purpose of disputing forum, when it would only confuse the question of the forum actually intended by the parties.
[22] The most significant reason, however, for my conclusion that the first sentence should not be read to address attornment as separate from forum selection is that the first sentence specifically states that the parties agree to attorn to the “exclusive” jurisdiction of the Ontario courts. On John Hancock’s interpretation, even though the parties attorned to Ontario’s “exclusive” jurisdiction, in some cases, like the one before me, the proper forum would be Boston. The word “exclusive” would have no meaning in those cases, which, in my view, cannot be what the parties intended.
[23] John Hancock submits that it would not make sense for all claims to be required to be brought in Ontario. It says the clause would be impossible to apply if one of the parties moved its office out of province. In my view, the response to this is that the parties did not contemplate that either party would move out of province, considering that all of their dealings were in Ontario.
[24] John Hancock also submits that if all claims had to be brought in Ontario, it would not make sense to say that each party “submits itself and its property to the exclusive personal jurisdiction and venue thereof.” While I agree that this wording is somewhat awkward, I do not think it is meaningless. Indeed, it would require John Hancock to submit its property, presumably including the property in the United States, to the exclusive personal jurisdiction of the city or county of the Responding Party. This would benefit Infinite Media, as it would ensure their ability to access John Hancock’s US assets in the context of Ontario claims. In addition, although I find this portion of the clause awkward, I find that interpreting the clause in this manner is much less awkward than John Hancock’s suggested reading, which would give little meaning to the parties’ express statement that they agreed to attorn to the exclusive jurisdiction of the courts of Ontario.
[25] Finally, John Hancock submits that this interpretation does not give effect to the wording in the clause that requires a claim to be commenced in “the” city or county of the Responding Party. It says that this means there is a single city or county and, in John Hancock’s case, that must be Boston. However, I agree with Infinite Media about the dangers of parsing the Agreement by overly examining individual words. Each word in an agreement is not to be “placed under the interpretive microscope in isolation without regard to the entire document and the nature of the relationship created by the agreement”: Bell Canada v. The Plan Group, 2009 ONCA 548, 96 O.R. (3d) 81 at para. 38; Glimmer Resources Inc. v. Exall Resources Ltd. (1999), , 119 O.A.C. 78 (C.A.), at para 17. In my view, read in the context of the whole clause, in which the parties attorned to the exclusive jurisdiction of the Ontario courts, “the” city of John Hancock was Toronto.
Agreement as a Whole and Factual Matrix
[26] In addition, I find that this interpretation of the clause accords with a reading of the Agreement as a whole, and in the context of the factual matrix. When engaging in the interpretation of a contract, a commercial contract should be interpreted as a whole: Ventas Inc. v. Sunrise Senior Living Real Estate Investment Trust, 2007 ONCA 205, 85 O.R. (3d) 254 at para. 24. Further, the court may consider the words of the written contract in the context of the factual matrix: Creston Moly Corp. v. Sattva Capital Corp., 2014 SCC 53, [2014] 2 S.C.R. 633 at para. 50, Ventas Inc., at para. 24. The factual matrix consists of objective evidence of the background facts at the time of the execution of the contract: Creston Moly Corp., at para. 58.
[27] I have set out above the many references and connections to Ontario in the Agreement and in the dealings between the parties at the time the Agreement was negotiated. These include statements that John Hancock “is a company, duly organized, validly existing and in good standing under the laws of Ontario” and that the parties agreed that mediations would be through ADR Chambers Canada (or such other organization or person agreed to) and that all arbitrations would take place in Toronto. In addition, the parties agreed that any communication to John Hancock under the Agreement would be directed to John Hancock at the Manulife offices on Bloor Street in Toronto.
[28] When I weigh these connections against the statements relied on by John Hancock, including the definition of “Customer” in the Agreement and the statements in the Amended Statement of Claim (about Boston, excerpted above), I find the references and connections to Toronto to be stronger. While the Agreement defined John Hancock as being based in Boston, read as a whole, it also meant, in my opinion, that the part of John Hancock that Infinite Media was dealing with was in Toronto. Further, I find the references and connections to Toronto and Ontario at the time of and in the Agreement to be more meaningful than the statements in the Amended Statement of Claim. The statements in and at the time of negotiating the Agreement arise at the time the parties were entering into their contract and are a better indication of the intention of the parties. The statements in the Amended Statement of Claim arise some seven years after the Agreement was signed. More importantly, the statements in the Amended Statement of Claim were made in the context of a dispute in which Infinite Media alleges that John Hancock disclosed confidential information without consent to a third party based in India (allegedly giving approximately 800,000 third and fourth party programmers access to the Infonet). Infinite Media also alleges that John Hancock provided third party access to users employed by companies operating in China, India and the Philippines. In this context, Infinite Media emphasized that the users of the Infonet were supposed to be employees of John Hancock based in Boston. However, the Amended Statement of Claim also states that John Hancock operates as a subsidiary of Manulife and alleges various facts related to Infinite Media’s dealings with Manulife and Manulife Canada, as well as with John Hancock representatives based out of Toronto, such as Alison Hodge and Cheryl Mallett.
[29] I find that, in all of the circumstances, the connections to Toronto and Ontario that existed at the time the Agreement was negotiated and in references throughout the Agreement have more bearing on the parties’ intentions than the statements in the Amended Statement of Claim almost seven years later.
[30] I conclude, therefore, that the proper interpretation of the forum selection clause is that the party bringing the claim is required to bring it in the city or county of the Responding Party within Ontario. Currently, this would mean bringing the claim in Toronto regardless of which party commenced it.
Disposition
[31] Accordingly, the motion to stay or dismiss the action is dismissed.
Costs
[32] I encourage the parties to reach an agreement on the costs of the motion. If they are unable to reach an agreement, Infinite Media may provide me with its submissions on costs within 30 days of the release of this decision. John Hancock will then have 15 days to provide responding submissions. Costs submissions should be no more than three pages, not including costs outlines and any other attachments. Submissions may be provided to my judicial assistant, Anna Maria Tiberio, at Annamaria.tiberio@ontario.ca.
S.M. O’Brien, J. Released: June 5, 2019
[^1]: The initial Agreement included two documents: an agreement setting out terms and conditions, and a Statement of Work. The parties also agreed to an Amending Agreement, dated December 6, 2016 and a Statement of Work dated December 6, 2016. [^2]: OSFI is the Canadian Office of the Superintendent of Financial Institutions. OSFI’s Guideline B-10 applies to Federally Regulated Entities (FREs), which are defined in Guideline B-10 as follows: For the purposes of this Guideline, an FRE is defined as: 1. a bank (listed in Schedule I or II) to which the Bank Act applies; 2. a body corporate to which the Trust and Loan Companies Act applies; 3. an association to which the Cooperative Credit Associations Act applies or a central cooperative credit society for which an order has been made under subsection 473(1) of that Act; 4. an insurance company or a fraternal benefit society incorporated, formed, or continued under the Insurance Companies Act; 5. a bank holding company incorporated, formed or continued under Part XV of the Bank Act; 6. an insurance holding company incorporated, formed or continued under Part XVII of the Insurance Companies Act; 7. the Canadian branch of a foreign bank in respect of which an order under subsection 524(1) of the Bank Act has been made; 8. the Canadian branch of a foreign company in respect of which an order under subsection 574(1) of the Insurance Companies Act has been made.