Immerspa Inc. v. Aqua Innovation Inc.
CITATION: 2021 ONSC 2690
COURT FILE NO.: CV-74091/20
DATE: 2021-04-12
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Immerspa Inc. and Cypress Landscaping Inc., plaintiffs
AND: Aqua Innovation Inc., Aqua Therma Inc., Richard Poirier and Richard Poirier operating as Aqua Therma, defendants
BEFORE: Mr Justice J.A. Ramsay
COUNSEL: John V. Kranjc plaintiffs; Amanda McBride, Daniel Michaud-Shields defendants
HEARD: April 9, 2021 at Hamilton
ENDORSEMENT
[1] Before pleading, the defendant moves under Rule 17.06 for an order setting aside the service upon it of the statement of claim outside Ontario and an order permanently staying the proceeding on the grounds that service outside Ontario is not authorized by the Rules and that Ontario is not a convenient forum.
[2] The defendant (Aqua Therma) designs, manufactures and sells pools and spas in Quebec. The plaintiff (Immerspa) installs spas in Ontario. The plaintiff purchased spas from the defendant for customers in Ontario. It received complaints from forty customers for defects in the spas.
[3] In 2019 the plaintiff stopped buying spas from the defendant and bought spas from other suppliers or manufactured its own. The defendant claims that the plaintiff used the defendant’s designs and breached its copyright and the contract. The defendant instituted an action in the Superior Court of Quebec claiming damages with respect to spas manufactured by the plaintiff. In the Quebec action, Immerspa takes the position that the spas they manufactured were not of Aqua Therma’s design. Immerspa did not counterclaim in the Quebec action for Aqua Therma’s forty allegedly defective spas.
[4] Instead, in the present action Immerspa sues for breach of contract, breach of warranty and the tort of product liability. It served the statement of claim outside Ontario without leave of the court. The defendant does not carry on business in Ontario.
[5] This is not really a product liability case. The losses come only from the cost of repairing or replacing the spas. This is really a breach of contract and breach of warranty case.
Service outside Ontario
[6] Under Rule 17.02, a party may, without a court order, be served outside Ontario with an originating process where the proceeding consists of a claim or claims:
(f) in respect of a contract where,
(i) the contract was made in Ontario,
(ii) the contract provides that it is to be governed by or interpreted in accordance with the law of Ontario,
(iii) the parties to the contract have agreed that the courts of Ontario are to have jurisdiction over legal proceedings in respect of the contract, or
(iv) a breach of the contract has been committed in Ontario, even though the breach was preceded or accompanied by a breach outside Ontario that rendered impossible the performance of the part of the contract that ought to have been performed in Ontario.
(g) in respect of a tort committed in Ontario.
(p) against a person ordinarily resident or carrying on business in Ontario.
Was the contract made in Ontario?
[7] There is no signed contract. As to the unwritten portion of the contract, I accept the uncontradicted evidence of Richard Poirier, principal of Aqua Therma, who deposed:
Au début de l'année 2015, Monsieur Van Aman, à titre de représentant de Immerspa, a fait une visite au siège social d'Aqua Innovation situé au 1765 route de l'Aéroport, à l'Ancienne Lorette, dans la province de Québec. Pendant cette visite, une entente verbale entre les parties a été formée, confirmant les modalités de l'entente de distribution entre les parties.
Toutes les transactions pour l’entente de distribution ont eu lieu au Québec :
(a) Les bons de commandes devaient être envoyés au Québec; et
(b) Le contrat prévoyait qu'Aqua Innovation n'était pas responsable pour la livraison des biens et qu'Immerspa avait l'obligation de prendre possession des biens à l'usine d’Aqua Innovation, qui était située au Québec.
[8] I do not believe, however, that the entire contract was contained in the oral agreement of 2015. Many terms are contained in a price list, to which M. Poirier refers as “l’entente de distribution,” and the boilerplate on the invoices related to the sales. These documents contain far too much detail for the parties to have agreed on them orally.
[9] Purchases and sales ensued. Immerspa sent its shipper to Quebec City to pick up the spas. In most cases Immerspa remitted payment before picking up the spas. In most cases, Aqua Therma sent invoices with boilerplate terms drafted by it. The boilerplate mentioned the limited warranty.
[10] On February 2, 2019 the defendant sent the plaintiff a document entitled “Spas price list Immerspa distribution” (affidavit of Richard Poirier dated December 14, 2020, exhibit B). That document set out the manufacturer’s warranty thus:
Aquatherma Warrantee his products from manufacturing fault for:
10 years on the Fiberglass part of the shell 1 year on the pump (s) and electronic pack
1 year on the seams of the vinyl skin of the cover.
[11] M. Poirier had sent a similar price list to the defendant every year from the beginning. The prices changed at some point.
[12] The plaintiff continued ordering spas, remitting payment and sending its shipper to the factory. When a customer complained about defects, in some cases the plaintiff did repairs and charged the defendant on the limited warranty. In three cases, the defendant sent someone to Ontario to effect repairs.
[13] By this continuous conduct the plaintiff accepted the additional terms in the invoices and the price lists. Their acts of acceptance took place in Ontario. The contract was therefore, made in Ontario. Service outside Ontario was justified under Rule 17.02(f)(i). Ontario has jurisdiction over the action: Van Breda v. Village Resorts Ltd., 2012 SCC 17, para. 90. I do not need to consider the remaining clauses of rule 17.02(f). It seems to me, however, that the breach of warranty occurred in Ontario as well.
Is Ontario not a convenient forum?
[14] Ontario should exercise its jurisdiction unless there is another forum that is clearly more appropriate: Van Breda, para. 108 - 109:
A court hearing an application for a stay of proceedings must find that a forum exists that is in a better position to dispose fairly and efficiently of the litigation. But the court must be mindful that jurisdiction may sometimes be established on a rather low threshold under the conflicts rules. Forum non conveniens may play an important role in identifying a forum that is clearly more appropriate for disposing of the litigation and thus ensuring fairness to the parties and a more efficient process for resolving their dispute.
[15] I first consider as a factor the following term endorsed on the invoices:
- Il est expressément entendu et convenu :
d) qu’advenant la nécessité pour la compagnie d’intenter des poursuites en justice pour faire respecter les clauses du contrat, le propriétaire assumera la totalité des frais et dépenses (entre l’avocat et son client) engagés par la compagnie et que toutes procédures en justice auront lieu sur le territoire de la Ville de Québec.
[16] I do not read this as an agreement that any possible dispute should be resolved in Quebec City. In the context of the entire paragraph, it seems to me that “toutes procédures en justice” refers to the antecedent “la nécessité pour la compagnie [Aqua Therma] d’intenter des poursuites en justice pour faire respecter les clauses du contrat.” The purpose of the clause must have been to ensure that when Aqua Therma sued on the contract it would not be met with the argument that it was limited to suing in the domicile of the purchaser.
[17] The following factors support the argument that the Superior Court of Quebec is better placed to dispose of the litigation fairly and efficiently:
• The Superior Court of Quebec has undoubted jurisdiction over the matters in issue both actions: Civil Code of Quebec, art. 3148.
• The plaintiff has agreed that the defendant can sue in Quebec.
• The Superior Court of Quebec has already exercised jurisdiction in the defendant’s action. It has set a timetable for the disposition of the case.
• The plaintiff still has time to file a counterclaim in Quebec.
[18] On the other hand, the alleged breach of contract and warranty have a real and substantial connection to Ontario. The tort alleged, though weak, is related to the contract which was made in Ontario. The spas were meant to be installed in Ontario and were installed in Ontario. The effects of alleged defects were felt in Ontario. In three cases the defendant came to Ontario to effect repairs. Most of the witnesses are in Ontario.
[19] The legal issues in the two actions are distinct. Manufacture of defective spas by Aqua Therma is no defence to breach of copyright. Breach of copyright by Immerspa is no defence to breach of contract or warranty.
[20] The factual issues are also distinct. The Quebec action has to do with spas manufactured by Immerspa. The Ontario action has to do with spas manufactured by Aqua Therma.
[21] Aqua Therma argues that there would be significant duplication of the evidence if two proceedings were held. Both courts would have to determine which spas were manufactured by whom. I do not agree. Either way, both parties will have to identify specific spas and show that the other party manufactured them. In the case of any particular spa, there will be documents showing that it was sold to Immerspa by Aqua Therma or there will not. This should be sorted out before trial, leaving as issues whether some spas were counterfeited and whether some others were defective.
[22] It is also evident that adding Immerspa’s counterclaim would require the timetable of the Quebec action to be amended.
[23] In these days of videoconference, there is little difference in having forty homeowners testify in Hamilton as opposed to Quebec City. It will be simpler for this court to subpoena Immerspa’s forty reluctant witnesses who live in Ontario. They are not necessary for the Quebec action. Whether the parties brief Ontario lawyers or brief their Quebec lawyers on multiple new transactions, additional expense comes from Immerspa having brought its claim, not from trying it in Ontario.
[24] While the Superior Court of Quebec is an appropriate forum for the Ontario action, I am not satisfied that it would clearly be in a better position than this court to dispose of it fairly and efficiently.
[25] The motion is dismissed. Costs are reserved to the trial judge.
J.A. Ramsay J.
Date: 2021-04-12