It’s All Becoming a (Jurisdictional) Blur: Roadtrek Motorhomes Ltd. v. Aralex Acoustics Ltd.

Pending the Supreme Court of Canada’s hearing next year in Van Breda v. Village Resorts Limited., 2010 ONCA 84 (CanLII) (Ont. C.A.) ["Van Breda"], there is another recent decision from the Court of Appeal for Ontario  in Roadtrek Motorhomes Ltd. v. Aralex Acoustics Ltd., 2010 ONCA 878 (CanLII) (“Roadtrek”), which appears to blur the distinction between jurisdiction simpliciter and forum non conveniens.

According to Van Breda, Rule 17.02 of the Ontario Rules of Civil Procedure now represents the statutory basis for establishing jurisdiction simpliciter, by focusing on various rebuttable presumptions (except 17.02(h)-tort committed in Ontario or 17.02(o)-necessary and proper party). In Roadtrek, both the motions judge and the Court of Appeal panel identified Rule 17.02(f) of the Rules of Civil Procedure as the proper frame of reference. Rule 17.02(f) reads:

Contracts

(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.

In Roadtrek, the motions judge, Matlow, J. concluded that the plaintiff could not bring its claim within Rule 17.02(f). He found that the contracts in issue were made not in Ontario, where the plaintiff is based, but in British Columbia, where the defendant is based, because they were formed when the defendant received a copy of its various quotations signed by the plaintiff. While the Court of Appeal endorsement does not discuss the mode of transmission, according to Justice Matlow’s reasons for decision, this ‘battle of the forms’ was waged by fax machine:

“The ordering process began each time with a price quotation faxed by the defendant from B.C. to the plaintiff in Ontario in which the plaintiff was invited to submit an order and a signed copy of the defendant’s quote by fax to the defendant. This quote was an offer from the defendant. The defendant’s offer was then accepted by the plaintiff when the plaintiff’s purchase order for TV’s and a signed copy of the defendant’s quote were faxed to the defendant in B.C. and received there by the defendant.”

In allowing the appeal, the Court of Appeal writes,

[2]               Unfortunately, the motion judge proceeded on an erroneous factual basis. The appellant did not sign and return the respondent’s quotations. Rather, it responded with its own and different counter offers, for example, to purchase a smaller number of goods at a slightly higher price than was quoted by the respondent. These counter offers were accepted by the respondent by its delivery of the goods to the appellant in Ontario. The legal consequence of this is that the contracts sued upon were made in Ontario. They were also to be performed in Ontario by the delivery of the goods. Thus, Rule 17.02(f) is applicable and creates the presumption that there is a real and substantial connection with Ontario.” [emphasis added]

This is perplexing, given that the Court of Appeal adopted the “facsimile transmission rule” as an exception to the “postal delivery” rule in  Eastern Power Limited v. Azienda Communale Energia and Ambiente, 1999 CanLII 3785 (ON C.A.), which held in part:

[22]         The  general rule of contract  law  is  that  a contract  is made in the location where the offeror receives notification  of the offeree’s acceptance: see Fridman,  The Law of Contract in Canada, 3rd ed., (1994), at p. 65; and Re Viscount  Supply  Co., [1963] 1 O.R. 640  (S.C.).   However, there  is  an  exception to this general rule.   It  is  the postal  acceptance  rule.  As expressed  by  Ritchie  J.  in Imperial Life Assurance Co. of Canada v. Colmenares,  [1967] S.C.R. 443 at 447:

It  has  long been recognized that  when contracts  are to be concluded  by  post the  place of mailing the acceptance  is to  be  treated as the place  where  the  contract was made. See  also:  Fridman,  The Law of Contract in Canada,  supra, at pp. 67-68.

There is,  however, case  authority  for  the  proposition  that  acceptance  by facsimile transmission should follow the general rule, which would  mean  that  a  contract  is  formed  when  and  where acceptance is received by the offeror.”

What this means is that “in  contract  law  an  acceptance by facsimile  transmission should  follow  the general rule of contract formation,  not the postal acceptance exception.” If the plaintiff’s counter-offer was accepted via fax by the defendant in B.C., then the contract was formed in B.C., not Ontario, which by implication, means that B.C. law also applies.

Nevertheless, the Court of Appeal in Roadtrek concludes:

[3]               The other factors relevant to the jurisdiction analysis do not support the displacement of this presumption. Many do the reverse. This is an interprovincial case, not an international one. Ontario courts would recognize a British Columbia judgment on comparable facts. No other parties are involved, nor is there any unfairness to the respondent if the Ontario court takes jurisdiction. This is especially so given the fact that the respondent was engaging in commerce in Ontario by selling into this market.

[4]               We therefore disagree with the motion judge. We would find that the appellant has established the necessary real and substantial connection for the Ontario court to take jurisdiction.”

[5]               We also conclude that the respondent cannot show that there is a more appropriate forum. On the record, the majority of witnesses are here. The damages to be proven arose here. The contracts were concluded here. The appellant carries on business here, and the respondent sells into this market. This is the convenient forum.

Accordingly, the place of the contract or where it was was formed (the “locus contractus”) or the place where the contract was to be performed or the debt paid (the “locus solutionis”) are now not only relevant to service ex juris, they also form the statutory basis for assumed jurisdiction in international contract dispute.s This, notwithstanding Sharpe J.A.’s view that presence-based jurisdiction and consent-based jurisdiction represented alternative means for establishing jurisdiction.  Recall further the various factors for forum non conveniens outlined by Justice Sharpe in Muscutt:

[41]         Courts have developed a list of several factors that may be considered in determining the most appropriate forum for the action, including the following:

•        the location of the majority of the parties

•        the location of key witnesses and evidence

•        contractual provisions that specify applicable law or accord jurisdiction

•        the avoidance of a multiplicity of proceedings

•        the applicable law and its weight in comparison to the factual questions to be decided

•        geographical factors suggesting the natural forum

•     whether declining jurisdiction would deprive the plaintiff of a legitimate juridical advantage available in the domestic court [emphasis added]

I hope that clears it up for you because, now, I’m confused.

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