When”Enforced” Doesn’t Mean “Enforced”

Global Universal Pictures. All Rights Reserved

In B & J Pictures v. Film Finances Canada, 2011 NBQB 257 (CanLII), the defendant moved to permanently stay an action or restrain further proceedings based upon an ambiguously drafted dispute resolution clause.

The action arose from the Plaintiff’s production and filming of the movie, Blue Seduction, in the Province of New Brunswick.  In or about October 15, 2008, the Defendant, Film Finances Canada Ltd.,(FFC), an Ontario corporation entered into a completion guarantee agreement for a motion picture produced in New Brunswick by the Plaintiff.

The Agreement provided, at Article 13 that:

“ [it] shall be deemed to have been executed in the Province of Ontario, and shall in all respects be Interpreted, enforced and governed by the laws of the Province of Ontario and of Canada.”; [emphasis added]

Benoit Martin (Martin), an officer, director and shareholder in B & J Pictures Inc. (B & J) and Jacqueline Giroux (Giroux), the President of Global Universal Pictures Inc. (Global) each disputed most of the facts sworn to by Jim Sternberg, the President of the defendant, FFC.

Following filming and during post production, FFC decided that Giroux was not keeping proper records, FFC took over the financial affairs of the plaintiff, B & J, and completed production of the motion picture. All post production matters were completed on March 5, 2009.

The Defendant moved under the New Brunswick Rules of Court for a stay relying on the “strong cause” test established in the English bill of lading case, The Eleftheria, [1969] 2 All E.R. 641 at p. 649, and followed in A/S Nyborg Plast v. Groupe Qualité Lamèque/Lamèque Quality Group Ltd., 2001 NBCA 86 (CanLII), 2001 NBCA 86; namely:

(I)           … [T]he English court, assuming the claim to be otherwise within its jurisdiction, is not bound to grant a stay but has a discretion whether to do so or not. (II) the discretion should be exercised by granting a stay unless strong cause for not doing so is shown. (III) The burden of proving such strong cause is on the plaintiffs. (IV) In exercising its discretion, the court should take into account all the circumstances of the particular case. (V) In particular, but without prejudice to (IV), the following matters, where they arise, may properly be regarded: (a) In what country the evidence on the issues of fact is situated, or more readily available, and the effect of that on the relative convenience and expense of trial as between the English and foreign courts; (b) Whether the law of the foreign court applies and, if so, whether it differs from English law in any material respects; (c) With what country either party is connected, and how closely; (d) Whether the defendants genuinely desire trial in the foreign country, or are only seeking procedural advantages; (e) Whether the plaintiffs would be prejudiced by having to sue in the foreign court because they would — (i) be deprived of security for that claim, (ii) be unable to enforce any judgment obtained, (iii) be faced with a time-bar not applicable in England, or (iv) for political, racial, religious or other reasons be unlikely to get a fair trial.

The motion judge conflates the conflict of laws principles of choice of law, forum non conveniens and exclusive jurisdiction clauses, stating “[i]t appears that the issue of forum selection and law choice are intertwined with convenient forum.”

 The motion judge then concludes:

[15]  Do the words “in all respects” strengthen this above clause to support the Moving Party’s contention that the reasonable implication is the forum is Ontario as well as the law is that of Ontario?   Is article 13 ambiguous as to forum selection?  In my view the clause is ambiguous.  There is no doubt that the agreement is to be interpreted, enforced and governed pursuant to the interpretation of the law applicable to such agreements by Ontario law, but the clause does not specifically exclude any other province.  In fact the clause also states “… and of Canada”.   The clause does not specifically state it is to be “determined” in Ontario.

[16] In regard to convenient forum, I suggest that FFC has not established that Ontario is any more convenient than New Brunswick.  However, to balance this argument I suggest that the Plaintiffs would likely not have lost any juridical advantage by a move to Ontario because it will need to enforce any judgment it might be granted in Ontario.

Forum for Disputes

[17] The Moving Party suggests that the language in article 13, above-noted, is clear that all disputes shall be resolved in Ontario.  With respect, I disagree.  In my view the parties did not agree on Ontario having exclusive jurisdiction.  An example of a clause granting exclusive jurisdiction is pointed to by Madam Justice Larlee in Blinds to Go Inc. (supra) at para 20 quoting from Z. I. Pompey Industrie v. ECU-Line N.V., [2003] S.C.J. No. 23 (S.C.C.):

The contract evidenced by or contained in this bill of Lading [sic] is governed by the law of Belgium, and any claim or dispute arising hereunder or in connection herewith shall be determined by the courts in Antwerp and no other Courts.

(Emphasis added)

I also rely on other cases cited by Justice Larlee (see Offen v. McCain Produce Co., [1983], 46 N.B.R. (2d) 108 (NBQB) and Eagle River International Ltd., Re2001 SCC 92 (CanLII), [2001] 3 S.C.R. 978 (S.C.C.) (which held clause to be not a choice of forum clause)).  In my opinion article 13 is not an exclusive jurisdiction clause that clearly states Ontario to be the forum or jurisdiction to hear the disputes. [emphasis added]

Admittedly, the contract drafting leaves much to be desired. The parties should have used more explicit language such as the following sample clause:

This Agreement shall be governed in all respects, whether as to validity, construction, capacity, performance or otherwise, by the laws of the Province of Ontario, Canada (without giving effect to principles of conflicts of laws) and the parties hereby irrevocably and unconditionally attorn and submit to the exclusive jurisdiction of the Superior Court of Justice in the Province of Ontario, Canada.

In my view, the “strong cause” test does not fit well in cases involving inter-provincial parties. Also, provincial laws are not “foreign laws”, in the context of international cases involving truly foreign parties, such as The Eleftheria.

Nevertheless, it is arguable that the conjunctive phrase “Interpreted, enforced and governed” is both a choice of law and an exclusive  jurisdiction clause.  Furthermore, the lex loci contractus is Ontario law which governs where the contract is to be construed and the dispute is to be adjudicated in an Ontario court where performance is to be enforced.  Unless the word “enforced” no longer means to “compel observance or obedience to” a law, contract, right or obligation.

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