Source: http://mccagueborlack.com/emails/articles/foreign-lawsuits.html
Timestamp: 2019-04-20 22:57:01+00:00

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With the proliferation of e-commerce, the past decade has seen a significant increase in the development of “do-it-yourself” online travel booking. Business and leisure travellers alike turn to online travel agents on their computers and mobile devices to co-ordinate and make their travel arrangements. In turn, the increased ease in making travel arrangements has given rise to more travellers. In Canada, many families travel outside of their home province, or even outside of Canada, for winter ski trips or summer trips filled with water activities. With the increased frequency of such trips comes a corresponding increase in activity-related injuries. These can result in lawsuits for injuries sustained abroad. Managing where lawsuits may be commenced becomes a source of concern for those involved in the travel industry, such as resort and tour operators and their insurers. Ontario hotel and resort operators may therefore unknowingly find themselves being named as defendants in actions commenced outside of Ontario.
This paper will first discuss how a defendant may intentionally or unintentionally subject itself to a foreign jurisdiction, known as attorning to the jurisdiction, which can be a frustrating ordeal for a litigant. It is thus crucial to examine the choices available to the defendant when facing a foreign action, whether it is to contest or to attorn to jurisdiction. The discussion will further examine the options a defendant has if it did indeed unintentionally acquiesce to the foreign jurisdiction. These same considerations apply when a foreign defendant is being sued in Ontario.
Secondly, the paper will discuss the legal test for finding and challenging jurisdiction in Ontario, as enunciated by the Supreme Court of Canada in Van Breda v. Club Resorts Ltd.1 The discussion will also touch on the legal principle of forum non conveniens, which presents another method to stay a foreign action for being brought in an improper forum.
As a final note, the paper will discuss how properly drafted forum selection clauses and governing law clauses can be effective tools in managing the certainty and predictability of claims arising out of a given policy, and how such a clause may be interpreted by an Ontario court. While they may not prevent all actions from being commenced in a foreign jurisdiction, a proper forum selection clause can afford certainty to insurers in terms of where claims brought against them by their insured could be litigated. Governing law clauses are useful as well to provide guidance and certainty as to which set of laws has been chosen to resolve the dispute arising out of the contract, regardless of the forum in which the claim was commenced.
I. Making the Decision: To Contest or to Attorn?
By way of example: an American couple from the state of Kentucky plans a canoe and hiking trip to Georgian Bay, Ontario. The husband makes the booking online through a travel website and uses his credit card to pay for the vacation, including the hotel. During their excursion in Ontario, organized by the hotel, the wife sustains injuries from a boating accident wherein a hotel employee acted in a negligent manner. She receives medical treatment in Ontario and upon returning home to Kentucky, the couple decides to sue the Ontario hotel in a Kentucky court. The hotel's insurer now faces a claim commenced outside of Ontario. At this stage, before taking any steps, the insurer has two options: to contest or to attorn to Kentucky's jurisdiction. Attornment to a particular jurisdiction refers to instances where the defendant in an action consents (intentionally or unintentionally) to the jurisdiction in which the plaintiff has commenced the action.
It is crucial that this decision is made before any steps are taken in response to the foreign claim. This is because attornment to jurisdiction can occur by filing a consequent pleading, such as a Statement of Defence, or by participating in the litigation process. In Ontario, another example of how attornment can happen is through the service and filing of a Notice of Intent to Defend.2 In our Kentucky example, the hotel's insurer would need to look to the laws of Kentucky to determine what responding pleadings should be filed and the effect of same on attorning to the jurisdiction of that state.
... it may be in the interest of a party to attorn, particularly where the law in the foreign jurisdiction is more favourable than the law in the home jurisdiction.
In some cases, it may be in the interest of a party to attorn, particularly where the law in the foreign jurisdiction is more favourable than the law in the home jurisdiction. For example, in our American couple case, the foreign jurisdiction, Kentucky, might have more favourable discovery rules compared to Ontario. Undoubtedly, making such a decision is inherently complex. It requires understanding the legislation and case law in both Ontario, as the home jurisdiction, and in Kentucky, as the relevant foreign jurisdiction. This involves interpreting foreign law according to that country's methods as well as understanding the hierarchy of courts in a given region. Even Canadian jurisdictions outside of Ontario may have differing procedural and substantive laws that require consideration if that is the relevant foreign jurisdiction. This would likely require retaining counsel in that foreign jurisdiction. Likewise, attornment to the jurisdiction of Ontario must be carefully considered when an action is brought in Ontario relating to an accident occurring outside of the province. Counsel should also be consulted in making such a decision in Ontario.
Where a tort has occurred in a jurisdiction with a shorter limitation period than Ontario's two year limitation period4, it may be beneficial for a defendant to plead that jurisdiction's law. Doing so may mean that the claim will be dismissed for being outside of the shorter limitation period. Thus, in our case with the American couple, it may be to the advantage of the Ontario insurer to attorn to the jurisdiction of Kentucky if it happens to have a shorter limitation period than the one in Ontario for the particular type of claim being made.
The opposite could also be true. In other words, it may be in a defendant's best interest to plead the law of the jurisdiction with a longer limitation period than that of the defendant's home jurisdiction. For example, this could be the case where a defendant wishes to issue a third party claim against another party, but requires additional time to do so.
There may be financial advantages to a plaintiff who pleads the law of the relevant foreign jurisdiction. For instance, in making the decision to attorn or to contest jurisdiction, one pertinent consideration is the different heads of damages that may be available in different jurisdictions, and the calculation of said damages in that jurisdiction.
Another case dealing with financial benefits in different jurisdictions is Brown v Kerr-McDonald.8 In that case, the issue was whether the laws of Alberta or those of Saskatchewan should apply. The plaintiff pointed out that the pain and suffering portion of her claim would be unavailable under Saskatchewan's no-fault scheme, but it was available in Alberta. Naturally, the plaintiff wanted the laws of Alberta to apply.
... damages can play an important role for defendants when deciding whether to attorn or to contest jurisdiction, as they may be calculated differently from one jurisdiction to another.
Thus, damages can play an important role for defendants when deciding whether to attorn or to contest jurisdiction, as they may be calculated differently from one jurisdiction to another.
Another consideration in deciding whether to attorn to a "foreign jurisdiction" is a practical one. Research into the laws of the foreign jurisdiction is imperative, as is appropriate statutory interpretation. Local counsel may need to be retained and damages assessments appropriately adjusted. Given the significant differences between Ontario and foreign jurisdictions, an Ontario based claim handler would require assistance with respect to those foreign laws and procedures.
C. After You Have Attorned, What Happens Next?
By way of example: Assume that a plaintiff living in Ontario sues a Manitoba defendant in Ontario. Before considering the issue of jurisdiction, and without realizing the impact of his or her actions, the Manitoba defendant files a Statement of Defence in accordance with the laws of Ontario.12 The defendant has now unknowingly attorned to Ontario's jurisdiction.
Nevertheless, this discretion has been used in some cases. For example, in Hanlan: although the motor vehicle accident took place in Minnesota, both parties were Canadian citizens and residents of Ontario.17 The vehicle was registered and insured in Ontario and all of the treatment and resulting damages were incurred in Ontario. With the exception of the fact that the incident occurred in Minnesota, there was no other link to the United States. For that reason, the Ontario Court of Appeal determined that the motion judge was correct to use their discretion and apply Ontario law.18 Thus, while typically the law of the territory where the tort occurred will apply,19 there are occasionally exceptions.
As such, the same damages considerations mentioned above also apply when deciding whether to plead the law of another jurisdiction (i.e. Ontario, where the tort occurred in our California example) once attornment has already occurred.
Imagine a scenario where travellers from Alberta vacation in Ontario and engage in canoeing lessons. One of them sustains an injury after falling into the water and hitting his head on a rock. The traveller receives some immediate medical attention in Ontario, but returns to Alberta in order to receive treatment at home. He then decides to commence an action against the Ontario lesson provider in Alberta. Given this situation, the defendant company and its insurer have decided to contest jurisdiction and argue that the lawsuit should have been brought in Ontario. In order to succeed with such an argument, the test formulated by the Supreme Court of Canada in Van Breda must be analyzed.
In Canada, the test for finding whether a court has proper jurisdiction over a claim was set forth by the Supreme Court in Van Breda v. Club Resorts Ltd.20 In the ruling that addressed two tort claims, the Court clarified the test for when an action should be stayed for lack of jurisdiction. The Court held that a "real and substantial connection" between the claim and the jurisdiction must exist for there to be a proper exercise of jurisdiction.
In formulating this list, the Court noted that these factors generally point to a relationship between the subject matter of the litigation and the forum. If any one of these factors is identified to link the litigation to the forum, then there is a presumption that the real and substantial connection test is met, thus suggesting proper jurisdiction. The Court further noted that new presumptive connective factors could be recognized in the future if certain considerations were met.
Once the presumption of jurisdiction is established, the burden then shifts to the defendant to rebut the presumption. A party may do so by demonstrating that the connecting factor, although present, does not provide a real relationship between the subject matter of the claim and the subject court.
The application of the Van Breda is heavily fact-dependent. Taking the aforementioned example of the Albertan travellers, an analysis of the presence of each connecting factor would be necessary. In the example, assuming that the Ontario defendant, or their head office, was not incorporated in Alberta, factor one (that the defendant is domiciled or resident in the province) cannot be satisfied. In addition, as the alleged tort was not committed in Alberta, factor three (the tort was committed in the province) likewise cannot be satisfied.
However, the plaintiff may argue that the defendant hotel had a virtual presence via a website, or that the booking was made in Alberta, thereby satisfying factor two (the Ontario defendant carried on business in Alberta). Furthermore, if the plaintiff had booked his canoe lesson online, he may argue that the underlying contract to the dispute was made in Alberta, and satisfied factor four (the contract connected with the dispute was made in the province). Such arguments would not be novel.
In a similarly decided case, the Ontario Superior Court in Kornhaber v. Starwood Hotels and Restaurants Worldwide, Inc.25 did not consider the defendant's 23 Westin Hotels owned and operated in Ontario to be sufficient to subject the defendant to Ontario jurisdiction. The claim arose from a food poisoning incident that occurred at a Westin Hotel in China. The plaintiffs were Toronto residents and argued that the defendant hotel had an online presence and operated business in Ontario, satisfying one of the presumptive connecting factors of Van Breda. The Court found the presumption rebutted since the subject matter of the claim had no real relationship with the business operated in Ontario by the defendant. Therefore, the Court found that the action could not continue in Ontario.
...a court still has the discretion to stay the action under the principle of "forum non conveniens".
the witnesses are in Ontario, and not the foreign jurisdiction.
appropriate forum for the action. As such, the Ontario action was stayed against the defendants.
contract would litigate any disputes arising from the contract.
Forum selection clauses provide a pre-determined location where parties to the contract would litigate any disputes arising from the contract.
on the merits may be commenced in a foreign jurisdiction.
claim or initiate a separate action against the insurer to claim a duty to defend and to indemnify.
plead the law of the jurisdiction where the tort took place.
will be interesting to see how courts continue to treat such arguments.
of the law as they unfold.
1 Van Breda v Club Resorts Ltd., 2012 SCC 17.
2 Wilson v Servier Canada Inc.,  50 OR (3d) 219.
3 Damme v Gelber, 2013 ONSC 388, 288 ACWS (3d) 91.
4 Ontario has a general two year limitation period but there are many exceptions to this general rule. A full review of the relevant legislation is required to ascertain the applicable limitation period.
5 Hanlan v Sernesky, 38 OR (3d) 479, 1998 CanLII 5809 (ONCA).
7 Ibid at para 9.
8 Brown v Kerr-McDonald, 2002 ABQB 955.
9 Throness Estate v Kerr, 1998 ABQB 1132.
10 Wong v Lee,  OJ No 885.
11 This decision was considered under the framework of Bill 164 in Ontario, effective from January 1, 1994 to October 31, 1996, which barred recovery in tort for pecuniary losses against an owner, occupant or other protected person.
12 As noted, this paper is not intended to provide legal advice with respect to jurisdictions outside of Ontario. When dealing with laws of a province or state other than Ontario, it is necessary to consult a lawyer within that jurisdiction for advice and with respect to the relevant laws of that jurisdiction.
14 Tolofson, at para 43.
15 Ibid. at para 50.
16 Wong, supra note 10.
18 In Hanlan, the exception was grounded in the concept of an injustice that would require the court to exercise the discretion, something beyond the ordinary differences between the laws of the forums. See Anand v Rumpal, 2014 ONSC 6030 at para 36.
19 For examples of Ontario decisions applying foreign law, see e.g. Wong supra note 10; Long (Litigation Guardian of) v Dundee Resort Development LLC, 2013 ONSC 4238 (applying Colorado substantive law); and Benson v Belair Insurance Co., 2015 CarswellOnt 16108 (FSCO Arb) (applying British Columbia law in Ontario).
21 Supra note 1, at para 90.
22 Colavecchia v. The Berkeley Hotel, 2012 ONSC 4747.
23 Ibid. at para 23.
24 See e.g. Export Packers Co. v. SPI International Transportation, 2012 ONCA 481; Tamminga v. Tamminga, 2014 ONCA 478; but see Toews v. First Choice Canada Inc., 2014 ABQB 784.
25 Kornhaber v. Starwood Hotels and Restaurants Worldwide, Inc., 2014 ONSC 6182.
26 Haufler (Litigation Guardian Of) v. Hotel Riu Palace Cabo San Lucas, 2013 ONSC 6044.
27 Wilson v. RIU, 2012 ONSC 6840.
28 Ibid., at para 14.
29 See Sugar v. Megawheels Inc.,  O.J. No. 4493.
30 Aldo Group Inc. v. Moneris Solutions Corporation, 2013 ONCA 725.
31 Momentous.ca Corp. v. Canadian American Association of Professional Baseball Ltd. 2012 SCC 9, at para 10-13.
32 Ibid. at para 9.
33 See e.g. Z.I. Pompey Industry v ECU-Line N.V., 2003 SCC 27, at para 20.
35 See 2249659 Ontario Ltd. Et al. v. Sparkasse Siegen et al., 2012 ONSC 3128, at para 18-19.
36 Momentous, supra note 30 at para 10-13.

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