Source: https://renvoi.wordpress.com/tag/forum-selection-clause/
Timestamp: 2019-04-24 12:41:30+00:00

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As the title says, the recent decision of BCSC in Rakunas v. SAL, 2008 BCSC 444, briefly addresses both of the above issues. The case concerned an alleged trust, in which the defendant British Virgin Islands corporation, extra-provincially registered in BC, was alleged to be a bare trustee holding a property in Whistler in trust for its shareholders, the plaintiff, and the personal defendant Murphy, neither of whom were resident in BC Rakunas and Murphy were the sole and equal shareholders in SAL, as well as its officers and directors. Rakunas launched the action in 2005, seeking to wind up the alleged trust and sell of the property. Murphy argued that the court lacked jurisdiction simpliciter and that BC was forum non conveniens because the dispute was ultimately a shareholder dispute within a BVI corporation and had nothing to do with BC. SAL entered a response, but did not file any pleadings.
The question of the day is when does a forum selection clause in a contract really provide for exclusive jurisdiction of a court? Especially if it does not say “exclusive” (although even if it does that may not be the end of it)? A recent decision of Mr. Justice McEwan in B. A. Blacktop Ltd. v. Gencor Industries Inc., 2008 BCSC 231 reinforces the argument that exclusive jurisdiction can arise without an exclusive label.
This Agreement will be governed by and interpreted in accordance with the laws of the Province of British Columbia, Canada and the parties will attorn to the jurisdiction of the Courts of the Province of British Columbia, Canada.
Without breaking any new legal ground, the decision of Master Scarth in Suncom Inc. v. Andrew Stone Casino Promotions Ltd., 2007 BCSC 1904 illustrates some interesting practical points.
In Suncom, the plaintiff brought a Rule 18 application for summary judgment to recognize and enforce a default judgment obtained in Nevada. The relatively unusual aspect of this case was that it was brought under Rule 18, rather than Rule 18A, showing that the plaintiff had a very high degree of confidence in its case, arguing that “there is no defence to the whole or part of a claim, or no defence except as to amount” and deposing that it “knows of no fact which would constitute a defence to the claim.” To successfully defend against this application, the defendants merely had to show a “bona fide triable issue”.
The defendants in fact argued three triable issues, all rooted in Beals v. Saldanha, 2003 SCC 72: (1) lack of real and substantial connection between the Nevada court and the defendants, despite the presence of a jurisdiction selection clause; (2) defence of fraud; and (3) defence of public policy.
Master Scarth held that none of the defendant’s arguments raised a bona fide triable issue. With respect to jurisdiction simpliciter of the Nevada court, relying on Beals and Z.I. Pompey Industries v. ECU-Line N.V., 2003 SCC 27, she held that a jurisdiction selection clause demonstrates a prima facie real and substantial connection and must be enforced by the court in the absence of “strong cause to the contrary”. The defendants’ argument that the work under the contract was not performed in Nevada did not raise a “strong cause” as a triable issue. Relying on Zaidenberg v. Hamouth, 2005 BCCA 356, she concluded “that there is no triable issue relating to the defence of fraud, in that it is clear that there is no new evidence supporting the fraud defence which was not discoverable with due diligence prior to the default judgment being granted.” Finally, with respect to the argument that the Nevada judgment was contrary to the “Canadian concept of justice” because it included prima facie compensatory punitive damages, relying on Old North State Brewing Co. v. Newlands Services Inc. (1998), 58 B.C.L.R. (3d) 144, she concluded that “whether punitive damages are included in the judgment or not, there is no issue which merits a trial on that point” as “award of … punitive damages, cannot be considered to be contrary to the public policy of British Columbia”.

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