COURT OF APPEAL FOR ONTARIO

CITATION: Prince v. ACE Aviation Holdings Inc., 2014 ONCA 285

DATE: 20140415

DOCKET: C57423

Doherty, Lauwers and Strathy JJ.A.

BETWEEN

Teri Prince and Matthew Walach

Plaintiffs

(Appellants/Respondents

by way of Cross-Appeal)

and

ACE Aviation Holdings Inc. and
Air Canada

Defendants

(Respondents/
Appellant

by
    way of Cross-Appeal
)

William Sasso, Peter Wardle and Jacqueline Horvat, for
    the appellants/ respondents by way of cross-appeal

David Byers and Genna Wood, for the respondents/appellant
    by way of cross-appeal

Heard: February 5, 2014

On appeal from the order of Justice Barbara A. Conway of
    the Superior Court of Justice, dated June 26, 2013, with reasons reported at
    2013 ONSC 2906.

Strathy J.A.:

[1]

This appeal and cross-appeal raise issues of jurisdiction and
forum

conveniens
in a proposed class action on behalf of U.S. and Canadian passengers
    who purchased tickets on Air Canada flights in Canada and between Canada and
    the U.S.

[2]

The plaintiff appellants (who, for convenience, I refer to as the
    appellants) are the proposed representative plaintiffs in the action. They allege
    that Air Canada has improperly collected transportation taxes levied under the United
    States

Internal Revenue Code
,
26 U.S.C. (the
Code
).
[1]

[3]

Their claims are really quite simple. They say that Air Canada is
    collecting U.S. taxes on ticket purchases in Canada and on air travel in
    Canada, thereby giving extra-territorial effect to U.S. tax laws. They also say
    that Air Canada is misapplying U.S. tax law by collecting taxes that are not lawfully
    exigible.

[4]

To advance these claims, the proposed class has been divided in four
    sub-classes. The sub-classes differ in terms of whether the passengers are
    resident in Canada or the U.S., whether the passengers paid for their tickets
    in Canada or in the U.S., and where the flights took off from and landed.

[5]

For the purposes of this appeal and cross-appeal, the most important
    distinction is the jurisdiction where the passengers purchased their tickets. It
    is alleged that three of the sub-classes paid for their tickets in Canada.
    These passengers make both claims described above. On behalf of the single
    sub-class of passengers who paid for their tickets in the U.S., the appellants
    claim only that Air Canadas practices gave extra-territorial effect to the
Code.

[6]

Air Canada moved for an order dismissing or permanently staying this
    action on the basis that the Ontario Superior Court of Justice does not have
    jurisdiction over the dispute, and on the basis of
forum non conveniens
.

[7]

The motion judge held the Superior Court of Justice had jurisdiction
    over the appellants claims for recovery of taxes on tickets paid for in Canada
    and that Ontario was the convenient forum in which to try those claims.
    However, she stayed the claims of the sub-class of passengers who paid for
    tickets in the U.S., on the ground of
forum non conveniens
.

[8]

The appellants appeal the stay granted by the motion judge with respect
    to tickets paid for in the U.S. Air Canada cross-appeals, asserting that all
    the claims should have been stayed.

[9]

For the reasons that follow, I would dismiss the appeal, allow the
    cross-appeal and vary the order below by staying these proceedings pending
    pursuit of the appellants remedies in the U.S.

A.

The

class
    action

[10]

This action was commenced in 2008, but remains uncertified. A fresh
    statement of claim, delivered in April 2013, resulted in the motion to dismiss
    or stay the proceeding.

[11]

In this section, I will describe the taxes at issue, the proposed class,
    the representative plaintiffs and the nature of the  claims made in the action.
[2]

(1)

The U.S. Taxes

[12]

The U.S. imposes excise taxes on air transportation. A passengers
    liability for tax varies, depending on the tax in question, the geographic
    scope of the transportation and the place of payment for the transportation.

[13]

Under s. 4261 of the
Code
, purchasers of tickets are required
    to pay:

(a) a Transportation Tax at the rate of 7.5% on the amount
    paid for transportation beginning in the U.S. or within 225 miles of the
    continental U.S. and ending in the U.S. or within 225 miles of the continental
    U.S. (s. 4261(a))
[3]
;

(b) a Domestic Flight Segment Tax in the amount of $3.00
    (indexed annually for inflation) on each segment of transportation (consisting
    of one takeoff and one landing), which begins and ends in the U.S. or within
    225 miles of the continental U.S. (s.4261(b)); and

(c) where the Transportation Tax is not applicable, an International
    Travel Facilities Tax of $12.00 (indexed annually for inflation) on any amount
    paid for transportation, if such transportation begins or ends in the U.S. (s.
    4261(c)).

[14]

If payment for the transportation is made
outside

the
    U.S., the Transportation Tax and the Domestic Flight Segment tax are
only
    payable
if the transportation
begins and ends

in the U.S.
    (s. 4261(e)(2)).

[15]

The International Travel Facilities Tax is payable whether payment is
    made inside or outside the U.S.

[16]

Air Canada, like other air carriers, acts as a withholding agent on
    behalf of the U.S. in collecting the taxes at the time of ticket purchase. It
    then files returns and remits the taxes to the IRS. If the taxes are not
    remitted, Air Canada is liable to the U.S. for any amounts that were or should
    have been collected.

[17]

Under U.S. law, a person who claims that any of these taxes have been
    improperly collected has no right of action against the withholding agent  in
    this case, Air Canada. A taxpayer must follow a statutory procedure to recover
    a tax alleged to have been unlawfully collected. A claim for a refund must be
    filed with the IRS (s. 7422(a)). If the claim is successful, the tax will be
    refunded. If the claim is denied, the taxpayer may file suit in a Federal
    District Court or in the U.S. Court of Federal Claims. The only proper
    defendant in such a suit is the U.S.: s. 7422(f)(1);
Kaucky v. Southwest
    Airlines Co.
, 109 F.3d 349 (7th Cir. 1997).

[18]

These procedural requirements are not unique to the U.S. Sales taxes and
    other transportation-related charges are typically imposed on the buyer, but as
    a practical matter, the carrier must collect them at the time the ticket is
    sold. It would be impractical to collect the taxes when passengers board or
    disembark the aircraft. Canadian law also requires intermediaries, such as
    airlines, to collect taxes and other charges from customers.  These Canadian laws
    also provide that the payer of the tax or charge has no private remedy against
    the intermediary: see, e.g.,
Excise Tax Act
, R.S.C. 1985, c. E-15, s.
    224.1;
Air Travellers Security Charge Act
, S.C. 2002, c. 9, s. 15.1.

(2)

The Proposed Class and the Representative Plaintiffs

[19]

The proposed class is defined as all persons who paid the U.S. Domestic Flight
    Segment Tax and the U.S. Transportation Tax to the defendants, directly or
    indirectly, on the purchase of airline tickets, and who fall within the
    following categories:

(a) Canadian residents who pay in Canada for flights that
    originate in Canada in the 225-Mile Zone and land in the U.S. or that originate
    in the U.S. and land in Canada in the 225-Mile Zone;

(b) U.S. residents who pay in Canada for flights that
    originate from and land exclusively (i.e., beginning and ending) within Canada
    in the 225-Mile Zone;

(c) U.S. residents who pay in Canada for flights that
    originate in Canada in the 225-Mile Zone and land in the U.S. or that originate
    in the U.S. and land in Canada in the 225-Mile Zone; and

(d) U.S. residents who pay for flights in the U.S. where the
    flights originate from and land exclusively (i.e., beginning and ending) within
    Canada.

[20]

Ms. Prince is a businessperson residing in the U.S. She travels
    regularly in the U.S. and Canada. She claims she was charged the Transportation
    Tax and the Domestic Flight Segment Tax when she purchased tickets on Air
    Canadas website for travel from Toronto to Saskatoon and from Toronto to
    Windsor. She was also charged these taxes when she purchased a ticket from
    Windsor to Montreal on Air Canadas website, which she accessed from her
    computer in her lawyers office in Windsor.

[21]

Mr. Walach is a salesperson, residing in Toronto. He says he purchased a
    ticket for a flight from Los Angeles to Calgary on Air Canadas website, and
    was charged what the statement of claim refers to as a USA Transportation
    Tax. Mr. Walach was actually charged the International Travel Facilities Tax
    and was not charged either the Transportation Tax or the Domestic Flight
    Segment Tax. He was also charged a U.S. Passenger Facility Charge imposed by
    the Los Angeles airport authority.
[4]

[22]

The proposed representative plaintiffs do not have the attributes of all
    members of the sub-classes. Indeed, there is some doubt whether Mr. Wallach falls
    within the class as presently defined as he was not charged either the
    Transportation Tax or the Domestic Flight Segment Tax. I will assume, as did
    the motion judge, that if this action is certified, the plaintiffs will be
    entitled to advance the claims of all the proposed sub-classes.

(3)

The Claims

[23]

As explained by the motion judge, the appellants complaints differ
    depending on whether a ticket was paid for in Canada or in the U.S. This
    distinction comes from the
Code
, which makes liability for taxes dependent
    on where the transportation is paid for.

[24]

In the case of tickets paid for in Canada, there are two complaints.
    First, that Air Canada collected U.S. taxes on tickets paid for in Canada,
    thereby giving unlawful extra-territorial effect to U.S. tax laws in Canada
    described by the motion judge as the Extra-Territorial Argument. Mr. Walach might
    make the same complaint in relation to the International Travel Facilities Tax
    he paid.

[25]

The second complaint is that Air Canada collected the Transportation Tax
    and the Domestic Flight Segment Tax on tickets paid for in Canada, on flights
    that do not
begin and end

in the U.S., contrary to s.
    4261(e)(2) of the
Code
.
This was described by the motion judge
    as the Improper Collection Argument.  Ms. Princes claims appear to fall into
    this category.

[26]

In the case of tickets paid for in the U.S., the appellants make only
    the Extra-Territorial Argument. They allege that Air Canada collected taxes in
    the U.S. on flights originating from and terminating exclusively in Canada in
    the 225-mile zone, thus giving extra-territorial effect to U.S. tax laws.

[27]

The appellants also claim that Air Canada negligently misrepresented
    that they were required to pay the taxes when they purchased their tickets,
    when those taxes were not properly payable.

[28]

In their submissions in this court, the appellants claimed that Air
    Canadas website deemed anyone who declared a U.S. residence at the time of
    purchase to have paid for the ticket in the U.S., and to be subject to the U.S.
    taxes, regardless of where that person was physically located when the purchase
    was made, and regardless of where the ticket was paid for. When Ms. Prince,
    sitting in her lawyers office in Windsor, bought tickets using her credit card
    on Air Canadas website, and declared herself to be resident in the U.S., she
    was charged the U.S. taxes as though she had paid for the tickets in the
    U.S., even though, in her view, she paid for them in Canada.

[29]

The merits of these claims and the suitability of this proceeding as a
    class action are not, of course, before us. I note, however, that the
    determination of where goods or services are paid for may not be quite as
    simple in the case of internet purchases as it is when a person buys a carton
    of milk at the corner grocery store. As Professor Michael Deturbide observes in
    his discussion of jurisdiction and the internet, [i]t is...difficult to
    localize online activities:
Electronic Commerce and Internet Law in Canada
,
    2nd ed. (Toronto: CCH, 2012), at p. 601.

[30]

Here, the situs of payment governs liability for the taxes, the division
    of class members into sub-classes and the identification of what claims have
    and have not been stayed by the motion judge. On the record before us, there is
    no clear answer to the question of where, in any given case, a class members
    ticket was paid for as a matter of fact and law. I am not sure that the
    answer is as simple as the appellants would have it  saying the ticket is
    paid for in the place where the purchaser is physically present when she
    clicks a button on her computer screen, authorizing the ticket to be charged to
    her credit card, which may have been issued in the U.S. by a U.S. bank. Is the
    ticket paid for in Canada when she is sitting in the Windsor law office, but
    paid for in the U.S. when she buys it using her computer to access the
    internet from her hotel in Detroit?

B.

the motion judgeS reasons

[31]

The motion judge found (at paras. 13 to 21) that the Superior Court had
    presence-based jurisdiction over Air Canada and there was a real and
    substantial connection between the claim and Ontario, permitting the court to
    assume jurisdiction. In support of these conclusions, she referred to
Club
    Resorts Ltd. v. Van Breda
, [2012] 1 S.C.R. 572, at paras. 79, 90. She
    found that the Revenue Rule, referred to in
United States of America v.
    Harden
, [1963] S.C.R. 366 (discussed below), was of no application,
    because the U.S. government was not seeking to collect taxes in Canada. The
    issue was simply whether Air Canada was entitled to collect the amounts at
    issue from its customers when they bought their tickets.

[32]

She then turned to the
forum non conveniens
argument (paras.
    22-35). By way of introduction, she noted, at para. 23, that Air Canada bore
    the burden on this issue:

The burden is on Air Canada to show why this court should
    decline to exercise jurisdiction. It must show that the alternative forum is
    clearly more appropriate:
Van Breda
, at paras. 101-112. The
    non-exhaustive list of factors that the court is to consider are set out in
Van
    Breda
, at para. 110.

[33]

The motion judge distinguished between tickets paid for in Canada and
    tickets paid for in the U.S. She found the claims relating to tickets paid for
    in Canada raised issues that were properly addressed by a Canadian court and
    that Ontario was the
forum conveniens
for these claims. She came to a
    different conclusion on tickets paid for in the U.S.

(1)

Tickets paid for in Canada

[34]

In the case of tickets paid for in Canada, the first issue was the
    Extra-Territorial Argument: by collecting taxes on tickets paid for in Canada,
    Air Canada was giving extra-territorial effect to U.S. tax laws in Canada. The
    motion judge found this was a matter for a Canadian court to decide.

[35]

The second issue, the Improper Collection Argument, was whether Air
    Canada had collected the Transportation Tax and the Domestic Flight Segment Tax
    on tickets paid for in Canada, contrary to s. 4261(e)(2) of the
Code
, where
    the flights did not both begin and end in the U.S. She found that a court would
    have to determine whether the amount was paid outside the United States and
    whether the transportation both begins and ends in the U.S. There was no
    reason why a Canadian court could not make these determinations, with expert
    evidence if necessary.

[36]

The motion judge noted that: Air Canada carries on business in Ontario;
    one of the plaintiffs is a Canadian resident; witnesses were located in both
    the U.S. and Canada; and the alleged ticket payments were made in Ontario. She concluded
    there are strong connections between the claim and Ontario.

[37]

Moreover, she noted that in the U.S, the plaintiffs would be required to
    apply for an administrative refund from the IRS before they could bring their
    claims in court. This was an additional procedural hurdle that favoured
    proceeding in Ontario.

[38]

The motion judge concluded, therefore, that Air Canada had not
    discharged the onus of establishing that Ontario was not a convenient forum for
    the determination of these claims.

[39]

I pause here to note that there is a degree of circularity to this
    conclusion  that a Canadian court can, for travellers who paid for their
    tickets in Canada, determine under U.S. law whether the ticket was paid for
    outside the U.S.

(2)

Tickets paid for in the U.S.

[40]

The motion judge came to a different conclusion, however, on the claims relating
    to tickets paid for in the U.S.

[41]

She noted that the appellants argued that Air Canada was giving
    extra-territorial effect to U.S. tax laws by collecting U.S. taxes on tickets
    for travel between destinations in Canada within 225 miles of the continental
    U.S.  She concluded at paras. 31-33 that to permit these claims to proceed in
    Canada would interfere with U.S. sovereignty:

In my view, a Canadian court should not be adjudicating any
    matters relating to the imposition and collection of taxes on transactions
    occurring within the U.S. To do so would constitute an interference with U.S.
    tax sovereignty.

The plaintiffs attempt to cast this as a Canadian domestic
    law issue because the ticket is for travel in Canada. They also argue that
    whether Air Canada has authority to collect these taxes in the United States is
    an issue of Canadian domestic law. They cite no authority for these
    propositions.

I reject these submissions. Regardless of how the plaintiffs
    frame their argument, they are in essence attempting to challenge a tax charged
    in the United States. If the taxpayer has an issue with respect to that tax, he
    should be required to follow the procedures available to him and seek recourse
    in that country. That is clearly the more appropriate forum in which to resolve
    any such issues.

[42]

The motion judge also rejected the appellants argument that requiring
    them and other members of the proposed class to pursue their claims in the U.S.
    would result in a multiplicity of proceedings. There was no unfairness in
    requiring the proposed class to address the claims in the jurisdiction in which
    those claims arose.

[43]

The motion judge accordingly stayed the claims with respect to tickets paid
    for in the U.S. The same circularity issue arises, in my view, in the
    assumption that one can readily identify which tickets were, as a matter of
    fact and law, paid for in the U.S.

C.

the submissions of the parties

[44]

The appellants central argument is that by collecting U.S. taxes in
    Canada from them and members of the proposed class, Air Canada is acting as an
    extra-territorial collection agent of a foreign state, resulting in an extension
    of U.S. sovereignty into Canada. They do not challenge the
Code
as
    domestic U.S. law. Nor do they dispute that the amounts at issue in this action
    have been collected by Air Canada and remitted to the IRS.

[45]

They say that all claims should proceed in Canada and the motion judge
    erred in determining that the claims relating to tickets paid for in the U.S.,
    for travel in Canada within the 225-mile zone, should be heard in the U.S.

[46]

In the cross-appeal, Air Canada says the entire action should be
    dismissed for want of jurisdiction or stayed on
forum non conveniens

grounds. It says that the appellants should make their complaint that the
    taxes were improperly levied against them in the jurisdiction that charged those
    taxes, according to its laws and procedures. It says the appellants are using a
    loophole: trying to sue Air Canada in Canada in order to circumvent its
    statutory immunity from suit in the U.S. and the mandatory procedures applicable
    to claims for recovery of U.S. taxes. Permitting this action to proceed in
    Canada would be unfair to Air Canada, because, to use the expression employed
    in
Kaucky v. Southwest Airlines Co.
, at p. 353, it would be whipsawed
     bound to collect the tax under U.S. law, but prohibited from charging it by
    Canadian law.

D.

analysis

(1)

Jurisdiction  the Revenue Rule

[47]

I begin with the threshold question of whether Ontario courts have
    jurisdiction over the appellants claims.

[48]

There is no doubt the Superior Court of Justice has presence-based
    jurisdiction over Air Canada. It was unnecessary to consider whether there was also
    a real and substantial connection, because that issue does not arise where
    the court can assume jurisdiction based on the defendants presence in the
    jurisdiction:
Incorporated Broadcasters Ltd. v. Canwest Global
    Communications Corp.
(2003), 63 O.R. (3d) 431 (C.A.), at paras. 29-30.

[49]

Air Canadas argument, however, is that the dispute concerns the
    interpretation of a U.S. revenue law and its application to U.S. and Canadian residents
    flying between the U.S. and Canada. This, it says, is a subject matter over
    which Ontario courts have no jurisdiction.

[50]

Air Canadas submission is based on the Revenue Rule in
Harden
.
    There, the U.S. sought to enforce in Canada a judgment for taxes obtained in
    the U.S. District Court. The Supreme Court of Canada affirmed the principle, at
    p. 369, that the courts of this country will not entertain a suit by a foreign
    State to recover a tax: referring to
Government of India v. Taylor
,
[1955] A.C. 491 (H.L.).

[51]

The Supreme Court described this ancient rule as having two rationales.
    One was that it would be contrary to all concepts of independent sovereignties
    for one state to pursue a claim for taxes in the jurisdiction of another
    sovereign state, because in so doing it would purport to extend its sovereign
    authority in the territory of the other state (at p. 370).  The second reason was
    given by Learned Hand J. in
Moore v. Mitchell
, 30 F.2d 600, 604 (2d
    Cir. 1929), affd on other grounds 281 U.S. 18 (1930), and referred to in
Harden
,
    as a reluctance of the courts to adjudicate on provisions for the public order
    of another state:

While the origin of the exception in the case of penal
    liabilities does not appear in the books, a sound basis for it exists, in my
    judgment, which includes liabilities for taxes as well. Even in the case of
    ordinary municipal liabilities, a court will not recognize those arising in a
    foreign State, if they run counter to the "settled public policy" of its
    own. Thus a scrutiny of the liability is necessarily always in reserve, and the
    possibility that it will be found not to accord with the policy of the domestic
    State. This is not a troublesome or delicate inquiry when the question arises
    between private persons, but it takes on quite another face when it concerns
    the relations between the foreign State and its own citizens or even those who
    may be temporarily within its borders. To pass upon the provisions for the
    public order of another State is, or at any rate should be, beyond the powers
    of the court; it involves the relations between the States themselves, with
    which courts are incompetent to deal, and which are intrusted to other
    authorities. It may commit the domestic State to a position which would
    seriously embarrass its neighbour. Revenue laws fall within the same reasoning;
    they affect a State in matters as vital to its existence as its criminal laws.
    No court ought to undertake an inquiry which it cannot prosecute without
    determining whether those laws are consonant with its own notions of what is
    proper.

[52]

In commenting on
Moore v. Mitchell
in
Castel & Walker: Canadian Conflict of Laws
,
    6
th
ed., looseleaf (Markham, Ont.: LexisNexis, 2005), Professor Janet
    Walker states at §8.4:

In
Moore v. Mitchell
, the United States Circuit
    Court took the requirement of disregarding laws relating to the policies of
    foreign sovereigns to its logical conclusion: if the viability of a claim
    depends upon a determination entailing inquiry into the policies of a foreign sovereign,
    the claim must fail. Thus, taxes levied in a deceaseds former residence would
    not be recoverable in estate proceedings in another jurisdiction. If the basis
    of the right sought to be vindicated consisted solely in the taxation laws of
    another jurisdiction, it would be impossible to determine its validity without
    engaging in an assessment of the policy of a foreign sovereign and this was
    something the court was not equipped to do. [Footnote omitted.]

[53]

The author adds that under the Revenue Rule, the courts will determine
    only the rights and obligations of the parties
inter se
that are not
    purely derivative of the sovereign authority of a foreign state: §8.4.

[54]

The appellants Extra-Territorial Argument is that Air Canadas
    administrative practices gave extra-territorial reach to U.S. revenue laws. Their
    Improper Collection argument is that Air Canada misapplied those laws. In my
    view, just as an Ontario court will not assist the direct or indirect enforcement
    of foreign revenue laws in Canada, so it has jurisdiction to restrain the application
    of foreign laws in its territory by a foreign state or its agent. I am therefore
    prepared to assume that an Ontario court has jurisdiction to determine whether
    a foreign law is being enforced extra-territorially and to grant appropriate
    relief. This is consistent with
Harden
. I am also prepared to assume
    that an Ontario court can interpret a foreign law and grant relief against its
    misapplication.

[55]

As I will explain, however, in this case an Ontario court should not inquire
    into the merits of the appellants claims regarding the foreign revenue law unless
    and until the appellants have submitted their claim to the taxing authority in
    the state that collected the taxes at issue, and have exhausted their remedies
    in the courts charged with the interpretation and enforcement of  that revenue
    law.

(2)

Forum Non Conveniens

[56]

The courts jurisdiction to stay a proceeding on the ground of
forum
    non conveniens

is part of its broader jurisdiction, under s. 106 of
    the
Courts of Justice Act
, R.S.O. 1990, c. C.43, to stay a proceeding
    on such terms as are considered just.

[57]

The determination of
forum conveniens

is a matter of
    discretion. The motion judges decision is entitled to deference in the absence
    of an error in law or principle, or a clear and serious factual error:
2249659
    Ontario Ltd. v. Sparkasse Siegen
, 2013 ONCA 354, 306 O.A.C. 288, at para.
    49, referring to
Van Breda

at para. 112.

[58]

In my view, the motion judge correctly stayed some of the claims in this
    action on the ground of
forum non conveniens
. Respectfully, however,
    she should have stayed all the claims.

[59]

The motion judges analysis of
forum conveniens

was incomplete.
    She properly put the onus on the moving party to show that the alternative
    forum was more appropriate and she considered the non-exhaustive list of
    factors set out in
Van Breda

at para. 110. However, she did not
    consider the underlying requirement that the moving party demonstrate that
    fairness to the parties and the efficient resolution of [the] claims makes
    the other forum clearly more appropriate:
Sparkasse

at paras.
    53, 59;
Van Breda

at para. 104.

[60]

Moreover, while the motion judge considered the issue of U.S.
    sovereignty in her analysis of the claim concerning tickets paid for in the
    U.S., she did not consider either that issue, or the related issue of comity,
    in considering the claim for tickets paid for in Canada.

[61]

In my view, the failure to consider these factors was an error of law
    which permits this court to make its own determination of the issue.

[62]

A procedure exists in the U.S. for the recovery of taxes paid under an
    error of law. The motion judge, at para. 27 of her reasons, regarded this as an
    additional procedural step that worked to the appellants disadvantage. In essence,
    she found that applying to the IRS for a refund would be a juridical
    disadvantage to them.

[63]

In my view, this does not give sufficient weight to the principle of comity,
    which underlies the
forum non conveniens

analysis. The
    principle has been expressed in different ways. In
Tolofson v. Jensen
,
[1994] 3 S.C.R. 1022, it was described, at p. 1047, as respect for the
    right of a foreign state to make and apply laws within its territorial limits. In
Van Breda
, at para. 74, it was said to be a flexible concept which
cannot be understood as a set of
    well-defined rules, but rather as an attitude of respect for and deference to
    other states.

[64]

Moreover, the concept of
    juridical advantage or disadvantage, relied upon by the motion judge, should be
    applied with some caution, having regard to the principle of comity and an
    attitude of respect for the courts and legal systems of other countries, many
    of which have the same basic values as us:
Van Breda
,

at para. 112. See also
Breeden v. Black
, [2012] 1 S.C.R. 666, at paras. 26-27:

[A]n emphasis on juridical advantage may be inconsistent with
    the principles of comity. In particular, a focus on juridical advantage may put
    too strong an emphasis on issues that may reflect only differences in legal
    tradition which are deserving of respect, or courts may be drawn too
    instinctively to view disadvantage as a sign of inferiority and favour their
    home jurisdiction.

[65]

In
Canadian Conflict of Laws
, Professor Walker summarizes the
    principle at p. 13-22:

Where the parties are equally capable of litigating in either
    forum, advantages to one party are disadvantages to the other and
vice
    versa
... As a result, personal or juridical advantages should be
    considered along with the other factors in determining whether to grant a stay.

[66]

The administrative process to recover an overpayment of tax from the IRS
    should not be characterized as a juridical disadvantage; comity requires that
    we view it in its context, as part of a complete system for the effective
    administration of taxes in the U.S. This is not, for example, a situation where
    the claims are simply unknown under U.S. law: see e.g.
Grammercy Ltd. v.
    Dynamic Tire Corp.
(2004), 69 O.R. (3d) 210 (S.C.)

[67]

Nor does the motion judges analysis give sufficient weight to the
    significant juridical advantage to Air Canada of proceeding in the U.S.  its
    statutory immunity from suit: see
Ontario Association of Architects v.
    Deskin
, [2000] O.J. No. 1589 (S.C.). The comparable provisions in the
Excise
    Tax Act

and the
Air Travellers Security Charge Act
demonstrate that Canada accepts such immunity as part of its own tax structure
    and as a reasonable protection for intermediaries collecting government taxes
    and charges.

[68]

The appellants claims raise issues about the taxes imposed by a foreign
    state, the methods used to collect those taxes, the immunity conferred on those
    who collect the taxes, and the procedures established for the recovery of taxes
    and for the interpretation of the taxing statute. As
Harden

tells
    us, at p. 371, these are matters that affect the foreign state in a manner
    vital to its existence. Insofar as the analysis touches on the relations
    between the foreign State and its own citizens or even those who may be
    temporarily within its borders it becomes a troublesome [and] delicate
    inquiry.

[69]

It is troublesome and delicate because, as a general rule of public
    international law, each state has jurisdiction to make and apply law within its
    territorial limit:
Tolofson
,
at p. 1047.

[70]

As
Tolofson

tells us, [a]bsent a breach of some
    overriding norm, other states as a matter of comity will ordinarily respect
    such actions and are hesitant to interfere with what another state chooses to
    do within those limits (p. 1047).  The principle of comity calls for an
    attitude of respect for and deference to other states:
Van Breda
,

at para. 74.

[71]

In this case, where the intrusion on Canadian sovereignty is not
    self-evident, we should operate from a presumption that a foreign state does
    not intend to infringe upon Canadian sovereignty by attempting to regulate
    persons or conduct within our territory. Before we engage in the interpretation
    of foreign revenue law which is said to have that effect, we ought to require
    the party alleging infringement to raise the issue in the appropriate forum in
    the foreign state. This achieves the goals of order, fairness, efficiency and
    comity, which are the bedrock of the
forum non conveniens

analysis.

[72]

As a matter of comity, the interpretation of this U.S. statute,
    including its intended scope, should be undertaken by agencies and courts in
    the U.S. I would therefore stay this proceeding pending pursuit of the
    appellants remedies in the United States. They should be required to apply to
    the IRS for a refund of the taxes in question. This will require the IRS to
    determine whether, in the factual circumstances of these cases, Air Canada
    over-reached the intended scope of the
Code
.
If the answer is
    yes, the appellants may recover the taxes and there may be means to ensure
    that other class members obtain redress, either in the U.S. or by moving to
    lift the stay in this action.

[73]

If the answer is no, they will have the right to challenge the IRS decision
    in the U.S. Federal Court or the U.S. Court of Federal Claims, which are, and
    should be, the arbiters of U.S. law. Again, if one of those courts determines they
    are entitled to recover some or all of the taxes, they will have their
    remedies.

[74]

If the U.S. court affirms the decision of the IRS that some or all of
    the taxes are payable, the Ontario court will have the benefit of those
    determinations, and the reasons for them, should it be called upon to decide
    whether the collection of the taxes is a violation of the principles governing
    the conduct of sovereign states and an extra-territorial application of U.S.
    law in Canada.

[75]

The negligent misrepresentation claim should be stayed on the same
    terms. The appellants claim they paid taxes they did not have to pay because Air
    Canada falsely misrepresented the taxes were payable as a condition of air
    carriage. If the taxes were properly payable, the misrepresentation claim will
    fail. The appellants liability for taxes should be determined before the
    misrepresentation claim proceeds.

E.

disposition

[76]

For the foregoing reasons, I would dismiss the appeal, allow the
    cross-appeal, and vary the order of the motion judge by staying this proceeding
    pending pursuit of the appellants remedies in the U.S. Costs of the appeal and
    of the motion are granted to the respondent in the agreed amount of $50,000,
    inclusive of disbursements and all applicable taxes.

Released: April 15, 2014 (DD)

G.R.
    Strathy J.A.

I
    agree Doherty J.A.

I
    agree P. Lauwers J.A.

[1]
The claim against ACE Aviation Holdings Inc., alleged to be Air Canadas
    parent, is being discontinued.

[2]
Because the motion was brought under Rule 21.01(3)(a) of the
Rules of Civil
    Procedure
, R.R.O. 1990, Reg. 194, the parties were entitled to adduce
    evidence on the motion. Air Canada adduced evidence of U.S. taxation law.

[3]
The reason for the 225-mile rule is unclear. It appears to have been in
    effect since 1956.

[4]
The
Code
permits an agency operating a public airport to charge a
    Passenger Facility Fee to each passenger boarding an aircraft under its
    authority. The fee is collected by the air carrier when it sells the ticket.


COURT OF APPEAL FOR ONTARIO

CITATION: Punit v. Punit, 2014
    ONCA 252

DATE: 20140402

DOCKET: C57327

Juriansz, Pepall and van Rensburg JJ.A.

(sitting as Divisional Court)

BETWEEN

Hemwattie Sandy Punit

Applicant (Appellant in Appeal)

and

Raj Komar Punit

Respondent (Respondent in Appeal)

Steven Bookman and Chris Stankiewicz, for the appellant

Peter Cozzi, for the respondent

Heard: March 7, 2014

On appeal from the order of Justice
Kevin
    W. Whitaker
of the Superior Court of Justice, dated June 18, 2013.

Juriansz J.A.:

A.

Introduction

[1]

The appellant has filed an appeal to the Court of Appeal from an order
    for the sale of the parties matrimonial home pursuant to s. 2 of the
Partition
    Act
, R.S.O. 1990, c. P.4. The order was made on an interlocutory motion in
    a matrimonial proceeding. The appeal raises the question of whether the motions
    judge erred in ordering the sale of the matrimonial home before trial without
    considering whether the sale would prejudice the appellants rights under the
Family
    Law Act
, R.S.O. 1990, c. F.3. However, given that s. 7 of the
Partition
    Act
provides that an appeal lies to the Divisional Court from any order
    made under the
Partition Act
, the Court of Appeals jurisdiction was
    the first issue at the hearing of this appeal. As explained below, the panel
    determined that the Court of Appeal did not have jurisdiction, and in the
    exceptional circumstances of this case it is appropriate to decide the appeal
    sitting as a panel of the Divisional Court, with the designation of the Chief
    Justice of the Superior Court of Justice.

[2]

The appellant commenced a family law proceeding against the respondent
    in December 2011. She claimed, among other things, interim and permanent
    exclusive possession of the matrimonial home, an unequal division of net family
    property, and ongoing and retroactive child and spousal support.

[3]

On December 29, 2011, Czutrin J. made a temporary order granting the
    appellant and the child exclusive possession of the matrimonial home.

[4]

By motion heard on June 18, 2013, the respondent sought an order for the
    sale of the matrimonial home. By cross-motion, the appellant sought an order
    permitting her to purchase the respondents interest in the home, and in the
    alternative, an order that his motion for the sale be adjourned to the trial of
    this matter.

[5]

At the outset of the motion, the motions judge granted the respondent
    leave to amend his Answer to plead the
Partition Act
. His entire reasons
    for granting the sale order are as follows:

The Applicant Mother seeks an Order permitting her to purchase
    the home and opposes the motion to sell under the
Partition Act
. The
    Father is in need of funds [
sic
] his assets are frozen and his only
    equity is in the house. There is no reason to find or conclude here that the
    father is acting maliciously or in circumstances of oppression or with
    vexatious intent. Accordingly, the matrimonial home is to be sold pursuant to
    section 2 of the
Partition Act
.

[6]

He addressed certain interim matters but ordered that all other issues
    were to be left to trial.

[7]

On August 23, 2013, the appellant obtained an order from the Court of
    Appeal staying the sale order pending appeal. Although the respondent raised
    the issue of jurisdiction on the motion to stay, Blair J.A. declined to make a
    final determination on jurisdiction given that the Court of Appeal had
    previously heard appeals from orders under the
Partition Act
, in spite
    of s. 7, in cases where the primary proceedings fell under the
Family Law
    Act.

B.

Jurisdiction

[8]

The respondent takes the position that the Court of Appeal lacks
    jurisdiction to entertain the appeal. Section 7 of the
Partition Act
provides that An appeal lies to the Divisional Court from any order made under
    this Act.

[9]

In response to the obvious jurisdictional problem, the appellant pointed
    to other cases where the Court of Appeal has heard an appeal from a final order
    of the Superior Court of Justice for the sale of a matrimonial home.

[10]

However,
    none of the cases cited provides authority for the Court of Appeal to assume
    jurisdiction in this appeal.

[11]

In
    several of the cases relied on by the appellant, the appeal from one or more
    parts of the order lay to the Court of Appeal, while the appeal from another
    part of the order lay to the Divisional Court. In these cases, the Court of
    Appeal had jurisdiction pursuant to s. 6(2) of the
Courts of Justice Act
,
    R.S.O. 1990, c. C.43. Section 6(2) provides that the Court of Appeal has
    jurisdiction to hear and determine an appeal that lies to the Divisional Court
    or the Superior Court of Justice if an appeal in the same proceeding lies to
    and is taken to the Court of Appeal. See
Buttar v. Buttar
, 2013 ONCA
    517 and
Slaughter v. Slaughter
, 2013 ONCA 432. See also
Barker v.
    Barker
, 2011 ONCA 447, where the application judge dismissed an
    application for partition and sale of a matrimonial home under the
Partition
    Act
, but ordered the husband to transfer his 50 percent interest in the
    property to the wife on specified terms. In the present case, the only matter
    under appeal is the order for sale under the
Partition Act
.

[12]

At
    least one of the other cases cited was first appealed to the Divisional Court,
    and then to the Court of Appeal: See
Martin v. Martin
(1992), 8 O.R.
    (3d) 41 (C.A.)

[13]

In
    the remaining cases, the court did not address its jurisdiction in light of s.
    7 and the question seems not to have been raised. Three of these,
Ames v.
    Bond
(1992), 39 R.F.L. (3d) 375 (Ont. C.A.);
Laurignano v. Laurignano
,
    2009 ONCA 241; and
Binkley v. Binkley
(1988), 14 R.F.L. (3d) 336 (Ont.
    C.A.) are brief oral endorsements. In
Laurignano
and
Binkley
there is so little detail, it is even unclear whether the motions judges had
    made the original orders for sale under the
Partition Act
. In
Silva
    v. Silva
(1990), 1 O.R. (3d) 436 (C.A.), the court did entertain an appeal
    from an order under the
Partition Act
but the issue of the courts
    jurisdiction seems not to have been raised and the court did not address it.

[14]

The
    issue of jurisdiction has been raised in this case and the parties made
    extensive submissions regarding it.

[15]

Counsel
    for the appellant could point to no case in which the Court of Appeal has
    concluded an order made under the
Partition Act
may be appealed
    directly to the Court of Appeal.

[16]

In
    the alternative, counsel for the appellant submits the motions judge acted
    without jurisdiction in making the order in this case and an appeal lies to the
    Court of Appeal to correct his jurisdictional error. He points out that, in
Silva,
the Court of Appeal stated that an application under the
Partition Act
should not proceed where it can be shown that it would prejudice the rights of
    either spouse under the
Family Law Act
. He submits that the reasons of
    the motions judge show he gave no consideration to the outstanding matrimonial
    issues and whether the appellants rights would be prejudiced by an order for
    sale. Hence, he submits, the motions judge had no jurisdiction to make the
    order that he did. An appeal lies to the Court of Appeal, he submits, to correct
    a judge of the Superior Court who has acted without jurisdiction.

[17]

We
    do not accept this argument. The Court of Appeal made clear in
Silva
that
    the
Family Law Act
does not oust the courts jurisdiction under the
Partition
    Act
. In fact, in
Silva
, the court upheld a pre-trial order for
    partition and sale under the
Partition Act
. The motions judge did not
    act without jurisdiction.

[18]

The
    sale order expressly states that it is pursuant to the
Partition Act
. This
    is the only provision of the order from which the appellant appeals. We
    conclude that an appeal from the order of the motions judge lies to the
    Divisional Court pursuant to s. 7 of the
Partition Act
. This appeal
    was brought to the wrong court. Ordinarily, we would order it transferred to
    the Divisional Court under s. 110 (1) of the
Courts of Justice Act
.
    However, the exceptional circumstance in this case is that the trial of the
    matrimonial proceeding is scheduled for April 21, 2014. In these special
    circumstances, the Chief Justice of the Superior Court of Justice has agreed to
    designate us as a panel of the Divisional Court to hear and determine this
    appeal.

C.

The merits

[19]

The
    appellant submits that the motions judge erred in law by ordering the sale of
    the matrimonial home before trial without considering how such an order would
    prejudice the appellants family law claims. In effect, the appellant submits
    that the motions judge applied the ordinary civil standard for the partition
    and sale of jointly held property rather than the family law standard for the
    sale of a matrimonial home before trial. If the motions judge did consider the
    family law issues, the appellant submits that the reasons of the motions judge
    are inadequate to permit appellate review. Finally, the appellant submits the
    motions judge committed overriding and palpable errors by misapprehending the
    evidentiary record and by accepting the respondents claim that he was in need
    of immediate funds.

[20]

The
    respondent accepts that before making a pre-trial order for the sale of a
    matrimonial home under the
Partition Act
in a family law proceeding,
    the court should consider whether or not granting the order would cause undue
    prejudice to either partys reasonably claimed substantive rights. While the
    motions judges reasons are brief, a judge is presumed to know the law and the
    judge should be presumed to have applied this principle. The respondent submits
    it is obvious that the motions judge resolved the factual issues in favour of
    the respondent. The motions judge had before him affidavits, factums and
    financial statements of the parties. His comment that the respondent was in
    need of funds shows that he rejected the appellants position that he had
    income and equity in commercial property he could draw upon. According to the
    respondent, the record before the motions judge established that the appellant
    was not working and could not maintain the home, which was in need of repairs.
    Only one teenage child would be disrupted by the sale. The respondent submitted
    that the motions judge must have been persuaded that the likely outcome at
    trial would be that the appellant would not be able to purchase the
    respondents share of the home.

D.

Analysis

[21]

The
    motions judge did not explicitly address the likelihood that the sale would
    prejudice the rights of the appellant under the
Family Law Act
nor did
    he indicate how he resolved the parties' conflicting positions as to whether
    the respondent had made proper financial disclosure.

[22]

From
    a practical perspective, the trial in these proceedings is scheduled to begin
    on April 21, 2014. Since the motion was heard, the respondent has been able to
    live without any funds from the sale of the home. The appellant has been able
    to live in the home and the ongoing expenses associated with the home have been
    met. Even if the order for partition and sale were upheld by this court, it is
    unlikely the house would be sold before trial. If the house were sold, rule
    66.03 of the
Rules of Civil Procedure
, R.R.O. 1990, Reg. 194 would require
    that the monies be paid into court. The respondent would not be able to receive
    any funds before trial.

[23]

For
    these reasons, I would allow the appeal, set aside the sale order, and allow
    this and any other remaining issues between the parties to proceed to trial. The
    respondent has been successful on the question of jurisdiction and the
    appellant on the merits. I would fix the costs of the appeal in favour of the
    appellant in the amount of $7,500.00.

Released: April 2, 2014

(RGJ)
    R.G. Juriansz J.A.

I agree S.E. Pepall J.A.

I agree K. van Rensburg J.A.


WARNING

The President of the panel hearing this appeal directs
    that the following should be attached to the file:

An order restricting publication in this proceeding
    under ss. 486.4(1), (2), (3) or (4) or 486.6(1) or (2) of the
Criminal Code
shall continue.  These sections of
the Criminal Code
provide:

486.4     (1)
Subject to subsection (2), the presiding judge
    or justice may make an order directing that any information that could identify
    the complainant or a witness shall not be published in any document or
    broadcast or transmitted in any way, in proceedings in respect of

(a)     any of the following offences;

(i)   an offence under section 151, 152,
    153, 153.1, 155, 159, 160, 162, 163.1, 170, 171, 172, 172.1, 173, 210, 211,
    212, 213, 271, 272, 273, 279.01, 279.02, 279.03, 346 or 347,

(ii)  an offence under section 144
    (rape), 145 (attempt to commit rape), 149 (indecent assault on female), 156
    (indecent assault on male) or 245 (common assault) or subsection 246(1)
    (assault with intent) of the
Criminal Code
, chapter C-34 of the Revised
    Statutes of Canada, 1970, as it read immediately before January 4, 1983, or

(iii) an offence under subsection 146(1)
    (sexual intercourse with a female under 14) or (2) (sexual intercourse with a
    female between 14 and 16) or section 151 (seduction of a female between 16 and
    18), 153 (sexual intercourse with step-daughter), 155 (buggery or bestiality),
    157 (gross indecency), 166 (parent or guardian procuring defilement) or 167
    (householder permitting defilement) of the
Criminal Code
, chapter C-34
    of the Revised Statutes of Canada, 1970, as it read immediately before January
    1, 1988; or

(b)     two or more offences
    being dealt with in the same proceeding, at least one of which is an offence
    referred to in any of subparagraphs (a)(i) to (iii).

(2)
In proceedings in respect of the offences referred
    to in paragraph (1)(a) or (b), the presiding judge or justice shall

(a)  at the first reasonable
    opportunity, inform any witness under the age of eighteen years and the
    complainant of the right to make an application for the order; and

(b)  on application made by the
    complainant, the prosecutor or any such witness, make the order.

(3)
In proceedings in respect of an offence under
    section 163.1, a judge or justice shall make an order directing that any
    information that could identify a witness who is under the age of eighteen
    years, or any person who is the subject of a representation, written material
    or a recording that constitutes child pornography within the meaning of that
    section, shall not be published in any document or broadcast or transmitted in
    any way.

(4)
An order made under this section does not apply in respect
    of the disclosure of information in the course of the administration of justice
    when it is not the purpose of the disclosure to make the information known in
    the community. 2005, c. 32, s. 15; 2005, c. 43, s. 8(3)(b).

486.6     (1)
Every person who fails to comply with an order
    made under subsection 486.4(1), (2) or (3) or 486.5(1) or (2) is guilty of an
    offence punishable on summary conviction.

(2)
For greater certainty, an order referred to in
    subsection (1) applies to prohibit, in relation to proceedings taken against
    any person who fails to comply with the order, the publication in any document
    or the broadcasting or transmission in any way of information that could
    identify a victim, witness or justice system participant whose identity is
    protected by the order. 2005, c. 32, s. 15.

COURT OF APPEAL FOR ONTARIO

CITATION: R. v. A.J.L., 2014 ONCA 313

DATE: 20140422

DOCKET: C56158

Laskin, Watt and Hourigan JJ.A.

BETWEEN

Her Majesty the Queen

Respondent

and

A.J.L.

Appellant

Jill Makepeace, for the appellant

Joanne Stuart, for the respondent

Heard and released orally: April 14, 2014

On appeal from the conviction entered on June 8, 2012 by
    Justice
Paul U.
Rivard of the Superior
    Court of Justice, sitting without a jury.

ENDORSEMENT

[1]

The appellant appeals his convictions for sexual assault and related
    offences.  His principal ground of appeal is that the trial judge failed to
    scrutinize the complainants evidence with the same degree of rigour as he did
    the appellants evidence.  In advancing this ground, the appellant also argues
    that the trial judge misapprehended certain evidence and failed to give
    adequate reasons. Ms. Makepeace, in her thorough submissions, gave several
    examples of what she maintained show the trial judges uneven scrutiny of the
    evidence.

[2]

We do not accept the appellants argument.  As Ms. Makepeace fairly
    acknowledges, this is a difficult argument to make on appeal.  And as she also
    fairly acknowledges, the trial judge did not unfairly reject the appellants
    evidence.  Certain aspects of his evidence were indeed problematic.

[3]

The only remaining question was whether the complainants evidence was
    sufficiently credible and reliable to prove the Crowns case beyond a
    reasonable doubt.  The trial judge did not refer to every piece of evidence
    pointed to by the appellant, nor was he required to do so.  For example, the
    evidence of the complainants motive to fabricate was so weak  and was only
    briefly referred to by defence counsel  the trial judge could be excused for
    not dealing with it.

[4]

As is evident from the trial judges reasons, he found the complainant
    to be credible.  The main attack on her credibility at trial was her
    incremental disclosure.  The trial judge addressed her disclosure in his
    reasons and accepted her explanation as he was entitled to do.  His reasons
    could have explained other aspects of the complainants evidence.  However, we
    are satisfied that his reasons were adequate to permit meaningful appellate review.
    We see no error justifying our intervention.

[5]

Accordingly the appeal is dismissed.

John Laskin J.A.

David Watt J.A.

C.W. Hourigan J.A.