ONTARIO – Forum Non Conveniens -The Ontario Court had jurisdiction to hear a contract dispute on the basis that the Ontario Court has jurisdiction simpliciter over the subject-matter of the contract, even though the defendant did not have a substantial connection with Ontario. A BC forum selection clause in a related agreement was not binding on the plaintiff. The defendant failed to prove that Ontario was not the forum conveniens to hear the dispute.
Force One Marketing et al. v. Rritual Superfoods
2022 ONSC 2877 May 12, 2022
Superior Court of Justice (Justice S. Vella)
(Editor’s note: The name of the defendant is indeed Rritual. There is no typo.)
This case concerns a breach of a consulting services contract. Force One was engaged to find strategic partners for Rritual, a plant-based superfoods company, based in Vancouver, BC. Rritual had no office, plant, employees or operations in Ontario. It did not sell any products in Canada because it had not yet received the required licencing to do so. All of its revenues came from U.S. sources. Rritual’s only business activities in Ontario were marketing and looking for investors.
Force One sued for breach of contract in Ontario. This was a motion by Rritual to stay the Ontario action on the basis that Rritual was entitled to rely upon a forum selection in a stock option agreement between the parties and that BC, not Ontario, was the forum conveniens to litigate the dispute.
In a lengthy decision, Justice Vella held that the Ontario Court had jurisdiction simpliciter and ought to exercise its jurisdiction in this case. Further, the forum selection clause relied upon by Rritual was not enforceable as it was not binding on the plaintiff. [para. 6]
Vella J. addressed the following issues: [para. 7]
(a) Has Rritual voluntarily attorned to the jurisdiction of the Ontario courts? If not, then,
(b) Has Force One demonstrated a “good arguable case” that Ontario has jurisdiction simpliciter? If yes, then,
(c) Is the forum selection clause relied upon by Rritual applicable and enforceable? If yes, then has Force One demonstrated “good cause” not to enforce the forum selection clause?
(d) Has Rritual demonstrated that British Columbia is clearly the convenient forum?
The Court held that Rritual did not attorn to the jurisdiction of the Ontario Court. There was insufficient evidence that Rritual was engaging in the merits of the claim at a level to warrant a finding of attornment. (Specifically filling a Notice of Intent to Defend and a Notice to Request inspection of two documents, which were referred to in the pleadings, was not sufficient to warrant a finding of consent- based attornment. [paras. 28-34].
On the issue of whether Ontario had jurisdiction simpliciter, the Court relied on 2249659 Ontario Ltd. v. Sparkasse Siegen, 2013 ONCA 354, at para. 25, where the Court of Appeal held that where a defendant is relying on a forum selection clause in a contract to challenge jurisdiction, the court must nonetheless first engage in a jurisdiction simpliciter analysis. [paras. 35-36]
The onus to prove that the Ontario Court has jurisdiction simpliciter lies on the plaintiff, who must persuade the court that there is a real and substantial connection between the claims asserted and Ontario: Club Resorts Ltd. v. Van Breda, 2012 SCC 17, paras. 79, 86, and 90, where the SCC set out rebuttable presumptive connecting factors which prima facie establish this jurisdiction. [para. 37]
The Stock Option Agreement, which contained a BC forum selection clause, was referred to in the Statement of Claim and the plaintiff claimed remedies under that agreement. [para. 69-70].
After assessing the presumptive factors, Vella J. concluded that Rritual rebutted connection factors, such as the residence of Rritual in Ontario and whether it carried on business in Ontario. [para. 54] However, the plaintiff established that the consulting contract was formed in Ontario and was inextricably connected with Ontario. [para. 71]
However, Vella J. held that Rritual did not rebut this connecting factor because in its anticipated defence, Rritual made the Consulting Agreement central to the resolution of the dispute. Accordingly, the Court held that there was a real and substantial connection to Ontario. The importance of the Consulting Agreement in relation to Force One’s causes of action in relation to its alleged right to have exercised its notice to redeem the stock options is also highlighted by Force One in its own pleadings. [para. 72]
Vella J. then conducted a forum non conveniens analysis and a review of the forum selection clause in the Stock Option Agreement. [paras.82-95]
Relying on the SCC decision in Z.I. Pompey Industrie v. ECU‑Line N.V., 2003 SCC 27, para. 31, the ONCA’s decision in the Sparkasse case, supra. and Douez v. Facebook, Inc., 2017 SCC 33 Vella J. held that the analysis for determining whether a forum selection clause will be enforced attracts a distinct test from the forum non conveniens test. The first element of the test is whether the contract containing the forum selection clause is binding. [paras. 99-104]
Justice Vella then conducted a very detailed analysis of the Stock Option Plan Agreement and concluded that Rritual cannot rely on the forum selection clause in it for several reasons, including that the forum selection clause was not included in the Consulting Agreement and that the stock option plan was analogous to a standard form contract (as in Tilden-Rent-a-Car v. Clendenning, 1978 CanLII 1446 (ON CA). Rritual did not point out the forum selection clause to Force One and therefore, could not rely on it. [paras. 112-120]
The Court then analyzed the geographic factors of holding the trial in Toronto rather than in Vancouver. The court concluded that the geographic factors were neutral in light of the availability of a hybrid trial in which witnesses can testify remotely and documents can be transmitted electronically. [paras. 127-137]
The Consulting Agreement contained a clause that British Columbia law would govern the contract. The Court held that this was not a basis on which the Ontario court should decline jurisdiction as Ontario courts are well ably to apply BC statutes as may be necessary. [paras. 139-146]
In the result, the Court held that Rritual failed to demonstrate that BC was clearly the more convenient forum. Rritual’s motion to stay or dismiss the action was dismissed. [paras. 150-151]