Ontario Court of Appeal Reiterates that Ontario Contract Provides Basis for Jurisdiction, Even Where Defendant Not Necessarily a Counterparty

23 July 2018

By Cynthia Spry

In Di Gregorio v. Sunwing Vacations Inc., the Ontario Court of Appeal dealt with the jurisdiction of Ontario courts to hear claims for breach of contract even where the existence of the contract is itself disputed.

Background: In 2010, the appellants (plaintiffs) purchased a vacation package to attend the Dreams Punta Cana Resort and Spa. While at the resort, the appellants’ hotel balcony allegedly collapsed, injuring two of them. The appellants had purchased their vacation package from Sunwing Vacations Inc. (“Sunwing”), who had a contact with Perfect Tours NV (“Perfect Tours”) with respect to bookings at the Dreams resort, who itself was a party to a hotel management agreement between the respondents (defendants), AMR Resort Management LLC (“AMR”) and AM Resorts, LLC (“AM”).

The appellants commenced four actions in Ontario. AMR and AM moved to dismiss the actions against them, alleging that the Ontario courts did not have jurisdiction and were not a convenient forum. Alternatively, if the Ontario courts did have jurisdiction, the laws of the Dominican Republic applied to bar the claims in tort, as these claims were commenced more than six months after the alleged incident occurred.

The motion judge found that the limitation issue, as a “threshold issue”, was determinative. Her Honour held that the actions could only be brought in tort, as there was no contract between the plaintiffs and AMR and AM, the laws of the Dominican Republic applied, and the actions were therefore statute-barred.

The Court of Appeal Disagreed: It held that the motion judge should have considered the jurisdictional issue first. The failure to do so was an error of law. If her Honour had properly considered jurisdiction, she would have found that the Ontario courts did have jurisdiction over AM, because it had attorned by filing a defence. The Ontario courts also had jurisdiction over AMR, because the claims included an alleged breach of an Ontario contract.

In Club Resorts Ltd. v. Van Breda, the Supreme Court held that in a case concerning a tort, there are four presumptive connecting factors that, prima facie, entitle a court to assume jurisdiction over a dispute: the defendant is domiciled or resident in the province; the defendant carries on business in the province; the tort was committed in the province; and a contract connected with the dispute was made in the province.

In this case, the Court of Appeal held that “all that is required for jurisdictional purposes is that a defendant’s conduct brings it within the scope of the contractual relationship and the events that give rise to the claim flow from the contractual relationship”.

In so finding, the Court relied upon the decision of the Supreme Court of Canada in Lapointe Rosenstein Marchand Melançon LLP v. Cassels Brock & Blackwell LLP. In that case, the Court held that:

all that is required for a Canadian court to assume jurisdiction is a connection between the claim and a contract that was made in the province where jurisdiction is sought to be assumed. A “connection” does not necessarily require that an alleged tortfeasor be a  party to the contract.

Accordingly, although there was a dispute as to whether there was a contract between the appellants and the respondents, the presumptive factor still applied.

The Court also found that the motion judge erred because, although there was no dispute that the laws of the Dominican Republic applied, and that the claims would therefore be subject to a six-month limitation period in tort, and a two-year limitation period in contract, there was no identified basis on which her Honour was entitled to determine the limitation period issue. The parties advised that they had argued summary judgment; however, there was no reference to Rule 20 in the notice of motion or in the reasons, the test for summary judgment was not referred to in the reasons, and there was no analysis of whether it had been met.

There was also little analysis of whether there was a claim in contract. The Court noted that the analysis that did exist was flawed because, among other things, the Court ignored the appellants’ key argument: that the respondents had a contract via agency or as an implied contract (since the appellants had a contract with Sunwing, who had a contract with Perfect Tours, who had a contract with the respondents). The contract with Sunwing also, on its face, suggested a contract between the appellants and the respondents.

The Court found that the reasons were inadequate, set aside the orders of the motion judge, and indicated that the claims should proceed to trial or a summary judgment motion, as the parties saw fit.

The Takeaway: This decision highlights the breadth of the fourth presumptive factor that, prima facie, entitles a Canadian court to assume jurisdiction over a dispute involving a tort. It also highlights the importance of a thoughtful, creative legal argument.

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