BACKGROUND

During Spring Break, 2006, Mrs. Haufler and her minor daughter travelled from Canada  to Mexico for an all-inclusive vacation. A family friend purchased the vacation from a  Canadian travel agency, and while in Mexico they stayed at the Hotel Riu Palace Cabo  San Lucas (the “Hotel”). While on vacation, the family went on an all-terrain vehicle (ATV)  excursion with an independent tour operator. During the ATV excursion, the minor child  was injured. As a result of those injuries, the Haufler family commenced an action in  Ontario against Mexican tour operator and the foreign Hotel.

The tour operator never responded to the  action. The foreign Hotel was successful in  staying the Ontario action against it on  the basis that the Ontario court did not  have jurisdiction over the dispute.

In writing for the Ontario Superior Court of  Justice, Mr. Justice J. Quigley utilized the  Supreme Court of Canada’s decision of Club  Resorts Limited v. Van Breda, 2012 SCC 17  (“Van Breda”).

JURISDICTION & FORUM MOTION BY A  FOREIGN DEFENDANT

After being served with a Statement of Claim,  the Hotel immediately moved for an order  staying the action against it on the basis that  the Ontario Court had no jurisdiction over it,  and in the alternative, if jurisdiction is found, that the Court should decline exercising  jurisdiction based on forum non conveniens.

The Supreme Court of Canada in Van Breda recently articulated a new analysis for tort  cases. This analysis requires the plaintiff  to demonstrate one of four rebuttable  presumptive connecting factors before a  Canadian court can assume jurisdiction  over a foreign defendant:

  1. the defendant is domiciled or resident in  the province;
  2. the defendant carries on business in  the province;
  3. the tort was committed in the province; or,
  4. a contract connected with the dispute was  made in the province.

Further, if the plaintiff cannot satisfy the  burden of establishing that one or more of the above four factors exist, the onus is then  on the plaintiff to identify a new presumptive  connecting factor to establish jurisdiction. 

In the event that a court finds that it has  jurisdiction over a foreign-defendant, the  defendant can still move to have the court  decline jurisdiction based on forum non  conveniens. In other words, notwithstanding  jurisdiction the foreign court would be the most  appropriate venue for the hearing of the issues. 

THE HOTEL’S JURISDICTION MOTION

Only one presumptive factor was considered for  the jurisdiction test in Haufler v. Hotel Riu:

Did the Hotel carry on business in Ontario?

On whether the Hotel carried on business  in Ontario, Mr. J. Quigley held that “carrying  on business” requires some form of actual  presence in the province and it is distinct from   simply doing business with province-based  companies. In these circumstances, the Hotel  itself did not sell or market rooms outside  Mexico. Instead, the Hotel sold its rooms to an  independent Spanish company, which then sold  the rooms to arm’s length travel wholesalers.  The travel wholesalers would then bundle the  rooms with other products and services and  sell the package to Canadian tourists through  its various affiliates and travel agents. The  Court held that the travel wholesaler was an  independent entity, and not an agent of  the Hotel. 

independent Spanish company, which then sold  the rooms to arm’s length travel wholesalers.  The travel wholesalers would then bundle the  rooms with other products and services and  sell the package to Canadian tourists through  its various affiliates and travel agents. The  Court held that the travel wholesaler was an  independent entity, and not an agent of  the Hotel.

The Court found that the Hotel was not  responsible for any advertising. The Hotel  did not create, publish, fund or distribute  any marketing materials in the province.  As a result, the existence of advertising  brochures, without more, was insufficient  to establish the requisite business connection  to Ontario. Further, although marketing trips  were made to Canada by an independent marketing company to advertise the Hotel’s  brand to travel wholesalers, the connection  between the foreign Hotel and the province  on this basis was weak. The jurisdiction test  requires more than occasional visits to a  province and solicitation.

The Court also considered whether the  existence of a Hotel website, accessible within  Ontario only in 2012 was sufficient to establish  that the Hotel was carrying on business in  Ontario. The Court determined that because  the website was not available at the date of  loss, six years earlier, it was not relevant to the  question of whether the Hotel was carrying on  business in Ontario.

The Court accepted that a foreign defendant  could potentially be subjected to Canadian  jurisdiction if it was carrying on trade in a  province through the use of electronic  means, or e-trade. However, the existence of  an electronic presence six years after the  events in question could not establish the  connecting factor necessary to permit the  Court to assume jurisdiction.

In addition, the Court noted that the tour  operator responsible for the subject ATV  excursion had no relationship with the Hotel.  Further, the ATV excursion was purchased in  Mexico and was operated off Hotel property.  Any contract entered into by the plaintiffs  relating to the subject-matter of the dispute  was formed in Mexico, not Ontario.

This decision is a welcome development for  foreign defendants such as international hotels.  Foreign defendants may successfully oppose  a court’s jurisdiction over the proceeding  depending on the circumstances.