Guest Tek Interactive Entertainment Ltd v PricewaterhouseCoopers LLP, 2017 ABQB 567

Court of Queen’s Bench of Alberta Citation: Guest Tek Interactive Entertainment Ltd v PricewaterhouseCoopers LLP, 2017 ABQB 567 Date: 20170925 Docket: 1701 03441 Registry: Calgary Between: Guest Tek Interactive Entertainment Ltd. Plaintiff/Respondent - and - PricewaterhouseCoopers LLP Defendant/Applicant _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice R.J.

Hall _______________________________________________________ [ 1 ] The issue before me in this application is whether to stay this Alberta action on the basis that the parties entered a contract providing exclusive jurisdiction to the courts of Ontario. [ 2 ] A contract was signed between the parties on September 12, 2016, in the form of an Engagement Letter, before services were to be performed by the defendant for the plaintiff.

The contract was prepared by the defendant and emailed to the plaintiff with the following covering e-mail: Attached is our engagement letter to provide tax compliance services to [Guest Tek]. Please sign and return the engagement letter to our office. A scanned copy by email is fine. Please let me know if you have any questions.

[3] Mr. Jeff Wood, vice president of the Plaintiff, Guest Tek, read and signed the letter and returned it to the defendant. [4] The engagement letter attached and incorporated pre-printed “Terms of Business” prepared by the Defendant.

Paragraph10.1 of the Terms of Business provided: 10.1 Law and Jurisdiction – The agreement and any dispute arising from it, whether contractual or non-contractual will be governed bythe laws of the Province of Ontario and the federal laws of Canada applicable therein and is subject to the exclusive jurisdiction of thecourts of the Province of Ontario. [5] The plaintiff argues that this clause was never brought to the plaintiff’s attention; it was provided on a take it or leave itbasis, with no opportunity to negotiate. I do not accept that argument.

The Plaintiff is a sophisticated business, operating internationally.In standard contracts prepared by it for use with its own customers it has a similar exclusive jurisdiction clause, (albeit in respect to theplace of arbitration, instead of the place of the court). [6] Further, the email attaching the intended contract invites further discussion where it says: Please let me know if you have any questions. [7] This is not a contract akin to that considered by the Supreme Court of Canada in Douez v Facebook, Inc, 2017 SCC 33,where the huge multinational company Facebook, Inc. required subscribers to agree to non-negotiable terms in a contract prepared byFacebook.

Nor do any of the public policy considerations that arose in Douez arise in the case before me. [8] The law regarding exclusive jurisdiction clauses in a contract signed by two relatively sophisticated commercial parties wasexpressed by the Supreme Court of Canada in ZI Pompey Industrie v ECU-Line NV 2003 SCC 27 , [2003] 1 SCR 450. Thestarting point is the presumption that “the parties should be held to their bargain” and that the plaintiff bears the burden of showing whythe stay should not be granted.

The Supreme Court of Canada confirmed the “strong cause” test, as later articulated in Douez, paragraphs28 and 29: ...At the first step, the party seeking a stay based on the forum selection clause must establish that the clause is “valid, clear andenforceable and that it applies to the cause of action before the court” ... Once the party seeking the stay establishes the validity of the forum selection clause, the onus shifts to the plaintiff. At this second stepof the test, the plaintiff must show strong reasons why the court should not enforce the forum selection clause and stay the action.

InPompey, this Court adopted the “strong cause” test from the English court’s decision in The “Eleftheria”, [1969] 1 Lloyd’s Rep. 237(Adm. Div.). In exercising its discretion at this step of the analysis, a court must consider “all the circumstances”, including the“convenience of the parties, fairness between the parties and the interests of justice” (Pompey, at paras. 19, 30 and 31).

Public policymay also be a relevant factor at this step ... [9] The court in Douez, goes on to note (paragraphs 31 to 33): That said, the strong cause factors have been interpreted and applied restrictively in the commercial context. In commercial interactions,it will usually be desirable for parties to determine at the outset of a business relationship where disputes will be settled. Sophisticatedparties are justifiably “. . . deemed to have informed themselves about the risks of foreign legal systems and are deemed to have acceptedthose risks in agreeing to a forum selection clause” (Aldo Group Inc. v.

Moneris Solutions Corp., 2013 ONCA 725, 118 O.R. (3d) 81, atpara. 47). In this setting, our Court recognized that forum selection clauses are generally enforced and to be encouraged “because theyprovide international commercial relations with the stability and foreseeability required for purposes of the critical components of privateinternational law, namely order and fairness” (GreCon Dimter inc. v. J.R. Normand inc., 2005 SCC 46, [2005] 2 S.C.R. 401, at para. 22).

In Pompey, for example, our Court enforced a forum selection clause contained in a bill of lading concluded between two sophisticatedshipping companies. The parties were of similar bargaining power and sophistication, since they were “corporations with significantexperience in international maritime commerce . . . [that] were aware of industry practices” (para. 29). The Court held that the “forumselection clause could very well have been negotiated” between the parties (ibid.). This context manifestly informed the Court’sapplication of the strong cause test.

But commercial and consumer relationships are very different. Irrespective of the formal validity of the contract, the consumer contextmay provide strong reasons not to enforce forum selection clauses. For example, the unequal bargaining power of the parties and therights that a consumer relinquishes under the contract, without any opportunity to negotiate, may provide compelling reasons for a courtto exercise its discretion to deny a stay of proceedings, depending on the other circumstances of the case (see e.g. Straus v. Decaire, 2007ONCA 854, at para. 5 ).

And as one of the interveners argues, instead of supporting certainty and security, forum selectionclauses in consumer contracts may do “the opposite for the millions of ordinary people who would not foresee or expect its implicationsand cannot be deemed to have undertaken sophisticated analysis of foreign legal systems prior to opening an online account”(Samuelson-Glushko Canadian Internet Policy and Public Interest Clinic Factum, at para. 7). [10] The contract before me is a commercial contract not a consumer contract. Opportunity existed (though not taken) for thePlaintiff to seek to negotiate its terms.

The standard terms, including the exclusive jurisdiction clause, were terms that had been presentedto the Plaintiff by the Defendant on previous occasions and signed as accepted by the Plaintiff. [11] Here, the contractual dispute is whether the Defendant failed to advise the Plaintiff of a tax filing deadline in relation to “SR&ED” tax credits in a timely fashion, or at all. The parties have bargained that Ontario courts have exclusive jurisdiction of such adispute. [12] I note that the contract was executed by the Plaintiff in Calgary.

The Defendant is headquartered in Calgary; the Plaintiff’switnesses to what transpired are in Calgary; the employees of the Defendant who ran and worked on the subject project are in Calgary.But for the exclusive jurisdiction clause, the forum conveniens for the contractual dispute would clearly be the judicial district of

Calgary, in the Court of Queen’s Bench of Alberta, where this action has been commenced. [ 13 ] But is convenience and cost savings to the parties substantial enough reason to oust an exclusive jurisdiction clause in a commercial agreement between two sophisticated parties? I find that it is not.

There is no sufficient “strong cause” to overcome the agreement as to jurisdiction. [ 14 ] The Plaintiff argues that this claim is, at least partially, one made in tort; that the Defendant owed a duty to the Plaintiff, independent of contract, to advise the Plaintiff of the time limit for filing the SR&ED tax credits claim; and because the situs of that tort is Alberta, the tort claim must be heard in Alberta. I disagree. Firstly, no duty arose for the Defendant PWC to advise the Plaintiff of anything unless and until a contract had been reached between the parties, that PWC would provide advice.

Secondly, while the situs of the alleged tort may dictate the law to be applied to the tort claim, it does not dictate the jurisdiction where the case is to be heard. [ 15 ] The Plaintiff argues that the contract for these services was signed only two weeks before the filing deadlines, and that PWC’s obligation and duty to inform the Plaintiff of such a filing deadline arose much before the signing of the contract.

However, PWC had provided services to the Plaintiff for years, and throughout there were various contracts, all of which included the same exclusive jurisdiction clause; such that, even if PWC did undertake a duty to advise prior to the subject engagement letter, an exclusive jurisdiction clause still applied. [ 16 ] Further, the evidence of the Defendant is that the SR&ED work was performed under the subject engagement letter. It included an entire agreement clause 11.2: The agreement, once executed by the parties, forms the entire agreement between the parties in relation to the services and deliverables.

It replaces any earlier agreements, representations and discussions. [ 17 ] The Statement of Claim itself invokes the subject engagement letter as the basis for the claim, in paragraphs 12, 22, 23 and 24. [ 18 ] Finally, the Plaintiff argues that the Defendant must have known that the issue of late filing would arise, and nefariously decided to have the agreement executed by the Plaintiff, to force the Plaintiff to incur extra expense to litigate in Ontario.

There is no factual or evidentiary basis for such an allegation and I reject it. [ 19 ] The parties may speak to me regarding costs, should they be unable to agree. Heard on the 7 th day of September, 2017. Dated at the City of Calgary, Alberta this 25 th day of September, 2017. R.J. Hall J.C.Q.B.A. Appearances: Christian J. Popowich for the Plaintiff/Respondent Allison G. Kuntz and Alexa Verspoor for the Defendant/Applicant