



COURT OF APPEAL FOR ONTARIO

CITATION: Loan Away Inc. v. Facebook Canada
    Ltd., 2021 ONCA 432

DATE: 20210618

DOCKET: C67908

Fairburn A.C.J.O., Harvison
    Young and Jamal JJ.A.

BETWEEN

Loan Away Inc.

Applicant/Responding Party (Appellant)

and

Facebook Canada Ltd. and
Facebook,
    Inc.

Respondents/
Moving Party
(
Respondent
)

Michael Crampton, for the appellant

Miranda Spence, for the respondent

Philip Underwood, for Facebook Canada
    Ltd., making no submissions

Heard: June 7, 2021 by video
    conference

On appeal from the order of Justice Andra
    Pollak of the Superior Court of Justice, dated December 16, 2019.

Jamal
    J.A.:

Introduction

[1]

The appellant, Loan Away Inc. (Loan Away), appeals
    from the order
of the motion
judge dated December
    16, 2019. In that order, the motion judge stayed Loan Aways application before
    the Ontario Superior Court seeking injunctive relief and a damages reference as
    against the respondent, Facebook, Inc. (Facebook), for having suspended Loan
    Aways advertising on Facebooks online social network (Facebook Service).
    The motion judge stayed the application because a forum selection clause in Facebooks
    Terms of Service provided that any disputes would be resolved exclusively
    before the California courts under California law. The motion judge also refused
    Loan Aways request to adjourn the stay motion. Loan Away claims that the
    motion judge erred in refusing the adjournment and staying its application.

[2]

For the reasons that
follow, I would dismiss the appeal.

Background

[3]

Loan Away is a commercial online lender doing
    business across Canada. A large part of its business came from advertising
    on the Facebook Service.

[4]

Facebook is a global technology company incorporated
    in Delaware with its head office in Menlo Park, California. As a condition of
    signing up for a Facebook account, users of the Facebook Service must agree to Facebooks
    Terms of Service. Section 4(4) of the Terms of Service, Disputes, contains
    forum selection and governing law clauses providing that any disputes with
    commercial (i.e., non‑consumer) users of the Facebook Service must be
    resolved exclusively before the U.S. District Court for the Northern District of
    California or a state court in San Mateo County and under California law:

We try to provide clear rules so
that
we can limit or hopefully avoid disputes
    between you and us. If a dispute does arise, however, its useful to know up
    front where it can be resolved and what laws will apply.

If you are a consumer, the laws of the country
    in which you reside will apply to any claim, cause of action, or dispute you
    have against us that arises out of or relates to these Terms or the Facebook
    Products (claim), and you may resolve your claim in any competent court in
    that country
that has jurisdiction
over the
    claim.
In all other cases, you agree that the claim must be resolved
    exclusively in the U.S. District Court for the Northern District of California
    or a state court
located
in San Mateo County,
    that you submit to the personal jurisdiction of
either
    of these courts for the purpose of litigating any such claim
, and that
    the laws of the State of California will govern these Terms and any claim,
    without regard to conflict of law provisions
. [Emphasis added.]

[5]

Commercial users such as Loan Away must reaffirm
    that they accept Facebooks Terms of Service each time they buy advertising
    from Facebook. Commercial users are also subject to Commercial Terms providing
    substantively the same forum selection and choice of law clauses.

[6]

In October 2018, Facebook suspended Loan Aways
    advertising on the Facebook Service. Loan Away tried, without success, to resolve
    the issue by writing to Facebook Canada Ltd. (Facebook Canada), a Canadian
    company related to Facebook. In late December 2018, Loan Away began an
    application before the Ontario Superior Court against Facebook Canada for
    injunctive relief requiring Facebook Canada to accept Loan Aways advertising
    and for a damages reference.

[7]

In late January 2019, Facebook Canada served its
    responding materials, claiming that Facebook alone operates the Facebook Service
    and that Facebook Canada could not grant the relief that Loan Away sought.

[8]

In late April or May 2019, Loan Away amended its
    application to add Facebook as a respondent. Although Facebook Canada remains a
    named respondent, Loan Away now seeks no relief as against it.

[9]

Around the same time, Facebook served its notice
    of motion asking the court to stay Loan Aways application as against it based
    on the forum selection clause.

[10]

On the stay motion, which was returnable on
    Monday, December 16, 2019, Loan Away filed affidavits of a law clerk employed
    by Loan Aways counsel addressing the litigation history leading up to the stay
    motion. On the Friday before the return of the stay motion, Facebook suspended
    Loan Aways Facebook business page.

[11]

At the return of the motion, Loan Away asked for
    an adjournment to file new evidence about the suspension of its Facebook business
    page. Facebook opposed. The motion judge refused the adjournment, noting that
    while there had been a related and perhaps very relevant event with respect to
    what ha[d] happened, neither counsel was prepared to deal with the issue. She
    also noted that Loan Aways application did not concern this issue.

[12]

The motion judge then granted Facebooks stay
    motion. She noted that Loan Away did not dispute the enforceability of the
    forum selection clause and that the law favours enforcement of such clauses in
    commercial contracts. She stated that a stay should be granted unless Loan Away
    could show strong cause not to enforce the clause. The motion judge determined
    that Loan Away did not meet its burden of showing strong cause because: (1)
    this was a commercial contract; (2) Loan Away filed no evidence addressing the
    convenience of the parties, fairness between the parties, or the interests of
    justice; and (3) the application sought no relief as against Facebook Canada. She
    therefore stayed the application as against Facebook.

Issues

[13]

Loan Away claims that the motion judge erred by refusing
    to adjourn the stay motion and in granting the stay.

Discussion

Issue #1: Did the motion judge err in refusing
    to adjourn the stay motion?

[14]

Loan Aways first ground of appeal asserts that
    the motion judge erred in refusing to adjourn the stay motion despite finding
that
there was a very relevant event  the shutdown
    of Loan Aways Facebook business page  that happened just before the motion. Loan
    Away says it should have been allowed to introduce new evidence about this event
    and the motion judge thus decided the stay motion on an incomplete record.

[15]

I do not accept this submission.

[16]

An appellate court can intervene with a motion judges
    discretionary decision on whether to grant an adjournment only if the discretion
    is not exercised judicially based on proper principles, after considering all
relevant
factors:
Romanko v. Aviva Canada Inc.
,
    2018 ONCA 663, at para. 4;
Estrada v. Estrada
, 2016 ONCA 697, at para.
    2.

[17]

No such error has been shown here. The motion
    judge
was entitled to find
that even though
    the shutdown of Loan Aways Facebook business page related to the broader
    dispute raised in the application, she should proceed with the stay motion as
    scheduled. Loan Aways application did not concern the shutdown of its business
    page and neither counsel was prepared to deal with this development. The motion
    judge
was also entitled to find
that the
    evidentiary record on the stay motion was complete and that no further evidence
    should be permitted at that late stage. In any event, evidence about the
    substantive legal issues underlying the dispute between the parties was not
    relevant to the motion to enforce the forum selection clause:
Z.I. Pompey
    Industrie v. ECU-Line N.V.
, 2003 SCC 27, [2003] 1 S.C.R. 450, at para. 31.
    I therefore see no basis for this court to intervene with the motion judges exercise
    of discretion to deny the adjournment.

Issue #2: Did the motion judge err in granting a stay based on the
    forum selection clause?

[18]

Loan Aways second ground of appeal asserts that
    the motion judge erred in enforcing the forum selection clause and staying Loan
    Aways application.

[19]

The following legal principles
govern the enforcement of a forum selection clause in
    the commercial or non-consumer context.

[20]

Forum selection clauses purport to oust the
    jurisdiction of otherwise competent courts in favour of a foreign jurisdiction.
    In commercial contexts, absent exceptional circumstances, forum selection
    clauses are generally enforced to hold sophisticated parties to their
    contractual bargain:
Douez v. Facebook, Inc.
, 2017 SCC 33, [2017] 1 S.C.R.
    751, at para. 1.

[21]

Courts apply a two-step approach in determining
    whether to enforce a forum selection clause and stay an action brought contrary
    to it:

1.

At the first step, the party seeking a stay must
    establish that the forum selection clause is valid, clear, and enforceable, and
    that it applies to the cause of action before the court. The court makes this
    determination based on the principles of contract law. The plaintiff may resist
    the enforcement of the forum selection clause by raising defences such as
, for example,
unconscionability, undue influence, or
    fraud. If the party seeking the stay establishes the validity of the forum
    selection clause, the onus shifts to the plaintiff:
Douez
, at paras. 28-29;
Pompey
, at para. 39
.

2.

At the second step, the plaintiff must establish
    strong cause not to enforce the forum selection clause. A court exercising
    its discretion at this step must consider all the circumstances, including the
    convenience of the parties, fairness between the parties, the interests of
    justice, and public policy. The list of strong cause factors is not closed
    and provides a court with some flexibility in exercising its discretion. In the
    commercial context, the strong cause factors have been interpreted and
    applied restrictively. Forum selection clauses are encouraged and generally
    enforced because they promote order and fairness by providing stability and foreseeability
    to international commercial relations:
Douez
, at paras. 29-31;
Pompey
,
    at paras. 19, 30-31; and
GreCon Dimter inc. v. J.R. Normand inc.
, 2005
    SCC 46, [2005] 2 S.C.R. 401, at para. 22.

[22]

Both before the motion judge and this court, Loan
    Away accepted that the forum selection clause in Facebooks Terms of Service is
    valid, clear, and enforceable. It thus accepted that the first step was met.

[23]

Instead, Loan Away asserts that the motion judge
    made essentially three errors at the second step.

[24]

First, Loan Away asserts
that
there is a
prima facie
injustice in allowing Facebook
    to rely on a forum selection clause when the relief Loan Away seeks is straightforward.
    Loan Away claims it should not have to sue in California just to learn why Facebook
    has a problem with its advertising. Loan Away says that if Facebook explains
    the problem, Loan Away can fix it.

[25]

I do not accept this submission. Loan Aways
    application does not simply seek to understand why Facebook has suspended its
    advertising. It also seeks injunctive relief as against Facebook and a damages
    reference. If Loan Away seeks such relief, it must sue in California, as agreed
    in the Terms of Service.

[26]

Second, Loan Away asserts that the motion judge
    failed to consider that, as a result of her ruling, Loan Away must now sue
    Facebook in California and Facebook Canada in Ontario. This multiplicity of
    proceedings, it claims, highlights the inconvenience and unfairness in enforcing
    the forum selection clause.

[27]

I disagree. The application seeks no relief as against
    Facebook Canada and at the hearing of the appeal Loan Away acknowledged that it
    has no contract with Facebook Canada. Loan Away cannot resist enforcement of
    the forum selection clause by invoking a multiplicity of proceedings arising because
    it has sued what appears to be an improper party.

[28]

Third, Loan Away asserts
that
there was strong cause not to enforce the forum selection
    clause because of the inequality of bargaining power between it and Facebook.
    Loan Aways factum submits that Facebook is an online giant that sets its own
    terms without negotiation, forcing small players such as Loan Away to either take
    it or leave it.

[29]

I do not agree. Even in the consumer context, where
    gross inequality of bargaining power may be a relevant circumstance in the strong
    cause analysis, gross inequality of bargaining power is not in itself
    determinative:
Douez
, at para. 39. Here, the motion judge
    considered all the
relevant
circumstances of
    the case, including its commercial context, and concluded that Loan Away ha[d]
    not led any evidence with respect to the inconvenience of the parties, fairness
    between the parties and the interests of justice. She thus found that Loan
    Away had not met its burden of proving to this court that there is strong
    cause not to enforce the forum selection clause. Those findings are
    unassailable on the record before the motion judge. I see no basis for this
    court to intervene.

Disposition

[30]

I would dismiss the appeal with costs payable by
    Loan Away to Facebook
in the amount of $7,500
all
    inclusive.

Released: June 18, 2021 J.M.F.

M.
    Jamal J.A.

I
    agree. Fairburn A.C.J.O.

I
    agree. Harvison Young J.A.


