



COURT OF APPEAL FOR BRITISH COLUMBIA




Citation:



Schuppener v. Pioneer Steel Manufacturers Limited,









2020 BCCA 19




Date: 20200121

Docket: CA46037

Between:

Mark Schuppener

Respondent

(Plaintiff)

And

Pioneer Steel
Manufacturers Limited

Appellant

(Defendant)






Before:



The Honourable Mr. Justice Groberman

The Honourable Madam Justice Fenlon

The Honourable Madam Justice DeWitt-Van Oosten




On appeal from:  An
order of the Supreme Court of British Columbia, dated
March 25, 2019 (
Schuppener v. Pioneer Steel Manufacturers Limited
,
2019 BCSC 425, Kelowna Docket S115403).




Counsel for the Appellant:



M. Nied
D. DiPardo





Counsel for the Respondent:



D.P. Yerema
C. Elkin





Place and Date of Hearing:



Vancouver, British
  Columbia

November 7, 2019





Place and Date of Judgment:



Vancouver, British
  Columbia

January 21, 2020









Written Reasons by:





The Honourable Madam Justice Fenlon





Concurred in by:





The Honourable Mr. Justice Groberman
The Honourable Madam Justice DeWitt-Van Oosten




Summary:

The respondent was injured
when a steel storage building he purchased from the appellant collapsed on him.
The chambers judge refused to stay or transfer the respondents action for
negligence and breach of contract on the basis that there was strong cause not
to enforce a forum selection clause contained in the written contract between
the parties. Held: Appeal allowed and action transferred to the Ontario
Superior Court. The judge erred in principle by characterizing ordinary considerations
as matters of public policy. The respondent did not establish strong cause for
overriding the contractual provision.

Reasons for Judgment of the
Honourable Madam Justice Fenlon:

[1]

The respondent Mark Schuppener was seriously injured when a steel
storage building he had purchased from the appellant Pioneer Steel
Manufacturers Limited (Pioneer Steel) and constructed on his Kelowna property
collapsed on him. Mr. Schuppener started an action in British Columbia
against Pioneer Steel for negligence and breach of contract. Pioneer Steel applied
for a stay of proceedings, relying on the forum selection clause in the
contract of purchase and sale which required all claims to be brought in
Ontario. The chambers judge found there were strong reasons not to enforce the
forum selection clause and refused to stay or transfer the action.

Issues on Appeal

[2]

Pioneer Steel appeals primarily on the ground that the judge erred in
his application of the strong cause analysis addressed in
Douez v. Facebook,
Inc.
, 2017 SCC 33, in particular by elevating ordinary contextual matters to
the status of public policy factors compelling enough to override the public
interest in certainty of contract.

[3]

Pioneer Steel also contends the judge erred by accepting, without
evidence, that the financial burden on Mr. Schuppener would be greater if
he was required to sue in Ontario.

[4]

If Pioneer Steel succeeds on either ground of appeal, Mr. Schuppener
seeks to uphold the order below on the basis that the judge erred in finding
the forum selection clause applied to the circumstances of this case.

[5]

I turn now to the first ground of appeal.

Did the Judge Err in His Application of the Strong Cause Test?

[6]

The test for enforcement of forum selection clauses in contracts was
settled by the Supreme Court of Canada in
Z.I. Pompey Industrie v. ECU‑Line
N.V.
, 2003 SCC 27. The inquiry proceeds in two steps. First, the court must
determine whether the forum selection clause is enforceable and applies to the
circumstances:
Pompey
at para. 39;
Preymann v. Ayus Technology
Corporation
, 2012 BCCA 30 at para. 43. The applicant seeking to
enforce the forum selection clause bears the burden of proof at this stage.
Second, the court must assess whether there are strong reasons not to give
effect to an otherwise enforceable forum selection clause:
Pompey
at paras. 19,
39. The party seeking to displace the forum selection clause bears the burden
of proof at this stage.

[7]

As set out in
Pompey
, the shifting burden of proof reflects the
foundational premise that parties who have agreed to a forum for resolving
disputes should be held to their bargain: at para. 21. Forum selection
clauses serve a valuable purpose and are generally to be encouraged because
they create certainty in commercial transactions:
Douez
at para. 24.

[8]

The judge in the present case correctly identified the two‑step
analysis to be applied (at paras. 1921). At the first stage, he
considered the wording of the clause in issue:

The parties agree that this
contract and any dispute, cause of action, and any and all claims, whatsoever
(hereinafter Claims) with respect to the supply of the steel building shall
be interpreted in accordance with the laws of Ontario, Canada. Any claims with
respect to the supply of the steel building shall be resolved in the city of
Mississauga, Province of Ontario. Any proceedings, which may be commenced
pursuant to the Claims, shall be commenced in the City of Brampton, Province of
Ontario, Canada;

He found the clause to be
enforceable and broad enough to encompass the claims raised by Mr. Schuppener
in his pleading. Turning to the second stage of the analysis, the judge said:

[45]
At this stage of
the analysis, the plaintiff must show strong reasons why the forum selection
clause should not be enforced.
In deciding how to exercise its discretion
at this stage of the analysis, the court must consider all the circumstances
including the convenience of the parties, fairness between the parties, and the
interests of justice. Moreover,
because this case involves a consumer
contract, I must consider the broader range of circumstances discussed in
Douez
,
including evidence of gross inequality of bargaining power, the nature of the
rights at stake, and any broader public policy considerations.

[Emphasis added.]

[9]

The judge began by noting that although there were witnesses in
both jurisdictions, the balance of convenience favoured British Columbia
because all of the physical evidence pertaining to the erection and collapse of
the building was located in and most easily accessed in British Columbia (at para. 47).
In assessing the interests of justice, the judge noted there were legitimate
access to justice concerns about Mr. Schuppeners ability to retain
counsel and fund a lawsuit in Ontario as opposed to British Columbia, but also
recognized that there were legitimate concerns about the ability of Pioneer
Steel, an Ontario company, to effectively carry on its business if it were
required to defend lawsuits in multiple jurisdictions. The judge also noted
that the law of Ontario was to apply to the contract (at para. 48).

[10]

Although the judge found the balance of convenience favoured British Columbia,
he acknowledged he was not conducting a
forum

non conveniens
analysis under the
Court Jurisdiction and Proceedings Transfer Act
, S.B.C.
2003, c. 28, which would have been the case in the absence of a forum
selection clause. He cited
Pompey
(at para. 21) for the proposition
that the presence of a forum selection clause warrants a different testthe
strong cause testwhich requires compelling evidence that it would be against
public policy to hold the parties to this aspect of their bargain: at para. 47.

[11]

Pioneer Steel contends the judge fell into error when he considered
whether the public policy concerns identified by the majority in
Douez
in
relation to consumer contracts arose on the facts of this case. Mr. Schuppener
submits the judge made no such error and argues that Pioneer Steel is asking
this Court to re‑weigh the factors considered by the judge at stage two
of the strong cause test. He stresses the discretionary nature of the judges decision
to override the forum selection clause, and the deferential standard of review
on appeal.

[12]

I agree that the standard of review is deferential and that this Court
cannot interfere with the judges decision unless he has made a palpable and
overriding error of fact or some extricable error in principle:
Housen v.
Nikolaisen
, 2002 SCC 33 at paras. 3637. However, with great respect
to the judge, I am of the view that he erred in principle by characterizing ordinary
considerations as matters of public policy compelling enough to justify
overriding the forum selection clause. My reasons for that view follow.

A standard form consumer contract

[13]

First, although the judge found there was no significant inequality of
bargaining power between Mr. Schuppener and Pioneer Steel, he found it
highly relevant that the forum selection clause was found in
a standard form
consumer contract
which meant that Mr. Schuppener had no ability to
negotiate the applicability or terms of the clause: at para. 50.

[14]

In my view,
Douez
does not support the proposition that inclusion
of a forum selection clause in a non‑negotiable standard form consumer
contract always raises a public policy concern sufficient to offset the public
policy interest in holding parties to the terms of their bargain. Neither
standard form contracts nor forum selection clauses raise public policy
interests
per se
. Courts generally give effect to the terms of standard
form consumer contracts absent legislative intervention:
Seidel v. Telus
Communications Inc.
, 2011 SCC 15 at para. 2. Forum selection clauses
have also been recognized as valid and beneficial:
Douez
at para. 24.
They do away with confusion about where suits are to be brought and defended,
and consumers may benefit from reduced prices if defendants can limit the
jurisdictions in which they may be sued. In
Douez
it was not the
standard form nature of the contract that was of concern, but rather the gross
inequality of bargaining power between the parties. That is not to say that the
form of the contract cannot be a contextual factor in assessing inequality of
bargaining power, but rather that the standardized form of the contract itself
does not raise a public policy concern.

[15]

Further, although the purchase of the steel building from Pioneer Steel can
be broadly characterized as a consumer contract, it is a contract far different
from the ubiquitous online consumer contract considered in
Douez
at para. 36
and described as follows:

[54]      Despite Facebooks claim otherwise, it is clear
from the evidence that
there was gross inequality of bargaining power
between the parties. Ms. Douezs claim involves an online contract of
adhesion formed between an individual and a multi‑billion dollar corporation
.
The evidence on the record is that Facebook reported almost $4.28 billion in
revenue in 2012 through advertising on its social media platform. It is in
contractual relationships with 1.8 million British Columbian residents,
approximately 40 percent of the provinces population. Ms. Douez is one of
these individuals.

[55]      Relatedly,
individual consumers in this context
are faced with little choice but to accept Facebooks terms of use.
Facebook asserts that Ms. Douez could have simply rejected Facebooks
terms. But as the academic commentary makes clear, in todays digital
marketplace, transactions between businesses and consumers are generally
covered by non‑negotiable standard form contracts presented to consumers
on a take‑it‑or‑leave‑it basis (
Pavlović
,
at p. 392).

[56]      In particular,
unlike a standard retail
transaction, there are few comparable alternatives to Facebook, a social
networking platform with extensive reach. British Columbians who wish to
participate in the many online communities that interact through Facebook must
accept that companys terms or choose not to participate in its ubiquitous
social network


[Emphasis added.]

[16]

The contract in the present case was entered into in far different
circumstances. The judge expressly found there was no significant inequality of
bargaining power between Mr. Schuppener and Pioneer Steel. Nor was the
transaction an instantaneous one. The contract went through more than one
iteration and was the product of discussions that occurred over a number of
months (at para. 40). Further, the judge found the forum selection clause
was set out in plain text on the front of the contract just above Mr. Schuppeners
signature (at para. 41) and that the terms of the contract in general were
not particularly complicated (at para. 43).

[17]

In addition, this was not a minor consumer transaction such as the one
in issue in
Douez
. In that case, Ms. Douez agreed to terms by
pressing a computer key in order to receive the benefits of the Facebook
platform at no cost to her:
Douez
at paras. 99 and 173. In the
present case, the contract was for the purchase of a large building of
commercial/industrial quality at a cost of close to $20,000. This was a
significant transaction, more akin to the purchase of a vehicle. Transactions
of that kind occur infrequently in the lifetime of the average consumer and
command heightened attention and scrutiny. In many respects, the contract in
issue falls closer to the sophisticated commercial contract end of the spectrum.

[18]

Nor was this a case like
Douez
where the consumer had no real
alternatives. Mr. Schuppener candidly acknowledged that he had
alternatives but wanted to buy Canadian and so chose to do business with
Pioneer Steel.

The claim involved more than a commercial dispute

[19]

I turn now to the second public policy factor the judge relied on to
find there were strong reasons not to enforce the forum selection clausethe
nature of Mr. Schuppeners claim. The judge stressed that the action
included damages in negligence for personal injury and was not a mere
commercial dispute over the breach of a contract (at para. 51). The
pleading stated Mr. Schuppener was knocked unconscious when the building
collapsed on him as he was following Pioneer Steels advice to shore up the roof.
The action is framed primarily in the torts of negligent manufacture and
failure to warn, and only in the alternative in breach of contract.

[20]

The judge did not elaborate on his conclusion that the hearing of a
personal injury claim in negligence or product liability in Ontario, as opposed
to British Columbia, engaged public policy interests. Indeed, he found there
was no reason to believe that the governing law in Ontario concerning issues of
contract and negligence would differ significantly from the law of British
Columbia. In contrast, in
Douez
the matter engaged a unique British
Columbia statute which had no equivalent in the other jurisdiction. Further, in
Douez
the nature of the claim was a strong reason to override the forum
selection clause because it involved the choice between a Canadian and a
foreign court and involved a quasi‑constitutional right. The court
observed that:

[58]       Canadian courts have
a greater interest in adjudicating cases impinging on constitutional and quasi‑constitutional
rights because these rights play an essential role in a free and democratic
society and embody key Canadian values.

In contrast, the present case concerns two competing Canadian
forums with roughly equivalent laws of contract, personal injury and product
liability.

Claim building was unsuitable for B.C.s climate

[21]

The third public policy interest identified by the judge as a strong
reason to override the forum selection clause related to the allegation that
Pioneer Steel sold Mr. Schuppener the building even though it knew from
previous collapses in British Columbia that the product was unsuitable for the
climatic conditions in this province. The judge reasoned that the public in
such cases has an interest in seeing the issues litigated in British Columbia where
the problem arose and the damages were suffered.

[22]

The difficulty with this approach is that there will always be a public
interest in seeing cases with facts and damages arising in a particular
province litigated in that province. That is a factor relating to convenience
and one of the circumstances to be considered in the strong cause analysis, but
it will rarely rise to the level of
a public policy concern
. In my respectful
view there is nothing unique to British Columbia about the cause of the
buildings collapse from the weight of snow that had accumulated on its roofa
climatic condition common to most of Canada in the winter months.

[23]

It is important in conducting the strong cause analysis to bear in mind
the principle that courts do not have discretion to refuse to enforce valid
contracts unless there is some paramount consideration of public policy
sufficient to override the public interest in freedom of contract:
Tercon
Contractors Ltd. v. British Columbia (Transportation and Highways)
, 2010
SCC 4 at para. 82 per Binnie J. dissenting in the result, but analytical
approach agreed to by the majority. The power to refuse enforcement on the
grounds of public policy should rarely be exercised and only in clear cases,
in which the harm to the public is substantially incontestable, and does not
depend upon the idiosyncratic inferences of a few judicial minds:
Tercon
at
para. 117.

[24]

It is helpful to consider the categories of public policy interests traditionally
held to be sufficient to override a contractual bargain. Contracts have been
struck down when found to:

(i)       be injurious to the state;

(ii)      be injurious to the justice system;

(iii)      be in restraint of trade;

(iv)     involve immorality; and

(v)      affect marriage.

Although the categories of public policy are not closed,
as is evident from
Douez
, significant judicial restraint is called for:
Niedermeyer
v.

Charlton
, 2014 BCCA 165 at para. 76.

[25]

In deciding whether strong cause to override a forum selection clause
has been established, the court is to consider all of the factors cumulatively:
Douez
at para. 50. As I earlier noted, the judge found balance of
convenience was a factor favouring British Columbia, but it is evident that the
three public policy concerns he identified were the predominant factors tipping
the balance in favour of denying a stay. In reaching his conclusion, the judge
said:

[53]      Taking all of these
factors into consideration, my conclusion is that Mr. Schuppener has shown
strong cause for declining to give effect to the forum selection clause. What
is in issue here is a forum selection clause in a consumer contract. Mr. Schuppener
claims damages not just for breach of contract, but also for negligence and
product liability, in respect of a product that was supplied to him in British
Columbia, and which he alleges was unsuitable for the climatic conditions in
his region. Much of the evidence required for Mr. Schuppener to prove his
case is located in British Columbia. In my view, it would be contrary to public
policy to deny Mr. Schuppener the opportunity to present his case in this
jurisdiction based on a forum selection clause that was part of a non‑negotiable,
standard set of fine print terms in a consumer contract.

[26]

In my view, absent the error in principle described above, the judge
could not reasonably have concluded that Mr. Schuppener had established
strong cause for overriding the contractual provision. I would therefore accede
to this ground of appeal.

[27]

Having reached that conclusion, it is not necessary to consider Pioneer
Steels second ground of appeal.

Did the Judge Err in Finding the Forum Selection Clause Applied in this
Case?

[28]

It is necessary, however, to consider Mr. Schuppeners submission
that the judges order denying a stay or transfer of the proceedings to Ontario
should nonetheless be upheld. Mr. Schuppener contends the judge erred at
stage one of the strong cause analysis and should have found that the forum
selection clause does not capture all of the claims raised against Pioneer
Steel. In addition, he says the judge should have found that Pioneer Steel is
not a party to the contract and cannot therefore rely on it. The latter
argument is based on the contract in issue being entered into by Pioneer Sales
Steel Depot Inc. (Pioneer Sales), a distributor for Pioneer Steel.

[29]

In my view, this submission can be dealt with summarily. The judge found
the wording of the forum selection clause to be broad enough to include all
claims advanced. He also found that Pioneer Sales signed the contract as agent
for Pioneer Steel, which was therefore bound by its terms and entitled to the
benefit of the forum selection clause. I agree with those conclusions and would
adopt the judges reasons for so finding.

Disposition

[30]

The appeal is allowed and the action transferred to the Ontario Superior
Court.

The
Honourable Madam Justice Fenlon

I AGREE:

The Honourable
Mr. Justice Groberman

I AGREE:

The Honourable
Madam Justice DeWitt-Van Oosten


