Supreme Court of Canada Sinks Italian Water Taxi Lawsuit

One of the most interesting and important issues inherent in lawsuits arising from travel-related bookings (and arising in many aviation cases) is the exercise of jurisdiction by local courts over foreign based defendants. In a decision released last summer (in Sinclair v. Venezia), the Supreme Court of Canada considered the jurisdiction of the Ontario Superior Court of Justice over three Italian companies.

The Plaintiff in this case (Duncan Sinclair) held a premium credit card with Amex Canada that gave him access to a concierge and travel agent service. While in Italy and just prior to arriving in Venice, Mr. Sinclair called the concierge service to arrange transportation from the Venice airport to a hotel, which included a water taxi ride. The Amex Canada agent arranged for a water taxi booking through a third-party service provider. Regrettably, the water taxi transporting Mr. Sinclair and his wife crashed into a large wooden structure, causing them to suffer serious injuries.

The Sinclairs started a lawsuit in Ontario against Amex Canada and various Italian entities (the third-party service provider, the driver of the water taxi, and three Italian companies). The Italian entities brought a motion challenging the jurisdiction of the Ontario Superior Court of Justice. The motion judge dismissed the motion and ruled that the Ontario court had jurisdiction over the dispute. The Ontario Court of Appeal allowed the appeal and held that it would be improper for the Ontario Court to assume jurisdiction.

In a 5-4 decision, the Supreme Court of Canada agreed that the Ontario Court did not have jurisdiction over the Italian defendants. The Court considered the seminal “real and substantial connection test”, where jurisdiction may be exercised when there is a real and substantial connection between the circumstances giving rise to the lawsuit and the jurisdiction in which the lawsuit is commenced. In a previous Supreme Court of Canada decision (Van Breda), four factors were used to evaluate whether a court could presumptively assume jurisdiction over a dispute in tort cases:

1. Was the defendant domiciled or resident in the province?
2. Does the defendant carry on business in the province?
3. Was the tort was committed in the province?
4. Was a contract connected with the dispute made in the province?

Because the answer to the first three questions was “no”, the crucial question in this case was whether a contract had been made in the province of Ontario. There was consideration of several possible contracts grounding jurisdiction:

1. a contract between Mr. Sinclair and Amex Canada for the service of arranging the water taxi booking;
2. a contract between Mr. Sinclair and Amex Canada for the actual booking of the water taxi;
3. a contract between Amex Canada and the third party travel service provider;
4. a contract between Mr. Sinclair and the third party travel service provider; and
5. a contract between Mr. Sinclair and the water taxi company.

The majority agreed that there was a contract between Mr. Sinclair and Amex Canada, but only for the purpose of providing benefits such as the concierge service. The majority found no contract between Amex Canada and the third-party travel service provider and no contracts (at least none formed in Ontario) between Mr. Sinclair, the third party travel service provider, and the water taxi company. Regarding whether any presumptive connection could be rebutted, the majority noted that the connection between the Ontario based cardholder agreement and the Italian defendants was very weak. The alleged tort occurred in Italy, on a water taxi owned by an Italian company, which was dispatched by a different Italian company, operated by an Italian national, and procured by Mr. Sinclair while on Italian soil.

The majority found that if the subject reservation made through Mr. Sinclair’s credit card was enough of a connection to give an Ontario court jurisdiction, then any travel reservation made using a credit card travel service would provide a sufficient basis for an Ontario court to assume jurisdiction over foreign defendants in disputes based on torts. This would result in the unfairness, unpredictability, and overreach that the Van Breda factors sought to avoid.

In contrast, the minority ruling noted that the allegations in the lawsuit were not only of negligent operation of the water taxi, but also Amex Canada’s negligence in engaging an incompetent travel service provider and the travel service provider’s negligence in engaging an incompetent water taxi operator. The minority also found a good arguable case that two contracts connected with the dispute were made in Ontario: (1) the Amex cardholder agreement; and (2) the agreement between Amex Canada and the third-party travel service provider for the booking of the water taxi in Italy made on behalf of Mr. Sinclair.

The Supreme Court of Canada’s rulings in this case illustrate the possible varying interpretations of contracts providing travel booking services, contracts providing actual services, and those contracts’ possible connections to parties located in different countries. The differences between the majority and the minority rulings also illustrate the difficulties that Canadian courts must grapple with when considering the fairness of forcing foreign parties (involved in incidents occurring in their home jurisdiction) to defend themselves in a Canadian court.

For more information please contact Michael Dery or a member of our Aviation Practice Group.