Executive Summary: Key Legal and Evidentiary Issues

• The enforceability of an exclusive Ontario forum selection clause in the contract between Gamma and SML was central to the motion to stay or dismiss the Third Party Claim.

• The court considered whether to decline jurisdiction in favor of the Ontario forum as stipulated in the Patina Purchase Order between Gamma and SML.

• Both the Nova Scotia and Ontario actions involve overlapping facts, parties, and issues, raising concerns about inefficiency and inconsistent findings.

• The court applied the two-step “strong cause” test for enforcement of forum selection clauses, as outlined in relevant case law.

• The evidence and issues regarding the alleged deficiencies in the Muntz metal panels are inevitably intertwined with the Nova Scotia Action.

• The motion to stay or dismiss the Third Party Claim was dismissed, with costs of $1,000 awarded to Gamma.

Background and contractual relationships

Queen’s Marque Developments Limited (“Queen’s Marque”) entered into a CCDC 17-2010 contract with Gamma Windows and Walls International Inc. (“Gamma”) on or about September 28, 2018, for the “Curtain Wall and Metal Panel Package” for the Queen’s Marque buildings in Halifax. Gamma was to supply and install Muntz metal panels with a patina finish. Prior to retaining Gamma, Queen’s Marque had discussions with Soheil Mosun Limited (“SML”) regarding the patina finish for approximately 73,000 square feet of exterior Muntz metal panels. In 2019, Gamma and SML, both based in Ontario, agreed that SML would apply the patina finish to Gamma-supplied panels, and their agreement included an exclusive Ontario jurisdiction clause. On March 7, 2019, Gamma issued purchase order 31714-1803 to SML for the supply and application of the patina and wax finishes, with the work to be performed at SML’s Toronto facilities. The Patina Purchase Order specified that all disputes would be resolved in the courts of Toronto, Ontario, and governed by Ontario law.

Litigation history and forum selection clause

In April 2022, Gamma initiated an action against SML in the Ontario Superior Court of Justice (CV-21-00673136-0000), alleging SML overcharged Gamma and seeking an accounting of extra time and materials. SML pleaded, and Gamma acknowledged, that the Ontario court would have to determine whether SML’s work was reasonable and in conformity with the Patina Purchase Order. Gamma relied on the exclusive jurisdiction clause in the Ontario action. There have been no material developments in the Ontario Action since SML filed its Statement of Defence.

On June 27, 2024, Queen’s Marque commenced the present action in Nova Scotia (the “Muntz Panel Action”), alleging that the Muntz metal panels were deficient, exhibiting pock marks, streaking, discolouration, dezincification, stress, corrosion, and other signs of deterioration. Queen’s Marque alleged these defects were caused by Gamma’s breach of contract and negligence, including deviation from the metal composition, improper fabrication, storage, or handling. Some allegations related to panels in areas where Gamma did not supply, store, or install the panels, including the Rise Again pavilion, completed after Gamma terminated the contract.

Gamma denied negligence or breach of contract and denied any connection to the deficiencies in the panels, further denying liability for work completed by others, potentially including SML. In September 2024, Gamma filed a Third Party Claim against SML for contribution and indemnity for any amounts for which Gamma may be found responsible to Queen’s Marque. Gamma alleged SML was negligent in its application of the patina, using improper products, poor techniques, or inadequate supervision, and failing to perform its work in a good and workman-like manner. SML responded by seeking a stay and dismissal of the Third Party Claim for want of jurisdiction, citing the exclusive Ontario forum selection clause.

Court’s analysis of jurisdiction and forum selection

The court’s authority to stay a proceeding was found in s. 41(e) of the Judicature Act, RSNS, c. 240. The court applied the two-step test for enforcement of forum selection clauses: first, confirming the validity and applicability of the clause, and second, determining whether there was “strong cause” not to enforce it. Gamma did not dispute the validity of the jurisdiction clause. The burden shifted to Gamma to establish “strong cause” why the clause should not be enforced, a high threshold requiring exceptional circumstances.

The court considered all circumstances, including convenience, fairness, interests of justice, location of evidence, and public policy. The court noted that the assessment of the issues in the Third Party Claim was unextractable from the assessment in the Muntz Panel Action, as the court would have to consider whether SML’s application of the finishes was deficient. The same individuals from Queen’s Marque, Gamma, and SML would be required as witnesses, making separate proceedings inefficient and risking inconsistent findings. SML’s work and involvement were relevant to the determination of the cause of the alleged deficiencies, and SML would have to be involved in the Nova Scotia Action regardless of the outcome of the motion.

Consideration of fairness and judicial efficiency

The court found it commercially unreasonable to require the same issues to be litigated in multiple jurisdictions. There was no evidence that the laws of Nova Scotia and Ontario were not similar, nor that litigating in Nova Scotia would put SML at a legal disadvantage. Both parties were resident in Ontario, making litigation in Nova Scotia equally inconvenient. There was no evidence that Gamma was seeking a procedural advantage or that SML would be deprived of security for the claim, unable to enforce a judgment, be time-barred, or unlikely to get a fair trial in Nova Scotia.

Outcome and costs

The court found strong cause to refuse enforcement of the jurisdiction clause. The Third Party Claim was highly intertwined with the Nova Scotia Action, and it would be more convenient for the parties to address SML’s contractual performance in the context of the larger dispute. The evidence on the issues of fact regarding any deficiencies in the panels was more readily available in Nova Scotia. The motion to stay or dismiss the Third Party Claim was dismissed. Costs were awarded to Gamma in the agreed amount of $1,000, including disbursements.