Wong v. Lee et al.
[Indexed as: Wong v. Lee]
58 O.R. (3d) 398
[2002] O.J. No. 885
Docket No. C35271
Court of Appeal for Ontario
Borins, Feldman and MacPherson JJ.A.
March 5, 2002
Conflict of laws — Choice of law — Torts — Exception to general rule that proper substantive law is lex loci delicti is only available where application of general rule would give rise to injustice — Lex fori should not be applied simply because all parties are residents of forum — Differences in public policy between forums cannot ground exception to general rule — Motions judge erred in holding that lex fori applied in Ontario action arising out of single vehicle accident in New York State where all parties were Ontario residents on basis that parties expected law of their province to govern and that public policy behind Bill 164 should be made applicable to claims brought in Ontario courts.
The plaintiff, a resident of Ontario, was injured in a single-car accident in New York State while travelling as a passenger in a car owned and driven by Ontario residents. The car was insured under a policy of automobile insurance issued in Ontario. The plaintiff’s insurer was an Ontario resident. The plaintiff brought an action in Ontario for damages for personal injuries. The motions judge held that this was a proper case for him to exercise his discretion to deviate from the rule that the proper substantive law is the lex loci delicti, and ruled that the applicable law in this case was the lex fori. Under Ontario law, the plaintiff could not claim for pecuniary losses, his non-pecuniary losses would have to meet the “threshold” set out in s. 267.1 of the Insurance Act, R.S.O. 1990, c. I.8, and his recovery would be subject to the statutory deductible. Under New York law, the plaintiff could recover for pecuniary loss subject to a threshold, and there was no monetary deducti ble. The plaintiff appealed.
Held, the appeal should be allowed.
Per Feldman J.A. (MacPherson J.A. concurring): The Supreme Court of Canada in Tolofson v. Jensen held that the general rule is that the law of the place where the wrong occurred is the applicable law, subject to a discretion to apply the lex fori where the application of the lex loci delicti would give rise to injustice. The trend in the case law since Tolofson has been to broaden what was intended to be a very narrow exception to the general rule and to apply the lex fori rather than the lex loci delicti generally in cases where the parties are resident in a province of Canada and have no connection with the state where the wrong occurred except to have been there in the accident. Although the exercise of the discretion must be available to address injustice in exceptional cases, exercising the discretion whenever all the parties to the action are from the forum represents a misapplication of the Tolofson decision and a failure to recognize and give effect to the policy behind the enunciation of the rule, which emphasizes the importance of certainty in the choice of law rules as a means of achieving fairness in the application of private international law.
The motions judge erred in basing his decision in part on the public policy of Ontario as reflected in Bill 164 and his view that that policy should be made applicable to claims brought in Ontario courts, if possible. International comity requires that respect be given to the policy of the forum where the wrong occurred, even where the action is to be tried in another forum. It is not mere differences in public policy that can ground the exception to the general rule of lex loci delicti; the exception is only available in circumstances where the application of the general rule would give rise to an injustice. An injustice that would require a court to exercise the discretion must be something beyond ordinary differences between the laws of the forums. There was no reason in this case to deviate from the general rule that the proper substantive law was the lex loci delicti, the law of New York State.
Per Borins J.A. (dissenting): The issue in this appeal was not the substantive law to be applied in adjudicating the plaintiff’s claim. Rather, the issue was whether there was any basis on which to interfere with the discretion exercised by the motions judge in holding that the law of Ontario applied.
Although Tolofson signalled a major change in the choice of law rule for interprovincial torts, it can also be read as an indication that courts should proceed cautiously in respect to an international tort choice of law rule until that issue is before the Supreme Court of Canada for determination.
Nevertheless, subsequent courts have taken Tolofson to stand for a broad principle that covers international torts, with discretion in the court to choose the lex fori where the lex loci delicti could give rise to injustice. As Tolofson has been applied to recognize a discretionary exception to the choice of law in the case of international torts, particularly in respect to the fact paradigm in this appeal, it is not for the Court of Appeal to impose limits on the exercise of that discretion.
The reasons of the motions judge disclosed that he was aware that discretion to supplant the lex loci delicti with the lex fori would be exercised on rare occasions. The motions judge explained why he chose the lex fori as the law to be applied in this case. He was not precluded from choosing the lex fori. It could not be said that this choice was either prima facie unlawful or wrong.
Hanlan v. Sernesky (1998), 38 O.R. (3d) 479, 41 C.C.L.T. (2d)
168 (C.A.), affg (1997), 35 O.R. (3d) 603, 40 C.C.L.T. (2d)
144, 31 M.V.R. (3d) 119, 14 C.P.C. (4th) 91 (Gen. Div.);
Tolofson v. Jensen, [1994] 3 S.C.R. 1022, 100 B.C.L.R. (2d) 1,
120 D.L.R. (4th) 289, 175 N.R. 161, [1995] 1 W.W.R. 609, 22
C.C.L.T. (2d) 173, 32 C.P.C. (3d) 141, 7 M.V.R. (3d) 202, consd
Other cases referred to
Charles Osenton & Co. v. Johnston, [1942] A.C. 130 (H.L.); Danyluk v. Ainsworth Technologies Inc., [2001] 2 S.C.R. 460,
2001 SCC 44, 54 O.R. (3d) 214n, 201 D.L.R. (4th) 193, 272 N.R.
1, 2001 C.L.L.C. 210-033, 7 C.P.C. (5th) 199; Friends of
Oldman River Society v. Canada (Minister of Transport), [1992] 1 S.C.R. 3, 48 F.T.R. 160n, 84 Alta. L.R. (2d) 129, 88 D.L.R.
(4th) 1, 132 N.R. 321, [1992] 2 W.W.R. 193; Gill v. Gill,
[2000] B.C.J. No. 1106 (S.C.); Hadmor Productions Ltd. v. Hamilton, [1983] 2 A.C. 191, [1982] 1 All E.R. 1042, [1982] 2
W.L.R. 322, [1982] 1 C.R. 114 (H.L.); Harelkin v. University of Regina, [1979] 2 S.C.R. 561, 96 D.L.R. (3d) 14, 26 N.R. 364, [1979] 3 W.W.R. 676; Lau v. Li (2001), 53 O.R. (3d) 727,
[2001] O.J. No. 1389 (S.C.J.); Lebert v. Skinner Estate (2001), 53 O.R. (3d) 559, [2001] O.J. No. 1038 (S.C.J.);
McLean v. Pettigrew, [1945] S.C.R. 62, [1945] 2 D.L.R. 65;
Metropolitan Stores (MTS) Ltd. v. Manitoba Food & Commercial Workers, Local 832, [1987] 1 S.C.R. 110, 46 Man. R. (2d) 241,
38 D.L.R. (4th) 321, 73 N.R. 341, [1987] 3 W.W.R. 1, 25 Admin.
L.R. 20, 87 C.L.L.C. 14,015, 18 C.P.C. (2d) 273 (sub nom.
Manitoba (Attorney General) v. Metropolitan Stores (MTS) Ltd.); Phillips v. Eyre (1870), L.R. 6 Q.B. 1, 10 B & S 1004, 40
L.J.Q.B. 28, 22 L.T. 869 (Ex. Ch.); R. v. Regan, 2002 SCC 12; Reza v. Canada, [1994] 2 S.C.R. 394, 116 D.L.R. (4th) 61, 167 N.R. 282, 21 C.R.R. (2d) 236; Wong v. Wei (1999), 65 B.C.L.R. (3d) 222, [1999] 10 W.W.R. 296, 45 C.C.L.T. (2d) 105, [1999]
B.C.J. No. 768 (S.C.) Statutes referred to
Family Law Act, R.S.O. 1990, c. F.3, s. 61 Insurance Act, R.S.O. 1990, c. I.8, s. 267.1
Treaties and conventions referred to
Hague Convention on the Law Applicable to Traffic Accidents, May 4, 1970
Authorities referred to
Barak, A., Judicial Discretion (New Haven: Yale University, 1989)
Castel, J.G., and J. Walker, Canadian Conflict of Laws, 5th ed., looseleaf (Markham: Butterworths, 2002)
APPEAL from an order of Nordheimer J. (2000), 50 O.R. (3d)
419 (S.C.J.) holding that substantive law of forum applied to the plaintiff’s action.
Harvey S. Consky, for appellant.
Marcus Snowden, for respondents Lee and 733696 Ontario Ltd.
FELDMAN J.A.(MACPHERSON J.A. concurring): —
Overview
[1] The issue in this case is the proper substantive law to be applied in a motor vehicle accident action brought in Ontario by the passenger, arising out of a single car accident which occurred in New York State, but where the driver, the passenger, the vehicle owner and their insurers are all residents of Ontario, and where no New York residents are involved.
[2] The motions judge held that this was a proper case for him to exercise his discretion to deviate from the rule that the proper law is the lex loci delicti (the place of the wrong, in this case, New York), and to order that the applicable law is the lex fori, the law of the forum of the action, Ontario.
[3] For the reasons set out below, I would allow the appeal and substitute an order that the applicable law is the law of the lex loci delicti, the state of New York.
Facts
[4] The parties stated the following case for the court:
1. On May 2, 1996, the plaintiff was a passenger in a vehicle operated by the individual defendant owned by the first named corporate defendant on an interstate highway in the state of New York.
2. The plaintiff claims for injuries allegedly sustained in a single vehicle accident when the vehicle left the road.
3. At all times before and after the accident in issue, the plaintiff was a resident of Ontario.
4. Each of the defendants, including the last named corporate defendant as insurer of the plaintiff, were and are residents of Ontario.
5. The vehicle involved in the accident was owned by an Ontario resident, registered in Ontario, insured under a policy of automobile insurance issued in Ontario and driven by a person authorized to operate the vehicle with the owner’s consent.
6. No persons resident in New York are alleged or potentially involved in the accident itself, apart from post-accident treatment at a local hospital.
7. It is agreed that the Ontario Superior Court of Justice is the appropriate forum for the trial of this action.
8. In return for agreeing to admit liability, the personal and first named corporate defendants are pursued for no more than the limits of insurance on the vehicle issued by The Hartford Canada.
9. For the purposes of this motion, the parties to this motion agree that the law of New York is fairly represented in the Affidavit of David Share, a copy of which is attached to this Special Case together with the pleadings.
[5] The importance of the choice of law to the parties is based on the relevant differences between New York and Ontario substantive law. Under Ontario law, the case would be governed by the Insurance Act, R.S.O. 1990, c. I.8, as am. by S.O. 1993,
c. 10, s. 25 (Bill 164). The consequences for the plaintiff would be that he could not claim for pecuniary losses, his non- pecuniary losses would have to meet the “threshold” set out
in s. 267.1 in order to recover more than the statutory scheme, and his recovery would be subject to the statutory deductible. In contrast, from the defendant’s point of view, under New York law the plaintiff may recover for pecuniary loss subject to a threshold, and there is no monetary deductible.
The Legal Test
[6] In Tolofson v. Jensen, [1994] 3 S.C.R. 1022, 120 D.L.R. (4th) 289, the Supreme Court of Canada reconsidered the choice of law rule for actions specifically concerning automobile accidents involving residents of different jurisdictions both within Canada and internationally.
[7] The court overruled the previous rule, as enunciated in Canada in McLean v. Pettigrew, [1945] S.C.R. 62, [1945] 2 D.L.R. 65, which allowed courts to apply the law of the forum in which the action was brought as long as: (1) the wrong would have been actionable if committed in that forum; and (2) the wrong was not justifiable by the law of the place where it occurred. In Tolofson, supra, the court held that the general rule now is that the law of the place where the wrong occurred is the applicable law. On a theoretical basis, the rule reflects the fact that a state has jurisdiction over what occurs in its territory. However, La Forest J. was also satisfied that the rule responded to practical considerations, the most important of which are certainty, ease of application, predictability and meeting normal expectations. La Forest J. emphasized that any exceptions to the rule, as applied to international cases, had to be carefully defined and stated at p. 1054 S.C.R.:
. . . because a rigid rule on the international level could give rise to injustice, in certain circumstances, I am not averse to retaining a discretion in the court to apply our own law to deal with such circumstances. I can, however, imagine few cases where this would be necessary.
[8] In that context, La Forest J. considered at p. 1057
S.C.R. whether there was room for an exception where the parties, as in this case, are residents of the forum where the action is brought, not of the state where the wrong occurred. However, after considering the reasons offered for the application of an exception in that circumstance, he rejected as unsound the assumptions and arguments in favour of the exception. First, he disagreed with the assumption that it is within the reasonable expectations of the parties that their home law would apply to an action between them. Earlier in his reasons, he indicated that in his view it was instead reasonable for parties to expect to be governed by the law of the state where they were at the time of the wrong. He also rejected the “public policy” argument that it would be unjust and unfair to apply the law of another state if some aspect of that law was considered contrary to the public policy of the forum as reflected in its own law. Rather, as he stated at p. 1058 S.C.R., his view was that differences in applicable laws “are a concomitant of the territoriality principle”. La Forest J. emphasized that a strict rule facilitates the principle of order and stated that “[w]hile . . . the underlying principles of private international law are order and fairness, order comes first. Order is a precondition to justice.”
[9] Canada is not a signatory to the Hague Convention on the Law Applicable to Traffic Accidents, May 4, 1970 which also applies the lex loci delicti rule but allows for an exception where all parties involved in the accident are from the forum where the action is brought. La Forest J. rejected this exception as inapplicable in the interprovincial context. Although he did not preclude its possible application to international situations, my reading is that he had already rejected most of the arguments in favour of the exception earlier in his analysis of the reasons for and against the rule. For example, he rejected the idea that today there is any problem for courts to hear evidence of, then apply the law of another jurisdiction. In any event, he immediately turned again to another point in favour of a strict rule: because at the outset of an action it may be difficult to determine the ambit of a claim, the existence of an exception to the rule may encourage frivolous cross-claims in or der to achieve forum- shopping objectives. In contrast, rejection of exceptions creates certainty in the law and promotes early settlement. [See Note 1 at end of document]
[10] In the result, La Forest J. applied the lex loci delicti rule in the Tolofson case, in spite of the fact that by applying Saskatchewan law, the infant plaintiff’s claim was barred by a limitation period and by a bar on claims by gratuitous passengers, whereas the law of the forum, British Columbia, would have allowed the plaintiff’s claim to proceed.
Analysis
[11] Since the Tolofson decision, there have been a number of international cases decided both in Ontario and in other provinces, where all of the parties were resident in one province, and where courts have applied the lex fori, thereby deviating from the normal rule, and exercising what La Forest
J. expressed and intended to be a very limited discretion designed to avoid an injustice: See Hanlan v. Sernesky (1998), 38 O.R. (3d) 479, 41 C.C.L.T. (2d) 168 (C.A.), affg (1997), 35
O.R. (3d) 603, 31 M.V.R. (3d) 119 (Gen. Div.); Lebert v. Skinner Estate (2001), 53 O.R. (3d) 559, [2001] O.J. No. 1038 (S.C.J.); Wong v. Wei (1999), 65 B.C.L.R. (3d) 222, [1999]
B.C.J. No. 768 (S.C.); Gill v. Gill, [2000] B.C.J. No. 1106 (S.C.). In Lau v. Li (2001), 53 O.R. (3d) 727, [2001] O.J.
No. 1389 (S.C.J.) (leave to appeal to Divisional Court denied, December 6, 2001) the court also applied the reasoning in Hanlan to an interprovincial case and exercised the discretion to apply the law of Ontario and not of Quebec, the place where the accident occurred, notwithstanding the ruling in Tolofson that the discretion is not available in such an interprovincial case.
[12] It appears that the trend of the case law is to broaden what was intended to be a very narrow exception to the general rule, and to apply the lex fori rather than the lex loci delicti generally in cases where the parties are resident in a province of Canada and have no connection with the state where the wrong occurred except to have been there in the accident. Although the exercise of the discretion must be available to address injustice in exceptional cases (such as Hanlan, supra; see para. 16, infra), it is my view that exercising the discretion whenever all the parties to the action are from the forum represents a misapplication of the Tolofson decision and a failure to recognize and give effect to the policy behind the enunciation of the rule, which emphasizes the importance of certainty in the choice of law rules as a means of achieving fairness in the application of private international law.
[13] In this case the motions judge reached his conclusion, as he said, with some hesitation given the tenor of the reasons of La Forest J.
[14] The motions judge at pp. 424-25 O.R. set out six reasons for concluding that this was a case where the exception to the rule should apply:
(i) First, where all of the parties are residents of Ontario, it is reasonable to assume that they would expect the law of their province to govern their affairs.
(ii) Second, it accords with the very exception that Mr. Justice La Forest anticipated in Tolofson at p. 1057 S.C.R. . . .
(iii) Third, it accords with the Hague Convention on Traffic Accidents, which allows for an exception where all parties involved in the accident are from the forum and which, as an international convention, is worthy of regard notwithstanding that Canada is not a signatory to that convention.
(iv) Fourth, it permits the public policy as determined by the Ontario legislature to be applied to a case where all of the parties are residents of Ontario.
(v) Fifth, it allows the trial judge in this action to apply our own law to the determination of the proceeding (which, by the plaintiff’s concession, the trial judge will have to apply to the assessment of damages in any event).
(vi) Sixth, it avoids the imposition on the defendants of a significant injustice in that it allows them the benefits of the application of Bill 164 in a factual situation which, but for the location of the accident, has every other connection to Ontario.
However, as discussed above, La Forest J. considered but rejected the arguments that parties expect the law of their province to govern an incident that occurred in another jurisdiction; that public policy differences are sufficient to ground an exception; and that any advantages in allowing judges to apply their own law could provide a basis to deviate from the generally applicable rule. He also pointed out that the value of the Hague Convention approach in international cases was its requirement of reciprocity among member states.
[15] With respect to the motions judge, in my view his reasoning constitutes an error in light of the Tolofson case. He based his decision in part on the public policy of Ontario as reflected in Bill 164, and his view that that policy should be made applicable to claims brought in Ontario courts, if possible. However, this public policy argument was specifically rejected by La Forest J. in Tolofson. He concluded that international comity requires that respect be given to the policy of the forum where the wrong occurred, even where the action is to be tried in another forum.
[16] It is not mere differences in public policy that can ground the exception to the general rule of lex loci delicti; the exception is only available in circumstances where the application of the general rule would give rise to an injustice. Every difference in the laws of the two forums is going to benefit one side or the other and be perceived as unjust to the one not benefiting. Because La Forest J. anticipated the exercise of discretion being necessary only in a very unusual case, an injustice that would require a court to exercise the discretion must be something beyond ordinary differences between the laws of the forums. La Forest J. did not articulate the criteria he envisaged for any particular circumstance to qualify as an injustice. However, as an example, the type of injustice the court sought to remedy in Hanlan was the unavailability to an Ontario plaintiff of a complete category of claim or cause of action according to the lex fori — the claims of family memb ers for damages pursuant to s. 61 of the Family Law Act, R.S.O. 1990, c. F.3.
[17] In this case, the injustice referred to by the motions judge is that if the law of New York State were to apply, the defendant insurance company [See Note 2 at end of document] would be open to liability for pecuniary damages without a deductible, whereas under Ontario law, this would not be the case. In my view, this is not the type of injustice which allows the court to intervene by exercising the discretion referred to by La Forest J. Rather, it is the necessary effect of applying the rule that the lex loci delicti is the applicable law. This articulation of the injustice appears to be merely another way of applying the public policy of Ontario as defined in its law, and effectively treating the fact that all of the parties are from the forum as in itself creating an injustice.
[18] This is not a situation where this court is seeking to substitute its discretion for that of the trial judge in which case, of course, this court is not entitled to intervene. Rather, the motions judge erred by finding that the precondition for the exercise of discretion — an injustice of the gravity contemplated by La Forest J. — was present in the circumstances of this case.
Procedural Versus Substantive
[19] The respondent also raised the argument that s. 267.1 of the Insurance Act, which bars an action in Ontario for pecuniary losses, is a procedural rule. Because the Ontario courts would apply their own procedural as opposed to substantive law, that section could bar the claim for pecuniary loss even if the substantive law of New York applied.
[20] That issue is answered as well by the Tolofson case where the court held that a limitation period and a bar to actions by gratuitous passengers were substantive provisions of the Saskatchewan law and therefore applied as part of the lex loci delicti to the action brought in British Columbia.
[21] I therefore conclude that similarly, the bar in s. 267.1 is a substantive as opposed to procedural law and applies only if the substantive law of Ontario applies to the action.
Conclusion
[22] In my view, this is a case where the general choice of law rule is to be applied. The fact that the parties to the action are all residents of Ontario without any connection to New York other than the accident, is not, by itself, a reason to deviate from the rule. There is no injustice here, as contemplated by La Forest J., which could provide the basis for the exercise of the court’s discretion to apply the law of Ontario rather than the law of New York.
[23] I would therefore allow the appeal with costs, set aside the order below and substitute an order that the law applicable to this action is the law of New York.
[24] BORINS J.A. (dissenting): — I have had the advantage of reading the reasons of my colleague, Feldman J.A. Unlike my colleague, I do not view the issue in this appeal to be the substantive law to be applied in adjudicating the plaintiff’s claim against the defendants. Rather, the issue in this appeal is whether there is any basis on which to interfere with the discretion exercised by Nordheimer J. in holding that the law in Ontario should be applied. As I have found no basis on which this court can properly interfere, I would dismiss the appeal.
[25] As this appeal is about the exercise of judicial discretion in the context of the choice of law which is to govern the determination of an international tort wherein the parties all reside in the domestic forum and the tort occurred in the foreign forum, I find it helpful to make brief reference to the nature of judicial discretion and the test for appellate review of the exercise of judicial discretion. In addition, it is necessary to consider the limited guidance provided by La Forest J., on behalf of a majority of the Supreme Court of Canada, in Tolofson v. Jensen, supra, for the exercise of discretion in the choice of law in circumstances similar to those that pertain to this case.
Judicial Discretion
[26] In his treatise, Judicial Discretion (New Haven: Yale University Press, 1989) Chief Justice Aharon Barak has provided a thorough analysis of judicial discretion. As the context for his analysis, at pp. 7-9 Justice Barak defined judicial discretion in the following discussion:
To me, discretion is the power given to a person with authority to choose between two or more alternatives, when each of the alternatives is lawful. Justice Sussman referred to this definition, saying, “Discretion means freedom to choose among different possible solutions.” Hart and Sacks offered a similar definition: “Discretion means the power to choose between two or more courses of action each of which is thought of as permissible.” Judicial discretion, then, means the power the law gives the judge to choose among several alternatives, each of them being lawful. . . .
Discretion assumes the freedom to choose among several lawful alternatives. Therefore, discretion does not exist when there is but one lawful option. In this situation, the judge is required to select that option and has no freedom of choice. No discretion is involved in the choice between a lawful act and an unlawful act. The judge must choose the lawful act, and he is precluded from choosing the unlawful act.
Discretion, on the other hand, assumes the lack of an obligation to choose one particular possibility among several. Discretion assumes the existence of several options, of which the judge is entitled to choose the one that most appeals to him. In the words of Justice Cardozo,
Other cases present a genuine opportunity for choice — not a choice between two decisions, one of which may be said to be almost certainly right and the other almost certainly wrong, but a choice so nicely balanced that when once it is announced, a new right and a new wrong will emerge in the announcement.
Thus, discretion assumes a zone of possibilities rather than just one point. It is founded on the existence of a number of options that are open to the judge. . . .
The zone of lawful options may be narrow, as when the judge is free to choose between only two lawful alternatives. Or the range of lawful options may be considerable, as when the judge stands before many lawful alternatives and combinations of alternatives. In this sense one may distinguish between narrow and broad discretion. This distinction, of course, is only relative.
(Footnotes omitted)
The standard of appellate review of judicial discretion
[27] The standard of appellate review of judicial discretion has been considered by the Supreme Court of Canada in a number of cases. In Reza v. Canada, [1994] 2 S.C.R. 394 at pp. 404-05, 116 D.L.R. (4th) 61 at p. 68, the Supreme Court held that:
. . . the test for appellate review of the exercise of judicial discretion is whether the judge at first instance has given sufficient weight to all relevant considerations: Friends of the Oldman River Society v. Canada (Minister of Transport), [1992] 1 S.C.R. 3, at pp. 76-77, per La Forest J. See also Manitoba (Attorney-General) v. Metropolitan Stores (MTS) Ltd., [1987] 1 S.C.R. 110, at pp. 154-55.
[28] In Friends of Oldman River Society v. Canada (Minister of Transport), [1992] 1 S.C.R. 3, 88 D.L.R. (4th) 1 , at pp. 76-77 S.C.R., La Forest J. stated that in Harelkin v. University of Regina, [1979] 2 S.C.R. 561, 96 D.L.R. (3d) 14, the Supreme Court had essentially adopted the following standard of review articulated by Viscount Simon L.C. in Charles Osenton & Co. v. Johnston, [1942] A.C. 130 at p. 138 (H.L.):
The law as to the reversal by a court of appeal of an order made by the judge below in the exercise of his discretion is well-established, and any difficulty that arises is due only to the application of well-settled principles in an individual case. The appellate tribunal is not at liberty merely to substitute its own exercise of discretion for the discretion already exercised by the judge. In other words, appellate authorities ought not to reverse the order merely because they would themselves have exercised the original discretion, had it attached to them, in a different way. But if the appellate tribunal reaches the clear conclusion that there has been a wrongful exercise of discretion in that no weight, or no sufficient weight, has been given to relevant considerations such as those urged before us by the appellant, then the reversal of the order on appeal may be justified.
[29] In Metropolitan Stores (MTS) Ltd. v. Manitoba Food & Commercial Workers, Local 832, [1987] 1 S.C.R. 110, 38 D.L.R. (4th) 321, at p. 155, the Supreme Court applied the standard of review explained by Lord Diplock on behalf of the House of Lords in Hadmor Productions Ltd. v. Hamilton, [1983] 2 A.C. 191 at p. 220, [1982] 1 All E.R 1042 at p. 1046:
Before adverting to the evidence that was before the judge and the additional evidence that was before the Court of Appeal, it is I think appropriate to remind your Lordships of the limited function of an appellate court in an appeal of this kind. An interlocutory injunction is a discretionary relief and the discretion whether or not to grant it is vested in the High Court judge by whom the application for it is heard. On an appeal from the judge’s grant or refusal of an interlocutory injunction the function of an appellate court, whether it be the Court of Appeal or your Lordships’ House, is not to exercise an independent discretion of its own. It must defer to the judge’s exercise of his discretion and must not interfere with it merely on the ground that the
members of the appellate court would have exercised the discretion differently. The function of the appellate court is initially one of review only. It may set aside the judge’s exercise of his discretion on the ground that it was based on a misunders tanding of the law or of the evidence before him or on an inference that particular facts existed or did not exist, which, although it was one that might legitimately have been drawn on the evidence that was before the judge, can be demonstrated to be wrong by further evidence that has become available by the time of the appeal, or on the ground that there has been a change of circumstances after the judge made his order that would have justified his acceding to an application to vary it. Since reasons given by judges for granting or refusing interlocutory injunctions may sometimes be sketchy, there may also be occasional cases where even though no erroneous assumption of law or fact can be identified the judge’s decision to grant or refuse the injunction is so aberrant that it must be set aside on the ground that no reasonable judge regardful of his duty to act judicially could have reached it. It is only if and after the appellate court has reached the conclusion that the judge’s exercise of his d iscretion must be set aside for one or other of these reasons that it becomes entitled to exercise an original discretion of its own.
(Emphasis added)
Although, in Hadmor Productions, Lord Diplock considered the scope of appellate review in the context of an interlocutory injunction and in circumstances where further evidence was before the court, his comments apply to all cases of appellate review of discretion exercised by a lower court.
[30] More recently, in R. v. Regan, 2002 S.C.C. 12 at para. 117, LeBel J., speaking on behalf of a majority of the Supreme Court of Canada, described the standard of review as follows:
The decision to grant a stay is a discretionary one, which should not be lightly interfered with: “an appellate court will be justified in intervening in a trial judge’s exercise of his discretion only if the trial judge misdirects himself or if his decision is so clearly wrong as to amount to an injustice” (Tobiass, supra, at para. 87; Elsom v. Elsom, [1989] 1 S.C.R. 1367, at p. 1375). Furthermore, where a trial judge exercises her or his discretion, that decision cannot be replaced simply because the appellate court has a different assessment of the facts (Stein v. The Ship “Kathy K”, [1976] 2 S.C.R. 802; see also R. v. Oickle, [2000] 2 S.C.R. 3, 2000 SCC 38; R. v. Van der Peet, [1996] 2 S.C.R. 507).
Tolofson v. Jensen
[31] In Tolofson, the Supreme Court of Canada radically changed the Canadian law concerning choice of law in tort in the context of interprovincial torts. La Forest J., on behalf of a majority of the Supreme Court, rejected the forum law bias (lex fori) inherent in the traditional common law approach to choice of law in tort. The pre-eminence of the lex fori, established by Phillips v. Eyre (1870), L.R. 6 Q.B. 1, 40 L.J.Q.B. 28 (Ex. Ch.), as interpreted in McLean v. Pettigrew, supra, was abolished. Under the new rule, the law of the place of the tort (lex loci delicti) is paramount and applies without exception in respect to interprovincial torts. Following a lengthy analysis of common law tort choice of law principles, La Forest J. rested his reasons for the new rule on articulated principle, consistency of approach to choice of law, territorial sovereignty and certainty.
[32] Although not required to do so on the facts of Tolofson, La Forest J. made a number of brief observations concerning the choice of law in cases of international torts. While some room was conceded for the operation of what appears to be a public policy exception to the lex loci delicti rule at the international level, it was thought that such cases would be rare. However, one of the cases that fit into the exception was the fact paradigm that exists in this appeal: the plaintiff and the defendant are residents of the domestic forum and are the sole parties to a tort that took place in a foreign forum. While it may be argued that La Forest J.’s references to a choice of law rule applicable to foreign torts was obiter dicta, it is clear that the courts have interpreted and applied
Tolofson as establishing as the choice of law rule in the case of foreign torts the same rule as in the case of domestic torts, the lex loci delicti, with the exception that the lex fori may be chosen to prevent an injustice. The cases referred to by Feldman J.A., including the decision of this court in Hanlan v. Sernesky, supra, are illustrations of the exercise of judicial discretion in cases of international torts to apply the lex fori in circumstances where the court was of the opinion that the application of the lex loci delicti could give rise to an injustice. For an analysis of Tolofson and a discussion of its application by trial level courts in respect to the choice of law in cases of interprovincial and international torts, see Castel & Walker, Canadian Conflict of Laws, 5th ed., looseleaf (Markham: Butterworths, 2002) at pp.
35.8 to 35.27.
[33] The reasons of the motion judge, which are reported in (2000), 50 O.R. (3d) 419, disclose that he was aware that discretion to supplant the lex loci delicti with the lex fori would be exercised on rare occasions. The motion judge quoted [at pp. 421-24 O.R.] the following passages from Tolofson at pp. 1054, 1062, 1057 and 1060 S.C.R., respectively, which contain La Forest J.’s reference to a choice of law rule for international torts:
I have already indicated, of course, that I view the lex loci delicti rule as the governing law. However, because a rigid rule on the international level could give rise to injustice, in certain circumstances, I am not averse to retaining a discretion in the court to apply our own law to deal with such circumstances. I can, however, imagine few cases where this would be necessary.
. . . . .
On the whole, I think there is little to gain and much to lose in creating an exception to the lex loci delicti in relation to domestic litigation. This is not to say that an exception to the lex loci delicti such as contained in the Hague Convention is indefensible on the international plane, particularly since it is enshrined in a convention that
ensures reciprocity.
. . . . .
There might, I suppose, be room for an exception where the parties are nationals or residents of the forum. Objections to an absolute rule of lex loci delicti generally arise in such situations: [citations omitted]
. . . . .
With the general rule of lex loci delicti, in cases involving parties from two or more jurisdictions, chances are that the lawsuit will take place in the country in which the tort took place. But when all parties are from another state, the likelihood is that the lawsuit will take place in their home jurisdiction. There is some merit to allowing judges in this situation to apply their own law.
Reasons of the Motion Judge
[34] The motion judge explained why he chose the lex fori as the law to be applied in this case at pp. 424-25 O.R.:
Having considered all of the authorities to which I have been referred, I have concluded, albeit with some hesitation given the tenor of the reasons of La Forest J., that this is the case to which the exception to the law of the place rule should apply. I have reached this conclusion for the following reasons:
(i) First, where all of the parties are residents of Ontario, it is reasonable to assume that they would expect the law of their province to govern their affairs.
(ii) Second, it accords with the very exception that Mr. Justice La Forest anticipated in Tolofson at p. 1057 S.C.R., p. 310 D.L.R. to which I earlier referred.
(iii) Third, it accords with the Hague Convention on Traffic
Accidents, which allows for an exception where all parties involved in the accident are from the forum and which, as an international convention, is worthy of regard notwithstanding that Canada is not a signatory to that convention.
(iv) Fourth, it permits the public policy as determined by the Ontario legislature to be applied to a case where all of the parties are residents of Ontario.
(v) Fifth, it allows the trial judge in this action to apply our own law to the determination of the proceeding (which, by the plaintiff’s concession, the trial judge will have to apply to the assessment of damages in any event).
(vi) Sixth, it avoids the imposition on the defendants of a significant injustice in that it allows them the benefits of the application of Bill 164 in a factual situation which, but for the location of the accident, has every other connection to Ontario.
[35] The motion judge placed reliance on Wong v. Wei, supra, which is based on the same fact paradigm as the case under appeal. The law of British Columbia, the home forum of the parties, provided for a more limited recovery than the law of California where the motor vehicle accident took place. Kirkpatrick J. placed particular emphasis on this fact, stating that the legislature of British Columbia had established a public policy in limiting the recovery available to the plaintiff. As the motion judge stated at p. 423 O.R.: “Kirkpatrick J. considered that this public policy, which was clearly at odds with the laws of California, militated significantly against the application of California law.”
[36] The motion judge made particular reference to Ontario’s statutory scheme of damage recovery arising from motor vehicle accidents at p. 424 O.R. He concluded that “the public policy which is reflected in the legislation ought to be made applicable to claims brought within Ontario if possible.”
[37] Finally, the motion judge took note that his choice of the lex fori was consistent with that made by Platana J. in Hanlan, which involved an accident that had occurred in Minnesota between two persons who were insured in, and were residents of, Ontario. In its endorsement dismissing an appeal from that decision, this court said at p. 480 O.R.:
In accordance with Tolofson v. Jensen, [1994] 3 S.C.R. 1022, 120 D.L.R. (4th) 289, we are satisfied that the motions judge had a discretion to apply the lex fori in circumstances where the lex loci delicti rule would work an injustice.
Justice Platana purported to exercise the discretion and ruled that in the particular circumstances before him, the operation of the lex loci rule would work an injustice. In coming to this conclusion, it is apparent that Mr. Justice Platana considered the following factors:
1. that the parties were both resident in Ontario;
2. that the contract of insurance was issued in Ontario;
3. that there was no connection with the State of Minnesota other than that it was the place of the accident;
4. that although the accident occurred in Minnesota, the consequences to members of the injured plaintiff’s family were directly felt in Ontario; and
5. that the uncontradicted evidence before him was that claims of this nature are not permitted under Minnesota law.
We are not persuaded that Mr. Justice Platana erred in exercising his discretion as he did. Accordingly, the appeal is dismissed with costs.
Analysis
[38] Given the limited attention accorded by La Forest J. to the choice of law rule for international torts in the passages from his reasons for judgment quoted by the motion judge, I confess to having some difficulty in applying the test for appellate review of the exercise of the motion judge’s discretion. As Tolofson was concerned only with the choice of law rule applicable to interprovincial torts, La Forest J.’s limited reference to a choice of law rule for international torts may be because he anticipated that the Supreme Court would provide a definitive consideration of that issue when it came before the Supreme Court for its consideration. Indeed, it may be said that because he was deciding a choice of law rule for interprovincial torts, La Forest J. was taking care not to extend the reach of that rule to cases of international torts. Although Tolofson signalled a major change in the choice of law rule for interprovincial torts, it can also be read as an indication that courts should proceed cautiously in respect to an international tort choice of law rule until that issue is before the Supreme Court of Canada for determination. Moreover, it may be that by referring to an exception in cases of international torts, La Forest J. was keeping the definitive decision on the choice of law rule for international torts open for the future.
[39] Nevertheless, as I have observed, subsequent courts have taken Tolofson to stand for a broad principle that covers international torts, with discretion in the court to choose the lex fori where the lex loci delicti “could give rise to injustice”. As Tolofson has been applied to recognize a discretionary exception to the choice of law in the case of international torts, particularly in respect to the fact paradigm in this appeal, in my view it is not for this court to impose limits on the exercise of that discretion.
[40] It would be wrong, in my view, to interpret Hanlan as standing for the proposition that all cases that contain a fact paradigm similar to that of Hanlan and this case will give rise to an injustice thereby justifying the court to choose the lex fori rather than the lex loci delicti. However, I view Hanlan as a case in which this court accorded deference to the exercise of the motion judge’s discretion in the circumstances of that case. Indeed, all of the trial court decisions to which we have been referred in which the court has exercised a discretion in the choice of law in cases of international torts are no more than examples of cases in which the court has exercised its discretion in choosing the lex fori or the lex loci delicti.
[41] Unfortunately, little guidance is found in the reasons of La Forest J. respecting the nature of the injustice which might lead a judge to exercise his or her discretion in the choice of law to govern the dispute. However, he did envision a judge choosing the lex fori in circumstances such as those addressed in the Hague Convention on The Law Applicable to Traffic Accidents: when all of the parties are nationals or residents of the forum, not the state where the accident occurred. He appears to give two reasons why, in such circumstances, it would be appropriate to choose the lex fori. At p. 1062 S.C.R., he suggests that it is because the choice of the lex fori emanates from its enshrinement in a convention “that ensures reciprocity”. At p. 1060 S.C.R., he notes that in the fact paradigm of this case there “is some merit to allowing judges . . . to apply their own law”.
[42] In respect to the second reason, although La Forest J. did not expand upon this statement, in my view, it is not unreasonable to conclude that the merit may lie in a desire to limit the number of occasions when judges of the forum would be required to apply foreign law, which must be proved, with the attendant expense involved in expanding a trial to allow such proof. As well, it is to be assumed that judges are experienced in applying their domestic law which, in this fact paradigm, includes the application of the legislated policy of compensation in force in the home forum. In this regard, to insist on the lex loci delicti would preclude an Ontario court from awarding damages based on the Ontario statutory no-fault compensation regime for personal injuries sustained as a result of motor vehicle accidents.
[43] On the level of comity, it is difficult to see what interest New York State would have in applying its statutory compensation regime to a claim between two non-resident parties litigating in their home forum. In my opinion, the better view is that Ontario has a greater interest in the compensation of an Ontario resident by another Ontario resident being determined by Ontario law, rather than by New York law.
[44] In exercising his discretion in favour of the lex fori, the motion judge considered six factors which, it would appear, he derived from Tolofson. In essence, what the motion judge did was to interpret the local legislative policy governing the compensation of Ontario residents injured in a motor vehicle accident by another Ontario resident to give it wide extraterritorial scope. An Ontario resident injured in a foreign state by the negligence of another Ontario resident, each of whom was insured in Ontario by an Ontario insurer, should be compensated under the Ontario statutory no-fault compensation regime for personal injuries sustained in a motor vehicle accident. To insist on the application of the lex loci delicti in this fact paradigm would preclude an Ontario court from awarding damages in compliance with Ontario’s statutory compensation regime and would, thus, result in giving rise to an injustice of the nature contemplated in Tolofson.
[45] To conclude that the motion judge wrongly exercised his discretion in favour of the lex fori because the plaintiff stands to recover greater damages under New York law than under Ontario law does not produce an injustice in the sense that the plaintiff will be denied an assessment of damages according to the law. Moreover, this conclusion would effectively deny the existence of any discretion to choose the lex fori whenever that law produces a lower assessment of damages than the lex loci delicti. In my view, such a categorical denial is not warranted. Had the Supreme Court of Canada intended the lex loci delicti to be the choice of law rule in the case of all international torts, it would not have provided for the discretion exercised by the motion judge.
[46] As Justice Barak has pointed out, when we say that a judge has a discretion we mean that there is no legal rule that compels the judge to make a particular decision. Rather, if the judge considers relevant factors, it is accepted that different judges can reasonably interpret the factors in different ways and reach different, but reasonable, decisions. Thus, where no legal rule unambiguously requires a particular legal decision, there are no constraints that require a given result. In such cases, judges no doubt believe that neither party has the right to any particular decision. They identify their task as selecting the decision that is best on the whole, all things considered, and they talk not about what they must do but about what they should do. It can be said, therefore, that discretionary decisions illustrate that judging is an art, not a science, and that the judge, in considering the relevant factors, blends analogy, craft, political wisdom, and experience into a decision w hich his or her reasons, no matter how carefully crafted, may fail to capture or express his or her full insight. Such decisions may also illustrate that there are no right answers to hard questions, that insight is subjective, and that the decision is only what seems right, for better or for worse, to the particular judge on a particular day. Such, then, is the nature of discretionary decision making and, no doubt, accounts for the significant deference to be accorded to discretionary decisions reached by judges.
[47] In the circumstances of this appeal, the discretion accorded to the motion judge permitted him to choose between two alternatives, each of which was lawful. Unlike the domestic tort choice of law rule which is absolute and admits of no exceptions, the motion judge in this international tort choice of law case was not precluded from choosing the lex fori. It cannot be said that this choice was either prima facie unlawful or wrong. Although the motion judge’s discretion was narrow in the sense that he was free to choose between only two lawful alternatives, nevertheless he had that choice and on appellate review the court must defer to the exercise of his discretion, even though the appellate court may have exercised it differently.
[48] The motion judge addressed the factors for and against the exercise of the discretion which the court clearly possessed and gave appropriate weight to those factors. It is not for this court to reconsider the same discretionary factors. To do so is to embark on the road of substituting this court’s discretion for that of the motion judge should a reconsideration of the factors produce a result that differs from that reached by the motion judge. This is not a case, for example, like Danyluk v. Ainsworth Technologies Inc., [2001] 2 S.C.R. 460, 201 D.L.R. (4th) 193 at p. 219, in which, because the lower court failed to address the factors for and against the exercise of discretion which it possessed, this court is entitled to consider the discretionary factors. Moreover, I am satisfied that the motion judge reached a decision that is not so clearly wrong as to amount to an injustice. I would not interfere with Nordheimer J.’s exercise of his discretion in choosing the lex fori as the law which is to govern the determination of the plaintiff’s claim.
[49] For all of the foregoing reasons, I would dismiss the appeal with costs.
Appeal allowed.
Notes
Note 1: In addition, the possibility of the exercise of the forum court’s discretion in favour of the lexi fori may cause litigants who are within the territorial jurisdiction of the court to sue elsewhere, even though it may be more convenient for all or most of the parties to sue in the forum. See Tolofson at p. 1054 S.C.R. where La Forest J. makes this point in the context of rejecting the old “double actionability” rule.
Note 2: The conclusion on injustice may have been different, had the parties not agreed to limit liability to the policy limits of the insurer; for example, had the defendant had personal exposure to unlimited pecuniary losses.