COURT OF APPEAL

CANADA

PROVINCE OF QUEBEC

REGISTRY OF MONTREAL

BY THE COURT

[1]          The issue raised by this appeal is whether the motion's judge correctly dismissed the declinatory exception of the appellant Green Planet Technologies Company, a corporate entity based in Wales, by which it sought to dismiss an action for recovery of a deposit of the Canadian dollar equivalent of $504,000 paid by a Quebec company, the respondent Blackstone Tire Corporation. The outcome of the appeal turns on the application of article 3148 (3) C.C.Q. in light of the proceedings and exhibits in the Superior Court.

[2]          The only aspects of that provision that are relevant to these proceedings are those that provide that in a personal action of a patrimonial nature, a Quebec authority has jurisdiction where either "damage was suffered in Quebec" or "one of the obligations arising from a contract was to be performed in Quebec".

[3]          Towards the end of 2011, Blackstone initiated discussions with Green Planet concerning the possibility of purchasing Bridgestone "Off the Road" (OTR) tires for sale by it to one its customers operating a mine in Brazil. The parties agreed on a price of U.S. $35 per tire, and Green Planet accordingly requested its Chinese supplier to reserve 168 tires for the purposes of the transaction.

[4]          According to Blackstone, however, the deal was limited to the purchase of 72 tires. It caused an advance of U.S. $504,000 to be transferred from its bank in Montreal to Blackstone's bank in the United Kingdom in partial satisfaction of a signed purchase order dated December 6, 2011 for 72 OTR Bridgestone tires at a unit price of U.S. $35,000 for a total of $U.S. 2,520,000. Green Planet nevertheless took the position that this purchase order represented only partial completion of the verbal agreement between the parties, and that it would not deliver the 72 tires until a deposit had been received for the remaining 104 tires it had reserved with its Chinese supplier.

[5]          Blackstone thus initiated proceedings in the Superior Court of Montreal claiming the cancellation of the purchase order referred to above and the return of the deposit to it by Green Planet. This is what led to Green Planet's declinatory exception, based on on the assertion that none of the conditions of article 3148 (3) C.C.Q. attributive of jurisdiction to Quebec courts were satisfied, as well as forum non conveniens.[1]

[6]          The Superior Court judge held that Blackstone, on whom the burden lay,[2] had failed to establish that it had suffered damages in Quebec, but that the payment Blackstone made was one that arose from the contract between the parties and that it was to be performed in Quebec.

[7]          Dealing first with the latter issue, the Court concludes that the motion's judge erred. She found that the transfer from Blackstone's bank in Montreal to Green Planet's bank in the U.K. was itself evidence of an obligation arising from the contract to be executed in Quebec. The error is this: there is a distinction between an obligation being executed in fact in Quebec, and that obligation having to be executed in Quebec according to the contract. The fact that the purchase order from Blackstone to Green Plant that the latter accepted mentions Blackstone's banking information in Montreal did create any obligation on its part to pay the deposit in Quebec. Moreover, there is no such obligation in any of the documentation before the Court, nor is it suggested that any of the verbal discussions between the parties allude to the existence of such an obligation.

[8]          This distinction arises plainly from the reasons of Nuss, J.A. on behalf of the Court in D.D.H. Aviation inc. v. Fox,[3] where he said this:

[26]      None of the allegations in the Declaration provide a basis for the conclusion that one of the obligations of the Agreement was to be performed in Quebec. Although it is mentioned that the Challenger Aircraft were to be refurbished, it is not alleged that it was part of the Agreement that they were to be refurbished in Quebec. Neither is it alleged that arising from the Agreement Fox had a duty to perform in Quebec with respect to the refurbishing. As it turned out, only two of the eight Aircraft were brought to Dorval for that purpose, after the purchase, and apparently, according to Fox, after the date that the consulting fee should have been paid.

[27]      The crucial point is that there is no basis for concluding from the allegations in the Declaration, that according to Fox's Agreement with Appellants, he had an obligation to perform in Quebec. The allegation that Fox assisted with the refurbishing process does not confer jurisdiction on the Superior Court. In order to confer jurisdiction, there has to exist an obligation to perform in Quebec which arises from the Agreement.

[28]      Indeed, if a duty on Fox to attend in Dorval (or elsewhere in Quebec) and perform services here, arises from that Agreement, his actual performance of the services might well be irrelevant, because it is the place where the obligation is to be executed which is determinative for the purpose of establishing jurisdiction rather than the mere fact of his physical presence. As a corollary, even if Fox performed services in Quebec, if he had no obligation to do so arising from the Agreement, then no jurisdiction is conferred on the Superior Court by article 3148 (3) C.C.Q.

[Emphasis added.]

[9]          The motion's judge nevertheless arrived at the correct conclusion on the issue of whether damages had been suffered in Quebec. The loss of the deposit undoubtedly was recorded on the books of Blackstone in Quebec,[4] but the situs of the loss is where the money is for the purchase - in the United Kingdom, or, according to the purchase order, where it is deemed to be located - in Tianjin, China, where the goods were to be shipped FOB by Greet Planet's supplier. In any event the payment would be deemed as a matter of Quebec civil law to be made at the place of delivery in the case of a sale - article 1734 C.C.Q. - and not the place of payment in the domicile of the debtor as if there were no sale - article 1566 C.C.Q.[5]

[10]       Subsequent to leave being granted, Blackstone amended its proceedings in the Superior Court to claim a loss of profit of U.S. $177,790 resulting from the failed transaction. Green Planet did not contest the amendment in order to preserve its position that it has not attorned to the jurisdiction of the Superior Court. Blackstone argues in its factum that this loss of profit was suffered in Quebec, and relies in support of that proposition on a recent judgment of this Court in Federated Corporation v. Triangle Tires.[6] That judgment is inapplicable, however, since in Triangle Tires, the failed transaction resulted in the inability of the Quebec party to sell the products it purchased in Quebec and other eastern Canadian provinces.[7]

[11]       The loss of profit in this case arises from the inability of Blackstone to sell OTR tires to its customer operating a mine in Brazil. Therefore, the loss of profit occurred in Brazil, although it would undoubtedly be recorded in Quebec. The mere allegation in Blackstone's amended motion introductive of suit that the loss of profit it claims was suffered in Quebec is a legal characterization of facts that does not bind the Court, and moreover is inconsistent with the documents in the record.

[12]       Green Planet's declinatory exception therefore should have been granted and Blackstone's action dismissed.

FOR THESE REASONS, THE COURT:

[13]       ALLOWS the appeal with costs;

[14]       GRANTS the appellant's declinatory exception with costs;

[15]       DISMISSES the respondent's amended action in the Superior Court, with costs.