SCC Reformulates Test for Assuming Jurisdiction Over Foreign Defendants

Patrick J. Cotter and Nathan Fan
Published April 20th, 2012

Club Resorts Ltd. v. Van Breda, 2012 SCC 17

Summary – On April 18, 2012, the Supreme Court of Canada (“SCC”) released its decision dismissing the appeal from the Court of Appeal for Ontario in Club Resorts Ltd. v. Van Breda, 2012 SCC 17 and related cases.

Analysis – The SCC accepted the approach of the Court of Appeal for Ontario to rely on presumptive connecting factors, to bring clarity and predictability to the assumption of jurisdiction over foreign defendants.  If the plaintiff can establish one of the listed connecting factors, the court can presume (absent indications to the contrary) that jurisdiction can be properly assumed under conflicts rules and that it is acting within the limits of its constitutional jurisdiction.  If no presumptive connecting factors are present (or if the connection is rebutted by the defendant), then the court would lack jurisdiction under the real and substantial connection test.  A defendant can rebut the presumption by establishing facts that demonstrate the presumptive connecting factor at issue does not actually demonstrate any real relationship (or only a weak relationship) between the subject matter of the litigation and the forum.  For example, where the connecting factor is a contract made in the province, the presumption can be rebutted by showing that the contract has little or nothing to do with the subject matter of the litigation.

Based on the particular issues on the appeal, the SCC provided four presumptive connecting factors in tort cases that will prima facie entitle the court to assume jurisdiction:

1)   the defendant is domiciled or resident in the province;
2)   the defendant carries on business in the province;
3)   the tort was committed in the province; or
4)   a contract connected with the dispute was made in the province.

For practice in Ontario, these presumptive factors correspond to Rules 17.02(p), (g), and (f)(i).  The SCC expressly rejected the use of Rule 17.02(h) (claims of damages sustained in Ontario) as a presumptive connecting factor.  The balance of the factors in Rule 17.02 were not addressed by the SCC and, as such, consideration as to whether any of them can constitute a presumptive connection sufficient to assume jurisdiction will need to be addressed, as with any other new connecting factors, by future courts.  To that end, the SCC provided four considerations for adopting new presumptive connecting factors:

1)   the similarity of the connecting factor with a recognized presumptive connective factor;
2)   the treatment of the connecting factor in the case law;
3)   the treatment of the connecting factor in statute; and
4)   the treatment of the connecting factor in the private international law of other legal systems with a shared commitment to order, fairness and comity.

Conclusion – The SCC has sanctioned the use of presumptive connecting factors for the assumption of jurisdiction over foreign defendants.  It will, however, take time for the courts to develop a robust list of connecting factors to bring the desired predictability.