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Supreme Court Rules on Jurisdiction

On April 18, 2012, the Supreme Court of Canada rendered three unanimous decisions (Club Resorts Ltd. v. Van Breda; Écosociété Publishing Inc. v. Banro Corp; Breeden v. Black) which identified a simplified test in determining the jurisdiction of Canadian courts.

The Court began by recalling that jurisdiction simpliciter (i.e. is the court competent?) requires a different analysis than the secondary question of forum non conveniens (should a competent court decline to exercise its jurisdiction in favour of a foreign court?)

With respect to jurisdiction simpliciter, the Supreme Court of Canada held that the overarching principle is that of a "real and substantial connection" between the case and the court. This test is used in two senses: first, as a constitutional guard against extra-provincial legislative reach (not at issue in these cases) and second, to attach a specific case to the forum.

The plaintiff can establish this connection by identifying a presumptive connecting factor that links the subject matter of the litigation to the forum. The Supreme Court listed four (4) connecting factors (although stated that the list is not closed, and that future cases may develop more by appealing to equity, order and comity): (a)   the defendant is domiciled or resident in the province; (b)   the defendant carries on business in the province; (c)   the tort was committed in the province; and (d)   a contract connected with the dispute was made in the province.

Once the existence of a presumptive factor is demonstrated, the defendant may rebut this presumption by demonstrating that no real connection exists, or the connection is at best tenuous.

Once jurisdiction of the court is established, it may nevertheless stay proceedings based on the doctrine of forum non conveniens. This analysis presupposes valid jurisdiction in more than one court, and the defendant’s burden is to demonstrate that an alternative forum is clearly more appropriate and that, in light of the characteristics of the alternative forum, the ends of justice are better met and both parties are treated fairly under the alternative forum.

Van Breda and Charron decisions

In Van Breda, the plaintiff suffered bodily injury while at a hotel in Cuba. Jurisdiction simpliciter was established as a result of the presence of one presumptive factor, namely, the employment contract which brought the plaintiff to the hotel had been concluded in Ontario between her husband and the Cuban hotel manager. Moreover, the hotel manager had not offered any evidence to rebut the presumption that this created a "real and substantial connection" to Ontario. The Court also ruled that despite the many connecting factors militating in favor of Cuban courts - especially given the fact that the harm had materialized on Cuban soil, that the potential witnesses and the defendants were all located in Cuba, as well as the applicability of Cuban law to the facts of the case - the Cuban courts were not clearly more appropriate

The Court came to the same conclusion in respect of a case arising from the death of a vacationer at a hotel run by the same Cuban management company. In that case, evidence had been led demonstrating that the defendant had more than a passing presence in Ontario.

Écosociété Publishing Inc. v. Banro Corp. and Breeden v. Black decisions

In Écosociété Publishing Inc. v. Banro Corp. and Breeden v. Black, the Supreme Court applied these tests to two cases of alleged defamation, which add the complicating factor that the tort is crystallized only upon publication, which may not occur in a single jurisdiction.

In the Banro case, an Ontario corporation claimed to have suffered damages resulting from the allegedly defamatory statements made by the appellant following the publication of a book in Quebec which was distributed in Ontario. The Court held that the libel had occurred in Ontario since the book was circulated in the province. As the appellant had failed to demonstrate that only a minor element of defamation was committed in Ontario, and therefore that the facts of the case did not present a "real and substantial" connection, it had failed to rebut the presumption of jurisdiction in Ontario. Moreover, Ontario was where the injured reputation of the plaintiff company would be felt and b the applicable law was that of Ontario.

In the Black case, the plaintiff alleged that he was defamed by press releases published by the appellants on an American company’s website and subsequently republished by three Ontario newspapers. Although the case involved an alleged fraud committed in the U.S., pertaining to the management of American companies, the Supreme Court was of the view that publication and dissemination of the statements in Ontario was a sufficient presumptive factor. Although a large number of factors militated for the application of forum non conveniens in favor of the U.S. courts (eg. the costs related to trying the dispute, the fact that the U.S. law would apply, and the difficulties associated with the enforcing of an Ontario judgment in the U.S.), the Court nevertheless refused to decline jurisdiction, holding that the damage to reputation had taken place in Ontario. While the U.S. courts could have potentially been an appropriate forum, the appellants had not met their burden of proving that they were clearly more appropriate than Ontario courts.

The Supreme Court also commented on forum shopping, implying that where it was felt that a Plaintiff was engaged in such activity, discretion would likely be exercised in favour of the defendant.