SCC Grants Leave in Van Breda v. Village Resorts Limited, 2010 ONCA 84

The Supreme Court of Canada today granted leave to hear the appeal of Van Breda v. Village Resorts Limited, 2010 ONCA 84, a decision I blogged on earlier here.

One hopes the Court will take the opportunity to clarify when a court should take personal jurisdiction over out-of-province defendants since, despite a clear intention to clarify or update the law by the Ontario Court of Appeal, I am not convinced they did as much.

A search here on my custom Google search of Canadian law firms, blogs and journal sites shows a fair bit of chatter over this decision.

Comments

  1. The problem is that it will always be complicated, however any court seeks to ‘clarify’ the tests.

    I found it interesting that one party before the Court of Appeal tried to get the court to adopt the Uniform Court Proceedings and Jurisdiction Transfer Act’s principles as preferable to the Muscutt rules. That Act was adopted in the wake of the Morguard decision of the SCC that declared that Canadian courts should give broad recognition to other Canadian judgments if the case had a real and substantial connection to the originating court. (It was part of a pair with the Uniform Enforcement of Canadian Judgments Act, since amended, but that’s too long a story for the present context.)

    While the Court declined to adopt the Uniform Act as a matter of law, it analyzed the Uniform Act in detail, and reprinted it as an appendix to its reasons. My reading of the analysis is that the Court found the Act helpful – but noted that even its ‘codification’ of the rules of interprovincial jurisdiction had a lot of flexibility built into them, for the same reasons as the Muscutt rules did, and as the new ‘van Breda’ rules do (at least until the Supremes get at them – but I’ll bet even then.)

  2. I apologize for those faulty links – which I copied from the address line of the Uniform Acts… I may be able to patch them once I’m back at a high-speed connection in a few days. Meanwhile to get to (almost) any Uniform Act, go to http://www.ulcc.ca and the Uniform Statutes tab.

  3. My understanding is that the ONCA essentially adopted the approach of the Uniform Court Proceedings and Jurisdiction Transfer Act (as found in the CJPTA), even if they failed to do so explicitly. That approach might be more appropriately done by the legislature, as was done in B.C. through Bill 131 in 2003.

    The status of implementation in other provinces can be seen through the Uniform Law Conference of Canada. But I think there was more to the ONCA decision than just this.

    E.P. Belobaba J. of the Ont. S.C.J. commented on the Muscutt factors in Black v. Breeden [2009] O.J. No. 1292, a rather interesting libel case involving multiple defendants in Ontario, the U.S. and Israel,

    31 One will immediately notice at least two things about these two lists. First, of the eight factors in the “jurisdiction” list which are intended to help the court decide if there is a “real and substantial connection” to this province, only the first two factors actually speak about “connection.” The other six factors, added by the Court of Appeal in Muscutt, deal with other matters, such as unfairness and enforceability, that prima facie appear to have little to do with “connection.” Secondly, notice the extent of overlap between these two lists of factors. When deciding jurisdiction, a judge is obliged to consider some of the very factors that will also be considered when deciding forum – namely, multiplicity of proceedings (factors 5 and (d)) and loss of juridical advantage (factors 3, 4 and (f)).

    32 Not surprisingly, the Muscutt factors have been subjected to criticism in the legal literature. Several commentators have suggested that the expansion of the “real and substantial connection” test to include notions of fairness or foreign enforceability, and the overlap with factors that should really be left for the second-stage “forum” analysis, is not only contrary to established precedent, but has resulted in confusion and uncertainty for both judges and litigants.

    33 Although I am inclined to agree that the Muscutt factors have led to some confusion and may warrant revisiting, I am bound by Muscutt and I will therefore apply the factors set out therein to the matter at hand.
    [emphasis added]

    Belobaba J. references an article by Tanya J. Monestier, A ‘Real and Substantial’ Mess: The Law of Jurisdiction in Canada, who states,

    The author argues that the Muscutt factors have obscured what the Supreme Court intended to be the core of the jurisdictional analysis: the need for a real and substantial connection, in the sense of a link or nexus, between the action and the forum. The Court envisaged that it was through such a connection that jurisdictional determinations would achieve the policy goals of order and fairness. By superimposing considerations extraneous to the existence of a connection between the action and the forum onto the jurisdictional analysis, Muscutt has effectively transformed the question of whether a court can hear a case (jurisdiction simpliciter) into the question of whether a court should hear a case (forum non conveniens). This invites inconsistency of results and creates uncertainty for parties involved in international litigation. Even leaving aside these major structural limitations of the Muscutt framework, the author suggests that many of the individual factors themselves are problematic on both a practical and a theoretical level. She further maintains that Muscutt has unnecessarily increased the procedural complexity of jurisdictional determinations and opened the door to litigation on a new front: that of jurisdiction simpliciter.
    Given the inherent limitations of the Muscutt jurisdictional analysis, the author suggests that courts should return to a pre-Muscutt approach to determining jurisdiction simpliciter. A possible model for reform can be found in the Uniform Court Jurisdiction and Proceedings Transfer Act, recently enacted in British Columbia.
    [emphasis added]

    Yet, I think still more was at hand. The Muscutt factors have come under scrutiny by other jurisdictions as well.

    The Newfoundland and Labrador Supreme Court stated in the 2010 decision Fewer v. Ellis,

    59 …I do not consider the Muscutt factors to be appropriate when considering the issue of territorial jurisdiction…
    60 By what process is the issue of territorial jurisdiction to be determined? The issue of jurisdiction is engaged when a plaintiff decides to commence a legal action and goes on to prepare and file the appropriate originating document. It is the facts asserted to support the claim that, in the first instance, establish the territorial parameters of the claim. It is these facts that will enable the plaintiff’s counsel to make an informed decision on which jurisdiction(s) would be constitutionally competent to entertain the proceeding. In most cases, these will be the only facts known to plaintiff’s counsel when the action is commenced. The current location of the defendants may not be known, and the number and location of witnesses for both sides may not be known. Further, it may not yet have been determined what law is properly applicable to the claim.
    61 It is contrary to the principle of order and to the need for certainty and clarity to suggest that a determination of territorial jurisdiction should depend on or be influenced by yet-to-be determined trial conduct matters which may change over time and which conceivably could be manipulated to secure a juridical advantage.
    62 The authorities support the conclusion that the determination of territorial jurisdiction of a court to adjudicate a claim is, in the first instance, based on the facts asserted in the pleadings. Those facts identify and locate the primary elements of the claim…
    70 The fact that, in the absence of legislative intervention, the plaintiff’s pleadings are considered as the primary source of the search for a “real and substantial connection” to the chosen forum promotes order, clarity and certainty. It enables the plaintiff to make an informed decision as to forum, it enables the defendant to make an informed decision on whether or not to contest the territorial jurisdiction of the chosen forum, and it enables the fundamental constitutional issue of territorial competence to be determined as soon as the assertion of competence is made by filing the initial pleading…

    Antonin Pribetic has commented on Fewer v. Ellis further on his site.

    Finally, there is the 2005 article by Joost Blom and Elizabeth Edinger in the U.B.C. Law Review, The Chimera of the Real and Substantial Connection Test,

    39 Turning to the relationship with forum non conveniens, if the Ontario Court of Appeal’s approach to jurisdiction simpliciter is right, the distinction between the power to take jurisdiction and the discretion whether to exercise it has become very hard to discern, even if the court affirmed that it is important to distinguish the two. The difficulty stems from the fact that the “order and fairness” side of Morguard predominates over the “real and substantial connection” side. Only the first two of the eight factors are strictly factual in nature; all the rest are designed, more or less explicitly, to assess the consequences of taking jurisdiction from the point of view of whether doing so would further the ends of justice.
    [emphasis added]

    It’s worth noting that this statement closely mirrors the changes made in Van Breda that place a greater emphasis on the first two factors, using the others as a lens of consideration. We’re still not sure what this means practically in application.

    I’ll also note that the ONCA in Van Breda cites Stanway v. Wyeth Pharmaceuticals Inc. favourably in applying s. 3(e) of the CJPTA to provide territorial competence over American defendants, without noting that the BCCA had weighed in on that case. Although the decision was upheld, the court noted that the approach taken was incorrect and the analysis flawed.

    I for one look forward to some clarification by the SCC on this subject.

  4. David Cheifetz

    If one is going to refer to, even quote from, Ms. Monestier’s article, one should also refer to “Muscutt v. Courcelles Revisited: The Court of Appeal for Ontario Takes Another Look” , 2009 36 Adv. Q. 35 just as the Trial Warrior site does.

  5. David,

    That’s obviously your prerogative to do so, to rightly point out the saving graces of the Muscutt approach, though others are certainly not obliged to. The ONCA themselves note this paper at paras. 51 and 55, so it seems rather redundant to raise it without pointing to anything within the paper in particular. They also point to a number of other papers in para. 55 that are probably worth looking at, including several by Prof. Steven Pitel of UWO Law who taught me International Commercial Litigation earlier this year, when Van Breda was released.

    Certainly litigators I’ve spoken to about this indicate that the Muscutt factors seem easier and more straightforward to apply than the Van Breda approach.

    The ONCA did state,

    [68]In my view, the submissions of the appellants exaggerate both the degree of uncertainty produced by Muscutt and the degree of certainty and predictability that would be achieved by adopting CJPTA. With regard to the alleged uncertainty produced by Muscutt, the appellants did not challenge the correctness of the results reached in the Muscutt quintet and were unable to identify conflicting or wrongly decided cases under the Muscutt test. With regard to the claim that CJPTA is more certain and predictable, CJPTA retains the real and substantial test as the guiding principle but does not define it. The connecting factors listed in s. 10 are merely presumptive and they are not exhaustive, leaving the issue of real and substantial connection as a matter to be resolved in every case…
    [emphasis added]

    They also summarize some of the pros and cons of the Muscutt approach in paras. 56-57.

    My points above are simply my own personal observations that I find interesting which I did not find much analysis in the commentary that Ted links to above, largely due to my coursework in the area. Although both Monestier and Blom & Edinger are mentioned in para. 55 of the decision, I don’t think many have looked at the complete backdrop and linked the statement in the latter paper to the specific changes made in Van Breda.