The Supreme Court of Canada’s decision in Club Resorts Ltd. v Van Breda addresses the legal test for when a Canadian court should assume jurisdiction over an out-of-province defendant.

For businesses with Canadian ties, Van Breda is a critical decision, as it outlines the circumstances under which foreign companies may be exposed to litigation in Canada.

Background

The decision deals with two actions that were consolidated on appeal.  Both cases involved personal injury claims by Canadian citizens arising from accidents they suffered while vacationing in Cuba.  One of the named defendants was the company that managed the two hotels where the accidents took place, Club Resorts Ltd.

Club Resorts argued that Ontario lacked jurisdiction over the actions, or in the alternative, that the doctrine of forum non conveniens should apply.  The motion judges in both cases dismissed Club Resorts’ argument and held that the Ontario courts had jurisdiction.  The Ontario Court of Appeal upheld both decisions.

The Supreme Court of Canada decision

The Supreme Court’s decision, written by Justice LeBel for a unanimous court, centres on two key issues: (i) the “real and substantial connection” test for the assumption of jurisdiction; and (ii) the doctrine of forum non conveniens.

Real and substantial connection

The court affirmed the “real and substantial connection” test as the appropriate common law rule for the assumption of jurisdiction.  Justice LeBel emphasized the importance of having a set of specific presumptive factors outlining when the assumption of jurisdiction is appropriate, as opposed to a regime based purely on individualized judicial discretion.  He identified the following factors that will, on their face, entitle a court to assume jurisdiction over a claim:

  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.

Where a connecting factor is established, a presumption of jurisdiction will arise, but that presumption may be rebutted by the party challenging jurisdiction.

The court noted that the list of factors is not exhaustive and that lower courts have the discretion to recognize additional factors. Justice LeBel set out the following framework with respect to the evaluation of new presumptive factors: (i) the court’s analysis should be guided by the values of order, fairness and comity; and  (ii) new presumptive factors should create similar connections to the forum to those created by the presumptive factors already listed.

The doctrine of forum non conveniens

Even where jurisdiction has been established, the doctrine of forum non conveniens gives a court the residual power to decline jurisdiction in order to ensure fairness to the parties and an efficient resolution of the dispute. 

The court’s application of this doctrine will be context-driven and is ultimately discretionary.  However, Justice LeBel outlined the following factors to help guide the analysis:

  1. the location of the parties and witnesses;
  2. the cost of transferring the case to another jurisdiction, or the cost of declining the stay;
  3. the impact of a transfer on the conduct of the litigation or on related or parallel proceedings;
  4. the possibility of conflicting judgments;
  5. problems relating to the recognition and enforcement of judgments; and
  6. the relative strengths of the connections of the two parties.

Outcome of the appeals

The Supreme Court of Canada dismissed the appeals on the basis that, applying the recognized presumptive connecting factors, the Ontario court had jurisdiction, and Club Resorts had failed to rebut those presumptions. In the case of Van Breda, the fourth presumptive factor applied, whereby the litigation was connected to a contract entered into in Ontario. With respect to the second action, the second presumptive factor was established on the basis that Club Resorts maintained an active commercial presence in Ontario.

The court also declined to exercise its discretion under the doctrine of forum non conveniens in both cases, on the basis that considerations of fairness weighed in favour of the plaintiffs.

The decision can be found here.2