Lapointe Rosenstein Marchand Melançon LLP v. Cassels Brock & Blackwell LLP (Private international law — Choice of forum — Court having jurisdiction — Forum non conveniens)

On appeal from a judgment of the Ontario Court of Appeal (2014 ONCA 497), affirming a decision of Belobaba J. (2013 ONSC 2289).

One of the casualties of the financial crisis in 2008 was the Canadian automotive sector. To assist, the federal government bailed out some of the country’s auto manufacturers in 2009, including General Motors of Canada Ltd (GM). A term of the government’s bailout of GM was that it close dealerships across the country. Over 200 Canadian dealerships were closed. GM offered compensation to each dealer pursuant to Wind-Down Agreements. Two hundred and seven GM dealers who had been closed down started a class action in Ontario, alleging that GM had forced them to sign Wind-Down Agreements, and that the law firm of Cassels Brock & Blackwell LLP (Cassels Brock) was negligent in failing to provide appropriate legal advice. Cassels Brock added 150 law firms from across the country as third party defendants, seeking contribution and indemnity from the law firms who gave the individual dealers the independent legal advice required under the Agreements. Eighty-three non-Ontario law firms challenged Ontario’s jurisdiction, including 32 based in Quebec. The motions judge dismissed the challenge. Only the 32 Quebec law firms appealed. The Ontario Court of Appeal dismissed the appeal.

Held (6-1) (Côté J. dissenting): The appeal should be dismissed.

Per McLachlin C.J. and Abella, Cromwell, Karakatsanis, Wagner and Gascon JJ.:

Before a court can assume jurisdiction over a claim, a real and substantial connection must be shown between the circumstances giving rise to the claim and the jurisdiction where the claim is brought. This Court’s decision in Club Resorts Ltd. v. Van Breda, 2012 SCC 17, [2012] 1 S.C.R. 572, sets out the test for establishing the requisite connection in tort claims, and identified four presumptive connecting factors. All presumptive connecting factors generally point to a relationship between the subject matter of the litigation and the forum where jurisdiction is proposed to be assumed.

This case engages the fourth factor: whether a contract connected with the dispute was made in the province. The fourth factor premises the determination of when a contract will be made in a given jurisdiction on the traditional rules of contract formation. All that is required is a connection between the claim and a contract that was made where jurisdiction is sought to be assumed. A connection does not necessarily require that an alleged tortfeasor be a party to the contract. Nothing in Van Breda suggests that the fourth factor is unavailable when more than one contract is involved, or that a different inquiry applies in these circumstances. Nor does Van Breda limit this factor to situations where the defendant’s liability flows immediately from his or her contractual obligations. It is sufficient that the dispute be connected to a contract made in the province or territory where jurisdiction is proposed to be assumed. This merely requires that a defendant’s conduct brings him or her within the scope of the contractual relationship and that the events that give rise to the claim flow from the relationship created by the contract. The fact that another forum may also be connected with the dispute does not undermine the existence of a real and substantial connection.

The first step is identifying the dispute. The nucleus of the claim against Cassels Brock, as well as that of Cassels Brock’s third party claim against the local lawyers who signed certificates of independent legal advice, relates to the claims that there was negligent legal advice about the Wind-Down Agreements. The dispute is therefore a tort claim for professional negligence.

The next question is whether a contract connected with this dispute was made in Ontario. The contract connected with this dispute is the Wind-Down Agreement, which is clearly connected to Cassels Brock’s third-party claims against the local lawyers. Valid acceptance of GM’s offer required that each individual dealer obtain independent legal advice. The local lawyers’ provision of legal advice brought them within the scope of the contractual relationship between GM and the dealers.

In Ontario, a contract is formed based on an offer by one party, accepted by the other, or by an exchange of promises, supported by consideration. Where the contracting parties are located in different jurisdictions, the contract will be formed in the jurisdiction where the last essential act of contract formation, such as acceptance, took place. Here, the contract in question was made in Ontario. The last act essential to contract formation occurred at GM’s office in Ontario, where its Vice President of Sales, Service & Marketing accepted and signed the Wind-Down Agreements that had been signed and returned by the dealers. Other contextual factors demonstrate that the Agreement was made in Ontario: the Agreement expressly provides that it is governed by Ontario law, GM’s head office and the bulk of the affected dealers were located in Ontario, and the business relationships and the litigation are deeply related to Ontario.

Cassels Brock has therefore demonstrated a real and substantial connection between a contract made in the province (the Wind-Down Agreement) and the dispute (the third-party negligence claim). The strength of this connection was not rebutted by the Quebec lawyers. The Ontario courts, therefore, properly assumed jurisdiction over the claim.

Once jurisdiction is established, the party contesting jurisdiction may raise the doctrine of forum non conveniens. The burden is on the defendant to demonstrate that a court of another jurisdiction has a real and substantial connection to the claim and that this alternative forum is clearly more appropriate than the one where jurisdiction may be assumed. This threshold will be met where the alternative forum would be fairer and more efficient for disposing of the litigation. It is not sufficient that the alternative forum merely be comparable to the forum where jurisdiction has been found to exist. Forum non conveniens is not concerned only with fairness to the party contesting jurisdiction, it is also concerned with efficiency and convenience for the proceedings themselves.

In this case, the third-party claims against the other 118 law firms will be heard in Ontario. This strongly weighs against finding that the Quebec courts are a clearly more appropriate forum for the 32 Quebec firms. Allowing the Quebec third-party claims to proceed in Ontario along with the 118 other law firms, would clearly be a more efficient and effective solution. Because the third-party claims involve a significant number of parties and require the mobilization of significant judicial resources, those resources should be allocated and expended with a view to making the litigation quicker, more economical and less complicated. Adjudicating all the third-party claims in the same forum avoids the possibility of conflicting judgments and duplication in fact finding and legal analysis, and will ensure that they are resolved in a timelier and more affordable manner. All of this leads to the conclusion that Ontario should assume jurisdiction over all the third party claims, including those involving the Quebec law firms.

Per Côté J. (dissenting):

At the heart of this dispute is the fourth connecting factor set out in Club Resorts Ltd. v. Van Breda, 2012 SCC 17, [2012] 1 S.C.R. 572, which provides Ontario with presumptive jurisdiction when a contract connected with the dispute was made in the province.

In this case, the relevant Wind-Down Agreements were simply not made in Ontario. Under the law of Ontario, a contract will be considered formed where the last essential act of contract formation takes place — in other words, where final acceptance is notified. Here, GM’s notice of final acceptance was itself an essential condition for the Wind-Down Agreements to become binding, and was clearly the last essential formative act. In Ontario, acceptance of a contract will be considered notified in the place where it is received. In this case, GM’s notice of final acceptance was transmitted to its Quebec dealers in Quebec. As such, the relevant Wind-Down Agreements in respect of the Quebec dealers would have been formed in Quebec. Contextual considerations, like the choice of law clause, and the fact that the bulk of the terminated dealers, as well as GM’s head office, are located in Ontario, have nothing to do with where the Quebec dealers’ Agreements were formed. Furthermore, if these considerations are given weight, the parties’ own desires regarding where their contract is formed risk becoming irrelevant.

Even if the Agreements had been concluded in Ontario, they are not connected with these claims in the manner required by Van Breda’s fourth connecting factor. This fourth connecting factor only provides jurisdiction over claims where the defendant’s liability in tort flows immediately from the defendant’s own contractual obligations. Indeed, in these kinds of cases, the claim in tort will often resemble a claim in contract. This may occur in cases of concurrent liability, where a defendant’s failure to exercise reasonable skill and care may constitute, at once, both a breach of contract and a tort. This may also occur in cases where a third party beneficiary to a contract has a claim in tort for acts which occurred in the performance — and potential breach — of that contract. In these cases, the defendant’s breach of contract and his tort are indissociable. Indeed, the duty of care the defendant owes stems from his contract. Establishing jurisdiction over these kinds of claims in tort represents the underlying rationale of Van Breda’s fourth connecting factor. It is what makes this factor both a defensible and a desirable conflicts rule. This may represent a narrow interpretation, but it reflects the way the fourth connecting factor was described, justified and applied in Van Breda.

On this narrow interpretation of Van Breda’s fourth factor, the courts of Ontario clearly do not have jurisdiction over Cassels Brock’s third party claims. The only contracts that could possibly be close enough to the dispute are the retainer agreements concluded between the Quebec lawyers and their clients. The Wind-Down Agreements — the subject of the Quebec lawyers’ legal advice — are simply too remote. The Quebec lawyers were never brought within the scope of the contractual relationship between GM and the dealers. They were not parties to the Agreements, never owed any obligations under them, were never owed any benefit under them, and are not being sued in tort for actions committed in their performance. Instead, their obligations flow entirely from their retainer agreements. The most that can be said is that the Wind-Down Agreements contributed to the factual circumstances following which an entirely separate fault or breach occurred.

The majority’s approach to Van Breda’s fourth factor misconstrues what it means for a contract to be connected with a claim in tort. The broad scope given to Van Breda’s fourth connecting factor by the majority divorces it from its specific and limited foundations. In doing so, this broader approach will lead to jurisdictional overreach. In this case, the requirement of independent legal advice is entirely unrelated to the quality of the legal advice that was obtained in Quebec, and that forms the basis of each claim. Nor can this requirement bring the Quebec lawyers within the scope of the dealers’ contractual relationship with GM. There is also nothing real or substantial about the fact that the allegedly negligent legal advice was about the Wind-Down Agreement. Every day, lawyers advise clients on contracts that will eventually be formed in another province. If these contracts are a fount of jurisdiction, then such lawyers could be sued for negligence wherever the contracts are entered into.

The majority’s approach also muddies an area of the law that should be kept clear and jeopardizes the certainty and predictability that was promised by Van Breda’s purposefully specific connecting factors. On a more restrained approach, it should always be clear when the fourth connecting factor can serve as a basis for jurisdiction. By contrast, the majority’s approach amounts to an open invitation for litigants to engage in long winded jurisdictional debates, since the words “connected with” and “connection” are notoriously flexible and fact specific.

There may also be harmful commercial implications that flow from the majority’s broader approach to the fourth connecting factor, as well as negative repercussions on the practice of law itself. The majority’s holding means that whenever a lawyer’s advice is required before his client can accept an offer, that lawyer may later be sued for professional negligence wherever the resulting contract is formed, regardless of where his services were provided. Such lawyers may feel conflicted, since they will likely have a personal stake in where their client’s contract is entered into.

With respect to the claims against the two national law firms which have offices both in Quebec and in Ontario, whatever jurisdiction the courts of Ontario have over these claims should be declined on the basis of forum non conveniens. It is clear that Quebec is the more appropriate forum for the third-party claims against the two national law firms. If these claims were heard in Ontario, the lawyers and witnesses involved, who are all residents of Quebec, would all have to travel to testify, incurring significant costs. Furthermore, since Quebec law will govern the claims against the national law firms with offices in Quebec, additional costs would be incurred to provide an Ontario court with expertise on Quebec law. Finally, if the claims against the Quebec law firms were to be divided between Quebec and Ontario, there is a risk of conflicting decisions.

Reasons for judgment by Abella J. (McLachlin C.J. and Cromwell, Karakatsanis, Wagner and Gascon JJ. concurring)

Dissenting reasons by Côté J.

Neutral Citation: 2016 SCC 30

Docket Number: 36087

http://scc-csc.lexum.com/scc-csc/scc-csc/en/item/16063/index.do