For the past eight years the decision of the Ontario Court of Appeal in Muscutt v. Courcelles (2002) has dictated the criteria that the court must consider when determining Ontario’s jurisdiction over a particular matter. The Muscutt decision posits the following eight factors that judges are to consider in ruling on whether a case can be tried in Ontario:
- The connection between the forum and plaintiff’s claim;
- The connection between the forum and defendant;
- Unfairness to the defendant in assuming jurisdiction;
- Unfairness to the plaintiff in not assuming jurisdiction;
- The involvement of other parties to the suit;
- The court’s willingness to recognize and enforce an extra-provincial judgment rendered on the same jurisdictional basis;
- Whether the case is interprovincial or international in nature; and
- Comity and the standards of jurisdiction, recognition and enforcement prevailing elsewhere.
In laying out these factors, Justice Sharpe stated: “No factor is determinative. Rather, all relevant factors should be considered and weighed together.”
Recently, in Van Breda (2010), Justice Sharpe revisited his ruling in Muscutt and reformed the jurisdiction test. The new jurisdiction test, currently under appeal to the Supreme Court of Canada, has two steps.
The New Jurisdiction Test
Step One: Existence of a Presumption of “Real and Substantial Connection”
The judge must determine if there is an initial reasonable presumption of “real and substantial connection” between the matter at hand and Ontario. In order to determine if there is such a presumption, the judge is to refer primarily to Rule 17.02 of the Ontario Rules of Civil Procedure, excluding subsections (h) and (o). Rule 17.02 establishes the rules for service, i.e., for notification to a defendant that legal action has been commenced against him, when the defendant is outside Ontario. Its various provisions (e.g., service outside Ontario is valid if the relevant suit relates to an Ontario mortgage, an Ontario trust, an injunction on an Ontario specific activity, etc.) provide guidelines about when and how the courts see a matter as “connected” to the province.
The judge is also to refer under the first step to a set of criteria set out at Section 10 of the Uniform Court Jurisdiction and Proceedings Transfer Act (“CJPTA”). Section 10 of the CJPTA sketches the broad outlines of when a “real and significant connection” can be presumed to exist. Basically, Section 10 states that there is a presumption of a link if the case at hand is about proprietary or financial interests that significantly involve parties or property in the relevant jurisdiction. The section lists several kinds of interests substantial enough to constitute a “connection” if significantly linked to the jurisdiction, beyond basic property interests, including interests involving trusts, contracts, torts, and taxes.
If the first step of the Van Breda test is met (the existence of a presumption), the judge is to proceed to the second step.
Step Two: “The Core of the Analysis”, i.e., Verification of the Presumption
Justice Sharpe states that the “core of the analysis” is an application of the first two Muscutt factors: an assessment of the link between (i) Ontario and the plaintiff’s claim, and (ii) Ontario and the defendant. The remaining six Muscutt factors are then to be considered simply as guidelines that clarify how to apply the first two.
If the presumption of connection from the first step is substantiated by the second step analysis, then the claim can be litigated in Ontario. If the presumption is not substantiated, then no Ontario trial is possible.
Muscutt versus Van Breda
One perceived advantage of Van Breda is obvious: the “ordering” effect of the Van Breda test makes the Muscutt test much easier to apply. With the first two Muscutt factors defined as the important factors, and the rest as simply secondary guidelines, the process of applying the test becomes less cumbersome. The judge does not have to strain to apply each factor to the case before him in turn, or to explain how and why a particular factor does not apply – a particular benefit in situations of fact in which many or most of the factors are not relevant.
Other scholars, such as Blom and Edinger, have argued that the tremendous openness of the Muscutt “real and substantial connection” test, with none of the factors being presented as definitive, final, or binding, amounts to a test based almost totally on the judge’s own subjective perspective.
On the other hand, there is a very strong legal argument for the Muscutt test, derived from the Supreme Court of Canada case of Morguard v. De Savoye (1990). Morguard is the Supreme Court’s leading statement on jurisdiction. In it, Justice La Forest identifies two deliberately broad, loosely defined principles that are to govern judicial decision making as to whether a case can be tried in a given province or territory: “order and fairness”. In context, “order” refers to the need for courts to respect the prerogatives of other jurisdictions and to not hear cases of tenuous connection to their own jurisdiction. “Fairness”, in context, refers to the simple need to not deny a plaintiff a forum if his case is reasonable and if the court in question seems the appropriate forum, or at least an appropriate forum, in which to try the matter.
The openness of the Muscutt test would seem to mirror the openness of the approach in Morguard. The somewhat vague emphasis on “fairness” in Muscutt is, in this light, a necessity. To provide a much more restricted definition and application regimen for the test factors may prioritize “order” over “fairness”, contrary to the careful balancing that Morguard requires.
We can expect the Supreme Court of Canada’s guidance on this issue in 2011 and will keep you up to date in this regard.