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Order in the Court? The Van Breda Trilogy – Part II – A New Test for Jurisdiction Simpliciter

Posted in Conflict of Laws, Features, Media, Procedure, Torts, Van Breda Trilogy
Brandon KainElder MarquesByron Shaw

The Supreme Court of Canada’s Van Breda Trilogy – and its judgment in Van Breda in particular – endorses a new approach to jurisdiction simpliciter focused on categories of prima facie jurisdiction. Building on the Ontario Court of Appeal’s judgment, which revised the old Muscutt test, the Court has attempted to introduce greater clarity and predictability to disputes about assumed jurisdiction. Whether this will come to pass remains to be seen; it may be that Van Breda will simply change the language of assumed jurisdiction, but that actual outcomes will remain as unpredictable as ever. The list of presumptive factors is not closed; the scope of each category of factors remains to be defined; and presumptions in favour of jurisdiction can still be rebutted by defendants. At the very least, however, Van Breda does provide some helpful direction from Canada’s highest court on the analytical framework for questions of assumed jurisdiction. It also represents an important signal from the Court that decisions about jurisdiction should be made carefully and cautiously, with an eye to incremental development of the law based on established precedent. In a practical sense, it also places a new burden on plaintiffs seeking to establish jurisdiction where circumstances may not clearly fall within established categories.

Order, Certainty and Predictability at the Supreme Court

An overview of the facts in the Trilogy cases is available in Part I of our series. In Van Breda, a five-member panel of the Ontario Court of Appeal replaced the multi-factorial Muscutt test with a two-stage approach that first considers established categories of presumed jurisdiction based on the Rules governing service ex juris. In the Van Breda Trilogy, a unanimous Supreme Court set out a similar presumptive approach, but one that goes further than the Court of Appeal in terms of its emphasis on certainty and predictability in the approach to jurisdiction simpliciter.

In Van Breda, LeBel J. wrote that the legal framework governing the assumption of jurisdiction “cannot be an unstable, ad hoc system made up ‘on the fly’ on a case-by-case basis – however laudable the objective of individual fairness may be.” While justice and fairness are “essential”, they:

 ”cannot be attained without a system of principles and rules that ensures security and predictability in the law….Parties must be able to predict with reasonable confidence whether a court will assume jurisdiction in a case with an international or interprovincial aspect. The need for certainty and predictability may conflict with the objective of fairness….The challenge is to reconcile fairness with the need for security, stability and efficiency in the design and implementation of a conflict of laws system.”

LeBel J. noted that comity itself depends on “order, which requires a degree of stability and predictability” in the rules governing cross-border relationships.

LeBel J.’s judgment set out a new test that is built on the same presumptive logic and structure of the Court of Appeal’s judgment, but one that imposes a new burden on plaintiffs. A party arguing in favour of jurisdiction must identify a “presumptive connecting factor” that proves jurisdiction on a prima facie basis. In the absence of a presumptive connecting factor, the court does not have jurisdiction. LeBel J. recognized four such presumptive connecting factors in relation to “tort claims” or “tort matters”:

(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.

Although LeBel J. expressly limited the above presumptive connecting factors to tort claims, they would appear to apply to other types of claims as well.

If one of these factors is present, a party resisting jurisdiction remains free to argue that on the particular facts of the case, the presumption should be rebutted. A party resisting jurisdiction must demonstrate that the relationship suggested by the factor is either illusory and “not real” or is real but “weak.” LeBel J. suggested, for example, that a contract made in the province that “has little or nothing to do” with the subject matter of a tort dispute may permit the presumption of jurisdiction to be rebutted. He also referred to the possible rebuttal of the presumption in a case “involving a multi-jurisdictional tort where only a relatively minor element of the tort has occurred in the province.”

Furthermore, LeBel J.’s judgment makes clear that plaintiffs will need to rely on a presumptive factor to establish jurisdiction, even if the facts would nonetheless appear to be support a real and substantial connection between the claim and the province. In the absence of an existing or new presumptive connecting factor, “the court will lack jurisdiction on the basis of the common law real and substantial connection test.” LeBel J. stated that the absence of a presumptive connecting factor cannot be overcome merely by a laundry list of other factors suggesting a connection, if all of these other factors are non-presumptive:

In particular, a court should not assume jurisdiction on the basis of a combined effect of a number of non-presumptive connecting factors. This would open the door to assumptions of jurisdiction based largely on the case-by-case exercise of discretion and would undermine the objectives of order, certainty and predictability that lie at the heart of a fair and principled private international law system.

This is a significant departure from the Court of Appeal’s approach, which would have permitted plaintiffs to demonstrate that jurisdiction should be assumed “in the particular circumstances of the case”. Under the Supreme Court’s judgment in Van Breda, a party seeking to rebut a presumption against jurisdiction must convince the court that it should recognize a new presumptive connecting factor under which jurisdiction could be assumed. While the list of four presumptive connecting factors is not closed, LeBel J.’s judgment suggests that courts should be cautious in recognizing new categories. He states that courts should consider the similarity of the proposed factor with currently recognized factors, the treatment of the factor in statute law or case law; and its treatment in the jurisdictional approach taken by other legal systems with shared values. Combined with the Court’s insistence that factors going to forum non conveniens are distinct from those going to jurisdiction simpliciter, this suggests lower courts may be reluctant to readily find new presumptive connecting factors. Interestingly, in Cugalj et al v. Wick, the first case to apply the Supreme Court’s Van Breda approach to jurisdiction simpliciter, the court rejected the plaintiff’s argument that an Ontario insurer responding to the claim on behalf of an out-of-province defendant should qualify as a new presumptive connecting factor.

Unanswered Questions

Whether or not Van Breda will actually bring increased certainty and predictability to the law of jurisdiction simpliciter remains to be seen. Only time will tell whether courts will be inclined to expand the list of presumptive categories. If they are not cautious, one can expect that the move away from the multi-factorial Muscutt test to a more focused inquiry may ultimately have little effect on outcomes. For plaintiffs, however, the requirement to fit one’s case into the confines of a presumptive connecting factor – existing or new – does appear likely to represent an additional hurdle that may have a practical impact on the law in this area.

Much will also turn, of course, on how courts interpret the existing categories laid out by LeBel J. The second presumptive connection – that a defendant “carries on business” in the province – is likely to remain fertile ground for litigation, as already demonstrated under Ontario’s service rules 16.02(1)(e) and 17.02(p). LeBel J. did state that for the purposes of jurisdiction, the mere fact of having intra-provincial business activities may be insufficient where the dispute is unrelated to those particular activities. He also urged courts to take care not to create “what would amount to forms of universal jurisdiction” based on limited commercial activity. He specifically suggested that “carrying on business” depends on “some form of actual, not only virtual, presence in the jurisdiction.” He also stated that the fact of advertising in a jurisdiction would not, on its own, be sufficient.

The third presumptive connecting factor will also require considerable clarification and refinement. The situs or location of a tort is itself so uncertain that it can hardly be said to qualify as a presumption at all, except perhaps in the most obvious cases. Indeed, the “real and substantial connection” test that Van Breda attempted to clarify has its Canadian roots in the 1975 judgment of Dickson J. in Moran v. Pyle. In Moran, the Supreme Court held that a Saskatchewan court had jurisdiction allowing service ex juris to be effected on an Ontario manufacturer that sold an allegedly defective product through the normal channels of trade. The Court in Moran laid down a flexible approach for determining the situs of a tort, stating that “in determining where a tort has been committed, it is unnecessary, and unwise, to have resort to any arbitrary set of rules.” The recognition of a presumptive connecting factor for torts committed in the province in Van Breda therefore simply begs the obvious question of when a tort can be said to have been committed in the province.

On this point, the Court offers no guidance, beyond a general reference to “major” and “minor” elements of the tort. The accidents giving rise to the claims in Van Breda and Charron occurred abroad; however, arguably the damages were suffered (at lest in the case of Charron) in Ontario. LeBel J. expressly refused to recognize damages sustained in the province as a presumptive connecting factor on the policy ground that its recognition would risk “sweeping into that jurisdiction claims that have only a limited relationship with the forum”. However, LeBel J. then distinguished torts “such as defamation”, where “sustaining damage completes the commission of the tort and often tends to locate the tort in the jurisdiction where the damage is sustained.” It is unclear why the location of damages in defamation claims should be more significant than in cases of personal injury. Furthermore, it is entirely unclear after Van Breda how multi-jurisdictional torts such as product liability claims will be analyzed for the purposes of determining whether the torts occurred “in the province”.

In relation to defamation actions, the Court used the presumptive factor of the tort having been committed in the province to find that there was jurisdiction in both Black and Éditions Écosociété. In Black, the Court noted that publication occurred in Ontario when the impugned statements were read, downloaded, and republished. In Éditions Écosociété, the Court found that the fact that 15 copies of the allegedly libelous book were in Ontario libraries (one copy having been checked out) was sufficient, noting that the defendant had also adduced evidence that it had a reputation in Ontario that was of some value. The Court did not comment on which circumstances would support a rebuttal of the presumption of jurisdiction in these types of cases, which could suggest that Ontario may have jurisdiction over defamation disputes even on very limited publication (despite the admonition in Van Breda against “sweeping in” all claims where damages have been suffered in the province). However, the facts of the cases were somewhat unique in that there was evidence that the damage to the plaintiffs’ reputation was strongly tied to Ontario (in particular, in Black, LeBel J. noted that Lord Black had “undertaken not to bring any libel action in any other jurisdiction, and has limited his claim to damages to his reputation in Ontario.”)

Accordingly, while a categorical approach may appear on the surface to provide considerable certainty and predictability, there will be ample room for the creativity of parties and their counsel to debate about whether the claim falls within a presumptive connecting factor. Assuming that the claim falls within a presumed connecting factor, it then remains open to the defendant to argue that the connection is insufficient on the facts. Finally, plaintiffs can attempt to demonstrate that a new factor should be given presumptive effect.

Van Breda also leaves several other less obvious questions unanswered. For instance, LeBel J.’s four categories are expressly framed as appropriate for claims “in tort and issues associated with such claims,” but he also holds that it would be a violation of the principles of fairness and efficiency to require plaintiffs to split their case; the test must address whether or not there is a real and substantial connection among the entirety of the dispute, the forum, and the defendant. Given that such motions generally arise at the pleadings stage, however, the “essence” of the claim may be very difficult for motion judges to assess.

The judgment also raises questions about the place of traditional private international law tests for jurisdiction in the contemporary “real and substantial connection” analysis. The Court in Van Breda expressly stated that the judgment does not purport to replace traditional grounds on which jurisdiction can be established, “like the defendant’s presence in the jurisdiction or consent to submit to the court’s jurisdiction.” Yet the Court neither sought to formally reconcile presence-based and consent-based jurisdiction with the new categorical approach to assumed jurisdiction, nor did it explain why these traditional approaches to establishing jurisdiction should continue to apply. It is not clear, for instance, whether the defendant’s mere presence, including a fleeting presence, in the jurisdiction is a genuinely “real” connection as opposed to a “weak” connection such that jurisdiction should be assumed. We can expect that lower courts will be required to grapple with the notion of “presence” and in doing so they will need to exercise great care to ensure that this traditional concept does not get used to undermine the principled approach to jurisdiction that the Court has tried to set out.

Finally, LeBel J. stated (no less than three times) that the court was not pronouncing on the doctrine of forum of necessity, which was not at issue on the appeals. At the Court of Appeal, Sharpe J.A. had expressly found that the forum of necessity operated as an exception to the real and substantial connection “[w]here there is no other forum in which the plaintiff can reasonably seek relief.” The doctrine would apply where an “inadequate connection” to the jurisdiction is overwhelmed by an “overriding concern for access to justice.” It remains to be seen whether Sharpe J.A.’s reasoning will be adopted in future cases.

Conclusion

LeBel J.’s suggestion that the Van Breda test will enable parties to predict whether a court will assume jurisdiction in a case with an international or interprovincial aspect “with reasonable confidence” seems unduly optimistic. It seems doubtful that Van Breda will instantly bring added certainty or predictability to the law of jurisdiction. The test leaves considerable room for litigants to attempt to prove or disprove jurisdiction in any given case.

However, the Van Breda test does provide a more structured framework for courts to apply in relation to assumed jurisdiction. In this regard, it is an improvement over the old Muscutt multi-factorial list of considerations. The categorical approach may bring a measure of added analytical certainty and facilitate more consistent appellate review of motion decisions.

The presumptive approach to the “real and substantial connection” test in Van Breda is not unlike the Supreme Court of Canada’s approach to duty of care in tort. In tort claims, the Court first considers whether the claim has been previously recognized as giving rise to a duty of care. If the claim does not fall into a recognized category, then the Court goes on to examine whether it nonetheless meets the requirements of foreseeability and proximity for imposing a new duty. In recognizing new duties of care, the Court may take guidance from the established categories by analogy. Notably, commentators have previously suggested an analogy between the “real and substantial connection” test and the development and use of “proximity” in tort jurisprudence.

Like the duty of care framework, the Supreme Court of Canada’s approach to jurisdiction in Van Breda is an attempt to balance certainty with sufficient flexibility to ensure fairness. In Cooper v. Hobart, the Court famously noted that the reliance on categories in the tort context “provides certainty to the law of negligence, while still permitting it to evolve to meet the needs of new circumstances.” The Van Breda Trilogy is a clear attempt to do the same in relation to the application of the “real and substantial connection” test. Whether or not it ultimately succeeds, Van Breda does provide a clear caution to lower courts to exercise restraint and to give added weight to certainty and predictability in assessing jurisdictional claims.