Today the Supreme Court of Canada released its much anticipated decision in Club Resorts Ltd. v. Van Breda, 2012 SCC 17 ("Club Resorts"), and provided a new common law test for determining when a court can assume jurisdiction over an out-of-province defendant. Here is a brief summary of the new test; a more detailed analysis will follow.
A New Test to Determine a "Real and Substantial Connection"
Under the common law doctrine of jurisdiction simpliciter, a court can assume jurisdiction over an out-of-province defendant if the defendant or the subject matter of the plaintiff's claim has a "real and substantial connection" to the province. However, over the years courts in Canada have struggled with various analytical frameworks for determining when the "real and substantial connection" requirement is met.
The Supreme Court of Canada's new test for a "real substantial connection" is substantially simpler than the eight‐factor framework that the Ontario Court of Appeal introduced in Muscutt v. Courcelles in 2002 and the two‐step reformulation of Muscutt that was proposed in Club Resorts by that same court in the decision below. Under the Supreme Court of Canada's new test, the party asking a court to assume jurisdiction has the burden of establishing that a "presumptive connecting factor" links the subject matter of the litigation to the forum. For tort claims, if one of the following presumptive connecting factors applies, then the court is presumed to have jurisdiction over the dispute:
- the defendant is domiciled or resident in the province;
- the defendant carries on business in the province;
- the tort was committed in the province; or
- a contract connected with the dispute was made in the province.
A party challenging the court's assumption of jurisdiction may rebut the presumption by establishing facts showing that the applicable presumptive connecting factor does not point to any real relationship between the subject matter of the litigation and the forum, or points only to a weak relationship between them.
The Supreme Court was careful to note that the above list of presumptive connecting factors is not closed, and that new presumptive connecting factors may be recognized over time. A court may identify a new presumptive connecting factor by looking at connections that give rise to a relationship with the forum that is similar in nature to the ones reflected in the factors already recognized. Relevant considerations include:
- similarity of the connecting factor with those already recognized as presumptive connecting factors;
- treatment of the connecting factor in the case law;
- treatment of the connecting factor in statute law; and
- treatment of the connecting factor in the private international law of other legal systems with a shared commitment to order, fairness, and comity.
If no presumptive connecting factor applies, or if the presumption of jurisdiction is rebutted, then the court must dismiss or stay the action subject to the possible application of the doctrine of forum of necessity.
Forum Non Conveniens
Even if a "real and substantial connection" is established and the court can assume jurisdiction over the out‐of‐province defendant, the court has the discretion to decline jurisdiction and stay the proceedings against the defendant on the basis that there is another forum that is clearly more appropriate for the claim (forum non conveniens). However, the Supreme Court emphasized that the normal state of affairs is for courts to exercise jurisdiction once the "real and substantial connection" test is met. The court should only consider the doctrine of forum non conveniens if it is invoked by one of the parties and the court is satisfied that an alternative forum is a better position to fairly and efficiently dispose of the litigation.
Further Discussion
In the days ahead, we will be following up this update with further commentary on Club Resorts, its companion cases, and what it means for civil litigation in Canada.
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