The SCC’s Real and Substantial Definition of the Real and Substantial Connection Test: Club Resorts v Van Breda

One of the primary considerations that Canadian courts have dealt with when confronting issues of private international law is that of the choice of jurisdiction— whether the court in which the case is being brought in is the one that is legally entitled to hear it. If this is deemed so, the next consideration is whether the court acts within its authority if it declines to apply itself to the case at hand. The evolution of jurisdiction simpliciter and the doctrine of forum non conveniens have followed a twisted path while trying to heed the principles of fairness, comity and norms of international law.

The “real and substantial connection” test was designed and developed as a method of adding an element of objectivity to the process of determination of an appropriate jurisdiction. Initially developed to help Canadian provincial courts recognize and enforce decisions from other provinces in their own jurisdictions, the test was gradually expanded to apply to issues of private international law as well. On April 18, 2012, the Supreme Court of Canada (“SCC”) further clarified the factors of the test in Club Resorts Ltd v Van Breda, 2012 SCC 17 [Van Breda]. In doing so, it followed the Canadian preference of prioritizing the application of a set of presumptive factors connecting the issue at hand to the jurisdiction over purely individualized judicial discretion. The SCC was mindful of the fact that the latter approach has created uncertainty in the precedent for forum non conveniens litigation, and sought to provide a definite shape to the test.

Facts

Two separate cases were heard under the Van Breda decision, both at the Ontario Court of Appeal (“ONCA”) and at the federal level. In Van Breda, the plaintiff had signed a contract to provide professional tennis lessons to the clients of a resort in Cuba, in exchange for lodging and boarding, but was severely injured while conducting exercises on a metal structure that collapsed, and which was on the premises of a resort owned and operated by the defendant. As a result, the plaintiffs brought actions in contract and tort, framing them as damages for personal injury, and for the loss of care, guidance, support and companionship. Punitive damages were also sought.

In Club Resorts Ltd v Charron, 2012 SCC 17 [Charron], the deceased plaintiff and his wife had booked a vacation, which included scuba diving, through the defendants. The plaintiff drowned on his second dive while in Cuba, and his estate and family sought recovery for breach of contract and negligence, specifically for loss of future income, love, care, guidance and companionship as per the Family Law Act, RSO 1990, c F.3). A number of foreign parties were also served under the Rule 17.02 of the Ontario Rules of Civil Procedure, O Reg 575/07, s 6(1), and these parties then sought to have the action dismissed on grounds of lack or jurisdiction.

Analysis

The SCC revisited the issues of whether the Ontario courts had the jurisdiction over the cases (the test for jurisdiction simpliciter), and whether, once jurisdiction was found, the court could decline to exercise its authority to do so. It built on the analyses of the lower courts, by tracing the evolution of the real and substantial connection test from both its constitutional and private international law origins. However, it also took care to point out that the former’s role is not to overwhelm the latter – in the provincial application of conflicts of laws rules, for instance, but to place limits on the scope of provincial courts. At the same time, Justice LeBel, in writing for a unanimous majority stated that the test also provides uniform guidelines for the cross-provincial enforcement of decisions, but allows individual provinces the freedom to determine the content of these guidelines. The ultimate aim, naturally, is to ensure that any conflicts of laws norms and rules fit within Canada’s constitutional framework.

The SCC provided a brief overview of the development of the real and substantial connection test in Canadian law. Moran v. Pyle National (Canada) Ltd. [1975] 1 SCR 393 was the first instance of Canadian courts’ recognizing the necessity of a set of guidelines that would set out a uniform approach to determining appropriate jurisdiction; subsequently, Morguard Investments v De Savoye [1990] 3 SCR 1077 formally adopted the test, putting it in primarily in a conflict of laws framework, ‘with constitutional overtones.’ By the time Hunt v T&N plc. [1993] 4 SCR 289 was decided, the dual nature the test was well accepted, and applied to challenges against the Canadian constitution. Finally, the SCC  applied the test to foreign jurisdictions in Beals v Saldanha [2003] 3 SCR 416.

Until Van Breda however, the principle ruling was Muscutt v Courcelles, (2002) 60 OR (3d) 20 (Ont CA) [Muscutt], which outlined eight factors that a Canadian court would consider, in order to determine whether it was appropriate to hold jurisdiction over a typically extra-territorial case. Justice LeBel’s concern in Van Breda, which was echoed in the jurisprudence after Muscutt, was that the test had come to rely too heavily on the expectations of the parties, and that its very flexibility was becoming its downfall. This was because excess emphasis on judicial discretion leading to an inconsistent application of the test, and endangering its purpose by creating a bias in favour of the plaintiff. The test was also leading to an analysis of the most convenient forum on a case-by-case basis, thus creating a skewed perception of objectivity.

Justice LeBel then analysed the reformation of the real and substantial connection test as it was set out in the Ontario Court of Appeal’s decision in Van Breda v Village Club Resorts Ltd 2010 ONCA 84, a commentary of which can be found at this post on TheCourt.ca. As outlined by Justice Sharpe, the determination of jurisdiction was to be split between the presumed factors that would lead to an automatic assumption of jurisdiction if met, and the adoption of the eight factors in Muscutt, to deem if jurisdiction can still be assumed (the onus for which falls on the plaintiff), if it does not fall within the presumed categories.

While remaining receptive to the ONCA’s characterization of the Van Breda-Charron version of the test, Justice LeBel’s concern centered on the tensions between the test’s constitutional and private international law aspects. While acknowledging that the modern conflict of laws system is built on the principle of comity, the SCC also stressed the importance of standardized guiding norms having place in the revised version of the test, deeming order as a precursor to comity.

Recognizing that connecting factors linking both the plaintiff and the defendant to the choice of forum was the foundation of the revised test, Justice LeBel’s interpretation of the test nevertheless leans towards determining jurisdiction on presumptive factors (whether existing or new). In his view, these factors, once established, will automatically lead to Canadian and foreign courts recognizing jurisdictions on the principles of comity. Further, he also deemed that once a court has assumed jurisdiction, it must do so over all aspects of the case, and splitting causes of action over jurisdictions is contrary to the principles of fairness and efficiency. And finally, once jurisdiction has been established, the onus of disproving the jurisdiction as appropriate shifts to the defendant in a case.

Justice LeBel also stressed the importance of demarcating between the ‘existence and the exercise of jurisdiction,’ stating that the doctrine of forum non conveniens only applies once the jurisdiction has been established, and does not play a role in the analysis of determining its applicability. Just as the defendant is responsible for invoking this doctrine, it is also the defendant’s responsibility to show, using the same real and substantial connection test, if another forum has the necessary connection with both parties to assume jurisdiction. If so, the question of why this alternate forum will be the better choice to litigate in, rather than the established Canadian one must also be answered by the defendant.

Citing s. 11(1) and (2) of the Court Jurisdiction and Proceedings Transfer Act , SBC 2003, c 28 [CJPTA], the SCC sets out a list of non-exhaustive considerations that provide an inclusion of relevant circumstances that might affect the choice or jurisdiction, ultimately positing that the standard to transfer an already established authority over jurisdiction is a high one, as reflected by the words “clearly more appropriate.” In Justice LeBel’s reasoning, this is to ensure that both parties are treated fairly, and the plaintiff’s hard work in establishing the proper jurisdiction, along with related factors such as the financial costs of transferring a case, and problems of enforcing judgments etc., do not automatically place the plaintiff at a disadvantage.

The revised test was then applied to the two cases in the appeal, with the SCC eventually determining that, for the individual Van Breda case, the existence of a contract was the decisive factor in Ontario being deemed the appropriate jurisdiction. Further, it also upheld the ONCA’s decision that Ontario was the best jurisdiction to hear the case, given that Cuban courts could not assure impartiality and fairness, thus showing that Cuba could not be a better forum than Ontario. Similarly, in the case of Charron, the SCC also upheld the ONCA’s decision that Ontario was an established and valid jurisdiction (by virtue of the parties’ business activities being carried out in it), and that Cuba was clearly not a more appropriate forum.

Van Breda has already proved to be an enormously influential decision, with the revised real and substantial connection test being applied to two cases of international defamation that were decided on the same day. A full comment on the application of the test in Breeden v Black, 2012 SCC 19 and Éditions Écosociété Inc. et al. v Banro Corp., 2012 SCC 18 can be found here. Additionally, the case has implications that stretch to the liabilities of foreign companies that conduct business within the confines of Canada, since the presence of a presumptive connecting factor is the core of the new analysis through the test.