In 2023, the Court of Appeal grappled with the application of one of the presumptive connecting factors for jurisdiction under the Van Breda test: "a contract made in the province."
Under the Van Breda test, a plaintiff can establish jurisdiction through a "real and substantial connection" between the matter and the jurisdiction, where one of four presumptive connecting factors is present (Club Resorts Ltd. v. Van Breda, 2012 SCC 17, Van Breda). The court must also consider whether that presumption has been rebutted. The fourth presumptive connecting factor is whether a contract connected with the dispute was made in the province.
The two sets of reasons from the Court of Appeal support, on one side, a more restricted application of the Van Breda test to limit territorial overreach and, on the other, a broader reading of the term "connected" (with the dispute) that would likely result in a presumptive connection being established more easily, and then relying on the chance for rebuttal to capture overreach. While in this case the concurring reasons resulted in the same outcome, they reflect different approaches to the test for establishing jurisdiction.
The case has now been granted leave to appeal to the Supreme Court of Canada – an opportunity for the Supreme Court to clarify the scope of the fourth Van Breda factor.
Background
This case arose from a water taxi accident that occurred while the Ontario-resident plaintiffs were on holiday in Venice, Italy. The water taxi voyage was part of the plaintiffs' travel from the airport to their hotel, arranged by the plaintiffs through the use of a multinational financial services corporation that provides travel-related services to individuals in Canada (the Financial Services Corporation). The Financial Services Corporation then itself contracted with multiple Italian companies to provide transport to the plaintiffs. After their return to Ontario following the accident, the plaintiffs sued the Financial Services Corporation and the Italian companies. The claim referred to a contract between the plaintiffs and the Financial Services Corporation, but the claim alleged negligence rather than breach of contract.
Three of the defendant Italian companies brought a motion to dismiss or stay the action, on the basis that the Ontario Superior Court of Justice lacked jurisdiction over them. The motion judge dismissed the motion, relying on a presumption of jurisdiction created by the presence of the fourth presumptive connecting factor from Van Breda: that the contract between the plaintiffs and the Financial Services Corporation had been made in Ontario.
On appeal, the Court of Appeal overturned the motion judge's decision and granted a stay. However, Justices Nordheimer and Young issued concurring decisions (with Justice Nordheimber writing for the majority), based on different approaches to the Van Breda test.
A return to a strict and rigorous application
Justice Nordheimer, writing for the majority, emphasized that the underlying analysis of the test for jurisdiction is that of a "real and substantive connection," the intention of which is to limit jurisdictional overreach, and that authorities since Van Breda have failed to apply the test with the "care and rigor" with which it was intended to be applied. Justice Nordheimer rejected the argument that the fourth connecting factor must now be interpreted with a broader scope, following the Supreme Court of Canada's decision in Lapointe Rosenstein Marchand Melancon LLP v. Cassels Brock & Blackwell LLP (2016 SCC 30, Cassels), which states that it is sufficient that the dispute flows from the relationship created by the contract, and as such is "connected" to the contract. Justice Nordheimer reasoned that the Supreme Court of Canada's intention in Cassels was not to expand the scope of the fourth factor, because to do so would be inconsistent with its intention to limit territorial overreach. Justice Nordheimer looked instead to Justice Côté's dissenting opinion in Cassels, which stated that the scope of the fourth factor should be limited to tort claims where the defendant's liability flows immediately from its own contractual obligations.
Justice Nordheimer reasoned that, even if the fourth factor did apply, the motion judge erred by not then considering the next stage of the Van Breda inquiry: whether the presumptive factor has been rebutted. As stated in Van Breda, where the relevant presumptive factor is that the contract was made in the jurisdiction, the presumption can be rebutted where the contract has little or nothing to do with the subject matter. Justice Nordheimer considered the factual matrix: the appellants are Italian, their engagements were not contemplated in the main contract with the plaintiffs, and the Italian defendants would not reasonably expect to be called to answer legal proceedings in Ontario. As such, the overriding consideration of whether there is a "real and substantial" connection was not met.
The evolution of a more broad, flexible approach
Justice Young, in concurring reasons, disagreed that the fourth factor did not create a presumptive connection. According to Justice Young, the majority's reasoning "effectively recast the dissenting opinion of Côté in Cassels as the governing precedent," and its finding that there was no Ontario contract creating a presumptive connecting factor was the result of a mechanical rather than functional reading. The concurring reasons explain that the approach to the fourth factor has evolved since Van Breda from "narrow and mechanical" to become broad and flexible, and that the phrase "connected to" has a broad meaning. Justice Young reasoned that narrowing the scope of the fourth criterion "undermines the flexibility required in private international law."
Justice Young ultimately agreed with the majority that there was no jurisdiction in this case because the presumptive connecting factor had been rebutted. In so finding, Justice Young expressed concern about a lack of judicial guidance regarding the rebuttal stage of the analysis. Justice Young attributed this to the fact that the inquiry simply did not reach the rebuttal stage very often when the approach was narrower, whereas now – with the evolution of the broader approach – the rebuttal stage will become increasingly relevant.
Takeaways
The Court of Appeal's concurring reasons raise further questions about how the fourth Van Breda connecting factor should be applied. The Court of Appeal decision evidences a lack of clear guidelines as to when Ontario courts should assume jurisdiction in cases involving a contract made in the province. Not surprising then, the Supreme Court of Canada has granted leave to appeal the decision (Duncan Sinclair, et al. v. Venezio Turismo, Venice Limousine S.R.L, Narduzzi e Solemar S.L.R., 2024 CarswellOnt 175), giving that court an opportunity to clarify the correct approach to the fourth Van Breda criterion. It also presents an opportunity for the Supreme Court to provide guidance on the rebuttal stage and its relationship with the first stage of analysis, which would be most welcome.
In the meantime, there remains some uncertainty as to when there will be a contract connected to a dispute that will ground jurisdiction, and whether the meaningful part of the analysis should happen at the rebuttal stage. Future litigants making Van Breda jurisdictional arguments should be sure to include alternative arguments as to how the test applies.
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