Canada: Assuming Jurisdiction In Contract Claims: Diverging Approaches Of Canadian Courts

An Alberta court decision this June directly disagreed with recent Ontario decisions regarding the appropriate factors to consider when a non-resident defendant challenges the jurisdiction of a Canadian court in a contract dispute.

In Bansal v Ferrara Pan Candy Co.,1  Madam Justice Veit of Alberta's Court of Queen's Bench sheds light on appropriate factors to consider when a party challenges the jurisdiction of a Canadian court in a contract dispute. This decision also provides guidance regarding what steps by a defendant prior to a challenge can constitute submission to the jurisdiction so as to preclude a successful challenge.

In Ferrara Pan Candy, the Alberta judge directly disagreed with two recent Ontario Superior Court of Justice decisions  that seem to suggest an expanded set of factors may connect a contract dispute and the court's jurisdiction. Staying true to the Supreme Court of Canada's leading decision in Club Resorts Ltd. v Van Breda,2 the Alberta court declined to follow the Ontario decisions and looked no further than Alberta's Rules of Court for the factors that would allow it to find jurisdiction.

The proceeding

In Ferrara Pan Candy, the judge had to decide whether the courts of the province of Alberta had jurisdiction to hear a dispute over an alleged breach of contract and the commission of various non-contractual wrongs. If jurisdiction were found to exist, the court then had to decide if Alberta was the most appropriate forum to adjudicate the dispute. The plaintiffs' claim essentially alleged that the defendants had breached contracts, conspired against the plaintiffs, and intentionally interfered with their economic interests regarding their exclusive rights to distribute the defendants' confectionary in Canada.

Early in the proceeding, the defendants brought an application to have the plaintiffs' solicitors disqualified from prosecuting the claim because an affiliated firm had previously acted for minority shareholders of the defendant Ferrara Pan Candy and, as corporate lawyers for the company, had investigated and researched some of the very allegations made in the plaintiffs' claim. The plaintiffs' solicitors subsequently gave notice of ceasing to act in the proceeding, so the application to remove them did not need to be heard.

The defendants then challenged the jurisdiction of the Alberta courts to hear the dispute.

Resisting the jurisdiction challenge, the plaintiffs argued that the defendants had submitted to Alberta's jurisdiction when they brought their application to disqualify the plaintiffs' solicitors. The judge found that the defendants had not submitted to the court's jurisdiction by bringing their application for the removal of the plaintiffs' solicitors. 

Ultimately, while the judge found that the Alberta courts did indeed have jurisdiction over the subject matter of the dispute, she determined that Alberta was not the most appropriate forum for the adjudication of the matter. She declined jurisdiction in favour of the courts of the province of Ontario or, alternatively, the state of Illinois in the United States.

No submission to the jurisdiction of the Alberta courts

Neither counsel nor the court was able to find a decision directly on point regarding whether the defendants, in bringing their disqualification motion, had submitted to the jurisdiction of the court.3

The judge relied on Norex Petroleum Ltd. v Chubb Insurance Co. of Canada4 to find that it would have been possible for the defendants to submit to the Alberta courts' jurisdiction because, where a court already has jurisdiction over the subject matter of a dispute, a defendant's consent—express or implied—can constitute submission.

However, the defendants had not submitted by bringing the removal application. That application raised a professional conduct issue and not an issue on the merits of the claim; attempting to disqualify the solicitors did not go to the merits of the dispute between the parties. While the circumstances of each case must be examined to determine whether a party has submitted to the jurisdiction of the court with respect to the merits of that case, the judge found that in this dispute the merits were not engaged.

Procedurally, it was necessary for the defendants to bring the removal application prior to the jurisdiction challenge because the firm had the potential to breach its duties of loyalty and confidentiality. The confidential information, which the plaintiffs' lawyers had presumably acquired, related directly to the plaintiffs' allegations and they might have been able to use the information in not only prosecuting the claim, but also in resisting the jurisdiction challenge. Effectively, the defendants had no choice but to bring the disqualification application first because they perceived that the plaintiff had an unfair advantage.

Alberta has jurisdiction by formation of the contract

The judge noted there have been relatively few post-Van Breda appellate cases identifying the factors in contract cases that allow a court to take jurisdiction over a dispute. These factors, called "presumptive connecting factors," are indicators that a jurisdiction has a "real and substantial connection" to a contract and a court therefore has jurisdiction over disputes about that contract. Following the lead of the Supreme Court, Madam Justice Veit looked to the Alberta Rules of Court5 for guidance as to what the presumptive connecting factors are in Alberta for contracts and what constitutes a real and substantial connection between a contract and the province.

The judge found four presumptive connecting factors for contracts cases, in a manner consistent with the Supreme Court's directions in Van Breda regarding how presumptive connecting factors for tort cases should be determined. The four presumptive connecting factors that may ground jurisdiction in contract cases in Alberta are:

  • the defendant is resident in Alberta;
  • the defendant carries on business in Alberta;
  • a contract or alleged contract is made, performed or breached in Alberta; and
  • a tort connected with the contract was committed in Alberta.

Any one of these connecting factors can furnish the Alberta court with jurisdiction over a contract claim.

The contract was found to have been made in Alberta and the province's courts therefore had jurisdiction over the subject matter of the dispute.

Alberta not the most appropriate forum

The court found that, despite the Alberta courts' jurisdiction, the province was clearly not the most appropriate forum in which to adjudicate the plaintiffs' claim. The court cited many factors in support of its finding, including that: the defendants were resident in Ontario and Illinois and their alleged wrongdoing would have been committed in those jurisdictions; the contract was varied several times outside of Alberta; few Albertan witnesses were required; and most records relating to the claim were probably in Ontario. Further, there was no evidence the plaintiffs would suffer any legal disadvantage if the proceeding were brought in Ontario or Illinois, and there would be no difficulty having an Ontario judgment recognized in Alberta. Either forum was found to be more appropriate than Alberta.

Presumptive connecting factors in contracts cases: where to from here?

The post-Van Breda jurisprudence on presumptive connecting factors in contracts cases is sparse. Ferrara Pan Candy clearly reflects that while Van Breda was a tort case, it represents a clear direction from the Supreme Court on how new presumptive connecting factors should be established for contract cases as well. The judge in Ferrara Pan Candy properly recognized the factors that connect a contract to the jurisdiction of Alberta in a manner consistent with the method set out for recognizing new factors for tort claims in Van Breda.

This case comes on the heels of two Ontario decisions6 that seem to depart from Van Breda's values of promoting clarity, predictability and consistency in jurisdiction cases—decisions Madam Justice Veit disagreed with and rejected.

The Ontario cases seem to suggest (but do not decide) that other factors—such as where the subject matter of a contract is generally located, where witnesses are located, and where actions were taken on the contract—might also be new presumptive connecting factors. As Her Ladyship pointedly remarked in Ferrara Pan Candy, these factors are not presumptive connecting factors and do not establish the presumption of a real and substantial connection with Alberta. These factors are solely for determining whether another forum is clearly more appropriate to hear a dispute rather than whether a court has jurisdiction over a contract dispute in the first place.

It remains to be seen whether other Canadian courts will stay true to the Supreme Court's Van Breda directive and strive to maintain clear tests and predictability in jurisdiction decisions, or whether judges will once again wade into the murky waters of allowing factors that should not create the presumption of a real and substantial connection to influence jurisdiction findings, instead of considering them in the appropriate forum analysis where they are properly relevant.

Eugene Bodnar of Norton Rose Fulbright's Transnational Litigation team was counsel for the plaintiffs in Norex Petroleum v Chubb Insurance, successfully opposing an application brought by a Russian insurer that asserted Alberta was not the appropriate forum to hear a claim for a declaration as to coverage in relation to oilfield equipment seized in Russia.

Footnotes

1 2014 ABQB 384.

2 [2012] 1 SCR 572.

3 Practitioners should note that, in Skagway Terminal Co. v The Ship "Daphne" (1987), 42 DLR (4th) 200, the trial division of Canada's Federal Court found that the defendant had not submitted to the jurisdiction when it provided the plaintiff with an undertaking, prior to the commencement of the claim, that the defendant's solicitors in the jurisdiction would accept service of any process, which undertaking expressly reserved all of the defendant's rights. Such an express reservation of rights should be considered with respect to any preliminary steps taken by a non-resident defendant that may subsequently challenge the jurisdiction of a Canadian court.

4 (2008) 444 AR 102, [2008] 12 WWR 322, 60 CPC (6th) 291 (QB).

5 Alta Reg 124/2010.

6 Patterson v EM Technologies Inc., 2013 ONSC 5849 and Leone v Scaffidi, (2013) 87 ETR (3d) 93 (Ont SC).

Norton Rose Fulbright Canada LLP

Norton Rose Fulbright is a global legal practice. We provide the world's pre-eminent corporations and financial institutions with a full business law service. We have more than 3800 lawyers based in over 50 cities across Europe, the United States, Canada, Latin America, Asia, Australia, Africa, the Middle East and Central Asia.

Recognized for our industry focus, we are strong across all the key industry sectors: financial institutions; energy; infrastructure, mining and commodities; transport; technology and innovation; and life sciences and healthcare.

Wherever we are, we operate in accordance with our global business principles of quality, unity and integrity. We aim to provide the highest possible standard of legal service in each of our offices and to maintain that level of quality at every point of contact.

Norton Rose Fulbright LLP, Norton Rose Fulbright Australia, Norton Rose Fulbright Canada LLP, Norton Rose Fulbright South Africa (incorporated as Deneys Reitz Inc) and Fulbright & Jaworski LLP, each of which is a separate legal entity, are members ('the Norton Rose Fulbright members') of Norton Rose Fulbright Verein, a Swiss Verein. Norton Rose Fulbright Verein helps coordinate the activities of the Norton Rose Fulbright members but does not itself provide legal services to clients.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions