Canada: What's The "Connection"? Ontario Court Of Appeal Confirms Continuing Divide Between Jurisdiction And Choice Of Law

Two companies based in different provinces enter into a contract. One company sues the other for breach of that contract. If the contract does not say which province's laws govern the agreement, how does a court determine which law to apply? The Ontario Court of Appeal recently addressed this question – the choice of law rule for contracts – in Lilydale Cooperative Limited v. Meyn Canada Inc. ("Lilydale").1

Fire in A Poultry Plant

Lilydale is an Alberta company that operates a poultry processing plant in Edmonton. In 1993, it purchased a fryer and oven system from Meyn Canada, a multi-national corporation that, in Canada, operates only in Ontario. In January 2004, there was a fire at Lilydale's plant. Lilydale sued Meyn for breach of contract and negligence,2 alleging that the fryer caused the fire. Lilydale commenced its claim in January 2006.

The parties' contract did not state whether Alberta or Ontario law applied. The issue of which province's law applied was critical to the dispute because of the ultimate limitation period within which Lilydale could commence its claim. Under Ontario law, a party potentially has up to 15 years to commence an action; in Alberta, the analogous limit is 10 years. For purposes of determining which province's law applied, the parties agreed that Lilydale's cause of action arose no later than August 31, 1994. Under Alberta law, then, the claim would necessarily be statute-barred, but if Ontario law applied, Lilydale might be able to succeed.

"Closest and Most Substantial Connection" – The Traditional Test

Nearly half a century ago, the Supreme Court of Canada set out the test to determine the law applicable to a contract in which the parties did not select the governing law:3

... the problem of determining the proper law of a contract is to be solved by considering the contract as a whole in light of all of the circumstances which surround it and applying the law with which it appears to have the closest and most substantial connection.4

The "closest and most substantial connection" is to be discerned through consideration of a series of factors, including:

  • the domicile and residence of the parties;
  • the national character of a corporation and the place of its principal business;
  • the place the contract was made and where it is to be performed;
  • the style in which the contract is drafted, such as whether the language is appropriate for one system of law as opposed to another;
  • the fact that certain terms are valid in one system of law and invalid in another;
  • the economic connection of the contract to another transaction;
  • the nature and subject matter;
  • the head office of a corporation; and
  • "any other fact which serves to localize the contract".5

In Lilydale, the three factors on which the lower court judge had relied were in issue on appeal – (1) the nature and subject matter of the contract; (2) the place of performance; and (3) the domicile and residence of the parties. Applying those factors, the judge had determined that Ontario law applied.

For the first two of the factors, the essential fact was that the contract between Lilydale and Meyn was not only for the delivery and installation of the fryer and oven system, but also involved the design of the system. The design element of the contract occurred primarily in Ontario. On that basis, the Court of Appeal refused to interfere with the judge's conclusion that the nature and subject matter and performance of the contract favoured Ontario's having the closest and most substantial connection.6 Because one party was resident in Ontario and the other in Alberta, the domicile and residence of the parties was neutral. Taking the factors together, the Court of Appeal deferred what it considered a discretionary balancing by the judge below and dismissed the appeal.

Before concluding, the Court of Appeal noted the irony that Meyn, an Ontario-based company, sought to rely on Alberta law, and observed that Meyn "could have inserted a choice of law clause in its contract with Lilydale."7

Choice of Law and Jurisdiction – What's the Connection?

In addition to which law applies, the other major question in a multi-forum case is which court gets to apply that law. In Lilydale, the question of jurisdiction had already been resolved – the Ontario courts had refused to give way to the courts of Alberta.8 It is nonetheless worth considering the interplay between the two tests and the implications for cases like Lilydale.

The "closest and most substantial connection" test that governs contract choice of law at first blush seems as though it should be similar to the "real and substantial connection" test that determines jurisdiction.9 Although the objective of the two tests is substantially the same, they are structured quite differently. As we have seen, the choice of law test is a multi-factor balancing analysis. The jurisdiction test has recently moved away from this kind of analysis.

In Club Resorts Ltd. v. Van Breda, the Supreme Court altered the test that applies to jurisdiction inquiry, at least for tort cases.10 The Court expressly decided to abandon a multi-factor, discretionary balancing approach:11

The real and substantial connection test does not mean that problems of assumption of jurisdiction or other matters, such as the choice of the proper law applicable to a situation or the recognition of interprovincial judgments, must be dealt with on a case-by-case basis by discretionary decisions of courts, which would determine, on the facts of each case, whether a sufficient connection with the forum has been established. Judicial discretion has an honourable history, and the proper operation of our legal system often depends on its being exercised wisely. Nevertheless, the rely completely on it to flesh out the real and substantial connection test in such a way that the test itself becomes a conflicts rule would be incompatible with certain key objectives of a private international law system.12

The Court instead adopted a list of presumptive connecting factors, all in the name of increasing the "clarity and predictability" of results in the jurisdiction analysis.13 In the same decision, the Supreme Court held that the approach to jurisdiction might well have an "impact" on choice of law rules:

the framework established for the purpose of determining whether a court has jurisdiction may have an impact on the choice of law and on the recognition of judgments, and vice versa. Judicial decisions on choice of law and recognition of judgments have played a central role in the evolution of the rules related to jurisdiction. None of the divisions in private international law can be safely analysed and applied in isolation from the others.14

In a similar vein, over two decades ago, the Supreme Court eschewed a connections-based approach to choice of law for torts in Tolofson v. Jensen.15 The Court rejected such an approach principally because of "its extreme uncertainty":

A means of achieving [avoidance of multiplicity of proceedings] has been attempted in the United States through an approach often referred to as the proper law of the tort.  This involves qualitatively weighing the relevant contacts with the competing jurisdictions to determine which has the most significant connections with the wrong.  The approach was adopted by the majority in a strongly divided Court of Appeals of New York ... [in a case in which] [t]he plaintiff, while a gratuitous passenger in the defendant's automobile, suffered injuries when the automobile was in an accident.  Both plaintiff and defendant were residents of New York, but the accident occurred in Ontario where a statute absolved the owner and driver from liability for gratuitous passengers.  In an action in New York, the defendant moved for dismissal on the ground that the law of Ontario applied.  A majority denied the motion to dismiss.  The court stated that while the jurisdiction where the wrongful conduct occurred will usually govern, justice, fairness and best practical results may better be achieved in tort cases with multi-state contacts by according controlling effect to the law of the jurisdiction which, because of its relationship and contact with the occurrence and the parties, has the greatest concern with the issue raised in the litigation...

I leave aside for the moment the assumptions that a flexible rule better meets the demands of justice, fairness and practical results and underline what seems to be the most obvious defect of this approach ‑‑ its extreme uncertainty.16 [Emphasis added.]

Instead, the Supreme Court adopted a more rigid rule of applying the law of the forum in which the tort occurred.

Conclusion – Will the Traditional Test Continue to Govern?

In Lilydale, the Ontario Court of Appeal confidently applied a venerable precedent to decide the issue of choice of law for a contract. That traditional choice of law test – and the manner in which the Court of Appeal deferred to a discretionary balancing exercise of a lower court judge – looks similar to the jurisdiction analysis Ontario courts employed before the Supreme Court's decision in Van Breda. The Court of Appeal in Lilydale made no mention of the potential impact of Van Breda on the choice of law analysis, nor did it note the possibility of extending the earlier reasoning of the Supreme Court in Tolofson to choice of law in contracts and adopt a bright line test of, for example, applying the law of the forum in which the contract was made.17

For now, the traditional test continues to guide a court's choice of law for a contract when the parties fail to do so themselves. However, there may be a shift in this area the implications of the Supreme Court's decision in Van Breda continue to reverberate through Ontario's – and Canada's – rules of private international law.

Case Information

Lilydale Cooperative Limited v. Meyn Canada Inc., 2015 0NCA 281

Docket: C57995

Date of Decision: April 22, 2015


1. 2015 ONCA 281.

2. The Superior Court had determined that Alberta law governed the tort claims and this aspect of the decision was apparently not appealed: see Lilydale Cooperative Limited v. Meyn Canada Inc., 2013 ONSC 5313

3.      Imperial Life Assurance Co. of Canada v. Segundo Casteleiro Y Colmenares, [1967] S.C.R. 443 at 448 [Colmenares], citing Bonython v. Commonwealth of Australia, [1951] A.C. 201 (P.C.) at 219.

4.      Lilydale, at para. 9.

5.      Lilydale, at para. 10, citing Colmenares, which, in turn, cited Chesire on Private International Law, 7th ed. at 190.

6.      Lilydale, at paras. 15-16.

7.      Lilydale, at para. 28.

8.      Lilydale Cooperative Limited v. Meyn Canada Inc., 2008 ONCA 126.

9.      See Club Resorts Ltd. v. Van Breda, 2012 SCC 17 ["Van Breda"]. The tests are not precisely the same because the inquiry must resolve a slightly different question. In the closest and most substantial connection test, the court must come to a single conclusion on which law applies. For jurisdiction, more than one court may have a real and substantial connection sufficient to establish jurisdiction. There need not be a single answer.

10.     Van Breda, at para. 85.

11.     See the Ontario Court of Appeal's decision: Van Breda v. Village Resorts Limited, 2010 ONCA 84; and that Court's earlier decision: Muscutt v. Courcelles (2002), 60 O.R. (3d) 20 (C.A.).

12.     Van Breda, at para. 70.

13.     Van Breda, at para. 78.

14.     Van Breda, at para. 16.

15.     [1994] 3 S.C.R. 1022.

16.     Tolofson, at 1055-56.

17.     It should be noted that this test has recently been questioned by the Ontario Court of Appeal: see Trillium Motor World Ltd. v. General Motors of Canada Limited, 2014 ONCA 497 at paras. 56-72.

To view the original article, please click here.

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

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

In association with
Related Video
Up-coming Events Search
Font Size:
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
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

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