Canada: For Want Of Jurisdiction

A recent dismissal by the Court of Appeal for Ontario reaffirms that plaintiffs are required to commence their actions for underinsured, uninsured or unidentified coverage in the jurisdiction in which the contract was made, and for tort actions to be made in a jurisdiction with a presumptive connecting factor.

The Court of Appeal for Ontario recently handed down its latest views regarding when an Ontario court can assume jurisdiction over a non-resident defendant. On September 9, 2015, a five-panel court dismissed the plaintiff's appeal from a stay of proceedings in Forsythe v. Westfall, issued in February by Ontario's Superior Court of Justice.

Done from the bench without hearing the respondent's submissions, the dismissal strongly affirms the current conflicts of law analysis, which may require a plaintiff to litigate his or her tort claim in one jurisdiction and his or her contractual insurance claims in another.

The Accident

In August 2012, Alberta resident Michael Westfall was driving his motorcycle outside the City of Vernon in British Columbia. Riding shotgun was Rennie Forsythe, who was visiting from Ontario. Westfall lost control of his motorcycle, resulting in a collision in which both he and Forsythe were injured. Westfall maintains that an oncoming vehicle swerved into his lane, causing the accident, although this was denied by the four other witnesses to the accident.

Forsythe eventually returned to Ontario, where she commenced an action against Westfall for damages. Given the potential that the unidentified vehicle was completely at fault, Forsythe also named her own insurer, Intact Insurance, as a defendant. This was pursuant to the unidentified and underinsured - as per Ontario's Insurance Act and the (Ontario Policy Change Form) OPCF-44R Family Protection Endorsement, respectively - provisions of her Ontario automobile policy.

Westfall brought a motion to stay Forsythe's tort claim against him on the basis an Ontario court had no jurisdiction over him - he was neither a resident of Ontario nor did the accident occur in the province. Forsythe then opposed the motion on the basis that she would be forced to litigate her tort claim in British Columbia and her contractual claim in Ontario.

The Motion to Stay

The motions judge, Justice Paul Perell of Ontario's Superior Court of Justice, reviewed the existing conflicts of law analysis as set out by the Supreme Court of Canada in its 2012 decision, Club Resorts Ltd. v. Van Breda. The analysis requires the court to first determine whether or not it has jurisdiction simpliciter, and in the event that it does, to then decide whether or not it should decline to exercise that jurisdiction in favour of a more favourable jurisdiction (known as forum non conveniens).

Jurisdiction simpliciter exists when a real and substantial connection exists between the parties, the matter and the jurisdiction. A real and substantial connection presumptively exists when one (or more) of the following factors exists:

(i) the defendant is domiciled/resident in the jurisdiction;

(ii) the defendant carries on business in the jurisdiction;

(iii) the tort was committed in the jurisdiction; and/or

(iv) a contract connected with the dispute was made in the jurisdiction.

This presumptive factor can then be rebutted by demonstrating the connection between the forum and the factor is weak.

As the court is assuming jurisdiction over a non-resident defendant, it is important to note that the inquiry is naturally defendant-oriented. The corollary of this is that the presence of the plaintiff in the jurisdiction is not considered a connecting factor, and neither is the fact that damages were sustained in the jurisdiction.

Forsythe pointed to the fact that her automobile insurance policy was made in Ontario. As she was required to litigate the unidentified and underinsured claim in Ontario vis-à-vis the policy, this should presumptively bind the defendant to Ontario as it was a "contract connected with the dispute."

Confirmation of Tamminga

Justice Perell disagreed with Forsythe's position, based heavily on the Court of Appeal for Ontario's reasoning in its 2014 decision, Tamminga v. Tamminga.

The situation in Tamminga was almost identical to Forsythe's case, and many of the same arguments were raised, including the connection between the plaintiff's insurance contract and the defendant tortfeasor.

Tamminga was explicit that a plaintiff's contract of automobile insurance is immaterial and disconnected [emphasis added] from the underlying tort claim.

While an insurance contract can be said to contemplate potential accidents, any claim for underinsured, uninsured or unidentified coverage "only arises in the aftermath of the tort and its application is conditional on the outcome of the appellant's claim against the tortfeasors," the decision notes. Until that point, there is nothing that "connects the appellant's insurance contract to the respondents," Tamminga adds.

As stated by Justice Robert Sharpe in the Court of Appeal for Ontario's 2002 decision, Gajraj v. DeBernardo, "[j]urisdiction over claims against extra-provincial defendants should not be bootstrapped by such a secondary and contingent claim against a provincial defendant."

In the ruling this year, Justice Perell also referred to Craig v. Allstate Insurance Co. of Canada, handed down by Ontario's appeal court in 2002. The decision held that a plaintiff need not have a finding of liability in the tort action before proceeding with a claim for uninsured / unidentified / underinsured coverage.

Indeed, Section 5.6.3 of the (Ontario Automobile Policy) O.A.P. 1 and Section 9 of the OPCF-44R endorsement explicitly state that findings of liability by courts outside of Ontario are not binding on the insurer with respect to claims for said coverage.

As Justice Perell did not find jurisdiction simpliciter, he had no need to refer to the forum non conveniens doctrine - which considers elements such as potential inconsistent results and multiplicity of proceedings.

He also denied the application of the forum of necessity doctrine, a narrow and exceptional remedy that allows the court to take jurisdiction despite there not being jurisdiction simpliciter.

While the ruling may have been an opportunity for the Court of Appeal for Ontario to explore this doctrine, this ground was not seriously argued on appeal given its exceptional nature. (This doctrine is not yet fully developed in Ontario case law, but its beginning was explored at some length in the 2014 decision, West Van Inv. v. Daisley. The doctrine typically applies when there is a denial of justice, not inconvenience.)

Justice Perell granted the defendant's motion for a stay of proceedings for want of jurisdiction.

The Aftermath

Given the fact that Tamminga was released just last year, there was little prospect that the Court of Appeal for Ontario would overturn itself after such a short time. The case law remains firm that plaintiffs are required to commence their actions for underinsured, uninsured or unidentified coverage in the jurisdiction in which the contract was made (in this case, Ontario), and for the tort action to be made in a jurisdiction with a presumptive connecting factor (in this case, possibly B.C.)

The reality is that should a B.C. court find that the unidentified motorist was 100% liable, and an Ontario court find that a named defendant was at least 1% liable, Forsythe will be denied recovery.

It will be interesting for this issue to eventually be heard by the Supreme Court of Canada, as the high court may need to clarify that such a multiplicity of proceedings should exist.

Previously published by Canadian Underwriter.ca

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.

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