Canada: Form Over Substance: Ontario Court Of Appeal Holds Courts May Re-characterize Pleadings When Assessing Jurisdiction

A motion judge may be able, in some circumstances, to go behind the characterization of a claim as pleaded for the purposes of a jurisdiction motion.

This was recently held by the Court of Appeal in Rieder zu Wallburg v Plista Gmbh, 2022 ONCA 281.

Overview of Decision

The claim in this case arose after the foreign Defendant terminated an agreement with the Plaintiff's corporation, alleging fraud. In response, the Plaintiff brought an action - but not one in contract. Instead, the Plaintiff pleaded various torts in conspiracy, negligence, and defamation.  The motion judge held the Ontario court had no jurisdiction, and agreed with the Defendants' submission that the Plaintiff had cast the claims in tort solely to obtain a jurisdictional advantage. The action, if it were to proceed in Ontario, was a simple breach of contract case - "without the contract, [the Plaintiff] has no claim".¹ 

The Court of Appeal upheld the decision of the motions judge. The Court rejected the Plaintiff's argument that the motion judge erred in going behind the characterization of the claim as pleaded, noting "the form of the claim cannot trump the substance of the claim when addressing a jurisdictional argument".²

Discussion

A court considering a jurisdiction motion must bear in mind the subject matter of the litigation and whether a real and substantial connection to the jurisdiction exists in respect of the "factual and legal" situation.³ This decision indicates the inquiry does not necessarily end with a plaintiff's own characterization of the claim as portrayed in the pleadings.⁴ The motion judge found that the Plaintiff's claim, if it even existed, was ultimately a claim for breach of contract and not one in tort. The Plaintiff was not permitted to recast the claim solely to obtain a jurisdictional advantage.⁵

This decision highlights a tension in the existing case law on jurisdiction. A plaintiff need only establish a "good arguable case" that a cause of action is sufficiently connected to Ontario.⁶ At the jurisdiction stage, all that is required is for the statement of claim to advance the core elements of a cause of action under law and appear capable of being amended to cure any pleading deficiencies such that the claim will have at least some prospect of success.⁷ Moreover, the Supreme Court of Canada held in Van Breda that a real and substantial connection with one cause of action is sufficient for the court to assume jurisdiction over the entire case.⁸

However, as the Court's decision in Rieder illustrates, pleadings alone may not be sufficient to establish a "good arguable case" where the cause of action pleaded is devoid of merit or the pleadings fail to demonstrate any air of reality concerning the possible existence of a presumptive connecting factor.⁹ Rieder also makes clear that a plaintiff cannot rely purely on its pleadings when the pleadings themselves do not properly reflect the substance of the claim and the plaintiff is merely attempting to secure a jurisdictional advantage.

Case Information

Rieder zu Wallburg v Plista Gmbh, 2022 ONCA 281

Docket: C69668

Date of Decision: April 8, 2022

Footnotes

1. Rieder v Plista GMBH, 2021 ONSC 4458 at para 31.

2. Rieder zu Wallburg v Plista Gmbh, 2022 ONCA 281 at para 10.

3. Club Resorts v Van Breda, 2012 SCC 17 at para 99.

4. Rieder zu Wallburg v Plista Gmbh, 2022 ONCA 281 at paras 9-10

5. Rieder v Plista GMBH, 2021 ONSC 4458 at paras 27-31.

6. Ontario v Rothmans Inc., 2013 ONCA 353 at paras 53-54.

7. Ibid at para 106.

8. Club Resorts v Van Breda, 2012 SCC 17 at para 99.

9. Ontario v Rothmans Inc., 2013 ONCA 353 at paras 110-113; Thind v Polycon Industries, 2022 ONSC 2322 at para 29.

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