Canadian courts have jurisdiction over out-of-province or out-of-country defendants where there is a "real and substantial connection" between the subject-matter of the litigation and the province or territory where the litigation is brought. In Club Resorts Ltd. v. Van Breda, the Supreme Court of Canada established a two-stage test for determining jurisdiction disputes.1 First, a court must determine whether it has prima facie jurisdiction over the dispute considering certain presumptive "connecting factors" — the fourth of which is whether a contract "connected with the dispute" was made in the province. The onus then switches to the party opposing jurisdiction to rebut the presumptive factor.

Although the Van Breda test has been in place for over a decade, its proper application remains a developing issue. This is illustrated by the recent decision Sinclair v. Amex Canada Inc., where judges of the Ontario Court of Appeal disagreed on how broadly or narrowly to interpret Van Breda's connecting factor relating to contracts.2

The case involved plaintiffs who alleged that they had contracted with a credit card company in Ontario to provide travel services in Venice, Italy. The claim was based on allegations that the credit card company had arranged, ultimately through Italian companies that were not parties to the plaintiffs' credit card contract, for a water taxi trip that ended in an accident. The plaintiffs sued in Ontario; the credit card company did not contest jurisdiction, but three Italian companies did.

The motion judge found that the Ontario Superior Court of Justice had jurisdiction over the Italian companies because of the fourth connecting factor, even though the companies were not parties to the credit card contract and the claim against them was in tort. On appeal, the judges of the Court of Appeal split on whether the credit card contract was a presumptive connecting factor, but were unanimous in concluding that the presumption was in any case rebutted. Of note, the majority was critical of the motion judge's decision, which, if upheld, would have had "sweeping implications":

It would mean that any person who books a trip through a credit card company that provides travel services and carries on business in Ontario would, through that fact alone, extend the jurisdiction of this province's courts to anyone who may subsequently become involved in those travel arrangements, regardless of where in the world that involvement occurs. In my view, that result would constitute the very type of jurisdictional overreach that the decision in Van Breda was cautioning against.3

Sinclair is a notable case for Canadian parties in litigation involving foreign entities, as the majority's analysis reflects a conservative approach to jurisdiction. As discussed more below, the case is also a powerful reminder of the important role facts play in distinguishing cases, even when it comes to Supreme Court jurisprudence — the analysis of the majority of the Court of Appeal was heavily fact-driven. Finally, parties that seek to ground jurisdiction in tort claims against foreign parties based on the existence of a contract should carefully consider the extent to which the contract is truly central to the claims at issue.

In Sinclair, the Italian companies had moved to dismiss, or alternatively, stay the action against them, on the basis that the Ontario court lacked jurisdiction over them. In her unreported endorsement, Justice Ramsay of the Ontario Superior Court dismissed the motion, finding that the credit card contract was a presumptive factor establishing jurisdiction. Justice Ramsay relied on the majority reasoning in Lapointe Rosenstein Marchand Melançon LLP v. Cassels Brock & Blackwell LLP, which held that all that is required is a connection between the dispute and a contract that was made in the province where jurisdiction is proposed to be assumed, and that "[a] 'connection' does not necessarily require that an alleged tortfeasor be a party to the contract."4

On appeal, Justice Nordheimer, writing for the majority, focused on Van Breda's "real and substantial connection test," which he concluded was intended to "preven[t] jurisdictional overreach" and "place limits on the assumption of jurisdiction by a province's courts."5 In this vein, Justice Nordheimer found that the motion judge erred by failing to consider the presumptive connecting factor "from the perspective of the defendant who is disputing jurisdiction,"6 and that where one defendant does not dispute jurisdiction, the plaintiff cannot "bootstrap" its jurisdictional claim against another party.7 This is consistent with the Supreme Court's direction in Van Breda, rejecting concerns for "order, efficiency or fairness" as a substitute for conducting a proper analysis to determine whether there is a real and substantial connection between Ontario, the dispute, and the defendant challenging jurisdiction.8

Justice Nordheimer did not treat the excerpts of Cassels Brock relied on by the motion judge as being of assistance. Justice Nordheimer instead distinguished the facts in Cassels Brock, stressing that the plaintiffs' claim in the matter before the court was founded solely in tort. Of note, in arguing that the fourth connecting factor should not be given an overly expansive view, Justice Nordheimer cited with approval from Justice Côté's dissent in Cassels Brock, writing that it was consistent with Van Breda.9 Justice Côté had written that "[t]he fourth factor only provides jurisdiction over claims where the defendant's liability in tort flows immediately from the defendant's own contractual obligations."10

In her concurring reasons, Justice Harvison Young disagreed with Justice Nordheimer's analysis of Cassels Brock, writing that it had "effectively recast the dissenting opinion of Côté J. [...] as the governing precedent on this court."11 Justice Harvison Young noted that jurisprudence post-Cassels Brock had followed the majority approach, taking an increasingly functional approach to the fourth presumptive factor, giving the word "connected to" a "broad interpretation [...] and reject[ing] the narrower approach, which my colleague now seeks to resurrect from the jurisprudential graveyard."12

The court was unanimous, however, that the fourth presumptive factor — whether or not it was established — was rebutted, because the credit card contract had "little or nothing to do with the subject matter of the litigation."13

In summary, the majority reasons in Sinclair were a strong endorsement of limiting jurisdiction in tort cases where jurisdiction is said to rest on contract. The majority characterized Van Breda's intention as "limit[ing] the territorial reach of Canadian courts,"14 writing that "some authorities subsequent to Van Breda, have failed to apply the decision with the care and rigour that was intended."15

Footnotes

1. 2012 SCC 17 [Van Breda].

2. 2023 ONCA 142 [Sinclair].

3. Sinclair at para. 44.

4. 2016 SCC 30 at para. 32 [Cassels Brock].

5. Sinclair at para. 17.

6. Sinclair at para. 18.

7. Sinclair at para. 19, excerpting from Hydro Aluminium Rolled Products GmbH v. MFC Bancorp Ltd., 2021 BCCA 182 at para. 10.

8. Van Breda at para. 82.

9. Sinclair at paras. 27-29.

10. Cassels Brock at para. 90.

11. Sinclair at para. 48.

12. Sinclair at paras. 49, 69.

13. Sinclair at para. 32.

14. Sinclair at para. 26.

15. Sinclair at para. 17.

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