Where to Bring a Lawsuit? The Supreme Court of Canada Clarifies Where Canadians Should Turn When They Are Injured Abroad

The Supreme Court of Canada’s recent decision in Club Resorts Ltd. v. Van Breda, 2012 SCC 17, has clarified the guidelines in Ontario for plaintiffs who have been injured outside of the province. While previous guidelines lacked predictability and consistency in helping plaintiffs determine what court in which country they should turn to in seeking relief, the Court’s decision will now help provide greater certainty.

Club Resorts Ltd. v. Van Breda concerned two separate cases of Ontario residents who were injured while on vacation at resorts managed by Club Resorts in Cuba. In response, Club Resorts argued that Ontario courts lacked jurisdiction and that Cuban courts would be the more appropriate forum, according to the doctrine of forum non conveniens – a doctrine used to determine which court from different countries or jurisdictions should hear a dispute.

Both levels of Ontario courts disagreed and held that the Ontario court was the more appropriate forum.

In dismissing Club Resort’s appeal, the Supreme Court of Canada clarified how a court should determine (1) whether it should hear a dispute and, if so, (2) whether it is the most appropriate forum to do so – the first being a question of the existence of jurisdiction with the second being the exercise of jurisdiction.

Real and substantial connection

Courts have traditionally relied on the “real and substantial connection test” to determine whether it should hear a case. The test is an organizing principle used to resolve issues related to a court’s assumption of jurisdiction and the appropriate choice of law applicable to a tort.

In conducting the test, both the common law and civil law have relied on the use of a number of objective factual connections. The Ontario Court of Appeal developed a list of eight factors in Muscutt v. Courcelles (2002), 60 O.R. (3d) 20, that were criticized for giving judges too much discretion with the potential of conflating of the two steps outlined above and creating bias in favour of the forum chosen by the plaintiff.

In Club Resorts Ltd. v Van Breda, the Supreme Court outlined a non-exhaustive list of presumptive connecting factors that entitle a court to assume jurisdiction to hear a dispute in cases involving a tort:

1. the defendant is domiciled or resident in the province;
2. the defendant carries on business in the province;
3. the tort was committed in the province; and
4. a contract connected with the dispute was made in the province.

In order to meet the “real and substantial connection test”, the plaintiff must establish that one or more of the factors exist. If the plaintiff succeeds, and absent indications to the contrary, the court may presume that it can hear the claim.

Forum Non Conveniens 

Only once jurisdiction has been established can the defendant argue that the court is not the most appropriate forum to hear the dispute.

Under forum non conveniens, the defendant must show that another forum has an appropriate connection and must demonstrate why the proposed alternative forum should be preferred and considered more appropriate.

The Court enumerated a non-exhaustive list of circumstances where forum non conveniens would apply, but stressed that the doctrine focuses on the context of each case and that the other forum must “clearly be more appropriate”.  These factors include:

1. the location of the parties and witnesses;
2. the cost of transferring the case to another jurisdiction or of declining the stay of proceedings;
3. the impact of a transfer on the conduct of the litigation or on related or parallel proceedings;
4. the possibility of conflicting judgments;
5. problems related to the recognition and enforcement of judgments; and
6. the relative strengths of the connections of the two parties.

Application to the two cases

In the end, the Supreme Court dismissed both appeals.

In the first case, there was a sufficient connection between the claim and Ontario arose which arose as a result of the contractual relationship that was created in the province between the plaintiff and Club Resorts.

Under the second part of the analysis – whether the motion judge should have declined jurisdiction based on forum non conveniens – the Court found that Club Resorts failed to show that a Cuban court was clearly the more appropriate forum, citing the far heavier burden on the plaintiffs if they were required to bring the action in Cuba.

In the second case, the evidence supported the presumptive connecting factor that Club Resort carried on business in Ontario. In the second part of the analysis, the Court again found that Club Resorts failed to discharge its burden that a Cuban court would clearly be a more appropriate forum in the circumstances of the case. Considerations of fairness also weighed heavily in favour of the plaintiffs.

Comment

The Supreme Court’s decision clarifies where a plaintiff should sue if they get injured outside of the province. In outlining the two-part analysis of (1) whether a court should hear a dispute and (2) whether it is the most appropriate forum to do so, the Court has struck somewhat of a balance between flexibility in relation to concerns about fairness to individuals engaged in litigation and predictability in the institutional process.

John Siwiec is a lawyer in our International Arbitration Group. He can be reached at 613.566.2814 or [email protected].