Ontario court jurisdiction denied over contracts with insufficient ties to the province by the Supreme Court of Canada
The Supreme Court of Canada (SCC) has released a judgment in Sinclair v. Venezia Turismo on July 31, shedding light on when Canadian courts have jurisdiction over a legal proceeding. This decision clarifies and refines the Van Breda test, a two-stage legal framework used in Canadian courts to determine if a court can assume jurisdiction over a foreign defendant based on whether there is a "real and substantial connection" between the dispute and the province where the claim is filed.
The Van Breda test consists of two stages. The first stage requires a court to weigh a non-exhaustive list of "presumptive" connecting factors to determine the existence of a real and substantial connection. If a presumptive connecting factor links the dispute to the province, the second stage allows the defendant to rebut this presumption by showing that the connection is not strong enough to justify jurisdiction.
In the case of Sinclair v. Venezia Turismo, the plaintiffs sued several Italian defendants for injuries from a water taxi accident arranged through a credit card concierge contract made in Ontario. The SCC ruled that although the contracts had some connection to Ontario, jurisdiction could not be assumed over the foreign defendants because the connection to the dispute was insufficient and specific to each defendant’s own contract.
The SCC's decision emphasizes that jurisdiction must be assessed individually for each defendant rather than aggregating connections across multiple defendants or contracts. Having jurisdiction over one defendant cannot be extended or "bootstrapped" to reach other defendants based on weak or indirect connections. The Court also reinforced the defendant’s ability to rebut the presumptive jurisdiction if the facts show little real connection between the contract and the dispute.
The decision is of particular interest to businesses based outside of Canada, or with ties to Canada, who may be required to defend against proceedings commenced in Canada. Lower courts need to meaningfully engage with the circumstances and terms of the alleged contract to ensure its formation in the relevant forum before determining the existence of a connection. Detailed pleadings are crucial for litigants to establish the existence of the presumptive factor, especially for contracts as the connecting factor.
In summary, Sinclair v. Venezia Turismo refines the Van Breda test by reinforcing the individual analysis of jurisdiction per defendant and limiting the extension of jurisdiction through aggregated or weak connections in multi-defendant cross-border contract disputes. This decision emphasizes the importance of a case-by-case assessment of jurisdiction and the need for a strong connection between the dispute and the Canadian jurisdiction.
[1] Supreme Court of Canada's decision in Sinclair v Venezia Turismo at paras 68-69 and 71. [2] Supreme Court of Canada's decision in Sinclair v Venezia Turismo at paras 50, 59, 62, and 63. [3] Ontario Court of Appeal's decision in Sinclair v Amex Canada Inc. was at paras 32 and 36. [4] The Motion Judge's decision in Sinclair v Amex Canada Inc. is not published on CanLII.
- In light of the Sinclair v Venezia Turismo decision, it's essential for businesses with ties to Canada to understand that jurisdiction in Canadian courts is assessed individually for each defendant, rather than aggregating connections across multiple defendants or contracts.
- The education-and-self-development aspect for businesses comes into play as determining the existence of a connection requires litigants to provide detailed pleadings, highlighting the importance of understanding the formation of contracts in the relevant forum.
