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Appeal court revisits key ruling on jurisdiction over non-residents

|Written By Julius Melnitzer

The Ontario Court of Appeal is getting set to reconsider a leading Canadian case on jurisdiction over non-resident defendants.

Barry Glaspell calls Muscutt one of the most ‘influential’ Court of Appeal decisions in recent years.

“This suggests that the court has already determined that Muscutt [v. Courcelles] should possibly be reversed, at least in part,” says Borden Ladner Gervais LLP’s Barry Glaspell.

Nevertheless, Glaspell argues the 2002 case that outlined the so-called real and substantial connection test for determining whether the court has jurisdiction is an important one.

“The Muscutt quintology demonstrated, for the first time, a careful integration of private and customary international law concepts, leaving a considerable degree of judgment to the courts as to the application of the real and substantial connection test to a given set of facts.

“The decision works well in practice and is likely the most persuasive and influential of its kind by the Ontario Court of Appeal in the past decade. It has been widely followed by judges across Canada, including many at the Supreme Court of Canada.”

The test arising from Muscutt is a flexible one involving eight factors, none of which is determinative by itself and all of which must be weighed.

The eight factors are: the connection between Ontario and the plaintiff’s claim; the connection between Ontario and the defendant; unfairness to the defendant in assuming jurisdiction; unfairness to the plaintiff in not assuming jurisdiction; involvement of other parties in the suit; the court’s willingness to recognize and enforce a similar judgment against a domestic defendant rendered on the same jurisdictional basis; whether the case is international or interprovincial in nature; and comity and the standards of jurisdiction, recognition, and enforcement elsewhere.

It appears, however, that the current Court of Appeal has had second thoughts about the Muscutt test or at least some of its components. Prompted, it seems, by academic criticism of the case, including an oft-cited article by professor Tanya Monestier, the court will be reconsidering the Muscutt framework at a hearing set for this week.

The issue arose following arguments in Charron v. Bel Air Travel Group Ltd. and Van Breda v. Village Resorts Limited. In both cases, the trial judges had applied Muscutt to find jurisdiction, but the defendants appealed.

After reserving judgment in both cases, the Court of Appeal advised that it had “become aware of certain developments in the law that may warrant this court revisiting aspects of its decision in Muscutt v. Courcelles.”

A five-judge panel will consider the issue.

Charron arose from the plaintiff’s purchase of an all-inclusive package holiday to Cuba from a resort owned by a Cuban company. While taking advantage of the free scuba diving at the resort, the plaintiff died.

The trial judge concluded that one of the defendant companies, resident in the Cayman Islands, had a real and substantial connection to Ontario because it had provided the accommodation in Cuba pursuant to an agreement with a tour operator here.

The incident that gave rise to Van Breda also occurred in Cuba when the female plaintiff suffered permanent injuries as a result of an accident at a beach resort.

The trial judge ruled that the resort, domiciled in the Cayman Islands, might have entered into the contract with the male plaintiff through a representative here.

He noted the potential unfairness of a Communist regime’s judicial system and the fact that none of the defendants were Cuban. He therefore concluded that a real and substantial connection between the subject matter of the action and Ontario existed.

According to Jerome Morse of Toronto’s Adair Morse LLP, who with colleague John Adair represents the plaintiffs in Charron, the academic commentary reveals four common criticisms of Muscutt: that it creates  uncertainty and unpredictability; it increases the cost and complexity of litigation because it requires parties to adduce evidence of foreign law; it conflates the jurisdiction simpliciter analysis with the forum non conveniens analysis; and developments in other provinces, notably the adoption of uniform legislation, mean that Ontario’s approach to jurisdiction is not consistent with the approach taken elsewhere.

But Morse vows to attack the academic literature.

“I’ve never seen a single case where a court has said that Muscutt is unworkable,” he says.

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