August 2002

Foreign Defendants and Forum Conveniens
Case Comment on
MUSCUTT et al v. COURCELLES et al
Court of Appeal of Ontario Docket C35934
Released May 2002

A series of appeals was heard by the Ontario Court of Appeal at the same time regarding the issue of whether or not an Ontario Court could take jurisdiction over a foreign defendant and, secondarily, whether or not the Ontario Court was a convenient forum.

Pursuant to the Rules of Civil Procedure, Rule 17.02(h), a foreign defendant may be sued by an Ontario plaintiff in Ontario where damage is sustained in Ontario arising out of tort or a breach of contract amongst other things. If the foreign defendant objects, it can bring a motion for an order staying the proceeding on the basis that the court does not have jurisdiction over the foreign defendant or on the basis that the proposed place of hearing is not the most convenient forum.

The Court of Appeal reiterated the test enunciated by the Supreme Court of Canada in Morguard Investments Ltd. v. De Savoye [1990] 3 S.C.R. 1077, amongst others, that jurisdiction could only be asserted against a foreign defendant if there was a real and substantial connection. The Court entered into a lengthy history of the evolution of this area of law and comparison of approach from different provinces.

The Court of Appeal, supporting Morguard's emphasis on flexibility, went on to provide a series of eight factors to be considered by a court when determining whether there is a real and substantial connection between the wrong and the jurisdiction. Only if this test is passed can inquiry be then made regarding whether Ontario is a convenient forum for the suit.

The Court listed factors which are helpful in all future cases: (1) the connection between the plaintiff's claim and the forum and warned that if the plaintiff has little connection with the forum, the court should be wary of assuming jurisdiction; (2) the defendant's connection to the forum. This factor is compelling where it was reasonably foreseeable that the foreign defendant's conduct would cause harm in the subject jurisdiction amounting to personal subjection to the forum or foreseeability of litigation in that forum; (3) unfairness to the defendant in assuming jurisdiction must be considered even it there is a connection between the forum and the defendant; (4) unfairness to the plaintiff in not assuming jurisdiction as well as the plaintiff's interest in having access to a court in his or her own province; (5) involvement of other parties to the suit in order to avoid multiplicity of proceedings and possibility of inconsistent results; (6) the court's willingness to recognize and enforce an extra provincial judgment rendered on same jurisdictional basis which recognizes that the same principles will be applied to against a domestic defendant who is sued elsewhere; (7) whether case is interprovincial or international in nature in that interprovincial cases allow for more easily justified assumption of jurisdiction given that there is less risk of unfair procedure as between provinces (8) comity and standards of jurisdiction, recognition and enforcement prevailing elsewhere. This factor need not be considered in Canadian provincial disputes since the standards are the same country wide but for international cases this consideration may have weight, subject to any agreements of which Canada is a part.

The Court of Appeal confirmed the factors to be considered regarding whether the chosen forum was the convenient forum including location of parties, key witnesses, contractual provisions, multiplicity of proceedings, applicable law and geographical factors ad whether there would be a juridical advantage to either the plaintiff or defendant.

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