Battle of the Jurisdictions: Muscutt Quintet vs Van Breda in Dilkas v Red Seal Tours Inc

Earlier this year, in Van Breda v Village Resorts Limited, 2010 ONCA 84 [Van Breda], the Ontario Court of Appeal (“OCA”) refined the assumed jurisdiction test as developed in Muscutt v Courcelles, [2002] 60 OR (3d) 20 (ONCA) [Muscutt]. In essence, the Van Breda decision simplified an eight-factor analysis into a two-step analysis (for a more detailed account of the reformulation, please see here and here). In March of 2011, the Supreme Court of Canada (“SCC”) will hear appeals regarding the OCA decision in Van Breda, putting to rest any uncertainties regarding the method of analysis. In the interim, however, although uncertainty may exist, the courts must apply the Van Breda holding. The present case, Dilkas v Red Seal Tours Inc (Sunwing Vacation), 2010 ONCA 634 [Dilkas], provides an interesting example of how the Muscutt analysis compares to the Van Breda reasoning: the trial decision was heard and released while the Muscutt Quintet reigned, but the appeal to the OCA was argued based on the law as now set out in Van Breda. This entry will compare the different analyses as applied by the Ontario courts to the same set of facts.

Background Facts

In 2005, the plaintiffs, residents of Toronto, purchased a vacation package to Mexico through Sunwing, a company headquartered in Toronto. The vacation package included transportation between the resort and the airport, which Sunwing contracted out to Best Day, a bus transportation company that operates exclusively in Mexico. Best Day subcontracted the bus service to another Mexico corporation, Autobus Rapidos de Zacatlan S.A. de C.V. (known as AutoTur). On the way from the resort to the airport for the flight home, the bus was involved in a single-vehicle collision. The Mexican police concluded the accident was caused solely by the negligence of the bus driver. The plaintiffs were injured, treated in hospital in Mexico and in Ontario, and suffered significant damages as claimed.

Claims

The plaintiffs brought an action in Ontario for damages against Sunwing and Best Day. Sunwing cross-claimed against Best Day for contribution and indemnity, based primarily on an indemnification agreement they signed following the accident to deal with claims arising out of the accident. Best Day challenged both the jurisdiction of the Ontario court and the appropriateness, or convenience, of the Ontario forum.

Application of Muscutt Quintet

An Ontario court can assume jurisdiction over an out-of-province defendant if there is a “real and substantial connection” between the action and a forum. Muscutt set out eight factors to consider in determining whether or not there is in fact a “real and substantial connection” between an action and the forum. The test was meant to be a flexible and fact-specific, with no one factor being determinative. Applying the eight factors, the trial judge held that a real and substantial connection was established between the action and Ontario. The judge held that there was a strong connection between the plaintiff’s claims and Ontario because of the connections of the plaintiffs and their witnesses; the transportation agreement between Best Day and Sunwing was to be governed by Ontario law; and there was an expectation that Best Day would be transporting Ontario visitors. The judge also concluded that while some unfairness to Best Day would arise from litigation in Ontario, that unfairness was overridden by the indemnity agreement. Moreover, there would have been unfairness to the plaintiffs if Mexico assumed jurisdiction due to the expiration of a limitation period and because mot of the witnesses were in Ontario. In fact, the trial judge found that only two factors militated against finding a real and substantial connection: assuming jurisdiction in Ontario was difficult to justify because the case is international; and enforcement in Mexico will be difficult. However, overall the Muscutt test established a connection that warranted the assumption of jurisdiction by the Ontario court.

The next consideration in the analysis turned to the question of forum conveniens. While jurisdiction simpliciter (ie. whether the court may assume jurisdiction) and forum non conveniens (ie. whether the court should assume jurisdiction) are separate and distinct legal principles, one does not inform the other. The motion judge concluded that all the factors she considered on the jurisdiction question supported her conclusion that Ontario was the convenient forum for hearing the actions.

Application of Van Breda

The defendants in Dilkas appealed the decision to the Ontario Court of Appeal. By the time the case was at bar, Van Breda had refined the Muscutt test. Under the revised Van Breda analysis, the first issue the court is to consider is whether there jurisdiction can be presumed on the basis of rule 17.02 of the Rules of Civil Procedure, RRO 1990, Reg 194. If the claim falls within any subrule, except (h) and (o), then there is a presumption that a real and substantial connection exists. The OCA found that with respect to the defendant Best Day, no subsection of the Rule applies other than ss. (h) and (o); as such, there is no presumption of a real and substantial connection. Therefore, the focus of the jurisdiction analysis shifts to the connection between the forum and the plaintiff’s claim and between the forum and the defendant. The OCA found that three key factors established the necessary real and substantial connection between the plaintiffs’ claims, the defendant Best Day, and the Ontario forum. First, the vacation packages, which explicitly included ground transportation services, were purchased in Ontario. Second, Best Day’s Ground Transportation Agreement with Sunwing was agreed to be governed by Ontario law. Lastly, and most significantly, Best Day entered into indemnity agreements with Sunwing and AutoTur following the accident, effectively acknowledging the expectation that claims arising out of the accident would or could be brought in Ontario and that those claims would have to be litigated in Toronto. Collectively, these factors overcame any indices that spoke against a connection between Ontario and Best Day.

Van Breda also instructs that other considerations in the jurisdiction simpliciter analysis are no longer to be treated as independent factors, but rather as principles that bear upon the analysis. These principles include fairness to each party in assuming or refusing to assume jurisdiction; the involvement of other parties to the suit; the court’s willingness to recognize and enforce an extra-provincial judgment rendered on the same jurisdictional basis; whether the case is interprovincial or international in nature; comity; and the standards of enforcement in other jurisdictions. Considering these various principles, the OCA found that the balance favours Ontario assuming jurisdiction in these actions. Unfairness to Best Day in Ontario assuming jurisdiction is overridden by the indemnity agreement. The plaintiffs have elected to proceed in Ontario in the face of any difficulties in enforcing a judgment in Mexico.

The last revision imposed by Van Breda separates the issue of jurisdiction simpliciter from forum non conveniens, which is not considered until after the jurisdiction simpliciter analysis. The court must focus its inquiry to the sole question of whether there is a more convenient and appropriate forum. If there is no such forum, then the court may exercise its residual discretion whether to assume jurisdiction. The OCA concluded that Mexico is not a more convenient forum for the trial of these actions. One factor relevant only to the forum non conveniens analysis is the location and convenience of many medical witnesses in Ontario. Although there are witnesses in Mexico, they could appear via video conference. Two other key factors were the passage of a limitation period in the Mexico jurisdiction, and the issue of multiplicity of actions.

A Simplified Process

Although the application of both tests led to the same result, Dilkas is a good example of how the process for assuming jurisdiction has been simplified in Van Breda. While the considerations taken into account are the same in both the Muscutt and Van Breda tests, Van Breda primarily focuses on two considerations if a presumed jurisdiction is not established under Rule 17.02: the connection between the forum and the plaintiff’s claim and between the forum and the defendant. This focus effectively addresses the criticisms raised against the Muscutt test of being too flexible, complicated and subjective. This result is demonstrated in the present case as the Van Breda analysis narrows the fact-based considerations to three determinative facts. The other six factors of Muscutt, now deemed to be informative principles by Van Breda, still contribute to the balancing act required by the analysis allowing some room for flexibility. Additionally, the separation of the jurisdiction analysis from the forum conveniens analysis reduces redundancy further contributing to the simplification. Overall, I would have to agree with the refinements effected by the OCA. As noted in my colleagues post, “Revising the Assumed Jurisdiction Test in Muscutt v Courcelles,” the Van Breda test effectively responds to calls for uniformity in Canadian conflict of laws jurisprudence between provinces. However, it is still uncertain how Van Breda, in practice, will address other criticisms of Muscutt. For example, I believe further clarification is still necessary in the analytical distinction between jurisdiction simpliciter and forum non conveniens. In Van Breda, the OCA stated the following:

The factors to be considered for jurisdiction simpliciter are different and distinct from those to be considered for forum non conveniens.  The forum non conveniens factors have no bearing on real and substantial connection and, therefore, should only be considered after it has been determined that there is a real and substantial connection and that jurisdiction simpliciter has been established.

Although their intent on separating the analysis is clear, further guidance is necessary to avoid conflation of the two-step jurisdictional analysis. In the case at bar, the appeal court analysis on forum non conveniens was relatively brief, and focused on the motion judge’s recognition of factors that made both Ontario and Mexico potentially available fora. However, those factors that the motion judge considered were factors applied in the Muscutt analysis. Notably, the OCA decision did point out that one factor considered by the trial court judge in the jurisdiction simpliciter analysis, the location and convenience of medical witnesses in Ontario, should only be considered in the forum non conveniens analysis.