Friday, June 27, 2014

Real and substantial connection and Canadian common market

Trillium Motor World Ltd. v. General Motors of Canada Limited, 2014 ONCA 497:

[27]       In Morguard Investments Ltd. v. De Savoye, [1990] 3 S.C.R. 1077, La Forest J., noted, at p. 1108, para. 51,  that the real and substantial connection test is a form of judicial self-restraint:

It seems to me that the approach of permitting suit where there is a real and substantial connection with the action provides a reasonable balance between the rights of the parties. It affords some protection against being pursued in jurisdictions having little or no connection with the transaction or the parties.

[28]       Justice La Forest added, in Tolofson v. Jensen; Lucas (Litigation Guardian) v. Gagnon, [1994] 3 S.C.R. 1022, at p. 1049, para. 40, that: "[t]his test has the effect of preventing a court from unduly entering into matters in which the jurisdiction in which it is located has little interest."

[29]       Morguard is often cited for some basic propositions about the importance of the Canadian common market. The ruling concept is comity, about which La Forest J. observed, at p. 1098, para. 35:

The considerations underlying the rules of comity apply with much greater force between the units of a federal state, and I do not think it matters much whether one calls these rules of comity or simply relies directly on the reasons of justice, necessity and convenience to which I have already adverted. 

[30]       This approach reflects, as La Forest J. noted, at p. 1099, para. 36, that: "[o]ne of the central features of the constitutional arrangements incorporated in the Constitution Act, 1867 was the creation of a common market." He also observed, at p. 1107, para. 48, that: "in Moran [Moran v. Pyle National (Canada) Ltd., [1975] 1 S.C.R. 393] Dickson J. derived the reasonableness of his approach from the 'normal distributive channels' of products and, in particular, the 'interprovincial flow of commerce'." La Forest J. added, at p. 1107, para. 49, that: "the above rationale is not, as I see it, limited to torts"; it was "obviously relevant to contracts."  See also the supportive comments of LeBel J. in Spar Aerospace Ltd. v. American Mobile Satellite Corp., 2002 SCC 78, [2002] 4 S.C.R. 205, at para. 53.

[31]       Finally, at least part of the court's concern must be with the efficient operation of that common market and the need to avoid fragmenting lawsuits unduly. In Van Breda, LeBel J. noted, at para. 99:

I should add that it is possible for a case to sound both in contract and in tort or to invoke more than one tort. Would a court be limited to hearing the specific part of the case that can be directly connected with the jurisdiction? Such a rule would breach the principles of fairness and efficiency on which the assumption of jurisdiction is based. The purpose of the conflicts rules is to establish whether a real and substantial connection exists between the forum, the subject matter of the litigation and the defendant. If such a connection exists in respect of a factual and legal situation, the court must assume jurisdiction over all aspects of the case. The plaintiff should not be obliged to litigate a tort claim in Manitoba and a related claim for restitution in Nova Scotia. That would be incompatible with any notion of fairness and efficiency.

[32]       The facts in this case exemplify the operation of the Canadian common market in goods and services. The interprovincial flow of commerce led to the appellants' retainers in this case.

[33]       I make four observations about the Supreme Court's approach that are relevant to the task of the court in this case.

[34]       First, the basic message is that an Ontario court should be neither too quick nor too slow to take jurisdiction over a dispute.

[35]       Second, there is usually another court that could take jurisdiction on a similar basis.

[36]       Third, there is no perfect court for a dispute that crosses borders. The connections with the province need not be the strongest nor all point in the same direction, as LeBel J. noted in Van Breda, at para. 34. There may not be a single preferable place when many of the witnesses and parties are from different places, as LeBel J. observed in Spar, at para. 73.

[37]       Fourth, the smooth operation of the Canadian common market is a relevant consideration in the application of the real and substantial connection test.

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