Ontario Court of Appeal rejects third party claims as a new presumptive category for asserting jurisdiction

Today’s decision of the Court of Appeal for Ontario in Export Packers Company Limited v. SPI International Transportation, 2012 ONCA 481 (Ont. C.A.) [“Export Packers”] confirms that a defendant’s third party claim does not amount to a “real and substantial connection” unless one of the (4) presumptive connecting factors set out in Club Resorts Ltd. v. Van Breda, [2012] S.C.R. 17 are present.

In Export Packers, the plaintiff, Export Packers Company Limited (“Export”), an Ontario food product seller, bought a shipment of 1,320 cartons of frozen pork spareribs from a Quebec company, A. Trahan Transformation (“Trahan”), which stored the cargo with Entrepôt du Nord Cold Storage Inc. (“EDN”) at its cold storage facility in Laval, Quebec. Export contracted with SPI International Transportation (“SPI”), a B.C. shipping agent and load broker with two offices in Ontario, to arrange transportation of the cargo from the EDN warehouse to a customer in Florida.  SPI then contracted with the third party, 726509 Ontario Inc. o/a Transvision Logistics (“Transvision”), to transport the cargo to Florida.  A rogue party purporting to represent Transvision picked up the cargo at EDN’s warehouse and absconded with the goods.

Export sued SPI for breach of contract and negligence.  SPI defended and commenced third party claims against Transvision and EDN, alleging that EDN was negligent in failing to ask for sufficient identification from the rogue.  EDN then moved to stay the third party claim on the basis of lack of jurisdiction, which the motion judge, Stinson J., granted due to an absence of a real and substantial connection between EDN and the claim against it on the one hand and Ontario on the other.

SPI appealed.

The Court of Appeal for Ontario dismissed SPI’s appeal and held that none of the four presumptive factors were present:

a) EDN is not domiciled or resident in the province: (at para. 10)

b) EDN does not carry on business in the province: (at para. 10)

c) the tort (negligent storage) was committed in the province of Quebec, not Ontario: (at para. 11)

d) the three contracts relied upon by SPI related to arrangements between the owner, the broker and the proposed carrier of the cargo, none of which are connected to EDN and all of which were made in the province of Quebec, not Ontario (at paras. 13-16)

SPI argued for creation of a new presumptive factor that EDN was a proper third party in the underlying action pursuant to the test set out in Rule 29 of the Ontario Rules of Civil Procedure, ostensibly on the grounds of promoting the goals of efficiency and fairness. (at para. 18-19). The appeal panel held:

[22]       We recognize that there may be efficiencies from a defendant’s standpoint, at least, in prosecuting a third party claim in the same jurisdiction as it defends the claim against it.  However, that potential efficiency should not, in itself, be a sufficient reason to create a new presumptive category by which Ontario courts assume jurisdiction.  There must be some factual connection to Ontario in the new presumptive factor.

[23]       Thus, we do not accept the appellant’s argument that the fact that the claim against EDN is a third party claim brought within an existing Ontario action should, without more, be sufficient to create a presumption that Ontario has jurisdiction over that claim.

The Court of Appeal concludes with a cryptic comment:

[24]       In Van Breda, the Supreme Court of Canada appears to have held that if there are no presumptive connecting factors, courts should not assume jurisdiction (paras. 93 and 100).  Whether that is the case or not, we agree with the motion judge that in this case there is not a sufficient real and substantial connection between EDN and Ontario or between the cause of action asserted against EDN and Ontario to warrant Ontario accepting jurisdiction. [emphasis added]

One would think that the Supreme Court of Canada was clear on this point.

WF4E3J4BM539

4 Responses to “Ontario Court of Appeal rejects third party claims as a new presumptive category for asserting jurisdiction”

  1. David Cheifetz Says:

    Antonin,

    Logically, maybe.

    Technically, not necessarily, because the issue of third of subsequent party claims for contribution or indemnity wasn’t discussed. It depends how far one one wants to argue the ratio of the SCC cases extends.

    If one were going to make an exception, claims for contribution or indemnity – intrinsically linked to the main action – seem to be valid grounds.

    David

  2. David Cheifetz Says:

    What’s important to note, too, is the very narrow decision the ONCA rendered:

    “[23] Thus, we do not accept the appellant’s argument that the fact that the claim against EDN is a third party claim brought within an existing Ontario action should, without more, be sufficient to create a presumption that Ontario has jurisdiction over that claim.”

    I think one has to read that to mean “mere fact”, given [22].

    The ONCA left it open – no doubt intentionally – for the defendant in this case, or a defendant in another case – to argue that there is something about the nature of contribution proceedings in general, or based on the facts of particular case, that will create jurisdiction.

    For those who care, BC has a case which discusses the issues. The BCSC decided to take jurisdiction over the 3P claim against the “foreigner”. The decision was appealed. I haven’t found a report of the appeal result, assuming it was heard.

    Josephson v. Balfour Recreation Commission, 2010 BCSC 603 (CanLII) (dismissing the 3Ps motion to dismiss or stay and Josephson v. Balfour Recreation Commission, 2010 BCCA 339 (staying the 3P action only pending the appeal).

    The result in BC might be different from what would occur in Ontario because BC has enacted the Court Jurisdiction and Proceedings Transfer Act, SBC 2003, c 28.

    That legislation is based on the model statute here http://www.ulcc.ca/en/us/Uniform_Court_Jurisdiction_+_Proceedings_Transfer_Act_En.pdf

    One provision in the BC statute, and the model statute, is that a “real and substantial connection is presumed to exist if the proceeding … concerns restitutionary obligations that, to a substantial extent, arose in” the jurisdiction where the proceeding is commenced.

    Contribution and indemnity claims – at least those that exist in a tort context between persons whose separate acts have caused damage to a 3rd person – are now understood to be a a form obligationtionary oblgiation.

    Can we say that the restitutionary obligation arises to a substantial extent in the jurisdiction where the proceeding was commenced if the wrongful act by the contribution defendant – wrongful as against the injured person – occurred in another jurisdiction, at least where the incident in which the plaintiff is later injured occurs in the jurisdiction where the 3P claim was commenced? Bear inind that the injury doesn’t necessarily occur contemporaneously with the wrongful act. The argument could be that the contribution right did not arise until the person was injured, and since the injury occurred in the jurisdiction …

    David

  3. Antonin I. Pribetic Says:

    Thanks for your thoughtful comment, David.

    Conflict of laws takes up a lot of space on this blog. I’ve written a 2-part series analyzing the Supreme Court of Canada trilogy:

    1. The Supreme Court of Canada Conflict of Laws Trilogy: Part I

    2. The Supreme Court of Canada Conflict of Laws Trilogy: Part II

    You will recall that in Van Breda, Justice Sharpe’s attempt to clarify the Muscutt factors, included the following remark:

    “The involvement of other parties to the suit is only relevant in cases where that is asserted as a possible connecting factor and in relation to avoiding a multiplicity of proceedings under forum non conveniens.”

    Given that Rule 17.02(o) “Necessary or Proper Party” is excluded as a presumptive factor, if the plaintiff does not sue any other potential tortfeasors, the defendant has to demonstrate that the third party is otherwise connected to the subject-matter of the action.

    Interestingly, Master Glustein in Kennedy v. Hughes, 2006 CanLII 32996 (ON SC) addressed the issue of third party claims under the rubric of “involvement of other parties to the suit” as follows:

    (5) The involvement of other parties to the suit

    [128] The Muscutt quintet did not address the potential involvement of other parties to the suit. Rather, certain cases (e.g. Lemmex and Leufkens) were concerned with situations in which some named defendants were in Ontario and other defendants were outside Ontario. In the present case, all of the defendants are foreign defendants and there are currently no other claims.

    [129] In the present case, there is a realistic possibility of a third party claim against the Massachusetts builders of the Massachusetts Home, as well as local municipality and building inspectors, if there was radon gas exposure[9]. It is not speculative that the defendants would seek recourse against those parties, who had no dealings whatsoever with Ontario. Consequently, while the possibility of such a claim does not provide as strong a basis for this factor as an actual claim, I conclude that I can consider the potential claim in my review of the Muscutt factors. Otherwise, parties would be required to issue third party claims in order for this factor to be incorporated in the weighing required under Muscutt, which would be difficult since motions for a stay are typically brought early in the proceedings.

    [130] Further, as Sharpe J.A. noted in Leufkens, “the core of this action lies” in Massachusetts and concerns Massachusetts defendants, “and the involvement of other parties must be assessed from that perspective” (Leufkens, at para. 31). Any third parties to be added would be Massachusetts-based.

    [131] Consequently, I conclude that this factor militates against assuming jurisdiction, although it is not a significant factor in the overall weighing required under Muscutt. [emphasis added]

  4. David Cheifetz Says:

    Antonin,

    You wrote: “if the plaintiff does not sue any other potential tortfeasors, the defendant has to demonstrate that the third party is otherwise connected to the subject-matter of the action.”

    You mean other than that the third party’s liability to pay contribution (if it is held liable) relates to the the subject mater of the action?

    That’s a problem with contribution claims and conflict rules.

    Contribution claims are intrinsically connected to the subject matter of the action in the local jurisdiction. The contribution claim is in respect of a potential for liability one is facing in that jurisdiction.

    In some cases, but not all – though certainly commonly enough in tort cases – there will be no connection whatsoever between the various persons whose conduct was a legal cause (or part of the cause) of the injury. But if the court would have jurisdiction if P sued T2 then clearly the court has jurisdiction where P doesn’t sue T2. So the problem arises only where the court would say it wouldn’t take jurisdiction over the injury claim against T2 if P sued T2. So making jurisdiction over the contribution claim between tortfeasors T1 and T2 depend on whether the court has jurisdiction over the claim by P against T1 doesn’t necessarily make sense.

    Bearing in mind that different jurisdictions may have different rules on when the contribution limitation period starts to run, it tmay be necessary to commence third party proceedings in Ontario and a separate action in the other province or territory.

    (Contribution makes heads spin as much, or more, than causation. But, then, my surname starts with “C”, too.)

    Cheers,

    David

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