Brisbin v. Lunev: Why Have One Jurisdictional Test, When You Can Have Three?

I previously discussed Brisbin v. Lunev, 2010 ONSC 1840 (CanLII), a recent Ontario decision on jurisdiction in a post entitled: “Share and Share alike?”: Subject-matter jurisdiction over foreign securities. In my post, I noted that the motion judge’s jurisdictional analysis on subject-matter jurisdiction was problematic:

“Whether or not the learned motion judge properly applied the “strong cause” test remains debatable. However, the issue of “where the Plaintiffs’ claim for an order directing B&C to issue shares to them or their other claims should be brought” is clear cut. It is an issue not of discretionary forum non conveniens analysis, but, rather of jurisdiction simpliciter; namely, subject-matter jurisdiction.”

It turns out that the Court of Appeal for Ontario is not particularly interested in subject-matter jurisdiction, in this instance.

In  Brisbin v. Lunev, 2011 ONCA 15,  the Court of Appeal  dismissed the appeal and held:

[2]              In our view, the motion judge was correct in finding that both claims fall within Rule 17(2), specifically 17(2)(f) and (g). The plaintiffs say that the contract was negotiated in Toronto, after extensive discussions there. That is a reasonable basis to find that for the purposes of jurisdiction, the contract was made in Ontario. The fraudulent misrepresentation claim is in tort, and does not base itself on the loan agreements themselves. These misrepresentations are said by the plaintiffs to take place between the plaintiffs and the individual defendants in Ontario where they all reside. That is a reasonable basis on which Rule 17(2)(g) is engaged.

[3]              Thus a presumption of jurisdiction simpliciter arises. The defendants have not displaced this. They basically deny that a contract for the shares was made, or that the fraudulent misrepresentations were made. That, however, is an issue for trial rather than this motion.

[4]              We agree with the motion judge’s summary when she says that “…the physical and business presences in Ontario of the plaintiffs and the individual defendants who control the corporate defendants, as well as the fact that Ontario was largely the place of their dealings concerning this enterprise, support the conclusion that a real and substantial connection between the plaintiffs claims and Ontario exists in this case”.

[5]              The appellants concede that if this is so, it follows that there is a real and substantial connection between Ontario and the plaintiffs’ claim for unpaid services. The claim for intellectual property infringement on the part of subsidiaries of the corporate defendants is so intertwined with the other three claims that the same result should prevail.

[6]              We also see no error with the motion judge’s conclusion that Ontario is the convenient forum. She considered a number of factors that favour this result, particularly, the predominant location of the parties and the key witnesses being in this jurisdiction; the avoidance of a multiplicity of proceedings, the failure to show a more convenient forum; and the possible loss to the plaintiffs of juridical advantage if the case is not tried in Ontario. Her conclusion deserves deference in this court. It is not unreasonable and we would not interfere with it.

Appellants’ counsel, Howard Wolch of Gardiner Roberts LLP, was kind enough to provide me with a copy of his appellants’ factum which included my argument relying on the Ontario decision in  Galustian v. The SkyLink Group of Companies, Inc., 2010 ONSC 292 (CanLII). (which identified the critical importance of subject-matter jurisdiction relating to a claim for declaratory relief for transfer of foreign company shares).

Regrettably, the Court of Appeal chose to focus instead on personal jurisdiction established via contract formation. This, notwithstanding the fact that asymmetrical contracts do not normally impute consensus ad idem. The motion judge had previously noted that the loan agreements containing  choice of law and choice of forum clauses stipulating the United Kingdom were executed by the defendants, Brisbin and West Group and SDS; albeit the plaintiffs alleged these loan agreements were shams.  Conversely, the unsigned Memorandum of Agreement was to be construed, performed and enforced in accordance with the laws of the Province of Ontario. However, where the contract was formed is a but one factor in the forum non conveniens test. Under the new Van Breda test, it is now also a rebuttable presumption under Rule 17.02 (f) of the Ontario Rules of Civil Procedure.

The Brisbin v. Lunev case highlights the conflation of jurisdictional tests in Ontario: the new Van Breda test for jurisdiction simpliciter; the forum non conveniens test; and the “strong cause” test for forum selection clauses.

2 Responses to “Brisbin v. Lunev: Why Have One Jurisdictional Test, When You Can Have Three?”

  1. John Polyzogopoulos Says:

    Mr. Pribetic:

    I was counsel for Brisbin in the Brisbin v Lunev matter.

    There are always, of course, two sides to every story, and you should consider investigating both sides before coming to a conclusion. Oftentimes, what is disclosed in a court’s reasons are insufficient to truly understand the facts of a case. I would be happy to provide you with a copy of my appeal factum if you are interested in understanding the case better. You may even be convinced that Justice Stewart and the Court of Appeal (which included Justice Sharpe, the author of Muscutt and Van Breda) made the correct decision. Of note is the fact that the Court of Appeal did not even call on me to make any oral submissions.

    One comment I would make on the substance of your critique: My clients have not sought a declaration that my clients own the shares in the Cyprus company. My clients merely seek an in personam order requiring the defendants, in particular, the individual defendants who control the company and who all live in the GTA, to issue shares to my clients pursuant to their agreement to do so.

    John Polyzogopoulos

    Direct TEL 416.593.2953

    Direct FAX 416.594.5083
    jpolyzogopoulos@blaney.com

    Blaney McMurtry LLP
    2 Queen Street East, Suite 1500
    Toronto, Canada M5C 3G5
    416.593.1221 TEL
    416.593.5437 FAX
    http://www.blaney.com

  2. Antonin I. Pribetic Says:

    Thanks for your comment. You’ve already made your able arguments before the motion judge and the Court of Appeal. I did read both facta, by the way. My views on Van Breda are fairly well known, but I’ll await the Supreme Court of Canada’s final pronouncement after the appeal is argued on March 21st.

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