Fewer v.Ellis: Nfld. and Lab. Court of Appeal Rejects Muscutt (and Van Breda)

Last February I wrote a post entitled “Fair is foul, and foul is fair”: Another conflicting decision in Canadian conflict of laws: Fewer v. Ellis (Nfld & Lab TD) noting that the Newfoundland and Labrador court neglected to apply the reformulated “real and substantial connection” test in Van Breda v. Village Resorts Limited, 2010 ONCA 84 (See also my previous posts: Supreme Court of Canada grants leave in Van Breda v. Village Resorts Limited appeal and  Hope Springs Eternal: SCC to hear 3 Conflict of Laws Appeals)

Fortunately, the Newfoundland & Labrador Court of Appeal “got the memo”; not only citing Van Breda in its reasons in Fewer v. Ellis, 2011 NLCA 17 (CanLII), but also providing the Supreme Court of Canada with some “food for thought” when it considers appeal arguments next month.

After a useful review of post-Morguard developments, White J.A. (Harrington and Hoegg, JJ.A. concurring) rejects the Muscutt approach:

[31]         Despite the criticism of the Muscutt analysis and in particular the relevance of “fairness” as an independent factor, the approach in that case was recently adopted by the Nova Scotia Court of Appeal in Penney (Litigation Guardian of) v. Bouch, 2009 NSCA 80 (CanLII), 2009 NSCA 80 (motion for reconsideration of the application for leave to appeal, dismissed at 2010 CarswellNS 773 (SCC)).  The Nova Scotia court also held that the introduction of the Court Jurisdiction and Proceedings Transfer Act, S.N.S. 2003, c. 2, merely codified the common law.

[32]         I do not agree with the approach taken in Muscutt and Penney.  I prefer the test as formulated in Coutu v. Gauthier (Succession de), 2006 NBCA 16 (CanLII), 2006 NBCA 16 and in Stanway v. Wyeth Canada Inc., 2009 BCCA 592 (leave to appeal to the Supreme Court of Canada denied).  In Stanway the British Columbia Court of Appeal held that with the introduction of the Court Jurisdiction and Proceedings Transfer Act, “any reliance on the Muscutt factors as a guide to determining the question of jurisdiction came to an end in British Columbia …” (para. 73).

[33]         These cases establish that considerations of order and fairness are subsumed in the real and substantial test and thus “fairness” need not be considered independently.

Noting Professor Tanya Monestier’s cogent critiques of both Muscutt and Van Breda (see, respectively, T. Monestier, “A Real and Substantial Mess: The Law of Jurisdiction in Canada” (2007), 33 Queen’s L.J. 179 and T. Monestier, “A Real and Substantial” Improvement?  Van Breda Reformulates the Law of Jurisdiction in Ontario” in Todd L. Archibald and Randall Scott Echlin, ed., Annual Review of Civil Litigation (Toronto, Carswell, 2010) at 185), the Court of Appeal opts for its own unique jurisdictional approach:

“The concern is that the inclusion of “fairness” and “general principles” as “analytical tools” confuses the analysis.  LeBlanc J. in Cougar Helicopter Inc. v. Sikorsky Aircraft Corporation, 2010 NLTD (G) 213 commented that the difference between the inclusion of fairness as an analytical factor or its total exclusion as an independent factor “may be more suspect than real”.

[42]         In my view, fairness should permeate the connections analysis; it should be considered when assessing the strength, quality and relevance of the connections themselves.  I believe this is what Justice LaForest was referring to in Hunt when he said that “the assumption of and discretion not to exercise jurisdiction must ultimately be guided by the requirements of order and fairness, not a mechanical counting of contacts or connections”.  In other words, while the test must ultimately look at the geographical connections the defendant and the transaction have to the jurisdiction, it is the quality, not the quantity, of those connections that matters.

[46]         It may be desirable to leave open the possibility of establishing new, discrete categories for the assertion of jurisdiction in exceptional cases where order, fairness and access to justice require it, such as the newly developing forum of necessity doctrine.

[47]         Any exceptions that would allow for the assertion of jurisdiction where the real and substantial connection test has not been met, however, would be “fragile from a constitutional point of view” (Tanya Monestier, “A “Real and Substantial Improvement? Van Breda Reformulates the Law of Jurisdiction in Ontario”, Supra, at 217) and would involve the court accepting that “the Constitution does not constrain it from exercising discretion to serve as a forum of necessity” (Janet Walker, “Muscutt Misplaced: The Future of Forum of Necessity Jurisdiction in Canada” (2009) 48 Can. Bus. L.J. 135 at 137).  Since the creation of such an exception was not argued in this case, this Court will not further consider the appropriateness of doing so.”

Justice White then summarizes the applicable principles as follows (at para. 53):

(1)     Jurisdiction can be assumed where there is a real and substantial connection between the jurisdiction and the subject matter of the action or the defendant;

(2)     In assessing whether jurisdiction is engaged a real and substantial connection can be demonstrated where the strength, relevance and quality of the connections between the jurisdiction and the subject matter of the action or the defendant make it fair to the defendant to assume jurisdiction;

(3)     Fairness to both parties is the goal of the analysis, but it does not form an independent factor which must be considered, nor does it trump weak connecting factors; and

(4)     The circumstances listed in Rule 6.07(1) are strong indicia of a real and substantial connection, but do not create a presumption that the test has been satisfied.

Ultimately, the Court of Appeal agreed with the applications judge that the real and substantial connection test was not satisfied in the tort action, concluding:

“If courts could assume jurisdiction in such circumstances, the risk of forum shopping is clear.  It would be unfair to subject a defendant to a legal system with different rules (longer limitation periods, the existence of presumed damages, etc.) merely because a plaintiff chose to move there to recuperate.

[59]         The geographical facts in the contract action, as found by the applications judge, were:

(1)              The contracts pleaded by Fewer relate to his work at the Tadoule Lake school, in the Province of Manitoba.

(2)              The contracts asserted in the statement of claim clearly contemplate performance in and only in Manitoba.

(3)               Fewer’s obligations under these contracts were performed wholly in Manitoba, but that he has not yet been paid in full.

[60]         I agree with the applications judge’s finding at paragraph 4 of the second decision that “the fundamental subject matter of the action relates to the performance or non-performance of contracts in Manitoba.” Based on the same analysis applied in relation to the tort action, the real and substantial connection test has not been satisfied in the contract action, and the trial judge correctly found that the court did not have territorial jurisdiction to entertain the claim.

[69]         The problem with issuing a stay of proceedings is that a court cannot provide a remedy that it has no jurisdiction to issue.  The Court’s inherent authority to order a stay is codified in subsection 97(1) of the Judicature Act, RSNL 1990, c. J-4.  That subsection provides:

97(1)  The Court may direct a stay of proceedings pending before it.

(Underlining added)

[70]         It is clear from a reading of this subsection that, in order to direct a stay of proceedings, the proceedings must be pending before the Court.  Where a court lacks jurisdiction simpliciter, the proceedings are not properly pending before the Court.  The plaintiff cannot invoke the Court’s jurisdiction for the purpose of obtaining a stay when the matter is not properly before it.  For this reason, the applications judge correctly determined that he could not issue the requested order.  He properly dismissed the actions as a dismissal was the only remedy available in the circumstances.”

One Response to “Fewer v.Ellis: Nfld. and Lab. Court of Appeal Rejects Muscutt (and Van Breda)”

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