When is a connection between a corporate defendant and the subject-matter “real” but not “substantial”?

Under Canadian conflict of laws, when is a connection between a corporate defendant and the subject-matter  “real” but not “substantial”?

In Unity Life of Canada v. Worthington Emond Beaudin Services Financières Inc., (2009), 96 O.R. (3d) 769, [2009] O.J. No. 2305 (Ont. S.C.J),  the plaintiff, a Canadian company with its head office in Ontario, sued the defendants, Quebec residents, for interference with contractual relations. The plaintiff argued that it suffered losses in Ontario after the defendants sold plaintiff’s products and solicited the plaintiff’s customers for the plaintiff’s competitors. The court found no real and substantial connection between the plaintiff’s claim and Ontario. Regarding the plaintiff’s argument that it had sustained damages in Ontario under Rule 17.02(h) of the Ontario Rules of Civil Procedure, Strathy J. said:

31 While I acknowledge the legal reality of corporate personality, we are dealing here with a federally incorporated company that carries on business across Canada, and has business connections in all provinces of Canada. Its head office happens to be in Ontario. It “suffers damages in Ontario” because damages to its business hit the bottom line when its accounts are prepared at head office. This occurs even where the damages are initially inflicted in another province. It occurs, in this case, if the plaintiff loses a customer in Québec because the defendants sell a competitor’s insurance product to that customer. This is not, in my view, as real or substantial a connection as that of an individual who lives in Ontario and who endures pain and suffering in Ontario, as was the case in Muscutt. Nor would I put it on the same level as the case of an Ontario-incorporated company carrying on business only in Ontario that suffers a loss of business in Ontario. Thus, while the connection to Ontario is real, I would not regard it as substantial, in the context of this case.

The Court of Appeal for Ontario,  2010 ONCA 283 (CanLII), 2010 ONCA 283 agreed:

[1]               We see no error on the part of the motion judge in relation to the application of the real and substantial connection test.  Whether viewed from the perspective of Muscutt, the decision applied by the motion judge, or from the perspective of Van Breda, handed down after the motion judge decided this case, we agree with the motion judge that on the facts of this case the real and substantial connection test had not been met.

[2]               We do not agree that the motion judge raised the bar too high in this application of the real and substantial connection test or that he failed to give adequate weight to the fact that as the plaintiff’s head office is Ontario, it could be said to have suffered damages in Ontario or that such damages were foreseeable.

[3]               In any event, we see no basis to interfere with the motion judge’s exercise of discretion in finding that jurisdiction should be declined on the basis of forum non conveniens.

See also, Dundee Precious Metals Inc. v. Marsland, 2010 CanLII 80799 (ON S.C.)and Wildwood Transport Inc. et al. v. Eagle West Cranes Inc. et al., 2011 MBQB 42 (CanLII)

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