Following up on yesterday’s post, this will be a two-part series of posts on the Supreme Court of Canada conflict of laws trilogy in:
Club Resorts Ltd. v. Van Breda, 2012 SCC 17 (“Van Breda”);
Éditions Écosociété Inc. v. Banro Corp., 2012 SCC 18 (“Banro”) and
Breeden v. Black, 2012 SCC 19. (“Black”).
In Part I, I will critically analyze the Van Breda decision and its implications to Canadian conflict of laws generally. In Part II, I will discuss the Banro and Black decisions from the perspective of internet defamation, corporate liability, choice of law and libel tourism.
Club Resorts Ltd. v. Van Breda/Charron Estate v. Bel Air Travel Group Ltd
The appeals in Van Breda and Charron involved the issue of when Ontario courts should assume jurisdiction over out-of-province defendants involving personal injury damages occasioned as a result of accidents suffered by Canadian tourists at resorts in Cuba. One lesson in these cases is one should be careful when vacationing in Cuba.In Van Breda, Morgan Van Breda was rendered a quadriplegic, while using a chin up bar on a beach in Cuba. In Charron, Claude Charron, a certified diver, died while scuba diving, also in Cuba. Actions were brought in Ontario against a number of parties, including the appellant, Club Resorts Ltd., a company incorporated in the Cayman Islands that managed the two hotels where the accidents occurred. Club Resorts challenged jurisdiction of the Ontario court, and, in the alternative, that a Cuban court was forum conveniens. In both cases, the motion judges found that the Ontario courts had jurisdiction with respect to the actions against Club Resorts. With respect to forum non conveniens, the motion judges each held that Ontario court was clearly a more appropriate forum. The two cases were heard together in the Court of Appeal, which dismissed both appeals.
1. The Supreme Court of Canada’s Decision
In Van Breda, Justice LeBel, writing for the unanimous Supreme Court of Canada ( Binnie and Charron JJ. took no part in the judgment) endeavours to clarify and elaborate upon the “real and substantial connection” test as an appropriate common law conflicts rule for the assumption of jurisdiction.
The first part of the judgment traces the history of the “real and substantial connection” test under Canadian common law, citing the leading Supreme Court of Canada conflict of laws decisions in the last few decades. LeBel J. distills the conflict of laws jurisprudence down into the fundamentally dual nature of the “real and substantial” test as both a constitutional principle and as the organizing principle of the law of conflicts:
 But, in the common law, the nature of the conflicts rules that would accord with the constitutional imperative has remained largely undeveloped in this Court’s jurisprudence. Although the real and substantial connection test has been consistently applied both as a constitutional test and as a principle of private international law, since Hunt, the Court has generally declined to articulate the content of the private international law rules that would satisfy the test’s constitutional requirements or to develop a framework for them. The Court has continued to affirm the relevance and importance of the test and has even extended it to foreign judgments, but without attempting to elaborate upon the rules it requires (see Beals, at paras. 23 and 28, per Major J.).
Justice LeBel adds that a constitutionally limiting test on the powers of a province’s legislature and courts does not require uniformity across Canada. However, judicial discretion must be judiciously avoided:
 Given the nature of the relationships governed by private international law, the framework for the assumption of jurisdiction cannot be an — however laudable the objective of individual fairness may be. As La Forest J. wrote in Morguard, there must be order in the system, and it must permit the development of a just and fair approach to resolving conflicts. Justice and fairness are undoubtedly essential purposes of a sound system of private international law. But they cannot be attained without a system of principles and rules that ensures security and predictability in the law governing the assumption of jurisdiction by a court. Parties must be able to predict with reasonable confidence whether a court will assume jurisdiction in a case with an international or interprovincial aspect. The need for certainty and predictability may conflict with the objective of fairness. An unfair set of rules could hardly be considered an efficient and just legal regime. The challenge is to reconcile fairness with the need for security, stability and efficiency in the design and implementation of a conflict of laws system.
LeBel J. further acknowledges the need for certainty and predictability in establishing a jurisdictional test based on a set of specific factors given presumptive effect, eschewing an “unstable,ad hoc system made up “on the fly” on a case-by-case basis” (at para. 73) composed of of “a regime based on an exercise of almost pure and individualized judicial discretion.” (at para. 75).
2. The New (But Not Improved) Real and Substantial Connection Test
When I first wrote about the Van Breda decision, I likened the Court of Appeal’s jurisdictional analysis to a nine-headed Lernaean Hydra requiring a Herculean effort to apply judicially. While the Supreme Court of Canada has chopped off a number of the heads, what remains is elusively serpentine.
According to LeBel J., the Van Breda test has been further modified as follows:
 To recap, in a case concerning a tort, the following factors are presumptive connecting factors that, prima facie, entitle a court to assume jurisdiction over a dispute:
(a) the defendant is domiciled or resident in the province;
(b) the defendant carries on business in the province;
(c) the tort was committed in the province; and
(d) a contract connected with the dispute was made in the province.
(b) Identifying New Presumptive Connecting Factors
 As I mentioned above, the list of presumptive connecting factors is not closed. Over time, courts may identify new factors which also presumptively entitle a court to assume jurisdiction. In identifying new presumptive factors, a court should look to connections that give rise to a relationship with the forum that is similar in nature to the ones which result from the listed factors. Relevant considerations include:
(a) Similarity of the connecting factor with the recognized presumptive connecting factors;
(b) Treatment of the connecting factor in the case law;
(c) Treatment of the connecting factor in statute law; and
(d) Treatment of the connecting factor in the private international law of other legal systems with a shared commitment to order, fairness and comity.
 When a court considers whether a new connecting factor should be given presumptive effect, the values of order, fairness and comity can serve as useful analytical tools for assessing the strength of the relationship with a forum to which the factor in question points. These values underlie all presumptive connecting factors, whether listed or new. All presumptive connecting factors generally point to a relationship between the subject matter of the litigation and the forum such that it would be reasonable to expect that the defendant would be called to answer legal proceedings in that forum. Where such a relationship exists, one would generally expect Canadian courts to recognize and enforce a foreign judgment on the basis of the presumptive connecting factor in question, and foreign courts could be expected to do the same with respect to Canadian judgments. The assumption of jurisdiction would thus appear to be consistent with the principles of comity, order and fairness.
 If, however, no recognized presumptive connecting factor — whether listed or new — applies, the effect of the common law real and substantial connection test is that the court should not assume jurisdiction. In particular, a court should not assume jurisdiction on the basis of the combined effect of a number of non-presumptive connecting factors. That would open the door to assumptions of jurisdiction based largely on the case-by-case exercise of discretion and would undermine the objectives of order, certainty and predictability that lie at the heart of a fair and principled private international law system.
 Where, on the other hand, a recognized presumptive connecting factor does apply, the court should assume that it is properly seized of the subject matter of the litigation and that the defendant has been properly brought before it. In such circumstances, the court need not exercise its discretion in order to assume jurisdiction. It will have jurisdiction unless the party challenging the assumption of jurisdiction rebuts the presumption resulting from the connecting factor. I will now turn to this issue.
 To recap, to meet the common law real and substantial connection test, the party arguing that the court should assume jurisdiction has the burden of identifying a presumptive connecting factor that links the subject matter of the litigation to the forum. In these reasons, I have listed some presumptive connecting factors for tort claims. This list is not exhaustive, however, and courts may, over time, identify additional presumptive factors. The presumption of jurisdiction that arises where a recognized presumptive connecting factor — whether listed or new — exists is not irrebuttable. The burden of rebutting it rests on the party challenging the assumption of jurisdiction. If the court concludes that it lacks jurisdiction because none of the presumptive connecting factors exist or because the presumption of jurisdiction that flows from one of those factors has been rebutted, it must dismiss or stay the action, subject to the possible application of the forum of necessity doctrine, which I need not address in these reasons. If jurisdiction is established, the claim may proceed, subject to the court’s discretion to stay the proceedings on the basis of the doctrine of forum non conveniens.
By contrast, the former Van Breda “real and substantial connection” test was expressed as follows (strike-throughs represent the factors that have been overruled by the Supreme Court of Canada):
- First, the court should determine whether the claim falls under rule 17.02 (excepting subrules (h) and (o)) to determine whether a real and substantial connection with Ontario is presumed to exist. The presence or absence of a presumption will frame the second stage of the analysis. If one of the connections identified in rule 17.02 (excepting subrules (h) and (o)) is made out, the defendant bears the burden of showing that a real and substantial connection does not exist. If one of those connections is not made out, the burden falls on the plaintiff to demonstrate that, in the particular circumstances of the case, the real and substantial connection test is met.
The “core of the analysis” at the second stage “rests upon the connection between Ontario and the plaintiff’s claim and the defendant, respectively.”
- The remaining considerations should not be treated as independent factors having more or less equal weight when determining whether there is a real and substantial connection but as general legal principles that bear upon the analysis;
Consideration of the fairness of assuming or refusing jurisdiction is a necessary tool in assessing the strengths of the connections between the forum and the plaintiff’s claim and the defendant. However, fairness is not a free-standing factor capable of trumping weak connections,subject only to the forum of necessity exception.
- Consideration of jurisdiction simpliciter and the real and substantial connection test should not anticipate, incorporate or replicate consideration of the matters that pertain to forum non conveniens test.
- 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.
The willingness to recognize and enforce an extra-provincial judgment rendered on the same jurisdictional basis is as an overarching principle that disciplines the exercise of jurisdiction against extra-provincial defendants. This principle provides perspective and is intended to prevent a judicial tendency to overreach to assume jurisdiction when the plaintiff is an Ontario resident. If the court would not be prepared to recognize and enforce an extra-provincial judgment against an Ontario defendant rendered on the same jurisdictional basis, it should not assume jurisdiction against the extra-provincial defendant. Whether the case is interprovincial or international in nature, and comity and the standards of jurisdiction, recognition and enforcement prevailing elsewhere are relevant considerations, not as independent factors having more or less equal weight with the others, but as general principles of private international law that bear upon the interpretation and application of the real and substantial connection test.
- The factors to be considered for jurisdiction simpliciter are different and distinct from those to be considered for forum non conveniens. The forum nonconveniens factors have no bearing on real and substantial connection and, therefore, should only be considered after it has been determined that there is a real and substantial connection and that jurisdiction simpliciter has been established.
- Where there is no other forum in which the plaintiff can reasonably seek relief, there is a residual discretion to assume jurisdiction.
Recall that Justice Sharpe in Muscutt delineated three distinct bases for jurisdiction simpliciter:
There are three ways in which jurisdiction may be asserted against an out-of-province defendant: (1) presence-based jurisdiction; (2) consent-based jurisdiction; and (3) assumed jurisdiction. Presence-based jurisdiction permits jurisdiction over an extra-provincial defendant who is physically present within the territory of the court. Consent-based jurisdiction permits jurisdiction over an extra-provincial defendant who consents, whether by voluntary submission, attornment by appearance and defence, or prior agreement to submit disputes to the jurisdiction of the domestic court. Both bases of jurisdiction also provide bases for the recognition and enforcement of extra-provincial judgments.
. . . Assumed jurisdiction is initiated by service of the court’s process out of the jurisdiction pursuant to Rule 17.02. Unlike presence-based jurisdiction and consent-based jurisdiction, prior to Morguard and Hunt, assumed jurisdiction did not provide a basis for recognition and enforcement. (Muscutt, at 586. )
At first glance, the Supreme Court of Canada notes the factual linkage between the subject-matter of the litigation, the defendant and the forum, on the one hand, and the traditional bases of establishing jurisdiction, on the other. LeBel J. writes,
 From this perspective, a clear distinction must be maintained between, on the one hand, the factors or factual situations that link the subject matter of the litigation and the defendant to the forum and, on the other hand, the principles and analytical tools, such as the values of fairness and efficiency or the principle of comity. These principles and analytical tools will inform their assessment in order to determine whether the real and substantial connection test is met. However, jurisdiction may also be based on traditional grounds, like the defendant’s presence in the jurisdiction or consent to submit to the court’s jurisdiction, if they are established. The real and substantial connection test does not oust the traditional private international law bases for court jurisdiction.
The Supreme Court of Canada in Van Breda then collapses the traditional bases of jurisdiction: ostensibly conflating presence and consent under the rubric of assumed jurisdiction.
Consider again the four rebuttable presumptions (“RPs”) identified by LeBel J.:
(a) the defendant is domiciled or resident in the province;
(b) the defendant carries on business in the province;
(c) the tort was committed in the province; and
(d) a contract connected with the dispute was made in the province.
RPs (a) and (b) related to the individual and corporate defendant’s presence within the jurisdiction.
RP (d) relates to a contract formed in Ontario, which is, arguably, a consent-based jurisdictional factor, that also factors into the forum non conveniens test. Take note that the Supreme Court has recently revisited the concept of attornment and has relegated consent-based jurisdiction under the “strong cause” test. See my post: A Triumph of Form Over Substance: Momentous.ca Corp. v. Canadian American Association of Professional Baseball Ltd.
4.“Carrying On Business”
The Court does offer foreign defendants a silver lining by not adopting universal jurisdiction to the concept of “carrying on business”, meaning a company must have actual, not merely virtual, presence in the jurisdiction:
 The presence of the plaintiff in the jurisdiction is not, on its own, a sufficient connecting factor. (I will not discuss its relevance or importance in the context of the forum of necessity doctrine, which is not at issue in these appeals.) Absent other considerations, the presence of the plaintiff in the jurisdiction will not create a presumptive relationship between the forum and either the subject matter of the litigation or the defendant. On the other hand, a defendant may always be sued in a court of the jurisdiction in which he or she is domiciled or resident (in the case of a legal person, the location of its head office).
 Carrying on business in the jurisdiction may also be considered an appropriate connecting factor. But considering it to be one may raise more difficult issues. Resolving those issues may require some caution in order to avoid creating what would amount to forms of universal jurisdiction in respect of tort claims arising out of certain categories of business or commercial activity. Active advertising in the jurisdiction or, for example, the fact that a Web site can be accessed from the jurisdiction would not suffice to establish that the defendant is carrying on business there. The notion of carrying on business requires some form of actual, not only virtual, presence in the jurisdiction, such as maintaining an office there or regularly visiting the territory of the particular jurisdiction. But the Court has not been asked in this appeal to decide whether and, if so, when e-trade in the jurisdiction would amount to a presence in the jurisdiction. With these reservations, “carrying on business” within the meaning of rule 17.02(p) may be an appropriate connecting factor.
…Moreover, I do not accept that evidence of advertising in Ontario would be enough to establish a connection. Advertising is often international, if not global. It is ubiquitous, crossing borders with ease. It does not, on its own, establish a connection between the claim and the forum. If advertising sufficed to create a connection with a forum, commercial organizations of a certain size could be sued in courts everywhere and anywhere in the world. The courts of a victim’s place of residence would possess an almost universal jurisdiction over diverse and vast classes of consumer claims. [emphasis added]
That said, the Van Breda decision offers no guidance as to when a connection between a corporate defendant and the subject-matter is “real” but not “substantial”. This issue was considered in Unity Life of Canada v. Worthington Emond Beaudin Services Financières Inc., (2009), 96 O.R. (3d) 769,  O.J. No. 2305 (Ont. S.C.J), a case which involved the plaintiff, a Canadian company with its head office in Ontario, suing 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:
 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 ofMuscutt, 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.
 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.
 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.
5. Forum Non Conveniens
Finally, on the issue of forum on conveniens, the Court does not create any new law. Whether it is the enactment of the Uniform Court Jurisdiction and Proceedings Transfer Act (“CJPTA”) or judicial decision-making, the forum non conveniens test generally reflects the historical factors applied to determine whether the chosen court is the most convenient forum, the burden of which rests on the defendant to oust the plaintiff’s choice.
In the end, the Court dismissed Club Resorts appeal in Van Breda, finding no reviewable error in the findings that a “contract was entered into in Ontario and a relationship was thus created in Ontario between Mr. Berg, Club Resorts and Ms. Van Breda, who was brought within the scope of this relationship by the terms of the contract.” Club Resorts was found to have failed to rebut the presumption of jurisdiction that arises where this factor applies. Club Resorts also failed to discharge the onus that Ontario was forum non conveniens. Similarly, in Charron, Club Resorts was held to be carrying on business in Ontario as its:
…”commercial activities in Ontario went well beyond promoting a brand and advertising. Its representatives were in the province on a regular basis. It benefited from the physical presence of an office in Ontario. Most significantly, on cross-examination Club Resorts’ witness admitted that it was in the business of carrying out activities in Canada. Together, these facts support the conclusion that Club Resorts was carrying on business in Ontario. It follows that the respondents have established that a presumptive connecting factor applies and that the Ontario court isprima facie entitled to assume jurisdiction.
 Club Resorts has not rebutted the presumption of jurisdiction that arises from this presumptive connecting factor. Its business activities in Ontario were specifically directed at attracting residents of the province, including the Charron family, to stay as paying guests at the resort in Cuba where the accident occurred. It cannot be said that the claim here is unrelated to Club Resorts’ business activities in the province. Accordingly, I find that the Ontario court has jurisdiction on the basis of the real and substantial connection test.
LeBel J. also held that motion judge made no error in declining to stay the proceedings on the basis of forum non conveniens.
Stay tuned for Part II in the near future.