Insurer’s Crossclaim Insufficient for Ontario Court to Assume Jurisdiction

The recent decision of Mr. Justice Perell in Misyura v. Walton, 2012 ONSC 5397 (CanLII)  (“Misyura”) confirms that a crossclaim brought by an insurer is insufficient to assume  jurisdiction over the dispute.

In Misyura, the plaintiff was struck by a motor vehicle driven by the defendant, Walton, while crossing a street in New York State. The plaintiff sued her insurance company, Economical Insurance Group, under the underinsured coverage of her standard motor vehicle insurance policy. The defendant, Walton then moved to  permanently stay the action on the grounds of lack of jurisdiction simpliciter, or in the alternative, that Ontario was forum non conveniens.

In its crossclaim against Mr. Walton, Economical claimed indemnity for any potential amount the court may order it to pay under s. 265 of the Insurance Act under s. 20 of the OPCF 44R. Family Protection Change Form.

The defendant, Walton relied on an opinion from an American attorney, Jeffrey F. Basse, who opined that a New York court would not assume jurisdiction if a New York resident was injured in Ontario and that a New York court would not enforce a default judgment granted against Mr. Walton.

Applying the Supreme Court of Canada’s decision in Club Resorts Ltd. v. Van Breda, 2012 SCC 17 (CanLII), 2012 SCC 17, Perell J. granted the motion and permanently stayed both the main action and crossclaim.  In Club Resort, the Court of Appeal held that a real and substantial connection is presumed to exist in all the situations listed in Rule 17.02 of the Ontario Rules of Civil Procedure except for subrules 17.02(h) (“damages sustained in Ontario”) and 17.02(o) (“a necessary and proper party”). In in the context of tort claims, the Supreme Court of Canada identified four presumptive factors:

(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: Club Resorts Ltd. v. Van Breda, supra at para. 90.

The plaintiff did not oppose Walton’s motion. Economical, however, argued that the court should assume jurisdiction over Walton on the basis that he was a necessary party to the crossclaim as the alleged at-fault driver. The learned motion judge rejected Economical’s argument and held:

[34]           Coming to the situation of the case at bar, it can be seen that none of the four connective factors for tort cases applies, except possibly the fourth factor that there is a contract connected with the dispute. As to the contract factor, Mr. Walton, however, is not a party to the contract between Economical and Ms. Misyura, and it would appear that the insurance contract between Ms. Misyura and Economical envisions that she can have her claim against Economical determined without joining Mr. Walton as a party to the litigation.

[35]           This last point follows from the fact that article 5.6.3 of O.A.P. 1 provides Economical with the right to ask the court to decide who is legally responsible and the amount of compensation owing. And article 10 of OPCF 44R specifies that in determining the amount that an eligible claimant is entitled to recover from the inadequately insured motorist, issues of quantum shall be decided in accordance with the law of Ontario, and issues of liability shall be decided in accordance with the law of the place where the accident occurred.

[36]           This point that the contract claim may be tried without Mr. Walton as a party,  may explain why Ms. Misyura is not opposing Mr. Walton’s motion. She will litigate in Ontario and leave Economical with the problem of re-litigating in the United States. In this regard, see also Gajraj v. DeBernardo 2002 CanLII 44959 (ON CA), (2002) 60 O.R. (3d) 68 (C.A.) at para. 10…

[37]           Economical submits that Ms. Misyura’s contract action must be brought in Ontario and that Economical has a right of subrogation against Mr. Walton. It submits that if the Ontario action is stayed against Mr. Walton, it will have to litigate in two different jurisdictions with the spectre of inconsistent judgments. Essentially, Economical’s argument for assumed jurisdiction is that Mr. Walton is a necessary party to the crossclaim and his presence is necessary to avoid a multiplicity of proceedings.

Perell J. also rejected Economical’s argument based on concurrent claims in tort and contract, noting:

[45]           The above conclusions also answers Economical’s reliance on a passage from Justice LeBel’s judgment in Club Resorts, where he makes the point that where there is a concurrent claim in tort and contract against a defendant and there is jurisdiction simpliciter for one but not both claims, the court will have jurisdiction simpliciter for both claims. At para. 99, Justice LeBel stated:

99. I should add that it is possible for a case to sound both in contract and in tort or to invoke more than one tort. Would a court be limited to hearing the specific part of the case that can be directly connected with the jurisdiction? Such a rule would breach the principles of fairness and efficiency on which the assumption of jurisdiction is based. The purpose of the conflicts rules is to establish whether a real and substantial connection exists between the forum, the subject matter of the litigation and the defendant. If such a connection exists in respect of a factual and legal situation, the court must assume jurisdiction over all aspects of the case. …

[46]           This passage does not help Economical. It would be helpful to it, if there was jurisdiction simpliciter for any claim against Mr. Walton, in which case, the other claims would be assumed. In the case at bar, however, there is no jurisdiction simpliciter over Mr. Walton in either the tort claim or in the crossclaim. I, therefore, conclude that there is no jurisdiction simpliciter in the case at bar.

On the issue of forum non conveniens. after considering the discretionary factors set forth in Muscutt v. Courcelles, 2002 CanLII 44957 (ON CA), (2002), 60 O.R. (3d) 20 (C.A.), at paras. 41-42, Perell J. concludes that he would also have declined to assume jurisdiction:

[48]            Liability in the immediate case is disputed, and the defendant Mr. Walton and two witnesses are in New York. The tort occurred in New York, and American law will govern liability and the quantification of damages will be governed by Ontario law, although it seems that in this regard, the heads of damages are similar. Ms. Misyuara and her doctors are in Ontario, which is a factor in her favour, but I am not aware of any juridical advantages or disadvantages to Ontario. In all these circumstances, assuming there was jurisdiction simpliciter, as a matter of discretion, I would decline to exercise the court’s jurisdiction. It does not strike me as fair or unreasonable to make Ms. Misyura travel to the jurisdiction where the accident occurred and where the tortfeasor resides.  [emphasis added]

Admittedly, the last sentence is awkwardly phrased and confusing. Perhaps the court meant “It does not strike me as unfair or unreasonable”. In any event, the decision is sound.

One Response to “Insurer’s Crossclaim Insufficient for Ontario Court to Assume Jurisdiction”

  1. Report #2: Has UKSC ‘dissed’ the Supreme Court of Canada? « Charon QC's UK Law Tour Says:

    […] Insurer’s Crossclaim Insufficient for Ontario Court to Assume Jurisdiction( […]

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