Jul 19, 2016

Supreme Court of Canada Sticks With Presumptive Jurisdiction Tests for Forum Non-Conveniens

Lapointe Rosenstein Marchand Melançon LLP v. Cassels Brock & Blackwell LLP, 2016 SCC 30 (CanLII)

On July 15, 2016 the Supreme Court of Canada, in a long-awaited decision, resisted the invitation to re-write the traditional rules for the establishment of forum non-conveniens, and enhanced the applicability of the of the “presumptive connecting factor” requirement: “a contract connected with the dispute was made in the province”. The decision is heavily fact-specific, but underscores that the Court is not – at least at this time – prepared to change its “presumptive jurisdiction” tests.

The case, Lapointe Rosenstein Marchand Melançon LLP v. Cassels Brock & Blackwell LLP, arose out of the well-known Ontario class action in which some 207 General Motors of Canada dealers saw their dealerships closed as a consequence of the 2008 Federal Government of Canada GMC bailout. Those dealers later joined together and launched a class action against law firm Cassels Brock. The class action alleged negligent advice and representation respecting the execution of so-called Wind-Down Agreements between GMC and the affected dealers; through an industry association, Cassels Brock had advised the affected dealers and ultimately counselled their entry into the Wind-Down Agreements. The class action also alleged that Cassels Brock was in a conflict of interest. The dealers' claims exceeded $750M. Cassels Brock defended the class action, and commenced third party proceedings in Ontario against some 150 law firms that, in addition to Cassels Brock, had individually advised the dealers and executed certificates of independent legal advice respecting the dealers’ executions of the Wind-Down Agreements. Of those 150 law firms, 32 were in Québec. The Québec firms sought to oust the Ontario courts’ jurisdiction over Cassels Brock’s third party claims on the basis of forum non-conveniens. The Quebec firms failed at the Ontario Superior Court of Justice and at the Ontario Court of Appeal – and ultimately at the Supreme Court of Canada.

The Supreme Court of Canada re-stated the tests for forum non-conveniens that it set out in its 2012 decision, Club Resorts Ltd. v. Van Breda. On the basis of those tests, jurisdiction can be established where the defendant carries on business in the province in which the third party proceedings are commenced, the tort alleged was committed or the contract in issue was made. The Court parenthetically re-stated its long-held view that to establish forum non-conveniens, the party seeking to oust the assumed jurisdiction must demonstrate there is another jurisdiction “clearly more appropriate” for the dispute in issue. Applying this test, the Court noted, amongst other things, that all the subject Wind-Down Agreements were, according to their unique terms, made in Ontario. Though some of the Agreements were executed in Quebec, the Agreements expressly stated they didn’t take effect until GMC had provided written notice that they had been accepted – and in every case, GMC provided this written notice in Ontario.

The Court additionally re-stated its earlier approach to flexibility and commercial efficiency in addressing issues of contested jurisdiction, confirming that a connection between the claim and the contract made in the province where the party seeks jurisdiction to be assumed is enough – and “a connection” did “not necessarily require that an alleged tortfeasor be a party to the contract.”

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