Jurisdiction in Tort Actions After The Muscutt Quintet

Overview

In its groundbreaking decision in Morguard Investments Ltd. v. De Savoye, [1990] 3 S.C.R. 1077 on the enforcement of interprovincial judgments, the Supreme Court of Canada emphasized the need for “order and fairness” in the assumption of jurisdiction over a defendant resident outside the jurisdiction. The court held that there must be a “real and substantial connection” between the subject matter of the action and the jurisdiction in order for a court to properly assume jurisdiction over the action. In Tolofson v. Jensen, [1994] 3 S.C.R. 1022, in holding that the choice of law in tort actions is the law of the place where the wrongful activity occurred, the Supreme Court of Canada stated that the real and substantial connection test “has the effect of preventing a court from unduly entering into matters in which the jurisdiction in which it is located has little interest.”

In 2002, in an attempt to elaborate on these general principles, the Court of Appeal for Ontario took the unusual step of consolidating five cases in which the jurisdiction of the Ontario courts arose in the context of torts occurring outside the province. All five cases had a common feature: an Ontario resident suffers injury outside the province, returns there to obtain medical treatment and suffers damage and a loss of income. The question in each case was whether it was consistent with the principles of order and fairness for the Ontario courts to assume jurisdiction over the action. Clearly, the purpose of the court in consolidating the cases was to try and bring a measure of predictability into a notoriously complex area of the law. The reasons for judgment of the Court of Appeal, authored by Sharpe J.A. in the lead case of Muscutt v. Courcelles (2002), 60 O.R. (3d) 20 (C.A.), do not disappoint. They are a model of clarity, organization and thoughtfulness. This paper will examine the application of the principles set forth in the Muscutt quintet since the decisions were rendered. It appears to me that judges of the Superior Court of Justice have been more inclined to accept the jurisdiction of Ontario courts than might be warranted by the principles set out in the Muscutt quintet.

The Eight Factors in Muscutt

To assist in determining whether the real and substantial connection test has been met, Sharpe J.A. set out eight factors a court must consider in deciding whether to assume jurisdiction over an action. They are: (1) the connection between the forum and the plaintiff’s claim; (2) the connection between the forum and the defendant; (3) unfairness to the defendant in assuming jurisdiction; (4) unfairness to the plaintiff in not assuming jurisdiction; (5) the involvement of other parties to the suit; (6) the court’s willingness to recognize and enforce a judgment rendered on the same jurisdictional basis; (7) whether the case is interprovincial or international in nature; (8) comity and the standards of jurisdiction, recognition and enforcement prevailing elsewhere. None of these factors are determinative.  Rather, they must be weighed, considered together and a decision reached as to whether the court can properly assume jurisdiction over the action. Unlike the discretionary principles in the related doctrine of forum non conveniens, jurisdiction is a matter of law and as such is treated for appeal purposes as being subject to review on a standard of correctness.

The Decisions in the Muscutt Quintet

In Muscutt, the plaintiff was injured in a motor vehicle accident in Alberta and returned to Ontario, having suffered serious personal injuries. In applying the eight factors, Sharpe J.A. held that the Ontario courts had jurisdiction over the action as the defendant was engaged in an activity that involved an inherent risk of harm to extra-provincial parties. Insurance arrangements applicable across Canada provided coverage for actions in other provinces and those insurance arrangements reflected the reasonable expectations of the motoring public. The burden of defending the action would therefore fall on the insurer.

In Lemmex v. Bernard (2002), 60 O.R. (3d) 54 (C.A.), the plaintiff was injured on a shore excursion in Grenada while on a cruise holiday, having inhaled carbon monoxide when travelling in a motor vehicle. An action was brought against the Canadian package tour operator and the cruise line, both of whom attorned to the jurisdiction. The Grenadian provider of the shore excursion and operator of the motor vehicle brought a motion to stay the action. The motions judge and Divisional Court dismissed the motion. The Court of Appeal allowed the appeal and held that the Ontario courts did not have jurisdiction over the action. The court held that it would be unduly onerous for the shore excursion provider to defend an action in any jurisdiction in which its customers happened to reside. While there was unfairness to the plaintiff in having to litigate the action in Grenada, it was not significant unfairness, and while there were other parties to the action who had attorned to the jurisdiction, the “core of the action” was in Grenada. In the reasons for judgment under factor 6 above, the court considered whether it would be appropriate for an Ontario court to enforce a foreign judgment rendered on the same jurisdictional basis and in doing so identified an important policy at para. 46 of the decision:

“Recognition and enforcement of foreign judgments in such circumstances would impose an unreasonable burden on providers of tourism services in Ontario. Providers of tourism services who confine their activities to Ontario are entitled to expect that actions against them will be litigated in Ontario courts. They should not be compelled to defend such actions in foreign courts or face enforcement of a default judgment against them.”

The court had made a similar point in Muscutt at para. 93:

“In considering whether to assume jurisdiction against an extra-provincial defendant, the court must consider whether it would recognize and enforce an extra-provincial judgment against a domestic defendant rendered on the same jurisdictional basis, whether pursuant to common law principles or any applicable legislation. Every time a court assumes jurisdiction in favour of a domestic plaintiff, the court establishes a standard that will be used to force domestic defendants who are sued elsewhere to attorn to the jurisdiction of  the foreign court or face enforcement of a default judgment against them. This principle is fundamental to the approach in Morguard and Hunt and may be seen as a self-imposed constraint inherent in the real and substantial connection test. It follows that where a court would not be willing to recognize and enforce an extra-provincial judgment rendered on the same jurisdictional basis, the court cannot assume jurisdiction, because the real and substantial connection test has not been met.”

In Gajraj v. DeBernardo (2002), 60 O.R. (3d) 68 (C.A.), the plaintiff was injured in a motor vehicle accident in New York City. A claim was brought against the driver and owner of the vehicle as well as the plaintiff’s own insurer pursuant to the underinsured motorist provisions of the policy. The court held that the real and substantial connection had not been met and that “where a party travels to another country and is involved in a motor vehicle accident there, it is reasonable to expect that a dispute with a local driver will be litigated in the foreign jurisdiction.” I will return to this issue in more detail below.

In Sinclair v. Cracker Barrel Old Country Store, Inc. (2002), 60 O.R. (3d) 76 (C.A.), the plaintiff was injured in a slip and fall accident in a restaurant in Buffalo. The defendant Cracker Barrel had its head offices in Tennessee and operated restaurants across the U.S. but not in Canada. In the course of declining jurisdiction for Ontario courts, the court stated: “a restaurant owner and operator should not be expected to litigate claims at the place of residence of all of its customers.” At para. 21, the court returned to the policy expressed in theLemmex decision:

“In my view, Ontario courts would not be prepared to recognize and enforce an extra-provincial judgment rendered on the same jurisdictional basis as in the present case. Restaurant owners and operators deal with customers who are travelling away from home on a regular and routine basis. To require restaurant owners and operators to litigate the claims of customers wherever they reside would impose a heavy burden that is difficult to justify under the principles of order and fairness expressed in Morguard and Hunt. Travellers from all corners of the earth might choose to dine in any Ontario restaurant. Absent special circumstances, to require Ontario restaurant owners and operators to defend their conduct in the home jurisdictions of their customers would impose an undue and unreasonable burden on them. If Ontario courts are not prepared to impose that burden on Ontario restaurant owners and operators, we should also refuse to assume jurisdiction against foreign restaurant owners and operators sued by Ontario residents for consequential damages resulting from a tort committed outside the province.”

In Leufkens v. Alba Tours International Inc. (2002), 60 O.R. (3d) 84 (C.A.), the plaintiff was injured on an excursion while on a package tour holiday in Costa Rica. The court held that the Ontario courts did not have jurisdiction over the action, stating: “While Swiss Travel Service [the excursion provider] offers a service aimed specifically at tourists, to require Swiss Travel Service to defend actions in the home jurisdiction of each of its customers would be unduly onerous.” In considering the issue of unfairness to the plaintiff, the court stated: “Here, the plaintiff travelled to Costa Rica as a tourist and availed himself of the services of a Costa Rican company offering an excursion within Costa Rica. In these circumstances, it seems to me that the plaintiff could have no reasonable expectation that he would be able to sue the Costa Rican company in the courts of Ontario if he was injured in Costa Rica.” As well, although there were Canadian defendants, the “core of the action” was in Costa Rica and concerned Costa Rican defendants. At para. 33, the court again returned to the policy identified in the Lemmex decision:

“When assessing the real and substantial connection test and the principles of order and fairness, it is important to consider the interests of potential Ontario defendants as well as those of Ontario plaintiffs. In light of Morguard and Hunt, finding that the real and substantial connection test has been met would require Ontario courts to enforce foreign judgments rendered on the same jurisdictional basis against Ontario defendants who offer tourism services to visitors of this province. In my view, we should not adopt such a rule, since it would impose an unreasonable burden on providers of tourism services in Ontario. To take the example mentioned during oral argument, it would seem harsh to require an Algonquin Park canoe rental operator to litigate the claim of an injured Japanese tourist in Tokyo. Although negligent operators should certainly be held to account for their negligence, if they confine their activities to Ontario, they are entitled to expect that claims will be litigated in the courts of this province.”

Decisions of the Court of Appeal since the Muscutt Quintet

It is immediately apparent that in the Muscutt quintet, the Court of Appeal permitted the action to proceed in Ontario only in respect of the interprovincial motor vehicle accident which occurred in Alberta. In all other cases, jurisdiction was declined. In decisions since the Muscutt quintet, the Court of Appeal has continued to take a restrained approach to the assumption of jurisdiction. Markandu (Litigation Guardian of) v. Benaroch (2004), 71 O.R. (3d) 377 (C.A.) involved an action for medical malpractice by an Ontario resident against a Quebec doctor and hospital. The court held that the real and substantial connection test had not been met and that the action would have to proceed in Quebec. In Bangoura v. Washington Post (2005), 258 D.L.R. (4th) 341 (Ont. C.A.) the court overturned a decision allowing a libel action to proceed by an Ontario resident against a U.S. newspaper and its reporters. The court stated with respect to the policy identified in the Muscutt quintet: “If the cautionary warning of Sharpe J.A. is not taken into account, it could lead to Ontario publishers and broadcasters being sued anywhere in the world with the prospect that the Ontario courts would be obliged to enforce foreign judgments obtained against them.”

Decisions of the Superior Court of Justice since the Muscutt Quintet

As indicated above, Superior Court judges have seemed more inclined to accept jurisdiction than has the Court of Appeal. Sidlofsky v. Crown Eagle Ltd., [2002] O.J. No. 4152 (S.C.J.) involved a slip and fall accident at a hotel in Jamaica. There was evidence of the defendant’s insurance arrangements and an indemnity agreement between the hotel and tour operator. Backhouse J. held that Ontario could properly assume jurisdiction over the action. Marabella v. Pietracupa, [2006] O.J. No. 403 (S.C.J.) involved a slip and fall accident outside a private residence in Quebec. In allowing the action to proceed in Ontario, Perell J. stated: “Ontario has an interest in protecting the legal rights of its citizens, such as Ms. Marabella, and in providing them with a forum in which to seek compensation for their injuries from civil wrongs.” In Miller v. Harding, [2006] O.J. No. 3412 (S.C.J.) Hockin J. permitted an action to proceed in Ontario where the plaintiff had been injured many years before as a child in an accidental gun shooting. There was evidence that proceeding with the action in Nova Scotia where the accident occurred would be psychologically harmful to the plaintiff and defendant. In Noble v. Carnival Corp. (2006), 80 O.R. (3d) 392 (S.C.J.) the plaintiff was involved in a motor vehicle accident in Russia while in the employ of a cruise line operator. An employment agreement provided that any disputes under the agreement would be brought in England. Sachs J. held that the real and substantial connection test had been met and that the Ontario court had jurisdiction to hear the action. In Brock (Litigation Guardian of ) v. Hsu(2007), 82 O.R. (3d) 786 (S.C.J.) the plaintiff brought an action for medical malpractice against a number of domestic parties as well as a physician in Illinois who had been the head of a drug study group. Browne J. stated: “With the Ontario hospital being a member institution it was always foreseeable that the protocol would be used in Canada with the inherent risk to any patient.” He also held that the core of the action involved the domestic defendants. In Ayroud v. MyTravel Canada Inc. et. al (August 13, 2007, S.C.J.) the plaintiff, then resident in Quebec, was involved in a slip and fall accident at a hotel in the Dominican Republic. He received medical treatment in both Quebec and Ontario but ultimately returned to Quebec. The foreign defendants brought a motion to stay the action. Kershman J. dismissed the motion and held that the Ontario court had jurisdiction to hear the action.

The New Brunswick Court of Appeal has also recently held that damage sustained within the jurisdiction (factor 1 in Muscutt) is by itself enough to satisfy the real and substantial connection test. Coutu v. Gauthier (Estate) (2006), 264 D.L.R. (4th) 319 (N.B.C.A.) involved a motor vehicle accident in Ontario and an action brought by the widow of the passenger killed in the accident, who had resided in New Brunswick. The court said at para. 61: “In my view, the foreseeability of harm being visited upon Mrs. Coutu in this province suffices to clothe the Court of Queen’s Bench with jurisdiction to try her action for losses flowing from the accident in Ontario.” The court was also critical of the eight point test in Muscutt and stated that all factors other than factor 1 were to be considered in the analysis of forum non conveniens rather than in the analysis of jurisdiction. In my view, there are serious problems with this decision, under which the New Brunswick courts would have jurisdiction in any case involving a resident injured by a defendant wherever situated. Clearly, this does not represent the law in Ontario.

A decision more in line with the thinking of our Court of Appeal is the careful judgment of Master Glustein in Kennedy v. Hughes (2006), 31 C.P.C. (6th) 314 (Ont. Master). The action was brought by the widow of a former Massachusetts resident who had been exposed to radon gas and later returned to Ontario and passed away from cancer. The defendants were the real estate agent and solicitor who had acted on the purchase and sale of the contaminated property. Master Glustein held that the court did not have jurisdiction to hear the action and specifically held that the decision of the New Brunswick Court of Appeal could not be applied in Ontario. A similar outcome was reached in Deakin v. Canadian Hockey Enterprises (2005), 7 C.P.C. (6th) 295 (S.C.J.) which involved a claim against a Quebec health practitioner following an on ice injury at a hockey tournament in Quebec. The plaintiff’s evidence was that some fifteen witnesses from Ontario would have to be transported and brought to trial if the action were to be heard in Quebec. Nevertheless, MacKenzie J. held that the real and substantial connection test had not been met and the court did not have jurisdiction to hear the action.

Some Random Thoughts

While the thoughts which follow have not to my knowledge been the subject of extensive judicial commentary, it seems to me there is good reason to treat cases involving motor vehicle accidents by Canadian residents in the United States differently than other tort actions for purposes of jurisdiction. For one thing, the ease and frequency of travel between the U.S. and Canada make it foreseeable that Canadian residents travelling in the U.S. might be injured in a motor vehicle accident occurring there. The expectation of the parties is a factor to be considered in determining whether order and fairness permit the assumption of jurisdiction. Insurance arrangements reflect these expectations. The Ontario Standard Automobile Policy, section 3.3.1, provides coverage for accidents occurring anywhere in Canada or the United States. U.S. insurers carrying on business in Ontario are required to provide a Power of Attorney and Undertaking to the Canadian Council of Insurance Regulators agreeing to abide by and pay the minimum limits in each province for claims involving their insured’s. It is also well known that many U.S. motorists are underinsured, with the result that accidents in the U.S. will often require that the plaintiff’s own insurer be brought into the action pursuant to the underinsured motorist provisions of the policy. Those provisions and Ont. Reg. 676, section 4(1) require that liability and damages of the plaintiff be determined by “a court of competent jurisdiction in Ontario” giving rise to the possibility of a multiplicity of actions and inconsistent results if there are parallel proceedings in the U.S. and Canada arising out of the same motor vehicle accident. In those cases where the defendant’s insurance limits are low and the injuries serious, the “core of the action” will in fact be against the plaintiff’s own insurer.

The Court of Appeal had occasion to consider some of these issues in Doiron v. Bugge(2005), 258 D.L.R. (4th) 716 (disclaimer: I was involved in this case at the Court of Appeal on behalf of the plaintiff) and held that the court could assume jurisdiction over a motor vehicle accident that occurred in the state of New York. There was evidence of the defendant’s policy limits and the claim against the plaintiff’s own insurer was far from speculative. Accordingly, the matter was distinguishable from the Court of Appeal’s earlier decision in Gajraj v. DeBernardo. A similar result was reached in the thoughtful judgment of Lane J. inSubramaniam v. Shetler (2002), 61 O.R. (3d) 136 (S.C.J.), an action involving a motor vehicle accident by an Ontario resident in the state of Nebraska. In reviewing these decisions, it seems to me that the very same considerations which caused the Court of Appeal in Muscutt to allow the action to proceed in Ontario in respect of a motor vehicle accident in Alberta, would apply with equal force to motor vehicle accidents involving Ontario residents in the United States.

Another thought concerns the implications of the Supreme Court of Canada decision inBeals v. Saldhana, [2005] 3 S.C.R. 416 to the principles set out in Muscutt. In Beals, the Court extended the rationale in Morguard v. De Savoye to foreign judgments and permitted the recognition and enforcement of a Florida judgment against a Canadian resident. It can perhaps be argued that an increased willingness by Canadian courts to enforce U.S. judgments may have reduced the importance of factors 6 and 7 set out in the Muscutt decision. On this view, it would stand to reason that if Canadian courts are more willing to recognize and enforce U.S. judgments, the factors relating to the recognition and enforcement of a judgment rendered on the same jurisdictional basis, and whether the action is international or interprovincial, might assume less importance, at least in actions involving the U.S. and Canada. If this is so, this would benefit plaintiffs seeking to have Canadian courts assume jurisdiction over torts committed elsewhere.

Against this however, it must be said that the Supreme Court of Canada made it clear in Beals that the recognition and enforcement of a foreign judgment was predicated upon the foreign court having asserted jurisdiction over the action in accordance with Canadian values. The court also said at para. 32: “The ‘real and substantial connection’ test requires that a significant connection exist between the cause of action and the foreign court. Furthermore, a defendant can reasonably be brought within the embrace of a foreign jurisdiction’s law where he or she participated in something of significance or was actively involved in that foreign jurisdiction. A fleeting or relatively unimportant connection will not be enough to give a foreign court jurisdiction. The connection to the foreign jurisdiction must be a substantial one.”

Conclusion

There is no doubt that decisions involving the assumption of jurisdiction by a court are “fact specific.” As I have tried to demonstrate, however, the noticeable trend from the Court of Appeal in tort actions has been to take a cautious approach to the assumption of jurisdiction. In practice, this has meant that Ontario residents injured elsewhere are less likely to be able to bring an action in the Ontario courts. Until this issue is addressed by the Supreme Court of Canada and a contrary approach taken, it would appear to me that judges of the Superior Court of Justice are bound to follow this approach.