Library:
Jurisdiction Simpliciter
Published in the August 2009 issue of Transportation Notes - View Article
In Universal Helicopters v. Rolls-Royce, a decision released by the Supreme Court of Newfoundland and Labrador on August 6, 2009, we have an example of how easy it is for a trial court to assert jurisdiction over a foreign defendant, given the “flexible” approach to jurisdictional analysis that has apparently won the field in Canada. While the Universal Helicopters case does not add anything to the substantial jurisprudence, it provides an occasion to reflect on how far we have come and how far Canadian law on the issue differs from that of the United States.
The current state of the law has evolved from a decision of the Supreme Court of Canada released almost 20 years ago. In Morguard v. De Savoye, the Court issued reasons that appeared to some of us to align the laws of Canada with those of the United States and thus require, as a prerequisite for a valid assertion of jurisdiction, certain “minimum contacts” between the defendant and the state purporting to exercise jurisdiction. The phrase by which this supposed requirement was captured was “real and substantial connection”. Some of us thought the real and substantial connection test was supposed to lead the court to consider the connections between the proposed defendant and the jurisdiction, as well as the actions of the proposed defendant, which might suggest he reasonably ought to have understood he was subjecting himself to the jurisdiction of the province in question.
However, it was not long before academics and appellate courts began to find a way to blur the lines created by this relatively clear rule. While retaining the words “real and substantial connection”, they have created an area of indeterminate extent within which courts can exercise their discretion as they see fit. An important step in the progress from relatively clear and limited jurisdictional boundaries to almost boundless discretion was the adoption of a test that seeks a “reasonable and substantial connection” between the “subject matter of the action” and the province. No longer is the inquiry to be focused on the connections between the proposed defendant and the province. Furthermore, courts are instructed to supplement the “connections” inquiry with one that seeks to identify elements of “order and fairness”.
This development did not occur within the bounds of a single case, but the decision most often cited for the present legal position is Muscutt v. Courcelles, a 2002 decision of the Court of Appeal for Ontario. The Court proposed a list of factors that should be weighed in order to determine whether a court should be said to have jurisdiction against a foreign defendant. These include connections between the province and both the claim and the defendant, unfairness to either party, existence of other parties, and considerations of enforceability.
Whatever one may think of the legal theory behind the present test, there is a practical outcome that is certain. Trial courts are told to “weigh” a large number of factors, but there is no objective measure against which to compare the different weighings. Everything is necessarily left to the discretion of the trial judge and it is difficult to see how that discretion can be challenged in the average case. All the judge need do is “review” the various factors, make subjective comments concerning his assessment of each and announce the result that emerges from his internal calculations. There will usually be no audit trail.
Thus it was in the Universal Helicopters case. The foreign defendants were the manufacturer and vendor of a component of an engine turbine that was alleged to have failed, causing an accident. The plaintiff was a company carrying on business in Newfoundland. The accident occurred outside of Newfoundland; there were no personal injuries; neither defendant had any direct presence in Newfoundland; the part was manufactured in the United States, and it was installed on the aircraft in British Columbia.
The Newfoundland Supreme Court duly applied the Muscutt factors and found that the balance inclined towards the plaintiffs. A concern for the economic plight of a small local company was probably a significant factor influencing the court’s decision.
Having concluded that it did have jurisdiction to hear the dispute, the Court then turned to the issue of forum non conveniens. Again, the Court reviewed a number of considerations that are fairly consistently set out in the leading cases. In the facts of this case, and given the way in which the Court had dealt with the jurisdiction simpliciter question, there could be little doubt as to the outcome. The burden was on the defendants to show that there was another jurisdiction which would be clearly more appropriate for the adjudication of the dispute. This the defendant Rolls-Royce failed to do and the Court ordered that the matter proceed. The other defendants did not argue this point.
While some might applaud the fairness of the result, there is something disturbing about a procedure in which a trial court is left free to vest itself with jurisdiction whenever it thinks that is the right thing to do.
Universal Helicopters v. Rolls-Royce
[2009] N.J. No. 213