Court of Appeal Provides Guidance on Whether Party Carrying on Business in Ontario as Basis for Jurisdiction

Andrew Ottaway, B.A. (Hons.), LL.B.Appellate Advocacy, Business Litigation, Civil Litigation, Commercial, Commercial and Contract Litigation, Commercial Litigation, Contract Disputes, Cross-Border Litigation, Jurisdictional Challenges, Of Interest to US Counsel0 Comments

In Sgromo v. Scott, 2018 ONCA 5, the Court of Appeal considered the scope of one of the presumptive grounds for jurisdiction of the Ontario Court: whether a party carried on business in Ontario.  The Defendants were incorporated in jurisdictions outside of Ontario.   The Defendants brought motions to stay or dismiss the subject actions.

On the motion, the Plaintiff alleged that because the products of some of the Defendants were advertised, marketed, and distributed by third party retailers in Ontario, the Defendants were carrying on business in Ontario, such that Ontario had presumptive jurisdiction.  The motion judge rejected that argument.

On appeal, the Court of Appeal agreed with the motion judge’s reasons, stating that:

  1. as set out by the Supreme Court of Canada in Club Resorts Ltd. v. Van Breda, 2012 SCC 17 (CanLII), the Courts must be cautious when considering whether an entity is carrying on business in the jurisdiction, to avoid what would amount to assuming universal jurisdiction in respect of tort claims arising out of certain categories of business or commercial activity;
  2. carrying on business in Ontario requires some form of actual, not only virtual, presence in Ontario, such as maintaining an office or regularly visiting the territory of the particular jurisdiction.

The Court of Appeal added that, as the Supreme Court stated in Van Breda, even active advertising in Ontario would not be enough to establish that a defendant was carrying on business in Ontario.  The Court of Appeal dismissed the appeal.

The lawyers at Gilbertson Davis LLP have experience advancing and responding to jurisdiction challenges, including in the context of international sale of goods contract disputes, international distribution litigation, and international product liability claims.  Please contact us for an initial consultation.

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About the Author
Andrew Ottaway, B.A. (Hons.), LL.B.

Andrew Ottaway, B.A. (Hons.), LL.B.

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