The Second Opinion: Can an Ontario Court Assume Jurisdiction Over Non-resident Class Members?
Is an Ontario-based inter-provincial class settlement enforceable in Manitoba? The answer depends in part on whether an Ontario court can properly exercise jurisdiction over non-resident class members. The Manitoba Court of Appeal recently provided guidance on these important issues in the first appellate case to comprehensively address these questions since the Supreme Court of Canada revamped the test for jurisdiction in its Van Breda decision.
The pertinent facts of the decision in Meeking v. Cash Store Inc., 2013 MBCA 81 were as follows. A class action relating to broker fees that were alleged to have been charged by small loan businesses was commenced and then certified in Ontario. The proceeding was then resolved by a court-approved settlement in Ontario which purported to be binding on Manitoba claimants as well. A Manitoba resident class member who was ostensibly a part of the Ontario-based settlement then initiated a similar class proceeding in Manitoba on behalf of Manitoba residents. He had not "opted out" of the Ontario settlement (indeed, he claimed not to have been aware of it).
In determining whether the Ontario settlement was binding on the Manitoba plaintiff, the Court first had to determine the threshold issue of whether the Ontario Court properly assumed jurisdiction over Manitoba residents. The Supreme Court of Canada in Van Breda had enunciated four factors which give rise to "presumptive" jurisdiction over a defendant. One of those factors is whether the defendant carries on business in the province. The defendants in the instant case fulfilled this condition. However, the Manitoba Court of Appeal, in recognizing the unique nature of class proceedings, ruled that the presence of this factor alone is not sufficient to give rise to jurisdiction over non-residents class members.
However, as the four factors identified in Van Breda are not exhaustive, the Manitoba Court of Appeal went on to recognize a new presumptive connecting factor which can furnish jurisdiction over non-residents in class proceedings, namely the presence of common issues across the class.
The Court identified four reasons for the recognition of this "new" presumptive jurisdiction-conferring factor. First, this factor, like the four existing factors set out by the Supreme Court of Canada in Van Breda, "deals with the subject matter of the wrongdoing" (at para. 95). Second, earlier pre-Van Breda jurisprudence had treated common issues as "a factor sufficient to satisfy the real and substantial connection test within Canada" (at para. 95). Third, the Uniform Law Conference of Canada's Committee on the National Class and Related Interjurisdictional Issues" had "strongly endorse[d] the concept of national class actions with opt-out clauses" (at para. 95). Fourth, class action legislation in various provinces allow for national class actions which extend to non-resident plaintiffs, subject to opt-out clauses" (at para. 95).
Accordingly, the Court ruled that "where the Court has jurisdiction over both the defendant and the representative plaintiff in a class action proceeding, common issues between the claim of the representative plaintiff and that of non-resident plaintiffs is a presumptive connecting factor, sufficient to give the court jurisdiction over non-resident plaintiffs" (at para. 97).
The ruling in Meeking will facilitate attempts by class action defendants to settle inter-provincial class actions with inter-provincial effect -- that is, in a way which binds non-resident members -- without being met with successful subsequent jurisdictional challenges.
In a future post, I will address the aspects of the Meeking decision pertaining to procedural measures which can be taken by settling defendants to help improve the likelihood of enforcing inter-provincial class settlements.
The McCarthy Tétrault Opinions Group consists of members of the firm’s litigation department whose practices focus on written advocacy and the provision of strategic advice and opinions in the context of complex business disputes and transactions. The members of the Opinions Group are Anthony Alexander, Martin Boodman, Brandon Kain, Hovsep Afarian and Kirsten Thompson.
2013 MBCA 81 Cash Store class actions Class proceeding common issues enforcement Instaloans inter-jurisdictional classes inter-provincial classes jurisdiction Meeking National classes new presumptive connecting factor real and substantial connection settlement Van Breda