2013 MBCA 81, 2013 MBCA 81

Citation: Meeking v. Cash Store Inc. et al., Date: 20130909 2013 MBCA 81 Docket: AI 12-30-07812 IN THE COURT OF APPEAL OF MANITOBA Coram: Mr. Justice Richard J. Chartier Madam Justice Holly C. Beard Madam Justice Diana M. Cameron BETWEEN: SCOTT MEEKING, AS ) P. R. BennettREPRESENTATIVE PLAINTIFF ) M. W. Mounteer and ) G. M. Wood (Plaintiff) Respondent ) for the Appellants ) - and - ) T. Pinos and ) J.

BeitchmanTHE CASH STORE INC., ) for the Respondent1152919 ALBERTA LTD., carrying on ) business as INSTALOANS, and THE ) Appeal heard:CASH STORE FINANCIAL SERVICES ) January 29 and 30, 2013INC. ) ) Judgment delivered: (Defendants) Appellants ) September 9, 2013 CAMERON J.A. Introduction [1] This appeal concerns: (

i) whether a court in Ontario had jurisdiction to certify a class action and approve acorresponding settlement that purported to be binding on Manitoba residents where the transactions giving rise to the claim occurredwholly within Manitoba and, if so, (ii) the conditions which must be met before the settlement is recognized and enforced in Manitoba.

This raises issues related to the principles of both private international law and the conflict of laws, on the one hand, and Canadianconstitutional law, on the other. [2] For the reasons that follow, I conclude that the Ontario court properly exercised jurisdiction in certifying a classaction, which included potential plaintiffs resident in Manitoba as class members, and in approving of a settlement judgment with respectto that action. However, on the facts of this case, certain portions of the Ontario judgment are not enforceable in Manitoba becauseproper notice was not given.

Background and Proceedings [3] In April 2010, the plaintiff filed a statement of claim in the Manitoba Court of Queen’s Bench against all of thedefendants pursuant to The Class Proceedings Act, C.C.S.M., c. C130, on his own behalf and on behalf of “all residents of Manitoba”and “any persons resident outside of Manitoba who have elected to claim in this action, in a manner to be determined by the Court” (theputative class).

In essence, the statement of claim concerns broker fees that were alleged to have been unlawfully collected in thedefendants’ loan businesses. [4] The plaintiff’s claim has been preceded by similar claims in Ontario, British Columbia and Alberta. Indeed, the claimin Ontario resulted in the proceedings that are the subject of this appeal. Specifically, in McCutcheon v. The Cash Store Inc., (ON SC), 80 O.R. (3d) 644 (S.C.J.), Cullity J. certified a class action against The Cash Store.

The resultant certificationorder included “[a]ny person in Canada, resident outside the Provinces of British Columbia and Alberta, who borrowed money as a‘payday loan’ from a Cash Store location.” Therefore, the certification order purported to include Manitoba residents, including theplaintiff. Of note, it only included the defendant, The Cash Store, and not the other named defendant, 1152919 Alberta Ltd. carrying onbusiness as Instaloans.

[5] After the certification decision in McCutcheon, the corresponding class action was resolved by a court-approvedsettlement incorporated in a judgment by Cullity J. (the McCutcheon settlement judgment). The McCutcheon settlement judgmentdefined the “class” to which it was applicable as including persons in Manitoba who had obtained a payday loan from The Cash Storeand those who had obtained a payday loan from 1152919 Alberta Ltd. (operating as Instaloans), who had repaid the loans at the time thatnotice of the settlement was given. [6] The McCutcheon settlement judgment ordered that a copy of the “Schedule ‘C’ notice” (the notice) be provided to allpotential claimants by:

a) first class mail to the last known address of all class members;

b) posting the notice in each of The Cash Storelocations in Canada, except Alberta and British Columbia;

c) causing a copy of the notice to be referred to in various press releases; d)causing a copy of it to be posted on class counsel’s website;

e) causing a copy to be placed on The Cash Store’s website; and,

f) orderingthat class counsel provide a copy of the notice to any person who requested it. The notice was accompanied by “Appendix 1,” whichwas a form to be filled out by those who wished to participate in the “Distribution Plan.” [7] The McCutcheon settlement judgment provided deadlines for any class member to opt out of the class action and forthose who wished to participate in the Distribution Plan resulting from the settlement.

It provided that the failure of a class member toindicate that he or she wished to participate in the Distribution Plan by the deadline would bar that class member from participating in it. It also provided that any class member who did not opt out of the action released the defendants from any claims arising out of the factsasserted in the action.

Finally, it provided that, unless a class member opted out of the action, all further claims against the defendantswere released and those class members would be barred from further proceedings with respect to the action. [8] The plaintiff did not opt out or indicate his intent to participate in the Distribution Plan before the deadline. Rather,well after the deadline, he filed the statement of claim that is the subject of these proceedings. He claimed that he did not notice theposters that were placed in The Cash Store that he frequented.

Further, he said he did not read the mail sent to him from The Cash Storeor Instaloans and, therefore, did not see the notice that was sent to him in accordance with the McCutcheon settlement judgment. [9] In response to the statement of claim filed by the plaintiff, the defendants filed a notice of motion requesting an orderthat the McCutcheon settlement judgment be recognized in Manitoba and, that it be enforced against the plaintiff and the putative classfor which the plaintiff sought to act as a representative.

The motion requested a declaration that the plaintiff be estopped fromrelitigating the subject matter of the McCutcheon settlement judgment. [10] The motion judge allowed the defendants’ motion for recognition and enforcement in part. It is his decision that is thesubject of this appeal. The Decision of the Motion Judge [11] The motion judge held that the court in Ontario had jurisdiction to bind Manitobans who had obtained loans from TheCash Store in Manitoba. However, he held that some portions of the McCutcheon settlement judgment should not be recognized andenforced.

In reaching his conclusion, he recognized that, based on Canada Post Corp. v. Lépine, 2009 SCC 16, [2009] 1 S.C.R. 549, theprerequisites for enforcement were:

a) that the Ontario court properly assumed jurisdiction;

b) that the principles of order and fairnesswere met insofar as Manitoba class members were concerned; and,

c) that there was no statutory or common-law rule precludingenforcement. This appeal concerns only the first two stages of analysis, the defendants not having raised any statutory or common-lawrule which would preclude enforcement. [12] Regarding the jurisdiction of the Ontario court, the motion judge commented that that issue was carefully considered byCullity J. in McCutcheon when he allowed the certification of non-residents in the class action.

He summarized Cullity J.’s analysis,stating (at paras. 8-9): In his reasons for his certification decision, Cullity J. wrote extensively on the issue of whether he had jurisdiction to bind personsoutside Ontario who obtained loans from the Cash Store in the provinces or territories in which they were resident. Relying on theprinciples set out in Morguard Investments Ltd. et al. v. De Savoye, (SCC), [1990] 3 S.C.R. 1077, 122 N.R. 81, hedecided he should bind non-resident class members to the Ontario proceeding because: (

a) there was a sufficient, real and substantialconnection between non-resident class members and Ontario, and (

b) the principles of order and fairness were met. He found that a common interest between the class members was sufficient to establish a real and substantial connection even where theclaims of individual non-resident class members were based on material facts that occurred outside of Ontario.

At para. 37 he stated: In such cases, the only connecting factor between Ontario, on the one hand, and such members and their claims, on the other, may be thatthey have claims against the same defendants and that these raise the same common issues as the claims of class members resident inOntario over who – and whose claims against the defendants – the court has jurisdiction. [13] In his analysis of the jurisdiction of the Ontario court, the motion judge held that the court had jurisdiction on the basisthat the defendants carried on business in Ontario; he does not appear to have relied on the factor of common issues between all potentialplaintiffs as a connecting factor, such as was done by Cullity J. and to which the motion judge had referred earlier in his decision.

Themotion judge noted that, after Cullity J.’s certification decision in McCutcheon, the Supreme Court of Canada issued its decision inLépine. Specifically, he considered that Lépine was similar to McCutcheon on its facts in that both cases involved “certified and settledclass proceedings in Ontario which purported to bind non-resident class members” (at para. 44). With respect to Lépine, he observed (at

para. 45 ): Once settlement was reached in Lépine , the defendant sought to have the judgment approving the settlement recognized and enforced in Qu[é]bec under

article 3155 of the Civil Code of Québec. The Supreme Court found that the defendant’s presence in Ontario gave the Ontario court jurisdiction over the dispute. The court raised no issue regarding the Ontario court’s authority to bind non-resident class members who had not opted out of the proceeding. While the Supreme Court refused to recognize and enforce the Ontario judgment in Qu[é]bec, it did so because: (

a) the Ontario notice did not properly explain the impact of the judgment to Qu[é]bec members of the national class and therefore breached the fundamentals of procedure; and (b) article 3155(4) of the Civil Code of Québec precluded enforcement of the judgment in the particular circumstances of the case. [ 14 ] Regarding the principles of order and fairness, the motion judge found that the provision of notice to Manitoba class members was crucial to the issue of fairness.

He held that he was satisfied that Manitoba class members who obtained payday loans from The Cash Store were given proper notice and that the McCutcheon settlement judgment should be enforced against them in Manitoba . [ 15 ] However, the motion judge held that, despite the fact that he was satisfied that Cullity J. intended that the McCutcheon settlement judgment should apply to loans borrowed from Instaloans, he found the notice given to Manitoba customers was inadequate on the basis that the heading of the notice did not mention Instaloans. [ 16 ] Next, the motion judge dealt with two other types of loans purported to be covered by the McCutcheon settlement judgment.

Those loans were known as “signature loans” and “title loans.” He explained that The Cash Store and Instaloans provided three types of short-term loans and described them as (at para. 58): …. (

a) Payday loans which were loans made to persons who were employed, and were for amounts up to 60% of the person’s take-home pay and for a term of no more than 18 days or until the borrower’s next pay day, whichever was the lesser. (

b) Signature loans which were loans to persons who had a fixed monthly income, such as a family allowance or pension, and were for an amount up to 60% of that fixed monthly income and for a term of no more than 35 days. (

c) Title loans which were secured against a motor vehicle, and were for amounts up to 25% of the vehicle’s value and for a term of no more than 35 days. [ 17 ] The motion judge underscored that the McCutcheon settlement judgment only defined class members as persons who took out payday loans and that it made no reference whatsoever to signature or title loans. Further, the notice did not mention signature or title loans.

Thus, he concluded that the McCutcheon settlement judgment was unenforceable against Manitoba residents who had taken out such loans from The Cash Store. [ 18 ] To summarize, the motion judge concluded that the McCutcheon settlement judgment should be recognized and enforced in Manitoba only with respect to payday loans from The Cash Store. Issues [ 19 ] The defendants have appealed the finding that only portions of the McCutcheon settlement judgment are enforceable.

They claim that it should be enforced in its entirety, which would prevent the plaintiff from proceeding with the statement of claim he filed in Manitoba. [ 20 ] The plaintiff has cross-appealed, claiming that the motion judge erred in finding that the Ontario court had jurisdiction to determine certification and in recognizing and enforcing any part of the settlement judgment as against him or his putative class. [ 21 ] Alternatively, the plaintiff asks that the wording of the order of the motion judge be varied with respect to signature and title loans, with a view to having that determination applicable to non-residents of Manitoba who obtained those loans.

In this regard, the motion judge had previously rejected his request that the order not be limited to residents of Manitoba, but rather, that it state that signature or title loans were not enforceable because those loans did not fall within the scope of the McCutcheon settlement judgment. [ 22 ] In this case, a finding that the Ontario court had jurisdiction to make the class action binding on Manitoba residents is a prerequisite to the determination of the rest of the issues raised by the parties and, therefore, will be dealt with first. Thus, the issues are: 1.

Did the motion judge err in his determination that the Ontario court properly assumed jurisdiction over non-resident Manitobans in McCutcheon ?

2. If the Ontario court properly assumed jurisdiction, did the motion judge err in finding that the McCutcheon settlement judgment should not be enforced against Manitoba class members with respect to loans borrowed from Instaloans? 3. If the Ontario court properly assumed jurisdiction, did the motion judge err in finding that the McCutcheon settlement judgment should not be enforced against Manitoba class members with respect to signature and title loans? 4.

Did the motion judge err in refusing to include in his order that the McCutcheon settlement judgment was not enforceable in respect of signature or title loans because those loans do not fall within the scope of the McCutcheon settlement judgment? Positions of the Parties The Plaintiff [ 23 ] In his cross-appeal, the plaintiff maintains that the Ontario court did not have jurisdiction over him or the putative class he seeks to represent. He points out that he does not reside in Ontario and that none of the transactions for which he could have claimed a benefit occurred in Ontario.

He relies on Club Resorts Ltd. v. Van Breda , 2012 SCC 17 , [2012] 1 S.C.R. 572 , for the proposition that, before a court can assume jurisdiction, it must apply the real and substantial connection test which has “evolved into an important constitutional test or principle that imposes limits on the reach of a province’s laws” (at para. 69). [ 24 ] The plaintiff maintains that the motion judge did not properly apply the test when he determined that jurisdiction could be assumed on the basis that the defendants carried on business in Ontario.

He states that the motion judge erred in applying Lépine to hold that the Ontario court properly assumed jurisdiction because the Lépine case was based on Qu é bec legislation that provided for the recognition of jurisdiction. Furthermore, the plaintiff maintains that Cullity J. erred in McCutcheon when he held that the real and substantial connection test was met based on the common issues between all the potential plaintiffs.

It is the plaintiff’s position that a finding of common issues is not a basis on which a finding of a real and substantial connection can be found. [ 25 ] The plaintiff also maintains that the court in Ontario had no jurisdiction over his individual action. He argues that the class action procedure does not alter the jurisdiction of the court. In this regard, he relies on Bisaillon v. Concordia University , 2006 SCC 19 at para. 17 , [2006] 1 S.C.R. 666 , and Dell Computer Corp. v.

Union des consommateurs , 2007 SCC 34 at para 108 , [2007] 2 S.C.R. 801 , for the proposition that a class action “cannot serve as a basis for legal proceedings if the various claims it covers, taken individually, would not do so.” [ 26 ] Next, the plaintiff claims that the certification decision in McCutcheon constituted an unconstitutional assertion of extra-provincial jurisdiction.

He argues that, in Van Breda , the Supreme Court confirmed that there are territorial limits on the authority of the courts of provinces based on the fact that s. 92 of the Constitution Act , 1867 , limits the authority of provincial legislatures to matters within the province. [ 27 ] With respect to the second and third issues, the plaintiff maintains that the motion judge properly applied the requirements concerning extra-provincial notice, as set out in Lépine , to correctly conclude that the manner in which the notice was written was likely to confuse Instaloans customers and that the reference to payday loans in the notice was insufficient to include signature and title loans. [ 28 ] Although the point was not strongly pressed in his factum or in oral argument, the plaintiff asks that, if this court upholds the decision of the motion judge regarding the signature and title loans, then it should vary his order to include a statement that the McCutcheon settlement judgment should not apply because “on a proper construction of the [McCutcheon settlement judgment] it did not apply to those loans.” The Defendants [ 29 ] The defendants argue that the motion judge correctly relied on the decision in Lépine to conclude that the fact that they carried on business in Ontario was sufficient to satisfy the real and substantial connection test outlined in the jurisprudence.

Further, they state that, despite the fact that the decision in Lépine was based on Québec legislation, it should not be limited in its application. Rather, they assert that Lépine was reinforced by the Supreme Court in Van Breda , which accepted that a defendant carrying on business in a jurisdiction is sufficient to establish a presumptive connecting factor that entitles a court to assume jurisdiction over a dispute. [ 30 ] Next, the defendants maintain that the plaintiff has misinterpreted Bisaillon and Dell . They argue that the motion judge was correct to conclude that these cases should be distinguished.

They argue that those cases were not about the real and substantial connection test, but rather, dealt with subject-matter jurisdiction. [ 31 ] For basically the same reasons as summarized above, the defendants disagree that the assumption of jurisdiction by the Ontario court was unconstitutional.

Moreover, they contend that the assumption of jurisdiction by Cullity J. on the basis that common issues were sufficient to satisfy the real and substantial connection test was not unconstitutional. [ 32 ] Regarding their appeal on the second and third issues, the defendants state that the motion judge incorrectly substituted his own assessment of the facts in place of that of Cullity J., and erred in ignoring the evidence that was presented respecting the adequacy and efficacy of the notice program.

Additionally, they claim that the motion judge failed to look at the notice as a whole. [ 33 ] Finally, the defendants oppose the plaintiff’s request that this court vary the motion judge’s order regarding signature and title loans to include a statement that the McCutcheon settlement judgment does not apply because “on a proper construction of the [McCutcheon settlement judgment] it did not apply to those loans.” The Law [ 34 ] For the purpose of this decision, it is useful to examine the nature of class actions, the evolution of the jurisprudence

regarding the assertion of jurisdiction by a provincial superior court and the recognition and enforcement of that assertion by the court of another jurisdiction. As these issues must be resolved within the confines of private international law and Canadian constitutional law, I will begin there.

Private International Law and Canadian Constitutional Law [ 35 ] In Van Breda , LeBel J., writing for the court, undertook a comprehensive review of private international law, its constitutional underpinnings and the history of the real and substantial connection test. [ 36 ] He commenced his analysis by describing private international law as (at para. 15): …. [I]n essence domestic law, and it is designed to resolve conflicts between different jurisdictions, the legal systems or rules of different jurisdictions and decisions of courts of different jurisdictions.

It consists of legal principles that apply in situations in which more than one court might claim jurisdiction, to which the law of more than one jurisdiction might apply or in which a court must determine whether it will recognize and enforce a foreign judgment or, in Canada, a judgment from another province (S. G. A. Pitel and N. S. Rafferty, Conflict of Laws (2010), at p. 1). [ 37 ] Importantly, he considered the constitutional underpinnings of private international law (at para. 21): Conflicts rules must fit within Canada’s constitutional structure.

Given the nature of private international law, its application inevitably raises constitutional issues. This branch of the law is concerned with the jurisdiction of courts of the Canadian provinces, with whether that jurisdiction should be exercised, with what law should apply to a dispute, and with whether a court should recognize and enforce a judgment rendered by a court of another province or country.

The rules of private international law can be found, in the common law provinces, in the common law and in statute law and, in Québec, in the Civil Code of Québec , S.Q. 1991, c. 64, which contains a well- developed set of rules and principles in this area (see Civil Code of Québec , Book Ten, arts. 3076 to 3168). The interplay between provincial jurisdiction and external legal situations takes place within a constitutional framework which limits the external reach of provincial laws and of a province’s courts. The Constitution assigns powers to the provinces.

But these powers are subject to the restriction that they be exercised within the province in question (see P. W. Hogg, Constitutional Law of Canada (5th ed. 2007), vol. 1, at pp. 364-65 and 376-77; H. Brun, G. Tremblay and E. Brouillet, Droit constitutionnel (5th ed. 2008), at p. 569; British Columbia v. Imperial Tobacco Canada Ltd. , 2005 SCC 49 , [2005] 2 S.C.R. 473 , at paras. 26-28 , per Major J.), and they must be exercised in a manner consistent with the territorial restrictions created by the Constitution (see Castillo v.

Castillo , 2005 SCC 83 , [2005] 3 S.C.R. 870 , at para. 5 , per Major J.; Unifund Assurance Co. v. Insurance Corp. of British Columbia , 2003 SCC 40 , [2003] 2 S.C.R. 63 , at para. 51 , per Binnie J.). [emphasis added] Class Actions [ 38 ] Before the widespread enactment of class action legislation, various provinces, including Manitoba, modeled their court rules governing class actions on a rule originally devised by the courts of England. In its report, the Manitoba Law Reform Commission, Class Proceedings , No. 100 (Winnipeg: Man. Law Ref.

Com., January 1999) (the Report), the commission explained the rule as follows (at pp. 6-7): Class actions were devised by the Court of Chancery for reasons of convenience. As Lord Macnaghten, in [ Bedford (Duke of) v. Ellis), [1901] A.C. 1 at 8 (H.L.) ] stated: The old rule in the Court of Chancery was very simple and perfectly well understood. Under the old practice the Court required the presence of all parties interested in the matter in suit, in order that a final end might be made of the controversy.

But when the parties were so numerous that you never could “come at justice”, to use an expression in one of the older cases, if everybody interested was made a party, the rule was not allowed to stand in the way. It was originally a rule of convenience; for the sake of convenience it was relaxed. [ 39 ] Historically, most provinces maintained similarly worded rules governing class actions.

For example, the commission noted that, at the time of its Report, Manitoba’s Rule 12.01 of the Queen’s Bench Rules, stated (at p. 6): Where there are numerous persons having the same interest, one or more of them may bring or defend a proceeding on behalf or for the benefit of all, or may be authorized by the court to do so.

[40] The provincial superior court rules on which class actions were based proved to be inadequate. As noted by thecommission, these inadequacies were underscored by the Supreme Court of Canada in General Motors of Canada Ltd. v. Naken et al., (SCC), [1983] 1 S.C.R. 72. Specifically, the commission stated (at p. 7): The Supreme Court of Canada held in Naken that the class action rule (the same rule currently in force in Manitoba) was simplyinadequate to accommodate Naken’s action.

The rule’s deficiencies included, amongst others, the lack of provisions for opting out,service of notice, costs, modification of the discovery rules and approval of settlements, and the uncertain application of limitationperiods and the res judicata doctrine. In short, the historic rule was not up to the task of modern, complex claims. …. [41] Despite the above, in the seminal case of Western Canadian Shopping Centres Inc. v. Dutton, 2001 SCC 46, [2001] 2S.C.R. 534, McLachlin C.J.C., writing for a unanimous court, concluded that Rule 42 of the Alberta Rules of Court allowed for classactions in Alberta.

At the time, Alberta did not have comprehensive class action legislation. Rule 42 simply restated the English rule. [42] In her analysis, McLachlin C.J.C. engaged in a comprehensive review of the history and purpose of class actions,concluding (at paras. 27-29): Class actions offer three important advantages over a multiplicity of individual suits. First, by aggregating similar individual actions,class actions serve judicial economy by avoiding unnecessary duplication in fact-finding and legal analysis. ….

Second, by allowing fixed litigation costs to be divided over a large number of plaintiffs, class actions improve access to justice bymaking economical the prosecution of claims that would otherwise be too costly to prosecute individually. ….

Third, class actions serve efficiency and justice by ensuring that actual and potential wrongdoers do not ignore their obligations to thepublic. …. [43] She found that the absence of comprehensive legislation in Alberta required the court to fill in the void and settle therules of practice and procedure with respect to the class actions brought before it and proceeded to outline the four conditions necessaryto found a class action.

Those criteria were: 1) that the class be capable of clear definition; 2) that there must be issues of fact or lawcommon to all class members; 3) with respect to the common issues, success for one class member must mean success for all; and, 4) theclass representative must adequately represent the class (at paras. 38-41, 48). [44] Soon after the decision in Western Canadian Shopping Centres, and on the basis of the Report, Manitoba enacted TheClass Proceedings Act, C.C.S.M., c.

C130 (the Act), which included the four conditions necessary to found a class action as described byMcLachlin C.J.C. [45] Aside from the conditions necessary to found a class action, the Report strongly endorsed the certification of nationalclass actions. The commission began by noting the different legislative approaches taken by Ontario and British Columbia with respectto the inclusion of non-residents in a class action.

Specifically, it stated (at p. 67): As earlier noted, the Ontario class proceedings regime probably permits certification of a class covering all potential plaintiffs regardlessof their residence, the British Columbia regime permits the certification of national classes (although non-resident plaintiffs must takesteps to opt into the class), while the American courts have assumed the jurisdiction to certify foreign classes.

It is in order to considerwhether Manitoba should include in its class proceedings legislation provisions permitting the certification of classes that include non-residents of the province. [46] It went on to conclude (at p. 67): We are of the opinion that there is no compelling reason to preclude Manitoba courts from certifying class proceedings that include non-residents of the province, and that to enable them to do so would introduce a desirable reciprocity among provinces with classproceedings legislation.

We are further of the opinion that the best procedure for doing so is the procedure adopted in Ontario, for tworeasons. First, requiring non-residents to opt in to a proceeding will inhibit participation, and thereby limit access to justice, in the samemanner that an opt in requirement would inhibit participation by Manitoba residents. The second reason an opt-in procedure isundesirable is the fact that, realistically, class proceedings involving classes composed of both residents and non-residents will tend to bebrought in those jurisdictions that do not require non-residents to opt in.

[47] In this case, the motion judge correctly observed that the resultant Act clearly evidenced the intent of the ManitobaLegislature to recognize national class actions in a manner similar to Ontario. While this case deals with the assumption of jurisdictionby an Ontario court, he explained the significance of this observation (at para. 66): Obviously the Manitoba legislature expects Manitoba judgments which affect non-attorning, non-resident class members to berecognized and enforced in other provinces.

In light of this, Manitoba, in the spirit of comity, must in appropriate circumstances alsogive effect to class action judgments granted in other provinces which affect Manitoba residents. National Class Actions – Conflict of Laws and The Real and Substantial Connection Test [48] National class actions involve the assumption of jurisdiction by a provincial superior court over a plaintiff class thatincludes and purports to bind non-residents of that province.

Correspondingly, the superior court of the province of the non-residentplaintiff maintains the authority to determine whether any judgment resulting from the assumption of jurisdiction will be recognized andenforced in that province.

The issues involved in the assumption of jurisdiction and the recognition of, and enforcement of, judgmentsresulting from that assumption raise both constitutional and conflict of laws issues. [49] While not a class action case, the seminal case dealing with extra-provincial recognition of judgments and the source ofthe real and substantial connection test that is at the heart of this litigation is Morguard Investments Ltd. v. De Savoye, (SCC), [1990] 3 S.C.R. 1077.

In that case, the Supreme Court of Canada considered whether a judgment of the Alberta court against amortgagor who had resided in and entered into mortgages in Alberta, but subsequently moved to British Columbia and defaulted on themortgages, was enforceable against him in British Columbia despite the fact that he did not attorn to the jurisdiction of the Alberta court. [50] In holding that the Alberta judgment should be enforced in British Columbia, LaForest J., writing for the court, notedthat, historically, the development of Canadian law respecting the extra-provincial enforcement of judgments was based on the Englishcommon law regarding recognition of foreign judgments.

That law was anchored in the principle of territoriality which was reflective ofone of the “basic tenets of international law, that sovereign states have exclusive jurisdiction in their own territory” and that “[a]s aconcomitant to this, states are hesitant to exercise jurisdiction over matters that may take place in the territory of other states” (at p.1095). [51] Ultimately, LaForest J. found that the English approach no longer reflected the realities of the changing world, stating,“[t]he business community operates in a world economy and we correctly speak of a world community even in the face of decentralizedpolitical and legal power” (at p. 1098).

After noting that other countries had adopted more generous rules for the recognition andenforcement of foreign judgments, he went on to conclude that, in Canada, the obvious constitutional intention to create a single country“presupposes a basic goal of stability and unity where many aspects of life are not confined to one jurisdiction” (at p. 1099). [52] In the subsequent case of Hunt v.

T&N plc, (SCC), [1993] 4 S.C.R. 289, LaForest J. stated that, inMorguard, the factors he identified as supporting extra-provincial recognition and enforcement of a judgment granted in anotherprovince were (at p. 322): …. … (1) common citizenship, (2) interprovincial mobility of citizens, (3) the common market created by the union as reflected inss. 91(2), 91(10), 121 and the peace, order and good government clause [of the Constitution Act, 1867], and (4) the essentially unitarystructure of our judicial system with the Supreme Court of Canada at its apex …. [53] In Morguard, La Forest J. concluded that courts in one province should give full faith and credit to the judgments givenby a court in another province or territory, “so long as that court has properly, or appropriately, exercised jurisdiction” (at p. 1102).

Hewas, however, cognizant of the fact that the assumption of jurisdiction had the potential to create unfairness in circumstances that wouldpermit a person to sue another in any jurisdiction, without regard to the contacts that jurisdiction might have to the defendant or thesubject matter of the suit. To address this concern, he stated that the principles of order and fairness would be met in the determinationof jurisdiction by the application of the real and substantial connection test developed in private international law.

That test required aconnection between the jurisdiction of the action and the wrongdoing. [54] While Morguard was not a constitutional case, LaForest J. noted (at p. 1109): The private international law rule requiring substantial connection with the jurisdiction where the action took place is supported by theconstitutional restriction of legislative power “in the province”. ….

The restriction to the province would certainly require at leastminimal contact with the province, and there is authority for the view that the contact required by the Constitution for the purposes ofterritoriality is the same as required by the rule of private international law between sister-provinces. …. [55] LaForest J. concluded by adopting the real and substantial connection test as the basis for determining whether aprovincial superior court had jurisdiction over an action commenced in that province such that a resulting judgment should be recognized

and enforced in another province (at pp. 1108-1109). In obiter, he observed that the rule, which required at least minimal contact withthe province assuming jurisdiction, was “supported by the constitutional restriction of legislative power ‘in the province’.” The Real and Substantial Connection Test as a Constitutional Principle [56] Three years later in Hunt, one of the issues facing the Supreme Court concerned the “extraterritorial application ofjudicial pronouncements in another province” and “whether the doctrine propounded in Morguard is of a constitutional character” (at pp.319-20).

In Hunt, the court was tasked with determining whether Québec legislation prohibiting the removal of documents from theprovince was enforceable to prevent a resident of British Columbia, who suffered lung cancer as a result of asbestos manufactured inQuébec, from obtaining information necessary to his lawsuit. [57] Writing for the court, LaForest J. reviewed his decision in Morguard and concluded that the constitutionalconsiderations in that case amounted to “constitutional imperatives, and as such apply to the provincial legislatures as well as to thecourts” (at p. 324), thus cloaking the real and substantial connection test with constitutional status.

In characterizing the Québeclegislation as a “blocking statute” and finding it constitutionally inapplicable in British Columbia, LaForest J. stated (at p. 328): …. Morguard requires that the rules of private international law must be adapted to the structure of our federation. In a federation, weassume that there is more commonality as to what is acceptable action; we have many common procedures. We even have similarconflicts rules, related, for example, to jurisdiction and deference, and to procedures regarding the lex fori.

And courts are required, byconstitutional restraints, to assume jurisdiction only where there are real and substantial connections to that place.

In terms of policy, thepresence of such blocking statutes is an anachronism, not even, so we were told, aimed at interprovincial litigation at its inception in the1940s, but definitely inimical to such litigation if applied on the interprovincial level. [58] At the end of the day, the court concluded that, while a province may enact legislation that could have some effect onlitigation in other provinces in accordance with the principles enunciated in Morguard, those principles were not met in the case before itand, therefore, the Québec legislation was inapplicable to the litigation occurring in British Columbia.

Application of the Real and Substantial Connection Test to International Class Actions [59] As stated, the real and substantial connection test has its genesis in private international law. Therefore, it is helpful toexamine the development of the real and substantial connection test in that context. [60] In Currie v. McDonald’s Restaurants of Canada Ltd., (ON CA), 74 O.R. (3d) 321 (C.A.), the courtwas tasked with considering whether a class action settlement judgment made in Illinois (the Illinois class action), was binding onresidents of Ontario.

The litigation was based on improperly run promotional games by McDonald’s, resulting in the senior employeesof the marketing company that operated the games being indicted for embezzling the prizes. In the embezzlement trial, evidence wasled that McDonald’s instructed the employees that no high value prizes were to be awarded to Canadians. Notwithstanding that theIllinois class action ostensibly included all affected Canadians who had not opted out, Currie and others commenced their own classaction against McDonald’s in Ontario.

McDonald’s defended the class action on the basis that the issues had been resolved in the Illinoisclass action, and it applied for a declaration that all members of the class who had not opted out of the Illinois class action were bound byit. [61] In considering whether or not the Illinois court properly assumed jurisdiction over potential plaintiffs (including Currie)residing in Ontario, Sharpe J.A. noted that the “novel point raised on this appeal is the application of the real and substantial connectiontest and the principles of order and fairness to unnamed, non-resident plaintiffs in international class actions” (at para. 13). [62] In considering the issues, he commented on the nature of class actions and the importance of the recognition ofjudgments, stating (at paras. 15-16): There are strong policy reasons favouring the fair and efficient resolution of interprovincial and international class action litigation:Vitapharm Canada Ltd. v.

F. Hoffman-La Roche Ltd., (ON SC), [2001] O.J. No. 237, 6 C.P.C. (5th) 245 (S.C.J.), atpara. 27, affd (ON SCDC), [2002] O.J. No. 1400, 20 C.P.C. (5th) 65 (Div. Ct.), affd (ON CA),[2003] O.J. No. 868, 30 C.P.C. (5th) 107 (C.A.); Wilson v. Servier Canada Inc., [(2000), (ON SC), 50 O.R. (3d) 219]at pp. 243-44 O.R. (S.C.J.); Wilson v. Servier Canada Inc. (2002), (ON SC), 59 O.R. (3d) 656, at pp. 664-70 O.R.. Conflict of law rules should recognize, in appropriate cases, the importance of having claims finally resolved in one jurisdiction.

Insome cases, Ontario courts will render judgments affecting the rights of non-residents and in other cases, Ontario residents will beaffected by class action proceedings elsewhere. Ontario expects its judgments to be recognized and enforced, provided its courts assertjurisdiction in a proper manner and comity requires that, in appropriate cases, Ontario law should give effect to foreign class actionjudgments. Recognition and enforcement rules should take into account certain unique features of class action proceedings. In this case, we mustconsider the situation of the unnamed, non-resident class plaintiff.

In a traditional non-class action suit, there is no question as to thejurisdiction of the foreign court to bind the plaintiff. As the party initiating proceedings, the plaintiff will have invoked the jurisdictionof the foreign court and thereby will have attorned to the foreign court’s jurisdiction. The issue relating to recognition and enforcement

that typically arises is whether the foreign judgment can be enforced against the defendant. [emphasis added] [ 63 ] He then commented that, in determining whether the real and substantial connection test and the principles of order and fairness have been satisfied, it is necessary to consider the situation from the position of “ the party against whom enforcement is sought ” (at para. 18).

In that case, as in this case, the plaintiff Currie argued that the court should analogize to a traditional two-party lawsuit. [ 64 ] In considering the issue, Sharpe J.A. rejected the strict application of a two-party lawsuit analogy, stating (at paras. 20- 21): This analogy is of some assistance, but I am not persuaded that a model entirely based upon the position of the defendant in a traditional two-party lawsuit can adequately capture the legal dynamics and complexity of the situation of an unnamed plaintiff in modern cross- border class action litigation.

The position of the class action plaintiff is not the same as that of a typical defendant. Rules for recognition and enforcement of class action judgments should reflect those differences. The class action plaintiff is not hauled before a foreign court and required to defend him or herself upon pain of default judgment. As stated by Rehnquist J. in the leading American decision, Phillips Petroleum Co. v. Shutts , 472 U.S. 797, 105 S. Ct. 2965 (1985), at pp. 809, “[un]like a defendant in a civil suit, a class- action plaintiff is not required to fend for himself”.

Class action regimes typically impose upon the court a duty to ensure that the interests of the plaintiff class members are adequately represented and protected. This is a factor favouring recognition and enforcement against unnamed class members : see John C.L. Dixon, “The Res Judicata Effect in England of a U.S. Class Action Settlement” (1997) 46 I.C.L.Q. 134, at pp. 136, 150-51. On the other hand, I accept [Currie’s] basic point that it would be wrong simply to approach the issue of jurisdiction by asking whether the Illinois court would have jurisdiction over [Currie] at the suit of Canadian plaintiffs.

The court must have regard to the rights and interests of unnamed plaintiffs who did not participate in the [Illinois class action] proceedings. The question of jurisdiction should be viewed from the perspective of the Ontario client of a McDonald ’s Canada restaurant, participating in a promotional prize giveaway presented by McDonald’s Canada, who has done nothing to invoke or submit to the jurisdiction of the Illinois court. [emphasis added] [ 65 ] I agree with the reasons given by Sharpe J.A.

Class action proceedings are not strictly comparable to a lawsuit involving two parties and must be looked at from the unique circumstances they present as a class action. [ 66 ] In Currie , the court concluded that the real and substantial connection test was satisfied on the basis that (at para. 22): The principal connecting factors linking the cause of action asserted in Currie ’s proposed class action to the state of Illinois are that the alleged wrong occurred in the United States and Illinois is the site of McDonald’s head office.

The alleged wrongful conduct, manipulating the “random” selection of winners of “high value” prizes to ensure that no such prizes would be awarded to contestants in Canada, occurred in the United States. …. Therefore, the court concluded that the Illinois court properly assumed jurisdiction over non-resident Canadian plaintiffs. However, despite the above, the court upheld the motion judge’s conclusion that the judgment was not enforceable because the requirements of procedural justice were not met.

Specifically, the motion judge concluded that “the wording of the notice was so technical and obscure that the ordinary class member would have difficulty understanding the implications of the proposed settlement on their legal rights in Canada or that they had the right to opt out” (at para. 39). The court held that these factual findings of the motion judge were entitled to deference (see para 38).

The Real and Substantial Connection Test – Presumptive Connecting Factors [ 67 ] After the decision of the motion judge in this case, the Supreme Court of Canada had the opportunity to revisit the real and substantial connection test in the context of private international law in Van Breda . That case dealt with two different actions that gave rise to issues relating to the assumption of jurisdiction and the conflict of laws. The facts are that, in two separate cases, plaintiffs were injured while vacationing in Cuba.

Actions were brought in Ontario against Club Resorts Ltd., a company incorporated in the Cayman Islands, which managed the two hotels where the accidents occurred. Club Resorts Ltd. argued that the Ontario courts lacked jurisdiction to determine the matter. [ 68 ] LeBel J. emphasized that he was considering the common law conflicts rule and leaving constitutional territorial concerns for another day. Specifically, he stated (at para. 34):

This case concerns the elaboration of the “real and substantial connection” test as an appropriate common law conflicts rule for the assumption of jurisdiction. I leave further elaboration of the content of the constitutional test for adjudicative jurisdiction for a case in which a conflicts rule is challenged on the basis of inconsistency with constitutionally imposed territorial limits .

To be clear, however, the existence of a constitutional test aimed at maintaining the constitutional limits on the powers of a province’s legislature and courts does not mean that the rules of private international law must be uniform across Canada. Legislatures and courts may adopt various solutions to meet the constitutional requirements and the objectives of efficiency and fairness that underlie our private international law system.

Nor does this test’s existence mean that the connections with the province must be the strongest ones possible or that they must all point in the same direction. [emphasis added] [ 69 ] While LeBel J. considered it important to be mindful of the distinction between the real and substantial connection test for private international law and that for constitutionally imposed territorial limits, he did not clearly explain that distinction.

Presumably, it would prevent the extraterritorial reach of provincial legislation in circumstances as described in the Hunt case. [ 70 ] LeBel J. recognized that there was dissatisfaction with the real and substantial connection test and with its meaning. He commented that case law often conflated the distinction between the constitutional test and the rules of private international law.

Therefore, he found that it was “necessary to clarify the rules of the conflict of laws in a way that is consistent with the constitutional constraints on the provinces’ courts but does not turn every private international law issue into a constitutional one” (at para. 67). [ 71 ] Ultimately, LeBel J. held that, for the purpose of conflict of laws, a non-exhaustive list of presumptive connecting factors should be used in the application of the real and substantial connection test.

He clarified that jurisdiction must “be established primarily on the basis of objective factors that connect the legal situation or the subject matter of the litigation with the forum” (at para. 82).

Further, he stated that, while abstract issues such as fairness, efficiency or comity were not to be included in the list of presumptive connecting factors, “[t]hese systemic values may influence the selection of factors or the application of the method of resolution of conflicts” (at para. 84). [ 72 ] He concluded (at para. 90): To recap, in a case concerning a tort, the following factors are presumptive connecting factors that, prima facie , entitle a court to assume jurisdiction over a dispute: (

a) the defendant is domiciled or resident in the province; (

b) the defendant carries on business in the province; (

c) the tort was committed in the province; and (

d) a contract connected with the dispute was made in the province. [ 73 ] LeBel J. then provided guidance to courts engaged in the identification of new presumptive connecting factors (at paras. 91-92): .… In identifying new presumptive factors, a court should look to connections that give rise to a relationship with the forum that is similar in nature to the ones which result from the listed factors. Relevant considerations include: (

a) Similarity of the connecting factor with the recognized presumptive connecting factors; (

b) Treatment of the connecting factor in the case law;

(

c) Treatment of the connecting factor in statute law; and (

d) Treatment of the connecting factor in the private international law of other legal systems with a shared commitment to order,fairness and comity. When a court considers whether a new connecting factor should be given presumptive effect, the values of order, fairness and comity canserve as useful analytical tools for assessing the strength of the relationship with a forum to which the factor in question points. Thesevalues underlie all presumptive connecting factors, whether listed or new.

All presumptive connecting factors generally point to arelationship between the subject matter of the litigation and the forum such that it would be reasonable to expect that the defendantwould be called to answer legal proceedings in that forum. …. [emphasis added] [74] Where an action falls within one of the existing presumptive connecting factors or a new one recognized by the court,“the court might presume, absent indications to the contrary, that the claim is properly before it under the conflicts rules and that it isacting within the limits of its constitutional jurisdiction” (at para. 80).

And further, where “a recognized presumptive connecting factordoes apply, the court should assume that it is properly seized of the subject matter of the litigation” (at para. 94).

These factors beingonly presumptive, of course, it is always open to the party challenging the jurisdiction of the court to establish that the presumptiveconnecting factor does not point to any real relationship between the subject matter and the litigation (see paras. 95-100). [75] It is important to note that, in establishing the presumptive connecting factors, LeBel J. specifically rejected the notionthat the presence of the plaintiff in the jurisdiction is, on its own, a sufficient connecting factor (see para. 86).

Application of the Real and Substantial Connection Test Where the Facts Material to a Non-Resident Plaintiff Occurred in that Non-Resident Plaintiff’s Province [76] In this case, the plaintiff is not a resident of Ontario. He is a resident of Manitoba. Furthermore, the transactions givingrise to his claim all occurred within Manitoba. [77] Because the motion judge held that the fact that the defendants were carrying on business in Ontario was sufficient tosatisfy the real and substantial connection test, he did not significantly analyze this issue.

However, in McCutcheon, Cullity J. was aliveto the issue when he certified the proceeding on the basis that the common issues were sufficient to satisfy the real and substantialconnection test for the purpose of inclusion of non-residents, including potential Manitoba plaintiffs, in the national class action. [78] In reaching his conclusion, Cullity J. followed a line of jurisprudence that has been slowly developing, whereinprovincial superior courts have certified multi-jurisdictional class actions involving non-resident class members. The concept wasexplained by Winkler J. (as he then was) in Baxter v.

Canada (Attorney General), [2005] O.T.C. 391 (S.C.) (at para. 12): .… In several recent cases it has been held that the certified common issues in a class action can serve as a basis for the properassumption of jurisdiction by the court over extra-provincial parties. (See: Harington v. Dow Corning Corp. (2000), 2000 BCCA 605, 193 D.L.R. (4th) 67 (B.C. C.A.); Wilson v. Servier (2000), (ON SC), 50 O.R. (3d) 219 (S.C.), (2000), (ON SC), 52 O.R. (3d) 20 (Div. Ct.), leave to appeal denied, [2001] S.C.C.A. No. 88, S.C.C.

Bulletin, 2001, p.1539.) The thrust of Harrington and Wilson, in relation to the jurisdiction determination, is that where a class action involving intra-provincial plaintiffs could be certified, and the common issues forming the basis for the certification are shared by both the resident classand extra-provincial non-residents against the defendant, the existence of such common issues provides a “real and substantialconnection” of the non-residents to the forum in relation to the action. …. [emphasis added] [79] Some authors opine that this expansion of the real and substantial connection test is territorially unconstitutional.

Forexample, Peter W. Hogg & S. Gordon McKee, “Are National Class Actions Constitutional?” (2010) 26 N.J.C.L. 279, state (at p. 284): …. The superior court of the province only has jurisdiction inside the boundaries of the province. And the provincial Legislature lacksjurisdiction to enact laws with effect outside the boundaries of the province, so that the Legislature cannot expand the jurisdiction of itscourts outside the boundaries of the province, which, of course, is territory exclusively occupied by the courts of the other provinces (orforeign countries). ….

[80] The jurisdictional argument is based on the notion that, in order for the court to assume jurisdiction over a classproceeding, the court must have jurisdiction over each and every class member and that class action legislation is procedural in natureand cannot convey substantive rights. In this regard, reliance is placed on the case of Bisaillon, wherein the court held that the classaction procedure does not alter the jurisdiction of courts.

Finally, they argue that reliance on the factor of common issues in the real andsubstantial connection analysis conflates the test for certification with the test for jurisdiction. [81] Relying on the above analysis, the plaintiff maintains that, because the Ontario court would not otherwise havejurisdiction over him or his action, class action proceedings cannot cloak it with jurisdiction. [82] First, I agree with the defendants that the plaintiff’s

interpretation of Bisaillon and Dell is too wide. Both cases can bedistinguished on the basis that they dealt with subject-matter jurisdiction, and not the broader questions of the real and substantialconnection test and constitutional territorial jurisdiction. The motion judge was correct when he held that (at para. 48): .… The facts in those cases bear no resemblance to the facts at issue here.

Nor did the Supreme Court provide any instruction onwhether it is open to a Canadian court in a class proceeding to make orders binding non-resident, non-attorning class members. .… [83] Next, contrary to the opinions of Hogg and McKee, others contend that provincial superior courts are not subject to thesame territorial limits as provincial legislatures. This position was summarized by Winkler C.J.O. in the recent case of Parsons v. TheCanadian Red Cross Society, 2013 ONSC 3053 (QL).

In that case, the court was tasked with determining whether it had jurisdiction tosit in another province to hear a motion concerning a pan-Canadian settlement agreement of class actions involving various provinces. Inholding that the court did have jurisdiction, he stated (at paras. 26-27): AG Ontario further submits that Ontario courts historically could not hold hearings outside Ontario. However, it did not point to anyconstitutional or statutory limitation on the geographical location where the provincial superior courts may sit in order to adjudicate onthe issues raised in a proceeding.

Professor Janet Walker observes in her article, “Are National Class Actions Constitutional? – A Reply to Hogg and McKee” (2010) 48Osgoode Hall L.J. 95, at pp. 105-108, that there is no provision in the Constitution Act, 1867 (U.K.), 30 & 31 Vict., c.3., that addresses orcould be said to confine the superior courts’ jurisdiction to adjudicate within territorial boundaries. Equally, there is no provision of theConstitution that speaks to the physical location where the superior courts must sit. [84] In Wilson v.

Servier Canada Inc. (2002), (ON SC), 59 O.R. (3d) 656 (S.C.J.), Cumming J.considered the same issue, concluding (at paras. 59-61):

Section 129 of the Constitution Act, 1867 provides that the court retains its pre-Confederation jurisdiction except as thereafter altered byParliament or the legislature of the province within the scope of their respective constitutional authority.

Section 92 of the Constitution Act, 1867 sets forth the exclusive powers of provincial legislatures.

Section 92 does not restrict the pre-Confederation jurisdictional reach of the courts. The third “whereas” clause in the

preamble to the Constitution Act, 1867 states that it isthe authority of Parliament and the provincial legislatures, together with the nature of the Executive Government, that is being providedfor in the Constitution Act, 1867.

In my view, the [Class Proceedings Act, 1992, S.O. 1992, c. 6] recognizes and affirms the court’s inherent jurisdiction to include non-resident claimants within an Ontario action where jurisdiction in respect of that action is rooted constitutionally, as in the case at hand,i.e., where there is a real and substantial connection between the subject matter of the action and the representative plaintiff and Ontarioclass members. [emphasis added] [85] Recently, this line of reasoning was also adopted by Popescul J. (as he then was) in Thorpe v.

Honda Canada Inc., 2011SKQB 72, 373 Sask.R. 71, wherein he concluded that the “opt-out” model of multi-jurisdictional class action legislation inSaskatchewan was constitutional and certified a class action that included non-residents.

[ 86 ] The above jurisprudence emphasizes that s. 129 of the Constitution Act, 1867 provides that “all Courts of Civil and Criminal Jurisdiction … shall continue … as if the Union had not been made” subject to repeal, abolishment or alteration by the Parliament of Canada or by the Legislature of the respective provinces in accordance with the authority provided. Correspondingly, provincial legislation has continued the historical power of the courts. For example, s. 11(2) of the Ontario Courts of Justice Act , R.S.O. 1990, c.

C.43, provides that the Superior Court of Justice has all of “the jurisdiction, power and authority historically exercised by courts of common law and equity in England and Ontario.” Similarly, in Manitoba, s. 32 of The Court of Queen’s Bench Act , C.C.S.M., c.

C280, provides: Jurisdiction of Court 32 The court is and continues to be a court of record of original jurisdiction and possesses and may exercise all such powers and authorities as by the laws of England are incident to a superior court of record of civil and criminal jurisdiction in all civil and criminal matters and possesses and may exercise all the rights, incidents and privileges of those courts as fully to all intents and purposes as they were on July 15, 1870 possessed and exercised by any of the superior courts of common law at Westminster, the Court of Chancery at Lincoln’s Inn, the Court of Probate or by any other court in England having cognizance of property and civil rights and of crimes and offences. [ 87 ] As already stated, the law of class actions developed in the Court of Chancery, which was a court of superior jurisdiction.

Halsbury’s Laws of England (2d ed.) Vol. 8 (Toronto: Butterworth & Co. (Canada), Ltd., 1933), describes the territorial jurisdiction of superior courts (at para. 1173): ….

The jurisdiction of the superior courts … extends in civil cases over the whole of England and Wales … though in certain circumstances the jurisdiction may be more extensive, and the courts may take cognizance of personal actions in respect of contracts or torts though the cause of action may have arisen abroad or the parties be foreigners. …. [ 88 ] Applied to Canada, the jurisdiction of the superior court would be throughout the country and not limited to a particular province. [ 89 ] As previously stated, the law of class actions developed in the Court of Chancery. In R. W.

White’s, “Equitable Obligations in Private International Law: The Choice of Law”, (1986) 11 Sydney L. Rev. 92, the author extensively examined the jurisdiction of the Court of Chancery. He contrasted the historical and traditional practice of the Courts of Law with the Court of Chancery by noting that, in the Courts of Law, “the foundation of jurisdiction was the amenability of the defendant to the command of the summons in the originating writ, which depended primarily on his presence in England” (at p. 96). However, he continued by explaining that ( ibid ): ….

In the Court of Chancery the mere presence of the defendant in England was neither a necessary nor a sufficient criterion for the assumption of jurisdiction over him. Jurisdiction depended upon the residence or domicile of the defendant within England, or on the cause of action arising, or the subject matter of the suit being situated, in England. Of note, this test is similar to the real and substantial connection test enunciated by the Supreme Court in Morguard . [ 90 ] In support of his position, White considered the English case of Tanfield v.

Irvine (1826), 2 Russ. 149, concluding (at p. 97): .… [f]or the Court of Chancery jurisdiction was not defined by the amenability of the defendant to service. As a general rule the Court would not entertain the proceedings if the defendant did not have adequate notice of them, and the adequacy of notice was secured by the defendant being properly served. The subpoena could not be served effectually outside the territorial jurisdiction, and therefore the Court generally could not entertain proceedings over a defendant abroad. But this was so for reasons of natural justice, not jurisdiction .

Although service was subject to territorial limits, jurisdiction was not founded on amenability to service. [emphasis added] [ 91 ] Of course, White’s

article dealt with private international law and not constitutional law. Nonetheless, the parallel manner in which the two areas of law have evolved, and their interconnectivity, cannot be ignored. [ 92 ] As the above illustrates, the constitutional territorial jurisdiction of provincial superior courts may not necessarily be defined by the legislative jurisdiction of the provinces.

[ 93 ] The Canadian jurisprudence to which I have referred that would allow for common issues to be considered as a presumptive connecting factor in the real and substantial connection test is persuasive. Fairness to non-resident plaintiffs is achieved through the notification process and opt-out provisions, while, at the same time, the policy considerations favouring class actions described by McLachlin C.J.C. in Western Canadian Shopping are fulfilled. Further, the constitutional principle of federalism is respected.

Expansion of the Presumptive Real and Substantial Connecting Factors to Include Common Issues Pursuant to Van Breda [ 94 ] While the presumptive connecting factors for the real and substantial connection test outlined in Van Breda concerned private international law, considering the parallel development of constitutional law regarding the issue of jurisdiction, it is appropriate to apply the presumptive connecting factors to situations where the matter at issue is the court’s territorial jurisdiction.

Therefore, in this case the principles regarding the recognition of a new presumptive connecting factor, as outlined in Van Breda , will be applied. [ 95 ] The application of the test for the recognition of a new presumptive connecting factor, as outlined in para. 73 herein, shows that the common issues factor is similar to the recognized presumptive connecting factors in that it deals with the subject matter of the wrongdoing. The wrongs committed are the same across the country.

Next, the jurisprudence I reviewed has considered common issues to be a factor sufficient to satisfy the real and substantial connection test within Canada. Furthermore, initiatives such as the “Report of the Uniform Law Conference of Canada’s Committee on the National Class and Related Interjurisdictional Issues: Background, Analysis and Recommendations”, Uniform Law Conference of Canada , Civil Law

Section , (9 March 2005), online: Branch MacMaster LLP, Barristers & Solicitors < http://www.branchmacmaster.com/storage/articles/ULCC_Report.pdf>, strongly endorse the concept of national class actions with opt-out clauses, despite an acknowledged awareness of the constitutional debate.

Finally, class action legislation in a number of provinces, including Manitoba and Ontario, allows for national class actions and the inclusion of non- resident plaintiffs, subject to opt-out clauses. [ 96 ] In considering the above, it must be remembered that, in Van Breda , LeBel J. stated that the connections with the province need not be the strongest ones possible in order to fulfill the real and substantial connection test. Further, to recognize common issues as a presumptive connecting factor in circumstances where the court has territorial jurisdiction over the defendant(

s) and the representative plaintiff is consistent with the principles of order, comity and fairness. [ 97 ] Therefore, I would conclude that, in circumstances where the court has territorial 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.

Recognition and Enforcement of Class Action Judgments - Procedural Fairness [ 98 ] When a court has properly assumed jurisdiction over a class action involving non-residents, jurisprudence has confirmed that recognition and enforcement of the resulting judgment in another province or country involves a consideration of the procedures leading up to and giving effect to that judgment. [ 99 ] In Lépine , the Supreme Court of Canada considered the ability of an Ontario court to assume jurisdiction over Québec residents in a national class action and the subsequent recognition and enforcement of the settlement judgment from the Ontario court.

The class action in Lépine arose as a result of an offer by the Canada Post Corporation for lifetime internet access via certain software that the corporation sold to its customers. However, Canada Post discontinued the lifetime internet service approximately one year after its implementation. Class action proceedings were initiated in Ontario, Québec and British Columbia. British Columbia and Ontario accepted an offer to settle by Canada Post however; Québec refused the offer. Certification and settlement approval proceedings were initiated in Ontario and Québec. Mr.

Lépine asked the Ontario court not to include Québec residents in the class. Despite this, the resulting certification order and corresponding settlement agreement purported to include “[a]ny person in Canada, not a resident of the Province of British Columbia” (at para. 9). The day after the Ontario certification and settlement approval, the Québec Superior Court approved a class action against Canada Post that was limited to Québec residents. [ 100 ] The recognition and enforcement of the Ontario judgment in Québec was governed by the Civil Code of Qu é bec , S.Q., 1991, c. 64 (the C.C.Q.).

The court noted that, as a whole, the rules for identifying connecting factors were set out in the C.C.Q., but in essence, they complied with the basic requirement that there be a real and substantial connection (see paras. 19, 25).

Article 3168 of the C.C.Q. identified that one of the factors favoring recognition included situations where the defendant was domiciled in the country where the decision was rendered. I note that the connecting factors in the legislation are similar to the presumptive connecting factors listed in Van Breda . As stated earlier, Van Breda also included the place where a “defendant carries on business” (at para. 90) as constituting a presumptive connecting factor.

Based on the fact that, in Lépine , Canada Post had its head office in Ontario, the Supreme Court held that the Ontario court had properly assumed jurisdiction over the proceedings. [ 101 ] Concerning recognition and enforcement, a. 3155(3) of the C.C.Q. provided that any decision rendered by a foreign authority must be recognized unless an exception applied. One exception was where there has been a contravention of the fundamental principles of procedure.

Writing on behalf of the court in Lépine , LeBel J. noted that a judge hearing an application for recognition and enforcement should not examine the merits of the judgment. Nevertheless, at the stage of recognition, the court must be concerned “not only with the procedure prior to the judgment but also with the procedural consequences of the judgment” (at para. 41). He went on to explain the significance of procedural fairness in class action proceedings (at para. 42): A class action takes place outside the framework of the traditional duel between a single plaintiff and a single defendant.

In many class proceedings, the representative acts on behalf of a very large class. The decision that is made not only affects the representative and the defendants, but may also affect all claimants in the classes covered by the action. For this reason, adequate information is necessary to satisfy the requirement that individual rights be safeguarded in a class proceeding.

The notice procedure is indispensable in that it informs members about how the judgment authorizing the class action or certifying the class proceeding affects them, about the rights – in particular the possibility of opting out of the class action – they have under the judgment, and sometimes, as here, about a settlement in

the case. …. [102] Despite the fact that the issue of enforceability was governed by the C.C.Q., in support of his position, LeBel J. citedwith approval the Ontario Court of Appeal decision in Currie with respect to the common law governing procedural fairness and theissue of notice (at para. 43): The Ontario Court of Appeal stressed the importance of notice to members in a case involving an application for recognition of ajudgment rendered in Illinois, in the United States. It emphasized the vital importance of clear notices and an adequate mode ofpublication (Currie v.

McDonald’s Restaurants of Canada Ltd. (2005), (ON CA), 74 O.R. (3d) 321, at paras. 38-40). In a class action, it is important to be able to convey the necessary information to members. Although it does not have to be shown thateach member was actually informed, the way the notice procedure is designed must make it likely that the information will reach theintended recipients. The wording of the notice must take account of the context in which it will be published and, in particular, thesituation of the recipients.

In some situations, it may be necessary to word the notice more precisely or provide more completeinformation to enable the members of the class to fully understand how the action affects their rights. These requirements constitute afundamental principle of procedure in the class action context. In light of the requirement of comity between courts of the variousprovinces of Canada, they are no less compelling in a case concerning recognition of a judgment from within Canada.

Compliance withthese requirements constitutes an expression of such comity and a condition for preserving it within the Canadian legal space. [emphasis added] [103] Ultimately, the court in Lépine concluded that the Ontario judgment “did not properly explain the impact of the judgmentcertifying the class proceeding on Québec members of the national class established by the Ontario Superior Court of Justice” (at para.46). Therefore, the court held that the fundamental principles of procedure were not followed and the Ontario judgment was notenforceable in Québec.

Thus, despite the fact that the enforceability of the order was governed by legislation as opposed to the commonlaw, the common law provided the standard by which the court interpreted the legislation.

Analysis Issue 1: Did the motion judge err in his determination that the Ontario court properly assumed jurisdiction over non-residentManitobans in the McCutcheon class action? [104] The parties agree, as do I, that the standard of review with respect to whether the court in Ontario properly exercisedjurisdiction is a question of law, and the standard of review is correctness. [105] There are two aspects to the question of jurisdiction in this case – the jurisdiction of the Ontario court over proceedingsin Ontario affecting Ontario residents, and the jurisdiction of the Ontario court over proceedings in Ontario affecting non-residents ofOntario.

The motion judge, relying on Lépine, found that the Ontario court had jurisdiction because the defendants were carrying onbusiness in Ontario (see para. 49). However, as argued by the plaintiff, the issue of real and substantial connection was agreed to by theparties in Lépine and did not receive substantial analysis in that case.

Based on Currie, I would find that, while the carrying on ofbusiness in Ontario is sufficient to establish jurisdiction over the proceedings as they affect Ontario residents, more is required for theOntario court to have jurisdiction over non-residents of Ontario. [106] In Currie, the court noted that, when determining whether a real and substantial connection exists for the purpose ofjurisdiction, a court should consider the perspective of the non-resident plaintiff who has done nothing to invoke or submit to thejurisdiction of the foreign court.

In this case, I have determined, consistent with the principles set out in Van Breda, that incircumstances where there is jurisdiction in a traditional sense over the defendant and the resident representative plaintiff in a classaction proceeding, the factor of common issues between the claim of the resident representative plaintiff and the non-resident plaintiff isa presumptive connecting factor in the application of the real and substantial connection test regarding the court’s jurisdiction over thenon-resident plaintiffs.

Having found that the defendants have established that there are sufficient common issues between the claims ofthe representative plaintiff and those of the non-resident plaintiffs in Manitoba, I would conclude that the Ontario court properlyassumed jurisdiction over the Manitoba plaintiff, despite the fact that he did not attorn to the jurisdiction of the Ontario court. [107] Furthermore, for the reasons stated in paras. 76-97, the recognition of common issues as a presumptive connector, in thecircumstances I have outlined, does not constitute an unconstitutional expansion of the real and substantial connection test. [108] The connecting factor is a presumption and, like the other presumptions created in Van Breda, it is not absolute and canbe rebutted in appropriate circumstances.

In this case, the plaintiff failed to rebut the presumption. Issue 2: If the Ontario court properly assumed jurisdiction, did the motion judge err in finding that the McCutcheon settlementjudgment should not be enforced against Manitoba class members with respect to loans borrowed from Instaloans? Issue 3: If the Ontario court properly assumed jurisdiction did the motion judge err in finding that the McCutcheon settlementjudgment should not be enforced against Manitoba class members with respect to signature and title loans? [109] Issues two and three both deal with the requirement of procedural fairness.

There is no question that a court reviewing acertification order must apply a deferential standard (see Van Breda at para. 121). However, in Lépine, the court stated that the

procedural hearing was not to be confused with a review of the merits of the judgment of the court that had assumed jurisdiction. Rather, the analysis was described as follows (at para. 41): …. … [A]t the stage of recognition and, therefore, of enforcement of the judgment, [the judge] must consider whether the procedure leading up to the decision and the procedure for giving effect to it are consistent with the fundamental principles of procedure. The judge hearing the application is concerned not only with the procedure prior to the judgment but also with the procedural consequences of the judgment.

This approach is particularly important in the case of class actions. [ 110 ] The ultimate determination by the judge conducting the recognition and enforcement proceeding as to whether there had been procedural fairness is entitled to deference. For example, in Currie , the motion judge found that the notice given to Canadian clients was inadequate. On appeal, Sharpe J.A. concluded with respect to that finding (at para. 38): I am not persuaded that we should interfere with the motion judge’s findings.

They are essentially factual in nature and therefore entitled to deference on appeal to this court . [emphasis added] [ 111 ] In this case, the motion judge held that the Manitoba customers who obtained payday loans from The Cash Store were given ample notice of the proceeding and had an opportunity to opt out of it. However, respecting Instaloans, he held (at paras. 54-55): While I am satisfied it was the intention of Cullity J., that his judgment should apply to loans borrowed from Instaloans, the notic

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