With most business being conducted long distance – often through emails and other electronic communications – the issue of which court has jurisdiction in the event of a claim is becoming an increasing source of litigation. Each jurisdiction has its own unique rules and requirements, so this provision can have dramatic consequences for both inter-provincial and international contracts. While your contract templates should and often do address this issue through express language, the following case illustrates the critical importance of the ‘fine print’ provisions often buried in the contract’s general terms and conditions. If your contract is silent on this aspect of the relationship, it may be time to bring forward the suggestion for a template amendment so that you don’t end up, as the parties did here, ‘litigating over the litigation.’

The defendant in this case was Spike Marks Inc (“Spike Marks”), operating as Casa Cubana. Spike Marks is a federally incorporated company offering consumer goods such as coffee, cigars, and vaping products with its head office and management in Montréal, Québec. Spike Marks was never extra-provincially registered in British Columbia (“BC”) and never had a place of business in this province.

The Facts

Between December 2015 and January 2016, Spike Marks negotiated a contract with Murray Market Development Inc (“Murray Market”) in which Murray Market agreed to provide marketing for Casa Cubana products in Manitoba, Saskatchewan and Thunder Bay (Ontario). Murray Market is a company incorporated in BC, with its head office and central management in Delta (in the Lower Mainland). The company provides marketing in BC, Alberta, Saskatchewan, and Manitoba.

The parties executed a written contract on January 19, 2016. The contract itself states that it was signed in Montréal; Mr. Beauchemin and another executive signed in Montréal on behalf of Spike Marks, but Mr. Murray signed in Delta on behalf of Murray Market, and emailed a scanned copy of the contract to Spike Marks’ head office. On June 27, 2016 Spike Marks’ Vice President and General Manager Jacques Renaud emailed Murray Market to give notice that Spike Marks was terminating the contract for cause. Spike Marks claimed that insufficient efforts had been made by Murray Market with regard to staff training, sales, marketing, and other support services. On that same day, Mr. Murray replied by email, setting out the efforts he claimed his company had made.

Toward the end of 2016, Murray Market’s counsel sent Spike Marks a letter claiming that Spike Marks had terminated the contract without cause and demanding payment for work done in May, June, and the “remaining term of the contract.” The plaintiff Murray Market then commenced the action, and in its Notice of Civil Claim alleged that Spike Marks had always understood that Murray Market operated from BC and that all of the work undertaken by Murray Market on behalf of Spike Marks was done at Murray Market’s office in Delta. Mr. Murray’s affidavit also identified five sales representatives who worked under the contract in “western Canada,” which the judge took to mean outside of BC. Mr. Renaud, in his affidavit for Spike Marks, stated that to his knowledge only one sales representative had been assigned to the Casa Cubana project, and that that representative was based in Winnipeg, Manitoba.

In this application, Spike Marks applied to dismiss Murray Market’s breach of contract action on the basis that the action was brought in BC but that the BC Supreme Court (the “Court”) lacked jurisdiction to hear the case. Spike Marks argued that their company is based in Québec with no place of business in BC, that the contract was signed in Québec, and that since the contract was for marketing goods in Manitoba and Saskatchewan, there is no real and substantial connection to BC. Spike Marks argued further that even if the Court did have jurisdiction to hear the case, the action should be stayed because it would be more appropriate to hear the case in Québec.

In arguing that the case should be heard in BC, Murray Market pointed out that the services it performed under the contract were directed, supervised, invoiced and paid for in BC, such that there does exist a real and substantial connection between the province and the facts of the case. Murray Market also argued that there is no reason that the Court should conclude that the case would be more appropriate to be heard in another forum.

The Law

In BC, courts assess whether they have jurisdiction by reference to the Court Jurisdiction and Proceedings Transfer Act (the “Act”). Sections 3(a) to (e) of the Act provide for a variety of circumstances under which the BC courts have jurisdiction in a proceeding. Here Murray Market relied on section 3(c), asserting that there was a “real and substantial connection” between the events and the province of BC. Further, under the BC Supreme Court Civil Rules, a plaintiff only needs to establish a “good and arguable case” that there is a real and substantial connection between the province and the facts of the case.

The concept of a real and substantial connection is addressed further in section 10 of the Act, which provides for a rebuttable presumption for connection if any of the elements from section 10(a) through (l) are present. Murray Market argued further that the elements from section 10(e)(i) – contractual obligations – and section 10(h) – a business carried on in BC – were present here.

Finally, a plaintiff can also argue that a real and substantial connection exists due to the interests of the parties, the ends of justice, and the factors listed in section 11(2), which include the comparative convenience and expense for the parties, the desirability of avoiding conflicting decisions in different courts, and the enforcement of an eventual judgment, among others.

Spike Marks maintained that aside from Murray Market’s being a BC company, the case has little or no connection to BC – and the mere residence of a plaintiff in a particular province is not enough to give that province territorial competence.

» Does the BC Court Have Jurisdiction in this Case?

 

Answer

In this case, the judge ruled that the BC Supreme Court did have jurisdiction over Murray Market’s action for breach of contract, and held that it would not necessarily be more appropriate to have the case heard in Québec.

In forming this decision, Justice Paul Riley first considered section 10(e)(i) of the Act, contemplating whether the proceeding did, as Murray Market argued, concern contractual obligations that were, to a substantial extent, to be performed in BC. To determine this, the Court must consider the context as a whole, along with the obligations of that contract, focusing on what the parties expected the performance of the contract to be like. Here the judge held while the contract was formed in Québec and was for marketing in Manitoba and Saskatchewan, since Murray Market was a BC-based business it must have been within the parties’ reasonable expectations that the contractual obligations of Murray Market would be performed in BC. Riley J emphasized that the importance here was on the obligations reasonably expected to be performed in BC, and noted that the Murray Market was, for example, obligated through the terms of the contract to collect centralized monthly sales reports, submit invoices, and receive payment – all of which reasonably would, and did, occur at the head office in BC.

Riley J also held that pursuant to section 10(h) of the Act, requiring that a business be “carried on” in BC, the Court had jurisdiction. Spike Marks had argued that the mere fact of Murray Market having an office in BC was insufficient, citing Thumbnail Creative Group Inc v Blu Concept Inc, 2009 BCSC 1833. However, the judge held that that case was distinguishable from this one, as in that case the company was merely resident in BC and did not direct, supervise, bill, and receive payment for its services in BC, as Murray Market did.

Finally, the Court addressed Spike Marks’ argument that even if the Court had jurisdiction, it should decline to exercise that jurisdiction. However, none of the factors listed in section 11(2) were held by the judge to require that he decline jurisdiction. The case will thus proceed in the BC Supreme Court, the forum chosen by Murray Market.

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Readers are cautioned not to rely upon this article as legal advice nor as an exhaustive discussion of the topic or case.  For any particular legal problem, seek advice directly from your lawyer or in-house counsel.  All dates, contact information and website addresses were current at the time of original publication.