Assuming Jurisdiction In Contract Claims: Diverging Approaches Of Canadian Courts

An Alberta court decision this June directly disagreed with recent Ontario decisions regarding the appropriate factors to consider when a non-resident defendant challenges the jurisdiction of a Canadian court in a contract dispute.

In Bansal v Ferrara Pan Candy Co.,1 Madam Justice Veit of Alberta's Court of Queen's Bench sheds light on appropriate factors to consider when a party challenges the jurisdiction of a Canadian court in a contract dispute. This decision also provides guidance regarding what steps by a defendant prior to a challenge can constitute submission to the jurisdiction so as to preclude a successful challenge.

In Ferrara Pan Candy, the Alberta judge directly disagreed with two recent Ontario Superior Court of Justice decisions that seem to suggest an expanded set of factors may connect a contract dispute and the court's jurisdiction. Staying true to the Supreme Court of Canada's leading decision in Club Resorts Ltd. v Van Breda,2 the Alberta court declined to follow the Ontario decisions and looked no further than Alberta's Rules of Court for the factors that would allow it to find jurisdiction.

The proceeding

In Ferrara Pan Candy, the judge had to decide whether the courts of the province of Alberta had jurisdiction to hear a dispute over an alleged breach of contract and the commission of various non-contractual wrongs. If jurisdiction were found to exist, the court then had to decide if Alberta was the most appropriate forum to adjudicate the dispute. The plaintiffs' claim essentially alleged that the defendants had breached contracts, conspired against the plaintiffs, and intentionally interfered with their economic interests regarding their exclusive rights to distribute the defendants' confectionary in Canada.

Early in the proceeding, the defendants brought an application to have the plaintiffs' solicitors disqualified from prosecuting the claim because an affiliated firm had previously acted for minority shareholders of the defendant Ferrara Pan Candy and, as corporate lawyers for the company, had investigated and researched some of the very allegations made in the plaintiffs' claim. The plaintiffs' solicitors subsequently gave notice of ceasing to act in the proceeding, so the application to remove them did not need to be heard.

The defendants then challenged the jurisdiction of the Alberta courts to hear the dispute.

Resisting the jurisdiction challenge, the plaintiffs argued that the defendants had submitted to Alberta's jurisdiction when they brought their application to disqualify the plaintiffs' solicitors. The judge found that the...