The Second Opinion: The Ontario Court Of Appeal Addresses Jurisdiction Over International Tort Claim

Global commerce transcends borders. When related litigation ensues, it can give rise to thorny jurisdictional issues. For instance, when an Ontario-headquartered mining company relies — based on recommendations from its technical staff in its Vancouver satellite office — upon the engineering reports of US-based consultants to build a gold mine in Costa Rica which then collapses, does an Ontario court have jurisdiction over the subsequent legal dispute between the parties?

The Ontario Court of Appeal addressed this very scenario recently in Central Sun Mining Inc. v. Vector Engineering Inc., 2013 ONCA 601. Central Sun was an Ontario company with its head office in Toronto. It retained various American engineering consultants to assist with the siting and the design of a proposed mine which was to be built in Costa Rica. The American consultants prepared various reports, some of which were sent to technical staff in Vancouver (some reports were sent to Ontario directly). The Vancouver staff then made recommendations to the head office in Toronto where the strategic decisions regarding the mine were made. The mine was constructed in Costa Rica but then suffered a catastrophic collapse which led to the shutdown of the mine, significant remediation costs and the plummeting of Central Sun's stock prices in Toronto. Central Sun then sued the US engineers in Ontario for negligent misrepresentation (among other causes of action). The US engineers sought to stay the Ontario action, claiming that Ontario courts did not have jurisdiction.

The essence of the engineers' argument was that the tort of misrepresentation did not occur in Ontario (but rather in Vancouver or Costa Rica), or that only a minor part of the tort occurred in Ontario. The Court of Appeal rejected this argument. The appeal court ruled that a misrepresentation takes place where it is received and relied upon. The misrepresentations, the Court concluded, were received and relied upon in Toronto as the controlling mind of the company was in Ontario, even though...