Advertising, Marketing and Distributing Products in Ontario Does Not Satisfy The “Doing Business in Ontario” Requirement When Determining Whether Ontario Court Has Jurisdiction

A plaintiff sued various defendants that are domiciled in the United States. While the plaintiff is a Canadian citizen, during the relevant time period the plaintiff lived in the United States. The defendants brought motions to dismiss or stay the actions on the ground that the court had no jurisdiction over the claims because there was no real and substantial connection between the plaintiff’s claims and Ontario.

The principal issue that the Court of Appeal dealt with was whether a defendant can be deemed to be carrying on business in Ontario if the defendants’ only connection to Ontario was that the products of the defendants were advertised, marketed, and distributed in Ontario.

In finding that Ontario courts lacked jurisdiction, the lower court cited to the Supreme Court of Canada case of Club Resorts Ltd. v. Van Breda [Van Breda]that

“[t]he notion of carrying on business requires some form of actual, not only virtual, presence in the jurisdiction, such as maintaining an office or regularly visiting the territory of the particular jurisdiction.”

The Van Breda case set out four non-exhaustive presumptive connecting factors that, prima facie, entitle a court to assume jurisdiction over a dispute:

1. the defendant is domiciled or resident in the province;
2. the defendant carries on business in the province;
3. the tort was committed in the province; and
4. a contract connected with the dispute was made in the province.

Where a new connecting factor is considered, the following relevant considerations include:
the similarity of the new proposed connecting factor with the recognized presumptive connecting factors;

1. the treatment of the new proposed connecting factor in the case law;
2. the treatment of the new proposed connecting factor in statute law; and
3. the treatment of the new proposed connecting factor in the private international law of other legal systems with a shared commitment to order, fairness and comity.
4. The Court of Appeal in this case agreed with the lower court that advertising, marketing, and distributing products in Ontario was not sufficient to grant to the

Ontario courts jurisdiction over the dispute.

Read the Sgromo v. Scott, 2018 ONCA 5 case here.

Ruzbeh Hosseini

Ruzbeh Hosseini is a Canadian lawyer specializing in business litigation and cross-border litigation with a special focus on the recognition and enforcement of foreign judgments and arbitral awards in Canada.

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