Law Times

Page 10 February 3, 2014 • Law Times www.lawtimesnews.com Central Sun shows reach of Van Breda Case centres on where party receives and acts upon information FOCUS he Ontario Court of Appeal's decision in Cen- tral Sun Mining Inc. v. Vector Engineering Inc. demonstrates just how far the Supreme Court of Canada's 2012 decision in Club Resorts Ltd. v. Van Breda has extended the reach of Ontario courts. "What's interesting about Central Sun is how the Court of Appeal used the tort of negligent misrepresen- tation to bring a case that had little to do with Ontario within the jurisdiction of the Ontario courts," says Marc Kestenberg of Norton Rose Fulbright Canada LLP. e case involved a dispute between Ontario-based Central Sun Mining and Vector Engineering, a group of American engineering consultant companies. Vector provided services related to a mine Central Sun owned in Costa Rica. It made recommendations about the mine's design, stability, location, and operation. Aer a landslide destroyed the mine, Central Sun sued Vector Engineering in Ontario in a lawsuit seeking damages based on neg- ligence, negligent misrepresentation, and breach of contract. Vector Engineering sought dismissal of the action for lack of jurisdiction. e decision on appeal, however, turned on whether the tort of negligent representation had occurred in Ontario. Tim Alexander and Alva Orlando of Toronto's Blaney McMurtry LLP, who with co-counsel John Lloyd and Anthony Cole of Toronto's Lloyd Burns McInnis LLP acted for the Vector group, argued it had done the work in Costa Rica and the United States with the ensuing reports sent to Central Sun's technical staff in Vancouver. In response, Central Sun counsel David Hamer, William Black, and Christopher Hubbard of Mc- Carthy Tétrault LLP's Toronto office pointed out that the Vancouver office forwarded both the reports and staff 's recommendations to senior executives in To- ronto who then relied on the information in making their business decisions. At first instance, Superior Court Justice David Stin- son ruled the case lacked a real and substantial connec- tion with Ontario because the tort didn't occur in this province. Even if it had, Vector Engineering had rebut- ted the presumptive connection to the province be- cause the link between the misrepresentation and On- tario was minor in comparison to other jurisdictions. e Court of Appeal, however, ruled that a mis- representation could occur in the jurisdiction where the party receives and acts upon it. "ere can be no question that the appellant acted on these studies in Ontario," wrote Justice Stephen Goudge for a unani- mous court also composed of justices Eileen Gillese and Sarah Pepall. "at is where it relied on the studies to take the decisions about where to locate the mine and how to build and operate it. e inevitable con- clusion is that the misrepresentations were received and relied on in Ontario. e respondents do not contest that if that were so, Ontario THE MOST COMPLETE DIRECTORY OF ONTARIO LAWYERS, LAW FIRMS, JUDGES AND COURTS With more than 1,400 pages of essential legal references, Ontario Lawyer's Phone Book is your best connection to legal services in Ontario. Subscribers can depend on the credibility, accuracy and currency of this directory year after year. 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Indeed, the negligent misrep- resentation would likely have oc- curred in Ontario even if Vector's reports themselves hadn't been sent to Toronto. "I am inclined to think that even if the respondents' studies had been received only in Vancouver and only the recom- mendations based on those stud- ies were transmitted to Toronto, the negligent misrepresentation would still have been committed in Ontario," wrote Goudge. "e respondents foresaw that their studies would be received by the appellant and acted on in To- ronto. ey should have expected to be called to account in Ontario. "In the modern world where corporations have various offic- es in various locations, corporate defendants should not escape li- ability simply because they send their studies to an office of the plaintiff outside Ontario with the clear understanding that it will be acted on in Ontario." Stinson also erred in his con- clusion that Vector Engineering had rebutted the presumptive connection created by the tort having been committed in On- tario on the basis that the link to this province was "relatively weak." According to Goudge, that was an "erroneous" approach. "It is at the forum conveniens stage that comparison becomes important," he concluded. "At the jurisdiction stage of the analysis, the respon- dents' task is to show no real rela- tionship or at most, a weak rela- tionship between the subject mat- ter of the action and the forum." While it was possible to rebut the presumption of jurisdiction — albeit with difficulty — if only a "relatively minor element of the tort" had occurred in the province, that wasn't the case here. "As noted above, the core of the tort of negligent misrepresen- tation is that the misrepresenta- tion is received and acted upon," wrote Goudge. "In this case, the misrepresentation was received and acted upon in Ontario. It cannot be said that only a rela- tively minor element of the tort occurred in this province." Manjit Singh of Cambridge LLP believes the decision "affirms and reinforces" the principles set out by the Supreme Court. "Cen- tral Sun refocuses the jurispru- dence on the expansive nature of Van Breda," says Singh. As Kestenberg sees it, Central Sun creates risk for anyone doing business with Ontario companies. "You may think you're not doing business anywhere near Ontario and the province's courts may still assume jurisdiction," he says. "And once you establish jurisdic- tion based on one of the claims on which the alleged liability is founded, the court will take juris- diction over the entire case." LT BY JULIUS MELNITzER For Law Times T The case creates considerable risk for anyone doing business with Ontario companies, says Marc Kestenberg.

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