Conflict of Laws

RECENT DEVELOPMENTS IN CANADIAN LAW: CONFLICT OF LAWS

Joost Blom*

INTRODUCTION ...... 417

II. JURISDICTION ...... 419

A. In Personam Jurisdiction ...... 419

1. Defendant's Presence in the Jurisdiction ...... 419 1988 CanLIIDocs 6

2. Attornment to the Jurisdiction ...... 420

3. Service Ex Juris ...... 422

(a) Introduction ...... 422

(b) Contract ...... 423

(d) Damage Sustained in the Province ...... 426

4. Declining Jurisdiction:Forum Non Conveniens ...... 427

(a) HistoricalDifference Between Actions Commenced By Service In Juris and by Service Ex Juris ...... 427

(b) The Recent English Cases ...... 429

(i) Adoption of the English Text ...... 432

* Faculty of Law, University of British Columbia. Ottawa Law Review/Revue de droit d'Ottawa [Vol. 20:2

(ii) Forum Non Conveniens in Service Ex Juris Cases ...... 435

(iii) The Federal Aspect ...... 438

(iv) Advantage to the Plaintiff ...... 439

(v) Lis Alibi Pendens ...... 442

5. Declining Jurisdiction: Contractual Choice of Forum ...... 443

B. Actions Relating to Property: Matrimonial Property ...... 444

C. Matrimonial Causes ...... 452 1988 CanLIIDocs 6 1. D ivorce ...... 452

2. Nullity of Marriage ...... 452

D. Infants and Children ...... 453

E. Injunctions Against Proceeding with Foreign Litigation ...... 457

III. MATTERS OF PROCEDURE AFFECTING INTERJURISDICTIONAL C ASES ...... 460

A. Proof of Foreign Law ...... 460

B. Damagesfor Losses Expressed in Foreign Currency ...... 462

IV. RECOGNITION AND ENFORCEMENT OF FOREIGN JUDGMENTS ...... 465

A. Basis of Recognition ...... 465

B. Jurisdiction of the Original Court ...... 471

1. Defendant's Presence in the Territory of the Original Court ...... 471

2. Defendant's Submission to the Jurisdiction of the Original Court ...... 472 1988] Recent Developments in Canadian Law

3. Finality of the Judgment ...... 473

V. CHOICE OF LAW (INCLUDING STATUS OF PERSONS) ...... 474 A. Characterization ...... 474 B . Contracts ...... 477 1. Express Choice of Law Clauses ...... 477 2. Determining the ProperLaw on Objective G rounds ...... 478 3. ProperLaw of Maritime Contracts ...... 481

4. Formation of the Contract ...... 482 5. Regulatory Statute Applied to a Contract as

Part of the Lex Fori ...... 484 1988 CanLIIDocs 6 6. Formalities ...... 484 C . Torts ...... 486

1. The Rule in Phillips v. Eyre ...... 486

2. Subrogated Claims ...... 490

D. Matrimonial Property ...... 493 1. Choice of Law with Respect to the Division of Property ...... 493 2. Marriage Contracts ...... 495 E. Husband and Wife: Recognition of Foreign D ivorces ...... 498 VI. CONCLUSION ...... 501

I. INTRODUCTION The last survey of recent Canadian developments in the conflict of laws appeared in this REVIEW in 1981, written by Professor John Swan.'

I J. Swan, Annual Suney of Canadian Law: Conflict of Laws: Part I (1981) OTrAWA L. REV. 123 [hereinafter 1981 Survey]. Some of the ideas expressed in that survey were further developed in J. Swan, The Canadian Constitution, Federalism, and the Conflict of Laws (1985) 63 CAN. BAR REv. 271. Ottawa Law Review/Revue de droit d'Ottawa [Vol. 20:2

The seven years since then have witnessed a good many changes in the area, although it remains true, as Professor Swan remarked in his survey,2 that progress tends to be incremental and ad hoc, rather than the result of basic reorientation or emergence of new fundamental principles. The growing maturity of the study of the conflict of laws in Canada has, however, been marked by the appearance of two scholarly treatises. The second edition of Professor Jean-Gabriel Castel's CANADIAN CON- FLICT OF LAWS3 combines the two volumes of the first edition into a more concise book. A wholly new textbook appeared in 1983 by Professor James G. McLeod 4. Each work is of great value in drawing together the rather ramshackle collection of statutes, rules of court and judicial decisions that make up the Canadian conflict of laws doctrine, 5 and linking it with the English doctrines from which most of it derives and which must still be looked to in order to fill many of the gaps in the Canadian jurisprudence. These books mark the last time that the connection between the Canadian and English conflict of laws can be drawn so clearly. Much of the English law in this area is changing beyond recognition under the

impact of the Conventions of the European Economic Community, as 1988 CanLIIDocs 6 only a glance at the new editions of CHESHIRE AND NORTH'S PRIVATE 7 INTERNATIONAL LAW6 or DICEY AND MORRIS ON THE CONFLICT OF LAWS will show. The impetus for change in the Canadian conflict of laws in the years covered by this survey has in many areas come from the legislatures. This is particularly so in family law, where the new federal legislation on divorce and uniform provincial Acts on child custody have ameliorated most of the worse defects of the existing conflicts rules. New legislation will be summarized wherever it has substantially altered the legal landscape, but a detailed analysis or commentary is beyond the scope of this survey. The recent contribution of Canadian courts towards developing the conflict of laws has been substantial, but seldom adventurous. Where the judges have changed the law, they have more often than not been following the lead of the English courts. The best example is the rapid elaboration of the doctrine of forum non conveniens, although Canadian courts have still not quite caught up with the strides taken by the House of Lords. By contrast, choice of law in torts seems to drift in a Canadian backwater compared with the English law, which itself has been forging

2 1981 Survey, ibid. at 123. 3 J.-G. Castel, CANADIAN CONFLICT OF LAWs (Toronto: Butterworths, 1986) [hereinafter Castel]. 4 J.G. McLeod, THE CONFLICT OF LAWS (Calgary: Carswell, 1983) [hereinafter McLeod]. 5 In the common law provinces and territories, and the federal jurisdiction. 6 P.M. North & J.J. Fawcett, eds, CHESHIRE AND NORTH'S PRIVATE INTERNA- TIONAL LAW, 1 1th ed. (London: Butterworths, 1987) [hereinafter CHESHIRE &NORTH]. 7 L. Collins, ed., DICEY AND MORRIS ON THE CONFLICT OF LAWS, 11 th ed. (Lon- don: Stevens & Sons, 1987) [hereinafter DIcEY & MORRIS]. 1988] Recent Developments in Canadian Law ahead at only modest speed. In the matrimonial property field, both in jurisdiction and choice of law, Canadian courts have had to fashion new doctrine to resolve questions on which English precedent did not exist. The results to date cannot be called a total success, but it is the recent legislation that gives rise to most of the problems and must bear part of the blame. The relative uniformity of Canadian law among the common law provinces and territories is probably the main reason why the case law is, at least by volume, concentrated in the areas of jurisdiction and foreign judgments and fairly sparse in choice of law. Nevertheless, the past seven years have produced much that is interesting and noteworthy in all parts of the subject.

II. JURISDICTION

A. In Personam Jurisdiction 1988 CanLIIDocs 6

1. Defendant's Presence in the Jurisdiction

Two cases have considered whether a corporate defendant was present in the province so as to be amenable to service of process there. hzteranerican Transp. Sys. Inc. v. Grand Trunk W. Ry.8 held that the Toronto sales manager of an American railway company could be served with a writ in an action against the railway, although the manager had no authority to make contracts for the company and the company has no right of way or other assets in Ontario. The Ontario Divisional Court held that the sales manager's solicitation of business for the company, from a room in Union Station with a telephone and a postal address, was transacting or carrying on the business of the corporation within Rule 23 of the former Rules of Practice. This seems to go beyond the standard approach to the presence of a corporation through an agent, which usually requires that the agent carry on business for the corporation, in the sense of entering into transactions so as to bind the corporation, in the jurisdiction. 9 The second case on the presence of a foreign-incorporated company was one involving a dormant Delaware corporation.1o The British Co-

: (1985), 51 O.R. (2d) 568 (Div. Ct.). 9 Vogel v. R & A Kohnstanmm Ltd. (1971), [1973] Q.B. 133, [1971] 2 All E.R. 1428; McLeod, supra, note 4 at 83-84. If it is the addition of the word "transacting" to "carry on business" that makes the difference, the result would be changed under the current rule, Ont. R.P. 16.02(l)(e), which refers only to the agent's "carrying on business" in Ontario. 10 Church of Scientology of Calif. v. World Federationfor Mental Health, Inc. (1981), 126 D.L.R. (3d) 6, [1981] 5 W.W.R. 74 (B.C.C.A.). Ottawa Law Review/Revue de droit d'Ottawa [Vol. 20:2 lumbia Court of Appeal decided that the facts that the company's Del- aware tax reports referred to its principal place of business as being in British Columbia, and that the president and the secretary lived there, were enough to hold that the company was subject to the jurisdiction of the British Columbia court. To the extent that the company carried on any business at all, it did so in British Columbia. Humphreys v. Buraglia"l was one of the rare reported cases where a plaintiff had used substituted service on a defendant who was outside the province when the writ was issued. The New Brunswick Court of Appeal followed English authority 12 in holding that such service was irregular. It was not a nullity, however, and the defendant had waived the irregularity by applying to the court to have a Mareva injunction against him set aside, by which he admitted that an action was in existence.1 3 The question whether an individual's simple presence in the province, no matter how transitory, should suffice to found the court's jurisdiction over him, is losing much of its importance as the doctrine of forum non conveniens develops. 14 The issue is still crucial, however, in 1988 CanLIIDocs 6 the recognition of foreign default judgments. If the defendant was served in the foreign country but did not appear in the action, or appeared only to try to persuade the foreign court to decline jurisdiction, a court that is asked to recognize the resulting default judgment must consider whether the defendant's presence in the foreign country, no matter how fleeting, necessarily gives the original court jurisdiction "in the international sense". This will be discussed later.' 5

2. Attornment to the Jurisdiction

Van Der Est v. State Farm Fire & Cas. Co.'6 decided that an American insurer, defending an action in British Columbia on behalf of a British Columbia resident who had had an accident in a rental car in Hawaii, was not submitting to the British Columbia court's jurisdiction on its own behalf, so as to expose the insurer to suit at the hands of the successful plaintiff. Nor had the insurer submitted by filing a standard "power of attorney and undertaking" with the Superintendent of Insurance for British Columbia, under the national arrangement for the non-resident

11 (1982), 39 N.B.R. (2d) 674, 135 D.L.R. (3d) 535 (C.A.) [hereinafter Hum- phreys cited to D.L.RJ. 12 Fry v. Moore, [1889] 23 Q.B.D. 395 (C.A.); Wilding v. Bean, [1891] 1 Q.B. 100 (C.A.). See also Myerson v. Martin, [1979] 1 W.L.R. 1390, [1979] 3 All E.R. 667 (C.A.). 13 Supra, note 11 at 542. The Court of Appeal also upheld the issuing of the injunction. 14 Infra, PART IV. 15 Infra, PART IV, FOREIGN JUDGMENTS, and CarrickEstates Ltd. v. Young, [1988] 59 Sask. R. 39, [19881 1 W.W.R. 261 (C.A.). 16 (1983), 45 B.C.L.R. 133 (S.C.). 1988] Recent Developments in CanadianLaw interprovincial motor vehicle liability insurance card. The submission in that form was only in relation to claims arising out of accidents in British Columbia. '7 According to Lucas-CaliforniaCo. v. Charlottetown Metal Prods. Ltd.,Is "the party seeking to question [the court's] jurisdiction must do so in a clear and unambiguous manner and must not take any further steps in the proceedings until the question of jurisdiction has been settled".' 9 The defendant, which had been served ex juris, had attomed to the jurisdiction of the Prince Edward Island court by obtaining an interlocutory order against the plaintiff and by filing a defence. It availed the defendant nothing that, initially, it had also applied to have the action struck out on the ground of lack of jurisdiction. The defendant ought to have proceeded with the jurisdictional issue before taking the other steps. In another case, 20 applying for security for the costs of the action was held to be submission. The court suggested that it might have been different if the application had been limited to security for the costs of contesting jurisdiction, or had been made with a reservation of the applicant's right to contest the jurisdiction. 1988 CanLIIDocs 6 Applications relating to the court's jurisdiction, for example to set aside service ex juris, or to decline jurisdiction on the ground of forum non con'eniens, are usually not acts of submission to the court's jurisdiction. Indeed, most provincial rules of court expressly so provide.2' The British Columbia Court of Appeal held in Neptune Bulk Terminals Ltd. v. Intertec InternationaleTechnische Assistenz GmbH22 that the same was not true of an application to stay proceedings on the ground that the plaintiff was bound by an arbitration agreement. That was asking the court to decide a non-jurisdictional issue in the defendant's favour and the defendant was accordingly bound by the court's jurisdiction in the action if his application failed.23 These cases on attornment show that a lawyer may have to proceed with caution to avoid taking a step on behalf

17 Ibid. at 134-36. Compare Loomis CourierServ. Ltd. v. National Union Fire hIs. Co. of Pittsburgh (1986), 17 C.C.L.I. 107 (Ont. H.C.), where the insurer was statutorily deemed to carry on business in Ontario because of its activities there. 18 [1982] 36 Nfld. & P.E.I.R. 115, 134 D.L.R. (3d) 438 (P.E.I.C.A.). 19Ibid. at 122, 134 D.L.R. (3d) at 443. 20 Catalyst Research Corp. v. Medtronic Inc., [1982] 2 EC. 657, 131 D.L.R. (3d) 767 (A.D.), affg (1981), 120 D.L.R. (3d) 159 (F.C.T.D.). The application for security was also made more than a month before the motion objecting to the jurisdiction. 21 See, e.g., Ont. R.P. 17.06(4), B.C.S.C.R. 14(8), N.B.R.C. 19.05(3), N.S.C.P.R. 11.05(d), P.E.I.S.C.R. 11.05(d). It is not clear whether the same principle applies if the issue is whether the defendant submitted to the jurisdiction of a foreign court for the purposes of recognizing a judgment against him; hifra, under PART IV, FOREIGN JUDGMENTS. 22 (1981), [1982] 31 B.C.L.R. 73, 127 D.L.R. (3d) 736 (C.A.). - Ibid. at 77, 127 D.L.R. (3d) at 740, citing Henry v. Geoprosco Int'l Ltd. (1975), [1976] Q.B. 726, [1975] 2 All E.R. 702 (C.A.). Ottawa Law Review/Revue de droit d'Ottawa [Vol. 20:2 of an out of province client that will later be taken to be a submission to the jurisdiction.24

3. Service Ex Juris

(a) Introduction

Since the last survey of the conflict of laws in this journal, New Brunswick 25 has joined the other provinces (British Columbia, 26 Sas- katchwan,27 Manitoba28 and Ontario 29) that permit service exjuris without leave in certain categories of action and allow service ex juris in any other action with leave.30 Alberta3l and Newfoundland 32 still follow the English model and permit service ex juris only with leave and only in certain types of action. Nova Scotia33 and Prince Edward Island34 allow service ex juris as of right in any case, on a person resident in Canada or the United States. Leave is required, in any action, if the defendant resides elsewhere. 35 The Federal Court Rules 36 require leave to serve ex juris but do not limit the types of action in which such service may be obtained. 37 1988 CanLIIDocs 6 Where service ex juris is effected without leave, as it now is in the vast majority of cases in all provinces except Alberta and Newfoundland, the two issues of (a) whether such service was authorized by the rules of court and (b) whether, even if it was authorized, the court should exercise a discretion to decline jurisdiction, are argued only if the defendant applies to have the service on him set aside.38 The treatment of issue (b), that of declining jurisdiction in cases of service ex juris, is tending to merge with the corresponding issue that arises when a defendant

24 The issue of attornment may also be crucial for the enforcement of any eventual judgment against the client in his home country. 23N.B.R.C. 19.01. 26 B.C.S.C.R. 13(1). 27 Sask. Q.B.R. 31(1). 28 Man. Q.B.R. 28. 29 Ont. R.P. 17.02. See also N.W.T.S.C.R., 0.5, 38(1). 30 B.C.S.C.R. 13(3), Sask. Q.B.R. 31(2), Man. Q.B.R. 30 (with some restriction), N.B.R.C. 19.02, Ont. R.P. 17.03. 31 Alta. R.C. 30. 32 Castel, supra, note 3 at 192. 33 N.S.C.P.R. 10.08(l). 34 P.E.I.S.C.R. 10.08(l). 3-5N.S.C.P.R. 10.07(l), P.E.I.S.C.R. 10.07(l). 36 F.C.C.R. 307. 37 The power to give leave to serve exjuris in any case is of long standing in the Federal Court and its predecessor, the Exchequer Court of Canada: see Antares Shipping Corp. v. The Capricorn, [19771 2 S.C.R. 422 at 435-36, 65 D.L.R. (3d) 105 at 113- 14 [hereinafter Antares cited to S.C.R.]. 38 Or otherwise asks the court to decline jurisdiction by a declaration to that effect: B.C.S.C.R. 14(6)(c), and see E. Edinger, Discretion in the Assumption and Exercise of Jurisdiction in British Columbia (1982) 16 U.B.C. L. REV. 1 at 10-12. 19881 Recent Developments in CanadianLaw who is served within the province applies to have an action stayed. For this reason the question of declining jurisdiction where service has been ex juris and where it has been in juris are dealt with together below. The problem of defining the categories of action in which the rules of court allow service ex juris will be discussed here. The seven provinces whose rules of practice define the classes of action in which service exjuris is allowed, with or without leave, employ very similar lists of categories of action. They are largely copied from the sub-rules in Order 11 of the English Supreme Court Rules. Only two rules are quite distinct from the general pattern. One is Ontario Civil Procedure Rule 17.02(h), which refers to an action "in respect of damage sustained in Ontario arising from a tort or breach of contract, wherever committed". New Brunswick has the same rule, 39 and Saskatchewan has a rule confined to damages sustained in the province from a breach of contract committed elsewhere.40 The other distinctive rule, found only in British Columbia, allows service exjuris where "the claim arises out of goods or merchandise sold or delivered in British Columbia". 41 The grounds for service ex juris that have recently been considered in a way worth noting are those relating to contract, tort and damage 1988 CanLIIDocs 6 sustained in the province arising from a tort or breach of contract, wherever committed.

(b) Contract

The rules of court of the seven provinces being discussed all permit service ex juris on the ground that there has been a breach of contract in the province. Two recent cases have confirmed the rule that in the case of a failure to perform an obligation under the contract the breach is located where the obligation should have been performed.42 They also show that the place of intended performance can depend on just how the obligation to be performed is characterized. A Toronto agent's failure to remit advertising revenues to the New Brunswick radio station it represented was held to be a breach committed in New Brunswick, where the station performed the advertising services and, by implication, was to be paid for them.43 But in the other case,44 the failure for eleven years by Newfoundland solicitors, acting for the purchaser of real estate, to forward a promissory note to the Ontario resident vendor as part of the sale price, was held to have been committed in Newfoundland. The solicitors had mislaid the note or failed to dispatch

39 N.S.C.P.R. 19.01(i). 40 Sask. Q.B.R. 31(1)(f)(vi). 41 R.C.S.C.R. 13(I)(o). See Davidson v. The Anchorage Inc. (1980), 23 B.C.L.R. 352 (S.C.). 42 McLeod, supra, note 4 at 94. 43 BathurstBroadcasting Co. v. Group One Radio Ltd. (1982), 42 N.B.R. (2d) 30 (Q.B.). Ralph v. Halley (1982), 30 C.P.C. (Ont. Master). Ottawa Law Review/Revue de droit d'Ottawa [Vol. 20:2 it. The difference seems to be that in the former case the obligation broken was identified as seeing the plaintiff was paid (in New Brunswick), whereas in the latter it was dispatching (in Newfoundland) a physical object that constituted the payment. In De Havilland Aircraft of Canada Ltd. v. Metroflight Inc. 45 the plaintiff's action, for which service exjuris was held proper, was not in respect of the breach of contract but was brought for a declaration that a contract the plaintiff was alleged to have broken was invalid. The Ontario rule, which refers to a claim "in respect of a contract where. . .a breach of the contract had been committed in Ontario", 46 was held to apply to such a case. The plaintiff had been accused by the defendant of breaking the contract in Ontario and was entitled to seek declaratory relief there as to its rights. In most other provinces the corresponding rule is worded in terms of a claim in respect of the breach, not the contract, which would make it harder, though not impossible, to reach the same result. If the breach takes the form of a renunciation of the contract, either of the breach is more anticipatorily or during performance, the locus 1988 CanLIIDocs 6 difficult to define. On the one hand it has been said that an actual breach committed in country A cannot be treated as changed to country B simply because the defaulting party announced beforehand in country B that he would not perform. 47 Nevertheless if the whole contract is repudiated, it seems that the renunciation itself has to be treated as the breach. Thus in Rhodes v. Shorter48 the British Columbia Court of Appeal held that an anticipatory repudiation by telephone of a contract of employment was committed, not where the services were to be performed (Alberta), nor where the plaintiff heard the repudiation (British Columbia), but where the intended employer spoke the repudiation into the telephone (California). The idea that anticipatory repudiation by telephone takes place where the party in breach dispatches his message is in line with earlier cases on renunciations sent by mail.49

Service ex juris is possible under all the rules of court being discussed, if the claim is in respect of a tort committed in the province. The most interesting recent case on the locus of a tort for this purpose

5 (1978), 29 C.P.C. 225 (Ont. H.C.). 46 Then Ont. R.P. 25(1)(f), now Ont.R.P. 17.02(f)(iv). 47 InternationalPower & Eng'r ConsultantsLtd. v. Clark (1964), 41 D.L.R. (2d) 260 at 265 (B.C.S.C.), affd [19641 46 W.W.R. 310, 43 D.L.R. (2d) 394 (B.C.C.A.). 48 [1981] 27 B.C.L.R. 60, 20 C.P.C. 25 (C.A.). 49 KellardMarbleInc. v. Cox (1979), 10 B.C.L.R. P-1 10 (S.C.),following Cherry v. Thompson (1892), 7 L.R.Q.B. 573, and Martin v. Stout, [1925] A.C. 359 (P.C.). These cases are at odds with the rule that a repudiation, postal or otherwise, takes effect only when received. In Cherry v. Thompson, ibid. at 579 it was explained that the receipt of the letter was evidence of the act of posting, which was the actual breach. 19881 Recent Developments in Canadian Law is Ichi Canada Ltd. v. Yamauchi Rubber Indus. Co.50 Here a British Columbia distributor of polyurethane coverings for pulp mill rollers sued the manufacturer of the coverings, a Japanese company, in contract for failing to supply goods as required by the distributorship contract. The British Columbia distributor also sued an American company for inducing the Japanese company to break that contract. McKenzie J. held that the manufacturer could not be served exjuris, because the breach of contract had taken place in Japan, the sale terms were f.o.b. the port of Kobe. The plaintiff's effort to bring the manufacturer within the "necessary or proper party" rule, 51 by serving another defendant in British Columbia, failed because the Canadian firm that was served in British Columbia had no connection with the plaintiff's action, except that it was a member of the same corporate group as the American defendant. However, the American company's alleged inducement of the Japanese company's breach of contract was held to be a tort committed in British Columbia. The court relied on Moran v. Pyle Nat'l (Canada)Ltd.52 as establishing a test based on the alleged tort having substantially affected the province, together with the province's law as having been in the reasonable con- templation of the parties (or, more properly, the defendant). The breach 1988 CanLIIDocs 6 of contract affected the plaintiff's business and its reputation, which were centered in British Columbia, and the potential application of British Columbia law would have been reasonably contemplated by the American company as well as the plaintiff.53 The Ichi case points out the different ways in which the courts have approached the place of a tort compared with the place of a breach of contract for the purposes of judicial jurisdiction. Since Moran the locus of a tort has been determined by a flexible test emphasizing the place where the breach of duty caused harm, as well as the place where the defendant acted. By contrast, the locus of a breach of contract is still determined exclusively by reference to the place where the defendant acted, or failed to act, under the contract. The difference can be accounted for by noting that damage is not essential to a cause of action in contract, whereas it is essential in tort; but this juristic subtlety has nothing to do with the pros and cons of asserting jurisdiction over a defendant outside the province. The introduction of the Ontario and New Brunswick rule based on damage sustained in the province from a tort or breach of

- (1982), 36 B.C.L.R. 100, 134 D.L.R. (3d) 396 (S.C.), affd (1983), 43 B.C.L.R. 215, 144 D.L.R. (3d) 533 (C.A.) [hereinafter Ichi cited to 36 B.C.L.R.]; Compare Dorset PrecisionCorp. v. Norvest PrecisionLtd. (1985), 52 O.R. (2d) 437, 22 D.L.R. (4th) 765 (H.C.), where the plaintiff tried in vain to argue that the contracting party in breach, as well as the inducing party, could be treated as implicated in a tort committed in the province. 51B.C.S.C.R. 13(1)j): "a person outside British Columbia is a necessary or proper party to a proceeding properly brought against some other person duly served in British Columbia". 52 [1975] 1 S.C.R. 393, 43 D.L.R. (3d) 239. 53 Ichi, supra, note 50 at 107. Ottawa Law Review/Revue de droit d'Ottawa [Vol. 20:2 contract, wherever committed, can be seen partly as a way of placing contractual claims on the same footing as tort claims for the purposes of the service ex juris rules. In a number of recent cases the plaintiff has tried to bring his case within the tort ground for service exjuris by alleging a tort that the court held did not exist. Thus, the fact that shares situated in the province were alleged to have been fraudulently conveyed by the defendant did not constitute a tort committed in the province, since fraudulent conveyance is not a tort. 54 Likewise, the Alabama manufacturer of a prefabricated building that collapsed in New Brunswick was held not to have committed any tort in that province. 55 Canadian law gives no claim in tort if the only damage caused by the defect in the product is the cost of repairing the product itself. (d) Damage Sustained in the Province Determining the place where damage is sustained can be an even more impressionistic exercise than determining the locus of the commission of the tort. Damage can be intangible, such as mental suffering 1988 CanLIIDocs 6 or financial loss and can be sustained over periods of time during which the plaintiff moves from one jurisdiction to another. For this reason the decisions on Ontario Civil Procedure Rule 17.02(h) show a struggle for definition that is still inconclusive. Some order was imposed by the Divisional Court in Hayter & Scandrett Ltd. v. Deutsche Ost-Afrika- Linie GmbH,5 6 which held that the mere fact that a company incorporated and doing business in Ontario had lost money on a contract of carriage performed entirely outside the province, was not "damage sustained in Ontario" for the purpose of the rule. There had to be some further connection between the subject matter of the breach of contract or tort and Ontario. In another case the mere fact that some Italian-made goods had been sold in Ontario, allegedly in breach of a Quebec company's exclusive distributorship rights, was not damage the Quebec company sustained in Ontario57 On the other hand, physical suffering caused to an Ontario resident by injuries he received in an accident in another province, has repeatedly been held to be damage sustained in Ontario58 However, suffering by a

54 Suncorp Realty Inc. v. P.L.N. Inv. Inc. (1985), 36 M.R. (2d) 280, 23 D.L.R. (4th) 83 (Q.B.). 55 Neonex Hous. Indus. Ltd. v. American Bldg. Co. (1981), 36 N.B.R. (2d) 305 (C.A.). Whether the Alabama law of tort might be relied on was not discussed. 56 (1985), 8 O.A.C. 150, 50 C.P.C. 194 (H.C.), apparently overruling Interimco Projects Eng'r Corp. v. Canadian Co-op. Implements Ltd. (1984), 47 C.P.C. 142 (Ont. Master). 57 Dorset Precision Corp. v. Norwest PrecisionLtd., supra, note 50. 58 Poirierv. Williston (1980), 29 O.R. (2d) 303, 113 D.L.R. (3d) 252 (H.C.), aff d (1981), 31 O.R. (2d) 320, 118 D.L.R. (3d) 576 (C.A.); Vile v. Von Wendt (1979), 26 O.R. (2d) 513, 103 D.L.R. (3d) 356 (H.C.); Ang v. Trach (1986), 57 O.R. (2d) 300, 33 D.L.R. (4th) 90 (H.C.). 19881 Recent Developments in Canadian Law

Quebec resident who was injured in a Quebec accident but treated in an Ontario hospital did not qualify as damage sustained in Ontario. 59 Mental suffering caused by wrongful dismissal has not been considered sufficient to constitute damage in the province, where the plaintiff worked and was fired outside the province but afterwards, still distressed, came to the province. 60 These cases illustrate that where the ground for service ex juris is as malleable as the "damage sustained" rule, the decision whether or not the case falls under the rule is often hardly distinguishable from a decision on forum non conveniens. 4. DecliningJurisdiction: Forum Non Conveniens Probably no part of the conflict of laws has been as discussed during the period covered by this survey, as the discretion to decline jurisdiction. The proper approach to many of the issues is still under debate. The case law has been in a process of rapid evolution, although it may have attained a plateau of sorts with recent leading decisions in England and Canada. One source of difficulty and confusion is that the court's discretion

to decline jurisdiction in a particular case may arise in two contexts in 1988 CanLIIDocs 6 which, historically, the courts have taken different approaches to the problem. The first is where the defendant has been served within the territory of the forum court and applies to have the action stayed. The second is the case where the defendant must be served exjuris. Here the issue may be raised when a court is asked to give leave for such service or, if the plaintiff was entitled to serve exjuris without leave, the defendant argues that the court should decline jurisdiction. Another complicating factor, in Canada, is that the considerations relevant to deciding whether the alternative forum is in another Canadian province or in a foreign country. This side of the problem has, to date, been highlighted more by scholars 61 than by the courts, but it is gradually coming to the fore in the reported cases. 62 (a) Historical Difference Between Actions Commenced by Service In Juris and by Service Ex Juris Until about a decade ago it was axiomatic that if a plaintiff could serve the defendant within the jurisdiction he had an almost unqualified right to invoke the court's process. The only limitation was that sum-

59 Eades v. Hamilton (1985), 52 O.R. (2d) 307, 13 C.C.L.I. 65 (Dist. Ct.). 60 Bowers v. M.W.G. Apparel Corp. (1985), 6 C.P.C. (2d) 35 (Ont. Dist. Ct.); Cornish v. Northern Canada Power Comm'n (1983), 47 N.B.R. (2d) 200 (C.A.); Compare Wardell v. Tower Co. (1961) Ltd. (1984), 49 O.R. (2d) 655 (H.C.). 61 1981 Survey, supra, note 1 at 131-32; E. Edinger, The MacShannon Test for Discretion: Defence and Delimination (1986) 64 CAN. BAR REV. 283 at 305. 62 E.g., Jannock Corp. v. R.T. Tamblyn & PartnersLtd. (1985), 8 O.R. (2d) 622 at 632, 58 D.L.R. (3d) 678 at 688 (C.A.) [hereinafter Jannock], as discussed in 1981 Survey, ibid. Ottawa Law Review/Revue de droit d'Ottawa [Vol. 20:2 marized by Scott L.J. in St. Pierre v. South Am. Stores (Gath & Chaves) Ltd.:

(1) A mere balance of convenience is not a sufficient ground for depriving a plaintiff of the advantages of prosecuting his action in an English court if it is otherwise properly brought. The right of access to the King's Court must not be lightly refused. (2) In order to justify a stay two conditions must be satisfied, one positive and the other negative: (a) the defendant must satisfy the court that the continuance of the action would work an injustice because it would be oppressive or vexatious to him or would be an abuse of the process of the court in some other way; and (b) the stay must not cause an injustice to the plaintiff. On both the burden of proof is on the defendant.6 3

The position in Canadian common law was the same. 64 According to the English rule any reference in this type of case to forum non conveniens was misplaced. 65 The issue was not whether the forum was appropriate but whether the plaintiff should be deprived of his right to sue in England on the ground of his abuse of the court's process. Canadian judges nevertheless referred to forum non conveniens in this connection from 1988 CanLIIDocs 6 time to time, apparently overlooking the distinction between the Scottish and American doctrines from which they drew the phrase, and the English abuse of process rule they were applying. 66 Service ex juris cases were handled starting with the opposite assumption, that is to say, that the jurisdiction the plaintiff was seeking to invoke was exceptional. Therefore, in applying for leave to serve exijuris the plaintiff had the burden of showing not only that the action fell within one of the categories of cases in which the rules of court allowed service exjuris, but also that the chosen forum was so clearly appropriate to the action that the assertion of jurisdiction, with its concomitant infringement of another country's sovereignty, was justified. Hereforum non conveniens, in the sense of a broad consideration of the factors, for and against the court's taking jurisdiction, was an integral part of the exercise of what Laskin C.J.C., inAntares Shipping Corp. v. The Capricorn,referred to as a "disciplined discretion".67 The relevant factors, as listed by Ritchie J. in the same case,

include the balance of convenience to all the parties concerned, including the plaintiff, the undesirability of trespassing on the jurisdiction of a foreign state, the impropriety and inconvenience of trying a case in one country

63 [1936] 1 K.B. 382 at 398 (C.A.) [hereinafter St. Pierre]. 64 Empire-UniversalFilns Ltd. v. Rank, [19471 O.R. 775 (H.C.). 65 See The Atlantic Star, [19741 A.C. 436 at 453-54, [1974] 2 All E.R. 175 at 181-82 (H.L.) [hereinafter The Atlatic Star cited to A.C.]. 66 Van Vogt v. All-Canadian Group Distrib. Ltd. (1967), 60 W.W.R. 729 (Man. Q.B.), rev'd9 D.L.R. (3d) 407 (Man. C.A.); Sittlerv. ConwestExploration Co., [1972] 4 W.W.R. 385, 31 D.L.R. (3d) 201 (Y.T. Tern Ct.); Edinger, supra, note 38 at 22-23. 67 Supra, note 37 at 437. 1988] Recent Developments in CanadianLaw

when the cause of action arose in another where the laws are different, and 6 the cost of assembling foreign witnesses. 8

Ritchie J. also identified one matter as paramount:

[T]he overriding consideration which must guide the Court in exercising its discretion by refusing to grant such an application as this must. . .be the existence of some other forum more convenient and appropriate for the pursuit of the action and for securing the ends of justice.69

(b) The Recent English Cases

In England a remarkable string of decisions by the House of Lords, beginning with The Atlantic Star7o in 1973 and - at least for the moment - culminating in Spiliada Maritime Corp. v. Cansulex Ltd. 71 in 1986, have transformed the relationship between the discretion to decline jurisdiction in cases of service in juris and cases of service exjuris.72 This was done by completely re-orienting the approach to staying an action against a defendant served in England. Abuse of process is no longer 1988 CanLIIDocs 6 the touchstone, as it was under the old St. Pierre formulation. Lord Diplock, in MacShannon v. Rockware Glass Ltd., replaced that formula with one couched in less stringent terms:

In order to justify a stay two conditions must be satisfied, one positive and the other negative: (a) the defendant must satisfy the court that there is another forum to whose jurisdiction he is amenable in which justice can be done between the parties at substantially less inconvenience or expense, and (b) the stay must not deprive the plaintiff of a legitimate personal or juridical advantage which would be available to him if he invoked the jurisdiction of the English court. 73

Although he said there that the English test was not identical to the Scottish doctrine of forum non conveniens, Lord Diplock admitted in a later case, The Abidin Daver,74 that there was no longer any distinction between the two. The synthesis was completed by Lord Goff in the

63 Ibid. at 448. 69 Ibid. 70 Supra, note 65 (service in juris). 71 (1986), [1987] A.C. 460, [1987] 3 All E.R. 843 (service exjuris) [hereinafter Spiliada cited to A.C.]. See A. Briggs, Forum Non Conveniens: The Last Word, [1987] LLOYDS MAR. & COMP. L.Q. 1. 72 The intervening cases were MacShannon v. Rockware Glass Ltd., [1978] A.C. 795, [1978] 1 All E.R. 625 (H.L.) (service in juris) [hereinafter MacShannon cited to A.C.];Amin RasheedShippingCorp. v. Kuwait Ins. Co. (1983), [1984] A.C. 50, [1983] 2 All E.R. 884 (H.L.) (service exjuris) [hereinafter Amin Rasheed cited to A.C.]; The Abidin Daver, [1984] A.C. 398, [1984] 1 All E.R. 470 (H.L.) (service injuris) [hereinafter The Abidin Daver cited to A.C.]. 73 MacShannon, ibid. at 812. 74 Supra, note 72 at 411. Ottawa Law Review/Revue de droit d'Ottawa [Vol. 20:2

Spiliada case. 75 He rephrased part (a) of the MacShannon formula in language drawn from the Scottish cases. 76 "The basic principle," he said,

is that a stay will only be granted on the ground of forum non conveniens where the court is satisfied that there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of the be tried more suitably for the interests action, i.e., in which the case may 77 of all the parties and the ends of justice. Rather than focus on expense and inconvenience, as the MacShannon formula did, Lord Goff thought the inquiry should be put more broadly. The question was to find the "natural forum" for the action, meaning that the court should look to all the factors that may indicate the forum with which the action has its most real and substantial connection.TS Part (b) of the MacShannon formula, that the stay "must not deprive the plaintiff of a legitimate personal or juridical advantage" in the local forum that he would not have in the alternative forum, was also sharply attenuated by Lord Goff in the Spiliada case. The ability of the plaintiff to show such an advantage was not by itself a bar to a stay. The issue 1988 CanLIIDocs 6 was whether, given that there is another forum that prima facie is more appropriate for the action, "there are circumstances by reason of which justice requires that a stay should nevertheless not be granted". 79 Here the court could consider factors besides those connecting the action with one forum or the other. "One such factor can be the fact, if established objectively by cogent evidence, that the plaintiff will not obtain justice in the foreign jurisdiction." 80 Compelling the plaintiff to show that he will "not obtain justice" in the other forum is a much more demanding notion than his showing just that the other forum is juridically or personally disadvantageous to his cause. In a later case the House of Lords actually stayed an action where it was clear that the plaintiff had an advantage in an English action that she would lose if the case were heard in the alternative forum, France. The Law Lords saw no injustice in the plaintiff being so disadvantaged, in view of her much stronger personal ties with France than with England. 8'

75 Spiliada, supra, note 71. 76 Particularly Sim v. Robinow, [ 18921 R. 665 at 668 (Ct. Sess.), per Lord Kinnear; Societj du Gaz de Paris v. Societj Anonyme de Navigation "Les Armateurs Franvais" (1925), [1926] Sess. Cas. 13 at 22 (H.L.) per Lord Sumner. 77 Spiliada, supra, note 71 at 476. 78 Ibid. at 477-78, [1987] 3 All E.R. at 860-61, citing TheAbidin Daver, supra, note 72 at 415, per Lord Keith. See also A. Briggs, Forum Non Conveniens: Now We Are Ten? (1983) 3 LEG. STUD. 74, to which Lord Goff expresses his indebtedness: Spiliada, ibid. at 488. 79 Spiliada, supra, note 71 at 478. 80 Ibid. 81 De Dampierre v. De Dampierre, [1987] 2 W.L.R. 1006, [1987] 2 All E.R. 1 (H.L.) [hereinafter De Dampierre cited to W.L.R.]; see infra, notes 136, 137 and accompanying text. The court treated the question as essentially one of forum non conveniens although the issue was the exercise of statutory discretion in matrimonial causes legislation: ibid. at 1016-17. 1988] Recent Developments in Canadian Law The relationship in English law between the new test of forum non conveniens as applied to staying an action against a defendant served in juris, and the discretion to authorize service ex juris, was unclear until the Spiliada case. Three years earlier Lord Wilberforce had still said that cases on the former issue were of little help in deciding the latter, because the situations were different. 82 But in the Spiliada case the House of Lords laid down that the principles to be applied in the two situations were the same, except that the plaintiff had the burden of proof on the issue of the appropriate forum 83 in service ex juris cases, whereas the defendant had it in stay of proceedings cases. The burden to be satisfied also had to be viewed somewhat differently, bearing in mind that the court was exercising a discretion expressly reserved to it by the rules of court, and that the jurisdiction being exercised was an extraordinary one in the sense that English courts themselves would not recognize a judgment obtained in a foreign court that purported to exercise a similar jurisdiction. 84

Broadly speaking, Canadian common law courts have followed the shift in the English law on forum non conveniens.8 5 The picture is nevertheless clouded by a number of factors. These include pockets of resistance to abandoning the "oppressive and vexatious" terminology in cases where the defendant is served in the province; a failure in many cases to distinguish between service in juris and ex juris; and the need to deal with a question that was absent from all the English cases, namely the relevance of the plaintiff being a local resident rather than a foreigner.86 Moreover, the Canadian context differs from the English in two respects: the fact that in most provinces service ex juris in defined cases does not require leave, which may influence the burden of proof on the issue of forum non conveniens; and the fact that the choice of fora may be between two Canadian provinces, which may arguably have a bearing on how the question of forum non conveniens should be approached.

82 Anin Rasheed, supra, note 72 at 72. 83 The burden on the question of the plaintiff's personal or juridical advantage in the local forum is on the plaintiff in all cases: Spiliada, supra, note 71 at 478. 84 Ibid. at 481, referring to Amin Rasheed, supra, note 72 at 65, per Lord Diplock. 85 The Quebec Court of Appeal recently rejectedfornm non conveniens absolutely where the court's jurisdiction is defined by the Civil Code: Aberman v. Solomon (1986), 1 Q.A.C. 40, R.D.J. 385. 86 In the English cases the plaintiffs were respectively a Dutch barge owner (The Atlantic Star, supra, note 65), Scots workers (MacShannon, supra, note 72), a Liberian shipowner (Amin Rasheed, supra, note 72), a Cuban shipowner (The Abidin Daver, supra, note 72), another Liberian shipowner (Spiliada, supra, note 71) and a French wife (De Damnpierre, supra, note 81). Ottawa Law Review/Revue de droit d'Ottawa [Vol. 20:2

(i) Adoption of the English Test

Up to now the two most important Canadian cases that have adopted the new English rule - in the form of Lord Diplock's two part test in MacShannon v. Rockvare Glassy8 not yet in the form it received in the Spiliada8- are the British Columbia Court of Appeal decision in Rogers v. Bank of MontrealS9 and the Ontario Divisional Court decision in Bon- aventure Sys. Inc. v. Royal Bank of Canada.90 Based on oddly similar facts, both cases arose out of alleged wrongs committed when the defendant creditors put a company into receivership. The primary defendants were national financial institutions and so could be served with process in any province. In Rogers the defunct company was incorporated in Alberta and headquartered in Calgary, although it also did business in British Co- lumbia and elsewhere. Its relationships with the two defendant lending institutions were centered in Calgary. The plaintiffs were three individual shareholders and officers of the company, two of whom resided in British

Columbia at the time of the action, and claimed to have lost enormous 1988 CanLIIDocs 6 sums because of the wrongful receivership. The company itself, through the receiver, was claiming damages against the same primary defendants in Alberta. Notwithstanding that the Alberta litigation arose out of the same facts and involved largely the same issues, the British Colubmia Court of Appeal held that the plaintiff shareholders' action for the alleged wrongs committed against them personally should be allowed to continue in British Columbia.9 l The court held that the appropriate test for declining jurisdiction, the discretion for which is expressly provided in the British Columbia Rules of Court, 92 was that laid down in MacShannon. The meaning given to that test in Rogers v. Bank of Montreal was quite restrictive. It was said to be significantly different from forum non conveniens, which the court saw as applicable only to service ex juris.93 (Later English cases, as already noted, have erased any difference between the two except the burden of proof.) The chief points of distinction were that the MacShannon test

87 MacShannon, supra, note 72. The earlier version of the English doctrine in The Atlantic Star, supra, note 65, was applied in Mohler v. Dairy Queen of TV. Canada Ltd., [1976] 3 W.W.R. 619 (Alta. C.A.) [hereinafter Mohler]. 88 Supra, note 71. 89 (1984), 49 B.C.L.R. 85, 4 D.L.R. (4th) 507 (C.A.), leave to appeal refused [1984] 1 S.C.R. v [hereinafter Rogers cited to B.C.L.R.]. 90 (1986), 57 O.R. (2d) 270, 32 D.L.R. (4th) 721 (Div. Ct.) [hereinafter Bon- aventure cited to O.R.]. 9' It was subsequently held that they had no cause of action distinct from the company's: Rogers v. Bank of Montreal (1985), 64 B.C.L.R. 63, [1985] 5 W.W.R. 193 (S.C.), affjd (1986), 9 B.C.L.R. (2d) 190, [1987] 2 W.W.R. 364 (C.A.). 92 R. 14(6)(c). 93 Supra, note 89 at 108. 19881 Recent Developments in Canadian Law

seems to focus on the consideration of whether the action amounts to an abuse of process in the sense that it will cause a severe injustice to the defendant. . .and seems to emphasize, also, the right of a plaintiff to carry on an action in his own jurisdiction. 94 The chambers judge, in ordering a stay, had wrongly applied a forum conveniens test. He did not have grounds for holding that the British Columbia action was an abuse of process in the sense that it would cause the defendants a severe injustice, and he had not placed enough emphasis on the plaintiffs' right to bring the action in their own jurisdiction. 95 The case is especially striking because the plaintiffs' right to sue in British Columbia was given more weight than the inevitable and extensive du- plication of legal resources if a British Columbia action were to be carried on in parallel to the action already begun in Alberta. The facts of the Bonaventure case in Ontario differed in only three significant respects from those in Rogers. The plaintiff claiming in respect of the wrongful receivership was the debtor company itself, a federal corporation based in Montreal, where it had dealt with the defendant

lenders. Some individuals, who resided in Quebec, were joined as de- 1988 CanLIIDocs 6 fendants; and there was no parallel action on foot in Quebec. As in Rogers the relationship between the company and its creditors was centered in the other province; the events out of which the alleged causes of action arose took place there; and the company's relationships with its creditors were governed by Quebec law. If anything, the facts were less favourable to a stay of proceedings than those in Rogers, but the Divisional Court ordered a stay. Ontario judges at first instance had been divided on whether to adopt the new English doctrine offorum non conveniens. Some applied it intact, some in tandem with the old test and some not at all. 96 The Divisional Court in Bonaventure applied the MacShannon formula without reser- vations. On the first limb it held that the province of Quebec was the natural forum since it clearly had the most real and substantial connection with the lawsuit (the court here anticipated the language in the Spiliada case 97); the only connection with Ontario was that most of the plaintiff's witnesses lived there. The plaintiff could not satisfy the second limb by showing that a stay would deprive it of a legitimate personal or juridical advantage that it had in Ontario and not in Quebec. The fact that a Quebec trial might be in French was not, at least in Canada, a relevant consideration.98

94 Ibid. 95 Ibid. at 109. 96 See the cases cited in Bonaventure, supra, note 90 at 277. Of these, two applied the old St. Pierreformula, four applied the new MacShannon test and two applied both together. See also Hudson's Bay Co. v. P.C.L. Constr. Ltd. (1984), 45 O.R. (2d) 443, 6 D.L.R. (4th) 763 (H.C.) which also straddled the two tests and Mainguy v. Mainguy (1984), 42 C.P.C. 84 (Ont. S.C. (M.C.)), which also applied the newer test. 97 Supra, note 78 and accompanying text. 98 Supra, note 90 at 280. Ottawa Law Review/Revue de droit d'Ottawa [Vol. 20:2

The Rogers cases seems out of step with the Bonaventure case and the English authorities. It is worth examining why, because the case contains some ideas that percolate through other Canadian cases. The British Columbia court thought that the defendant must show a "severe injustice" to itself, by which the court meant more than just the added inconvenience and expense of defending a second action in British Co- lumbia based on the same wrongful acts as the Alberta action. One would think (as the dissenting judge did) that this extra burden, not only on the defendants but also on the legal system, was by itself amply sufficient to justify a stay. The plaintiffs could point to no advantage to themselves at all from an action in British Columbia compared with one in Alberta. The plaintiffs had been senior executives of a company, based in Calgary, and were suing in respect of alleged wrongs done by creditors in the course of commercial relationships that were centered in Calgary. Re- stricting the plaintiffs to an action in Alberta would not appear to be unjust; indeed it seems eminently sensible. The factor that overrode these considerations, in the eyes of the

Court of Appeal, was apparently the plaintiffs' (or at least two of the 1988 CanLIIDocs 6 plaintiffs') "right" to sue in their "own" jurisdiction, 99 meaning the province where they lived. It is unclear from the report whether they resided in British Columbia at the time of the alleged wrongs as well as when the action was brought. It is true, as already mentioned, that none of the recent English authorities dealt with an action brought by an English plaintiff. But it is submitted that to talk of a plaintiff's "right" to sue in his "own" province can only distract the decision maker from the real question, which is whether, under all the circumstances, it would be more just to require the plaintiff to bring his action in the other forum. The necessity of the plaintiff having to travel to the other jurisdiction, or at least instruct lawyers there, is obviously an inconvenience to him compared with a local action, but it does not deserve to be treated as if it automatically counts heavily in his favour. In a significant commercial case, brought by senior businessmen, as Rogers was, the difference to the plaintiffs between suing in Vancouver and suing in Calgary was surely entitled to negligible weight, especially in view of the fact that the case was otherwise much more closely connected with Alberta than with British Columbia. In a different case, for example, an action by a small customer against a bank in respect of routine transactions that took place in another province, the fact that the plaintiff is a local resident might be a much more compelling consideration for letting his action against the bank be heard in the local forum. It is a tenuous idea that the plaintiff's local residence, or simply his selection of the local forum, entitles the plaintiff to some degree of deference in deciding the issue of forum non conveniens. It is ultimately a vestige of the Anglocentric bias that was long shown by the English

99 Supra, note 89 at 108. 1988] Recent Developments in CanadianLaw courts in cases on a stay of proceedings.10o Under the contemporary doctrine of forum non conveniens the plaintiff's residence or his choice of forum should be treated as a factor like all the others that a court should take into account, varying in importance depending on the rest of the factual context. There is no reason to attach any special weight to the plaintiff's residence in the forum province or to his decision to sue there. There is even less reason to speak, as some Canadian cases do, of the plaintiff's choice of forum being entitled to presumptive weight where the action is brought, not against a defendant in the province, but one served ex juris.i 0 l (ii) Forum Non Conveniens in Service Ex Juris Cases Although in Rogers v. Bank of Montreal the British Columbia Court of Appeal maintained that there was a difference between the discretion to stay an action begun in juris, and the discretion to decline jurisdiction in an action begun by service ex juris, the distinction is rarely adverted to elsewhere in the recent cases. There are at least two reasons for this. One is thatforum non conveniens, based on the notion of the "appropriate 1988 CanLIIDocs 6 forum", was the test expressly adopted ten years ago by the Supreme Court of Canada for deciding on the appropriateness of service exjuris.10 2 The approach to staying an action begun in juris has now come to be phrased in almost identical language. Judges often discuss forum non conveniens without even mentioning whether service was within or outside the jurisdiction.10 3 A related reason for the assimilation is the procedural context. In most Canadian provinces service ex juris may usually be made without leave, so that as in cases of stay of proceedings it is the defendant who must apply to have the issue of forum non conveniens resolved, either by having the service set aside or by obtaining a declaration that the court should decline jurisdiction. As a result judges in these provinces seem to have assumed that the burden is on the defendant, even in ex juris cases, to show that the court is forum non conveniens, whereas in England (and two Canadian provinces, as well as the Federal Court) the plaintiff must obtain leave to service ex juris and so must show that the court is forum conveniens. 04

100 See The Atlantic Star, supra, note 65 at 436. 10 Oulton Agencies Inc. v. Knolloffice Inc. (1987), 66 Nfld. & P.E.I.R. 207 (P.E.I.S.C.), rev'd (1988), 48 D.L.R. (4th) 545, 69 Nfld. & P.E.I.R. 65 (P.E.I.C.A.) [hereinafter Oulton Agencies]; Cranston v. Hull (Ville) (1983), 62 N.S.R. (2d) 343, 39 C.P.C. 290 (S.C.) [hereinafter Cranston];Glenbrook Developers Ltd. v. Gatley, [1984] 6 W.W.R. 450 (B.C.S.C.) [hereinafter Glenbrook] (unclear whether service was ex juris). See also Edinger, supra, note 61. 102Supra, note 37. 103 See, e.g., Oulton Agencies, supra, note 101; Cranston, supra, note 101; ChurchillFalls (Labrador)Corp. v. McGraw-Edison Co. (1985), 54 Nfld. & P.E.I.R. 48, 1 C.P.C. (2d) 229 (Nfld. T.D.) [hereinafter ChurchillFalls]. 104 See infra, notes 106-111 and accompanying text. Ottawa Law Review/Revue de droit d'Ottawa [Vol. 20:2 Two points still have to be settled definitively in Canadian law, with respect to declining jurisdiction in actions begun by in juris service as distinct from actions begun by ex juris service. One point is on whom the burden lies to show that the local court, or a court elsewhere, is the most appropriate forum for the plaintiff's action; the other is whether the nature of the discretion to be exercised is qualitatively different in any other way. In English law the Spiliada case seems to have answered both questions for the time being. The burden is on the defendant in cases begun in the jurisdiction, whereas it is on the plaintiff in cases of service ex juris; but the issues to be taken into account are the same in both situations. Lord Goff said that in service ex juris cases the burden is, quite simply, "the obverse of that applicable where a stay is sought of proceedings started in this country as of right". 105 So far, in Canada, the burden of proof seems to depend on the procedure used for service ex juris. If the rules of court provide in the particular situation for service without leave, the burden on the issue of forum non conveniens seems to be on the defendant, who raises the issue, 06 and not the plaintiff. 1 On applications for leave the burden is the other 1988 CanLIIDocs 6 way. 0 7 Is this sensible? Professor Edinger has argued' 0s that it is wrong to confuse the plaintiff-oriented discretion to stay an action begun against a defendant in juris, with what has always been a defendant-oriented discretion to decide on the appropriateness of service ex juris. Putting the burden on the defendant in both situations tends to erase this distinction. Also in favour of maintaining the defendant-biased approach to service ex juris is the view of the Ontario Court of Appeal, in Singh v. Howden Petroleum Ltd., 109 that even where rules of court permit service exjuris without leave, once the defendant raises the issue the court must apply "the same principles which governed the scrutiny, by the Court, of process issued under the old Rules when the court was hearing an application to set aside the order allowing service ex juris"."0 On the other hand, Ontario Rule 17.06(2)(c), which now provides explicitly for the discretion, says that the court must be "satisfied that. . .Ontario is not a convenient forum for the hearing of the proceeding","' which would seem to clearly reverse the onus from what used to be when leave was required.

105 Supra, note 71 at 481. 106 Oulton Agencies, supra, note 101; Cranston, supra, note 101; Warren v. Robinson (1982), [1983] 55 N.S.R. (2d) 147, [1982] 31 C.P.C. 305 (T.D.); Pindling v. National BroadcastingCorp. (1984), 49 O.R. (2d) 58, 14 D.L.R. (4th) 391 (H.C.). 107 Supra, note 37. 108 Supra, note 61 at 300-01. She is more willing to assimilate the two approaches in cases where the choice is between two Canadian fora. See infra, notes 117-121 and accompanying text. "0 (1979), 22 O.R. (2d) 588, 100 D.L.R.. (3d) 121 (C.A.). 110 Ibid. at 600, 100 D.L.R. (3d) at 133. 111 [Emphasis added]. See also N.B.R.C. 19.05(2)(c). 19881 Recent Developments in Canadian Law

In other provinces it is also likely that when the issue is squarely raised, the courts will go so far as to explicitly put the burden on the plaintiff to prove that a local action is more appropriate than an action in another province or country. The fact that the case falls within one of the categories for service ex juris without leave (in the provinces that restrict it to certain classes of action) already provides substantial factual link with the forum. It will probably seem more natural to the court to ask the defendant to overcome this primafacie connection by a showing of forum non conveniens, than to revert to the old position that it was the plaintiff who had to justify the service. The approach most likely to be followed, and probably the most practical, is to deal with the service injuris/serviceexjuris problem, not as changing the burden of proof, but as an element to be considered in exercising the discretion. This element may be of great or modest weight, depending on where the defendant was served with process, whether the defendant was there as a resident or as a transient visitor, and on the centre of gravity of the case in other respects. The traditional argument, that jurisdiction over defendants served outside the country must always be exercised with "great caution" because the jurisdiction is "exorbitant" 1988 CanLIIDocs 6 and touches on the sovereignty of another state, rings hollow when service is made in another Canadian province. 112 It is hardly a foreign sovereign entity, and among the provinces jurisdiction based on service ex juris is not "exorbitant" 13 but common practice. For that matter, even where the defendant is served outside Canada it is hard to see that the service itself impinges on the sovereignty of the country in question. The defendant is simply given notice that an action has been started against him or her in Canada. If there is an infringement of sovereignty it stems from the Canadian court's purporting to exercise judicial power over persons or matters that under international law are beyond the proper reach of its laws and inside the jurisdiction (used in the public international law sense) of the other country. International law is very vague on this point, 14 and many cases of service ex juris would clearly be within Canada's proper sphere of international competence on any test, as for example when a Canadian citizen resident in the United States is sued in Canada in connection with acts done in Canada. Aside from the burden of proof, is there any other difference in the way the issue of declining jurisdiction should be approached in cases brought against a defendant in the jurisdiction as compared with exjuris cases? As already mentioned, the Rogers case 15 suggested that there

112 See Re Wismer and Javelin Int'l Ltd. (1982), 34 O.R. (2d) 785 at 792, 132 D.L.R. (3d) 156 at 163 (H.C.) [hereinafter Re Wismer]; Jannock, supra, note 62. 113 See also Lord Goff's deprecation of this term in the Spiliada case, supra, note 71 at 481. 14 See S.S. Lotus, [1927] P.C.I.J. ser. A, no. 10; I. Brownlie, PRINCIPLES OF PUBLIC INTERNATIONAL LAW, 3d ed. (Oxford: Oxford University Press, 1979) at 298- 304. 115 Supra, note 89. Ottawa Law Review/Revue de droit d'Ottawa [Vol. 20:2 was. If the defendant was served in juris the question was not simply one of the convenient forum. More weight was to be given to the plaintiff's right to sue in his own jurisdiction and the action would not be stayed unless having to defend the action in the local forum would be a "severe injustice" to him. It is submitted that these are spurious distinctions. The notion of a "right" to sue in one's "own" jurisdiction has already been criticized. 1 6 The idea that an action will only be stayed if there is a "severe injustice" to the defendant is a hangover from the old, "oppressive and vexatious" approach to abuse of process. It wrongly suggests that being forced to defend an action in an inappropriate forum is not unjust enough; that something more must be shown. 1 7 It would make much more sense to recognize, as the House of Lords has done in the Spiliada case, that, whether it arises in the in juris setting, the question of forum non conveniens is the broad one of deciding which forum is more appropriate for the interests of all the parties and for securing the ends of justice. That leaves quite enough scope for the exercise of a disciplined discretion, without confusing the issue by hanging on to vague and irrelevant makeweights that are supposed to be applied in one case but not the other. 1988 CanLIIDocs 6

(iii) The FederalAspect

There are suggestions in the cases" 8 that the issue of forum non conveniens should be approached differently depending on whether the alternative forum is in Canada or a foreign country. This was said in connection with service ex juris, and the point being made was that the caution usually necessary in taking jurisdiction over a person in a foreign country was not called for if the defendant was in Canada; there was no foreign sovereignty involved. Therefore, to the extent that considerations of sovereignty play a role - which as a rule is probably not much - the fact that the conflict of jurisdictions is interprovincial rather than international works in favour of asserting jurisdiction. Whether in other respects it cuts one way rather than the other is hard to say. If the alternative forum is another Canadian court (except in some respects a court in Quebec) one can say that the choice between them is probably less significant for the parties, in terms of procedures available, the law to be applied, or the enforceability in Canada of the eventual judgment," 9

116 Supra, notes 99-101 and accompanying text. 117 See Glenbrook, supra, note 101 at 453, where Proudfoot J. refused to stay the action, even though B.C. had been shown to be the less convenient forum, because she had no evidence before her on the question whether the continuation of the action would be a severe injustice to the defendant. "s Supra, note 112. 19 Compare Aetna FinancialServices Ltd. v. Feigelman, [19851 1 S.C.R. 2, 15 D.L.R. (4th) 161; P. Glenn, Comment (1986) 64 CAN. BAR REV. 382. 1988] Recent Developments in Canadian Law

than if the alternative forum is in another country. But this can work as easily in favour of taking jurisdiction as declining it. 120 Probably the most one can say about the significance of the federal aspect is that it, too, is a relevant consideration in deciding an issue of forum non conveniens, but one whose weight depends on all the circumstances. There seems no reason to give it any special status or presumed effect. 121 Its primary importance is probably to the effect it may have on the relative weight that should be given to the other factors in a particular case. For instance, the fact that if it hears the case a British Columbia court will need to apply foreign law, may mitigate more strongly against taking jurisdiction if the law is German (or even English) than if the law is Albertan. Similarly, to a British Columbia court, the fact that the working language in the alternative forum is Swedish, whereas the plaintiff and his witnesses speak only English, may count against Sweden as a forum, and thus in favour of taking jurisdiction, more than a trial being in French would count against Quebec.122

(iv) Advantage to the Plaintiff 1988 CanLIIDocs 6 The second limb of the MacShannon formula, which applies if on the first limb the balance is in favour of declining jurisdiction, directs the court not to stay the action if the plaintiff would thereby lose a legitimate personal or juridical advantage that he has in the local court but would not have in the other, prima facie more appropriate, forum. This is a problematic element in Lord Diplock's test. If read broadly, it is an explicit approval of the right to forum-shop, a thing that in other contexts is usually decried. The qualifier "legitimate" was presumably added with an eye to distinguishing between (illegitimate) forum-shopping and (legitimate) forum selection, but it has played little role in the cases. The types of advantage that Canadian courts have held sufficient to bar any stay of the action, or other declining of jurisdiction, include the following: the defendant's having exigible assets in the local forum that would not be available to satisfy the plaintiff's judgment if he obtained it in the alternative forum;123 the plaintiff's cause of action being statute

120 Edinger, supra, note 61 at 305. 121Lord Goff suggested in Spiliada, supra, note 71 at 476, that in a federal jurisdiction the plaintiffs choice of forum is entitled to a "strong preference" because the constitution recognizes that both alternative fora are legitimate ones. Is is not clear, however, why he assumes that the constitutional framework is designed to serve the interests of the plaintiffs but not those of the defendants or of the federal system of justice as a whole. 122 See Bonaventure, supra, note 90. 123 Nemaha Energy Inc. v. Wood & Locker Inc. (1985), 68 B.C.L.R. 187 (S.C.); Delbreuck & Co. v. Muenzenberg (1984), 54 B.C.L.R. 264, 44 C.P.C. 36 (S.C.); Canadian Imperial Bank of Commerce v. Ria-Mar Fisheries Ltd. (1985), 71 N.S.R. (2d) 466 (S.C.T.D.) [hereinafterRia-Mar]; Pace v. Synetics, Inc. (1983), 41 O.R. (2d) 267, 145 D.L.R. (3d) 749 (H.C.) [hereinafter Pace]. Ottawa Law Review/Revue de droit d'Ottawa [Vol. 20:2 barred in the alternative forum124 the plaintiff's claim being for a remedy under a statutory provision that would probably not be applied in the alternative forum but might be applied in the local province;125 the defendant's probably having a defence in the alternative forum that he does not have in the local forum; 126 and the availability of a head of damage in the local forum but not in the alternative forum. 127 In some cases the advantage the plaintiff enjoyed in the local forum was enough to outweigh a very considerable argument in favour of the alternative forum in other respects. In Avenue PropertiesLtd. v. First City Development Corp.,128 for example, the British Columbia resident purchaser of some units in a residential real estate development in Ontario was being sued in Ontario by the vendor for enforcement of the sale agreements, which were expressly governed by Ontario law. The purchaser began an action in the British Columbia Supreme Court for a declaration that the agreements were unenforceable because the vendor had not complied with the prospectus requirements of the British Columbia Real Estate Act.129 Although the case was clearly most substantially connected with Ontario, 130 and the purchaser's rival action in British Columbia would 1988 CanLIIDocs 6 duplicate most of the issues in the Ontario case which might result in conflicting decisions, the British Columbia Court of Appeal refused to stay the action. The purchaser had a right, the Court thought, to argue that the prospectus requirements in the British Columbia statute applied to any solicitation of purchasers in the province, regardless of the location of the real estate or the proper law of the relevant contracts, and rendered the contracts in question unenforceable. It was unlikely that an Ontario court would apply the statute, given the Anglo-Canadian conflicts rule that the proper law of the contract governs nearly all issues 131 exclusively, unless there is a statutory rule of the lexfori that, on its true construction, applies to the contract regardless of its proper law. The potential appli-

124Butkovsky v. Donahue (1984), 52 B.C.L.R. 278, 42 C.P.C. 260 (S.C.); Van- couver IslandHelicopters Ltd. v. Robertshaw Controls Co. (1980), 30 O.R. (2d) 283, 116 D.L.R. (3d) 716 (H.C.). 125Avenue PropertiesLtd. v. First City Dev. Corp. (1986), 32 D.L.R. (4th) 40, [19871 1 W.W.R. 249 (B.C.C.A.) (remedy under B.C. statutory provision that an Ontario court would probably not apply to an Ontario contract) [hereinafter Avenue Properties]. Re Wismer, supra, note 111 (provision in Canada Business CorporationsAct valid in Ontario but unconstitutional in Quebec). 126Mason v. Mason (1987), 20 B.C.L.R. (2d) 75, [1988] 2 W.W.R. 307 (S.C.); Pindling v. National Broadcasting Corp., supra, note 106. 127Westcoast Transmission Co. v. InterprovincialSteel and Pipe Corp. (1982), 41 B.C.L.R. 103 (S.C.); Skagway Terminal Co. v. TheDaphne (1987), 42 D.L.R. (4th) 200 (F.C.T.D.) [hereinafter The Daphne]. 128 Supra, note 125. 129 R.S.B.C. 1979, c. 356, s. 62. 130 Compare Hein v. Linvell Wood Prods. Ltd. (1986) 56 O.R. (2d) 106, 11 C.P.C. (2d) 57 (Dist. Ct.) (contracts performed in Nova Scotia and governed by Nova Scotia law). 131 Except issues of illegality by the lex loci solutionis, formalities of execution, and a few others. 1988] Recent Developments in Canadian Law cation of the British Columbia statute was therefore a legitimate juridical advantage to the plaintiff in his British Columbia action and militated against a stay. The effect of the decision in Avenue Propertieswas deliberately to countenance the bringing of a second action that was designed to preempt or block an expected contrary decision of the court of another province in an action between the same two parties. This is the antithesis of judicial comity. The only thing to say in favour of such a position is that the plaintiff was invoking a local statutory rule whose availability to protect British Columbia residents, solicited by out of province vendors, was arguably a matter of public policy. 132 Except for this element of the case the plaintiff's attempt to escape from the consequences of an Ontario lawsuit, on a contract dealing with Ontario immovable and expressly governed by Ontario law, could easily be called mere forum-shopping. The line between a local advantage that the plaintiff should be permitted to pursue, and one that should be denied to him, has recently been considered twice by the House of Lords. In the Spiliada case, Lord Goff said that a court should generally not be deterred from granting a stay of proceedings or denying leave to serve ex juris simply because 1988 CanLIIDocs 6 the plaintiff would thereby be deprived of an advantage like higher damages or a longer limitation period "provided that the court is satisfied that substantial justice will be done in the available appropriate forum". 133 In that case, where it was argued that an action in British Columbia, the defendant's residence, might be a statute barred, he said, obiter, that the plaintiff had reasonably refrained from suing in British Columbia. At the relevant time the plaintiff could justifiably have assumed that the case could also be heard in England on the basis of service exjuris, especially since an action by a different plaintiff on similar facts against the same defendant was already under way there. 34 Under these circumstances, even if the plaintiff were to be relegated to the British Columbia forum, it would only be on condition that the defendant give an undertaking to waive the time bar in British Columbia. 35 This more critical approach to the plaintiff's advantage in the local forum was followed in De Dampierrev. De Dampierre,a case of declining jurisdiction in divorce. 136 Although the wife had a right to a financial provision in an English divorce court which she might well not have in French divorce proceedings, the House of Lords held that her English divorce action should be stayed. The couple's married life had been spent mostly in London, but both parties were French and the wife had left

132 Compare Ross v. McMullen (1971), 21 D.L.R. (3d) 228 (Alta. S.C.T.D.). 133 Supra, note 71 at 482. 134 Ibid. at 487. '35 Ibid. at 487-88. CompareNissho Iwai Corp. v. ParagonGrand CarriersCorp. (1987), 11 ET.R. 134. 136 Supra, note 81 at 1016-18. The court treated the question as essentially one of forum non conveniens although the issue was the exercise of statutory discretion in matrimonial causes legislation. Ottawa Law Review/Revue de droit d'Ottawa [Vol. 20:2 the matrimonial home in London to live in New York. It was not unfair, thought the Law Lords, to subject the wife to possible financial disad- vantage by denying her access to an English divorce court. Lord Tem- pleman explained:

On the one hand it is logical and not unfair to the wife to treat her as a French wife entitled to the rights conferred by French law on divorced wives. On the other hand it would be unfair to the husband to treat the wife as if she were an English wife entitled to the rights conferred by English law on divorced wives when, in truth, the wife is a French wife, resides at present in the United States and has no connection with England. 137

If this approach had been used in the Avenue Properties case the question would have been whether it would be unfair to the plaintiff to stay his action and thereby deprive him of the possible refuge of the British Columbia Real Estate Act, or whether it would be unfair to the Ontario vendor to subject it to litigation in two provinces and to the possible defeat of its claim by the application of the British Columbia statute. One suspects that the British Columbia Court of Appeal would have answered yes to the first question and no to the second - reaching 1988 CanLIIDocs 6 the same conclusion as it actually did - because of the weight the court seems to attach to British Columbia's interest in regulating solicitations in the province by vendors of real estate elsewhere. An example of a case where the result might have been changed is The Daphne,138 where the owners of a dock in Alaska sued a ship in Canada in the Federal Court Trial Division for damages caused by a collision with the dock. Mr. Justice Collier thought that "there is little doubt an Alaskan court would be a more suitable forum than this court", 139 but that the dock owners had a chance of higher damages in a Canadian court because no depreciation allowance would be made as in a United States court. He denied a stay because this was a legitimate advantage the plaintiff was entitled to pursue. Applying the Spiliada critical approach, it surely could not be said that the Alaskan dock owner would be denied substantial justice if it was confined to the damages provided by United States law. 140 (v) Lis Alibi Pendens

Under the old approach to stays of proceedings, the fact that the same plaintiff was also suing the defendant in another jurisdiction could

137 Ibid. at 1011-12. 138 Supra, note 127. 139 Ibid. at 201. 140 It would be different if the defendant refused to put up security for its damages in the U.S. court, and had no assets other than the ship. In such a case the Canadian court that had jurisdiction over the ship might be the only one where the plaintiff had a chance of realizing on its judgment. See Kohr v. The FriedrichBusse, [1982] 2 F.C. 709, 134 D.L.R. (3d) 261 (T.D.); compare Elesguro Inc. v. Ssangyong Shipping Co. (1980), [1981] 2 F.C. 346, 117 D.L.R. (3d) 105 (T.D.). 1988] Recent Developments in Canadian Law be evidence of oppression or vexation. The fact that the defendant was suing the plaintiff elsewhere, on the same subject matter, was less likely to weigh against the plaintiff's bringing his own action on the local forum. 4 Under the MacShannon test the presence of a lis alibi pendens is primarily relevant on the first limb, that of determining whether the action would be more appropriately litigated in the foreign jurisdiction than locally. The fact that another action is already proceeding elsewhere may reinforce the conclusion that the interests of justice would be better served by confining litigation to the other jurisdiction. 142 Conversely, the fact that the defendant has already sued the plaintiff in the local forum may argue against a stay because it is desirable to try both actions in the same place. 143 In other situations the lis alibi pendens may be viewed as a neutral consideration, as where the foreign action was started by the plaintiff only to protect its position under a limitation period, pending a decision on whether the local court would hear the case. 144 Even where it would usually militate in favour of declining jurisdiction, the lis alibi pendens may be offset by the second limb of the MacShannon test. In numerous cases Canadian courts have allowed the local action to continue notwithstanding that it duplicated a foreign action, 1988 CanLIIDocs 6 because the plaintiff had a good reason for thinking that his chances of success in the action 145 or of recovering on his judgment 146 were better if he proceeded in the local forum than in the other jurisdiction.

5. Declining Jurisdiction:Contractual Choice of Forum

Under this heading it need only be noted that the Saskatchewan Court of Appeal's mistaken suggestion in 1973147 that an agreement to litigate exclusively in a foreign court "ousts" the jurisdiction of the local court, has by now been generally rejected. Canadian courts continue to apply the English rule148 that an exclusive choice of forum clause in favour of a tribunal in another province or country will usually be a ground for a stay, but that the local action may be allowed to proceed if

141 See CHESHIRE & NORTH, supra, note 6 at 234-35. 142 The Abidin Daver, supra, note 72; Mohler, supra, note 87; Carrothers J.A. (dissenting) in Rogers, supra, note 89. See CHESHIRE & NORTH, ibid. at 235-37. 143 Island Surf Holdings Ltd. v. Bank of Nova Scotia (1987), 35 D.L.R. (4th) 259 (N.W.T.S.C.). 144 Churchill Falls, supra, note 103. 145 See Avenue Properties,supra, note 125. 146 Ria-Mar, supra, note 123; General Dynamics Corp. v. Veliotis (1985), 53 O.R. (2d) 371, 7 C.P.C. (2d) 169 (H.C.); Polar Hardware Mfg. Co. v. Zafir (1983), 42 O.R. (2d) 161, 43 C.P.C. 156 (H.C.); Pace, supra, note 123. 147 E.K. Motors Ltd. v. Volksivagon CanadaLtd. (1972), [1973] 1 W.W.R. 466 (Sask. C.A.); see 1981 Survey, supra, note 1 at 126-28. 148 Summarized in The Eleftheria, [1969] 2 All E.R. 641, [1969] 1 Lloyd's Rep. 237 (P.D.). Ottawa Law Review/Revue de droit d'Ottawa [Vol. 20:2 the circumstances make that the better course to follow. 149 Considerations that have led courts in recent cases to override an exclusive choice of forum clause have included the fact that practically all the facts of the case were connected with the court's own province;150 the desirability of hearing the action in conjunction with claims against other parties arising out of the same transactions;151 and the fact that the plaintiff was seeking injunctive relief that would be effective only if obtained in the province. 152

B. Actions Relating to Property: MatrimonialProperty

The common law provinces' matrimonial property regimes are suf- ficiently divergent from each other that many conflicts problems will arise interprovincially as well as internationally. The jurisdictional issues that arise under matrimonial property legislation are further complicated by the fact that the spouses' remedies in respect of matrimonial property may be in personam, in rem, or a combination of both. Thus the location of the property as well as the residence of the parties must be considered.

Another source of confusion is that some provinces' legislation includes 1988 CanLIIDocs 6 specific rules for dealing with interjurisdictional issues, and the legislation of others does not. The statutes fall into three groups so far as their conflicts provisions, or lack of them, is concerned. The first group, consisting of British Columbia 153 and Saskatchewan, 154 have no provision defining the court's jurisdiction in applications by one spouse for a matrimonial property order against the other, nor any rules on choice of law. The second group, which includes Alberta 55 and Manitoba, 156 empower the court to make orders under the Act only where both spouses are habitually resident in the province at the time the proceedings are begun; or their last common

149 Burrard-Yarrows Corp. v. The Hoegh Merchant (1981), [1982] 1 EC. 248 (T.D.), aff d [1983] F.C. 495 (C.A.); Volkswagen Canada Inc. v. Auto Haus Frohlich Ltd. (1985), 41 Alta L.R. (2d)5, [1986] 1 W.W.R. 380 (C.A.); Neptune Bulk Terminals Ltd. v. IntertecInternationale Technische Assistenz GmbH (1981), 31 B.C.L.R. 73, 127 D.L.R. (3d) 736 (C.A.) (stay not granted) [hereinafter Neptune Bulk Terminals]; Lam Co. v. O'Lori Holdings Ltd. (1981), 27 B.C.L.R. 378 (C.A.); G & E Auto Brokers Ltd. v. Toyota CanadaInc. (1980), 25 B.C.L.R. 145, 117 D.L.R. (3d) 707 (S.C.); Hi- Dro Electric Co. v. Commonwealth Constr. Co. (1984), 36 Sask R. 182 (Q.B.). 1so Westcoast Commodities Inc. v. Yehia (1985), 30 B.C.L.R. 107 (Co. Ct.). 151 Neptune Bulk Terminals, supra, note 149; United Nations v. Atlantic Seaways Corp., [1980] 2 EC. 345, 99 D.L.R. (3d) 609 (T.D.). 152 PirranaSmall Car Centres Ltd. v. Rumm (1981), 27 B.C.L.R. 279, [1981] 5 W.W.R. 79 (S.C.). 153 Family Relations Act, R.S.B.C. 1979, c. 121, Part 3. 15' The MatrimonialProperty Act, S.S. 1979, c. M-6-. 155 MatrimonialProperty Act, R.S.A. 1980, c. M-9, s. 3(1). 156 The MaritalProperty Act, S.M. 1978, c. 24, s. 2(1). The section says that the Act "applies" to spouses if the habitual residence criteria are met. This has been construed as a jurisdictional provision: Baker v. Baker (1985), 33 Man. R. (2d) 33, 49 R.EL. (2d) 216 (C.A.). 1988] Recent Developments in Canadian Law habitual residence 157 was in the province; or, if the parties have not had a common habitual residence since the marriage, each was habitually resident in the province at the time of the marriage. Additionally, the Alberta statute gives the court jurisdiction if a petition for divorce under the federal Divorce Act is presented to an Alberta court.158 In Manitoba the provision of express grounds for jurisdiction has been interpreted as excluding any jurisdiction to entertain matrimonial property claims brought otherwise than under the Act, that is, under Manitoba common law or another country's law. 159 Neither province's statute includes any choice of law rules, presumably because if the court has jurisdiction, the spouses will usually be connected with the province through their current or past habitual residence. 160 The third and largest group, which includes all the other common law provinces, have statutes that do not expressly restrict the court's jurisdiction by reference to the past or present residence of the spouses, but do have choice of law rules. These define the circumstances in which the Act's matrimonial property regime, or that of another province or country, will apply to determine the spouses' respective rights to the 1988 CanLIIDocs 6 matrimonial assets. All of the relevant rules, except Ontario's,161 distinguish between the ownership of property and its division. Newfoundland, Nova Scotia and Prince Edward Island include a choice of law rule for ownership. The law of the parties' last common habitual residence applies to the ownership of movables, 162 and the lex situs applies to ownership of immovables. 163 The choice of law rule for the division of matrimonial assets, in these provinces and New Brunswick, covers movables and immovables alike. Division is to be done according to the law of the parties' last common habitual residence. If the spouse never had a common habitual residence, lex fori is to be applied, except in the case of New Brunswick, which applies the law of the last habitual residence of the

157 Alberta's provision uses "joint habitual residence". I!' MatrimonialProperty Act, R.S.A. 1980, c. M-9, s. 3(2). 159 Wolch v. Wolch (1980), 17 Man. R. (2d) 68, 19 R.F.L. (2d) 307 (Q.B.), affd (1981), 20 R.EL. (2d) 325 (C.A.); see A. Bissett-Johnson & W.H. Holland, MATRI- MONIAL PROPERTY LAW IN CANADA (Toronto: Carswell, 1980) at 1-72-73 [hereinafter Bissett-Johnson & Holland]; McLeod, supra, note 4 at 395. 160 Except possibly under the Alberta provision giving jurisdiction on the basis that a divorce petition has been presented in Alberta; infra, note 165 and accompanying text. 161 Since the Family Law Act, 1986, S.O. 1986, c. 4, replaced the Family Law Reform Act, R.S.O. 1980, c. 152. 162 Tle MatrimonialProperty Act, S.N. 1979, c. 32, s. 30(l); MatrimonialProp- erty Act, S.N.S. 1980, c. 9, s. 22(1); Family Law Reform Act, S.P.E.I. 1978, c. 6, s. 14(1). If there was no common habitual residence lexfori applies. 163 The MatrimonialProperty Act, S.N. 1979, c. 32, s. 30(2); MatrimonialProp- erty Act, S.N.S. 1980, c. 9, s. 22(2); Family Law Reform Act, S.P.E.I. 1978, c. 6, s. 14(2). Ottawa Law Review/Revue de droit d'Ottawa [Vol. 20:2

6 applicant. 1 4 In all four provinces the statute implicitly (in the case of New Brunswick, explicitly) recognizes that the court may not have jurisdiction to order directly the division of immovables outside the province, and provides that the value of such immovables may be taken into consideration for the purposes of making orders under the Act with respect 65 to other property. 1 Ontario's Family Law Act has a single choice of law rule that applies to all "property rights of spouses arising out of the marital relationship". 166 Analogously to the four maritime provinces' statutes, the rule provides that these questions are governed by the internal law of the place of the spouses' last common habitual residence or, if they never had a common habitual residence, by Ontario law. This rule may include questions of ownership as well as division of property 67 because the court has power to make orders with respect to both. But it would include issues of ownership or possession only so far as the rights claimed by either spouse could be said to "arise out of the marital relationship", as opposed to the ordinary laws regarding title to property. Thus a question of ownership would fall inside the rule if, for example, the claimant's title was based 1988 CanLIIDocs 6 on a foreign system of community property under which title vests in both spouses without any judicial action being taken. It would fall outside the rule, and presumably be governed by the general conflicts rules relating to title to property, if the rights claimed did not depend on the marital relationship. The statutory choice of law rules in the matrimonial property statutes will be discussed below under choice of law. The question here is the court's jurisdiction to make orders for the division of matrimonial assets. Only Alberta and Manitoba, as already mentioned, provide specific rules in this regard, tying jurisdiction basically to the spouses' last common (or joint) habitual residence. Thus they largely control choice of law by limiting jurisdiction. In Alberta choice of law may become an issue if the court takes jurisdiction to divide property because one spouse has petitioned for divorce in Alberta, 68 but the case so far as matrimonial property is concerned is more closely connected with another province or country. The Alberta jurisdictional provisions, especially the meaning of "habitual residence", were extensively discussed by the Alberta Court

164 The MatrimonialProperty Act, S.N. 1979, c. 32, s. 30(1); MatrimonialProp- erty Act, S.N.S. 1980, c. 9, s. 22(1); Family Law Reform Act, S.P.E.I. 1978, c. 6, s. 14(l); MaritalProperty Act, S.N.B. 1980, c. M-1.1, s. 44(2). 165 The MatrimonialProperty Act, S.N. 1979, c. 32, s. 30(3); MatrimonialProp- erty Act, S.N.S. 1980, c. 9, s. 22(3); Family Law Reform Act, S.P.E.I. 1978, c. 6, s. 14(2); MaritalProperty Act, S.N.B. 1980, c. M-1.1, s. 45. 166 S.O. 1986, c. 4, s. 15. 167 Ss. 7(1), 10(1). 168 Matrimonial Property Act, R.S.A. 1980, c. M-9, s. 3(2). Jurisdiction under the Divorce Act, 1985, S.C. 1986, c. 4, requires only that either spouse have been ordinarily resident in Alberta for a year (S. 3(1)). 1988] Recent Developments in CanadianLaw of Appeal in Adderson v. Adderson. 169 The parties had married in 1970 and except for a three month period in 1982, they had lived in Alberta from their marriage until March 1984. Then they moved to Hawaii, having obtained alien registration cards to permit them to work in the United States. The husband moved to California in August 1984 and wife obtained a decree of divorce in Hawaii in October 1985. She applied in Alberta for a division of the matrimonial property. It is unclear from the report how much matrimonial property remained in Alberta at that time. The Court of Appeal held that the trial judge had jurisdiction because the parties' stay in Hawaii, and particularly the husband's transitory connections with that state, had not been enough to establish a common habitual residence there. The last common habitual residence was thus Alberta. In the first extensive attempt to define "habitual residence" in Canadian law, Laycraft C.J.A. said that, in his view, both the length of time and the intention with which the parties resided in Alberta were relevant to determine habitual residence, but were to be viewed quite differently from factum and animus in determining domicile. There, intention (aninus) plays the dominant role and presence (factum) is only a threshold requirement. In habitual residence, both circumstances are 1988 CanLIIDocs 6 to be weighed together. He summarized the concept as follows:

[T]he term "habitual residence" refers to the quality of residence. Duration may be a factor depending on the circumstances. It requires an animus less than that required for domicile; it is a midpoint between domicile and residence, importing somewhat more durable ties than the latter term. In my view it is not desirable, indeed it is not possible, to enter into any game of numbers on the duration required. All of the factors showing greater or 70 less present intention of permanence must be weighed. 1

This judgment will be important because the term habitual residence has found its way not only into matrimonial property laws, but also into legislation on child custody and statutes implementing international conventions like the Hague Conventions on private international law. 171 In the majority of provinces the Act lays down no jurisdictional rules so the courts have to decide in what circumstances they could, or should, take jurisdiction to make orders enforcing the rights given by the matrimonial property legislation. The rules have not assumed a definite shape, partly because relatively few cases have considered the problem at any length, and most of these are at first instance. The clearest rule, and the only one that has the imprimatur of courts of appeal, is that a court has no jurisdiction to make an order for the division of immovable property situated outside the province. In other words, BritishSouth Africa

169 (1987), 51 Alta. L.R. (2d) 193, 36 D.L.R. (4th) 631 (C.A.). 170 Ibid. at 198, 36 D.L.R. (4th) 631 at 636. 171 Such as the Convention on Child Abduction: infra, notes 227-233 and accompanying text. Habitual residence almost was used in the Divorce Act, 1985: see infra, note 199 and accompanying text. Ottawa Law Review/Revue de droit d'Ottawa [Vol. 20:2

Co. v. Companhia de Mozambique712 applies to deny jurisdiction where a spouse seeks an order purporting to deal directly with title to an immovable property that is situated elsewhere. 173 Conversely, a court always has jurisdiction to make orders with respect to immovable property in the province. 174 The British Columbia Court of Appeal recently held that since only the court in the province where the immovable is located may deal with it under matrimonial property legislation, and argument that it is forum non conveniens must fail; there is no other possible forum. 175 It may be possible for a court to include an extraprovincial immovable in its order in one of two ways. First, it may take the value of the immovable into account in deciding how to divide the property over which it does have jurisdiction; this is expressly provided for in most provinces' statutes. 176 Second, it may couch the order in terms that make it operate in personam rather than in rem so that personal jurisdiction over the respondent will suffice. An example of the first technique is illustrated in Jeske v. Jeske. 177 The British Columbia Supreme Court took into account the value of immovables in Alberta in making an order against the husband for a lump 1988 CanLIIDocs 6 sum payment to the wife in respect of her share of the matrimonial assets. The wife was able to enforce this judgment in Alberta, notwithstanding the references to immovable property in Alberta, because the order was strictly in personam and the British Columbia Court had personal jurisdiction over the husband. 178 An example of the other technique would be to make a personal order against the owner spouse to convey all or part of it to the claiming spouse, as distinct from making an order purporting actually to transfer

172 British South Africa Co. v. Companhia de Mogambique, [1893] A.C. 602 (H.L.) [hereinafter Mogambique]. 173 Re Middleton and Middleton (1980), 15 R.EL. (2d) 251, 110 D.L.R. (3d) 497 (Sask. C.A.), leave to appeal refused [19801 1 S.C.R. x [hereinafter Middleton cited to R.EL.]; Hull v. Hull (1981), 12 Man. R. (2d) 134, 21 R.F.L. (2d) 72 (C.A.). 174 Palmer v. Palmer (1979), 13 R.FL. (2d) 40, 107 D.L.R. (3d) 401 (Sask. C.A.). 175Tezcan v. Tezcan (1987), 20 B.C.L.R. (2d) 253, [198812 W.W.R. 264 (C.A.). 176 The Matrimonial PropertyAct, S.N. 1979, c. 32, s. 30(3); MatrimonialProp- erty Act, S.N.S. 1980, c. 9, s. 22(3); Family Law Reform Act, S.P.E.I. 1978, c. 6, s. 14(2); MaritalProperty Act, S.N.B. 1980, c. M-1.1, s. 45; MatrimonialProperty Act, R.S.A. 1980, c. M-9, s. 11; and see Cowan v. Cowan (1983), 37 R.EL. (2d) 66, 133 A.P.R. 248 (N.S.S.C.T.D.). The Ontario Family Law Act, 1986 does not make the value of extraprovincial immovables a ground for departing from an equal division of the net family assets: see s. 6(6). The former Family Law Reform Act did provide for extraprovincial immovables: see Nuss v. Nuss (1983), 37 R.EL. (2d) 7 (Ont. Co. Ct.). 177 (1984), 36 R.EL. (2d) 376, [1984] 1 W.W.R. 61 (Alta. Q.B.). 178 Ibid. at 384, [1984] 1 W.W.R. 61 at 69-70. The husband agreed to the court's jurisdiction (and to the application by the B.C. judge of Alberta law: see infra, PART V(D)(1), CHOICE OF LAW). 1988] Recent Developments in Canadian Law the title. A personal order to convey would not offend against the Mo- ambique principle. 179 So far as movable property among the matrimonial assets is concerned, the court's jurisdiction to make orders with respect to such property is most often said to depend on whether the court has personal jurisdiction over the spouse who owns the property. In Britten v. Britten, 180 the British Columbia Supreme Court said that it had no jurisdiction to make an order with respect to a federal government pension located in Ontario' s' because the husband, the beneficiary of the pension, was resident in Ontario and had not attorned to the court's jurisdiction. Lord Justice Hyde of the Supreme Court distinguished an earlier case, Mc- Kiney v. McKinney, 82 in which the court had ordered the division of two pension funds located outside the province, but the beneficiary, the husband, had submitted to the jurisdiction. The courts' approach to these jurisdictional questions is open to the criticism that to some extent it confuses jurisdiction with choice of law. There is no problem with dividing all the movables (and for that matter the immovables too 8 3) according to a single matrimonial property statute; indeed it is probably the best way to proceed. But the court's power to 1988 CanLIIDocs 6 accomplish the division directly by an order in rem, such as one trans- ferring the property or ordering it to be partitioned or sold, 84 is another matter. The court's power to make an order directly affecting title can extend only to property within its territorial jurisdiction, whether that property is movable or immovable. This follows from both the rule that the lex situs governs transfers of title to movables, as well as immovables, and from the constitutional limitation that restricts provincial authority to property and civil rights within the province. 85 So the fact that the court of a particular province has personal jurisdiction, by service or attornment, over the spouse who owns the property does not give the court jurisdiction to make orders in rem against movable or immovable property in another province or country. The court, however, can make personal orders against the owner spouse for the transfer of the property.

179 This may be the explanation for Karaa v. Karaa (1985), 48 R.EL. (2d) 416 (B.C.S.C.), where the court purported to divide an immovable the husband owned in England. 11o (1983), 50 B.C.L.R. 131, 37 R.FL. (2d) 329 (S.C.); see also Key v. Key (1986), 1 R.FL. (3d) 150 (B.C.S.C.). I'l The situs of the pension was apparently assumed to depend on the residence of the beneficiary. Compare Middleton, supra, note 173 at 256, where the situs of a pension was "where it is properly payable or where it is recoverable". See Bissett- Johnson & Holland, supra, note 159 at 1-78. 182 (1980), 17 R.EL. (2d) 308 (B.C.S.C.). 183 As most statutes do: see supra, notes 163-166 and accompanying text. 'm E.g., Family Law Act, 1986, S.O. 1986, c. 4, s. 9(1)(d). 185 Constitution Act, 1982, being Schedule B of the CanadaAct 1982 (U.K.), 1982, c. 11, s. 92(13). Bissett-Johnson & Holland, supra, note 158 at 1-77 to 1-78. They suggest that an in rein order against movables outside the province might be possible, although its enforceability in the other province would be another question. Ottawa Law Review/Revue de droit d'Ottawa [Vol. 20:2 This situation seems to be the true explanation for the results in McKinney v. McKinney8 6 and Britten v. Britten. 187 If the owner of the property is not subject to the court's jurisdiction, the court can only make an effective order against that spouse's property if it is within the court's territorial jurisdiction. 188 If the court does have personal jurisdiction over the owner spouse, then the court can make an order that imposes a personal obligation on the spouse to transfer movables, wherever they are situated, or to make a lump sum payment based on their value. To summarize, up to now the tendency has been to treat foreign immovables as being absolutely beyond the scope of any order which the court may make and to treat foreign movables as being within the court's scope if the court has personal jurisdiction over the owners. The dichotomy, however, is inaccurate. The distinction to be observed is not between movables and immovables but between orders in personam and in rem. Even if the court has jurisdiction to grant relief in respect of the division of matrimonial property it may choose to decline it. In this area, too, the doctrine of forum non conveniens has been adopted. The most 189 interesting example is Vladi v. Vladi. Mrs. Vladi, who lived in Nova 1988 CanLIIDocs 6 Scotia, applied for an order in respect of her matrimonial property rights under the Nova Scotia Matrimonial Property Act. 190 Mr. Vladi, who resided in West Germany, applied to strike his former wife's proceeding for want of jurisdiction. The couple were Iranian nationals. Chief Justice Glube, sitting in chambers, found their last common habitual residence was West Germany, although they had visited Nova Scotia from time to time. The assets in question included three immovable properties in Halifax, one of which was jointly owned and the others were in the husband's name alone. The rest of the assets were movable and immovable property in West Germany and shares in companies located in West Germany, Nova Scotia, Switzerland and Lichtenstein.'19 The husband maintained that Nova Scotia was forum non conveniens, especially if West Germany was the last common habitual residence. That meant that West German law had to be applied to the division of all the property, wherever it was located, under the Act's choice of law rule. 192 Glube C.J.T.D. agreed that West German law had to be applied, but took this to mean the whole law, including the German conflicts rule

186 Supra, note 182. 187 Supra, note 180. 188 In Middleton, supra, note 173, the court seems to have limited its jurisdiction on this principle with respect to both movables and immovables. 189 (1986), 73 N.S.R. (2d) 418, 3 R.EL. (3d) 276 (S.C.) [hereinafter Vladi cited to R.EL.]. Others are Wong v. Wong (1985), 60 B.C.L.R. 135, 44 R.FL. (2d) 82 (S.C.); Cackette v. Cackette (1981), 19 R.F.L. 276 (1980), 28 Nfld. & P.E.I.R. 458 (P.E.I.S.C.). 190 S.N.S. 1980, c. 9. 191 Vladi v. Vladi (1987), 79 N.S.R. (2d) 356 at 358, 39 D.L.R. (4th) 563 at 565-66 (S.C.) (decision on the merits of the application: see infra, PART V CHOICE OF LAW) [hereinafter Vadi v. Vladi cited to N.S.R.]. 192 See supra, note 164 and accompanying text. 1988] Recent Developments in Canadian Law for determining the matrimonial regime. This rule, she found, referred to the law of Iran as the spouses' lexpatriae. She also accepted the wife's evidence that Iranian law would accord the wife no rights in respect of the matrimonial assets, though the wife might be awarded maintenance (her only property right apparently would be a token return of the symbolic gift of the bride, a small Koran). The Chief Justice held that denial of any substantial claim to her husband's property, "would probably offend against substantial justice as we know it in Nova Scotia" because it "would clearly offend the principles of equal division of matrimonial assets which is the law in Nova Scotia". 93 This conclusion countered any argument that West Germany was a more appropriate forum for the wife's action. The result of the decision on jurisdiction (the subsequent decision on the merits is discussed below in connection with choice of law) is unexceptionable. The court had personal jurisdiction over the husband by his attornment and, as it turned out, the bulk of the matrimonial assets were the immovable properties in Nova Scotia; the husband's corporate assets and thus exempt from division. 194 interests were held to be business 1988 CanLIIDocs 6 As already mentioned, the appropriate forum for dividing immovable assets can only be the court of the province where the assets are situated. 195 No West German court order could be effective to deal with the Halifax real estate. There is room for debate, however, about the actual reasons Glube C.J.T.D. gave for excluding West Germany as an alternative forum. To say that an equal division of matrimonial assets is such a fundamental principle of Nova Scotia law that a separate property regime is against public policy is unwarranted and without historical foundation. Separate property was the law of Nova Scotia until the 1970s. Even though we are now under the sway of the equality provisions of the Charter of Rights,196 does that mean that any foreign law that does not measure up to the new Canadian standards of equality is contrary to public policy and, thus, is to be denied effect by a Canadian court? Is that not coming close to saying that we regard as against public policy any law that is substantially different from our own? A less sweeping rationale might be preferable. It was really the location of the assets that was crucial in Vadi v. Vadi. Suppose that the matrimonial assets had almost all been in West Germany. It is very doubtful whether a Nova Scotia court should feel obliged to take jurisdiction just because in West Germany - usually regarded as a civilized country - the court would probably deny the wife any rights in her husband's property. The result may be unattractive, but if the spouses spent most of their married life in West Germany and most of their

193 Valdi, supra, note 189 at 287. 194 Supra, note 191 (merits), table of assets at 372. 195 Supra, note 175 and accompanying text. 196 McLeod, annot. to Vadi, supra, note 189 at 278-79. Ottawa Law Review/Revue de droit d'Ottawa [Vol. 20:2 property was there, it is not a result that can fairly be described as beyond the pale.

C. Matrimonial Causes

1. Divorce

As of 1 June 1986 the Divorce Act, 1985 allows the court of a province to take jurisdiction over a divorce proceeding if either spouse has been ordinarily resident in the province for at least one year immediately preceding the commencement of the proceeding. 197 This rule abolishes the additional requirements under the former Act that the pe- titioner be domiciled in Canada and that either spouse must have actually been resident in the province for at least ten months of the period of ordinary residence. 198 This expansion and simplification of the jurisdictional test is a welcome improvement. In an earlier version of the legislation, Bill C-47,199 the test was to be "habitual residence" instead of

"ordinary residence". The final decision, to go with ordinary residence, 1988 CanLIIDocs 6 may have been partly to keep the benefit of the jurisprudence on "ordinary residence" that had developed under the former Act. 200 Another beneficial feature of the new Divorce Act's jurisdictional provisions is the removal of the exclusive jurisdiction of the court that granted a divorce to vary subsequently any order it made for the corollary relief of maintenance or custody. The old Act required parties, who years ago might have left the province where they were divorced, to return to the court there in order to obtain any variation of a corollary maintenance or custody order. Under the Divorce Act, 1985 a former spouse may apply for a variation in the province where he or she is currently ordinarily resident,20' or any other province if the other party agrees. 202

2. Nullity of Marriage

Jurisdiction in nullity can be based, as a recent British Columbia case affirmed, on the residence of both spouses in the province.23 That

197 Divorce Act, 1985, S.C. 1986, c. 4, s. 3(1). Sections 3(2) and (3) deal with the case where petitions are presented in two different provinces. 198 Divorce Act, R.S.C. 1970, c. D-8, s. 5(1). 199 Bill C-47, Divorce and CorollaryRelief Act, 1st Sess., 33rd Parl., 1984-85. 200 See Castel, supra, note 3 at 95-100 and McLeod, supra, note 4 at 182-84 for the case law. 20, S. 5(1)(a). 202 S. 5(l)(b). Again there are provisions in s. 5(2) and (3) dealing with variation applications between the same parties made in different provinces. 203 The respondent spouse's residence alone is probably enough: McLeod, supra, note 4 at 269, 272. The province is the appropriate jurisdiction unit because no federal law exists dealing with nullity. Each province retains the law relating to nullity of marriage that it had when it entered confederation. 1988] Recent Developments in Canadian Law case, Sangha v. Mander,204 involved what used to be a tricky question of jurisdiction: where the marriage was alleged to be voidable, not void, the petitioning wife's domicile depended on that of her husband, to whom she was validly married, unless and until a decree of nullity was pronounced. If the husband was domiciled outside the province, then the wife was too. Residence, whetherjoint as in Sangha v. Mander or separate, was determined by the residence of the husband alone,205 and was the only basis on which the wife could ask the court to take jurisdiction. On the other hand, if the wife claimed that the marriage was void, she was treated as being domiciled independently of her husband and so jurisdiction could be based on her own domicile. This anomaly presumably has been eliminated by recent legislation, driven by the CharterofRights, that gives a married woman a legal personality independent of her husband's and, by extension, gives her a separate domicile. 206 The wife's own domicile will now give the court jurisdiction irrespective of whether the marriage is alleged to be voidable or void. 207

D. Infants and Children 1988 CanLIIDocs 6

The Canadian law reports still show a large number of custody cases where the court's jurisdiction, or the recognition of an extraprovincial custody order, is at issue. The problem was especially acute at common law because the court, in any province where the child was present for the time being, could take jurisdiction and make a custody order if it thought it was in the child's best interests to do so.208 Existing custody orders or pending custody proceedings elsewhere could be taken into account as being relevant to the decision on the child's welfare, but extraprovincial custody orders were not entitled to recognition or enforcement as such. 209 This situation has been substantially improved by legislation.

2- [19851 6 W.W.R. 250, 65 B.C.L.R. 265 (S.C.). 20-5McLeod, supra, note 4 at 269, 272. 206 E.g., Family Law Act, 1986, S.O. 1986, c. 4, s . 64; Law and Equity Act, R.S.B.C. 1979, c. 244, s. 55(3)(c), as am. Charter of Rights Amendments Act, 1985, S.B.C. 1985, c. 168, s. 80. 207 SeeDavisv. Davis (1985), [1986] 64A.R. 173, [1986] 1 W.W.R. 383 (Q.B.), where the court took jurisdiction to annul a voidable marriage on the basis that the wife had her domicile in Alberta, whereas the husband's was in Ontario. Illogically, the Alberta court applied Ontario law to decide whether the wife had an independent domicile. 203 The source of this part of the law is McKee v. McKee, [1951] A.C. 352, [1951] 1 All E.R. 942 (P.C.). See C. Davies, InterprovincialCustody (1978) 56 CAN. BAR REV. 17. See also Charmasson v. Charmasson (1982), 34 O.R. (2d) 498, 131 D.L.R. (2d) 74 (C.A.). 209 The law is summarized in C. Davies, FAMILY LAW IN CANADA (Toronto: Car- swell, 1984) at 289-300. For one of the last cases on the common law position of extraprovincial custody orders, before statutory reform, see Re Solnik and Solnik (1983), 41 O.R. (2d) 427 (Unif. Fam. Ct.), affd (1984), 44 O.R. (2d) 684 (C.A.). Ottawa Law ReviewlRevue de droit d'Ottawa [Vol. 20:2

A uniform Extra-ProvincialCustody Orders Enforcement Act was adopted by the Uniformity Commissioners in 1974,210 and a revised and expanded version, the uniform Custody Jurisdiction and Enforcement Act, was adopted in 1981.21, The latter, as its title says, includes provisions that define the court's jurisdiction in custody matters generally, as well as dealing with the effect of custody orders made in other provinces. The new Act was modelled on the relevant part of the Ontario Children's Law Reform Act, 212 and has been enacted in British Columbia,2 1 3 in three of the maritime provinces2 14 and, without the jurisdictional provisions, in Manitoba. 2 5 The other three common law provinces have statutes that reflect the earlier version of the uniform Act.21 6 Essentially, the uniform Custody Jurisdiction and Enforcement Act makes habitual residence the key to both jurisdiction and the enforcement of extraprovincial orders. If the child is habitually resident in the province at the time the application is made, then the court has jurisdiction, but the court may decline its jurisdiction in favour of another province or country if the court sees that as more appropriate.2 7 On the other hand, a child who is habitually resident elsewhere may be made the subject of

a custody order in the province only if the court is satisfied that six defined 1988 CanLIIDocs 6 factors are present. These factors include: the child's physical presence in the province; the child's real and substantial connection with the province; and the appropriateness, on the balance of convenience, of exercising jurisdiction in the province. 218 These provisions have been considered in a number of recent cases.2 19

210 [1974] Unif. L. Conf. Proc. 29, 112-15. 211 [1981] Unif. L. Conf. Proc. 31, 91-101. 212 Children'sLaw Reform Act, R.S.O. 1980, c. 68, as am. S.O. 1982, c. 20. 213 Family Relations Act, R.S.B.C. 1979, c. 121, ss. 38-42, as am. S.B.C. 1985, c. 72, s. 17. 214 Family ServicesAct, R.S.N.B. 1983, c. F-2.2, ss. 130(l)-130(8); The Custody Jurisdiction and Enforcement Act, S.N. 1983, c. 30 (not yet in force); Custody Juris- diction and Enforcement Act, S.P.E.I. 1984, c. 17. 215 Child Custody Enforcement Act, S.M. 1982, c. 27. 216 Extra-Provincial Custody Orders Enforcement Act, R.S.A. 1980, c. E-17; Children'sServices Act, S.N.S. 1976, c. 8, s. 81 (very modified form); Extra-Provincial Custody Orders Enforcement Act, R.S.S. 1978 (Supp.), c. E-18. 217 See Ont. Children's Law Reform Act, ss. 22(l)(a). 25. "Habitual residence" is also defined: s. 22(2). It cannot be changed by abduction or by holding the child without the consent of the party with custody: s. 22(3). 218 Ont. Children's Law Reform Act, s. 22(1)(b). 219 Cases in which the court took jurisdiction because the child was habitually resident in the province: Hartmann-Jorgensenv. Hartmann-Jorgensen(1986), 50 R.FL. (2d) 430 (Ont. Unif. Fam. Ct.); Gordon v. Gordon (1984), 40 R.EL. (2d) 309 (Ont. S.C.); Lawson v. Banmnan (1985), 42 R.F.L. (2d) 395 (Ont. Prov. Ct.). Cases where the child was not habitually resident in the province but jurisdiction was taken because the alternative grounds were present: Obregon v. Obregon (1984), 39 R.FL. (2d) 164 (Ont. Unif. Fam. Ct.); Kastern v. Banning (1983), 32 R.FL. (2d) 315 (Ont. Dist. Ct.); Richards v. Richards (1987), 6 R.F.L. (3d) 131 (P.E.I.S.C.). Cases where the court had no jurisdiction: Wickham v. Wickham (1983), 35 R.EL. (2d) 448 (Ont. C.A.); Gilbert v. Gilbert (1985), 47 R.F.L. (2d) 199 (Ont. Unif. Fam. Ct.); Martocqv. Martocq (1986), 3 R.F.L. (3d) 381 (Ont. H.C.); Raines v. Raines (1986), 50 R.F.L. (2d) 157 (Ont. H.C.). 1988] Recent Developments in CanadianLaw Under the new model statute, the enforcement of extraprovincial custody or access orders, final or interim, is mandatory if the originating court took jurisdiction under circumstances in which the province's own court would have had jurisdiction according to the rules just described. 220 The only defences to enforcement, if jurisdiction was present, are: lack of reasonable notice to the respondent; lack of an opportunity for the respondent to be heard; the lack of a requirement in the law of the originating jurisdiction that the tribunal have regard for the child's best interests; or public policy.221 The most often litigated part of the enforcement statutes is the power given to the court in a province to vary or supersede an enforceable order made in another province or country. Essentially the court may do so in three sets of circumstances. The first is when there has been a material change in circumstances with respect to the child's best interests and the child is now habitually resident within the province. 222 The second is when there has been such a material change in circumstances that the court may make such an order, even if the child is not habitually resident in the province, on the condition that five criteria are met. These criteria include: the child's presence in the province; the absence of any remaining 1988 CanLIIDocs 6 real or substantial connection with the originating province or country; the existence of such a connection with the forum province; the availability in the province of substantial evidence as to the child's best interests; and the appropriateness, on a balance of convenience, of exercising jurisdiction in the forum province.223 The third ground for jurisdiction to vary or supersede is essentially when the court is satisfied that if it does not make such an order the child will suffer serious harm.224 Even if the child is subject to an enforceable extraprovincial custody order and the court cannot or chooses not to vary that order, the court can make interim orders in the child's best interests.225 For instance, the court can give interim custody to a relative in the province pending the outcome of an application for custody in another province.226 An additional legislative measure with respect to the custody of children is the implementation of the 1980 Hague Convention on the

220 See, e.g., Ont. Children'sLaw Reform Act, s. 42(1). Under the 1974 Model Act the basic criterion for enforcement was whether the child had a real and substantial connection with the originating jurisdiction: see McArdle v. Riley (1982), 28 R.F.L. (2d) 428 (B.C.C.A.); Correiav. Williams (1984), 46 Nfld. & P.E.I.R. 87 (Nfld. S.C.), affd but order varied (1984), 40 R.F.L. (2d) 54 (Nfld. C.A.). 221 Ont. Children's Law Reform Act, s. 42(l)(a)-(d). 222 S. 43(1)(a). 223 S. 43(b). See Re Mayor and Mayor (1983), 4 D.L.R. (4th) 55, 57 B.C.L.R. 228 (C.A.). Here the child had not lost a real and substantial connection with Ontario so there was no jurisdiction to vary (decided under the old form of the Model Act). 224 S. 44. See Clement v. Clement (1982), 17 Man. R. (2d) 9, 29 R.EL. (2d) 29 (C.A.); Minister of Social Services v. TB. (1984), 39 R.FL. (2d) 204 (N.S. Fam. Ct.). 225 S. 41. 226 E.g., Burton v. Burton (1986), 74 N.S.R. (2d) 339 (S.C.); Perry v. Perry (1987), 62 Nfld. & P.E.I.R. 332, 190 A.P.R. 332 (Nfld. S.C.). Ottawa Law Review/Revue de droit d'Ottawa [Vol. 20:2

Civil Aspects of International Child Abduction. At least four provinces have already passed legislation to bring the Convention into force in their jurisdictions.227 The Convention obliges states who are party to it to secure by judicial or administrative means the return of children who are wrongfully removed to or retained in the jurisdiction. "Wrongful" is defined to mean in breach of rights of custody given under the laws of the state where the child was habitually resident immediately before the removal or retention. 22 8 Thus, a mother or father who was awarded custody in a foreign country that is a party to the Convention229 may invoke the procedures of the Convention, so long as the originating country was the child's habitual residence. The relevant provincial authorities (including courts) are not bound to order the child's return in a number of circumstances, the most important of which is when "there is a grave risk that his or her return would expose the child to physical or psychological harm or otherwise place the child in an intolerable situation". 230 The Convention does not apply to the custody orders of another

Canadian province. In most provinces where the Convention has been 1988 CanLIIDocs 6 implemented it is included in the same Act as the uniform legislation that applies to the enforcement of all extraprovincial custody orders. This inclusion led the Manitoba Court of Appeal, in Re Lavitch and Lavitch,231 to try to harmonize the Convention's terms with the provisions of the uniform Act. The Court noted that in some respects the defences to enforcement under the Convention were framed in wider terms than the defences under the enforcement provisions of the uniform Act. 232 It could not have been the intent of the legislature, the Court thought, that the enforcement of custody orders from non-Convention countries, like the United States, should be more stringently required than those from Con- vention countries. The two sets of enforcement provisions should be construed broadly to achieve similar results where the relevant circumstances were the same. 233

227 Family Relations Act, R.S.B.C. 1979, c. 121, s. 42.1, as am. S.B.C. 1982, c. 8, s. 1; Child Custody Enforcement Act, S.M. 1982, c. 27, s. 17; The International Child Abduction Act, S.N. 1983, c. 29 (not yet in force); Children'sLaw Reform Act, R.S.O. 1980, c. 68, s. 47, as am. S.O. 1982, c. 20, s. 47. See also the proposed uniform legislation, [1976] Unif L. Conf. Proc. 128-40. 228 For Art. 3 of the Convention, see Children's Law Reform Act, R.S.O. 1980, c. 68, s. 47, as am. S.O. 1982, c. 20, Schedule to s. 47. 229 For Art. 4, ibid. 230 For Art 13(b), ibid. 231 (1985), 37 Man. R. 261, 24 D.L.R. (4th) 248 (C.A.). 232 In particular, it is expressly a defence under the Convention if "the child objects to being returned and has attained an age and degree of maturity at which it is appropriate to take account of its views" (Art. 13). The uniform legislation has no equivalent provision. 233 Supra, note 231 at 254-55. 1988] Recent Developments in Canadian Law

E. Injunctions Against Proceeding with Foreign Litigation Over the last few years the English courts have had to decide a number of cases on the right of a defendant in foreign legal proceedings to obtain an injunction in England restraining the other party from prosecuting the foreign action. In one of these decisions, in the House of Lords, 234 it was emphasized that where the defendant could not bring his claim in an English court as an alternative to the foreign one, the applicant had to show a much stronger case than just that the foreign court was forum non conveniens. Lord Scarman said:

[T]he power of the English court to grant the injunction exists, if the bringing of the suit in the foreign court is in the circumstances so unconscionable that in accordance with our principles of a "wide and flexible" equity it can be seen to be an infringement of an equitable right of the applicant ... This equitable right not to be sued abroad arises only if the inequity is such that the English court must intervene to prevent injustice. Cases will, therefore, be few: but the jurisdiction exists and must be sustained.235

Where, however, the claim could also be litigated in England the 1988 CanLIIDocs 6 decision whether to grant an injunction has been treated as closer to one of forum non conveniens. In Castanho v. Brown & Root (U.K.) Ltd.236 Lord Scarman expressed the court's discretion in language drawn directly from Lord Diplock's MacShannon formula: the party seeking the injunction must show both that litigation in England would be substantially less inconvenient and less expensive than elsewhere, and that the injunction would not deprive the other party of a legitimate personal or juridical advantage that he enjoyed in the foreign court. 237 In the Castanho case the injunction was denied primarily because the plaintiff could obtain higher damages in Texas than in England for his personal injury claim. This advantage made it legitimate for him to pursue the case in Texas. In a later case2 38 the Court of Appeal granted an injunction because the action was more substantially connected with England than with Penn- sylvania. The applicants for the injunction already were being sued in England and the other party had shown no legitimate advantage in suing them in Pennsylvania. Increasingly, there is doubt whether the discretion to grant an injunction restraining foreign legal proceedings is exactly the converse of

2-_4 British Airways Bd. v. Laker Airways Ltd. (1984), [1985] 1 A.C. 58, [1984] 3 All E.R. 39 (H.L.) [hereinafterBritish Airways cited to A.C.]. See also South Carolina Ins. Co. v. Assurantie Maatschappij "de Zeven Provincien" NV (1986), [1987] 1 A.C. 24, [1986] 3 All E.R. 487 (H.L.); Castanho v. Brown & Rost (U.K.) Ltd. (1980), [1981] A.C. 557, [1981] 1 All E.R. 143 (H.L.) [hereinafter Castanho cited to A.C.]. 2-5 See British Airways, ibid. at 95, for Lord Scarman's discussion of the Court of Appeal decision. 2-36 Supra, note 234. 237 Ibid. at 575. 238 Smith Kline & French LaboratoriesLtd. v. Bloch (1982), [1983] 1 W.L.R. 730, [1983] 2 All E.R. 72 (C.A.). Ottawa Law Review/Revue de droit d'Ottawa [Vol. 20:2 the forum non conveniens discretion, at least where England is an alternative forum to the foreign one. There is much to be said for the proposition that the courts should be considerably more cautious when in- terfering (even if indirectly) in foreign legal proceedings than when they are controlling their own. 239 This proposition is particularly apt when the plaintiff in the foreign legal proceedings is suing in his own country.240 Also, the plaintiff's right to choose his forum in order to pursue a personal or juridical advantage may deserve more weight than where the issue is his right to invoke the local court's jurisdiction. 241 The Privy Council recently said that an injunction cannot be granted just because the court thinks that the local jurisdiction is the natural forum. Generally speaking, the Privy Council held that foreign legal proceedings should be restrained in favour of English (or, in that case, Brunei) proceedings only if pursuing the proceedings in the foreign court would actually be vexatious or oppressive. 242 The discretion to enjoin extraprovincial litigation is an area where, in the Canadian context, the distinction between interprovincial and in-

ternational conflicts of jurisdiction may be vital. Granting an injunction 1988 CanLIIDocs 6 is, in effect, premised on the belief that the foreign court's own jurisdictional principles are inadequate to prevent what the local court per- ceives to be a serious injustice. If it were otherwise, the applicant could presumably ask the foreign court to decline jurisdiction. It should require an extreme case before a court in one Canadian province implicitly makes such an imputation on the ability of a court in another province to ensure that a lawsuit before it is not prosecuted unjustly.2 43 The only Canadian case in which a party has been restrained from proceeding with an extraprovincial lawsuit is the Nova Scotia Supreme Court's Appeal Division decision in CanadianHome Assurance Co. v. Cooper.244 The dependants and the estate of a Canadian Armed Forces serviceman, who had lived in Nova Scotia and was killed in Florida crossing a highway, were suing the driver of the car, a Florida resident, in Florida. The driver had relatively little insurance, so the dependants also claimed on the underinsured motorist coverage in the deceased's own automobile insurance policy, which was issued in Nova Scotia. They

239 Compare Lord Scarman in British Airways, supra, note 234 at 95 and Bank ofToklyo Ltd. v. Karoon (1984), [1986] 3 All E.R. 468 at 484-85 (C.A.) per Goff L.J.; CHESHIRE & NORTH, supra, note 6 at 249-50; DICEY & MORRIS, supra, note 7 at 596. 240 Metall und Rohstoff A.G. v. ACLI Metals (London) Ltd., [19841 1 Lloyd's Rep. 598 at 613 (C.A.). 241 CHESHIRE & NORTH, supra, note 6 at 249-50. 242 Socijtj Nationale IndustrielleAgrospatiale v. Lee Kui Jak, [1987] 2 W.L.R. 59 at 74, [1987] 3 All E.R. 510 at 522 (P.C.) per Goff L.J. 243 Compare Graymac Trust Co. v. BNA Realty Inc. (1985), 50 C.P.C. 45 (Ont. H.C.), where the Ontario Court refused to stay Quebec proceedings that were alleged to be oppressive and vexatious; the Quebec Court had already heard and rejected that argument. 244 (1986), 73 N.S.R. (2d) 230, 29 D.L.R. (4th) 419 (C.A.) [hereinafter Cooper cited to N.S.R.]. 19881 Recent Developments in Canadian Law sued the insurer in Nova Scotia and also joined it as a defendant in the action in Florida.245 The insurer was taking steps to have the Florida action vacated, but it also applied in the Nova Scotia proceedings for an injunction against the dependant's pursuing their claim on the policy in Florida. The Appeal Division held that the injunction should be granted. The claim on the underinsured motorist coverage was entirely distinct from the action against the Florida motorist. The claim was "in contract by Nova Scotians, including the estate of a deceased Nova Scotian, against a Canadian insurance company in respect of a contract of indemnity made in Nova Scotia, a contract payable to Nova Scotians and undoubtedly a contract to be construed by Nova Scotia law". 246 This made Nova Scotia the "only proper forum for action on the policy". 247 The contract, moreover, contained an arbitration clause for any dispute about the insured's right to recover damages. The right to arbitration might well be negated if an action were pursued in a foreign court, unless that court was able and willing to stay the action on that ground. Finally, any action against the insurer was premature until the Florida court had decided on the motorist's liability and on the quantum of damages. MacKeigan J.A. 1988 CanLIIDocs 6 concluded that "[t]he Florida action is thus of no value to the respondents and serves merely to confuse proceedings and harass and cause unnec- essary expense". 248 Accordingly, it was appropriate to grant the injunction. The Court commented as well:

If the Florida action is not struck out by the Florida court and were to continue after the Silecchia [the Florida motorist] issues were decided, the Florida court, if it applied what I deem to be the Nova Scotia law applicable, would presumably reach the same conclusions as the Nova Scotia court. But its decision, whether the same or not, would not be recognized here because of what we respectfully would have to consider a jurisdictional error.2 49

The reference to "jurisdictional error" is intriguing. The insurer had appointed the Florida Insurance Commission as its agent for service in respect of claims arising out of a motor vehicle accident in Florida. It is not clear whether the suggested Florida "jurisdictional error" was to treat the present claim as falling within the scope of the insurer's agreed submission to the jurisdiction, as the court seemed to think, 250 or whether

245 The insurer had given power of attorney to the Florida Insurance Commission to accept process in claims arising out of a motor vehicle accident in Florida; see infra, note 250 and accompanying text. 246 Supra, note 244 at 233, 29 D.L.R. (4th) at 423. 247 Ibid. 248 Ibid. at 235. 249 Ibid. at 235. 250 The court said that this action did not arise out of a motor vehicle accident in the sense contemplated by the agreement; it was an action between Canadians about a Canadian insurance policy; ibid. at 233-34. Ottawa Law Review/Revue de droit d'Ottawa [Vol. 20:2 it was to take jurisdiction over a case whose natural forum was Nova Scotia. If MacKeigan J.A. meant the latter, it would introduce a novel element into the law of foreign judgments. Never before has it been suggested that a judgment from a competent foreign court that had personal jurisdiction over the defendant, can be refused recognition because the foreign court was, according to Canadian notions, forum non conveniens.

1I1. MATTERS OF PROCEDURE AFFECTING INTERJURISDICTIONAL CASES

A. Proof of Foreign Law

The Federal Court of Appeal made an unusually interesting decision on the "presumption" that foreign law is the same as lexfori, in Fernandez v. The Mercury Bell.251 The question was whether Filipino seamen employed on a Liberian ship had a right to sue in Canada for unpaid wages. The wages were based on a collective agreement between their international union and the shipowners; the agreement was made before the 1988 CanLIIDocs 6 seamen were hired. They had signed on to the ship in Manila with individual contracts of employment which provided for lower wages than did the collective agreement. The parties put to the court, as a preliminary question of law, the issue whether the plaintiffs could rely upon the collective agreement, although they were not parties to it. Under the Canada Shipping Act any conflicts of law in the matter was to be decided according to Liberian law as the law at the port of registry,2 52 but no evidence of that law had been given. The court followed the rule that if foreign law is not proved it is presumed to be the same as Canadian law. However, that raised the question whether Canadian law for this purpose was to be taken to include all the provisions of the Canada Labour Code;253 or some of them; or common law rules exclusively, with the statute being ignored as special law. If the Act was to be applied holus bolus the plaintiffs could not rely on the collective agreement, because it did not meet the requirements of a "collective agreement" as defined in the Act. It lacked a provision for compulsory arbitration and a no-strike clause.254 The plaintiffs' claim would then be defeated by the common law rule of privity of contract. On the other hand, if Canadian law, in the context of the presumption, referred only to the common law and not to statute at all, their claim would be defeated for the same reason.

-1 [1986] 3 EC. 454, 27 D.L.R. (4th) 641 (C.A.) [hereinafter The Mercury Bell cited to F.C.]. 252 Canada Shipping Act, R.S.C. 1970, c. S-9, s. 274, now R.S.C. 1985, c. S- 9, s. 275, makes the law of the flag applicable "[w]here in any matter relating to a ship or to a person belonging to a ship there appears to be a conflict of laws.... 253 R.S.C. 1970, c. L-1, now R.S.C. 1985, c. L-2. 254 S. 155(1), now s. 57. 1988] Recent Developments in Canadian Law The court decided that the proper approach was an intermediate one. The statute law of the forum was neither to be applied in its entirety nor excluded from application altogether. The line to be drawn was not between common law and statute law, as some commentators seemed to suggest, 55 but between general law - common law or statutory - and provisions of a localized or regulatory character. 256 Marceau J. explained:

This English jurisprudential rule that in the absence of proof of the foreign law governing the case, the judge will apply the law of the forum should not and cannot be seen. . . as a pure abandonment of the rule of conflict, as if a rule of conflict was so unimportant that its application could be left to the whim of the parties. In fact, it is not a genuine rule of conflict ... It is a rule strictly related to the incidence of evidence. The court does not repudiate the premise that the case is governed by and has to be decided on the basis of the foreign law, but simply says that so far as it is formally aware, the foreign law is similar to its own law. It is. . .a pure rule of convenience, and one which, it seems to me, can be rationally acceptable only when limited to provisions of the law potentially having some degree 2 7 of universality. 5 1988 CanLIIDocs 6 In this case the Canada Labour Code provisions recognizing the role of labour unions and giving effect to collective agreements, as well as the judicial interpretation that individual employees derived legally enforceable rights from a collective agreement, were all aspects of Ca- nadian labour law that had that potential degree of universality. Others, including those relating to the role of the Canada Labour Relations Board and the requirement of arbitration for the settlement of disputes, were linked to Canadian circumstances and purposes, and thus should not be considered in this case, owning to its foreign nature. This is the first time a Canadian court has considered in such depth the so-called presumption that foreign law is the same as lexfori. The Federal Court of Appeal's approach is not without its dangers. In a case where foreign law is not proved or inadequately proved, and the court proceeds to decide the case by applying some domestic statutory rules but ignoring others, there is a risk that the case will be decided according to a disjointed set of principles. The rejection of particular statutory provisions, as limited to Canadian circumstances or institutions, will obviously call for a careful evaluation of whether the rest of the statute can still be applied in a way that does not distort its purposes. Under the court's approach, if foreign law is not proved the Canadian court may end up by applying a set of rules that is neither foreign law nor Canadian law. This does look like fiction, but it must be remembered

255 The court referred to J.H. Morris, DicEY & MORRIS ON THE CONFLICT OF LAWS, 10th ed. (London: Stevens, 1980) at 1216; Castel, supra, note 3 at 144-46. 256 Supra, note 251 at 466. Reference was made to Cartwright J. in Hellens v. Densmore, [1957] S.C.R. 768 at 780, 10 D.L.R. (2d) 561 at 581-82, and in Gray v. Kerslake, [19581 S.C.R. 3 at 10, 11 D.L.R. (2d) 225 at 240. 27 Ibid. Ottawa Law Review/Revue de droit d'Ottawa [Vol. 20:2 that fiction cannot be avoided no matter what approach is taken to this problem. Applying domestic law, including all its statutory provisions, is to pretend that a foreign case can be treated as identical to a domestic one, which is patently unrealistic, and may actually be impossible if the statutory language expressly or impliedly refers to local facts or institutions (like the Canada Labour Relations Board). On the other hand, applying only common law and ignoring statute law is plainly arbitrary and based on the untenable assumption that all common law is "general" and all statutes are only "special" or locally restricted.258 The more sophisticated solution, adopted by the Federal Court of Appeal, is submitted to be the fiction that is best suited to reaching a just result. If the court is to decide the case, it must rely on its own law if foreign law is not proved. 259 Given that - already fictitious - starting point, it seems best to apply as much of the lexfori as can rationally be brought to bear on the case. Today, a large and growing part of the legal principles that give domestic law its basic structure are contained in statutes, and it simply makes more sense to apply them than to leave them aside. 1988 CanLIIDocs 6 B. Damagesfor Losses Expressed in Foreign Currency

Canadian courts have still not settled on whether they, like the English courts, will abandon the "breach-date rule" for calculating the equivalent in Canadian currency of a loss expressed in a foreign currency. Examples of such a loss are where the claim is for failure to pay a foreign currency debt, or for unliquidated special damages reflecting amounts the plaintiff paid out in foreign currency. The House of Lords, in Mil- iangos v. George Frank (Textiles) Ltd.,260 abandoned its own previous decision261 that the failure to pay a foreign currency amount had to be quantified in sterling by using the rate of exchange prevailing on the date the payment should have been made, that is, the date of the breach of contract or the date of the loss caused by a tort. The Law Lords held that if a loss was suffered in a foreign currency, justice demanded that compensation be "neither more nor less than [the creditor] bargained for",262 which meant that the amount awarded be the sterling equivalent of the foreign currency debt or loss, at the date the damages were actually

258 Compare Hugessen J., ibid. at 468. The approach might make more sense in Quebec, if one applied the Civil Code as the general law and ignored ordinary statutes as special; but one suspects that even here the results would be unsatisfactory. 259 Compare MorgardshammarA B v. H.R. Radomski & Co. (1983), 145 D.L.R. (3d) 111 (Ont. H.C.), affd (1984), 5 D.L.R. (4th) 576 (Ont. C.A.). 26 (1975), [1976] A.C. 443 (H.L.), [1975] 3 All E.R. 801 [hereinafterMiliangos cited to A.C.]. 261 Re United Rys. of Havana and Regla Warehouses Ltd. (1960), [1961] A.C. 1007, [1960] 2 All E.R. 332 (H.L.). 262 Supra, note 260 at 466, per Lord Wilberforce. 1988] Recent Developments in Canadian Law paid. In England this principle applies to unliquidated damages in contract or tort263 and restitutionary claims 264 as well as to foreign currency debts. Two things have inhibited Canadian courts from following the Eng- lish lead. Neither has anything to do with the merits of the English position, which are very considerable, if not conclusive. One obstacle has been that the Supreme Court of Canada applied the breach-date rule, following the then current English authorities, more than forty years ago.265 The other is section 24 of the Currency Act, 266 which provides that "any statement as to money or money value in any indictment or legal proceeding shall be stated in the currency of Canada". Neither of these obstacles is really insurmountable. The two cases in which the Supreme Court of Canada applied the breach-date rule are not especially strong authorities. In the later one the court pointed out that the result there would have been the same whether the date of breach or the date of judgment was used to fix the rate of exchange. 267 Nor is section 11 of the CurrencyAct clearly worded so as to require a conversion at any particular date. It is entirely arguable that the section would be

satisfied by an order in the form sanctioned by Miliangos: "Pay $1,000 1988 CanLIIDocs 6 in U.S. funds or the equivalent in Canadian currency at the date of payment." 268 One assumes that the purpose of the section is to ensure that Canadian dollars are always legal tender. That purpose will be fully served as long as the debtor always has the legal right to discharge the judgment by paying an ascertainable sum of Canadian dollars; the rate of exchange is quite immaterial. Ontario has dealt with the issue of foreign currency obligations by statute, adopting the Miliangos date of payment rule, 269 but leaving the court a discretion to use a different date if conversion as of the date of payment would be inequitable to any party.270 (The Ontario legislature obviously believed that section 24 of the Currency Act did not dictate

263 The Despina R, [1979] A.C. 685, [1979] 1 All E.R. 421 (H.L.). 264 BP Exploration Co. (Libya) v. Hunt (No. 2), [1979] 1 W.L.R. 783, [1982] 1 All E.R. 925 (C.A.); affd [1983] 2 A.C. 352 (H.L.). 265 Gatineau Power Co. v. Crown Life Ins. Co., [1945] S.C.R. 655, [1945] 4 D.L.R. 1 [hereinafter Gatineau Power cited to S.C.R.]; The Custodian v. Blucher, [1927] S.C.R. 420, [1927] 3 D.L.R. 40 [hereinafter Blucher cited to S.C.R.]. 266 R.S.C. 1970, c. C-39, now R.S.C. 1985, c. C-52. 267 Gatineau Power, supra, note 265 at 659. Blucher, supra, note 265, may possibly be explained by the fact that if the debtor, the C.P.R., had paid the dividends when they became due (in U.S. funds), they would have been paid, not to the claimant (a resident in Guernsey) but to the Canadian Custodian of Enemy Property, who would presumably have converted the funds into Canadian currency and held them until they were released to the claimant in 1921. If this is right the case really turned, not on the breach-date rule, but on the fact that the U.S. dollar dividends would have been converted into Canadian currency at the date of payment even if there had been no breach. 268 Supra, note 260 at 468-69. 269 Courts of Justice Act, S.O. 1984, c. 11, s. 131(1). 270 S. 131(3). If the obligation being enforced itself provides the manner of conversion, this must be followed: s. 131(4). Ottawa Law Review/Revue de droit d'Ottawa [Vol. 20:2

any particular date for conversion of the obligation.) Similar legislation was recommended in an extensive report of the Law Reform Commission of British Columbia,271 which has not yet been implemented in that province. Canadian courts have been divided on whether Miliangos can be followed in Canada in the face of the Currency Act provision and the Supreme Court of Canada cases applying the breach-date rule. Courts that have felt bound to adhere to the breach-date rule until it is changed by the Supreme Court of Canada include courts of first instance in British Columbia, 272 Alberta 273 and New Brunswick,274 as well as the Federal Court of Appeal.275 The courts in Ontario, before they received statutory power to use the date of payment rule, had felt free to depart from the breach-date rule but had not settled on a single alternative date. They used the date the action was begun276 as well as the date of judgment. 277 The date of payment was apparently thought to be ruled out by section 24 of the Currency Act, because use of the date of payment could mean that the judgment could not be expressed as a specific sum of Canadian dollars. 278 1988 CanLIIDocs 6 Quebec courts have also used the date of judgment.279 Only the Sas- katchewan Court of Appeal, in a little noticed judgment, has applied the Miliangos principle fully and made an order for payment of a sum in

27, Law Reform Commission of British Columbia, Report on Foreign Money Liabilities (Victoria: The Queen's Printer, 1983) at 57. The Commission did not rec- ommend a judicial discretion to vary the date of payment rule, but opinion on this point was divided. 272 Am-Pac Forest Prods. Inc. v. Phoenix Doors Ltd. (1979), 14 B.C.L.R. 63 (S.C.). See also Williams & Glyn's Bank Ltd. v. Belkin Packaging Ltd. (1981), 123 D.L.R. (3d) 612 at 630, 28 B.C.L.R. 96 at 116 (C.A.), per Hutcheon l.A. (dissenting), affd without deciding this point, [1983] 1 S.C.R. 661, [1983] 6 W.W.R. 481. 273 FirstNat'l Bank of Oregon v. A.H. Watson Ranching Ltd. (1984), 34 Alta. L.R. (2d) 110 (Q.B.). 274 Farmers' Nat'l Bank & Trust Co. of Ashtabula v. Coles (1981), 33 N.B.R. (2d) 248 (Q.B.). But see S.r.1. Rolimex v. McCormack, Zatzman Ltd. (1979), 32 N.B.R. (2d) 436 (Q.B.). 275 Schweizerische Metallwerke Selve & Co., Thun v. Atlantic Container Line Ltd. (1985), 63 N.R. 104 (F.C.A.); N.V. Bocimar S.A. v. Century Ins. Co. of Canada (1984), 53 N.R. 383, 7 C.C.L.I. 165 (EC.A.), rev'd on other grounds [1987] 1 S.C.R. 1247, 76 N.R. 212. 276 Clinton v. Ford (1982), 37 O.R. (2d) 448, 137 D.L.R. (3d) 281 (C.A.); Airtemp Corp. v. Chrysler Airtemp Can. Ltd. (1981), 31 O.R. (2d) 481, 121 D.L.R. (3d) 236 (Div. Ct.). 277 Batavia Times Publishing Co. v. Davis (1978), 20 O.R. (2d) 437, 88 D.L.R. (3d) 144 (H.C.), aff d(1974), 26 O.R. (2d) 800,105 D.L.R. (3d) 192 (C.A.) [hereinafter Batavia Times]; Principalityof Monaco v. ProjectPlanning Assocs. (Int'l)Ltd. (1980), 32 O.R. (2d) 438 (Div. Ct.). 278 Batavia Times, ibid. 279 Omnivalor-RhoninterS.A. v. Leroy, [1987] R.J.Q. 1544 (C.S.) and cases cited there. 1988] Recent Developments in Canadian Law United States dollars converted into Canadian dollars as of the date payment is made.280 The date of payment rule is clearly the most logical one to apply, if a Canadian court is to give damages that truly compensate the plaintiff for a loss expressed in foreign currency. Using a different exchange conversion date will result in a loss or a gain for the plaintiff that is due solely to the fluctuation of the value, relative to the Canadian dollar, of the currency in which his loss was suffered. 281 That fluctuation is irrelevant to the loss that the defendant's breach of contract (or other wrong) actually caused; it is related only to the plaintiff's need or choice to sue the defendant in a Canadian court. That should not affect the value of the damages he receives.

IV. RECOGNITION AND ENFORCEMENT OF FOREIGN JUDGMENTS

A. Basis of Recognition

It has always been one of the backward features of the Canadian 1988 CanLIIDocs 6 conflict of laws that a judgment from another Canadian province or territory has been assumed to enjoy no higher standing, so far as recognition or enforcement was concerned, than a judgment from the most distant foreign country. In particular, the requirement that the other province's court have had personal jurisdiction over the defendant "in the international sense" has meant that the defendant either had to be resident in the other province when the action was commenced, or had to have submitted to the jurisdiction of that province's courts. A judgment in an action begun by service ex juris, where the defendant did not appear or otherwise submit to the court's jurisdiction, was unenforceable outside the province where it was given. This has been so, even though the "foreign" court took jurisdiction in circumstances where the local court would have done exactly likewise. The British Columbia courts have now declared that this is not the law in Canada, or at least in British Columbia. Rejecting the venerable authority of Emanuel v. Symon282 and Schibsby v. Westenholz 283 as out of date and inappropriate to Canadian needs, they have placed the enforcement of in personam money judgments from other Canadian provinces on an entirely new footing, that of reciprocity.

280 Sandy Frank Filn Syndication Inc. v. CFQC Broadcasting Ltd., [1984] 4 W.W.R. 360, 23 Sask. R. 241 (C.A.). The contrary authorities were not discussed. 281 An exception may seem to be the case where it can be shown that the plaintiff would have taken the foreign currency, had he been paid it at the time the obligation was due, and converted it into Canadian dollars. Compare Blucher, supra, note 265. But this is only an apparent exception; properly viewed it is a case where the plaintiff's loss is best expressed in the Canadian dollars he would have bought. 282 [1908] K.B. 802 (C.A.). 283 (1870), L.R. 6 Q.B. 155. Ottawa Law Review/Revue de droit d'Ottawa [Vol. 20:2

In Marcotte v. Megson284 the judgment creditor under an Alberta default judgment for $6,307 sued the judgment debtor on the judgment in British Columbia. The judgment was based on the defendant's personal liability, as director, for wages unpaid by an Alberta company.285 The defendant pleaded that he had changed his residence to British Columbia about six months before the action was commenced, and had not at any time submitted to the jurisdiction of the Alberta court. Gow Co. Ct. J. held that the judgment was nevertheless enforceable because there was "reciprocity of jurisdiction" between Alberta and British Columbia.2 86 By this he apparently meant that Alberta exercised jurisdiction over the non-resident defendant in circumstances in which, mutatis mutandis, the British Columbia court would have done likewise.287 It is unclear whether the Alberta court gave leave to serve ex juris28 because the action was for a breach of contract committed in Alberta, or because the action was brought on a contract made in Alberta. 2s9 In fact the British Columbia Rules of Court include only the former ground for service ex juris, not the latter.2 90

The British Columbia Court of Appeal, in MorguardInvs. Ltd. v. 1988 CanLIIDocs 6 De Savoye,291 used an identical rationale in an action to enforce an Alberta default judgment granted in proceedings for foreclosure and sale of real property in Alberta. 292 The judgment debtor had entered into the mortgages in 1978, when he lived in Alberta; he had moved to British Co- lumbia in 1979. He was served exjuris in British Columbia. The Court held the judgment was enforceable in British Columbia because a local court could also have taken jurisdiction on the basis of service ex juris, either because the action was for a breach of contract in the province or because the proceeding was by a mortgagee in relation to a mortgage of property in the province. Seaton J.A. concluded in his judgment as follows:

There is no decision binding on us. We are obliged to decide whether to apply a test enunciated 80 years ago in England for foreign judgments to judgments of other Canadian courts or to apply a test that is suited to Canada today. I conclude that we should recognize and enforce the judgment of a Canadian court exercising a jurisdiction we would exercise.293

284 (1987), 19 B.C.L.R. (2d) 300 (Co. Ct.) [hereinafter Marcotte]. 285 Business CorporationsAct, R.S.A. 1980, c. B-15, s. 114(1). 286 Castel, supra, note 3 at 314-17. 287 Ibid. at 304. He also noted that the statutory liability on which the defendant had been sued in Alberta had a counterpart in British Columbia. 288 Leave is still necessary in Alberta, unlike in British Columbia and most other provinces; see supra, PART II: JURISDICTION. 289 Alta. R.C. 30(g) and (f) (i) respectively. 290 B.C.S.C.R. 13(l)(g). 291 [1988] 1 W.W.R. 650, 27 B.C.L.R. (2d) 155 (C.A.) [hereinafter Morguard]. 292 Enforcement was sought of the "Rice orders" made after default, orders nisi and the expiry of the redemption periods. 293 B.C.S.C.R. 13(l)(g) and (k) respectively. 1988] Recent Developments in Canadian Law

Two recent British Columbia cases had assumed the traditional rule, based on Schibsby v. Westenholz and Emanuel v. Symon, to be Canadian law. These were distinguished by Gow Co. Ct. J. and the Court of Appeal 294 on the ground that they dealt with judgments from outside Canada. The judgments in the Marcotte and Morguardcases could not have been registered under the uniform reciprocal enforcement of judgments statute, which, in the British Columbia version as elsewhere, precludes registration of any judgment (Canadian or foreign) where

the judgment debtor, being a person who was neither carrying on business nor ordinarily resident in the state of the original court, did not voluntarily appear or otherwise submit during the proceedings to the jurisdiction of [the original] court. 295

The Court of Appeal thought that the position adopted by the legislature was no reason why the common law should stand still.296 What particularly swayed both British Columbia courts was aca- demic opinion. They relied on works of Dr. Kennedy297 and Professor 29s Castel, who have both upheld the view that, at least as a first step 1988 CanLIIDocs 6 towards rationalizing the recognition of judgments among Canadian provinces, our courts should recognize any ground on which they themselves would take jurisdiction as a valid ground for another Canadian court to do the same. These authors drew support from Travers v. Holley,299 a 1953 decision of the English Court of Appeal on the recognition of foreign divorce decrees that until now has not been extended to judgments in personam. If these British Columbia decisions stand, and are followed elsewhere in Canada, the system for recognition of judgments within this country will have been transformed by judicial fiat. The registration procedure under the uniform reciprocal enforcement statutes will be left far behind the rules for enforcement at common law, and a default judgment based on service ex juris will not be registrable under the statutes

294 Weiner v. Singh (1981), 22 C.P.C. 230 (B.C. Co. Ct.); New York (State) v. Fitzgerald (1983), 46 B.C.L.R. 26, [1983] 5 W.W.R. 458 (S.C.); Walsh v. Herman (1908), 13 B.C.R. 314 (S.C.) en banc, was directly on point but not followed by the Court of Appeal. 295 Court Order Enforcement Act, R.S.B.C. 1979, c. 75, s. 31(6)(b). "During the proceedings" has been held to include a previous agreement to submit to the jurisdiction: Bank of Montreal v. Snoxell (1982), 44 A.R. 224, 143 D.L.R. (3d) 349 (Q.B.); FirstCity Capital Corp. v. Winchester ComputerCorp. (1987), 51 Sask. R. 153, [1987] 6 W.W.R. 212 (C.A.); C.I.B.C. v. Kabat, [1985] N.W.T.R. I (S.C.). 296 Supra, note 291 at 9 of memorandum of judgment. 297 G.D. Kennedy, "Reciprocity" in the Recognition of ForeignJudgments (1954) 32 CAN. BAR REV. 359 and Recognition of Judgments in Personam: The Meaning of Reciprocity (1957) 35 CAN. BAR REV. 123 [hereinafter Kennedy, Recognition]. 298 J.-G. Castel, Recognition and Enforcement of ForeignJudgments in Personamn and in Rem in the Common Law Provinces of Canada (1971) 17 McGILL L.J. 11 at 46-47. 299 [1953] P. 246, [1953] 2 All E.R. 794 (C.A.). Ottawa Law Review/Revue de droit d'Ottawa [Vol. 20:2 but will often be enforceable by a common law action. There is no denying the basic logic of the premise on which this transformation will be based. It is anomalous in the extreme that, in every province, jurisdiction over out of province defendants is routinely taken in a wide range of cases but that, unless the defendant attorns to the jurisdiction, any resulting judgment is regarded as a legal nullity outside the province where it was pronounced. Still, embracing the reciprocity principle is not without its own problems. Two of the problems are uncertainty, and an inevitable lack of uniformity. The English common law position, which confines recognition to judgments where the defendant was resident in the territory of the foreign court or submitted to its jurisdiction, at least had the merit that it was usually obvious whether a particular judgment could be recognized in other provinces or not. Moreover, if the judgment could be recognized in one province it could almost always be recognized in every other common law province, because the recognition rules were uniform. Both predictability and uniformity are lost, however, so far as default judgments in ex juris cases are concerned, if reciprocity is a ground

for 1988 CanLIIDocs 6 recognition. The grounds for service exjuris are broadly similar in most of the common law provinces but wide variations exist, and Nova Scotia and Prince Edward Island allow service ex juris in any case where the defendant is in Canada. Thus the domestic jurisdictional rules against which the particular default judgment will be tested vary from province to province, and the judgment may be recognized in some provinces but not others. Also, it is far from clear just what "reciprocity" means in this connection. At least three possibilities may be suggested, all of which are consistent with the British Columbia decisions: (1) The court that gave the judgment took jurisdiction on a ground for service ex juris that is duplicated in the rules of court of the recognizing province; (2) Although the same ground for service ex juris does not exist in the recognizing province the facts of the case nevertheless fit into one or more grounds for service exjuris that the recognizing province does have. (3) The test is not merely whether in parallel circumstances the recognizing court could have taken jurisdiction but whether it would have taken jurisdiction, bearing in mind forum non conveniens and the other elements in the court's discretion to decline jurisdiction. The first alternative is unlikely, because it is needlessly formalistic and has been rejected in favour of the second alternative in the context of the recognition of foreign divorce decrees, to which the principle of Travers v. Holley300 applies. 301 The choice between the second and third

300 Ibid. 30! Robinson-Scott v. Robinson-Scott (1957), [1958] P. 71, [1957] 3 All E.R. 473 (D.A.); Castel, supra, note 3 at 312 gives the test as whether the foreign court took jurisdiction in "roughly comparable circumstances" as the recognizing court would have done. 1988] Recent Developments in CanadianLaw alternatives is more difficult. If the court is confined to asking whether it could have taken jurisdiction in similar circumstances, not whether it actually would have done so, the result would be to treat judgments from other provinces more generously from a jurisdictional point of view than domestic cases. The test would also be over-inclusive, because in most provinces service exjuris is possible, at least with leave, in any class of case. It must be recalled, too, that the judgments in question here are default judgments. Usually the defendant will not have argued the question of jurisdiction before the original court, so that issues like forum non conveniens and choice of forum clauses will not have been canvassed. On the other hand, if the third alternative is the rule, it means that the status of the particular default judgment is even more unpredictable, because the judgment debtor can always resist its enforcement by opening up the issue of whether the domestic court, in parallel circumstances, would have declined jurisdiction on the ground of forum non conveniens or some other ground. The third and most serious difficulty is whether and to what extent the defendant can reopen the merits of the judgment before the court that is asked to recognize it. The general Anglo-Canadian rule has been that 1988 CanLIIDocs 6 the issues of fact and law on which the foreign judgment was based cannot be reopened at all except where the judgment is vitiated by extrinsic fraud, a failure of natural justice, or offends against public policy.302 Manitoba has a statutory exception to this common law rule.30 3 In British Columbia, and only in that province, the courts have said that a default judgment that otherwise qualifies for recognition (that is, because the defendant appeared or had previously agreed to submit to the jurisdiction) may be denied recognition on the ground that it was made under a "manifest error" apparent on its face.304 The general common law rule that the foreign judgment is conclusive rests, obviously, on the fact that the only judgments that would be recognized at common law are those where the defendant either was subject to the court's jurisdiction because he was resident within the foreign territory, or submitted to the jurisdiction. Where the defendant was not in the originating province and did not submit to that province's court,

302 Castel, supra, note 3 at 247-58; McLeod, supra, note 4 at 599-606; DICEY & MORRIS, supra, note 7 at 460-64; Geo. Robberecht Seafoods Inc. v. Island Fish Export hIc. (1987), 43 D.L.R. (4th) 157 (P.E.I.C.A.). See also Ruttan v. Ruttan, [1982] 1 S.C.R. 690 at 694-95, 135 D.L.R. (3d) 193 at 196-97. '103 Queen's Bench Act, R.S.M. 1987, c. C-280, s. 83, a general right to defend on the merits of the original cause of action, subject to the application being struck out for embarrassment or delay. Nova Scotia, P.E.I. and Ontario had other, more limited exceptions (see McLeod, supra, note 4 at 603-06) that have now been repealed. The history of these exceptions is given in Kennedy, Recognition, supra, note 296 at 138- 48. -34 Boyle v. Victoria Yukon Trading Co. (1902), 9 B.C.R. 213 (S.C.) en banc; Re Gacs and Maierovitz (1968), 64 W.W.R. 923, 68 D.L.R. (2d) 345 (B.C.S.C.); Re House of Colour and Expert DecoratorsLtd. (1968), 70 D.L.R. (2d) 527 (B.C.S.C.); May v. Shell Co. of Hong Kong Ltd. [1981] 1 W.W.R. 193 at 195-96 (B.C.C.A.). Ottawa Law ReviewlRevue de droit d'Ottawa [Vol. 20:2 great injustice could result if the conclusiveness rule applies to a default judgment that is enforced against him under the reciprocity principle. It would mean that if defendant living in British Columbia was served ex juris in an action in the Newfoundland Supreme Court he would effec- tively be compelled to defend the action. If he did not he would face the prospect of a default judgment in Newfoundland that could be enforced against his assets in British Columbia, or other provinces, without his having any chance to dispute liability. Canada may be one country, as the courts in Marcotte and Morguard cases emphasized, but it is a very large one and such considerations cannot be ignored. It may be no hardship for major companies to defend actions in any province where they may be sued, but for the individual or small corporate defendant the cost and inconvenience may be great. If default judgments against out of province defendants are now going to be enforceable wherever the defendant could or would have been served ex juris under the rules of the recognizing court, it seems inevitable and fair that the conclusiveness rule will have to be substantially modified, at least for these judgments. The British Columbia Court of Appeal in the Morguardcase did not address this problem. In explaining 1988 CanLIIDocs 6 why the traditional recognition rule should be discarded they did say that "[n]ow it is not at all impractical to travel to another province for a trial",305 but that is surely too sweeping. On the other hand, in Marcotte v. Megson, Gow Co. Ct. J. did see the problem but dismissed it because at common law, he stated, a default judgment can always be defended on the merits of the original cause of action. The only authority he cited was one of the British Columbia cases on "manifest error"; these cases fall far short of supporting such a broad proposition. Thus the two present decisions hardly resolve the matter. Dr. Kennedy's article, which both courts heavily relied on, considered at length the problem of conclusiveness of judgments if the grounds for recognition were to be shifted to reciprocity. He concluded only that we should not be too quick to allow the merits to be re-opened, but should instead consider narrowing the breadth of our domestic rules for service exjuris.30 6 Those rules have been much expanded since he wrote, which makes the problem even more acute.307 It is submitted that the irruption of the "reciprocity" principle, with all its ramifications, makes new uniform legislation on foreign judgments a matter of urgency. Nothing could be more wasteful of legal resources than a prolonged period of uncertainty about what judgments are enforceable, in which provinces, and under what conditions. At least the

305 Supra, note 291 at 16 of memorandum of judgment. 306 Supra, note 297 at 148-49. 307 It may be plausibly suggested that one of the reasons the provinces have felt so free to assert jurisdiction over absent defendants is that it was assumed that any resulting default judgment would bind the defendant only within the province. 1988] Recent Developments in Canadian Law British Columbia courts are forcing the issue, which in the long run is all to the good.

B. Jurisdictionof the Original Court

1. Defendant's Presence in the Territory of the Original Court It has never been clear whether the domestic jurisdictional rule that the defendant's mere presence in the province, no matter how transitory, is enough to give the province's courts jurisdiction over him, also holds true in the recognition of foreign judgments. The old Alberta case Forbes v. Sinmons3os decided that it was, but there are strong arguments and some authority to the contrary. 30 9 To hold the defendant irrevocably bound by the judgment if he was in the other province or country only because he spent an hour there in an airport transit lounge, or had some equally tenuous connection with the province, is manifestly unfair. The domestic jurisdictional rule is tempered, increasingly so, by the doctrine of forum non conveniens, and similar considerations ought to apply in the sphere of foreign judgments. 1988 CanLIIDocs 6 This was the view of the Saskatchewan Court of Appeal in Re CarrickEstates Ltd. and Young, 31o although technically this was a decision not on the common law but on The ReciprocalEnforcement ofJudgments 31 Act. 1 Under subsection 4(b) the foreign judgment cannot be registered if

the judgment debtor, being a person who was neither carrying on business nor ordinarily resident within the jurisdiction of the original court, did not voluntarily appear or otherwise submit during the proceedings to the jurisdiction of that court.

The defendant had been served in British Columbia, apparently on a temporary visit to play in a professional football game. The Court of Appeal held that the exjuris registration of the British Columbia default judgment should be set aside. Cameron J.A. said:

I believe service upon Mr. Young in British Columbia is immaterial. Even if service there had the effect of the internal or intraprovincial jurisdiction of the British Columbia court, the service did not, of itself, found external or interprovincial jurisdiction according to the law of Saskatchewan and the latter is essential to the recognition and enforcement of the judgment in this province. While at common law, temporary presence within the territorial limits of the original court may suffice to found international jurisdiction - although for enforcement purposes even that is doubtful - under the

303 (1914), 8 Alta. L.R. 87, 20 D.L.R. 100 (S.C.). 109 DICEY & MORRIS, supra, note 7 at 439-40; McLeod, supra, note 4 at 585-86. 310 (1987), 43 D.L.R. (4th) 161, [1988] 1 W.W.R. 261 (Sask. C.A.) [hereinafter CarrickEstates cited to D.L.R.]. 311 R.S.S. 1978, c. R-3. Ottawa Law Review/Revue de droit d'Ottawa [Vol. 20:2

statutory law of this province, casual presence in the foreign jurisdiction, in the absence of submission to that jurisdiction, is insufficient for the purposes of enforcement in Saskatchewan .... 312

2. Defendant's Submission to the Jurisdiction of the Original Court

The other argument in the Carrick Estates case was that Mr. Young had submitted to the jurisdiction of the British Columbia court by applying unsuccessfully to have the default judgment against him set aside and for leave to defend. The majority of the court held that this was not a submission during the proceedings for the purposes of subsection 4(b) of the statute. Whether taking such a step was a submission that gave the court jurisdiction at common law was unclear. English authority suggested that it did amount to submission, 3 3 whereas two old cases from Alberta and Ontario suggested it did not.314 The majority of the Court of Appeal preferred to follow the Canadian cases. One reason was that it was hard to say whether particular cases were right or wrong, the question of whether conduct amounted to a submission being a "largely 1988 CanLIIDocs 6 technical and often uncertain" one.315 Moreover, Saskatchewan should stay in step with what was presumably still the law in Alberta and Ontario. The merits of the action might or might not have been gone into on the defendant's application in British Columbia to have the default judgment set aside; the case for submission was thus marginal. 316 The statutory language, "during the proceedings", reinforced the conclusion that the defendant was, for this purpose at least, outside "the proceedings". Gerwing J.A. dissented; he thought that to treat "the proceedings" as ending with the default judgment was unduly narrow and that the intent of the Act would be carried out by following the English position. It is hard to see in principle why asking a foreign court to reopen the action and permit a defence should not be a submission, when one considers how minimal an invocation of the foreign court's jurisdiction has been found to be submission in other contexts. In recent years, submission has been held to include such relatively informal acts by the defendant as sending the court a copy of a letter to his solicitors that

312 Carrick Estates, supra, note 310 at 163. The decision on this point was unanimous. 313 Guiard v. De Clermont, [1914] 3 K.B. 145; DICEY & MORRIS, supra, note 7 at 441-42. Compare SA Consortium Gen. Textiles v. Sun & Sand Agencies Ltd. (1977), [1978] Q.B. 279 (C.A.). 314 Esdale v. Bank of Ottaiva (1920), 51 D.L.R. 485 (Alta. C.A.) (not a submission to obtain order giving conditional leave to defend, which was later vacated because the defendant did not satisfy the condition); McLean v. Shields (1885), 9 O.R. 699 (H.C.) (not a submission to apply unsuccessfully to set judgment aside, but the judgment was in a case that a lawyer had defended without the defendant's authority). In DICEY & MoRRIs, supra, note 7 at 442, the author thinks these cases are of doubtful authority. 315 CarrickEstates, supra, note 310 at 165. 316 Ibid. at 166. 19881 Recent Developments in CanadianLaw

stated an intention to appear;317 authorizing his uncle to write the court on his behalf;318 and sending a West German court a letter giving his side of the story and appointing the West German consulate as his "repre- sentative".a' 9 Another question, which has been much discussed since the English Court of Appeal's decision in Henry v. GeoproscoInt'l Ltd. ,320 is whether an appearance limited to objecting to the foreign court's jurisdiction amounts to a submission. The Court of Appeal thought it did, at least if the objection took the form of asking the court in its discretion to decline jurisdiction. The current of Canadian authority is running against this position. The Ontario Court of Appeal has said, obiter, that protesting the jurisdiction of the foreign court is not a voluntary submission. 32' The New Brunswick Court of Appeal has refused to follow Henry in interpreting what is meant by "voluntarily appearing as a defendant in the action without protest" in that province's ForeignJudgments Act.322 The defendant there had not submitted to an Illinois court by moving to dismiss an action for want of personal jurisdiction. 323 1988 CanLIIDocs 6 3. Finality of the Judgment

At common law the fact that an appeal may still be filed or is actually pending in the foreign jurisdiction does not prevent the lower court's judgment from being final and conclusive and so enforceable. The recognizing court may, however, stay the action on the foreign judgment or stay execution on the local judgment on account of a pending appeal. The uniform reciprocal enforcement of judgments legislation, unlike the common law, bars registration of a judgment if the period for filing an appeal has not expired.324 The difference was critical in two NEW Corp.

317 This puts the defendant "in the position of a person who had entered an appearance and done nothing further": Roglass Consultants Inc. v. Kennedy (1984), 65 B.C.L.R. 393 at 396 (C.A.). 318 Herzberg v. Manitoba, [1984] 3 W.W.R. 737 (Man. Q.B.). 319 Re Brandt and Overseas FoodImporters & Distribs.Ltd. (1981), 27 B.C.L.R. 31 (C.A.). 320 (1975), [1976] Q.B. 726, [1975] 2 All E.R. 702 (C.A.) [hereinafter Henry cited to Q.B.]. 321 Clinton v. Ford (1982), 137 D.L.R. (3d) 281 at 285. See also The McCain Foods Ltd. v. Agricultural Publishing Co. (1979), 103 D.L.R. (3d) 724 (Ont. C.A.). The court in Clinton also approved in obiter the anomalous rule, repeated in Henry, supra, note 320, that an appearance is involuntary, and so not a submission, if the purpose is merely to contest the validity of a seizure of property of the defendant that has already taken place. 322 R.S.N.B. 1973, c. F-19, para. 2(c)(ii). 323 Dovenmnuehle v. Rocca Group Ltd. (1981), 34 N.B.R. (2d) 444 (C.A.). 324 There is some variation. For example, subsection 3(e) of the Reciprocal En- forcement of Judgments Act, R.S.O. 1980, c. 432, bars registration only if an appeal is actually pending or if the defendant intends to appeal. Ottawa Law Review/Revue de droit d'Ottawa [Vol. 20:2

v. Steintron Int'l Elecs. Ltd. cases. 325 The judgment creditor under a British Columbia judgment, which was under appeal, sought to register it in Ontario and to obtain a Mareva injunction to restrain the defendant from disposing of any assets in Ontario until the appeal had been decided. Steele J. held that he had no choice but to refuse registration under the Ontario ReciprocalEnforcement of Judgments Act326 and, since no Ontario action was in process, he could not grant the Mareva injunction. The judgment creditor promptly issued a writ in an action at common law on the British Columbia judgment. Four days after Steele J.'s decision, O'Driscoll J. held that the new action was properly brought since it was not vexatious or an abuse of process and not res judicata; the Mareva injunction could now issue as interlocutory relief in the Ontario action. O'Driscoll J. did not have to decide whether the pendency of the British Columbia appeal was a ground for staying the Ontario action.327 It is a matter of discretion. In another recent Ontario case the court refused to stay an action on a foreign judgment, notwithstanding that the original judgment was under appeal, because it would have been unjust to the judgment creditors to deprive them of the advantage of having an Ontario judgment. If the appeal was still unresolved when they took their 1988 CanLIIDocs 6 judgment the defendants could move for a stay of execution.328

V. CHOICE OF LAW (INCLUDING STATUS OF PERSONS)

A. Characterization

On a fair number of occasions recently, the courts have had to decide whether particular legal rules were procedural or substantive. A technical but fascinating one is Marlex Petroleum Inc. v. The Har Rai.329 The plaintiff Marlex sued in the Federal Court, Trial Division, for the price of fuel oil and diesel oil supplied to the defendant ship at the port of Long Beach/Los Angeles, California. The goods had been ordered through New Jersey brokers by the ship's time charterers, Libra. Marlex did not know the ship was under charter and did not know the charterparty contained a prohibition of lien clause. The ship had been arrested when she put into Vancouver. The action was both in rem, against the vessel and in personam, against her owners, an Indian company. At trial,330 the judge dismissed the in personam claim on the ground that there was no

3- (1985), 5 C.P.C. (2d) 182 (Ont. H.C.), per Steele J. and (1985), 5 C.P.C. (2d) 187 (Ont. H.C.), per O'Driscoll J. 326 R.S.O. 1980, c. 432. 327 Steele J. had said this would undoubtedly be the case: supra, note 325 at 186. 328 FourEmbarcadero Center Venture v. Kalen (1987), 59 O.R. (2d) 236 (H.C.). 329 [1984] 2 EC. 345, 4 D.L.R. (4th) 336 (A.D.), affJd [1987] 1 S.C.R. 57, 72 N.S.R. 75 [hereinafter The Har Rai]. 330 [1982] 2 RC. 617 (T.D.). Recent Developments in Canadian Law evidence to upport the owners' being liable for the oil. He also held that the in rein action failed. Although he found that the plaintiff was entitled to a maritime lien under United States maritime law, that lien was unenforceable by action in rem because under Canadian law a right in rem cannot be exercised against a ship unless her owners are personally liable. The plaintiff argued on appeal that United States law should govern and that the lien should be enforced. The characterization question was thus whether the availability of a right in rein based on a lien for necessaries supplied to a ship should be seen as a question of remedy and therefore procedural (the Canadian rule would then apply), or as a question of the existence of a right of property and therefore substantive (the United States rule would apply). The Supreme Court of Canada had held in The Ioannis Daskalelis33' in 1972 that a maritime lien validly created under foreign law would be recognized and enforced in a Canadian court exercising admiralty jurisdiction even if under Canadian maritime law no lien would arise.332 The court did not qualify this proposition by any reference to the owners being personally liable. Seven years later, in The Halcyon Isle,333 on

appeal from Singapore, the majority of the Privy Council said that the 1988 CanLIIDocs 6 Supreme Court of Canada had erred, and that a maritime lien in English law was to be characterized as involving rights that were procedural or remedial only. Thus there is no right in rem based on a lien for necessaries unless a maritime lien would have been conferred on them according to the lexfori.334 In The Har Rai, the Federal Court of Appeal held that the Supreme Court of Canada's recognition of a foreign-created right of maritime lien, in circumstances where no lien would arise by Canadian law, determined the matter. There was "no sound reason of policy for confining that recognition to cases where the owner of the ship at the time the necessaries were supplied would be personally liable";335 the result did not offend against Canadian public policy. The Supreme Court of Canada was apparently unimpressed by the Privy Council's strictures because it dismissed the appeal, simply agreeing with the Federal Court of Appeal. 336 The Supreme Court of Canada had every reason to stick with its earlier decision. Jurisprudentially a right in rem is much more than the mere application of a remedy. It functions as a security interest in property.

311 Todd Shipyards Corp. v. Altema Compania Maritima S.A., [1974] S.C.R. 1248, 32 D.L.R. (3d) 571 (sub nom. The loannis Daskalelis),following The Strandhill v. Walter TV. Hodder Co., [1926] S.C.R. 880. 332 A lien so recognized would be treated as equivalent to a maritime lien created by Canadian law for the purpose of determining priorities among creditors, the priorities being a question for the lexfori. 333 Bankers Trust Int'l Ltd. v. Todd Shipyards Corp. (1980), [1981] A.C. 221, [1980] 3 All E.R. 197 (P.C.) [hereinafter The Halcyon Isle cited to A.C.]. 334 Ibid. at 238. 335 Supra, note 329, [1984] 2 F.C. 353. 336 Supra, note 329, [1987] 1 S.C.R. 57. Ottawa Law Review/Revue de droit d'Ottaiva [Vol. 20:2

Characterizing it as a question of rights in movable property means that its validity ought to be governed by the proper law of the transaction under which it is said to have been created, 337 here United States maritime law. Strong and explicit support for the Canadian position comes from the dissenting judgment of the Privy Council in The Halcyon Isle, which saw no difference from the point of view of characterization between a maritime lien and a mortgage; each is a limited right of property that forms part of the claim and as such travels with the ship. 338 To hold otherwise would defeat the perfectly legitimate expectations of the lien holder on the ground that he had the misfortune to be obliged to press 339 his claim against the ship in an English or Canadian court. Almost all the other recent cases on the distinction between substance and procedure have involved statutory provisions that no action should be brought, or brought without leave, in respect of a particular claim. 340 With one exception the courts have rightly refused to attach importance to the fact that these sections were worded in terms of the bringing of an action, which in more formalistic days was thought to indicate that

the provision was procedural. 34, Thus a statutory bar in the lexfori against 1988 CanLIIDocs 6 a real estate agent's suing for a commission, unless he was licensed in the province, was held to be part of the substantive rules applicable to the contract of agency and so not to be applied if the proper law of that contract was the law of another province.342 Similarly, the Saskatchewan statutory rule that a mortgagee cannot bring an action against his mortgagor without leave343 was held to be a rule with respect to the rights arising out of the mortgage, not a rule of procedure. The one recent case where a court has been distracted by the statutory language and held a provision procedural when it clearly was not, is Alberta Treasury Branches v. Granoff.344 The section in question was the

337 CHESHIRE & NORTH, supra, note 6 at 88. Technically, two laws might be relevant. The proper law of contracts should determine whether the parties' agreement was apt to create the lien, and the lex situs of the ship should determine whether as a matter of property rights under maritime law such a lien should exist. To all practical purposes, however, the two laws coincide. 338 Supra, note 333 at 250. 339 Ibid. at 246-47; CHESHIRE & NORTH, supra, note 6 at 90. 340 See also Khalij Commercial Bank Ltd. v. Woods (1985), 50 O.R. (2d) 446, 17 D.L.R. (4th) 358 (Ont. H.C.), which enforced a debt governed by Dubai law notwithstanding that the courts of Dubai might, in some circumstances, have excused the debtor from satisfying the judgment. That was a question of procedure not affecting the availability of the debt. 341 Huber v. Steiner (1835), 2 Bing. N.C. 202, 132 E.R. 80; Leroux v. Brown (1852), 12 C.B. 801, 138 E.R. 1119. This approach survives so far as limitation statutes are concerned: Linklater v. Langan Estate (1986), 47 Man R. (2d) 311 (Q.B.). 342 Block Bros. Realty Ltd. v. Mollard, [1981] 4 W.W.R. 65, 22 D.L.R. (3d) 323 (B.C.C.A.). See also Sennett v. Tape Estate (1986), 45 Sask. R. 314 (Q.B.), where the point was agreed. 343 The Land Contracts (Actions) Act, R.S.S. 1978, c. L-3, ss. 2, 3. 34 (1984), 15 D.L.R. (4th) 295 (B.C.C.A.). 1988] Recent Developments in Canadian Law

"seize or sue" provision in the British Columbia ChattelMortgage Act, 345 which says that a mortgagee "may enforce his right" to the debt either by taking possession of the chattel or by suing the mortgagor for the amount due, but not both. Precedent 346 as well as principle are against this conclusion. The provision has nothing to do with the manner in which the British Columbia court administers justice. It is a definition of the mortgagee's rights under a contract of mortgage loan. It should therefore not have been applied to the chattel mortgages in question in the Granoff case, which were governed by Alberta law. The result was to deprive the mortgagee of a perfectly justified expectation that the mortgagor would be liable for the deficiency after repossession and sale.347

B. Contracts

1. Express Choice of Law Clauses

Nothing has really shaken the fundamental position of deference to

an express choice of law by the parties, as expressed nearly fifty years 1988 CanLIIDocs 6 ago by Lord Wright in Vita Food Prods. Inc. v. Unus Shipping Co.:

[W]here the English rule that intention is the test applies, and where there is an express statement by the parties of their intention to select the law of the contract, it is difficult to see what qualifications are possible, provided the intention expressed is bona fide and legal, and provided there is no reason for avoiding the choice on the ground of public policy. 348

One recent British Columbia case349 involved a choice by the parties of the law of a province that had nothing to do with the transaction. The contract was one by which an Alberta company in the business of ex- tracting oil from the northern Alberta tar sands ordered gearboxes for its conveyor belts from an American manufacturer located in California. The general conditions on the purchase orders included an express choice of Ontario law to govern the contract. This was apparently a standard form used by the purchaser's agent, another Canadian company, for all its orders whether placed on behalf of others or itself. The court held that the Ontario Sale of Goods Act applied because the parties clearly

45 R.S.B.C. 1979, c. 48, s. 23. '46 CanadianAcceptance Corp. v. Matte (1957), 9 D.L.R. (2d) 304, 22 W.W.R. 97 (Sask. C.A.); Traders Fin. Corp. v. Casselman, [1960] S.C.R. 242, 22 D.L.R. (2d) 177. These were unconvincingly distinguished on the basis that the statutory language being considered was different and pointed to substantive characterization. -147 Esson J.A. (dissenting) pointed out, supra, note 344 at 302-03, that the approach to the point in this case was exactly opposite to that in Block Bros., supra, note 342, where a rule whose operative words were virtually identical was held to be substantive in nature. 348 [1939] A.C. 277 at 290, [1939] 1 All E.R. 513 at 526-27 (P.C.). 349 Syncrude Canada Ltd. v. Hunter Eng'r Co. (1985), 27 B.C.L.R. 59 (S.C.), affd (1985), 68 B.C.L.R. 367 (C.A.). Ottawa Law Review/Revue de droit d'Ottawa [Vol. 20:2 intended their rights and liabilities to be determined according to the domestic law of that province.3 50 It was implicit in Lord Wright's judgment in Vita Foods35' that the legislature may by statute render a particular type of choice of law illegal or ineffective so far as its own courts are concerned. An example of this, indeed involving the same type of legislation as in Vita Foods, occurred in recent English and Canadian cases on bills of lading. The Canadian decision, Agro Co. of Canada v. The Regal Scout,352 was on a claim for damages in respect of cargo by its Canadian owner against the owner of the ship. The bill of lading, which had apparently been issued by the charterer, a Japanese company, stipulated that any dispute arising under it should be decided exclusively in the Tokyo District Court according to Japanese law. The expert evidence showed that if the matter were heard by the Tokyo District Court as agreed, the court would apply Japanese law, which regards the shipowner as not being a party to the bill of lading and so not liable under it. Under the Canadian Carriage of Goods by Water Act, 353 the bill of lading was subject to the Hague Rules. Article III, rule 8 provides that: 1988 CanLIIDocs 6

Any clause, covenant or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage to or in connection with goods. . .or lessening such liability otherwise than as provided in these 3 Rules, shall be null and void and of no effect. 54 Cattanach J., in the Federal Court Trial Division, held that the effect of enforcing the combined choice of forum and choice of law clauses would be to relieve the shipowner of the liability the Act provided, and that the clause was therefore of no effect. A motion to stay the action on the ground of the choice of forum must fail. 355 He followed The Hollandia,356 in which the House of Lords had invoked the same article in the Hague- Visby Rules to strike down a combined choice of forum and choice of law clause in a bill of lading that referred all disputes to litigation in and under the law of the Netherlands. 2. Determining the ProperLaw on Objective Grounds If no agreement on the governing law can be expressed or necessarily implied in the terms of the contract, Canadian courts follow the English

350 Ibid. at 68-69. The passage is clouded by some confusion as to whether the clause operated as an incorporation of Ontario law or as a choice of governing law, but by the end it is clear the judge meant the latter. 351 Supra, note 348 at 296 and 300. 352 (1983), [1984] 2 RC. 851, 48 D.L.R. (3d) 412 (T.D.) [hereinafter The Regal Scout cited to D.L.R.]. 353 R.S.C. 1970, c. C-15, s. 2. 354 The Regal Scout, supra, note 352 at 415. 355 It is unstated but implicit that the choice of law portion of the clause would likewise be ineffective in a Canadian court. 356 [1983] 1 A.C. 565, [1983] 1 Lloyd's Rep. 1 (sub nom. The Morviken) (H.L.). 1988] Recent Developments in CanadianLaw approach of asking what is the system of law with which the transaction has its closest and most real connection. 357 This has to be a matter of intuition rather than calculation, because the relevant connections include both territorial ones (such as where the parties were resident and carried on business, where the contract was made and to be performed) and subjective or legal ones (such as its language, its drafting, its validity or invalidity by one or other law), which cannot be compared on any uniform scale of values. One rationalizing approach, which I favour, is to relate the various elements to the common interest of the parties in the efficacy of their transaction, by asking what system of law the parties could most sensibly have chosen, under all the circumstances, as the governing law. The tendency in the cases, though, seems to be to leave the parties' concerns in the background at this stage and to treat the inquiry as an "objective" one, as contrasted with the "subjective" approach used when there is an agreed choice of law. Yet there is no reason to have any less regard for the parties' interests in the absence of an agreed choice of law than when it is present. And if the style of drafting and legal structure

of the contract are relevant "objective" factors to take into account, as 1988 CanLIIDocs 6 they clearly are, 35s that can only be explained by its relevance to how well the contract will do the work the parties expected it to. Recently in an Alberta case, Kenton Natural Resources Corp. v. Burkinshaw, 359 the judge chose to express the "closest and most real connection" test in a way that stressed the commercial nature of the issue: "[T]he determination which must be made in the absence of being able to impute a clear intent of the parties [is] what law or laws a just and reasonable businessman would have selected as having the closest and substantial connection to the transaction and the contract." 360 In the contract before him, individuals resident in Alberta and the United States sold certain oil and gas interests in lands in Tennessee to an Alberta company. He concluded that "a just and reasonable businessman involved in dealing in oil and gas interests in properties would have selected Tennessee law if it [sic] had considered that problem at the time of entering into the Agreement".361 In many cases the court finds the proper law is decided by one critical factor that tips the balance, rather than by the cumulative weight of the indications pointing to one or other law. Thus in an Ontario case the decisive consideration in holding that West German law governed a distributorship contract between a West German manufacturer and an exclusive Canadian distributor was that the distributor had originally

3-7Imperial Life Assoc. Co. of Canada v. Cohnenares, [1967] S.C.R. 443, 62 D.L.R. (2d) 138; Castel, supra, note 3 at 535-44; McLeod, supra, note 4 at 482-88. -51Anin Rasheed Shipping Corp. v. Kuwait Ins. Co. (1983), [19841 A.C. 50, [1983] 2 All E.R. 884 (H.L.), was decided almost entirely on this basis. 359(1983), 47 A.R. 321 (Q.B.). 360 Ibid. at 328. He drew the formula partly from the Colmenares case, supra, note 357 and partly from DICEY & MORRIS, supra, note 7 at 743. 361 Supra, note 359 at 331. Ottawa Law Review/Revue de droit d'Ottawa [Vol. 20:2 approached the manufacturer and not the other way around. Anyone in the distributor's position, said the High Court, would expect West German law to apply to any contract they drew up and settled on the manufacturer's home territory; it would not expect to carry Ontario law "with it wherever it went, as it were, in a satchel".362 Although in Imperial Life v. Colmenare 363 the proper law of a contract of life insurance was decided especially by reference to where the insurer decided to "go the risk", a different factor weighed much more heavily in determining the proper law of a policy of liability insurance in Cansulex Ltd. v. Reed Stenhouse Ltd.364 The policy was issued to a sulphur exporting firm based in Calgary and carrying on operations worldwide but not in the United States. Its shipments were through the port of North Vancouver, British Columbia. The policy was obtained from a United States insurer by Calgary brokers through the Seattle, Washington office of an underwriters' association that acted as agent for insurers covering risks outside the United States and Canada. Although to accept the risk was clearly taken in the United States 365 the decision 1988 CanLIIDocs 6 and an American form of policy was used, the proper law was held to be the law of British Columbia. The primary reason was that the policies were for liability insurance and the claims might be expected to arise in Alberta, British Columbia or worldwide, but not in the United States. 366 Alberta law was put aside because its connection with the contract was more tenuous than that of British Columbia or the United States. 367 The case is a good example of how impressionistic an exercise the application of the "closest and most real connection" test can be. The reason why the location of the subject matter of the insurance was so much more important here than in Colmenares is far from clear. And if at the time the policy was issued one had asked the parties to choose the law to govern the policy, British Columbia law would probably have been the least likely candidate, given that the policy was being issued by an American insurer through an American agent to a firm based in Alberta.

362 Anthes Equip. Ltd. v. Wilhelm Layner G.m.b.H. (1986), 6 C.P.C. (2d) 252 at 261 (Ont. H.C.). 363 Supra, note 357. 3- (1986), 70 B.C.L.R. 273 (S.C.). The issue was the effect to be given to the particular exclusion of coverage. 365 The court held it had to assume the contract was formed in British Columbia, because of s. 7 of the Insurance Act, R.S.B.C. 1979, c. 200, which deems any contract insuring a person domiciled or resident in the province, or property in the province, to be made in British Columbia. The place of formation was not, however, decisive as to the proper law. 366 Supra, note 364 at 290. 367 No particular state of the United States was mentioned. 1988] Recent Developments in Canadian Law

3. Proper Law of Maritime Contracts

ITO-Int'l Terminal OperatorsLtd. v. Miida Elecs. Inc.368 is of great importance to Canadian maritime law. This case decided that a ware- houseman's liability for the loss of cargo being stored in its terminal in the Port of Montreal, and its right to rely on a "Himalaya clause" in the bill of lading purporting to exempt warehousemen and others besides the carrier, were matters of Canadian maritime law and not the Quebec law of obligations. This conclusion was based on the terminal, its operations and the particular storage in the case being so closely connected with the port and with the contract of carriage by sea. 369 What is of interest from the point of view of the conflict of laws is the following passage from McIntyre J.'s judgment for the majority of the Court:

It is my view . . .that Canadian maritime law is a body of federal law encompassing the common law principles of tort, contract and bailment. I am also of the opinion that Canadian maritime law is uniform throughout Canada, a view also expressed by Le Dain J. in the [Federal] Court of

Appeal who applied the common law principles of bailment to resolve 1988 CanLIIDocs 6 Miida's claim against ITO.370

This affirmation of a federal common law in maritime matters is in line with the law in the United States. 371 The implication would seem to be that a contract that falls within the federal maritime sphere is governed by the law of Canada rather than by the law of a particular province. If this is right, a Canadian court, faced with having to determine the proper law of a bill of lading without an express choice of law, should ask itself whether the contract has its closest and most real connection with Canada, not with any particular province of Canada. Parties who draft such contracts can validly stipulate that Canadian law will govern, meaning federal law. An interesting ques-

363 [1986] 1 S.C.R. 752, 28 D.L.R. (4th) 641 [hereinafter ITO cited to S.C.R.], followed in Mount Royal/Walsh Inc. v. The Jensen Star (1988), 17 FT.R. 289. The latter involved a question of the allocation of funds received by ship repairers from a shipowner, for work done on different ships. It was held an issue of Canadian maritime law, and so to be decided by common law principles, not the Quebec civil law, which would have applied otherwise. 369 ITO, ibid. at 775-76. An unexplained feature of the case is that all the courts assumed the effect of the Himalaya clause was to be decided by Canadian law, although the contract of carriage was between a Japanese shipper and a Japanese carrier for a voyage from Japan to Montreal, which suggests the proper law of the contract may have been Japanese. It may be that the issue of whether the clause was a defence was assumed to be a question of the law of torts rather than of contract. CompareSayers v. International Drilling Co. N.V., [1971] 1 W.L.R. 1176, [1971] 3 All E.R. 163 (C.A.). 370 ITO, ibid. at 779. 371 R. Leflar, L.L. McDougal & R.L. Felix, AMERICAN CONFLICTS LAW, 4th ed. (Charlottesville: Michie, 1986) at 198-99, where it is pointed out that Erie R.R. v. Tompkins (1938),304 U.S. 164, clearly did not abolish the notion of a federal common law, despite a widespread impression to the contrary. Ottawa Law Review/Revue de droit d'Ottawa [Vol. 20:2 tion is what effect will now be given to an express choice of law in favour of the law of Quebec, say, or of British Columbia. Is this a choice of the domestic law of contracts in that province, or a choice of the maritime law that applies in that province, the federal maritime law? The Federal Court of Appeal, in a different case, has opted for the latter construction. 372 4. Formation of the Contract The question of what law governs the formation of a contract, in the sense of whether an agreement came into existence, was raised but passed over in St. John Shipbuilding & Dry Dock Co. v. Kingsland- Maritime Corp.373 The issue there was, again, the right of a party other than the carrier to claim the protection of a "Himalaya clause" in the bill of lading covering the cargo. Here the defendants were stevedores in St. John, New Brunswick who had negligently damaged machinery being unloaded off a Swedish ship that had brought it from Denmark.

The bill of lading issued to the shipper in Copenhagen included, as well 1988 CanLIIDocs 6 as the Himalaya clause, a clause that all claims against the carrier should be decided according to Swedish law. The shipment had been arranged, however, by the buyer, a New Brunswick company, who had sent a "purchase order" or booking note to the Swedish shipping line's agent in St. John, who had signed it. The purchase order included an express choice of New Brunswick law, which in this context the Federal Court of Appeal took to mean the maritime law of Canada. The Court decided that the contract of carriage was created by the sending and acceptance of the purchase order, and that the bill of lading was only evidence of its terms; thus the choice of New Brunswick law was the operative one, and the choice of Swedish law in the bill of lading was rejected as being inconsistent. The Court did not consider whether the question, which of the two documents constituted the actual agreement, should be decided by Ca- nadian or Swedish law; the Court simply applied Canadian precedents. It certainly can be argued that as an issue of formation, this question is to be decided not by the lex fori but by the putative proper law of the contract, that is, the law with which the contract was formed, and ignoring any express choice of law clause, would have had its closest and most real connection. 374 In the St. John case it is hard to say whether the putative proper law of the contract of carriage was Canadian or Swedish; perhaps with the other factors fairly evenly balanced the law of the flag of the ship might be the deciding factor. 375 Thus, if Swedish law regarded

372 St. John Shipbuilding & Dry Dock Co. v. Kingsland Maritime Corp. (1981), 126 D.L.R. (3d) 332 at 341 (EC.A.D.) [hereinafter St. John]. 373 Ibid. 374 Castel, supra, note 3 at 547; McLeod, supra, note 4 at 488-90. 375 Compare, Coast Lines Ltd. v. Hudig & Vedor CharteringN.V., [1 972] 2 Q.B. 34, [1972] 1 All E.R. 451 (C.A.). 19881 Recent Developments in Canadian Law the bill of lading, not the purchase order, as defining the contract of carriage, Swedish law as the putative proper law would have made Swed- ish law the actual proper law by giving effect to the express choice of law in the bill of lading. The question akin to formation is that of the effect of a contract on third parties. What law decides whether a contract between A and B confers rights or imposes liabilities on C? This issue was featured in both the ITO and St. John cases, which turned on the right of warehousemen and stevedores, respectively, to invoke an exemption clause contained in a contract between others. In ITO the Supreme Court of Canada decided the question by Canadian maritime law, apparently as the law governing in tort; there was no reference to the proper law of the bill of lading in that case, which may well have been Japanese.376 In St. John the Federal Court of Appeal also applied Canadian maritime law, but explicitly on the ground that it was the proper law of the contract. Analytically the latter seems to be the better view. It is hard to see how a third party could derive rights from a contract otherwise than by virtue of the con- 77 tract's proper law giving effect to such rights.3 1988 CanLIIDocs 6 A recent Alberta case raised the unusual question whether the proper law can also impose obligations on third parties. In Wincal Properties Ltd. v. Cal-Alta Holdings Ltd.378 a second mortgagee, an Alberta company, had had its interest foreclosed by the first mortgagee and sued two other Alberta companies for the debt still owing on the second mortgage. The mortgaged property was in Winnipeg, Manitoba. The defendant companies were not sued as the original borrowers but as transferees, who had acquired the property.379 They had sold it to a third company that ultimately defaulted on the debt. Their liability was based on a Manitoba statute that implied a covenant on the part of any transferees of property subject to a mortgage or other encumbrance to pay the debt secured by the mortgage or encumbrance, and to indemnify the transferor in respect of the debt.3 o MacDonald J. held that the proper law of the contract of the second mortgage was Manitoba law, and that the defendants were therefore liable on the implied covenant that the Manitoba statute imposed on them as transferees of the property. 38'

376 See ITO, note 368 at 779. 377 It is a nice question whether for this purpose the proper law must be objectively determined ignoring only express choice of law. The argument would be that C cannot logically derive rights through the operation of a system of law that A and B but not C have made applicable to their contract. See Castel, supra, note 3 at 547-48; CHESHIRE &NORTH, supra, note 6 at 478-79; Scott v. Pilkington (1862), 2 B. & S. 511, 121 E.R. 978 (Q.B.). 378 (1983), 43 A.R. 223, [1983] 3 W.W.R. 57 (Q.B.). 379 In fact one of the defendants was the original mortgagor but had sold the property to the other defendant and some time later acquired a half interest in it. 380 Real Property Act, R.S.M. 1970, c. R-30, s. 75. 381 Supra, note 378 at 225-26, [1983] 3 W.W.R. 57 at 61. Ottawa Law ReviewlRevue de droit d'Ottawa [Vol. 20:2

5. Regulatory Statute Applied to a Contract as Part of the Lex Fori

Just as the legislature may dictate to the local courts what the proper law of a contract shall be, 382 it may also require rules of domestic law to be applied to the contract notwithstanding that the proper law may be the law of another jurisdiction. Since the statutes rarely spell out their territorial scope of operation, this is usually a matter for judicial interpretation of the will of the legislature. One recent case where a domestic statute was tentatively construed to override the proper law was the Avenue Properties case, discussed above in connection with the jurisdictional issue. 383 The type of legislation involved there, which was investor protection legislation, lends itself most easily to this construction. Its scope of application is probably most sensibly determined not by the proper law the parties may agree to, but by the location of the regulated activity, namely offering property for sale. Securities legislation also suggests a 384 similar treatment. 1988 CanLIIDocs 6 6. Formalities

The recent cases on this point are all spawned by the Alberta Guar- antees Acknowledgement Act, which renders of no effect any guarantee that is not executed by the guarantor in person before a notary public. 385 The conflicts case law produced by this unique statute is so voluminous that Professor Black has devoted an article to it.386 As he points out, the cases hardly do more, and sometimes do less, than apply the choice of law rule given by the standard texts: namely, that a contract is formally valid if it complies with the requirements as to form of either the law of the place of execution, or the proper law of the agreement. 387 Three cases were very similar. In each, a mortgage loan to a British Columbia borrower secured with British Columbia land was guaranteed by a number of guarantors, some but not all of whom were Alberta residents who executed the guarantees in Alberta. In each case a British Columbia court rejected the Alberta guarantors' defence based on the GuaranteesAcknowledgement Act, on the ground that the guarantees and the principal transaction were to be seen as a single composite transaction that had its closest and most substantial connection with British Columbia.

382 See supra, note 347 at 296 and 300 and notes 352-358 and accompanying text. 383 Supra, notes 128-32 and accompanying text. 384 Compare Midland Doherty Ltd. v. Zonaila (1982), 36 B.C.L.R. 326, 17 B.L.R. 95 (S.C.), rev'd on other grounds (1983), 43 B.C.L.R. 138, 146 D.L.R. (3d) 345 (C.A.). 385 R.S.A. 1980, c. G-12, s. 3. 386 V. Black, The Strange Case of Alberta's GuaranteesAcknowledgement Act: A Study in Choice-of-Law Method (1987) 11 DALHOUSIE L.J. 208. 387 Castel, supra, note 3 at 421-22; McLeod, supra, note 4 at 494-95. 1988] Recent Developments in Canadian Law

Thus the proper law of the guarantees was British Columbia law, which regarded them as formally valid.388 In a fourth case decided on similar grounds, 389 two Alberta residents executed in Alberta a promise to refund a U.S.$50,000 advance the plaintiff Alberta company had paid in respect of its purchase of certain oil and gas leases on land in Tennessee from a group that included the two "guarantors". The Alberta court held that the Guarantees Acknowledgement Act did not apply, because the transaction as a whole, including the guarantee (assuming it was one) was governed by Tennessee law, with which it had its closest connection. 390 In each of these cases the guarantee was held valid, notwithstanding that it was signed in Alberta by an Alberta resident without compliance with the formalities prescribed by the Alberta statute, because it formed part of a larger transaction that was held to be more closely connected with the law of another jurisdiction. This defeats the presumed purpose of the Act to protect Albertans from giving rash or ill-formed guarantees at the instance of stronger or unscrupulous parties, 39' although on the reported facts none of the cases smacks of overreaching. In support of the results one can point not only to the claims of the non-Albertan creditor (Albertan in the Kenton case), who reasonably relied on the 1988 CanLIIDocs 6 guarantee, but also to the fact that an Albertan who signs papers in connection with an obviously non-Albertan business deal, is in some sense put on notice that he should take advice on what he is doing. The less clearly "foreign" the deal is, however, the weaker both these arguments become. The creditor is more likely to realize that Alberta law may be relevant, and the debtor is less likely to think of the transaction as out of the ordinary. Such considerations may have helped the Alberta court in Jorges Carpet Mills Inc. v. Bondar392 to hold that a guarantee, signed in Alberta by the principals of an Alberta company in favour of a Georgia firm that was giving their company an increased line of credit for the purchase of carpets, was governed by Alberta law and had to comply with the Act. The Georgia firm had in fact realized that Alberta law had some special rules about guarantees and had taken steps, albeit ineffective ones, to legalize the guarantees in question.393

-11 Central Trust Co. v. Jo-Val EnterprisesLtd. (1987), 18 B.C.L.R. (2d) 325 (C.A.); Morguard Trust Co. v. Affkor Group Ltd. (1984), 55 B.C.L.R. I (C.A.); Morguard Trust Co. v. Heritage Horizons Ltd. (1987), 44 R.P.R. 135 (B.C.S.C.). 319 Supra, note 359. 390 Professor Black finds this result "incomprehensible" (supra, note 386 at 243) because the guarantee portion of the agreement was almost wholly connected with Alberta, both the guarantors and the plaintiff being Alberta residents. He argues that an "interpretive" approach to the choice of law issue, based on implementing the policy of the statute, where the circumstances warrant, would demand the Act be applied. I am more inclined to accept the result, especially given the particular nature of the "guarantee", a promise to refund an amount paid on account of the purchase price. It does seem to me that the proper law of the principal transaction can reasonably be applied to uphold the guarantee as well, when the two are so closely connected. 391 Black, ibid. at 212-15. 392 [1981] 4 W.W.R. 470 (Alta. Q.B.). 393 Ibid. at 472. Ottawa Law Review/Revue de droit d'Ottawa [Vol. 20:2

In Greenshields Inc. v. Johnston394 a resident of Edmonton had opened a trading account for his holding company with the Edmonton office of the plaintiff, a national firm of securities brokers. He had given a personal guarantee on this account. When he was sued on the guarantee and raised the defence of the GuaranteesAcknowledgment Act the brokers relied on the guarantee form's provision that it was to be construed in accordance with the law of Ontario. The Alberta Court of Appeal saw no reason to deny effect to this express choice of Ontario law as the proper law, and held that the noncompliance with the Act afforded Mr. Johnston no defence. There is something unattractive about a guarantor being stripped of the protection of the Act by the plaintiff's insertion of a boiler plate choice of law clause into the guarantee. On the other hand, one cannot describe the choice of law as senseless or mala fide; aside from the Toronto base of the brokers, much of the trading in the account would be done through Toronto. Also, a guarantor whose company en- gages in trades worth a good $500,000 can hardly claim that he was so unsophisticated as to be oblivious to the legal dimensions of the paper he was signing. The oddest decision regarding the Act is Lehndorf Property Man- 1988 CanLIIDocs 6 agement Ltd. v. McGrath,395 where the guarantors signed the document in British Columbia but it included an express choice of Alberta law to govern the contract. According to the usual rule, the guarantee should have been upheld on the basis that it was valid by the law of the place of execution, but Wetmore L.J.S.C. thought the express choice of Alberta law precluded this. His brief judgment suggests that the Act's requirements were not formalities at all, because they were "substance" rather than "procedural", 396 a palpable confusion. 397 He may have assumed that the choice of Alberta law was a deliberate choice for all purposes, including formalities, but that would mean construing the choice of law clause as a conscious decision of the parties to submit their contract to the exclusive regime of a law that rendered it formally invalid, an unlikely interpretation.

C. Torts

1. The Rule in Phillips v. Eyre

The most significant recent development in the area of torts is that there has been no development at all. Canadian courts struggle on with the rule in Phillips v. Eyre,398 as it was applied in the most recent decision

394 (1981), 28 A.R. 1, 119 D.L.R. (3d) 714 (Q.B.), affd (1981), 35 A.R. 487, 131 D.L.R. (3d) 234 (C.A.). 395 [1984] 3 W.W.R. 187 (B.C.S.C.). 396 Ibid. at 189-90. 397 Black, supra, note 386 at 228-30. 398 (1870), L.R. 6 Q.B. 1 (Exch. Ch.). 19881 Recent Developments in Canadian Law of the Supreme Court of Canada, McLean v. Pettigrew,399 in 1945. To succeed the plaintiff must show two things: first, that the facts would have given him a cause of action in tort according to the lex fori had they occurred in the forum; and, second, that the defendant's acts were not justifiable, meaning free of any civil or criminal liability, according to the lex loci delicti.400 In England the House of Lords has modified this rule in Chaplin v. Boys, 40 1 although the exact limits of the change are obscured by the assortment of reasons given by the Law Lords. Two things seem fairly clear about the present English position. The second limb of the rule in Phillips v. Eyre, referring to the non-justifiability of the defendant's acts by the lex loci delicti, will not be satisfied only by showing that the acts were civilly actionable in that jurisdiction; it is no longer enough to show that they were punishable as a criminal or quasi- criminal offence.402 Also the rule in Phillips v. Eyre is only a general rule that admits of exceptions. The House of Lords left it unclear how broad the exceptions might be. At least the court may dispense with the need to satisfy the (newly narrowed) requirement of actionability by the lex loci delicti if that law has no interest in the issue at stake.403 It may be that in the converse situation the court can apply the lex loci delicti 1988 CanLIIDocs 6 and give recovery under the foreign law even though the requirements of English law are not met, but that is less certain. The recent Canadian cases, with only a few exceptions, all arose out of car accidents .404 Of those the great majority were cases of accidents in Quebec. The Quebec Automobile Insurance Act4o5 of 1977 abolishes delictual recovery for bodily injury40 6 caused by automobile accidents, and replaces it with a right of recovery on a no-fault basis against the R6gie de l'assurance automobile du Qurbec. 4° 7 This right of recovery extends to all residents of Quebec wherever they are injured and to a non-resident who is injured in Quebec, but the latter's recovery is subject to being reduced in proportion to his fault unless the R6gie and the authorities in his home province or country have agreed on higher com-

399 [1945] S.C.R. 62, [1945] 2 D.L.R. 65. 400 Castel, supra, note 3 at 606-08; McLeod, supra, note 4 at 534-41. -1 [1971] A.C. 356, [1969] 2 All E.R. 1085 (H.L.). 402 Ibid. at 377 (Lord Hodson), at 381 (Lord Guest) and at 388-89 (Lord Wil- berforce). 403 Ibid. at 380 (Lord Hodson), at 391-92 (Lord Wilberforce) and at 406 (Lord Pearson). The first two referred to ss. 6 and 145-146 of the 1968 Proposed Official Draft of the American Law Institute's Restatement 2d, Conflict of Laws. 404 The exceptions include Exco Corp. v. N.S. Savings and Loan Co. (1987), 78 N.S.R. (2d) 91, 193 A.P.R. 91 (S.C.T.D.) where the rule in Phillipsv. Eyre was applied to deny an action in Nova Scotia for offences under the Ontario SecuritiesAct, R.S.O 1980, c. 466; and Meilleur v. Uni-Crete Can. Ltd. (1985), 32 C.C.C.T. 126 (Ont. H.C.), where an industrial accident in Nova Scotia was held actionable in Ontario. 5 R.S.Q. 1987, c. A-25. 406 Ss. 116 and 173: Property damage is subject to a separate system of recovery against the insurer of the damaged property. 407 S. 4. Ottawa Law Review/Revue de droit d'Ottawa [Vol. 20:2 pensation. 408 Delictual recovery for bodily injury is preserved against non-residents whose fault causes injury in an accident in Quebec, but may be exercised only by the R6gie, which is given a statutory subrogated right of action in respect of the compensation it has paid to victims of the accident. 409 In six reported cases involving accidents in Quebec the plaintiff was suing in a neighbouring province where tort recovery was available by the lexfori (Ontario in five, New Brunswick in the other), but was faced with the argument that no civil action was possible under the lex loci delicti. In each case, although pressed with Chaplin v. Boys, the court applied McLean v. Pettigrew strictly and held that it was sufficient if the plaintiff showed that the defendant had committed a penal offence under Quebec law. In each case the plaintiff had duly pleaded that the defendant had infringed one or more of the Quebec highway traffic laws, and so the way was open to the recovery of tort damages under the lex fori.410 Although stare decisis was the ground for these decisions some of the judges commented quite extensively on the merits of the rule in Phillips v. Eyre as it applied in Canada. In Lewis v. Leigh41' Grange J.A. stated that the rule's application led to a just result on the facts, which 1988 CanLIIDocs 6 involved a one-car accident in which the corporate owner of the car, the negligent driver, and the passenger-victim were all from Ontario. Three of the other cases dealt with similar passenger-driver actions where the parties had travelled together from home.412 In these cases there is some attraction, which the Ontario Court of Appeal felt, to the notion that the passenger's right to recover in tort from the driver, owner or insurer in case of an accident should not change merely because the parties drive across a provincial or national boundary. As in the famous decision in Babcock v. Jackson,413 which had an anal- ogous fact pattern, the lex loci deliciti can be seen as having a relatively minor concern with the victim's rights against the defendant driver, owner or insurer compared with the lexfori where all the parties are resident.414

408 S. 8: See the agreement between the Ontario and Quebec authorities discussed in Lewis v. Leigh (1986), 54 O.R. (2d) 324 at 327-28, 26 D.L.R. (4th) 442 at 445-46 (C.A.). 409 S. 9: See infra, notes 423-38 and accompanying text. 410 Perron v. Parise (1983), 44 N.B.R. (2d) 409, 116 A.P.R. 409 (Q.B.); Lewis v. Leigh, supra, note 408; Donald v. Huntley Serv. Centre Ltd. (1987), 61 O.R. (2d) 257, 42 D.L.R. (4th) 501 (H.C.); Ang v. Trach (1986), 57 O.R. (2d) 300, 33 D.L.R. (4th) 90 (H.C.); Going v. Reid Bros. Motor Sales Ltd. (1982), 35 O.R. (2d) 201, 136 D.L.R. (3d) 254 (H.C.); Guerin v. Proulx (1982), 37 O.R. (2d) 558 (Co. Ct.). 411 Lewis v. Leigh, supra, note 408. 412 Perron v. Parise,supra, note 410; Guerin v. Proulx, supra, note 410; Donald v. Huntley Service Centre, supra, note 410. 413 191 N.E. 2d 279, 240 N.Y.S. 2d 743 (N.Y. Ct. App. 1963). 414 The concern of the lex loci delicti in these recent cases is probably more substantial than Ontario's was in Babcock. Quebec has expressed the intention to legislate with respect to non-resident victims suing non-resident defendants for injuries received in an accident in Quebec (see supra, notes 408-409 and accompanying text) but compared with Ontario's or New Brunswick's interest in seeing the victim compensated, Quebec's interest, although expressed in the statute, is probably small. 1988] Recent Developments in Canadian Law

Much more difficult would be the case where all the parties came from Quebec, the accident was in Quebec but the passenger-victim sued the driver in Ontario. Here the McLean v. Pettigrew approach would still lead ineluctably to applying Ontario law so long as the plaintiff could meet the threshold requirement of showing the wrongfulness of the defendant's acts according to Quebec law. Such an all-Quebec action would normally fail in Ontario at the jurisdictional stage because the defendant would have to be served ex juris and no grounds would usually exist for such service. Even if service was possible the Ontario court would prob- 5 ably be forum non conveniens.41 The situation where the victim was a resident of the forum but the defendant was a resident of Quebec arose in two cases. 416 In the later of them, Ang v. Trach,417 the plaintiffs, Mr. and Mrs. Ang, and their children were gravely injured when the car they were in, driven by Mr. Trach and owned by Mrs. Trach, collided on a Quebec highway with a Quebec Provincial Police car. The Angs and the Traches were all from Ontario, where their car was registered and insured. The Angs sued Mr. and Mrs. Trach, the Quebec Provincial Police officer who was driving the other car, and the Queen in right of Quebec as owner of the other car and the 1988 CanLIIDocs 6 officer's employer. The Ontario High Court took jurisdiction over the Quebec defendants on the basis of service ex juris4 8 and held that the plaintiffs' claim against all the defendants was to be decided according to Ontario tort law notwithstanding that a civil remedy was completely abolished according to the law of Quebec 419 and that two of the defendants were entirely connected with Quebec. The result was dictated by McLean v. Pettigrew. The plaintiff had pleaded provincial driving offences by the defendant drivers that would make their conduct not justifiable by Quebec law.

415 CompareEades v. Hamilton (1985), 52 O.R. (2d) 307 (Dist. Ct.). The plaintiff could argue that the availability of a tort action in Ontario, compared with only the statutory recovery against the Rdgie in Quebec, was a legitimate advantage that justified the selection of an Ontario forum, but a court would be reluctant to accept that the advantage was "legitimate" if the facts were entirely linked with Quebec. 416 Ang v. Trach, supra, note 410. In Beck v. Beck (1986), 56 O.R. (2d) 205, 30 D.L.R. (4th) 591 (H.C.), Ontario resident victims sued a New Brunswick resident in connection with an accident in New Brunswick. The defendant's acts were not justifiable by New Brunswick law so Ontario law applied, including the statutory right to sue for pecuniary loss from injuries to one's family (Family Law Act, 1986, S.O. 1986, c. 4, s. 61). 417 Supra, note 410. The earlier was Going v. Reid Bros. Motor Sales Ltd., supra, note 410, decided by the same judge. 418 On the grounds that damage had been sustained in Ontario (Ontario Rules of Civil Procedure, R. 17.02(h)) and that the Quebec police officer and The Queen in Right of Canada were necessary and proper parties to an action properly brought against defendants served in Ontario (R. 17.02(o), namely Mr. and Mrs. Trach. 419 Going v. Reid Bros. Motor Sales Ltd., supra, note 410, was decided when a delictual claim was still possible for property damage although claims for bodily injury were already barred. Ottawa Law Review/Revue de droit d'Ottawa [Vol. 20:2

Henry J. was very much alive to the unattractiveness of this result where, as here, the defendant was from Quebec and had no connection with the Ontario resident victim. In extended obiter dictum he pointed out how this defeated the reasonable expectations of the defendant, whose own law would protect him if his car was involved in a collision with another Quebec resident, and how the legislative policy of Quebec was frustrated by an Ontario court's applying Ontario law. Fairness and equity were both lacking in such a solution. 420 The best approach, the judge thought, would be to adopt the lex loci delicti in normal cases, including cases such as this one, with the flexibility to apply another law if the "proper law of the tort" lay elsewhere. The proper law would take into account the relevant contacts with and conflicting policy concerns of the provinces involved. 421 That Canadian courts still adhere to the indefensible principle in McLean v. Pettigrew is no credit to our law. The most one can say for it is that it happens to give satisfactory results in some cases, but that is not very different from the broken clock that is right twice a day. I have doubts about the notion of the "proper law of the tort". Unlike contract, there is no single unifying policy such as giving effect to the parties' 1988 CanLIIDocs 6 reasonable expectations, by which the various factual elements in the case can be weighed in relation to each other in an arguable rational process. The fairness element Henry J. referred to is a matter not so much of what the parties can foresee, as of a basic principle that a party's rights or liabilities should not be derived from a system of law with which neither party himself, nor his actions, have any connection. It is the interaction between the principle and the need to respect the legislative aspirations of the different jurisdictions in question that the answer must be found. It seems that the Supreme Court of Canada will have to take an appeal before progress can be made, although there may be one avenue of escape open to a lower court. McLean v. Pettigrew probably does preclude a lower court from adopting the double actionability rule as the House of Lords has done, but it is submitted that it does not prevent the court from adopting the more important aspect of Chaplin v. Boys, 42 2 namely the recognition that the rule in Phillips v. Eyre, however it is interpreted, is only a general rule that can be departed from if the circumstances of the case so justify. 2. Subrogated Claims An interesting side issue that has cropped up on some recent torts cases is the treatment of statutory subrogated claims. Assuming an individual plaintiff could have sued in respect of the injury, will the court

420 Ang v. Trach, supra, note 410 at 107-08. 421 Ibid. at 108-10. 422 Supra, note 401. 1988] Recent Developments in Canadian Law recognize the claim of a foreign commission or other body that has paid benefits to the victim and is subrogated by the foreign law to the victim's rights? A negative answer was given in Grimm v. Co-Operative Fire & Cas. Co.423 While driving in Nova Scotia in a truck owned by their employer, a Quebec transport company, two Quebec residents were injured in a collision caused by the negligence of the Nova Scotia resident driver of the other vehicle. The two Quebec residents applied for and received benefits under the Quebec workers' compensation legislation. Under that statute the Commission des accidents du travail du Qu6bec became subrogated to their claims to the extent of the benefits paid. The Nova Scotia defendant (actually her insurer) argued successfully that the Commission's claim, either in its own name or in the victims' names, could not be brought in a Nova Scotia action. The judge held that the Commission's claim was not truly a subrogated one because it did not arise out of a contract of indemnity,424 and so it could not be recognized on that ground. 425 Nor could it be recognized by the force of the Quebec legislation that created it. Even if the Quebec legislature had intended to give a cause of action exercisable outside 1988 CanLIIDocs 6 Quebec, which was doubtful, it could not constitutionally do so. That would go beyond the territorial limits of the provincial power to legislate with respect to property and civil rights within the province. 426 Much to be preferred is the line taken in the Saskatchewan case of Cudmore v. Tabin. 427 There the Ontario Workers' Compensation Board claimed to recover damages under the Saskatchewan Fatal Accidents Act 428 for the death of an Ontario resident who was killed in Saskatchewan while driving his Ontario employer's vehicle. The damages were claimed on behalf of the deceased's child and common law wife, both of whom had claimed benefits under the Ontario Workers' Compensation Act, 42 9 Under the Act that election meant that the Board became subrogated to all the rights of the deceased and his dependants in respect of the deceased's injury.430 Scheibel J. held that the statutory subrogation had nothing to do with the dependants' claim against the tortfeaser. Subro- gation was not a transfer of the cause of action but only a giving of control over the conduct of the action. That was a matter entirely between

423 (1981), 50 N.S.R. (2d) 462, 129 D.L.R (3d) 304 (S.C.TD.), per Morrison J. [hereinafter Grimm cited to N.S.R.]. 424 Ibid. at 469-71. 425 A true subrogated claim will be recognized if it is valid by the proper law of the contract of insurance: DICEY & MORRIS, supra, note 7 at 1396. 426 Grimm, supra, note 423 at 473-76. 427 (1984), 32 Sask. R. 105 (Q.B.) [hereinafter Cudmore], followed in Meilleur v. U.N.l.-Crete Canada Ltd., supra, note 404. 42S R.S.S. 1978, c. F-i1I. 429 R.S.O. 1980, c. 539. 430 S. 8(4). Ottawa Law Review/Revue de droit d'Ottawa [Vol. 20:2 the dependants and the Board.431 He distinguished Grimm on the ground that the facts were somewhat different,432 but the difference is hard to 3 detect.43 There is no reason in principle to treat a statutory subrogation any differently from a private one arising out of a contract of indemnity. The question is simply whether the subrogation is valid under the law that, by conflicts principles, governs the relationship between the original claimant and the party who becomes subrogated to the claim. If the source of the right of subrogation is contractual the proper law of the contract should be applied. 434 If it is statutory, the question of whether the statute "properly" governed the situation is less easily answered, but the approach should be to ask whether the subject matter of the statute - in the case of workers' compensation, the employment relationship 435 properly fell within the ambit of the legal system in question. A good case in this area is United States of America v. Bulley.436 The United States government sued a British Columbia resident for medical expenses that, pursuant to an American statute, it had paid for an

American serviceman's wife who was injured by the defendant's neg- 1988 CanLIIDocs 6 ligence while on a visit to British Columbia. Spencer J. held that as a claim in negligence against the driver the action failed, because the loss was too remote.437 Nor could the United States government succeed on the ground that this was a regular instance of subrogation. The victim herself could not have claimed for medical expenses that were paid for her, not by virtue of a voluntary contract such as insurance or employment but because she was under a statutory scheme for which she paid no fee or premium. Finally, the United States government tried to argue that the court should recognize and enforce its statutory right of subrogation as provided in the United States statute. The judge held that since all the facts in the case were connected with British Columbia, except the na- tionality and residence of the victim, it was British Columbia law that applied to determine the parties' substantive rights. 438 A United States

431 He referred to R. v. Snell (1946), [1947] S.C.R. 219 at 227, [194712 D.L.R. 81 at 87; Rossignol v. Hart (1955), [1956] S.C.R. 314 at 316, [1956] I D.L.R. (2d) 705 at 707. 432 Cudmore, supra, note 427 at 111. 433 He suggested that the Quebec Commission in Grimm was claiming on its own behalf, which is not clear from the report, and the effect of the Quebec subrogation provision, Workmen's CompensationAct, R.S.Q. 1977, c. A-3, s. 7(3), seems identical to that of the Ontario provision. 434 Supra, note 425. 435 Compare Workmen's CompensationBd. v. CanadianPacific Ry. Co. (1919). [1920] A.C. 184 (P.C.). 436 (1988), 26 B.C.L.R. (2d) 395 (S.C.). 437 Perhaps more accurately, the driver owed no duty of care to the U.S. government because the latter's loss was not reasonably foreseeable and was purely economic. 438 Compare the result in Ang v. Trach, supra, note 410. See also supra, notes 417-21 and accompanying text. 19881 Recent Developments in Canadian Law statute could not give the government an independent right that it did not have under British Columbia law.

D. Matrimonial Property

1. Choice of Law with Respect to the Division of Property

As noted above, 439 the matrimonial property statutes of most common law provinces have a choice of law rule which specifies that the law of the parties' last common habitual residence governs the division of the parties' matrimonial assets. Aside from the cases in Alberta440 and Ontario 44' interpreting the connecting factor of habitual residence in the context of particular facts, the only decision that considers the statutory choice of law rule in any depth is Vladi v. Vladi,442 already discussed in connection with the jurisdictional issue.443 After Glube C.J.T.D. had determined that Nova Scotia was the forum conveniens for the action, Burchell J. tried the wife's claim on the merits. The Nova Scotia Mat- rimonialProperty Act stipulated that the "division of matrimonial assets", wherever situated, was governed by "the law of the place where both 1988 CanLIIDocs 6 parties had their last common habitual residence". 444 The parties agreed that the last common habitual residence was West Germany (as Glube C.J.T.D. had found) and that a West German court would apply the law of Iran, under which the wife might be entitled to minimum support but would have no substantial claim to her husband's property. Burchell J. construed the statute's choice of law rule as permitting the use of renvoi in an appropriate case, so that in principle he could apply not West German domestic law, but the Iranian law that a West German court would have applied to the case. There was nothing in the section's wording to indicate that renvoi was excluded, whereas the corresponding provision in some other provinces had excluded it spe- cifically by referring to the internal law of the relevant jurisdiction. 445 Keeping the option of renvoi open also gave the flexibility that was generally desirable in the conflict of laws. 44 6 Nevertheless the judge refused to apply Iranian law because he followed Glube C.J.T.D.'s view that to do so would offend the public policy of Nova Scotia. 447 Thus he applied West German domestic law. However, he felt constrained by the

439 See supra, text accompanying notes 153-68. 440 Adderson v. Adderson, supra, note 169. 441 Pershadsinghv. Pershadsingh(1987), 60 O.R. (2d) 437, 40 D.L.R. (4th) 681 (H.C.). 442 Supra, note 191, per Burchell J. 443 See supra, text accompanying notes 189-96. 444 S.N.S. 1980, c. 9, s. 22(l). 445 The MatrimonialProperty Act, S.N. 1979, c. 32, s. 30(1); Family Law Act, 1986, S.O. 1986, c. 4, s. 15; Family Law Reform Act, S.P.E.I. 1978, c. 6, s. 14(1). 446 Vladi v. Vladi, supra, note 191 at 364-66. 447 Ibid. at 363-64. See supra, text accompanying note 193. Ottawa Law Review/Revue de droit d'Ottawa [Vol. 20:2 wording of the choice of law rule that applied the West German regime only to "matrimonial assets" as defined in the Nova Scotia statute. 448 The result was to exclude the husband's business assets from division although a West German court would have included all his business assets acquired during the marriage.449 By West German law the wife was entitled to an equalization payment representing half the amount by which the value of the husband's assets exceeded those of hers. This was the remedy the court gave, secured by a charge on the husband's assets to the extent that the court had the power to give one. 450 By value, the Nova Scotia immovable property represented almost all of the matrimonial assets that Burchell J. considered, except for some Persian carpets. 45' The gyrations the judge went through to reach his conclusion the flirtation with renvoi and the illogical combination of the West German matrimonial property scheme with the Nova Scotia definition of matrimonial assets - were due to the peculiarities of drafting of the Nova Scotia statute, and so are unlikely to occur in this form in provinces where the choice of law rule is differently worded. 452 Nevertheless it is

regrettable that these complications were introduced at all. Renvoi should 1988 CanLIIDocs 6 not have been considered. The basis of the choice of law rule in favour of the parties' last common habitual residence is presumably that that country's domestic system of dividing matrimonial property is the most appropriate one to impose on the parties. If the question were one of ownership of property there might be more to say in favour of renvoi, at least if the property was abroad. In principle a court in jurisdiction A should not declare that a particular item of property belongs to the wife when a court in jurisdiction B, where the property is located, would say it belonged to the husband. If the question is the application of a scheme for the redistribution of assets this consideration is absent. The combining of the West German matrimonial property regime with the Nova Scotia definition of matrimonial assets is unsound, even if consistent with a narrow reading of the Act. The method of division is intrinsically linked to the nature of the property being divided and it makes no sense to apply a hybrid scheme which is founded upon different legal systems. The reference to matrimonial assets should have been interpreted as meaning the matrimonial assets as defined by the foreign law to which the court was referred. 453 Of the provinces whose matrimonial property legislation has no choice of law rule, only British Columbia has so far produced any reported

448 MatrimonialProperty Act, S.N.S. 1980, c. 9, s. 4. -9 Vladi v. Vladi, supra, note 191 at 358-59 and 368. 450 Ibid. at 372-73. 451 Ibid. 452 The importation of the domestic meaning of matrimonial assets into the choice of law rule is also possible under The Matrimonial PropertryAct, S.N. 1979, c. 32, s. 30(1) and the Family Law Reform Act, S.P.E.I. 1978, c. 6, s. 14(1); and renvoi would be possible under the Marital Property Act, S.N.B. 1980, c. M-1.1, s. 44(2). 453 J. McLeod, annot. to Vladi v. Vladi (1987), 7 R.EL. (3d) 337 at 339-40. Recent Developments in Canadian Law cases that discuss the approach a court should take. The result is hardly satisfying. One case, Woodward v. Woodward,454 applied the common law conflicts rule that the matrimonial property rights of the parties are governed by the law of the husband's present domicile subject, as to particular property, to vested rights under the law of a previous domicile.455 The Saskatchewan Matrimonial Property Act was therefore applied to the assets of spouses who were domiciled in Alberta for the last nine years of the marriage. After the separation the husband had returned to Saskatchewan, where the parties had previously lived, and the wife moved to British Columbia. The assets were now nearly all in Saskatchewan. It is submitted that the Woodward approach points in the wrong direction. The common law rule referring property rights to the law of the domicile was devised as a rule for determining ownership, not for the division of property. Domicile is a much less suitable connecting factor for the latter question than for the former, even apart from the basic inequality in referring to the husband's and not the wife's domicile. The husband's domicile at the time the question of division is raised may have nothing to do with the other spouse or with the parties' married life. The solution must be sought in a judge-made choice of law rule that 1988 CanLIIDocs 6 is suited to the particular nature of the issues raised. Adopting a rule based on the parties' last common habitual residence, by analogy with the statutory choice of law rules in other provinces, would be a better solution. In Woodward it would have indicated the law of Alberta instead of Saskatchewan. Perhaps even preferable, albeit less certain, would be some kind of proper law approach: with which system of law did the parties' relationship, seen as an economic partnership, have its closest and most real connection? The two tests will usually give the same answer, as indicated in Woodward, but the proper law test avoids the spurious precision that results from the habitual residence test in borderline situations. As well, it avoids possible unfairness when the parties' last habitual residence was of minor significance as compared with a previous habitual residence that was the dominant residence for most of the marriage. McKinney v. McKinney456 hints at a proper law approach, but only in that the British Columbia court decided the jurisdictional question by asking in effect whether the case had a real and substantial connection with the province. This was not explicitly a choice of law case.457 2. Marriage Contracts Before the advent of the modern Canadian matrimonial property statutes it was clear that a marriage contract, in which the spouses agreed

454 [1981] 6 W.W.R. 385, 30 B.C.L.R. 351 (S.C.) [hereinafter Woodward cited to W.W.R.]. 455 Ibid. at 388-89. 456 Supra, note 182. 4-7 See also Jeske v. Jeske (1982), 39 B.C.L.R. 396, 29 R.FL. (2d) 348 (S.C.), where the court applied Alberta law because the parties had agreed to this effect. Ottawa Law Review/Revue de droit d'Ottawa [Vol. 20:2 on their future property rights, would be given effect if it was valid by the proper law of the contract and any other law relevant to issues such as formalities and capacity.458 The contractual regime would persist through changes in domicile during the marriage 459 and would extend to immovable property included in its terms. 460 The effect of a marriage contract on the statutory regimes now employed in the Canadian common law provinces depends on two things, the role designated to a marriage contract under the statute in question and the interpretation of the particular contract being considered. Typ- ically these statutes allow the spouses to contract out of the statutory scheme46' if they satisfy prescribed formalities which apply at least to a contract whose formal validity is governed by the lexfori.462 There have been at least seven reported cases, all involving marriage contracts that were entered into by parties who were marrying in Quebec or in a foreign civil law country and agreed to remain separate as to property, thus excluding the community property regime that would otherwise have applied. 463 In Nova Scotia, Ontario and Prince Edward Island the courts have refused to regard such marriage contracts as excluding the spouses' 1988 CanLIIDocs 6 right to a division of property. The statutes do permit spouses to make agreements as to the ownership or division of their property 464 but the courts have construed the contracts in question as dealing solely with ownership and not with division. In order to exclude the right to a division of property under the statute the contract would have to deal explicitly with division; a mere agreement to be separate as to property, such as these contracts were, is not enough. 465 This is a somewhat disingenuous approach because, in the legal systems to which the spouses were subject when they made the contract, there was no distinction between ownership and division; in effect, one determined the other. It would have been extremely surprising if the parties had mentioned the division of the

458 Re Jutras Estate, [ 1932] 2 W.W.R. 533 (Sask. C.A.); Devos v. Devos, [1970] 2 O.R. 323, 10 D.L.R. (3d) 603 (C.A.); Castel, supra, note 3 at 433-36; McLeod, supra, note 4 at 372-79. 459 De Nicols v. Curlier (1899), [1900] A.C. 21 (H.L.). 460 Re De Nicols (1900), [1900] 2 Ch. 410 (Ch. D.). 461 For example, Family Law Act, 1986, S.O. 1986, c. 4, s. 52. 462 S. 55(1). 463 Hansson v. Hansson, [198114 W.W.R. 88,26 B.C.L.R. 231 (S.C.) [hereinafter Hansson cited to W.W.R.] (Sweden); Schaub v. Schaub (1984), 51 B.C.L.R. 1 (S.C.), affd (1985), 63 B.C.L.R. 64, 45 R.FL. (2d) (C.A.) [hereinafter Schaub cited to 63 B.C.L.R.] (West Germany); Robinson v. Robinson (1988), 82 N.S.R. (2d) 424, 13 R.EL. (3d) 90 (C.A.) [hereinafter Robinson cited to N.S.R.] (St. Lucia); Kerr v. Kerr (1983), 147 D.L.R. (3d) 384 (Ont. C.A.), affg (1981), 32 O.R. (2d) 146, 121 D.L.R. (3d) 221 (H.C.) [hereinafter Kerr cited to O.R.] (Quebec); Sinnett v. Sinnett (1980), 15 R.F.L. (2d) 115 (Ont. Ct. Ct.) [hereinafter Sinnett] (Quebec); Roome v. Roome (1984), 42 R.FL. (2d) 337 (PE.I.S.C.) [hereinafterRoome] (Quebec); Boucher-McKay v. Boucher- McKay (1983), 34 R.FL. (2d) 366 (P.E.I.S.C.) [hereinafterBoucher-McKay] (Quebec). 464 The MatrimonialProperty Act, S.N.S. 1980, c. 9, s. 22(1); Family Law Act, 1986, S.O. 1986, c. 14, s. 54(a);FamilyLaivReformAct, S.P.E.I. 1978, c. 6, s. 51(l)(a). 465 Robinson, Kerr, Sinnett and Roome, supra, note 463. 1988] Recent Developments in Canadian Law property expressly. The courts' narrow construction of such agreements is probably based in part on a suspicion that these agreements might not have been a fair bargain between equals when they were made, and partly on a feeling that parties who had contracted to be separate as to property should be similarly situated to the general married population of the province, who had all been separate as to property before the new regime came along in the 1970s. If everybody else had to adapt to the new system, then these people would have to as well. 466 In the British Columbia cases the courts have not drawn the distinction between ownership and division in construing marriage contracts. They have assumed that the standard type of contract, providing for separate property, does qualify as a marriage agreement that affects the division of property. 467 But they have held that such a contract is subject to the discretion that the British Columbia Family Relations Act gives the court46s power to reapportion the division of property under the agreement if it considers that division unfair.469 It should be noted that the effect of the agreement is determined by the matrimonial property statute of the forum only if the question of division is governed by the lexfori. In Boucher-McKay v. McKay470 the 1988 CanLIIDocs 6 parties had not only made a Quebec marriage contract but were still subject to Quebec law as to the division of property because their last common habitual residence had been Quebec. In such a case the agreement must be construed as would a Quebec court in deciding on the disposition of property on the termination of a marriage. Similarly, in the Ontario Court of Appeal's decision in Vien Estate v. Vien Estate471 a Quebec marriage contract received full effect because the issue was a widow's right to a share in her husband's estate. That was an issue to which the Ontario matrimonial property statute did not apply.472 It was thus a question of property ownership and succession. The ownership was governed by the marriage contract, validly made

466 Kerr (H.C.), ibid. at 154. 467 Hansson and Schaub, supra, note 463. 468 R.S.B.C. 1979, c. 121, s. 51. 469 In Sehaub (B.C.C.A.), supra, note 463 at 65, Lambert J.A. hinted that greater deference to such agreements might be desirable. 470 Supra, note 463. 471 (1988), 12 R.EL. (3d) 94 (Ont. C.A.) [hereinafter Vien Estate]. 472 Ibid. at 100. This case arose under the Family Law Reform Act, S.O. 1978, c. 2. The Family Law Act, 1986, S.O. 1986, c. 4, ss. 5(2) and 6, gives a surviving spouse an election to claim an equalization of the net family property of the deceased spouse and her own, or to claim under her rights of succession. The right to this election does not seem to be covered by the statutory choice of law rule in s. "15, which refers any question of property rights between "spouses" to the law of the parties' last common habitual residence. But for the fact that "spouses" does not include an estate, s. 15 would have invoked the law of Ontario as the Viens' last common habitual residence. See J. McLeod, annot. to Vien Estate, ibid. at 95. If s. 15 did include property claims against estates, it is not clear how it would operate in relation to the common law choice of law rule for succession, which is based on domicile. Ottawa Law Review/Revue de droit d'Ottawa [Vol. 20:2 under Quebec law, and the succession by the law of the deceased's last domicile, which was also Quebec. The result was that the widow had no claim to her husband's property by constructive trust or unjust en- richment. These doctrines were unknown to Quebec law and, in any event, such claims were, according to Quebec law, barred by the marriage 3 contract. 47

E. Husband and Wife: Recognition of Foreign Divorces

Very few foreign divorces granted after 1 June 1986 will be subject to the common law grounds for recognition. Subsection 22(1) of the Divorce Act, 1985474 provides:

Divorce granted, on or after the coming into force of this Act, pursuant to the law of a country or subdivision of a country other than Canada by a tribunal or other authority having jurisdiction to do so shall be recognized for all purposes of determining the marital status in Canada of any person, if either former spouse was ordinarily resident in that country or subdivision for at least one year immediately preceding the commencement of pro- 1988 CanLIIDocs 6 ceedings for the divorce.

Generally speaking, the only foreign divorces that will not qualify for recognition are those not granted by "a tribunal or other authority", which may include some non-judicial or religious divorces, 475 and divorces obtained in a jurisdiction where one or the other spouse was temporarily resident or had only recently become ordinarily resident. The Act expressly preserves "any other rule of law "476 with respect to the recognition of divorces so that such divorces may still qualify for recognition if they satisfy one of the common law tests. Subsection 22(2) of the new Act, which applies to divorces granted after 1 July 1968, preserves the statutory ground for recognition introduced by the old Act's subsection 6(2), namely that the wife was independently domiciled in the country where the divorce was granted. (She might, of course, be domiciled there without having been ordinarily resident there for one year before the commencement of proceedings.) Unbelievably, the drafters have rearranged the wording so as to make nonsense of the provision. Read literally it now requires that the divorce have been granted on the basis of the wife's independent domicile, whereas the former provision said (albeit awkwardly) that recognition should be given on the basis of her domicile. It is very unlikely that a foreign court will base its jurisdiction on the wife's independent domicile since few countries use domicile in the common law sense as a juris-

473Vien Estate, ibid. at 101-02. 474 S.C. 1986, c. 4. 475Compare Castel, supra, note 3 at 315. 476 The qualifier "existing" in the corresponding section of the old Divorce Act, R.S.C. 1970, c. D-8, s. 6(2), has happily been dropped. 1988] Recent Developments in Canadian Law dictional test. As well, a divorce is not granted on the basis of domicile, a jurisdictional test, but on the basis of the grounds for divorce being present. It is to be hoped that judges will ignore the change in syntax as it is clearly an oversight. If the foreign divorce falls outside the two statutory recognition sections, the array of common law grounds for recognition must still be canvassed. Three of these still have vitality.477 First, the rule in Le Me- surier v. Le Mesurier478 holds that the divorce will be recognized if it was granted in the country where the parties (that is, the husband 479) were domiciled when the proceedings were begun. Second, the rule in Armitage v. Attorney-General4o holds that the divorce will be recognized if it was recognized by the law of the husband's domicile at the time the divorce was granted. And, third, the rule in Indyka v. Indyka481 is based on either party's having a "real and substantial connection" with the foreign country when the proceedings were commenced there. This connection is judged in the light of the policy against recognizing sham divorces in which parties have sought to evade the laws of the jurisdiction to which they belong.482 The Saskatchewan Court of Appeal had occasion to consider the 1988 CanLIIDocs 6 Indyka principle in Re Edward and Edward.483 The divorce in question was that of the late Mr. Edward from his second wife. It had been granted by the California Superior Court in 1955. The issue was whether his widow had been validly married to him in Saskatchewan in 1957. A daughter of the first marriage argued that the California divorce had not validly dissolved the second marriage and that Mr. Edward's estate passed to her on his intestacy. Mr. Edward had been born in California but spent

477 The "reciprocity" ground in Travers v. Holley, supra, note 299, has little scope because very few foreign divorces would fall within the Canadian jurisdictional rules, applied mutatis miutandis to the facts of the case, without also falling under one of the other common law rules for recognition. Conceivably, a pre-June 1, 1986 foreign divorce, granted in a country where one spouse was ordinarily resident but neither spouse was domiciled, would not be recognized under the Armitage or Indyka tests, but would be recognized if the jurisdictional rules in the Divorce Act, 1985 can be applied ret- roactively via Travers v. Holley to foreign divorces granted before the Act came into force. See Indyka where the majority approved such a retroactive recognition and Be- vington v. Hewitson (1974), 4 O.R. (2d) 226, 47 D.L.R. (3d) 510 (H.C.), where Lacourci~re J. had doubts about it. 478 [1895] A.C. 517 (P.C.). 479 Quaere whether the wife's independent domicile will now qualify as well (this is only of importance for pre-July 1, 1968, divorces since s. 22(2) of the new Act covers the rest). The provincial statutes giving the wife an independent domicile (supra, note 205) may not apply to the recognition of divorces because it is a federal matter. 480 [1906] P. 135 (P.D.). 431 [19691 1 A.C. 33 (H.L.); see Castel, supra, note 3 at 312-13 and McLeod, supra, note 4 at 679-83. 482 Messina v. Smith, [1971] P. 322 (P.D.); Bate v. Bate (1978), 1 R.F.L. (2d) 298 (Ont. H.C.). 483 (1987), 39 D.L.R. (4th) 654 (Sask. C.A.). The facts are given more fully in the trial decision, Edward v. Edward Estate (1985), 44 Sask. R. 266 (Unif. Fam. Ct.). Ottawa Law ReviewlRevue de droit d'Ottawa [Vol. 20:2

most of his adult life in Saskatchewan. He had married his second wife in Idaho in 1950. He looked for work in California (where his parents still lived) in 1953 and 1954. When his second wife petitioned for divorce there on 22 December 1953, California law required, for jurisdictional purposes, that she had been a bonafide resident of the state for one year. The court record showed that she had met that requirement. On these rather meager facts the trial judge found that Mr. Edward had had a real and substantial connection with California when the proceedings were commenced; he had not been there for a quickie divorce. 484 The Court of Appeal upheld this conclusion, but pondered at length the argument that it was wrong to treat as valid a marriage that Canadian law would have regarded as void when it was entered into in 1957, the previous divorce being one that was not granted by nor recognized in the husband's domicile. The court noted that Indyka v. Indyka, which was decided in 1967, had often been used in England and Canada to recognize divorces that were obtained long before then. 485 There was considerable American authority for applying the technique of prospective

overruling of precedent but Canadian judges, the Court of Appeal held, 1988 CanLIIDocs 6 should continue to have nothing to do with it. Prospective overruling would impair the independent, neutral and non-legislative role of the judiciary and would usurp the function of the legislature. If it were to be used it should be so only after extensive study as to its possible effects .486 It is open to debate whether retrospective overruling is any less a legislative act than prospective but the particular decision to uphold the validity of the 1955 divorce and 1957 marriage is surely right. For twenty- seven years the widow and her husband had reasonably believed they were married. It is irrelevant what a Canadian court would or would not have decided if the validity of the marriage had been challenged in 1957 or at any other time. The only question was whether there was any good reason, in 1985, to say the marriage had always been invalid. The answer was no. The Edward case illustrates once again that the "real and substantial connection" test in Indyka is flexible and the way it is applied tends to be coloured by the facts of the case. It may, in that sense, be an uncertain test, but in a case like Edward, the uncertainty is of no consequence, because the court decision settles the matter. A more rigid test might not have let the court reach what seemed to be an eminently just result.

484 Ibid. (Unif. Fam. Ct.) at 270. The facts were also most unfavourable to the daughter's case. The widow had nursed her husband through the last six years of his life, when he had been a complete invalid, whereas the daughter had had little to do with him for nearly forty years. 485 Ibid. (C.A.) at 662, referring to three English and five Canadian cases. 486 Ibid. at 664. 19881 Recent Developments in Canadian Law 501

CONCLUSION

As mentioned at the outset, much of the impetus for change in Canadian Conflict of Laws in recent years has been by legislative ini- tiatives. As the decision in Edwards illustrates, judicial contributions to the subject area have tended not to be adventurous. Perhaps the coming years will see a more adventurous development in this emerging and interesting area of the Canadian legal landscape. 1988 CanLIIDocs 6 1988 CanLIIDocs 6