The Ontario Court of
Appeal has held that the government of Ontario can proceed with a $50 billion lawsuit
against several foreign tobacco companies to recover the cost of health
care services arising from "tobacco related disease " and "tobacco related
wrongs". See Ontario v. Rothmans Inc. 2013 ONCA
353
Ontario's case is
based on legislation - The Tobacco Damages and Health Care Costs Recovery
Act - enacted by the province in 2009. The Act gave Ontario a stand-alone
statutory right to sue tobacco manufacturers to recover the cost of health care
services provided to the public as a result of "tobacco related disease arising
out of tobacco related wrongs".
In substance,
Ontario is claiming that since the 1950s, several of the defendants committed
tobacco related wrongs by manufacturing and distributing cigarettes in Ontario
when they knew or ought to have known that smoking cigarettes and being exposed
to second-hand smoke could cause or contribute to disease. In addition, Ontario
claims that all of the defendants have engaged in various conspiracies to
mislead the government and the public about the dangers of smoking and to
suppress information about those dangers.
Many of the
defendants are foreign - British American Tobacco (Investment) Limited, BAT
Industries p.l.c., British American Tobacco p.l.c., Carreras Rothmans Limited,
RJ Reynolds Tobacco Company and RJ Reynolds Tobacco International
Inc. Several of these
foreign defendants asserted that the Ontario courts do not have jurisdiction to
determine the claims against them and brought a motion to set aside the service
ex juris of the statement of claim and to stay or dismiss the action on
the basis of lack of jurisdiction. Justice Conway of the Ontario Superior Court
of Justice dismissed the defendants' motion. They appealed to the Ontario Court
of Appeal.
The Ontario Court of
Appeal dismissed the appeal for the following reasons:
Under rule 17.02(g) of Ontario's Rules of Civil Procedure,
a defendant may be served out of Ontario with a statement of claim where there
is an allegation that the damages sought are based on a tort committed in
Ontario. The Supreme Court of Canada has confirmed that a claim in respect of a
tort committed within the jurisdiction gives rise to a "presumptive connective
factor" sufficient to establish a real and substantial connection with the
jurisdiction. Unless rebutted, this factor is sufficient to provide the domestic court
with "jurisdiction simpliciter" to determine the dispute before it. In this case, the foreign
defendants claimed that the offence created by the Act was not a tort for the purposes of
rule 17.02(g). However, the Court of Appeal held that, "If something looks
like a duck, walks like a duck and quacks like a duck, it probably is a duck."
In the court's view, Ontario's claim against the defendants under the Act
created a statutory tort and fell within the section of the
rule.
In addition, the Court of Appeal held that t is a
breach of a common law duty to engage in a civil conspiracy that
causes harm to others. A conspiracy occurs in the jurisdiction where the harm
is suffered regardless of where the wrongful conduct occurred. The Act addresses
this sort of breach and provides for joint and several liability where two or
more defendants jointly breach a duty or obligation described in the definition
of tobacco related wrong. The Court of Appeal held that Ontario's claim in
this action is founded on the common law tort of conspiracy, alleged to have
been committed in Ontario because the damage flowing from the conspiracy was
sustained in Ontario. It is therefore an action in respect of a tort committed
within Ontario was contemplated by the rule.
Secondly, the Court
of Appeal held that Ontario had established "a good arguable case" for the
Ontario courts to assume jurisdiction.
The Court of Appeal
held that it is well established that an Ontario court will assume jurisdiction
against a foreign defendant only where the plaintiff establishes a good arguable
case for assuming jurisdiction either through the allegations in the statement
of claim or a combination of the allegations in the statement of claim and
evidence filed on the jurisdiction motion.
The Court of Appeal
found that Justice Conway did not err, when she concluded that, despite
deficiencies in Ontario's statement of claim, Ontario had established a good
arguable case for assuming jurisdiction.
The case law on the
issue did not go as far as the defendants had argued. Even if Ontario's
statement of claim was deficient, Justice Conway was of the view that it was
capable of amendment. In the Court of Appeals' opinion, on a jurisdiction
motion, the motion judge is not required to subject the pleadings to the
scrutiny applicable on a rule 21 motion (motion to strike pleadings). So long
as the statement of claim advances the core elements of a cause of action known
to law and appears capable of being amended to cure any pleading
deficiencies such that the claim will have at least some prospect of success,
the issue for the motion judge is whether the claimant has established a good
arguable case that the cause of action is sufficiently connected to Ontario to
permit an Ontario court to assume jurisdiction.
The motion judge did
that in the following way, by submitting the allegations on the motion to the
following assessment:
(a) the facts
pleaded in the statement of claim are taken as true and if they are sufficient
to establish a good arguable case, the pleadings alone can satisfy the court
that it has jurisdiction;
(b) the foreign
defendants may put forth affidavit evidence for the purpose of challenging the
factual allegations in the statement of claim, but any allegations in the
statement of claim that remain unchallenged by the defendants may be challenged
as true for the purpose of the jurisdiction motion; and
(c) the plaintiff
may respond to any evidence put forward by the foreign defendants in order to
satisfy the court that there is a good arguable case.
The Court of Appeal
held that the core allegations against the defendants were that they
participated in three levels of conspiracy to breach duties to persons in
Ontario: an international conspiracy; a Canadian conspiracy,
and intra-group conspiracies. The court was satisfied that the pleadings, in
combination with the affidavit evidence filed by the parties, adequately
established a cause of action known to law with sufficient connection to
Ontario. It held that a jurisdiction motion is not the appropriate proceeding for
scrutinizing in detail the adequacy of the pleadings, nor is it the proper place
for engaging in a rigorous assessment of whether the plaintiff's claim would
ultimately succeed.
Ontario's case against the tobacco companies will proceed in the Ontario courts.
Regards,
Blair
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