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PRIL - 'Real and Substantial Connection'. Shirodkar v. Coinbase Global, Inc.
In Shirodkar v. Coinbase Global, Inc. (Ont CA, 2025) the Ontario Court of Appeal dismissed an appeal, here from a class action motion order finding that Ireland was the "preferable forum for the adjudication of the appellant’s claims".
The court considered the Van Breda test, here regarding 'real and substantial connection':(2) The motion judge did not err in declining to assume jurisdiction over the non-Canadian respondents based on the “real and substantial connection” test
[46] The Van Breda framework requires the court to review factors that arguably connect the subject matter of the litigation to the forum. Once established, a connecting factor gives rise to a presumption of jurisdiction. To rebut this presumption, the defendant “must establish facts which demonstrate that the presumptive connecting factor does not point to any real relationship between the subject matter of the litigation and the forum or points only to a weak relationship between them”: Van Breda, at para. 95. If the presumption is rebutted, the action should be stayed or dismissed: Van Breda, at paras. 97, 100.
(a) The motion judge’s analysis of the Van Breda factors
[47] The appellant relied on two presumptive connecting factors. He argued that the respondents carried on business in Ontario and that they committed a statutory tort in Ontario by failing to comply with s. 71(1) of the Securities Act.
[48] Relying on findings made in her analysis of presence-based jurisdiction, the motion judge found that none of the non-Canadian respondents was carrying on business in Ontario.
[49] Reviewing the elements of the statutory tort alleged in the statement of claim, she found that:. The appellant’s purchase of the alleged securities took place in Ireland through Coinbase Europe;
. The contractual relationship between the appellant and Coinbase Europe was formed in Ireland;
. The steps to accept, execute, and fulfill the appellant’s trades in digital assets on the Coinbase platform occurred outside of Ontario;
. The physical server infrastructure used to operate the Coinbase platform is located outside of Ontario;
. The appellant accessed the Coinbase platform to execute trades in digital assets from his home computer in France and later from his home computer in Ontario; and
. The appellant allegedly suffered damages in Ontario. [50] The motion judge noted that, at para. 89 of Van Breda, the Supreme Court held that an allegation that a plaintiff has suffered damages in Ontario does not constitute a presumptive connecting factor. This left the appellant’s accessing of the Coinbase platform from Ontario as the sole presumptive connecting factor. The motion judge found that the respondents had rebutted the presumption arising from this weak connection, reasoning that:If the [appellant]’s choice to use his home computer in Ontario to conduct trades on the Coinbase Platform were sufficient to ground jurisdiction, every jurisdiction in the world where anyone purchased digital assets on the Coinbase Platform would also have jurisdiction. This universal jurisdiction is exactly what our courts have cautioned against. [Citations omitted.] [51] The motion judge concluded that, “viewed practically, it would not be reasonable for the [respondents] to expect that they would be called to answer proceedings in Ontario in the circumstances where almost every element of the alleged tort occurred outside Ontario and only a relatively minor element of the tort occurred in Ontario”.
[52] The motion judge rejected the appellant’s argument that Ontario should assume jurisdiction over the non-Canadian respondents based on the impact of Coinbase’s activities in this province. The appellant relied on evidence that the Coinbase trading platform is popular in Canada and that Canadian securities regulators have taken steps to regulate crypto-trading platforms. The motion judge found that this evidence fell short of establishing that Ontario is substantially affected by the conduct of the non-Canadian respondents.
(b) The motion judge did not commit an error in principle or palpable and overriding error in applying the Van Breda test
[53] The appellant has not persuaded me that the motion judge erred in applying Van Breda.
[54] It was open to the motion judge to find that the non-Canadian respondents did not carry on business in Ontario, and that the only element of the statutory tort alleged by the appellant besides his damages was his access to the Coinbase platform from his home computer in Ontario. It was likewise open to her to find that access to a global internet platform from Canada is, at best, a weak presumptive connecting factor, which the respondents had rebutted. Although the activity in question is somewhat different in this case, her conclusion on the latter point is consistent with the principles articulated in Yip v. HSBC Holdings plc, 2017 ONSC 5332, at para. 211, aff’d 2018 ONCA 626, 141 O.R. (3d) 641, at paras. 45-50, leave to appeal refused, [2018] S.C.C.A. No. 410.
[55] The appellant argues that Sharp v. Autorité des marchés financiers, 2023 SCC 29, 487 D.L.R. (4th) 467, establishes that provincial securities legislation applies to foreign defendants whose cross-border conduct adversely affects domestic investors and capital markets, and that this links the subject-matter of his action to Ontario. This argument confuses adjudicative and legislative jurisdiction. In Sharp, the question was whether the Quebec Securities Act, C.Q.L.R., c. V-1.1, applied extra-territorially (legislative jurisdiction), not whether Quebec courts had jurisdiction over the defendant (adjudicatory jurisdiction): at paras. 115, 123 and 136.
[56] The motion judge properly focused her analysis on whether Ontario had adjudicative jurisdiction. She correctly found that the appellant’s assertion of a cause of action under an Ontario statute does not automatically mean that an Ontario court has jurisdiction over the claim.
[57] The appellant contends that the respondents’ dealings with provincial securities regulators prove that they expected that they could be subject to claims in Ontario. The motion judge canvassed the evidence and argument on this point at length in her analysis of consent-based jurisdiction. She rejected the appellant’s submission that, by taking steps to obtain limited registration from Canadian securities regulators, the non-Canadian respondents consented to the jurisdiction of Ontario courts with respect to claims by private citizens. I see no error in her reasoning.
[58] The appellant contends that the motion judge was bound to find that the respondents collectively carry on business in Ontario given the interconnected nature of the respondents’ operations. He relies on Sakab Saudi Holding Company v. Jabri, 2022 ONCA 496, at para. 44, for the proposition that there is “no need to expressly and mechanically run through the Van Breda factors with respect to each defendant where the defendants are alleged to have acted in an interconnected way and under the direction of a single controlling mind”.
[59] The motion judge properly rejected this argument. The circumstances in Sakab are distinguishable from this case. In Sakab, the defendant corporations allegedly orchestrated a massive fraud under the direction of a single controlling mind. The motion judge in Sakab found a prima facie case of conspiracy carried out from Ontario collectively by the defendants. In these circumstances, it was unnecessary to consider the possible presumptive connecting factors between each defendant and Ontario.
[60] The situation is different here. There is no allegation of a single controlling mind and no allegation of fraud and conspiracy. This is a statutory claim, and “each defendant occupies different roles in the Coinbase group structure”. The motion judge accordingly determined that “undertaking the Van Breda analysis for each defendant would not be a ‘mechanical’ exercise, as the court found it would have been in Sakab.”
[61] Nor is there any suggestion that this is an oppression case like Stubbs v. ATS International BV, 2010 ONCA 879, 272 O.A.C. 386, on which the appellant also relies. The motion judge found that the activities of the non-Canadian respondents are not enmeshed with those of Coinbase Canada, and sorting their roles would not be akin to “trying to unscramble an egg”, as in Stubbs.
[62] In these circumstances, I agree with the motion judge that, as reaffirmed recently in Sinclair v. Amex Canada Inc., 2023 ONCA 142, 478 D.L.R. (4th) 683, at para. 18, the court had to find an unrebutted presumptive connecting factor linking each defendant who opposed the claim proceeding in Ontario before it could assume jurisdiction over that defendant.
[63] I would accordingly not grant the appeal on this ground. . Abaxx Technologies Inc. v. Pasig and Hudson Private Limited
In Abaxx Technologies Inc. v. Pasig and Hudson Private Limited (Ont CA, 2024) the Court of Appeal considered 'venue' based on the Van Breda 'real and substantial connection' test, and as well a related contrasting of the standard for such a motion ['good arguable case'] compared both the distinct R20 ['summary judgment'] standard ('genuine issue for trial'), and R21 ['determination of issue before trial'] ('plain and obvious'):[13] The respondents brought companion motions to dismiss the claim on the ground that the claim lacks a real and substantial connection to Ontario that would ground jurisdiction over the claim in this province, and, in the alternative, that Singapore would be the preferable forum.
[14] None of the respondents have a presence in Ontario nor did they attorn to the jurisdiction.
[15] The motion judge correctly identified the test to establish the requisite jurisdictional connection to Ontario as set out in Club Resorts Ltd. v. Van Breda, 2012 SCC 17, [2012] 1 S.C.R. 572, at para. 90, namely that (i) the defendant is domiciled or resident in the jurisdiction, (ii) the defendant carries on business in the jurisdiction, (iii) the tort was committed in the jurisdiction, or (iv) a contract connected with the dispute was entered into in the jurisdiction.
[16] He noted that the moving party must demonstrate a “good arguable case” on the basis of the pleadings and/or the evidence filed on the jurisdiction motion: Ontario (Attorney General) v. Rothmans Inc., 2013 ONCA 353, 115 O.R. (3d) 561, at para. 54, leave to appeal refused, British American Tobacco P.L.C. v. Ontario, [2013] S.C.C.A. No. 327. The presumption of jurisdiction arising from these factors may be rebutted by showing that there is at most, a weak relationship between the subject matter of the litigation and the proposed forum: Lapointe Rosenstein Marchand Melançon LLP v. Cassels Brock & Blackwell LLP, 2016 SCC 30, [2016] 1 S.C.R. 851, at para. 27.
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[24] We see no error in the motion judge’s articulation of the test, his application of the test to the evidence, or his findings of fact. The appellants had the opportunity to lead evidence to challenge the rebuttal of the presumption of jurisdiction but failed to do so. We therefore agree with the motion judge that the appellants did not demonstrate that there was a “good arguable case” made out on the pleadings and or evidence filed on the motion. Nor do the demands of fairness, efficiency and justice augur in favour of the court in Ontario assuming jurisdiction over this claim, as the appellants have not demonstrated that Ontario should assume jurisdiction over any of the parties or any of the claims.
[25] Finally, we do not agree that the motion judge improperly embarked on a “disguised, unrequested and premature Rule 20 and/or Rule 21 motion.” The threshold posed by a “good arguable case” is commensurate with a genuine issue to be tried and is a higher threshold than the plain and obvious standard applied on a Rule 21 motion. . Castillo v. Xela Enterprises Ltd.
In Castillo v. Xela Enterprises Ltd. (Ont CA, 2024) the Court of Appeal considered an appeal of a contempt finding, here where the contemnor (the one being in contempt) sworn a key Declaration in Guatemala.
Here the court discusses the 'real and substantial connection' test:Analysis
(1) Did the motion judge err in law by holding that the court had territorial jurisdiction to find the appellant in contempt based on his Declaration that was not made in Canada but in Guatemala?
[55] The appellant submits that because the court found that the contemptuous conduct by the appellant was making the Declaration in Guatemala, the court did not have territorial jurisdiction to make the contempt finding against him. The appellant relies on the Supreme Court of Canada’s decision in Libman v. The Queen, 1985 CanLII 51 (SCC), [1985] 2 S.C.R. 178, at pp. 199, 212-13, 1985 CanLII 51, at paras. 42, 73-76.
[56] In Libman, the Supreme Court set out the test for determining when a Canadian court may take jurisdiction over a criminal offence that occurred in whole or in part outside Canada. LaForest J. summarized the test at pp. 212-12 (para. 74):As I see it, all that is necessary to make an offence subject to the jurisdiction of our courts is that a significant portion of the activities constituting that offence took place in Canada. As it is put by modern academics, it is sufficient that there be a “real and substantial link” between an offence and this country, a test well-known in public and private international law. [57] He concluded at p. 213 (para. 76):Just what may constitute a real and substantial link in a particular case, I need not explore. There were ample links here. The outer limits of the test may, however, well be coterminous with the requirements of international comity. [58] The test also applies to a finding of civil contempt: see Canada (Human Rights Commission) v. Canada Liberty Net, [1998] 1 S.C.R. 626, at p. 670, 1998 CanLII 818, at para. 52.
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