The helicopter in question was originally purchased by CHC Helicopter Corporation as part of the sale of 12 such rotorcraft. That sales agreement provided that the law of Connecticut governed. The helicopter was then sold by CHC to Lloyds TSB General Leasing (No 20) Limited, which, together with certain Lloyd's underwriters, is its beneficial owner.
On the sale of the aircraft to Lloyds 20, a novation agreement was executed wherein the obligations assumed by CHC were transferred to Lloyds 20, which became bound by the original contract of sale, with the exception that Sikorsky now accepted that the law of England and Wales applied and exclusive jurisdiction for the resolution of disputes was with the English courts.
In March 2007 Cougar leased the helicopter from Lloyds 20. Under the terms of that lease, Lloyds 20 was to be the loss payee under the insurance that was to be procured for the helicopter.
Two separate legal proceedings ensued as a result of the crash.
The first, commenced in June 2010, involved Sikorsky commencing an action against Cougar and Lloyds 20, seeking a declaratory order that any claim related to the crash would be adjudicated in Connecticut, in accordance with Connecticut law, and further seeking an order prohibiting Cougar, Lloyds 20 or the Lloyd's underwriters from commencing litigation in any other jurisdiction. This application was opposed.
Eight days after the Connecticut application was filed, Sikorsky was served with a Newfoundland claim commenced by Cougar, Lloyds 20 and the Lloyd's underwriters (as well as others). As an aside, one of the other parties was Helicopter Support Inc (HIS). After commencement of this proceeding, the plaintiffs served a notice of discontinuance with respect to the HSI claim and the proposed issuance of such notice was unsuccessfully challenged by Sikorsky.
The overall claim was based on alleged torts that had occurred in Newfoundland - more specifically, negligent design and manufacture of the main gearbox on the helicopter, negligent/wilful/fraudulent misrepresentation and failure to warn. No breach of contract was identified in the claim and there is no contract between Cougar and Sikorsky (although Lloyds and Sikorsky are contractually linked, as discussed above).
On receiving the claim in the Newfoundland action, Sikorsky sought to prevent Cougar and Lloyds from proceeding with the Newfoundland claim for a number of reasons.
In short, the Newfoundland court had to decide whether:
- in contesting the discontinuance against HSI, Sikorsky had attorned to the jurisdiction of the Newfoundland courts;
- it was appropriate to order a temporary stay of the Newfoundland action while the Connecticut application was determined (and while a case involving similar issues was determined by the Supreme Court of Canada);
- the claim had a real and substantive connection to Newfoundland; and
- the Newfoundland court was the most convenient forum to deal with the claim.
On the first issue the court held that Sikorsky's actions with respect to HSI had constituted attornment. The court went through the jurisprudence on attornment and found that Sikorsky had gone beyond what was permitted (ie, merely challenging the jurisdiction of the court to deal with the claim that was issued) in order to avoid a finding of attornment.
On this point Justice LeBlanc took special note of the fact that Sikorsky not only opposed the discontinuance against HSI, but went so far as to seek (unsuccessfully) an order further barring the plaintiffs from commencing further proceedings against HSI on the theory that any such action should be taken in Connecticut.
On the issue of staying the matter pending the decision of the Connecticut court and the critical decision of the Supreme Court in
Van Breda v Village Resorts Ltd (which is to be argued in March 2011), the court was equally unsympathetic. With regard to the Connecticut litigation, the court noted that although the decision was expected imminently, it was still outstanding and the judge in that case had indicated that further evidence and argument might be required before a ruling on that case could be made.
Regarding the
Van Breda decision, the court noted that while the Supreme Court's decision would be relevant to the assessment of the matter of territorial jurisdiction, it was unlikely that the decision would be released until late 2011. Accordingly, LeBlanc decided that a temporary stay would not be appropriate given, among other things, the delay that would arise and the substantial losses that had been incurred.
On the third issue, the real and substantial connection to Newfoundland, LeBlanc placed heavy reliance on the test set out by the Ontario Court of Appeal in
Muscutt v Courcelles, as modified in
Van Breda. He found a real and substantial connection based on the following factors:
- The courts of Newfoundland are presumed to have jurisdiction, as the rules of practice prima facie permit the service of a claim in that province (because it is a claim "founded on a tort committed in the province");
- Although Sikorsky's defence relies (at least in part) on contract law principles, the claim is entirely founded in tort;
- Although the crash did not occur in Newfoundland proper (it occurred 35 miles offshore), the alleged misrepresentations were relied on by Cougar in the province (where the most significant part of its business operates - even though the president of Cougar resides in British Columbia);
- There were significant losses accruing to Cougar in the province - for example, lost profits, payroll and administration costs, public relations management costs, monies paid to families of employees and costs for search and rescue flights; and
- In accordance with the Supreme Court of Canada's ruling in Moran v Pyle National (Canada) Ltd:
"[b]y tendering… products in the market place directly or through normal distributive channels, a manufacturer ought to assume the burden of defending those products wherever they cause harm as long as the forum into which the manufacturer is taken is one that he reasonably ought to have had in his contemplation."
Before leaving this issue, LeBlanc addressed the participation of the Lloyds 20 and the Lloyd's underwriters in the litigation. He noted that it was the claim itself and not the residence of the parties that established jurisdiction. In the case of Lloyds 20 and the Lloyd's underwriters, he specifically indicated that:
"the claim of Lloyds 20 and Lloyd's Underwriters cannot be seen to be separate and apart from that of Cougar. The claim of each of the plaintiffs is grounded on the same factual basis."
In determining the fourth issue - namely, whether Newfoundland was the most convenient forum to deal with the claim -LeBlanc noted first that, based on the jurisprudence, a party loses the ability to argue
forum non conveniens once it attorns to the jurisdiction.
Regardless of the attornment, a review of the non-exhaustive list of factors set out in
Muscutt,
Van Breda and
Teck Cominco Metals Ltd v Lloyd's Underwriters would lead to the same conclusion. The court agreed that Sikorsky would face additional costs litigating in Newfoundland, and that witnesses would have to be called from outside the jurisdiction. However, it held that:
- the same would apply if the matter were heard in Connecticut;
- the claim could be presented primarily through witnesses resident in Newfoundland;
- it was unclear whether the laws of Connecticut would apply, given that the claim was founded in tort, not contract;
- there would not necessarily be a multiplicity of proceedings, given that the Connecticut court had not yet ruled on the application before it;
- if the action were pursued in Connecticut, the plaintiffs would be at a juridical disadvantage since, in that jurisdiction, they would be unable to recover pure economic loss in a product liability proceeding of this sort; and
- the evidence from the Canadian regulators in this case would be more important than that from the Federal Aviation Administration.
Sikorsky's motion was dismissed with costs.