On January 27, 2006, the Superior Court of Québec released its decision in HSBC Bank Canada v. Hocking and dismissed a motion to enforce in Québec a judgment of the Ontario Superior Court of Justice that had certified a class action against HSBC on behalf of a national class and had approved a settlement reached between the parties. This judgment is a serious warning to all parties involved in national, or even international, class actions across Canada: unless there is a real and substantial connection between each and every class member and the jurisdiction where the action was instituted, Québec courts will not recognize judgments rendered by courts outside of Québec.  

In March 2003, Robert Hocking filed a motion for certification of a class action against HSBC before the Ontario Superior Court of Justice seeking to act on behalf of all Canadian customers of the bank who had made an early pay-out of their mortgage and incurred a penalty. At roughly the same time, David Haziza, a resident of Québec, filed a motion for authorization of a class action before the Québec Superior Court against the bank based on identical grounds and covering a portion of the same time period, but limited to Québec residents. 

On June 20, 2005, after the Ontario Superior Court dismissed Haziza’s motion to intervene, the Ontario court certified the proceedings as a class action and approved a settlement reached between the parties. On August 2, HSBC, supported by Hocking, filed a motion for recognition of the Ontario judgment before the Québec courts. Haziza contested the bank’s motion. 

The Québec Superior Court refused to recognize the Ontario judgment, finding that the Ontario courts had no jurisdiction over class members residing in Québec, because, in the Court’s view, all of HSCB’s actions relevant to the litigation, as well all rights and obligations in question, any prejudice suffered by the class members and any fault committed by the bank had occurred  in Québec. 

According to the Court, in order for the jurisdiction of Ontario courts over a national class action to be recognized in Québec it was insufficient that a substantial number of class members were Ontario residents. The Court noted that the exclusively Ontarian case-law was to the effect that national class actions will be allowed either when the defendant is domiciled in the province where the proceedings are launched or when the essential facts took place there such that, pursuant to traditional conflicts of law rules, there is a real connection between each one of the individual claims covered by the class action and the province. 

The Court also refused to give any effect to HSBC’s acceptance of the Ontario courts’ jurisdiction over these proceedings, stating that it could not in and of itself ground the jurisdiction of that province’s courts over a national class action and that  to force out-of-province class members into class proceedings launched in a province where they did  reside would run contrary to the requirements of order and fairness. Finally, based on  the specific facts before it, the Court noted that even if the Ontario courts had had jurisdiction over the national class, they should have declined to entertain the proceedings for those class members residing in Québec pursuant to the forum non conveniens doctrine. 

If this judgment becomes final, it will result in Québec courts refusing to recognize and give effect to national class action judgments rendered in other provinces unless there is both a real a substantial connection between each one of the class members and the jurisdiction where the proceedings were launched and that that jurisdiction is the most convenient forum to entertain the action. Under Québec law, that connection will be found if, for example, the defendant is domiciled in, or has its head office in the jurisdiction in question, or if the rights and obligations to be determined, the fault committed or the damage allegedly suffered are situated  in that province. 

Notwithstanding the position that courts from  other provinces may take on this issue, this judgment will limit the enforceability in Québec of national class actions and makes clear that parties outside Québec who may choose to ignore the jurisdiction of Québec courts over class actions which involve residents of that province will do so at their own risk.

Davies is involved in some of the largest and most complex class action litigation matters in the country. Please do not hesitate to call Mathieu Bouchard (514-841-6479), David Stolow (514-841-6567) or Nick Rodrigo (514-841-6548) if you would like further information on this case or to obtain a complete copy of the decision.

Davies Ward Phillips & Vineberg LLP, with over 235 lawyers, practises nationally and internationally from offices in Toronto, Montréal, New York and an affiliate in Paris and is consistently at the heart of the largest and most complex commercial and financial matters on behalf of its North American and overseas clients. 

The information and comments herein are for the general information of the reader and are not intended as advice or opinions to be relied upon in relation to any particular circumstance. For particular applications of the law to specific situations, the reader should seek professional advice.