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31 August 2011
In February 2011 the Newfoundland court dismissed Sikorsky Aircraft Corporation's application to prevent Cougar Helicopters Inc from proceeding with a claim against it in that province (for further details please see "Sikorsky ordered to proceed in Newfoundland action").This decision was recently upheld by the Newfoundland and Labrador Court of Appeal.(1)
This claim, for pure economic loss, arises from the crash of a Cougar-operated Sikorsky S-92 helicopter off the coast of Newfoundland in 2009. There was no contract between Cougar and Sikorsky because the helicopter was leased to Cougar by another party in the litigation.
In the appeal, Sikorsky challenged the applications judge's ruling that the action could proceed in Newfoundland. The court had to decide on three issues:
On the issue of 'real and substantial connection', the appellate court relied particularly on the Supreme Court of Canada's decision in Moran v Pyle National (Canada) Ltd ( 1 SCR 393), in which the court held as follows:
"By tendering his 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 when he so tendered his goods. This is particularly true of dangerously defective goods placed in the interprovincial flow of commerce."
In this regard, the appellate court accepted the applications judge's finding that Sikorsky "knew or ought to have known that [the helicopter was] being operated in [Newfoundland]".
The court was not persuaded by Sikorsky's argument that Moran did not apply to actions for pure economic loss. Rather, it cited another case in the Newfoundland court which applied Moran in those circumstances.
In the end, the court found that there was no particular unfairness in having the matter heard in Newfoundland. Therefore, it upheld the applications judge's finding that the case had a real and substantial connection to the province of Newfoundland.
On the issue of whether Newfoundland was a convenient forum, the court was similarly unsympathetic to Sikorsky's arguments. In applying the leading case on the issue, Teck Cominco Metals Ltd v Lloyd's Underwriters ( 1 SCR 321), the appellate court determined that in this case, there would be inconvenience to one of the parties whether the matter was heard in Newfoundland or Connecticut (Sikorsky's preferred forum).
Moreover, although Sikorsky argued that the matter would be governed by the law of Connecticut, the appellate court held that this was not necessarily correct - particularly because the action was grounded in tort law, rather than contract law. In any event, the court noted that the Newfoundland court would be able to apply Connecticut law if it were found to govern.
The court also considered and rejected Sikorsky's argument that Cougar was "forum shopping" when it commenced the claim in Newfoundland, because Connecticut does not permit recovery for pure economic loss in product liability cases. The court refuted this argument, in part, by noting that Sikorsky could just as easily be accused of the same tactic - as it preferred to have the matter adjudicated in a jurisdiction in which the claim would be precluded.
The court found that Sikorsky had not established that the applications judge erred in assessing the above factors or in his determination that Newfoundland was a convenient forum for Cougar's claim.
Having determined that the dispute has a real and substantial connection to Newfoundland, and that the province was a convenient forum in which to hear the matter, the issue of attornment became moot.
However, the court provided some remarks in passing on the issue of whether Sikorsky had attorned to the jurisdiction by challenging the discontinuance of Cougar's claim against a co-defendant, Helicopter Support Inc. The court decided not to make a determination on this point. Rather, it stated that the case law on this point requires "refinement" by setting out the dilemma faced by a litigant which wishes to challenge the jurisdiction of a court, as follows:
"The case now before this Court provides an example of the untenable position in which the defendant may be placed, having to choose whether to abandon its jurisdictional challenge or to take action it deems necessary in the event that the jurisdictional challenge proves to be unsuccessful."
Sikorsky's appeal was dismissed, with costs.
For further information on this topic please contact Carlos P Martins at Bersenas Jacobsen Chouest Thomson Blackburn LLP by telephone (+1 416 982 3800), fax (+1 416 982 3801) or email (email@example.com).
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