Focus On

JURISDICTION - International issues (with foreign state or territory) - Determination of - Real and substantial connection

Friday, October 06, 2017 @ 9:30 AM  


Lexis Advance® Quicklaw®
Motion by the defendant HSBC Holdings to dismiss or stay the plaintiff’s class action. Cross-motion by the plaintiff for a declaration the defendant was a responsible issuer under s. 138.8 of the Ontario Securities Act. The plaintiff class was comprised of purchasers on foreign exchanges who purchased the defendant’s shares. They claimed they suffered $7 billion (USD) in losses because they overpaid for their shares based on two misrepresentations by the defendant that it was compliant with anti-money laundering and anti-terrorist financing laws and it had not participated in an illegal scheme to manipulate interest rates. The defendant was incorporated in England and had its headquarters in London. The defendant’s shares had never traded in Canada. It had a subsidiary that carried on business in Ontario and had raised capital directly from Canadian investors through private placements.

HELD: Motion allowed; cross-motion dismissed. The defendant was not a responsible issuer under the Securities Act because it did not have a real and substantial connection to Ontario. There were no presumptive factors that connected the defendant to Ontario, notwithstanding it had to comply with Canadian banking regulations. The defendant did not carry on its own business in Ontario. The defendant’s alleged misconduct fundamentally occurred outside of Canada. The Ontario court did not have jurisdiction simpliciter over the defendant. Even if Ontario had jurisdiction, the Ontario court was forum non conveniens.

Yip v. HSBC Holdings plc, [2017] O.J. No. 4729, Ontario Superior Court of Justice, P.M. Perell J., September 11, 2017. Digest No. TLD-Oct22017012